AMKOR TECHNOLOGY INC, S-1/A, 1997-10-27

AMKOR TECHNOLOGY INC
S-1/A, 1997-10-27
SEMICONDUCTORS & RELATED DEVICES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 27 1997

REGISTRATION NO. 333-37235

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

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT NO. 1

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

AMKOR TECHNOLOGY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
DELAWARE 3674 23-292-5614
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>

AMKOR TECHNOLOGY, INC.
1345 ENTERPRISE DRIVE
WEST CHESTER, PA 19380
(610) 431-9600
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

FRANK J. MARCUCCI
CHIEF FINANCIAL OFFICER
AMKOR TECHNOLOGY, INC.
1345 ENTERPRISE DRIVE
WEST CHESTER, PA 19380
(610) 431-9600
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

Copies to:

<TABLE>
<S> <C>
LARRY W. SONSINI, ESQ. ALAN L. BELLER, ESQ.
PAGE MAILLIARD, ESQ. YONG G. LEE, ESQ.
BRUCE M. MCNAMARA, ESQ. CLEARY, GOTTLIEB, STEEN & HAMILTON
WILSON SONSINI GOODRICH & ROSATI ONE LIBERTY PLAZA
PROFESSIONAL CORPORATION NEW YORK, NY 10006
650 PAGE MILL ROAD (212) 225-2000
PALO ALTO, CA 94304
(650) 493-9300
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
================================================================================
<PAGE> 2

SUBJECT TO COMPLETION

OCTOBER 27 1997

PROSPECTUS
LOGO

AMKOR TECHNOLOGY, INC.

COMMON STOCK
($.001 PAR VALUE)

Of the shares (the "Shares") of Common Stock, $.001 par value ("Common
Stock") of Amkor Technology, Inc. ("Amkor" or the "Company") offered hereby,
Shares are being sold by the Company and Shares are being
sold by certain stockholders of the Company (the "Selling Stockholders"). The
Company will not receive any proceeds from the sale of the Common Stock by the
Selling Stockholders.

Of the Shares offered hereby, Shares are being offered by
the U.S. Underwriters (as defined herein) in the United States and Canada (the
"U.S. Offering") and Shares are being offered by the International
Underwriters (as defined herein) in a concurrent offering outside the United
States and Canada (the "International Offering" and, together with the U.S.
Offering, the "Offerings"), subject to transfers between the U.S. Underwriters
and the International Underwriters (collectively, the "Underwriters"). The Price
to Public and Underwriting Discount per share will be identical for the U.S.
Offering and the International Offering. See "Underwriting." The closing of the
U.S. Offering and International Offering are conditioned upon each other.
Following the Offerings, certain members of management and their affiliates will
beneficially own % of the Company's outstanding Common Stock. See
"Principal and Selling Stockholders."

Prior to the Offerings, there has been no public market for the Common Stock. It
is currently estimated that the initial public offering price per share will be
between $ and $ per share. See "Underwriting" for a discussion of
factors to be considered in determining the initial public offering price.

Application has been made to have the Common Stock approved for listing on the
Nasdaq National Market under the symbol "AMKR."

SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SHARES.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
PROCEEDS TO
PRICE TO PROCEEDS TO SELLING
PUBLIC UNDERWRITING COMPANY(1) STOCKHOLDERS
DISCOUNT
<S> <C> <C> <C> <C>
Per Share................... $ $ $ $
Total(2).................... $ $ $ $
- -----------------------------------------------------------------------------------------------------
</TABLE>

(1) Before deducting expenses payable by the Company, estimated at $ .

(2) The Company has granted the U.S. Underwriters and the International
Underwriters 30-day options to purchase up to and additional
Shares, respectively, solely to cover over-allotments, if any. If the
Underwriters exercise these options in full, the total Price to Public,
Underwriting Discount and Proceeds to the Company will be $ ,
$ and $ , respectively. See "Underwriting."

The Shares are offered subject to receipt and acceptance by the Underwriters, to
prior sale and to the Underwriters' right to reject any order in whole or in
part and to withdraw, cancel or modify the offer without notice. It is expected
that delivery of the Shares will be made at the office of Salomon Brothers Inc,
Seven World Trade Center, New York, New York, or through the facilities of The
Depository Trust Company, on or about , 1997.

SALOMON BROTHERS INC

BANCAMERICA ROBERTSON STEPHENS

COWEN & COMPANY

The date of this Prospectus is , 1997.

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to the registration or qualification under the securities
laws of any such State.
<PAGE> 3

[ARTWORK]

[Photograph of manufacturing facilities; pictures of products; and diagram
of wafer fabrication, packaging and test operations.]

PowerQuad(R) and SuperBGA(R) are registered trademarks of the Company and
ChipArray(TM) and PowerSOP(TM) are trademarks of the Company. MicroBGA(TM) is a
trademark of Tessera, Inc. This Prospectus includes other trademarks and trade
names of the Company and other entities.

CERTAIN PERSONS PARTICIPATING IN THE OFFERINGS MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING PURCHASES OF THE COMMON STOCK TO STABILIZE ITS MARKET PRICE, PURCHASES
OF THE COMMON STOCK TO COVER SOME OR ALL OF A SHORT POSITION IN THE COMMON STOCK
MAINTAINED BY THE UNDERWRITERS AND THE IMPOSITION OF PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

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<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information found elsewhere in this Prospectus, including under "Risk Factors"
and the Consolidated Financial Statements and Notes thereto. Certain statements
contained in "Prospectus Summary," "Risk Factors," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business,"
including statements regarding the anticipated growth in the market for the
Company's products, the Company's anticipated capital expenditures and financing
needs, the Company's expected provision of wafer fabrication services, the
Company's expected capacity utilization rates, the Company's anticipated
assumption of marketing rights in Japan and Korea, the belief of the Company as
to its future operating performance and other statements contained in this
Prospectus that are not historical facts are "forward-looking" statements within
the meaning of the U.S. federal securities laws. Because such statements include
risks and uncertainties, actual results may differ materially from those
anticipated in such forward-looking statements as a result of certain factors,
including those set forth in "Risk Factors," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business." These
forward-looking statements are made as of the date of this Prospectus and the
Company assumes no obligation to update such forward-looking statements or to
update the reasons why actual results could differ materially from those
anticipated in such forward-looking statements

THE COMPANY

Amkor is the world's largest independent provider of semiconductor
packaging and test services. The Company believes that it is also one of the
leading developers of advanced semiconductor packaging and test technology in
the industry. The Company offers a complete and integrated set of packaging and
test services including integrated circuit ("IC") package design, leadframe and
substrate design, IC package assembly, final testing, burn-in, reliability
testing, and thermal and electrical characterization. As of June 30, 1997, the
Company had in excess of 150 customers, including many of the largest
semiconductor companies in the world. Such customers include, among others,
Advanced Micro Devices, Inc., International Business Machines Corp., Intel
Corporation, Lucent Technologies, Inc., Motorola, Inc., National Semiconductor
Corp., Philips Electronics N.V., SGS-THOMSON Microelectronics N.V., Siemens AG
and Texas Instruments, Inc. ("TI").

Today, nearly all of the world's major semiconductor companies outsource
some or all of their packaging and test needs. The increasing complexities,
investment requirements and time to market pressures associated with IC design
and production, combined with the growth in the number of ICs being produced and
sold, are driving increasing demand for independent packaging and test services.
This demand is expected to grow faster than that of the semiconductor industry
as a whole. According to industry estimates, independent packaging foundry
revenues are expected to grow at a compound annual rate of 20.3% over the next
five years from an estimated $5.0 billion in 1996 (32% of the world's IC
packaging needs) to $12.5 billion in 2001 (45% of the world's IC packaging
needs).

The Company provides packaging and test services through its three
factories in the Philippines as well as four factories of Anam Industrial Co.,
Ltd. ("AICL") in Korea pursuant to a supply agreement between the Company and
AICL. The Company and AICL have had a long-standing relationship. In 1996 and
the six months ended June 30, 1997, approximately 72% and 68%, respectively, of
the Company's revenues were derived from sales of services performed for the
Company by AICL. In addition, substantially all of the revenues of AICL in 1996
and the six months ended June 30, 1997 were derived from services sold by the
Company. The Company expects that the businesses of the Company and AICL will
continue to remain highly interdependent by virtue of their supply relationship,
family ties between their respective shareholders and management, financial
relationships, coordination of product and operation plans, joint research and
development activities and shared intellectual property rights.

In the first half of 1998, the Company is scheduled to begin offering wafer
fabrication services through AICL's new deep submicron CMOS foundry. The Company
expects that this foundry will be capable of producing up to 25,000 8" wafers
per month by the end of 1998. Through a strategic

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<PAGE> 5

relationship with TI, the Company and AICL are currently qualifying .25 micron
CMOS process technology, and AICL is negotiating with TI to obtain the
technology necessary to migrate to .18 micron CMOS process technology during
1998. AICL's foundry will primarily manufacture DSPs, ASICs and other logic
devices. By leveraging the Company's leading position in semiconductor packaging
and test services, the new wafer fabrication services will enable the Company to
become one of the first providers of a fully integrated, turnkey semiconductor
fabrication, packaging and test service solution.

The Company's strategy is to: (i) maintain its product technology
leadership by continuing to design and produce leading-edge packaging
technology; (ii) maintain advanced manufacturing capabilities through continuous
advancement and refinement of its process technology; (iii) leverage the scale
and scope of its packaging and test capabilities to provide Amkor with several
competitive advantages, including procurement of key materials and manufacturing
equipment, the ability to capitalize on economies of scale and the ability to
offer an industry-leading breadth of product offerings; (iv) establish industry
packaging standards to bolster sales of leading-edge, high margin and high
growth product lines; (v) enhance customer and supplier relationships; (vi)
continue to focus on customer support; and (vii) provide an integrated, turnkey
solution comprised of wafer fabrication, packaging and test services.

The Company was organized under the laws of Delaware in September 1997 as a
holding company for several affiliated entities under common control and
management. See "Reorganization." The Company's principal executive offices are
located at 1345 Enterprise Drive, West Chester, PA 19380 and its telephone
number at that address is (610) 431-9600.

THE OFFERINGS

<TABLE>
<S> <C>
Common Stock offered by the Company
U.S. Offering.................................... shares
International Offering........................... shares
-------------------
Total.................................... shares
Common Stock offered by Selling Stockholders
U.S. Offering.................................... shares
International Offering........................... shares
-------------------
Total.................................... shares
Common Stock to be outstanding after the
Offerings(1)..................................... shares
Use of Proceeds.................................... For repayment of approximately $240
million of short-term debt, capital
expenditures, and other general
corporate purposes. See "Use of
Proceeds."
Proposed Nasdaq National Market symbol............. AMKR
</TABLE>

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

(1) Excludes shares of Common Stock issuable upon exercise of options to
be granted prior to the Offerings under the Company's 1997 Stock Plan at a
price of $ per share. Also excludes an aggregate of
additional shares reserved for future issuance under the Company's 1997
Stock Plan and 1997 Director Option Plan. See "Management" and "Description
of Capital Stock" and Notes 1 and 15 of Notes to Consolidated Financial
Statements.

RISK FACTORS

See "Risk Factors" beginning on page 6 for a discussion of certain factors
that should be considered by potential investors.

4
<PAGE> 6

SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
JUNE 30, 1997
--------------------------------------------
DECEMBER 31, 1996 ACTUAL PRO FORMA(2) AS ADJUSTED(3)
------------------ -------- ------------ --------------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents..................... $ 49,644 $ 60,943 $ 49,143 $
Working capital (deficit)..................... 36,785 (6,461) (18,261)
Total assets.................................. 797,613 933,657 921,857
Long-term debt and due to affiliate
(non-current)............................... 402,338 436,922 436,922
Stockholders' equity.......................... 38,560 45,548 23,748
</TABLE>

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

(1) Prior to the reorganization of the Company, Amkor Electronics, Inc. ("AEI"),
one of the Company's principal subsidiaries, elected to be taxed as an S
Corporation under the Internal Revenue Code of 1986 and comparable state tax
laws. Accordingly, AEI did not recognize any provision for federal income
tax expense during the periods presented herein. The pro forma adjustment
for income taxes reflects the additional U.S. federal income taxes which
would have been recorded by the Company if AEI had not been an S Corporation
during these periods. See "Reorganization" and Note 1 of Notes to
Consolidated Financial Statements.

(2) Pro forma balance sheet data reflects (i) the termination of AEI's S
Corporation status which resulted in the recording of a deferred tax
liability of $10.0 million (ii) a distribution prior to the Offerings of
undistributed earnings of AEI through June 30, 1997 of $11.8 million to
shareholders of AEI prior to the Reorganization of the Company (as defined
in "Reorganization") and (iii) the reclassification of the remaining
retained earnings of AEI of $11.7 million to additional paid-in capital. The
amount actually distributed by the Company to such stockholders of AEI will
increase to reflect any undistributed net income earned by AEI following
June 30, 1997 and prior to such Reorganization. See
"Reorganization -- Termination of S Corporation status and Distributions"
and Notes 1 and 16 of Notes to Consolidated Financial Statements.

(3) As adjusted to give effect to the application of the estimated net proceeds
to the Company of the Offerings based on an assumed initial public offering
price of $ per share. See "Use of Proceeds." Also reflects the
elimination of the minority interest liability and recording of goodwill
related to the issuance of 2,390,000 shares to AICL in exchange for its 40%
interest in Amkor/Anam Pilipinas, Inc. See "Reorganization" and Note 1 of
Notes to Consolidated Financial Statements.
------------------------

Capitalized terms used in this summary have the meanings ascribed to such
terms elsewhere in this Prospectus. Unless the context otherwise requires, all
references in this Prospectus to the "Company" or "Amkor" are to Amkor
Technology, Inc. and its subsidiaries. Unless otherwise indicated, all
information in this Prospectus (i) gives effect to the Reorganization (as
defined under "Reorganization"), including the issuance of 85,000,000 shares of
Common Stock in connection therewith, and (ii) assumes that the Underwriters
have not exercised the over-allotment options. See "Reorganization,"
"Description of Capital Stock," "Underwriting," and Note 1 of Notes to
Consolidated Financial Statements. References in this Prospectus to "Korea" are
to the Republic of Korea, and references to "won" or "W" are to the currency of
the Republic of Korea. Solely for the convenience of the reader, this Prospectus
contains translations of certain won amounts into U.S. dollars. Unless otherwise
indicated, all such translations were made at the base rate under the market
average exchange rate system, as announced by the Korea Financial
Telecommunications and Clearings Institute in Seoul, Korea (the "Market Average
Exchange Rate"), in effect on June 30, 1997, which was W 888 to $1.00. No
representation is made that the won or U.S. dollar amounts referred to herein
could have been or could be converted into U.S. dollars or won, as the case may
be, at any particular rate or at all. On , 1997, the Market Average
Exchange Rate was W to $1.00. Financial information for AICL contained in
this Prospectus has been prepared on an consolidated basis and on the basis of
Korean generally accepted accounting principles ("GAAP"), which differ in
certain significant respects from U.S. GAAP.

Certain technical terms used throughout this Prospectus are defined in the
Glossary appearing immediately prior to the Consolidated Financial Statements at
the end of this Prospectus.

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<PAGE> 7

RISK FACTORS

Prospective investors should consider carefully the following risk factors,
in addition to the other information contained in this Prospectus concerning the
Company and its business, before purchasing the shares of Common Stock offered
hereby. Certain statements contained in "Prospectus Summary," "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business," including statements regarding the anticipated
growth in the market for the Company's products, the Company's anticipated
capital expenditures and financing needs, the Company's expected provision of
wafer fabrication services, the Company's expected capacity utilization rates,
the Company's anticipated assumption from AICL of marketing rights in Japan and
Korea, the
belief of the Company as to its future operating performance and other
statements contained in this Prospectus that are not historical facts, are
"forward-looking" statements within the meaning of the U.S. federal securities
laws. Because such statements include risks and uncertainties, actual results
may differ materially from those anticipated in such forward-looking statements
as a result of certain factors, including those set forth in "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business." These forward-looking statements are made as of the
date of this Prospectus and the Company assumes no obligation to update such
forward-looking statements or to update the reasons why actual results could
differ materially from those anticipated in such forward-looking statements.

FLUCTUATIONS IN OPERATING RESULTS; DECLINES IN AVERAGE SELLING PRICES

A variety of factors could materially and adversely affect the Company's
revenues, gross profit and operating income, or lead to significant variability
of quarterly or annual operating results. These factors include, among others,
the cyclical nature of both the semiconductor industry and the markets addressed
by end-users of semiconductors, the short-term nature of its customers'
commitments, timing and volume of orders relative to the Company's production
capacity, changes in capacity utilization, evolutions in the life cycles of
customers' products, rescheduling and cancellation of large orders, rapid
erosion of packaging selling prices, availability of manufacturing capacity,
allocation of production capacity between the Company's facilities and those of
AICL, fluctuations in package and test service charges paid to AICL, changes in
costs, availability and delivery times of labor, raw materials and components,
effectiveness in managing production processes, fluctuations in manufacturing
yields, changes in product mix, product obsolescence, timing of expenditures in
anticipation of future orders, availability of financing for expansion, changes
in interest expense, the ability to develop and implement new technologies on a
timely basis, competitive factors, changes in effective tax rates, the loss of
key personnel or the shortage of available skilled workers, international
political or economic events, currency and interest rate fluctuations,
environmental events, and intellectual property transactions and disputes.
Unfavorable changes in any of the above factors may adversely affect the
Company's business, financial condition and results of operations. In addition,
the Company increases its level of operating expenses and investment in
manufacturing capacity based on anticipated future growth in revenues. If the
Company's revenues do not grow as anticipated, the Company's business, financial
condition and operating results may be materially and adversely affected. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

The Company expects that average selling prices for its services may
decline in the future, principally due to intense competitive conditions. A
decline in average selling prices of the Company's services, if not offset by
reductions in the cost of producing those services or by a shift to higher
margin products, would decrease the Company's gross margins and could materially
and adversely affect the Company's business, financial condition and results of
operations. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

DEPENDENCE ON THE HIGHLY CYCLICAL SEMICONDUCTOR AND PERSONAL COMPUTER INDUSTRIES

The Company's business is substantially affected by market conditions in
the semiconductor industry, which is highly cyclical and, at various times, has
been subject to significant economic

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downturns and characterized by reduced product demand, rapid erosion of average
selling prices and production overcapacity. In addition, the markets for
semiconductors are characterized by rapid technological change, evolving
industry standards, intense competition and fluctuations in end-user demand.
Because the Company's business will be dependent on the requirements of
semiconductor companies for independent packaging, test and wafer fabrication
services for the foreseeable future, any future downturn in the semiconductor
industry could have a material adverse effect on the Company's business,
financial condition and results of operations. In 1996 and the first six months
of 1997, the Company's operating results were adversely affected by an
unexpected downturn in the semiconductor market. In addition, a significant
portion of the Company's net revenues from packaging and test services depends
on the packaging and testing of semiconductors used in personal computer ("PC")
products. The PC industry is subject to intense competition, is highly volatile
and is subject to significant shifts in demand. As a result, any deterioration
of business conditions in the PC industry could have a material adverse effect
on the Company. See "Business -- Industry Background" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

RISKS ASSOCIATED WITH LEVERAGE

At June 30, 1997, the Company had outstanding $677.8 million in principal
amount of indebtedness, including non-current amounts due to AUSA, and the
Company intends to incur additional bank debt prior to and following the
Offerings. Following the expected application of the net proceeds to the Company
of the Offerings, the Company will continue to have at least $304.7 million in
principal amount of indebtedness outstanding. At June 30, 1997, the Company has
also guaranteed amounts owed by affiliates of approximately $46 million. At June
30, 1997, the Company had $45.5 million of stockholders' equity and a working
capital deficit of $6.5 million (which amounts were $23.7 million and $18.3
million, respectively, on a pro forma basis, after giving effect to the
termination of AEI's S Corporation status and the distribution of undistributed
net income through June 30, 1997). Following the Offerings, the Company will
continue to be subject to the risks associated with leverage, which risks
include (i) principal and interest repayment obligations which require the
expenditure of substantial amounts of cash, the availability of which will be
dependent on the Company's future performance, (ii) inability to repay principal
or interest when due, which could result in a default on the debt and legal
actions against the Company, (iii) adverse effects of interest expense on the
Company's financial condition and results of operations and (iv) potential
violations of loan covenants which could lead to loans being called by banks. In
addition, a significant portion of the debt is owed to banks located in Korea or
branches of such banks located outside Korea. Recently, banks in Korea and their
overseas branches have been reducing their lending to companies which have
significant amounts of debt relative to their equity. Following the Offerings,
the Company will continue to have a significant amount of debt relative to its
equity, a large portion of which debt the Company plans to renew when it is due.
If the Company's banks do not renew these loans when they become due or do not
extend additional loans on acceptable terms to fund the Company's working
capital or capital expenditure needs, the Company will be forced to find other
sources of financing. There can be no assurance that such financing will be
available on favorable terms or at all. If the Company is not able to obtain
necessary financing, the Company's business and financial condition will be
materially and adversely affected. See "Reorganization," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
Notes 7, 8, 11 and 16 of Notes to Consolidated Financial Statements.

DEPENDENCE ON RELATIONSHIP WITH AICL; POTENTIAL CONFLICTS OF INTEREST

AICL was founded in 1956 by Mr. Hyang-Soo Kim, who currently serves as the
honorary Chairman and a Representative Director of AICL. AICL is a member of the
Anam group of companies (the "Anam Group"), consisting principally of companies
in Korea in the electronics industries. The management of AICL and the other
companies in the Anam Group are influenced to a significant degree by the family
of Hyang-Soo Kim, which, together with the Company, collectively owned
approximately 21% of the outstanding common stock of AICL as of June 30, 1997.
James Kim, the founder of the Company and currently its Chairman and Chief
Executive Officer, is the eldest son of Hyang-Soo Kim. Since

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<PAGE> 9

January 1992, in addition to his other responsibilities, James Kim has been
serving as acting Chairman of the Anam Group and a director of AICL. Mr. In-Kil
Hwang, the President and a Representative Director of AICL, is the
brother-in-law of James Kim and a director of AICL. After the Offerings, James
Kim and trusts established on behalf of members of his family (the "Kim Family
Trusts") will own approximately % of the Company's outstanding Common Stock
and James Kim and members of his family will continue to exercise significant
control over the Company. See "-- Benefits of the Offerings to Existing
Stockholders; Continued Control by Existing Stockholders" and "Principal and
Selling Stockholders."

The businesses of the Company and AICL have been interdependent for many
years. In 1996 and the six months ended June 30, 1997, approximately 72% and
68%, respectively, of the Company's revenues were derived from sales of services
performed for the Company by AICL. In addition, substantially all of the
revenues of AICL in 1996 and the six months ended June 30, 1997 were derived
from services marketed by the Company. The Company expects the proportion of its
revenues derived from sales of services performed for the Company by AICL and
the proportion of AICL's revenues from services sold by the Company to increase
as the Company begins selling the wafer fabrication output of AICL's new wafer
foundry and with the Company's scheduled assumption from AICL in late 1997 of
marketing rights for the Korean and Japanese markets. As a result, the Company's
business, financial condition and operating results will continue to be
significantly dependent on the ability of AICL to effectively provide contracted
services on a cost-efficient and timely basis. The termination of the Company's
relationship with AICL for any reason, or any material adverse change in AICL's
business resulting from underutilization of its capacity, the level of its debt,
labor disruptions, fluctuations in foreign exchange rates, changes in
governmental policies, economic or political conditions in Korea or any other
reason, could have a material adverse effect on the Company's business,
financial condition and results of operations.

The Company has recently entered into a new supply agreement with AICL (the
"Supply Agreement"). Under the Supply Agreement, AICL has granted to the Company
a first right to the packaging and test services of AICL and the wafer output of
its new wafer foundry. The Company expects to continue to purchase all of AICL's
packaging and test services, and to purchase all of AICL's wafer output, under
the Supply Agreement. Under the Supply Agreement, pricing arrangements relating
to packaging and test services provided by AICL to the Company will be subject
to quarterly review and adjustment, and such arrangements relating to the wafer
output provided by AICL to the Company will be subject to annual review and
adjustment, in each case on the basis of factors such as changes in the
semiconductor market, forecasted demand, product mix and capacity utilization
and fluctuations in exchange rates, as well as the mutual long-term strategic
interests of the Company and AICL. There can be no assurance that any new
pricing arrangements resulting from such review and adjustment will be favorable
to the Company. Pursuant to long-standing arrangements between AICL and the
Company's operating subsidiaries, sales from AICL to the Company will continue
to be made through Anam U.S.A., Inc. ("AUSA"), a wholly-owned financing
subsidiary of AICL. Under the Supply Agreement, the Company will continue to
reimburse AUSA for the financing costs incurred by it in connection with trade
financing provided to the Company. The Supply Agreement also provides that
Amkor-Anam, Inc., a subsidiary of the Company, will continue to provide raw
material procurement and related services to AICL on a fee basis. The Supply
Agreement has a five-year term, and AICL is under no obligation to renew the
agreement upon its expiration. There can be no assurance that AICL will renew
the Supply Agreement upon its expiration or that if it does renew such
agreement, it will be on terms that are favorable to the Company.

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<PAGE> 10

($721 million) of long-term debt. As of such date, the total shareholders'
equity of AICL amounted to approximately W288 billion ($324 million). In
addition, during 1996, AICL's cash flow from operations amounted to W191 billion
($215 million). There can be no assurance that AICL will be able to refinance
its existing loans or obtain new loans, particularly in light of recent
initiatives by Korean banks to reduce their exposure to highly leveraged
companies. In addition, there can be no assurance that AICL will be able to
continue to make required interest and principal payments on such loans or
otherwise comply with the terms of its loan agreements. Any inability of AICL to
obtain financing or generate cash flow from operations sufficient to fund its
capital expenditure, debt service and repayment and other working capital and
liquidity requirements could have a material adverse effect on AICL's ability to
continue to provide services and otherwise fulfill its obligations to the
Company. See "-- Risks Associated with Leverage" and "-- Dependence on
International Operations and Sales; Concentration of Operations in the
Philippines and Korea."

As of June 30, 1997, AICL was contingently liable under guarantees in
respect of debt of its subsidiaries and affiliates in the aggregate amount of
approximately W935 billion ($1.1 billion). Such guarantees included those in
respect of all of AUSA's debt, as well as $161 million of the Company's debt to
banks and the Company's obligations under a receivables sales arrangement. The
Company has met a significant portion of its financing needs through financing
arrangements obtained by AUSA based on guarantees provided by AICL for the
benefit of the Company. There can be no assurance that AUSA will be able to
obtain additional guarantees, if necessary, from AICL. Further, a deterioration
in AICL's financial condition could trigger defaults under AICL's guarantees,
causing acceleration of such loans. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources." In addition, if any relevant subsidiaries or affiliates of AICL were
to fail to make interest or principal payments or otherwise default under their
debt obligations guaranteed by AICL, AICL could be required under its guarantees
to repay such debt, which event could have a material adverse effect on its
financial condition and results of operations.

Historically, AICL has undertaken capacity expansion programs and other
capital expenditures primarily on the basis of forecasts of the Company and
business plans prepared jointly with the Company. The Supply Agreement provides
for continued capital investment by AICL based on the Company's forecasts and
operational plans prepared jointly by the Company and AICL reflecting such
forecasts. However, there can be no assurance that AICL will be able to fund
future capacity expansions and other capital investments required to supply the
Company with necessary packaging and test services and wafer output on a timely
and cost-efficient basis.

The Company and AICL have historically cooperated on the development of new
package designs and packaging and testing processes and technologies. The Supply
Agreement generally provides for continued cooperation between the Company and
AICL in research and development, as well as the cross-licensing of intellectual
property rights between the Company and AICL. If the Company's relationship with
AICL were terminated for any reason, the Company's research and development
capabilities and intellectual property position could be materially and
adversely affected.

After the Offerings, the Company will continue to be controlled to a
significant degree by James Kim and the Kim Family Trusts, and James Kim and
other members of his family will also continue to exercise significant influence
over the management of AICL and its affiliates. In addition, the Company and
AICL will continue to have certain contractual and other business relationships,
including under the Supply Agreement, and may engage in transactions from time
to time that are material to the Company. Although any such material agreements
and transactions would require approval of the Company's Board of Directors,
conflicts of interest may arise in certain circumstances. There can be no
assurance that such conflicts will not from time to time be resolved against the
interests of the Company. In addition, the Company may agree to certain changes
in its contractual and other business relationships with AICL, including
pricing, manufacturing allocation, capacity utilization and capacity expansion,
among others, which in the judgment of the Company's management will result in
reduced short-term profitability for the Company in favor of potential long-term
benefits to the Company and AICL. There can be no assurance

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<PAGE> 11

that the Company's business, financial condition or results of operations will
not be adversely affected by any such decision.

CUSTOMER CONCENTRATION; ABSENCE OF BACKLOG

Due to the concentration of market share in the semiconductor industry, the
Company has been largely dependent on a small group of customers for a
substantial portion of its business. In 1995, 1996 and the six months ended June
30, 1997, 34.1%, 39.2%, and 37.3%, respectively, of the Company's net revenues
were derived from sales to the Company's top five customers, with 13.3%, 23.5%,
and 21.2% of the Company's net revenues, respectively, derived from sales to
Intel Corporation ("Intel"). The ability of the Company to maintain close,
satisfactory relationships with such customers is important to the ongoing
success and profitability of its business. The Company expects that it will
continue to be dependent upon a relatively limited number of customers for a
significant portion of its net revenues in future periods. None of the Company's
customers is presently obligated to purchase any amount of packaging or test
services or to provide the Company with binding forecasts of product purchases
for any period. In addition, the Company's new wafer fabrication business will
be significantly dependent upon TI. See "-- Risks Associated with New Wafer
Fabrication Business." The reduction, delay, or cancellation of orders from
Intel or one of the Company's other significant customers could materially and
adversely affect the Company's business, financial condition and results of
operations. There can be no assurance that such customers will not reduce,
cancel or delay orders. See "-- Dependence on the Highly Cyclical Semiconductor
and Personal Computer Industries."

All of the Company's customers operate in the cyclical semiconductor
business and may vary order levels significantly from period to period. In
addition, there can be no assurance that such customers or any other customers
will continue to place orders with the Company in the future at the same levels
as in prior periods. From time to time, semiconductor companies have experienced
reduced prices for some products, as well as delays or cancellations in orders.
There can be no assurance that, should these circumstances occur in the future,
they will not adversely affect the Company's business, financial condition and
results of operations. The loss of one or more of the Company's customers, or
reduced orders by any of its key customers, could adversely affect the Company's
business, financial condition and results of operations. The Company does not
typically operate with any material backlog and, as a result, the Company
expects that in the future, revenues in any quarter will be substantially
dependent upon orders received in that quarter. The Company's expense levels are
based in part on its expectations of future revenues and the Company may be
unable to adjust costs in a timely manner to compensate for any revenue
shortfall. See "Business -- Marketing and Sales."

EXPANSION OF MANUFACTURING CAPACITY; PROFITABILITY AFFECTED BY CAPACITY
UTILIZATION RATES

The Company believes that its competitive position depends substantially on
its ability to expand its manufacturing capacity. Accordingly, although the
Company currently has available manufacturing capacity, the Company is
continuing to make significant investments to expand such capacity, particularly
through the acquisition of capital equipment and the training of new personnel.
There can be no assurance that the Company will be able to utilize such capacity
or to continue to expand its manufacturing capacity in a timely manner, that the
cost of such expansion will not exceed management's current estimates or that
such capacity will not exceed the demand for the Company's services. In
addition, expansion of the Company's manufacturing capacity will continue to
significantly increase its fixed costs, and the Company expects to continue to
incur substantial additional depreciation and other expenses in connection with
the acquisition of new equipment and the construction of new facilities.
Increases or decreases in capacity utilization rates can have a significant
effect on gross margins since the unit cost of packaging and test services
generally decreases as fixed charges are allocated over a larger number of units
produced. Therefore, the Company's ability to maintain or enhance its gross
margins will continue to be dependent, in part, on its ability to maintain high
capacity utilization rates.

Capacity utilization rates may be affected by a number of factors and
circumstances, including overall industry conditions, operating efficiencies,
the level of customer orders, mechanical failure,

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<PAGE> 12

disruption of operations due to expansion of operations or relocation of
equipment, fire or natural disasters, employee strikes or work stoppages or
other circumstances. Although the Company has been able to maintain a high rate
of capacity utilization in recent years as a result of its close association
with its customers, its knowledge of the semiconductor market conditions, and
its continued improvements in operating efficiencies and equipment maintenance,
there can be no assurance that this high utilization rate will be sustained in
the future. The Company's inability to generate the additional orders necessary
to fully utilize its capacity would have a material adverse effect on the
Company's business, financial condition and results of operations. For example,
in 1996 the Company's capacity utilization rates were negatively affected by an
unexpected downturn in the semiconductor industry. There can be no assurance
that the Company's utilization rates will not be adversely affected by future
declines in the semiconductor industry or for any other reason. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business -- Manufacturing and Facilities."

LIQUIDITY AND FUTURE CAPITAL REQUIREMENTS

The Company plans to continue to incur substantial costs to fund its
equipment and facilities expansion plans and its packaging technology
development. The Company believes that the net proceeds from the sale of the
Common Stock in the Offerings, together with existing cash balances, cash flow
from operations, available equipment lease financing, bank borrowings and
financing provided by AICL through its wholly-owned subsidiary, AUSA, will be
sufficient to meet its projected capital expenditures, working capital and other
cash requirements for at least the next twelve months. There can be no
assurance, however, that lower than expected revenues, increased expenses,
increased costs associated with the purchase or maintenance of capital
equipment, decisions to increase planned capacity or other events will not cause
the Company to seek more capital, or capital sooner than currently expected. The
timing and amount of the Company's actual capital requirements cannot be
precisely determined and will depend on a number of factors, including demand
for the Company's services, availability of capital equipment, fluctuations in
foreign currency exchange rates, changes in semiconductor industry conditions
and competitive factors. There can be no assurance that such additional capital
will be available when needed or, if available, will be available on
satisfactory terms. Failure to obtain any such financing could have a material
adverse effect on the Company. See "-- Risks Associated with Leverage" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

DEPENDENCE ON INTERNATIONAL OPERATIONS AND SALES; CONCENTRATION OF OPERATIONS IN
THE PHILIPPINES AND KOREA

All of the production facilities currently used to fill the Company's
orders are located in the Philippines and Korea and many of the Company's
customers' operations are located in countries outside of the United States. A
substantial portion of the Company's revenues are derived from sales to
customers located outside of the United States. In 1996 and the first six months
of 1997, sales to such customers accounted for 27% and 28%, respectively, of the
Company's revenues. The Company expects sales outside of the United States to
continue to represent a significant portion of its future revenues. As a result,
the Company's business will continue to be subject to certain risks generally
associated with doing business abroad, such as foreign governmental regulations,
currency fluctuations, political unrest, disruptions or delays in shipments,
currency controls and fluctuations, changes in local economic conditions, import
and export controls, as well as changes in tax laws, tariffs and freight rates.
The Company has structured its global operations to take advantage of lower tax
rates in certain countries and tax incentives extended to encourage investment.
The Company's tax returns through 1993 in the Philippines and through 1994 in
the U.S. have been examined by the Philippine and U.S. tax authorities,
respectively. The recorded provisions for subsequent open years are subject to
changes upon examination by tax authorities of tax returns for these years.
Changes in the mix of income from the Company's foreign subsidiaries, expiration
of tax holidays and changes in tax laws and regulations could result in
increased effective tax rates for the Company. See Note 10 of Notes to
Consolidated Financial Statements.

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<PAGE> 13

The Company's results of operations and growth will be influenced by the
political situation in the Philippines and by the general state of the
Philippine economy. Although the political and economic situation in the
Philippines has stabilized in recent years, it has historically been subject to
significant instability. Most recently, the devaluation of the Philippine peso
relative to the U.S. dollar beginning in July 1997 has led to instability in the
Philippine economy. Any future economic or political disruptions or instability
or low economic growth in the Philippines could have a material adverse effect
on the Company's business, financial condition and results of operations.

AICL's operations, which accounted for approximately 72% and 68% of the
Company's revenues in 1996 and the first six months of 1997, respectively, are
subject to certain specific risks. Relations between Korea and the Democratic
People's Republic of Korea ("North Korea") have been tense over most of Korea's
history. Incidents affecting relations between the two Koreas continually occur.
No assurance can be given that the level of tensions with North Korea will not
increase or change abruptly as a result of current or future events, which could
have a material adverse effect on AICL's, and as a result the Company's,
business, financial condition and results of operations.

Financial difficulties of certain large business groups in Korea, some of
which have undergone reorganization, have also raised concerns over Korea's
economic stability and have resulted in banks in Korea reducing their lending to
companies which have significant amounts of debt relative to their equity. There
can be no assurance that such events will not result in a material adverse
effect on AICL's and the Company's, business, financial conditions and results
of operations. See "-- Dependence on Relationship with AICL; Potential Conflicts
of Interest," "Business -- Marketing and Sales" and "-- Facilities and
Manufacturing," and Notes 11 and 14 of Notes to Consolidated Financial
Statements.

RAPID TECHNOLOGICAL CHANGE; PRODUCT DEVELOPMENT

The semiconductor packaging and test industry is characterized by rapid
increases in the diversity and complexity of semiconductor packaging products.
As a result, the Company expects that it will need to offer, on an ongoing
basis, more advanced package designs in order to respond to competitive industry
conditions and customer requirements. The requirement to develop and maintain
advanced packaging capabilities and equipment could require significant research
and development and capital expenditures in future years. In addition, advances
in technology also typically lead to rapid and significant price erosion and
decreased margins for older package types and may lead to products currently
being offered by the Company becoming less competitive or inventories held by
the Company becoming obsolete. The failure by the Company to achieve advances in
package design or to obtain access to advanced package designs developed by
others could have a material adverse effect on the Company's business, results
of operations and financial condition. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations."

The Company's success is also dependent upon the ability of it and AICL to
develop and implement new manufacturing process and package design technologies.
Semiconductor package design and process methodologies have become increasingly
subject to technological change, requiring large expenditures for research and
development. Converting to new package designs or process methodologies could
result in delays in producing new package types which could adversely affect the
Company's ability to meet customer orders.

MANUFACTURING RISKS; PRODUCTION YIELDS

The semiconductor packaging process is complex and involves a number of
precise steps. Defective packaging can result from a number of factors,
including the level of contaminants in the manufacturing environment, human
error, equipment malfunction, use of defective raw materials, defective plating
services and inadequate sample testing. From time to time, the Company expects
to experience lower than anticipated production yields as a result of such
factors, particularly in connection with any expansion of its capacity or change
in its processing steps. In addition, the Company's yield on new products will
be lower during the period necessary for the Company to develop the requisite
expertise and experience in producing such products and using such processes.
The failure of the Company or

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<PAGE> 14

AICL to maintain high quality production standards or acceptable production
yields, if significant and sustained, could result in loss of customers, delays
in shipments, increased costs, cancellation of orders and product returns for
rework, any of which could have a material adverse effect on the Company's
business, financial condition and results of operations. See
"Business -- Facilities and Manufacturing."

RISKS ASSOCIATED WITH NEW WAFER FABRICATION BUSINESS

The Company is scheduled to begin providing wafer fabrication services with
delivery of the first products from AICL's new foundry expected in the first
half of 1998. Neither the Company nor AICL has experience in providing wafer
fabrication services, and there can be no assurance that the Company will not
experience difficulties in marketing and selling these services or that AICL
will not encounter operational difficulties such as lower than expected yields
or longer than anticipated production ramp-up, unexpected costs and other
problems in providing these services. If the Company or AICL encounters these or
similar difficulties, the Company's and AICL's businesses, financial condition
and results of operations could be materially adversely affected. In addition,
TI has transferred certain of its CMOS processes to AICL and AICL is dependent
upon TI's assistance for developing other state-of-the-art wafer manufacturing
processes. If AICL's relationship with TI is disrupted for any reason, AICL's
ability to produce wafers could be adversely affected, thus negatively impacting
the Company's ability to fulfill its customers' orders for fabrication services,
which could materially and adversely affect the Company's business, financial
condition and results of operations. In addition, AICL's agreement with TI only
covers .25 micron CMOS technology and TI is not under any obligation to transfer
additional technology, particularly .18 micron or smaller CMOS technology. If
AICL is not able to obtain such technology on commercially reasonable terms or
at all, the Company's ability to market AICL's wafer fabrication services could
be materially and adversely affected which could have a material adverse effect
on the Company's and AICL's business, results of operations and financial
condition. The Company's right to the supply of wafers from AICL's foundry is
subject to a preexisting agreement between AICL and TI, pursuant to which TI has
agreed to purchase at least 40% of the capacity of this foundry and under
certain circumstances has the right to purchase up to 70% of this capacity. TI
has agreed to make such purchases through the Company. As a result, the
Company's wafer fabrication business will be significantly dependent upon TI,
which may adversely affect the Company's ability to obtain additional customers.
If the Company is unable as a result to sell substantially all of the output of
AICL's wafer foundry, its business, results of operations and financial
condition could be materially and adversely affected. See "Business --
Competition."

DEPENDENCE ON RAW MATERIALS SUPPLIERS AND SUBCONTRACTORS

The Company obtains the direct materials for the packaging and test
services of its factories and for the packaging and test services provided by
AICL to fill the Company's orders directly from vendors. To maintain competitive
manufacturing operations, the Company must obtain from its vendors, in a timely
manner, sufficient quantities of acceptable materials at expected prices. The
Company sources most of its raw materials, including critical materials such as
lead frames and laminate substrates, from a limited group of suppliers. The
Company purchases all of its materials on a purchase order basis and has no
long-term contracts with any of its suppliers. From time to time, vendors have
extended lead times or limited the supply of required materials to the Company
because of vendor capacity constraints and, consequently, the Company has
experienced difficulty in obtaining acceptable raw materials on a timely basis.
In addition, from time to time, the Company may reject materials that do not
meet its specifications, resulting in declines in output or yield. There can be
no assurance that the Company will be able to obtain sufficient quantities of
raw materials and other supplies of an acceptable quality. The Company's
business, financial condition and results of operations could be materially and
adversely affected if its ability to obtain sufficient quantities of raw
materials and other supplies in a timely manner were substantially diminished or
if there were significant increases in the costs of raw materials that the
Company could not pass on to its customers. See "Business -- Facilities and
Manufacturing."

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INABILITY TO OBTAIN PACKAGING AND TEST EQUIPMENT IN A TIMELY FASHION

In connection with its future expansion plans, the Company and AICL expect
to purchase a significant amount of new packaging and test equipment. From time
to time, increased demand for some of this equipment causes lead times to extend
beyond those normally met by the equipment vendors. The unavailability of such
equipment or the failure of such equipment, or other equipment acquired by the
Company or AICL, to operate in accordance with the Company's or AICL's
specifications or requirements, or delays in the delivery of such equipment
could delay implementation of the Company's or AICL's expansion plans and impair
the ability of the Company to meet customer orders or otherwise have a material
adverse effect on the Company's business, results of operations and financial
condition. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business -- Facilities and Manufacturing."

MANAGEMENT OF GROWTH

The Company has experienced and may continue to experience growth in the
number of its employees and the scope of its operations. For example, the
Company is expanding its scope of operations to include wafer fabrication
services and is hiring new personnel in connection with such expansion. This
growth is expected to continue to strain the Company's managerial, financial,
manufacturing and other resources. In addition, although the Company believes
its current controls are adequate, in order to manage its growth, the Company
must continue to implement additional operating and financial controls and hire
and train additional personnel. Although the Company has been successful in
hiring and properly training sufficient numbers of qualified personnel and in
effectively managing its growth in the past, there can be no assurance that the
Company will be able to do so in the future, and its failure to do so could have
a material adverse effect on the Company's business, financial condition and
results of operations. In addition, any failure to improve the Company's
operational, financial and management systems could have a material adverse
effect on the Company's business, financial condition and results of operations.
See "-- Risks Associated with New Wafer Fabrication Business," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business -- Employees."

COMPETITION

The independent semiconductor packaging and test industry is very
competitive, being comprised of approximately 50 companies with about 15 of
those companies having sales of $100 million per year or more. The Company faces
substantial competition from established packaging companies primarily located
in Asia, such as Advanced Semiconductor Engineering, Inc. (Taiwan), ASE Test
Limited (Taiwan and Malaysia), ASAT, Ltd. (Hong Kong), Hana Microelectronics
Public Co. Ltd. (Hong Kong and Thailand), Astra International (Indonesia),
Carsem (Malaysia), Hyundai Corporation (Korea), Siliconware Precision Industries
Co., Ltd. (Taiwan), and Shinko Electric Industries Co., Ltd. (Japan). Each of
these companies has significant manufacturing capacity, financial resources,
research and development operations, marketing and other capabilities, and have
been operating for some time. Such companies have also established relationships
with many large semiconductor companies which are current or potential customers
of the Company. The principal elements of competition in the independent
semiconductor packaging market include time to market, breadth of package
offering, technical competence, design services, quality, production yields,
responsiveness and customer service and price. On a larger scale, the Company
also competes with the internal manufacturing capabilities of many of its
largest customers. There can be no assurance that the Company will be able to
compete successfully in the future against existing or potential competitors or
that the Company's operating results will not be adversely affected by increased
price competition.

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<PAGE> 16

Ltd., Hitachi, Ltd., Toshiba Corp. and Winbond Electronics Corporation, who
provide foundry services for other semiconductor companies. Each of these
companies has significant manufacturing capacity, financial resources, research
and development operations, marketing and other capabilities and have been
operating for some time. Many of these companies have also established
relationships with many large semiconductor companies which are current or
potential customers of the Company. The principal elements of competition in the
wafer foundry market include technology, delivery cycle times, price, product
performance, quality, production yield, responsiveness and flexibility,
reliability and the ability to design and incorporate product improvements.
There can be no assurance that the Company will be able to compete successfully
in the future against such companies. See "Business -- Competition."

DEPENDENCE ON KEY PERSONNEL AND AVAILABILITY OF SKILLED WORKFORCE

The Company's success depends to a significant extent upon the continued
service of its key senior management and its technical personnel, each of whom
would be difficult to replace. Competition for qualified employees is intense,
and the loss of the services of any of its existing key personnel without
adequate replacement, or the inability to attract, retain and motivate qualified
new personnel could have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, in connection with
its expansion plans, the Company and AICL will be required to increase the
number of qualified engineers and other employees at their respective facilities
in the Philippines and Korea. Competition for such employees in the Philippines
and Korea is intense and the inability to attract new qualified personnel or to
retain such personnel could have a material adverse effect on the Company's
results of operations or financial condition. See "Management."

ENVIRONMENTAL REGULATIONS

The semiconductor packaging process involves a significant amount of
chemicals and gases which are subject to extensive governmental regulations. For
example, liquid waste is produced at the stage at which silicon wafers are diced
into chips with the aid of diamond saws and cooled with running water. In
addition, excess materials on leads and moldings are removed from packaged
semiconductors in the trim and form process. The Company has installed equipment
to collect certain solvents used in connection with its manufacturing process
and has contracted with independent waste disposal companies to remove such
hazardous material.

Federal, state and local regulations in the United States, as well as
environmental regulations in Korea and the Philippines, impose various controls
on the storage, handling, discharge and disposal of chemicals used in the
Company's and AICL's manufacturing process and on the facilities occupied by the
Company and AICL. The Company believes that its activities, as well as those of
AICL, conform to present environmental and land use regulations applicable to
their respective operations and current facilities. Increasing public attention
has, however, been focused on the environmental impact of semiconductor
manufacturing operations and the risk to neighbors of chemical releases from
such operations. There can be no assurance that applicable land use and
environmental regulations will not in the future impose the need for additional
capital equipment or other process requirements upon the Company or AICL or
restrict the Company's or AICL's ability to expand their respective operations.
The adoption of new ordinances or similar measures or any failure by the Company
or AICL to comply with applicable environmental and land use regulations or to
restrict the discharge of hazardous substances could subject the Company or AICL
to future liability or cause their respective manufacturing operations to be
curtailed or suspended.

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INTELLECTUAL PROPERTY

The Company currently holds 24 United States patents, five of which are
jointly held with AICL, related to various IC packaging technologies, in
addition to other pending patents. These patents will expire at various dates
from 2012 through 2016. With respect to development work undertaken jointly with
AICL, the Company and AICL share intellectual property rights under the terms of
the Supply Agreement between the Company and AICL. Such Supply Agreement also
provides for the cross-licensing of intellectual property rights between the
Company and AICL. In addition, the Company enters into agreements with other
developers of packaging technology to license or otherwise obtain certain
process or package technologies.

The Company expects to continue to file patent applications when
appropriate to protect its proprietary technologies; however, the Company
believes that its continued success depends primarily on factors such as the
technological skills and innovation of its personnel rather than on its patents.
The process of seeking patent protection can be expensive and time consuming.
There can be no assurance that patents will be issued from pending or future
applications or that, if patents are issued, they will not be challenged,
invalidated or circumvented, or that rights granted thereunder will provide
meaningful protection or other commercial advantage to the Company. Moreover,
there can be no assurance that any patent rights will be upheld in the future or
that the Company will be able to preserve any of its other intellectual property
rights.

As is typical in the semiconductor industry, the Company may receive
communications from third parties asserting patents on certain of the Company's
technologies. In the event any third party were to make a valid claim against
the Company or AICL and a license were not available on commercially reasonable
terms, the Company's business, financial condition and results of operations
could be materially and adversely affected. Litigation, which could result in
substantial cost to and diversion of resources of the Company, may also be
necessary to enforce patents or other intellectual property rights of the
Company or to defend the Company against claimed infringement of the rights of
others. The failure to obtain necessary licenses or the occurrence of litigation
relating to patent infringement or other intellectual property matters could
have a material adverse effect on the Company's business, financial condition
and results of operations. In addition, the agreement between AICL and TI
pursuant to which AICL received the technology to produce wafers does not grant
any license to AICL, and explicitly provides that TI reserves the right to bring
a patent infringement suit against AICL if TI is then generally bringing similar
suits against other wafer manufacturers. As a result, the Company could
similarly be subject to patent litigation by TI in connection with its sale of
wafers produced by AICL. Any such litigation could materially and adversely
affect AICL's ability to continue to manufacture wafers and AICL's and the
Company's business, financial condition and results of operations.

NO PRIOR MARKET; LIQUIDITY; STOCK PRICE VOLATILITY; DILUTION

Prior to the Offerings, there has been no public market for the Company's
Common Stock. Consequently, the initial public offering price will be determined
by negotiations among the Company and the representatives of the Underwriters.
There can be no assurance that an active public market for the Common Stock will
develop or be sustained after the Offerings or that the market price of the
Common Stock will not decline below the initial public offering price. The
trading price of the Company's Common Stock could be subject to wide
fluctuations in response to quarter-to-quarter variations in operating results,
announcements of technological innovations or new products by the Company or its
competitors, general conditions in the semiconductor industry, changes in
earnings estimates or recommendations by analysts, or other events or factors.
In addition, the public stock markets have experienced extreme price and trading
volume volatility in recent months. This volatility has significantly affected
the market prices of securities of many high technology companies for reasons
frequently unrelated to the operating performance of the specific companies.
These broad market fluctuations may adversely affect the market price of the
Company's Common Stock. Moreover, investors in the Offerings will incur
immediate, substantial book value dilution. See "Dilution" and "Underwriting."

16
<PAGE> 18

BENEFITS OF THE OFFERINGS TO EXISTING STOCKHOLDERS; CONTINUED CONTROL BY
EXISTING STOCKHOLDERS

Immediately after the closing of the Offerings, based upon shares
outstanding as of , the existing stockholders of the Company will hold
shares of Common Stock, or approximately % of the total number of
shares of Common Stock then outstanding. The Offerings will create a public
market for the resale of shares held by these existing stockholders. In
addition, the Company's officers, directors, 5% stockholders, and their
affiliates will, in the aggregate, beneficially hold shares of Common
Stock, or approximately % of the Company's outstanding shares of Common
Stock after the Offerings. As a result, such stockholders, acting together, will
be able to effectively control substantially all matters requiring approval by
the stockholders of the Company. Such matters could include the election of a
majority of the members of the Board of Directors, proxy contests, mergers
involving the Company, tender offers, open market purchase programs or other
purchases of Common Stock that could give stockholders of the Company the
opportunity to realize a premium over the then prevailing market price for their
shares of Common Stock. In addition, such continued control could also have the
effect of delaying, deferring or preventing a change in control of the Company,
may discourage bids for the Common Stock at a premium over the market price and
may adversely affect the market price of the Common Stock. See "Principal and
Selling Stockholders."

ANTI-TAKEOVER EFFECTS OF DELAWARE LAW AND CERTAIN CHARTER PROVISIONS

The Company's Board of Directors has the authority to issue up to
10,000,000 shares of preferred stock $.001 par value ("Preferred Stock") and to
determine the price, rights, preferences and privileges of those shares without
any further vote or action by the Company's stockholders. The rights of the
holders of Common Stock will be subject to, and may be adversely affected by,
the rights of the holders of any Preferred Stock that may be issued in the
future. While the Company has no present intention to issue shares of Preferred
Stock, such issuance, while providing desirable flexibility in connection with
possible acquisitions and other corporate purposes, could have the effect of
making it more difficult for a third party to acquire a majority of the
outstanding voting stock of the Company. In addition, the Company is subject to
the anti-takeover provisions of Section 203 of the Delaware General Corporation
Law, which prohibits the Company from engaging in a "business combination" with
an "interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner. The application of
Section 203 could have the effect of delaying or preventing a change of control
of the Company. The Company's Certificate of Incorporation (the "Certificate of
Incorporation") does not permit cumulative voting. This provision, and other
provisions of the Certificate of Incorporation, the Company's bylaws (the
"Bylaws") and Delaware corporate law, may have the effect of deterring hostile
takeovers or delaying or preventing changes in control or management of the
Company, including transactions in which stockholders might otherwise receive a
premium for their shares over then current market prices.

SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of Common Stock in the public market after the
Offerings could adversely affect the prevailing market price of the Common
Stock. In addition to the shares of Common Stock offered hereby
(assuming no exercise of the Underwriters' over-allotment options), as of the
date of this Prospectus (the "Effective Date"), there will be approximately
shares of Common Stock outstanding, all of which are "restricted"
shares (the "Restricted Shares") under the Securities Act of 1933, as amended
(the "Securities Act"). Beginning one year after the Reorganization,
approximately Restricted Shares will first become eligible for sale in
the public market pursuant to Rule 144 promulgated under the Securities Act,
subject to certain volume and other resale restrictions pursuant to Rule 144.
See "Shares Eligible for Future Sale."

17
<PAGE> 19

REORGANIZATION

In March, 1970, AEI was incorporated in Pennsylvania to design
semiconductor packages and provide semiconductor packaging services through a
supply relationship with AICL. Since that time, Mr. James Kim, founder of AEI,
and the Kim Family Trusts have acquired a majority interest in a number of other
companies which support or engage in various aspects of the semiconductor
packaging and test business (these companies, together with AEI, are referred to
as the "Amkor Companies"). Included within the Amkor Companies are C.I.L.
Limited, which markets the Company's services to semiconductor companies in
Europe and Asia; T.L. Limited ("TLL"), which provides manufacturing through its
subsidiaries Amkor/Anam Advanced Packaging, Inc. ("AARP") and Amkor/Anam
Pilipinas, Inc. ("AAP") (which is currently owned 60% by TLL and 40% by AICL),
and AAP's wholly-owned subsidiary Automated Microelectronics Inc. ("AMI"); and
AK Industries, Inc. and its wholly-owned subsidiary, Amkor-Anam, Inc., which
provides raw material purchasing and inventory management services. Amkor
Technology, Inc. was formed in September 1997 as a holding company for the Amkor
Companies. Prior to the consummation of the Reorganization, the Company
conducted no business and held no assets or liabilities.

Prior to the Offerings, Mr. James Kim and the Kim Family Trusts will
contribute all of their respective interests in the Amkor Companies to the
Company in exchange for shares of Common Stock. The foregoing contribution will
be made pursuant to the terms of certain contribution agreements among the
Company, Mr. Kim and the Kim Family Trusts. In addition, at approximately the
same time AICL will exchange its interest in AAP for shares of the Company's
Common Stock. Such transactions are referred to collectively as the
"Reorganization." Following consummation of the Reorganization, substantially
all of the issued share capital of the Amkor Companies will be owned by the
Company. Following the Offerings, Mr. James Kim and the Kim Family Trusts will
own shares of Common Stock, representing approximately % of the
outstanding shares of Common Stock. See "Certain Transactions" and "Principal
and Selling Stockholders."

The Offerings are conditioned upon, among other things, the consummation of
the Reorganization.

TERMINATION OF S CORPORATION STATUS AND DISTRIBUTIONS

Prior to the consummation of the Reorganization, AEI had elected to be
treated for U.S. federal and certain state tax purposes as an S Corporation
under the Internal Revenue Code of 1986 and comparable state tax laws. As a
result, AEI did not recognize federal corporate income taxes. Instead, up until
the termination of AEI's S Corporation status (the "Termination Date"), Mr.
James Kim and the Kim Family Trusts have been obligated to pay U.S. federal and
certain state income taxes on their allocable portion of the income of AEI. The
Company, AEI, Mr. Kim and the Kim Family Trusts will enter into tax
indemnification agreements providing that the Company and AEI will be
indemnified by such stockholders, with respect to their proportionate share of
any U.S. federal or state corporate income taxes attributable to the failure of
AEI to qualify as an S Corporation for any period or in any jurisdiction for
which S Corporation status was claimed through the Termination Date. The tax
indemnification agreements will also provide that the Company and AEI will
indemnify Mr. Kim and such stockholders if such stockholders are required to pay
additional taxes or other amounts attributable to taxable years on or before the
Termination Date as to which AEI filed or files tax returns claiming status as
an S Corporation. AEI has made various distributions to Mr. Kim and the Kim
Family Trusts which have enabled them to pay their income taxes on their
allocable portions of the income of AEI. Such distributions totaled
approximately $3.1 million, $19.9 million, $13.0 million and $5.0 million in
1994, 1995, 1996 and the first six months of 1997, respectively. The Company
expects to make additional distributions to such stockholders prior to the
consummation of the Reorganization, which distribution will represent AEI's
cumulative net income in all periods prior to the Termination Date less the
aggregate amount of distributions previously made to such stockholders. These
final distributions are intended to provide such stockholders with the balance
of AEI's net income for which they have already recognized income taxes. Through
June 30, 1997, the amount of such undistributed net earnings was $11.8 million.
See Notes 1 and 10 of Notes to Consolidated Financial Statements.

18
<PAGE> 20

RELATIONSHIP WITH ANAM INDUSTRIAL CO., LTD.

AICL is a Korean company engaged primarily in providing semiconductor
packaging and test services to the Company, which in turn sells such services to
its customers. AICL also currently markets its services directly in Korea and
Japan, although the Company is scheduled to assume marketing rights for such
countries in late 1997. In addition, AICL manufactures and sells electric wiring
devices and watches. AICL operates four semiconductor packaging and test
facilities in Korea, and is undergoing qualification of a new deep submicron
CMOS wafer foundry in Korea which it expects will be capable of producing 25,000
8" wafers per month by the end of 1998. As of June 30, 1997, on the basis of
Korean generally accepted accounting principles, AICL had non-consolidated total
assets of approximately W1,875 billion ($2.11 billion) and non-consolidated
total liabilities of approximately W1,588 billion ($1.79 billion).

AICL was founded in 1956 by Mr. Hyang-Soo Kim, who currently serves as the
honorary Chairman and a Representative Director of AICL. AICL is a member of the
Anam Group, consisting principally of companies in Korea in the electronics
industries. The businesses of AICL and the other companies in the Anam Group are
influenced to a significant degree by the family of Hyang-Soo Kim, which,
together with the Company, collectively owned approximately 21% of the
outstanding common stock of AICL as of June 30, 1997. James Kim, the founder of
the Company and currently its Chairman and Chief Executive Officer, is the
eldest son of Hyang-Soo Kim. Since January 1992, in addition to his other
responsibilities, James Kim has been serving as acting Chairman of the Anam
Group and a director of AICL. Mr. In-Kil Hwang, the President and a
Representative Director of AICL, is the brother-in-law of James Kim. After the
Offerings, James Kim and the Kim Family Trusts will own approximately % of
the outstanding Common Stock of the Company and James Kim and members of his
family will continue to exercise significant control over the Company.
See"Principal and Selling Stockholders" and "Risk Factors -- Benefits of the
Offerings to Existing Stockholders; Continued Control by Existing Stockholders."

The businesses of the Company and AICL have been interdependent for many
years. In 1996 and the six months ended June 30, 1997, approximately 72% and
68%, respectively of the Company's revenues were derived from sales of services
performed for the Company by AICL. In addition, substantially all of the
revenues of AICL in 1996 and the six months ended June 30, 1997 were derived
from services sold by the Company. The Company expects the proportion of its
revenues derived from sales of services performed for the Company by AICL and
the proportion of AICL's revenues from services sold by the Company to increase
as the Company begins selling the wafer fabrication output of AICL's new wafer
foundry and with the Company's scheduled assumption from AICL in late 1997 of
marketing rights for the Korean and Japanese markets. The Company expects that
the businesses of the Company and AICL will continue to remain highly
interdependent by virtue of their supply relationship, family ties between their
respective shareholders and management, financial relationships, coordination of
product and operation plans, joint research and development activities and
shared intellectual property rights. As a result, the Company's business,
financial condition and operating results will continue to be significantly
dependent on the ability of AICL to effectively provide contracted services on a
cost-efficient and timely basis. The termination of the Company's relationship
with AICL for any reason, or any material adverse change in AICL's business
resulting from underutilization of its capacity, the level of its debt, labor
disruptions, fluctuations in foreign exchange rates, changes in governmental
policies, economic or political conditions in Korea or any other reason, could
have a material adverse effect on the Company's business, financial condition
and results of operations.

The Company has recently entered into the Supply Agreement. Under the
Supply Agreement, AICL has granted to the Company a first right to the packaging
and test services of AICL and the wafer output of its new wafer foundry. The
Company expects to continue to purchase all of AICL's packaging and test
services, and to purchase all of AICL's wafer output, under the Supply
Agreement. Under the Supply Agreement, pricing arrangements relating to
packaging and test services provided by AICL to the

19
<PAGE> 21

Company will be subject to quarterly review and adjustment, and such
arrangements relating to the wafer output provided by AICL to the Company will
be subject to annual review and adjustment, in each case on the basis of factors
such as changes in the semiconductor market, forecasted demand, product mix and
capacity utilization and fluctuations in exchange rates, as well as the mutual
long-term strategic interests of the Company and AICL. There can be no assurance
that any new pricing arrangements resulting from such review and adjustment will
be favorable to the Company. Pursuant to long-standing arrangements between AICL
and the Company's operating subsidiaries, sales from AICL to the Company will
continue to be made through AUSA, a wholly owned financing subsidiary of AICL.
Under the Supply Agreement, the Company will continue to reimburse AUSA for the
financing costs incurred by it in connection with trade financing provided to
the Company. The Supply Agreement also provides that Amkor-Anam, Inc., a
subsidiary of the Company, will continue to provide raw material procurement and
related services to AICL on a fee basis. The Supply Agreement has a five-year
term, and AICL is under no obligation to renew the agreement upon its
expiration. There can be no assurance that AICL will renew the Supply Agreement
upon its expiration or that if it does renew such agreement, it will be on terms
that are favorable to the Company.

AICL's ability to continue to provide services to the Company will depend
on AICL's financial condition and performance. AICL currently has a significant
amount of debt relative to its equity, which debt the Company expects will
continue to increase in the foreseeable future. As of June 30,1997, on the basis
of Korean generally accepted accounting principles, AICL had current liabilities
of approximately W749 billion ($843 million), including approximately W443
billion ($499 million) of short-term borrowings and approximately W67 billion
($75 million) of current maturities of long-term debt, and had long-term
liabilities of approximately W839 billion ($945 million), including
approximately W640 billion ($721 million) of long-term debt. As of such date,
the total shareholders' equity of AICL amounted to approximately W288 billion
($324 million). In addition, during 1996, AICL's cash flow from operations
amounted to W191 billion ($215 million). There can be no assurance that AICL
will be able to refinance its existing loans or obtain new loans, particularly
in light of recent initiatives by Korean banks to reduce their exposure to
highly leveraged companies. See "Risk Factors -- Risks Associated With Leverage"
and " -- Dependence On International Operations and Sales; Concentration of
Operations in the Philippines and Korea." In addition, there can be no assurance
that AICL will be able to continue to make required interest and principal
payments on such loans or otherwise comply with the terms of its loan
agreements. Any inability of AICL to obtain financing or generate cash flow from
operations sufficient to fund its capital expenditure, debt service and
repayment and other working capital and liquidity requirements could have a
material adverse effect on AICL's ability to continue to provide services and
otherwise fulfill its obligations to the Company.

As of June 30, 1997, AICL was contingently liable under guarantees in
respect of debt of its subsidiaries and affiliates in the aggregate amount of
approximately W935 billion ($1.1 billion). Such guarantees included those in
respect of all of AUSA's debt, as well as $161 million of the Company's debt to
banks and the Company's obligations under a receivables sale arrangement. The
Company has met a significant portion of its financing needs through financing
arrangements obtained by AUSA for the benefit of the Company, based on
guarantees provided by AICL. There can be no assurance that AUSA will be able to
obtain additional guarantees, if necessary, from AICL. Further, a deterioration
in AICL's financial condition could trigger defaults under AICL's guarantees,
causing acceleration of such loans. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources". In addition, if any relevant subsidiaries or affiliates of AICL were
to fail to make interest or principal payments or otherwise default under their
debt obligations guaranteed by AICL, AICL could be required under its guarantees
to repay such debt, which event could have a material adverse effect on its
financial condition and results of operations.

20
<PAGE> 22

Company's forecasts and operational plans prepared jointly by the Company and
AICL reflecting such forecasts. However, there can be no assurance that AICL
will be able to fund future capacity expansions and other capital investments
required to supply the Company with necessary packaging and test services and
wafer output on a timely and cost-efficient basis.

After the Offerings, the Company will continue to be controlled to a
significant degree by the Kim Family Trusts, James Kim and other members of his
family will continue to exercise significant influence over the management of
AICL and its affiliates. In addition, the Company and AICL will continue to have
certain contractual and other business relationships, including under the Supply
Agreement, and may engage in transactions from time to time that are material to
the Company. Although any such material agreements and transactions would
require approval of the Company's Board of Directors, conflicts of interest may
arise in certain circumstances. There can be no assurance that such conflicts
will not from time to time be resolved against the interests of the Company. In
addition, the Company may agree to certain changes in its contractual and other
business relationships with AICL, including pricing, manufacturing allocation,
capacity utilization and capacity expansion, among others, which in the judgment
of the Company's management will result in reduced short-term profitability for
the Company in favor of potential long-term benefits to the Company and AICL.
There can be no assurance that the Company's business, financial condition or
results of operations will not be adversely affected by any such decision.

21
<PAGE> 23

USE OF PROCEEDS

The net proceeds to the Company from the sale of the shares of
Common Stock offered by the Company hereby are estimated to be approximately
$ (approximately $ if the Underwriters' over-allotment options
are exercised in full), assuming an initial public offering price of $
per share and after deducting the estimated underwriting discount and estimated
offering expenses. The Company will not receive any proceeds from the sale of
the shares of Common Stock offered hereby by the Selling Stockholders.

Approximately $195 million of the net proceeds to the Company from the
Offerings will be used to repay numerous short-term bank loans by one of the
Company's Philippine subsidiaries originally incurred to finance capital
expenditures for the construction and start-up of P3, the Company's newest
factory in the Philippines, and for working capital. All of these loans are due
within 12 months of June 30, 1997 and bear interest at rates ranging from 7% to
12%. An additional $45 million of the net proceeds to the Company from the
Offerings will be used to repay loans under a line of credit incurred by the
Company's materials procurement subsidiary. These loans currently have an
effective interest rate of 8.02%. The balance of the net proceeds will be used
to fund the Company's capital expenditures and for general corporate purposes. A
portion of the net proceeds may also be used for the acquisition of businesses,
products and technologies that are complementary to those of the Company,
although the Company has no current plans, agreements or commitments and is not
currently engaged in any negotiations with respect to any such transactions.
Pending such uses, the net proceeds to the Company of the Offerings will be
invested in investment grade, interest-bearing securities.

DIVIDEND POLICY

The Company currently anticipates that, following the completion of the
Offerings, all future earnings will be retained for use in the Company's
business and that the Company will not pay any cash dividends on its Common
Stock in the foreseeable future. The payment of any future dividends will be at
the discretion of the Company's Board of Directors and will depend upon, among
other things, future earnings, operations, capital requirements, the general
financial condition of the Company and general business conditions. As an S
Corporation, AEI made substantial cash distributions to its stockholders to pay
income taxes on their allocable portions of AEI's net income. The Company plans
to make additional distributions to such stockholders prior to the Termination
Date. See "Reorganization."

22
<PAGE> 24

CAPITALIZATION

The following table sets forth as of June 30, 1997 (i) the actual
capitalization of the Company derived from the Consolidated Financial
Statements, (ii) the pro forma capitalization of the Company reflecting the
termination of AEI's S Corporation status which will occur in connection with
the Reorganization, and (iii) the pro forma capitalization of the Company as
adjusted to reflect the sale by the Company of shares of Common Stock
pursuant to the Offerings at an assumed initial public offering price of
$ per share and the receipt by the Company of the estimated net
proceeds therefrom, after deducting the estimated underwriting discount and
estimated offering expenses. The capitalization information set forth in the
table below is qualified by the more detailed Consolidated Financial Statements
and Notes thereto included elsewhere in this Prospectus and should be read in
conjunction with such Consolidated Financial Statements and the Notes thereto.

<TABLE>
<CAPTION>
JUNE 30, 1997
------------------------------------------
PRO FORMA
ACTUAL PRO FORMA(1) AS ADJUSTED(2)
-------- ------------ --------------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C>
Short term borrowings and current
portion of long-term debt.......................... $240,829 $240,829 $
======== ======== ========
Long-term debt....................................... $158,802 $158,802 $
Due to affiliate (non-current)(3).................... 278,120 278,120
-------- -------- --------
Total long-term debt................................. 436,922 436,922
Stockholder's equity:
Preferred stock, $.001 par value; 10,000,000 shares
authorized, no shares issued and outstanding.... -- --
Common Stock, $.001 par value; 500,000,000 shares
authorized, 82,610,000 shares issued and
outstanding, actual; shares issued and
outstanding, as adjusted(4)..................... 46 46
Additional paid-in capital......................... 22,301 34,001
Retained earnings (deficit)........................ 29,615 (3,885)
Unrealized gains (losses) on investments........... (4,258) (4,258)
Cumulative transaction adjustment.................. (2,156) (2,156)
-------- -------- --------
Total stockholders' equity...................... 45,548 23,748
-------- -------- --------
Total capitalization....................... $482,470 $460,670 $
======== ======== ========
</TABLE>

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

(1) Pro forma balance sheet data reflects (i) the termination of AEI's S
Corporation status which resulted in the recording of a deferred tax
liability of $10.0 million, (ii) a distribution prior to the Offerings by
the Company of undistributed earnings of AEI through June 30, 1997 of $11.8
million to stockholders of AEI prior to the Reorganization and (iii) the
reclassification of the remaining retained earnings of AEI of $11.7 million
to additional paid-in capital. The amount actually distributed by the
Company to such stockholders of AEI will reflect any undistributed net
income earned by AEI following June 30, 1997 and prior to the
Reorganization.

(2) As adjusted to give effect to the application of the estimated net proceeds
to the Company of the Offerings based on an assumed initial public offering
price of $ per share. See "Use of Proceeds." Also reflects the issuance
of 2,390,000 shares to AICL in exchange for its 40% interest in AAP,
resulting in an increase in common stock of $2,000 and an increase in
additional paid-in capital of $ . See "Reorganization" and Note 1
of Notes to Consolidated Financial Statements.

(3) See "Management's Discussion and Analysis of Financial Condition and Results
of Operations -- Liquidity and Capital Resources."

(4) Excludes shares of Common Stock issuable upon exercise of options
to be granted prior to the Offerings under the Company's 1997 Stock Plan at
a price of $ per share. Also excludes an aggregate of
additional shares reserved for future issuance under the Company's 1997
Stock Plan and 1997 Director Option Plan. See "Management" and "Description
of Capital Stock" and Notes 1 and 15 of Notes to Consolidated Financial
Statements.

23
<PAGE> 25

DILUTION

The net tangible book value of the Company as of June 30, 1997 was
approximately $43 million or $ per share of Common Stock. Net tangible
book value per share represents the Company's total tangible assets less total
liabilities as reflected in the Consolidated Financial Statements, divided by
the number of outstanding shares of the Company's Common Stock (after giving
effect to the Reorganization). After giving effect to the sale by the Company of
shares of Common Stock offered hereby at an assumed initial public
offering price of $ per share and the receipt by the Company of the
estimated net proceeds therefrom, after deducting the estimated underwriting
discounts and offering expenses payable by the Company, the Company's net
tangible book value at June 30, 1997 would have been $ or $
per share of Common Stock. This represents an immediate increase in net tangible
book value of $ per share to existing stockholders and an immediate
dilution in net tangible book value of $ per share to new investors.
The following table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.......... $
Net tangible book value per share before the
Offerings........................................... $
Increase in net tangible book value per share
attributable to new investors.......................
------
Net tangible book value per share after the Offerings....
------
Dilution per share to new public investors...............
======
</TABLE>

The following table summarizes, as of June 30, 1997 (after giving effect to
the Reorganization), the number of shares of Common Stock purchased from the
Company, the total consideration paid and the average price per share paid by
the existing stockholders and by new investors purchasing shares in the
Offerings (at an assumed initial public offering price of $ per share
and before deducting underwriting discount and estimated offering expenses
payable by the Company).

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
----------------- --------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders(1).......... % $ % $
New public investors(1)...........
------- ----- ----------- -----
Total................... 100.0% $ 100.0%
======= ===== =========== =====
</TABLE>

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

(1) Sales by the Selling Stockholders will reduce the number of shares of Common
Stock held by existing stockholders to shares or % of the
total number of shares of Common Stock outstanding after the Offerings
( or % assuming the Underwriters' over-allotment options are
exercised in full), and will increase the number of shares of Common Stock
held by new investors to shares or % of the total number of
shares of Common Stock outstanding after the Offerings ( shares or
% assuming the Underwriters' over-allotment options are exercised in
full). See "Principal and Selling Stockholders."

24
<PAGE> 26

SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data presented below for, and as of the
end of, each of the years in the five-year period ended December 31, 1996 and as
of and for the six-month periods ended June 30, 1996 and 1997 are derived from
the consolidated financial statements of Amkor. The consolidated financial
statements as of December 31, 1995 and 1996 and for each of the years in the
three-year period ended December 31, 1996, and as of and for the six-month
period ended June 30, 1997 have been audited by Arthur Andersen LLP, independent
public accountants, and their report thereon, together with such consolidated
financial statements, are included elsewhere in this Prospectus. The selected
consolidated financial data presented below as of December 31, 1992, 1993 and
1994 and June 30, 1996 and for the years ended December 31, 1992 and 1993 and
the six months ended June 30, 1996 are derived from unaudited consolidated
financial statements. In the opinion of management, the unaudited consolidated
financial statements have been prepared on the same basis as the audited
consolidated financial statements and contain all adjustments, consisting only
of normal recurring adjustments, necessary for a fair presentation of the
Company's results of operations for such periods and financial condition at such
dates. The results of operations for the six months ended June 30, 1997 are not
necessarily indicative of the results to be expected for the full year or future
periods. The selected consolidated financial data set forth below is qualified
in its entirety by, and should be read in conjunction with, "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Consolidated Financial Statements and Notes thereto.

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------------------------------ -------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- ---------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net revenues..................................... $303,654 $442,101 $572,918 $932,382 $1,171,001 $542,590 $663,489
Cost of revenues................................. 274,236 371,323 514,648 783,335 1,022,078 462,346 586,541
--------- --------- --------- --------- ----------- --------- ---------
Gross profit............................... 29,418 70,778 58,270 149,047 148,923 80,244 76,948
Operating expenses:
Selling, general and administrative............ 27,465 42,649 41,337 55,459 66,625 29,700 47,265
Research and development....................... 836 1,755 3,090 8,733 10,930 4,857 3,515
Loss on shut-down of Scotland operations(1).... 15,231 -- -- -- -- -- --
--------- --------- --------- --------- ----------- --------- ---------
Total operating expenses................... 43,532 44,404 44,427 64,192 77,555 34,557 50,780
--------- --------- --------- --------- ----------- --------- ---------
Operating income (loss).......................... (14,114) 26,374 13,843 84,855 71,368 45,687 26,168
Other (income) expense:
Interest expense, net.......................... 6,330 5,116 5,752 9,797 22,245 6,509 16,355
Foreign currency translation................... 3,278 2,809 (4,865) 1,512 2,961 (1,845) 101
Other (income), expense net.................... (468) (3,501) (2,639) 6,523 3,150 4,705 1,287
--------- --------- --------- --------- ----------- --------- ---------
Total other (income) expense............... 9,140 4,424 (1,752) 17,832 28,356 9,369 17,743
--------- --------- --------- --------- ----------- --------- ---------
Income (loss) before income taxes and minority
interest....................................... (23,254) 21,950 15,595 67,023 43,012 36,318 8,425
Provision for income taxes....................... (115) 2,445 2,977 6,384 7,876 6,650 2,689
--------- --------- --------- --------- ----------- --------- ---------
Income (loss) before minority interest........... (23,139) 19,505 12,618 60,639 35,136 29,668 5,736
Minority interest................................ (6,709) 2,269 1,044 1,515 948 35 1,858
--------- --------- --------- --------- ----------- --------- ---------
Net income (loss)................................ $(16,430) $ 17,236 $ 11,574 $ 59,124 $ 34,188 $ 29,633 $ 3,878
========= ========= ========= ========= =========== ========= =========
PRO FORMA DATA (UNAUDITED):
Historical income (loss) before income taxes and
minority interest.............................. $(23,254) $ 21,950 $ 15,595 $ 67,023 $ 43,012 $ 36,318 $ 8,425
Pro forma provision for income taxes(2).......... 685 5,345 3,177 16,784 10,776 9,150 5,389
--------- --------- --------- --------- ----------- --------- ---------
Pro forma income (loss) before minority
interest(2) (23,939) 16,605 12,418 50,239 32,236 27,168 3,036
Historical minority interest..................... (6,709) 2,269 1,044 1,515 948 35 1,858
--------- --------- --------- --------- ----------- --------- ---------
Pro forma net income (loss)(2) $(17,230) $ 14,336 $ 11,374 $ 48,724 $ 31,288 $ 27,133 $ 1,178
========= ========= ========= ========= =========== ========= =========
Pro forma net income (loss) per common
share(2)....................................... $ (.21) $ .17 $ .14 $ .59 $ .38 $ .33 $ .01
========= ========= ========= ========= =========== ========= =========
Shares used in computing pro forma net income per
common share................................... 82,610 82,610 82,610 82,610 82,610 82,610 82,610
========= ========= ========= ========= =========== ========= =========
</TABLE>

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

(1) During 1992, the Company decided to cease operations at Amkor Anam
EuroServices Ltd. ("AAEL"). AAEL was an IC packaging and testing facility
located in Scotland. In connection with the shut-down of the facility, AAEL
accrued for all of the costs associated with the shut-down, including but
not limited to reserves to record the property, plant and equipment at net
realizable value, severance, and other operating expenses incurred during
the shut-down period.

(2) Prior to the Reorganization, AEI, one of the principal subsidiaries of the
Company, elected to be taxed as an S Corporation under the Internal Revenue
Code of 1986 and comparable state tax laws. Accordingly, AEI did not
recognize any provision for federal income tax expense during the periods
presented. The pro forma provision for income taxes reflects the additional
U.S. federal income taxes which would have been recorded if AEI had not been
an S Corporation during these periods. See "Reorganization" and Note 1 of
Notes to Consolidated Financial Statements.

25
<PAGE> 27

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30, 1997
----------------------------------------------------- ----------------------------------------
1992 1993 1994 1995 1996 ACTUAL PRO FORMA(1) AS ADJUSTED(2)
-------- --------- -------- -------- -------- -------- ------------ --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.... $ 5,451 $ 8,929 $114,930 $ 96,151 $ 49,664 $ 60,993 $ 49,143
Working capital (deficit).... 13,896 (13,256) 134,798 111,192 36,785 (6,461) (18,261)
Total assets................. 159,795 191,754 426,522 635,868 797,613 933,657 921,857
Long-term debt and due to
affiliates................. 79,788 48,740 278,908 326,422 402,338 436,922 436,922
Stockholders' equity
(deficit).................. (207) 7,890 7,146 54,778 38,560 45,548 23,748
</TABLE>

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

(1) Pro forma balance sheet data reflects (i) the termination of AEI's S
Corporation status which resulted in the recording of a deferred tax
liability of $10.0 million (ii) a distribution prior to the Offerings by the
Company of undistributed earnings of AEI through June 30, 1997 of $11.8
million to stockholders of AEI prior to the Reorganization and (iii) the
reclassification of the remaining retained earnings of AEI of $11.7 million
to additional paid-in capital. The amount actually distributed by the
Company to such stockholders of AEI will increase to reflect any
undistributed net income earned by AEI following June 30, 1997 and prior to
the Reorganization.

(2) As adjusted to give effect to the application of the estimated net proceeds
to the Company of the Offerings based on an assumed initial public offering
price of $ per share. See "Use of Proceeds." Also reflects the elimination
of the minority interest liability and recording of goodwill related to the
issuance of 2,390,080 shares to AICL in exchange for its 40% interest in
AAP. See "Reorganization" and Note 1 of Notes to Consolidated Financial
Statements."

26
<PAGE> 28

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion contains forward-looking statements within the
meaning of the federal securities laws, including statements regarding the
anticipated growth in the market for the Company's products, the Company's
anticipated capital expenditures and financing needs, the Company's expected
provision of wafer fabrication services, the Company's expected capacity
utilization rates, the Company's anticipated assumption from AICL of marketing
rights in Japan and Korea, the belief of the Company as to its future operating
performance and other statements that are not historical facts. Because such
statements include risks and uncertainties, actual results may differ materially
from those anticipated in such forward-looking statements as a result of certain
factors, including those set forth in the following discussion as well as in
"Risk Factors" and "Business." The following discussion provides information and
analysis of the Company's results of operations from 1994 through 1996 and for
the first six months of 1996 and 1997 and its liquidity and capital resources
and should be read in conjunction with the Consolidated Financial Statements and
Notes thereto and the selected consolidated financial data included elsewhere in
this Prospectus. The operating results for interim periods are not necessarily
indicative of results for any subsequent period or for the entire fiscal year.

OVERVIEW

Background. The Company is the world's largest independent provider of
semiconductor packaging and test services. The Company believes that it is also
one of the leading developers of advanced semiconductor packaging and test
technology in the industry. The Company offers a complete and integrated set of
packaging and test services including IC package design, leadframe and substrate
design, IC package assembly, final testing, burn-in, reliability testing, and
thermal and electrical characterization. The Company provides packaging and test
services through its three factories in the Philippines as well as the four
factories of AICL in Korea pursuant to the Supply Agreement between the Company
and AICL. As of June 30, 1997, the Company had in excess of 150 customers,
including many of the largest semiconductor companies in the world.

The Company was formed in September 1997 as a holding company for the Amkor
Companies, including one of the Company's principal operating subsidiaries, AEI,
which was incorporated in 1970. These companies were under common control and
management prior to the Company's formation. As a result of the Reorganization,
the financial statements included in this Prospectus are presented on a
consolidated basis. See "Reorganization" and "Certain Transactions." Prior to
the Reorganization, AEI elected to be taxed as an S Corporation under the
Internal Revenue Code of 1986 and comparable state tax laws. Accordingly, AEI
did not recognize any provision for federal income tax expense during the
periods presented in the Consolidated Financial Statements. The Consolidated
Financial Statements include a pro forma provision for income taxes which
reflects the U.S. federal income taxes which would have been recorded by the
Company if AEI had not been an S Corporation during these periods. See Notes 1
and 10 of Notes to Consolidated Financial Statements.

General. From 1994 to 1996, the Company's revenues increased from
approximately $572.9 million to $1.17 billion. This increase occurred primarily
as a result of increases in unit volumes together with the shift in the
Company's product mix from traditional leadframe products to advanced leadframe
and laminate products. See "Business -- Products." In order to meet customer
demand, the Company has invested significant resources to expand its capacity in
the Philippines. In 1996 and the first six months of 1997, the Company incurred
and expensed $15.5 million and $16.6 million, respectively, of pre-operating and
start-up costs and initial operating losses in connection with its newest
factory, P3, in the Philippines. This facility operated at substantially less
than full capacity during these periods while customers were completing
qualification procedures for BGA packages to be produced at the facility. The
Company expects to significantly increase utilization of P3 by the end of 1997.
See "Risk Factors -- Expansion of Manufacturing Capacity; Profitability Affected
by Capacity Utilization Rates" and "Business -- Facilities and Manufacturing."

27
<PAGE> 29

The Company's results of operations are generally affected by the
capital-intensive nature of its business. In 1994, 1995, 1996 and the first half
of 1997, the Company invested $68.9 million, $123.6 million, $185.1 million and
$114.4 million, respectively, in property, plant and equipment. Increases or
decreases in capacity utilization rates can have a significant effect on gross
margins since the unit cost of packaging and test services generally decrease as
fixed charges, such as depreciation expense for the equipment, are allocated
over a larger number of units produced. In addition, the Company's gross margin
is significantly affected by fluctuations in packaging and test service charges
paid to AICL pursuant to the Supply Agreement with AICL, which are subject to
quarterly review and adjustment on the basis of factors such as changes in the
semiconductor market, forecasted demand, product mix and capacity utilization
and fluctuations in exchange rates. The Company's results of operations are also
affected by declines over time in the average selling prices for particular
products. At times in the past the Company has been able to offset, at least in
part, the effect of such decline on its margins by successfully developing and
marketing new products with higher margins, such as advanced leadframe and
laminate products, and by taking advantage of economies of scale and higher
productivity resulting from volume production. However, there can be no
assurance that the Company will be successful at offsetting any such declines in
the future. See "Risk Factors -- Expansion of Manufacturing Capacity;
Profitability Affected by Capacity Utilization Rates" and "-- Competition."

Due to the concentration of market share in the semiconductor industry, the
Company has been largely dependent upon a small group of customers for a
substantial portion of its business. In 1994, 1995, 1996 and the six months
ended June 30, 1997, 33.5%, 34.1%, 39.2% and 37.3%, respectively, of the
Company's net revenues were derived from sales to the Company's top five
customers, with 10.6%, 13.3%, 23.5% and 21.2%, respectively, derived from sales
to Intel. See "Risk Factors -- Customer Concentration; Absence of Backlog."

Relationship with AICL. In 1996 and the first six months of 1997,
approximately 72% and 68%, respectively, of the Company's revenues were derived
from sales of services performed for the Company by AICL. In addition,
substantially all of the revenues of AICL in 1996 and the six months ended June
30, 1997 were derived from services sold by the Company. Historically, AICL has
directly sold packaging and test services in Japan and Korea. The Company
expects to assume marketing rights for services in Japan and Korea in late 1997.
Also, in the first half of 1998, the Company is scheduled to begin offering
wafer fabrication services through AICL's new deep submicron CMOS foundry. The
Company expects that this foundry will be capable of producing up to 25,000 8"
wafers per month by the end of 1998. See "Risk Factors -- Risks Associated with
New Wafer Fabrication Business." The Company expects the proportion of its net
revenues derived from sales of services performed for the Company by AICL and
the percentage of AICL's revenues from services sold by the Company to increase
as the Company begins selling the wafer fabrication output of AICL's new wafer
foundry and with the Company's anticipated assumption from AICL of the marketing
rights for Korea and Japan. Following the Company's assumption of these
marketing rights, the Company will have a first right to the packaging and test
services and wafer output of AICL's factories.

The Supply Agreement between the Company and AICL provides, among other
things, for periodic price reviews and adjustments and coordination of research
and development efforts regarding package design and packaging and testing
processes and technologies. The Supply Agreement has a five year term. There can
be no assurance that AICL will renew the agreement upon its expiration, or that
if it does enter into a new agreement with the Company, any new agreement would
be on terms favorable to the Company. See "Relationship with Anam Industrial
Co., Ltd."

The Company expects that the businesses of the Company and AICL will
continue to remain highly interdependent by virtue of their supply relationship,
family ties between their respective shareholders and management, financial
relationships, coordination of product and operation plans, joint research and
development activities and shared intellectual property rights. As a result, the
Company's business, financial condition and operating results will continue to
be significantly dependent on AICL, including without limitation AICL's ability
to effectively provide the contracted services on a cost-efficient and timely
basis as well as AICL's financial condition and results of operations. The
Company will continue to be

28
<PAGE> 30

controlled to a significant degree by James Kim and the Kim Family Trusts, and
James Kim and members of his family will also continue to exercise significant
influence over the management of AICL and its affiliates. In addition, the
Company and AICL will continue to have certain contractual and other business
relationships and may engage in transactions from time to time that are material
to the Company. Although any such material agreements and transactions would
require approval of the Company's Board of Directors, conflicts of interest may
arise in certain circumstances. There can be no assurance that such conflicts
will not from time to time be resolved against the interests of the Company. In
addition, the Company may agree to certain changes in its contractual and other
business relationships with AICL, including pricing, manufacturing allocation,
capacity utilization and capacity expansion, among others, which in the judgment
of the Company's management will result in reduced short-term profitability for
the Company in favor of potential long-term benefits to the Company and AICL.
There can be no assurance that the Company's business, financial condition or
results of operations will not be adversely affected by any such decision. See
"-- Liquidity and Capital Resources" and "Risk Factors -- Dependence on
Relationship with AICL; Potential Conflicts of Interest."

RESULTS OF OPERATIONS

The following table sets forth certain operating data as a percentage of
net revenues for the periods indicated:

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------- ---------------
1994 1995 1996 1996 1997
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net revenues............................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenues........................................... 89.8 84.0 87.3 85.2 88.4
----- ----- ----- ----- -----
Gross profit........................................... 10.2 16.0 12.7 14.8 11.6
Operating expenses:
Selling, general and administrative...................... 7.2 6.0 5.7 5.5 7.1
Research and development................................. 0.6 0.9 0.9 0.9 0.5
----- ----- ----- ----- -----
Total operating expenses............................... 7.8 6.9 6.6 6.4 7.6
----- ----- ----- ----- -----
Operating income........................................... 2.4 9.1 6.1 8.4 4.0
Other (income) expense:
Interest expense, net.................................... 1.0 1.0 1.9 1.2 2.5
Foreign currency translation............................. (0.8) 0.2 0.2 (0.4) 0.0
Other (income) expense, net.............................. (0.5) 0.7 0.3 0.9 0.2
----- ----- ----- ----- -----
Total other (income) expense........................... (0.3) 1.9 2.4 1.7 2.7
----- ----- ----- ----- -----
Income before income taxes and minority interest........... 2.7 7.2 3.7 6.7 1.3
Provision for income taxes................................. 0.5 0.7 0.7 1.2 0.4
----- ----- ----- ----- -----
Income before minority interest............................ 2.2 6.5 3.0 5.5 0.9
Minority interest.......................................... 0.2 0.2 0.1 0.0 0.3
----- ----- ----- ----- -----
Net income................................................. 2.0 6.3 2.9 5.5 0.6
Pro forma provision for income taxes....................... 0.0 1.1 0.2 0.5 0.4
----- ----- ----- ----- -----
Pro forma net income....................................... 2.0% 5.2% 2.7% 5.0% 0.2%
===== ===== ===== ===== =====
</TABLE>

SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996

Net Revenues. The Company's net revenues consist of fees for the packaging
and testing of ICs which are consigned by customers to the Company's or AICL's
factories. Net revenues for the first six months of 1997 increased 22.3% to
$663.5 million from $542.6 million for the first six months of 1996 primarily
due to an increase in unit volumes of semiconductors packaged and tested by the
Company, offset in part by declines in average selling prices for many of the
Company's leadframe products. In addition, the openings of K4, AICL's newest
factory, and P3 in September 1996 enabled the Company to begin to expand sales
of BGA packages in the first six months of 1997.

29
<PAGE> 31

Gross Profit. Gross profit decreased 4.1% to $76.9 million in the first six
months of 1997 from $80.2 million in the first six months of 1996, representing
a decrease in gross margin to 11.6% from 14.8% during these periods. Cost of
revenues consists principally of packaging and test service charges from AICL,
costs of direct material for both the Philippine factories and AICL and labor
and other costs at the Philippine factories. The decrease in gross margin was
primarily due to $10.0 million of initial operating losses and start-up costs
incurred in connection with P3, an increase in packaging and test service
charges paid to AICL, and the erosion in average selling prices for leadframe
products.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 59.1% to $47.3 million, or 7.1% of net
revenues, in the first six months of 1997 from $29.7 million, or 5.5% of net
revenues, in the first six months of 1996 primarily due to increases in
personnel in marketing and support to sustain the Company's growth. The growth
in employees contributed to an overall increase in employee-related expenses and
corporate travel expenses. In addition, during the first six months of 1997, the
Company recognized $5.2 million of selling, general and administrative expenses
associated with the start-up of P3. The Company has also continued to invest in
new information systems in order to enhance operating efficiencies and improve
customer service and support.

Research and Development Expenses. Research and development expenses
decreased 27.6% to $3.5 million, or 0.5% of net revenues, in the first six
months of 1997, from $4.9 million, or 0.9% of net revenues, in the first six
months of 1996. The decrease in research and development costs principally
reflected the termination in late 1996 of the Company's efforts to develop its
own laminate substrate manufacturing capability.

Other Income (Expense). Other income (expense) consists of interest
expense, net, foreign currency translation expenses and other expense (income),
net. Other expense increased 89.4% to $17.7 million in the first six months of
1997 from $9.4 million in the first six months of 1996 primarily as a result of
increased interest expense. Interest expense for the first six months of 1997
increased to $19.3 million from $9.8 million in the first six months of 1996 as
the Company significantly increased its borrowing to finance capacity expansion.
See "-- Liquidity and Capital Resources." Interest expense in each of the
periods was offset in part by interest income of $3.0 million and $3.3 million,
respectively.

Income Taxes. The Company's effective tax rate (after giving effect to the
pro forma adjustment for income taxes) for the first six months of 1997 was 64%
as compared to 25% for the first six months of 1996. The increase in the
Company's effective tax rate in the first six months of 1997 from its effective
tax rate of 25% in 1996 and 1995 was primarily due to a net loss in the first
six months of 1997 for the Company's Philippine subsidiary that owns P3. The
Company could not use this loss to offset income from the Company's other
Philippine subsidiaries and reduce the amount of Philippine income tax payable
by the Company because this subsidiary is not consolidated with the Company's
other Philippine subsidiaries for tax reporting purposes. The Company's
subsidiary that owns P3 operates under a tax holiday from Philippine income
taxes until the end of 2002. The Company expects that if P3 becomes profitable,
the Company's effective tax rate related to its Philippine operations during the
tax holiday will be less than the Philippine statutory rate of 35%. The Company
has structured its global operations to take advantage of lower tax rates in
certain countries and tax incentives extended to encourage investment. The
Company's tax returns through 1993 in the Philippines and through 1994 in the
U.S. have been examined by the Philippine and U.S. tax authorities,
respectively. The recorded provisions for subsequent open years are subject to
changes upon examination of these tax returns by tax authorities. Changes in the
mix of income from the Company's foreign subsidiaries, expiration of tax
holidays and changes in tax laws and regulations could result in increased
effective tax rates for the Company.

Minority Interest. Minority interest represents AICL's ownership interest
in the consolidated net income of two of the Company's Philippine subsidiaries.
In connection with the Reorganization, these subsidiaries became wholly-owned by
the Company.

30
<PAGE> 32

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995

Net Revenues. Net revenues in 1996 increased 25.6% to $1.17 billion from
$932.4 million in 1995. The increase was primarily due to an increase in units
sold together with an increase in sales of newer products, such as advanced
leadframe and laminate packages. This increase in sales of newer products offset
declines in average selling prices for many of the Company's other products.

Gross Profit. Gross profit in 1996 and 1995 was approximately $149 million
representing a decrease in gross margin to 12.7% in 1996 from 16.0% in 1995. The
decrease in gross margin was primarily attributable to increases in cost of
revenues due to $15.5 million in pre-operating and start-up costs associated
with P3, as well as increased packaging and test service charges paid to AICL.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 20.1% to $66.6 million, or 5.7% of net
revenues, in 1996 from $55.5 million, or 6.0% of net revenues, in 1995 as a
result of the addition of personnel and infrastructure to service increases in
customer demand. In addition, the Company continued its investments in new
information systems in order to enhance operating efficiencies and improve
customer service and support.

Research and Development Expenses. Research and development expenses
increased 25.2% to $10.9 million, or 0.9% of net revenues, in 1996 from $8.7
million, or 0.9% of net revenues, in 1995 as a result of increased staffing and
funding for the Company's efforts to develop laminate substrate manufacturing
capabilities, prior to termination of such efforts in late 1996.

Other Income (Expense). Other expense increased 59.0% to $28.4 million in
1996 from $17.8 million in 1995 primarily as a result of increases in interest
expense, net, offset in part by a decrease in other expense, net. Interest
expense, net in 1996 increased to $22.2 million from $9.8 million in 1995 as the
Company significantly increased its borrowing to finance capacity expansion. See
"-- Liquidity and Capital Resources." As a result of this increase in debt, the
Company's interest expense increased to $27.7 million in 1996 from $17.3 million
in 1995.

Income Taxes. The Company's effective tax rate (after giving effect to the
pro forma provision for income taxes) for 1996 and 1995 was 25%. These rates
were different from the United States statutory rate primarily due to the impact
of lower tax rates, including tax holidays, in certain of the countries in which
the Company's subsidiaries are located. See Note 10 of Notes to Consolidated
Financial Statements.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994

Net Revenues. Net revenues in 1995 increased 62.7% to $932.4 million from
$572.9 million in 1994. This increase was primarily due to an increase in units
sold as well as an increase in average selling prices which resulted from
significantly increased demand for semiconductors in 1995.

Gross Profit. Gross profit in 1995 increased 155.8% to $149.0 million from
$58.3 million in 1994, representing an increase in gross margin to 16.0% in 1995
from 10.2% in 1994. The increase in gross margin was primarily due to a
decrease, as a percentage of sales, in the packaging and test service charges
paid to AICL in 1995, together with an increase in the average selling price for
many of the Company's products and an increase in the percentage of the
Company's revenues from sales of new, higher margin products.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 34.2% to $55.5 million, or 6.0% of net
revenues, in 1995 from $41.3 million, or 7.2% of net revenues, in 1994 as a
result of the addition of personnel and infrastructure to service increases in
customer demand. In addition, the Company began making significant investments
in new information systems in 1995 in order to enhance operating efficiencies
and improve customer service and support.

Research and Development Expenses. Research and development expenses
increased 182.6% to $8.7 million, or 0.9% of net revenues, in 1995 from $3.1
million, or 0.6% of net revenues, in 1994 as a

31
<PAGE> 33

result of increased staffing as well as funding for the Company's efforts to
develop laminate substrate manufacturing capabilities.

Other Income (Expense). Other expense increased to $17.8 million in 1995
from income of $1.8 million in 1994 primarily as a result of foreign currency
translation losses of $1.5 million in 1995 as compared to foreign currency
translation gains of $4.9 million in 1994 due to a significant depreciation in
the Philippine peso relative to the U.S. dollar in 1995 as compared to 1994, as
well as increases in interest expense, net to $9.8 million in 1995 from $5.8
million in 1994 as a result of increased borrowing to finance capacity
expansion.

Income Taxes. The Company's effective tax rate (after giving effect to the
pro forma provision for income taxes) increased to 25% in 1995 from 20% in 1994
primarily due to a higher proportion of taxable income generated in countries
with relatively higher tax rates.

QUARTERLY RESULTS

The following table sets forth certain unaudited consolidated financial
information, including as a percentage of net revenues, for the six fiscal
quarters ended June 30, 1997. The Company believes that all necessary
adjustments, consisting only of normal recurring adjustments, have been included
in the amounts stated below to present fairly the selected quarterly information
when read in conjunction with the Consolidated Financial Statements and the
Notes thereto included elsewhere herein. The Company's results of operations
have varied and may continue to vary significantly from quarter to quarter and
are not necessarily indicative of the results of any future period. In addition,
in light of the Company's recent growth, the Company believes that
period-to-period comparisons should not be relied upon as an indication of
future performance.

<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------------
SEPT.
MAR. 31, JUNE 30, 30, DEC. 31, MAR. 31, JUNE 30,
1996 1996 1996 1996 1997 1997
-------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Net revenues............................ $270,327 $272,262 $285,784 $342,628 $313,019 $350,471
Cost of revenues........................ 230,387 231,959 250,898 308,834 287,449 299,093
-------- -------- -------- -------- -------- --------
Gross profit.......................... 39,940 40,303 34,886 33,794 25,570 51,378
Operating expenses:
Selling, general and administrative... 13,752 15,948 16,716 20,209 20,608 26,657
Research and development.............. 2,100 2,757 3,071 3,002 1,485 2,030
-------- -------- -------- -------- -------- --------
Total operating expenses....... 15,852 18,705 19,787 23,211 22,093 28,687
-------- -------- -------- -------- -------- --------
Operating income........................ 24,088 21,598 15,099 10,583 3,477 22,691
Other expense (income), net............. 3,317 6,052 9,853 9,135 8,165 9,577
-------- -------- -------- -------- -------- --------
Income before income taxes and minority
interest.............................. 20,771 15,546 5,246 1,448 (4,689) 13,114
Provision for income taxes.............. 3,803 2,847 961 265 (1,497) 4,186
-------- -------- -------- -------- -------- --------
Income before minority interest......... 16,968 12,699 4,285 1,183 (3,192) 8,928
Minority interest....................... 599 (564) 304 609 1,637 221
-------- -------- -------- -------- -------- --------
Net income.............................. $ 16,369 $ 13,263 $ 3,981 $ 574 $ (4,829) $ 8,707
======== ======== ======== ======== ======== ========
</TABLE>

32
<PAGE> 34

<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------------
SEPT.
MAR. 31, JUNE 30, 30, DEC. 31, MAR. 31, JUNE 30,
1996 1996 1996 1996 1997 1997
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net revenues............................ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenues........................ 85.2 85.2 87.8 90.1 91.8 85.3
-------- -------- -------- -------- -------- --------
Gross profit.......................... 14.8 14.8 12.2 9.9 8.2 14.7
Operating expenses:
Selling, general and administrative... 5.1 5.9 5.8 5.9 6.6 7.6
Research and development.............. 0.8 1.0 1.1 0.9 0.5 0.6
-------- -------- -------- -------- -------- --------
Total operating expenses............ 5.9 6.9 6.9 6.8 7.1 8.2
-------- -------- -------- -------- -------- --------
Operating income........................ 8.9 7.9 5.3 3.1 1.1 6.5
Other expense (income), net............. 1.2 2.2 3.5 2.7 2.6 2.8
-------- -------- -------- -------- -------- --------
Income before income taxes and minority
interest.............................. 7.7 5.7 1.8 0.4 (1.5) 3.7
Provision for income taxes.............. 1.4 1.0 0.3 0.1 (0.5) 1.2
-------- -------- -------- -------- -------- --------
Income before minority interest......... 6.3 4.7 1.5 0.3 (1.0) 2.5
Minority interest....................... 0.2 (0.2) 0.1 0.2 0.5 0.0
-------- -------- -------- -------- -------- --------
Net income.............................. 6.1% 4.9% 1.4% 0.2% (1.5)% 2.5%
======== ======== ======== ======== ======== ========
</TABLE>

The Company's revenues are generally lower in the first quarter of the year
as compared to the fourth quarter of the preceding year primarily due to the
combined effect of holidays in the United States, the Philippines and Korea.
Semiconductor companies in the United States generally reduce their production
during the holidays at the end of December which results in a significant
decrease in orders for packaging and testing services during the first two weeks
of January. In addition, the Company typically closes its factories in the
Philippines for holidays in January, and AICL closes its factories in Korea for
holidays in February. As a result of these factors, the Company's net revenues
are significantly reduced during the months of January and February.

Beginning in the third quarter of 1996, intense competition in the
semiconductor industry worldwide led to a decrease in the average selling prices
of many of the Company's leadframe packages. This decrease was partially offset
by an increase in sales of advanced leadframe and laminate packages, which carry
higher prices and gross margins. In addition, the Company's cost of revenues as
a percentage of revenues increased significantly during the three quarters ended
March 31, 1997 primarily as a result of initial operating losses and start-up
costs associated with P3. Cost of revenues was also affected in the two quarters
ended June 30, 1997, as the Company recognized a $3.7 million write-off for
custom laminate raw materials which were purchased to meet customer orders which
were subsequently cancelled. The Company also increased its staffing at P3 in
the two quarters ended June 30, 1997, which resulted in an increase in selling,
general and administrative expenses as a percentage of revenues in this period.
The combined effect of these factors, however, was to decrease the levels of
profitability in the third and fourth quarters of 1996 and the first quarter of
1997.

The Company's quarterly operating results may vary significantly due to a
variety of factors including, among others, the cyclical nature of both the
semiconductor industry and the markets addressed by end-users of semiconductors,
the short-term nature of its customers' commitments, timing and volume of orders
relative to the Company's production capacity, changes in capacity utilization,
evolutions in the life cycles of customers' products, rescheduling and
cancellation of large orders, rapid erosion of packaging selling prices,
availability of manufacturing capacity, allocation of production capacity
between the Company's facilities and AICL's facilities, fluctuations in
packaging and test service charges paid to AICL, changes in costs, availability
and delivery times of labor, raw materials and components, effectiveness in
managing production processes, fluctuations in manufacturing yields, changes in
product mix, product obsolescence, timing of expenditures in anticipation of
future orders, availability of financing for expansion, changes in interest
expense, the ability to develop and implement new technologies, competitive
factors, changes in effective tax rates, the loss of key personnel or the
shortage of available skilled workers, international political or economic
events, currency and interest rate fluctuations, environmental events, and
intellectual property transactions and disputes. Unfavorable

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<PAGE> 35

changes in any of the above factors may adversely affect the Company's business,
financial condition and results of operations. In addition, the Company
increases its level of operating expenses and investment in manufacturing
capacity in anticipation of future growth in revenues. To the extent the
Company's revenues do not grow as anticipated, the Company's financial condition
and operating results may be materially adversely affected. See "Risk
Factors -- Fluctuations in Operating Results; Declines in Average Selling
Price."

LIQUIDITY AND CAPITAL RESOURCES

The Company has been investing significant amounts of capital in increasing
its packaging and test services capacity, including for the construction of P3,
the addition of capacity in the Company's other Philippine facilities and the
construction of a new manufacturing facility in the United States, scheduled to
open in 1998. In 1994, 1995, 1996 and the first half of 1997, the Company made
capital expenditures of $68.9 million, $123.6 million, $185.1 million and $114.4
million, respectively. The Company presently anticipates that its capital
expenditures for the second half of 1997 will be approximately $80 million, and
between $200 million and $215 million for 1998.

The Company historically has met a significant portion of its cash
requirements for working capital and capital expenditures from a combination of
cash from operating activities, short-term and long-term bank loans and
financing obtained for the benefit of the Company by AUSA, a wholly-owned
financing subsidiary of AICL. Cash used by operating activities in 1994 was
$26.3 million and cash provided by operating activities in 1995, 1996 and the
first six months of 1997 was $47.6 million, $14.0 million, and $56.9 million,
respectively. Cash provided by financing activities was $205.9 million, $71.2
million, $148.0 million and $82.1 million for 1994, 1995, 1996 and the six
months ended June 30, 1997, respectively.

At June 30, 1997, the Company's debt consisted of $240.8 million of
short-term borrowings, $158.8 million of long-term debt and $278.1 million of
amounts due to AUSA. Following the expected application of the net proceeds to
the Company of the Offerings, the Company will continue to have at least $304.7
million in principal amount of indebtedness outstanding. In addition, at June
30, 1997 the Company had cash and cash equivalents of $60.9 million and a
working capital deficit of $6.5 million ($49.1 and $18.3 million, respectively,
on a pro forma basis, after giving effect to the termination of AEI's S
Corporation status and the distribution of undistributed earnings through June
30, 1997). The Company's working capital deficit results primarily from the
significant amount of its short-term debt, primarily in connection with its
Philippine subsidiaries. At June 30, 1997, the Company had extended guarantees
in respect of bank debt of affiliates in the amount of $35 million and in
respect of vendor obligations of an affiliate in the amount of $11 million,
which amount may vary over time. See Note 11 of Notes to Consolidated Financial
Statements.

At June 30, 1997, the Company had $208 million in borrowing facilities with
a number of domestic and foreign banks, of which $18 million remained unused.
Certain of these agreements require compliance with certain financial covenants
and restrictions, and are collateralized by assets of the Company. These
facilities are typically revolving lines of credit and working capital
facilities for one-year renewable periods and generally bear interest at rates
ranging from 7.5% to 9.75%. The Company has received commitments from the banks
representing $136 million of the facilities indicating that they intend to renew
the facilities when they expire through at least October 1, 1998. Also included
in short-term debt are a $40 million term loan, which was redeemed in August
1997 before maturity at its principal amount, and another $10 million term loan
that was repaid at maturity. In connection with the repayment of these loans,
the Company obtained a three-month $55 million bridge loan from a bank. The
Company is currently negotiating with this bank to secure a short-term loan to
replace such bridge loan. Also outstanding at June 30, 1997 is $210 million in
long-term debt and capital lease obligations with various expiration dates
through April 2004, which accrue interest at rates ranging from 6.6% to 9.1%.

The Company has met a significant portion of its financing needs through
financing arrangements obtained by AUSA, AICL's wholly-owned financing
subsidiary. A majority of the amount due to AUSA

34
<PAGE> 36

represents outstanding amounts under financing obtained by AUSA for the benefit
of the Company, with the balance representing payables to AUSA for packaging and
service charges paid to AICL. Based on guarantees provided by AICL, AUSA obtains
for the benefit of the Company a continuous series of short-term financing
arrangements which generally are less than six months in duration, and typically
are less than two months in duration. Because of the short term nature of these
loans, the flows of cash to and from AUSA under this arrangement are
significant. At June 30, 1987, AUSA had borrowed $273 million of its $285
million of credit facilities. These credit facilities are with U.S. branches of
a number of banks located in Korea and have interest rates ranging from
approximately 7% to prime plus 0.25%. The Company reimburses AUSA for the
interest charges incurred by AUSA under these loans. AUSA has received
commitments from its banks indicating that they intend to renew the facilities
when they expire through at least October 1, 1998. AUSA has extended similar
terms to the Company with respect to amounts due to AUSA by the Company.
Accordingly, amounts due to AUSA are classified as noncurrent liabilities. In
July 1997, the Company's indebtedness to AUSA was reduced by approximately $83
million with funds received from the Company's Receivables Sale (as defined
below). In addition, in August 1997, approximately $50 million of the Company's
indebtedness was assumed by AK Investments, Inc. an affiliate of the Company, in
connection with the sale to AK investments of its investment in Anam S&T Co.,
Ltd. and certain investments in and notes receivable from companies unrelated to
the semiconductor packaging and test business. See Note 15 of Notes to
Consolidated Financial Statements.

At June 30, 1997, all of AUSA's debt, as well as $161 million of the
Company's debt to banks and the Company's obligations under the Receivables Sale
(as defined below), was guaranteed by AICL. AICL currently has a significant
amount of debt relative to its equity and was contingently liable under
guarantees in respect of debt of its subsidiaries and affiliates in the
aggregate amount of approximately W935 billion ($1.1 billion), including the
guarantees of the Company's loans and AUSA's loans. As a result of its
relationship with AICL, the Company's business, financial condition and
operating results are significantly dependent on AICL. There can be no assurance
that AUSA will be able to obtain additional guarantees, if necessary, from AICL.
In addition, a deterioration in AICL's financial condition could trigger
defaults under AICL's guarantees, causing acceleration of such loans. See
"-- Overview -- Relationship with AICL," "Risk Factors -- Dependence on
Relationship with AICL; Potential Conflicts of Interest" and "Relationship with
Anam Industrial Co., Ltd."

In addition, in July 1997, the Company entered into a trade receivables
securitization agreement with a commercial financial institution. Under the
terms of the agreement, the financial institution has committed to purchase,
with limited recourse, all right, title and interest in eligible receivables, as
defined in the agreement, up to $100 million (the "Receivables Sale"). Funds
received pursuant to the agreement are subject to a discount of LIBOR plus
0.375%. The agreement, which has an initial term of one year, can be
automatically renewed for two consecutive one year periods. Pursuant to the
Receivables Sale, the Company has received proceeds of approximately $83.4
million which were applied to reduce the Company's indebtedness to AUSA.

The Company intends to use the net proceeds from the Offerings to repay
approximately $250 million of its outstanding short-term debt to banks.
Following the Offerings, the Company will continue to have a significant amount
of debt, and the Company expects that its average bank borrowings will increase
in 1998 to finance additional working capital requirements from growth of the
Company's operations as well as planned capital expenditures to support
additional revenue growth. The Company believes that the net proceeds from the
Offerings, together with existing funds and cash flow from operations, will be
sufficient to meet its anticipated cash needs for working capital and capital
expenditures for at least the next 12 months. There can be no assurance,
however, that lower than expected revenues, increased expenses, increased costs
associated with the purchase or maintenance of capital equipment, decisions to
increase planned capacity or other events will not cause the Company to seek
more capital, or capital sooner than currently expected. The timing and amount
of the Company's actual capital requirements cannot be precisely determined and
will depend on a number of factors, including demand for the Company's services,
availability of capital equipment, fluctuations in foreign currency exchange
rates, changes in semiconductor industry conditions and competitive factors.

35
<PAGE> 37

Prior to the consummation of the Reorganization, AEI was treated for U.S.
federal and certain state tax purposes as an S Corporation under the Internal
Revenue Code of 1986 and comparable state tax. As a result, AEI did not
recognize federal corporate income taxes. Instead, up until the the Termination
Date, Mr. James Kim and the Kim Family Trusts have been obligated to pay U.S.
federal and certain state income taxes on their allocable portion of the income
of AEI. The Company, AEI, Mr. Kim and the Kim Family Trusts will enter into tax
indemnification agreements providing that the Company and AEI will be
indemnified by such stockholders, with respect to their proportionate share of
any U.S. federal or state corporate income taxes attributable to the failure of
AEI to qualify as an S Corporation for any period or in any jurisdiction for
which S Corporation status was claimed through the Termination Date. The tax
indemnification agreements will also provide that the Company and AEI will
indemnify Mr. Kim and such stockholders if such stockholders are required to pay
additional taxes or other amounts attributable to taxable years on or before the
Termination Date as to which AEI filed or files tax returns claiming status as
an S Corporation. AEI has made various distributions to Mr. Kim and the Kim
Family Trusts which have enabled them to pay their income taxes on their
allocable portions of the income of AEI. Such distributions totaled
approximately $3.1 million, $19.9 million, $15.1 million and $5.0 million in
1994, 1995, 1996 and the first six months of 1997, respectively. The Company
expects to make additional distributions to such stockholders prior to the
consummation of the Reorganization, which distributions will represent AEI's
cumulative net income in all periods prior to the Termination Date less the
aggregate amount of distributions previously made to such stockholders. These
final distributions are intended to provide such stockholders with the balance
of AEI's net income for which they have already recognized income taxes. Through
June 30, 1997, the amount of such undistributed net earnings was $11.8 million.
See "Reorganization" and Notes 1 and 10 of Notes to Consolidated Financial
Statements.

FOREIGN CURRENCY TRANSLATION GAINS AND LOSSES

The Company's subsidiaries in the Philippines maintain their accounting
records in U.S. dollars. This is due to the fact that all sales, the majority of
all bank debt and all significant material and fixed asset purchases of such
subsidiaries are denominated in U.S. dollars. As a result, the Philippine
subsidiaries' exposure to changes in the Philippine peso/U.S. dollar exchange
rate relates primarily to certain receivables and advances and other assets
offset by payroll, pension and local liabilities. To minimize its foreign
exchange risk, the Company selectively hedges its net foreign currency exposure
through short-term (generally not more than 30 to 60 days) forward exchange
contracts. To date, the Company's hedging activity has been immaterial.

36
<PAGE> 38

BUSINESS

The following discussion contains forward-looking statements within the
meaning of the U.S. federal securities laws, including statements regarding the
anticipated growth in the market for the Company's products, the Company's
anticipated capital expenditures and financing needs, the Company's expected
provision of wafer fabrication services, the Company's expected capacity
utilization rates, the belief of the Company as to its future operating
performance and other statements that are not historical facts. Because such
statements include risks and uncertainties, actual results may differ materially
from those anticipated in such forward-looking statements as a result of certain
factors, including those set forth in "Risk Factors," "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and "Business."

Amkor is the world's largest independent provider of semiconductor
packaging and test services. The Company believes that it is also one of the
leading developers of advanced semiconductor packaging and test technology in
the industry. The Company offers a complete and integrated set of packaging and
test services including IC package design, leadframe and substrate design, IC
package assembly, final testing, burn-in, reliability testing, and thermal and
electrical characterization. As of June 30, 1997, the Company had in excess of
150 customers, including many of the largest semiconductor companies in the
world. Such customers include, among others, Advanced Micro Devices, Inc.,
International Business Machines Corp., Intel, Lucent Technologies, Inc.,
Motorola, Inc., National Semiconductor Corp., Philips Electronics N.V.,
SGS-THOMSON Microelectronics N.V., Siemens AG and TI.

In the first half of 1998 the Company is scheduled to begin offering wafer
fabrication services through AICL's new deep submicron CMOS foundry. The Company
expects that this foundry will be capable of producing up to 25,000 8" wafers
per month by the end of 1998. Through a strategic relationship with TI, the
Company and AICL are qualifying .25 micron CMOS process technology, and AICL is
negotiating with TI to obtain the technology necessary to migrate to .18 micron
during 1998. This foundry will primarily manufacture digital signal processors
("DSPs"), application specific integrated circuits ("ASICs") and other logic
devices. The Company expects to sell approximately 50% of AICL's wafer output to
TI pursuant to its relationship with TI. By leveraging the Company's leading
position in semiconductor packaging and test services, the new wafer fabrication
services will enable the Company to become one of the first providers of a fully
integrated, turnkey semiconductor fabrication, packaging and test service
solution.

The Company provides packaging and test services through its three
factories in the Philippines as well as the four factories of AICL in Korea
pursuant to a supply agreement between the Company and AICL, under which AICL
provides packaging and test services to the Company. In 1996 and the first six
months of 1997, AICL provided packaging and test services representing
approximately 72% and 68%, respectively, of the Company's net revenues.

INDUSTRY BACKGROUND

Manufacturing Process

The production of a semiconductor is a complex process that requires
increasingly sophisticated engineering and manufacturing expertise. The
production process can be broadly divided into three primary stages: (i) wafer
fabrication, (ii) assembly of die into finished devices (referred to as
"packaging") and (iii) testing of finished devices and other back-end processes.

37
<PAGE> 39

[ORGANIZATIONAL CHART]

The wafer fabrication process begins with the generation of a mask that
defines the circuit patterns for the transistors and interconnect layers that
will be formed on the raw silicon wafer. The transistors and other circuit
elements are formed by repeating a series of process steps wherein a
photosensitive material is first deposited on the wafer, the material is exposed
to light through the mask in a photolithography process, and finally, the
unwanted material is etched away, leaving only the desired circuit pattern on
the wafer. By stacking up the various patterns, the individual elements of the
semiconductor are defined. The final step in the wafer fabrication process is to
electrically test each individual chip in a wafer probe process in order to
identify the good chip for packaging.

The fabricated wafers are then transferred to packaging facilities.
Semiconductor packaging serves to protect the chip, facilitate integration into
electronic systems, and enable the dissipation of heat from the devices. In the
packaging process, the wafer is diced into its individual die which are then
separated from the wafer and attached to a substrate via an epoxy adhesive.
Leads on the substrate are then connected by extremely fine gold wires to the
input/output ("I/O") terminals on the chips through the use of automated
machines known as "wire bonders". Each die is then encapsulated in a plastic
molding compound, thus forming the package, which then goes through several
additional finishing steps to prepare it for testing.

Following packaging, each packaged device is then tested utilizing a
sophisticated test platform and program which tests the many different operating
specifications of the IC, including functionality, voltage, current and timing.
The completed devices are either shipped back to the customer or shipped
directly to their final destination.

Trends Toward Outsourcing

Historically, semiconductor companies manufactured semiconductors primarily
in their own factories. Independent packagers of semiconductors were used solely
to handle the overflow volume requirements of semiconductor companies.
Outsourcing of final testing and wafer fabrication was virtually non-existent

38
<PAGE> 40

in the early days of the industry. Over the past fifteen years, however, the
need for independent semiconductor packaging and test services has grown
dramatically for several reasons.

First, semiconductor companies are facing ever-increasing demands for
miniaturization, higher lead counts and improved thermal and electrical
performance in IC packages. As a result of this trend, semiconductor packaging
is now viewed as an enabling technology requiring sophisticated expertise and
technological innovation. Independent providers of packaging and test services
have developed substantial expertise in packaging and test technology and new
package innovation. Semiconductor companies, having found it difficult to keep
pace using their internal resources, have come to rely increasingly on the
independent packaging and test services providers as a key source for new
technology development and innovation.

Second, semiconductor companies are increasingly seeking to shorten their
time to market for new products. Having the right packaging technology and
capacity in place is a critical factor in reducing time to market. As packaging
solutions are identified for a specific product, semiconductor companies
frequently do not have the equipment or expertise to implement such solutions in
the volumes required, nor sufficient time to develop these capabilities before
introducing a new product into the market. For this reason, semiconductor
companies are increasingly leveraging the resources and capabilities of
independent packaging and test companies to deliver their new products to market
more quickly.

Third, the packaging and testing of ICs has evolved into an increasingly
complex process that requires substantial investment in specialized equipment
and facilities. For example, the investment in facilities and equipment
necessary for a processing line capable of packaging 100 million ball grid array
("BGA") packages per year can be as much as $200 million. As a result of the
substantial cost of this manufacturing equipment, the equipment must be utilized
at a high capacity level for an extended period of time in order to be cost
effective. With semiconductor companies facing increasingly shorter product life
cycles, faster new product introductions and the need to continuously update or
replace packaging equipment to accommodate new products, it has become
increasingly difficult for semiconductor companies to sustain such high levels
of capacity utilization. Independent providers of packaging and test services,
on the other hand, can use existing equipment at high utilization levels over a
longer period of time for a broad range of customers, effectively extending the
life of the equipment.

Fourth, as the cost to build a new wafer fabrication facility has increased
to over $1 billion, semiconductor companies have been forced to concentrate
their capital resources on core wafer manufacturing activities. As a result,
semiconductor companies are increasingly seeking to use independent packaging
and test providers who have the ability to invest the capital to develop new
packaging and test capacity. The Company believes that as the cost to construct
new wafer fabrication facilities continues to increase, semiconductor
manufacturers will increasingly seek to outsource packaging and test services.

Fifth, there has been a recent growth of "fabless" semiconductor companies
whose core competency and focus is entirely on the semiconductor design process.
According to industry estimates, sales by fabless semiconductor companies have
grown from $3.2 billion in 1993 to $6.8 billion in 1996, representing 3.7% and
4.8%, respectively, of the worldwide market for semiconductors. The significant
growth in the number of fabless semiconductor companies has been driven in large
part by the ability of such companies to effectively outsource virtually every
significant step of the semiconductor manufacturing process. This development
has allowed fabless semiconductor companies to introduce new semiconductors very
quickly without committing significant amounts of capital and other resources.
The Company believes that increases in the number of fabless semiconductor
companies will continue to be a significant driver of growth in the independent
semiconductor manufacturing industry.

These trends, combined with the growth in the number of ICs being produced
and sold, are driving increasing demand for independent packaging and test
services. This demand is expected to grow faster than that of the semiconductor
market as a whole. According to industry estimates, independent packaging
revenues are expected to grow at a compound annual rate of 20.3% over the next
five years from an estimated $5.0 billion in 1996 (32% of the world's IC
packaging needs) to $12.5 billion in 2001

39
<PAGE> 41

(45% of the world's IC packaging needs). Today, nearly all of the world's major
semiconductor companies use independent packaging and test service providers for
at least a portion, if not all, of their packaging and test needs.

Many of the same forces that have driven the growth of independent
packaging and test have also been driving increasing demand for independent
wafer fabrication services. Moreover, because the cost of new wafer fabrication
facilities has been rising steadily, many semiconductor companies are seeking to
leverage their capital resources by outsourcing some or all of their wafer
fabrication needs. This is particularly true for newer, smaller geometry
technologies that are necessary for producing the newest, leading edge ICs,
because they cannot be produced in many semiconductor companies' existing wafer
fabrication facilities. As the demand for ICs with smaller geometries increases,
the Company believes semiconductor companies will increasingly utilize
independent wafer manufacturers.

The Need for Turnkey Solutions

The growing demand for independent wafer fabrication, packaging, and test
services has generally been served by separate wafer fabrication, packaging or
test companies. This creates inefficiencies for semiconductor companies which
must manage the delays, complex logistics and uncertainty inherent in utilizing
a different service provider for each step of the semiconductor manufacturing
process. Only a very few, if any, independent service providers have the
capability of providing a combination of wafer fabrication, packaging and test
services.

THE AMKOR SOLUTION

Amkor is the largest independent provider of semiconductor packaging and
test services in the world. With its leading edge process technology and package
design expertise, the Company is able to provide its customers with a broad
range of new packaging solutions that enable faster, smaller and more powerful
ICs. Due to its size and industry-leading position, the Company is capable of
implementing and utilizing the capital equipment necessary for both new and
mature packages, thereby affording its customers an attractive alternative in
their capital allocation decisions. In addition, with AICL's new wafer
fabrication capabilities, the Company will be able to begin offering a fully
integrated, turnkey semiconductor manufacturing solution.

STRATEGY

Principal elements of the Company's strategy include:

Maintain Product Technology Leadership. The Company believes that it is one
of the world's leading designers and developers of new semiconductor packaging
technology. The Company has designed and developed such leading edge leadframe
and laminate products as its PowerQuad, SuperBGA, FlexBGA and ChipArray BGA
packages. The Company is focusing additional design and development efforts on
new generations of the BGA packaging format and on "flip chip" die attach
technologies where the I/O pads on the chip are attached directly to the
package's substrate rather than with wire-bonded connections. The Company
employs a staff of leading semiconductor packaging technologists and undertakes
significant research and development activities in its Chandler, Arizona and
Philippines locations, as well as through joint development activities with
AICL's development staff in Korea. The Company intends to continue to maintain
its leading packaging technology position.

Maintain Advanced Manufacturing Capabilities. The Company believes that its
tradition of manufacturing excellence has been a key factor in its success in
attracting and retaining customers, and it is committed to maintaining that high
level of excellence. Key to this effort is the Company's commitment to
continuous advancement of its process technology. The Company's development
teams work with its customers, suppliers, and others to develop new processing
technologies as well as pursue continuous improvements in the Company's existing
processing capabilities. These efforts have directly resulted in reduced time to
market, increased quality, and lower manufacturing costs. The Company holds
numerous

40
<PAGE> 42

process technology patents, including joint ownership with AICL of a U.S. patent
for the "Gold Gate" molding method, which enables automated mold processing for
BGA packages.

Leverage Scale and Scope of the Company's Packaging and Test
Capabilities. The Company believes that its scale of operations and its breadth
of product offerings provide it with several competitive advantages. First, the
Company believes that its size and position in the industry allow it certain
advantages in procuring key materials and manufacturing equipment. Second, the
Company is able to capitalize on the substantial economies of scale that result
from high utilization rates of its capital equipment, thereby lowering the
Company's per unit manufacturing costs and facilitating cost-effective solutions
for its customers. The Company's scale also allows it to offer an
industry-leading breadth of product offerings and to be a single source for many
of its customers' packaging requirements. The Company offers over 600 different
package formats and sizes with a variety of processing and materials options.
The Company added 175 and 139 new packaging options, respectively, in 1996 and
the first eight months of 1997. The Company is committed to continued expansion
of both its size of operations and its scope of product and service offerings.

Establish Industry Packaging Standards. The Company believes that by
bringing new package designs to market early, its designs are more likely to
become industry standards, which in turn will allow the Company to obtain higher
margins than its competitors for such new designs. The Company also seeks to
capture substantial market share and to spur the industry-wide adoption of its
new packages by investing aggressively in expanding its manufacturing capacity
for these packages. As a result, it is one of the leading providers of advanced
packaging solutions such as thin package formats and BGA packages. The Company
believes these package types will comprise some of the highest growth and more
profitable segments of the packaging market in coming years.

Enhance Customer and Supplier Relationships. As the world's largest
independent provider of semiconductor packaging and test services, the Company
has developed long-standing strategic relationships with leading semiconductor
and electronics companies, its suppliers, and other developers of new
semiconductor technologies. The Company believes that these relationships have
allowed it to stay ahead of the constantly advancing demand curve for
independent packaging services. The Company has repeatedly developed
leading-edge packaging technologies that have met the requirements of newer IC
devices and that have been quickly accepted in the marketplace. The Company's
alliances with certain of its key equipment and material suppliers have enabled
the Company to achieve packaging and manufacturing process innovation and cost
reduction. Developing and maintaining these relationships within the industry
will continue to be an integral part of the Company's overall strategic
direction.

Focus on Customer Service and Support. The Company believes that its focus
on customer service and support has been crucial in attracting and retaining
leading semiconductor companies as its customers. The Company has a firmly
established customer-oriented culture. To provide a dedicated customer support
infrastructure and to stay abreast of customers' expectations, the Company has
strategically established technical and sales teams near major customer
facilities and in acknowledged technology centers. In addition, the Company has
implemented direct electronic links with its customers to enhance communication
and facilitate real-time engineering data and order information flow.

Provide an Integrated, Turnkey Solution. The Company seeks to provide a
complete turnkey solution comprising wafer fabrication, packaging and test
services. In the first half of 1998, the Company is scheduled to begin to
provide wafer fabrication services through AICL's new deep submicron CMOS
foundry. With the addition of wafer fabrication, the Company will be able to
provide all stages of IC production for its customers from the fabrication of
wafers through the shipment of finished ICs. The Company believes this
integration will enable customers to improve the cost and performance of their
ICs and achieve faster time to market for both new product introductions and
production lead times.

41
<PAGE> 43

PRODUCTS

Packaging

The Company offers a broad range of package formats designed to provide
customers with a full array of packaging solutions for both commodity and
advanced products. The Company's products are divided into three product
families: traditional leadframe, advanced leadframe, and laminate products as

<TABLE>
<CAPTION>
shown in the following tables.
- -----------------------------------------------------------------------------------------------

TRADITIONAL LEADFRAME PRODUCTS
- -----------------------------------------------------------------------------------------------
- ---------------------------------------
PACKAGE TYPE NUMBER OF LEADS APPLICATIONS
- ------------------------------------------------------ --------------------------------------
<S> <C> <C>
PDIP (Plastic Dual In-line Packages) 8-48 General purpose plastic IC package for
SPDIP (Shrink DIP) 28-64 consumer electronic products such as
games, telephones, TV, audio equipment
and computer peripherals.
- -----------------------------------------------------------------------------------------------
Hermetic Custom A line of mature, ceramic predominant
packages used especially for high-
reliability applications (military,
space and commercial aviation).
- -----------------------------------------------------------------------------------------------
PLCC (Plastic Leaded Chip Carrier) 20-84 Used for logic, gate arrays, DAC,
processors and chip sets used in
larger form-factor items (copiers,
printers, scanners, desktop PCs,
electronic games and monitors).
- -----------------------------------------------------------------------------------------------
SOIC (Small Outline Integrated Circuit) 8-44 Designed for needs of lower lead
devices. End uses include consumer
audio/video and entertainment
products, pagers, cordless telephones,
fax machines, copiers, printers, PC
peripherals and automotive parts.
- -----------------------------------------------------------------------------------------------
MQFP (Metric Quad Flat Package) 44-304 Adapted to meet the increasing
challenges of advanced
processors/controllers, DSPs, ASICs,
video-DAC, PC chip sets, gate arrays,
logic devices, multimedia and other
technologies for consumer, commercial,
office, automotive, PC and industrial
products.
- -----------------------------------------------------------------------------------------------
PowerQuad(R) 100-304 Higher performance thermally enhanced
QFP package. Used for DSPs,
programmable logic devices,
microprocessors and micro-controllers,
high-speed and field programmable gate
array logic devices, ASIC and other
technologies requiring more thermal
performance than offered by standard
QFP packages.
- -----------------------------------------------------------------------------------------------
PowerSOP(TM) 8-36 Higher performance thermally enhanced
SOIC package. Used for wireless RF
telecom devices, automotive,
industrial, disk drive, pagers, and
other technologies requiring more
thermal performance than offered by
standard SOIC packages.
</TABLE>

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

42
<PAGE> 44

<TABLE>
<CAPTION>
- --------------------------------------
ADVANCED LEADFRAME PRODUCTS
- ---------------------------------------------------------------------------------------------
- --------------------------------------
PACKAGE TYPE NUMBER OF LEADS APPLICATIONS
- ------------------------------------------------------ -------------------------------------
<S> <C> <C>
TQFP (Thin Quad Flat Package) 32-256 Designed for lightweight, portable
electronics requiring broad
performance characteristics,
including notebook computers, desktop
PCs, audio/video and
telecommunications products,
cordless/RF devices, office
equipment, disk drives and
communication boards (e.g., Ethernet
and ISDN).
- ---------------------------------------------------------------------------------------------
TSOP (Thin Small Outline Package) 32-48 Primary application is for SRAM,
DRAM, FLASH and FSRAM memory devices.
End uses include PC cards, PCMCIA
form-factor products, cameras
(still/video) and notebook computers.
- ---------------------------------------------------------------------------------------------
TSSOP (Thin Shrink Small Outline 8-80 Designed for gate drivers,
Package) controllers, logic, analog, memory
(SRAM, DRAM, EPROM, E2PROM),
comparators and optoelectronics.
- ---------------------------------------------------------------------------------------------
SSOP (Shrink Small Outline Package) 8-64 Designed to enable end-products such
as pagers, portable audio/video
products, disk drives, and wireless
applications to be reduced in size
and weight.
- ---------------------------------------------------------------------------------------------
</TABLE>

43
<PAGE> 45

<TABLE>
<CAPTION>
- --------------------------------------
LAMINATE PRODUCTS
- ---------------------------------------------------------------------------------------------
- --------------------------------------
PACKAGE TYPE NUMBER OF BALLS APPLICATIONS
- ------------------------------------------------------ -------------------------------------
<S> <C> <C>
PBGA (Plastic Ball Grid Array) 119-544 Semiconductors for end users which
require the enhanced performance
provided by the integrated design of
PBGA, including microprocessors/
controllers, ASICs, gate arrays,
memory, DSPs and PC chip sets.
Designed for applications where
improved portability, form-factor and
high-performance are necessary,
including wireless products,
cellular, GPS, notebook computers,
video cameras and disk drives.
- ---------------------------------------------------------------------------------------------
SuperBGA(R) 64-600 Designed for high-speed, high-power
semiconductors such as ASICs,
microprocessors, gate arrays, and
DSPs. Applications include wireless
products, notebook computers, PDAs,
video GUI and CPU/BUS boards.
- ---------------------------------------------------------------------------------------------
FlexBGA 133-412 Higher performance, lower profile
package than PBGA due to size
reduction made possible by denser
substrate. Ideal for high performance
disk drives, cellular phones, pagers,
wireless communications, DSPs and
micro-controller applications.
- ---------------------------------------------------------------------------------------------
MicroBGA(TM) 8-200 Especially suited for memory devices
such as FLASH, SRAM, DRAM and FSRAM
technologies, microprocessors/
controllers and high value ASICs
requiring a low height, weight and
size packaging. End uses include
cellular and other telecommunications
products, disk drives, notebooks/sub-
notebooks, PDAs, wireless and
consumer systems and memory boards.
- ---------------------------------------------------------------------------------------------
ChipArray(TM) 36-128 Designed for semiconductors such as
memory, analog, ASICs and PLDs
requiring a smaller package than
conventional PBGAs. Applications
include cellular and other
telecommunications, notebooks/sub-
notebooks, PDAs, wireless systems and
GPS.
- ---------------------------------------------------------------------------------------------
FlipChip N/A An enabling interconnect technology
which can be utilized in advanced IC
packages such as PBGA, chip scale and
flex circuit solutions to support
improved electrical requirements and
very high semiconductor density in
very small systems.
</TABLE>

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

44
<PAGE> 46

Traditional Leadframe Products. Traditional leadframe products are the most
widely recognized package types and are characterized by a chip encapsulated in
a plastic mold compound with metal leads surrounding the perimeter. This package
type has evolved from packages designed to be plugged into the circuit board by
inserting the leads into holes on the circuit board to the more modern surface-
mount design, in which the leads are soldered to the surface of the circuit
board. Specific package customization and evolutionary improvements are
continually being engineered to enable improved electrical performance and
multi-chip capability, as well as smaller printed circuit board footprints. The
Company offers a wide range of lead counts and body sizes within this product
group to satisfy customer die size variations. In addition, the Company offers
power versions of the SOP, PLCC, and MQFP package types which are specially
designed to handle today's high power ICs that need with enhanced heat
dissipation characteristics.

Advanced Leadframe Products. The Company's customers are seeking
increasingly thinner packages, which has led the Company to develop newer, more
advanced leadframe products. The Company's advanced leadframe products are
similar in design to its traditional leadframe products. However, the advanced
leadframe products generally are thinner and smaller, have more leads, and have
advanced thermal and electrical characteristics which are necessary for many of
today's more advanced semiconductor applications. The TSOP, TSSOP and SSOP
packages are significantly smaller than the Company's traditional SOIC products,
while the TQFP package is a smaller version of the MQFP package. The Company
also offers power versions of these package types. The Company plans to continue
to develop increasingly smaller versions of these products to keep pace with
continually shrinking die sizes and increasing demands for miniaturization.

Laminate Products. The laminate product family represents the newest and
fastest growth area for the Company and consists of products employing the BGA
format which utilize a laminate (plastic or tape) substrate rather than a
leadframe substrate. BGA technology was first introduced in the industry as a
solution to problems associated with the increasingly high lead counts required
for advanced semiconductors. As the number of leads surrounding the IC
increased, packagers attempted to maintain the size of the package by increasing
the proximity of the leads to one another. As a result, however, these high lead
count packages experienced significant electrical shorting problems and required
the development of increasingly sophisticated and expensive techniques for
producing circuit boards to accommodate the density of the leads. The BGA
methodology solved this problem by effectively creating leads on the bottom of
the package in the form of small bumps or balls. These balls can be evenly
distributed across the entire bottom surface of the package, allowing greater
distance between the individual leads. The Company's first product in this
family was the plastic BGA. The Company has subsequently designed additional BGA
type packages which include features that enable low cost, high volume
manufacturing methods as well as higher performance packages. These new laminate
products include: SuperBGA(R), which includes a copper heat-sink for heat
dissipation and is designed for very low profile, high power applications;
ChipArray(TM), which allows the package to be as small as 1.5 mm larger than the
chip itself; and MicroBGA(TM), which is designed to be approximately the same
size as the chip and uses a tape substrate rather than a plastic laminate. The
Company is currently designing newer versions of BGA packages to enable further
significant reductions in package size.

Test and Related Services

The Company also provides its customers with semiconductor test services.
The Company has the capability to test digital logic, analog and mixed signal
products. The combination of the Company's test operations together with AICL's
Korean test operations comprises one of the largest independent test operations
in the world. Providing test services requires a high level of communication and
integration between the Company and its customers. In order to enable
semiconductor companies to improve their time to market and to reduce costs,
there has been an increasing trend to put packaging and test operations in the
same location. The Company has capitalized on this trend by supplying its own
testers or by supplementing customer-supplied testers with handlers and other
related equipment.

45
<PAGE> 47

Although test services accounted for only 3.3% of the Company's total 1996
revenue and 13% of the total units shipped, the Company expects test services to
grow significantly during the next several years as customers seek to reduce the
time to market for their products by using contractors with test services at the
packaging site. In addition to final test services, the Company provides a full
range of other related services, such as burn-in test services, "dry pack"
services, "tape and reel" packing, and wafer "probing" or "sorting."

The following table sets forth, for the periods indicated, the amount of
the Company's net revenues and the percentage of total net revenues by product
type:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED
----------------------------------------------------------- -----------------
1994 1995 1996 JUNE 30, 1997
----------------- ----------------- ----------------- -----------------
REVENUES % REVENUES % REVENUES % REVENUES %
-------- ----- -------- ----- -------- ----- -------- -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Traditional Leadframe....... $ 487 85.1% $ 699 75.0% $ 792 67.6% $ 394 59.4%
Advanced Leadframe.......... 53 9.2 157 16.8 220 18.8 142 21.4
Laminate.................... 3 0.5 15 1.6 90 7.7 81 12.3
Testing and Other 30 5.2 61 6.6 69 5.9 46 6.9
---- ----- ---- ----- ------ ----- ---- -----
Total................... $ 573 100.0% $ 932 100.0% $ 1,171 100.0% $ 663 100.0%
==== ===== ==== ===== ====== ===== ==== =====
</TABLE>

Wafer Fabrication

The Company is scheduled to begin offering wafer fabrication services
through AICL's new deep submicron CMOS foundry in the first half of 1998. The
Company expects the foundry to produce up to 25,000 8" wafers per month by the
end of 1998. Through a strategic relationship with TI, the Company and AICL are
currently qualifying .25 micron CMOS process technology, and AICL is negotiating
with TI to obtain the technology necessary to migrate to .18 micron CMOS process
technology during 1998. The Company's right to the supply of wafers from the
foundry is subject to a preexisting agreement between AICL and TI. TI has agreed
to purchase at least 40% of the capacity of the foundry and under certain
circumstances has the right to purchase 70% of the capacity of the foundry. See
"Risk Factors -- Risks Associated with New Wafer Fabrication Business" and
" -- Intellectual Property."

This foundry's capability is targeted to meet the needs of customers for
DSPs, ASICs and other logic devices. As technological capability and the needs
for CMOS designs in this area change, the Company anticipates the need to add
embedded memory and special analog functionality to its core CMOS technology.
The Company plans to continue to focus its semiconductor technology development
efforts to serve the needs of the high performance digital logic market.

With the addition of the wafer fabrication capability, the Company will be
able to offer fully integrated turnkey semiconductor manufacturing services to
its customers. This complete turnkey solution will enable the Company to work
with its customers' IC designers to optimize the integration of IC design with
wafer fabrication, package design, and packaging and test processes. The Company
believes this integration will enable customers to improve the cost and
performance of their ICs and achieve faster time to market in terms of both new
product introductions and production lead times.

46
<PAGE> 48

CUSTOMERS

The Company currently has more than 150 customers, including many of the
largest semiconductor companies in the world. Set forth below is a list of the
Company's top 50 customers in 1997:

<TABLE>
<S> <C> <C>
Actel Corporation IC Works Inc. Plessey Semiconductors
Altera Corporation Integrated Circuit Systems, Inc. Philips Electronics N.V.
Adaptec, Inc. Integrated Device Technology, Inc. Rockwell Corp.
Advanced Micro Devices, Inc. Intel Corporation S3 Incorporated
Alcatel Mietec Lattice Semiconductor Corporation SGS-THOMSON
American Megatrends, Inc. Level One Communications, Inc. Microelectronics N.V.
Analog Devices, Inc. LSI Logic Corporation Siemens AG
Atmel Corporation Lucent Technologies Inc. Siliconix Incorporated
Robert Bosch GmbH Macronix International Co., Ltd. SMC Corporation
Chip & Technologies, Inc. Matra Harris Semiconductors Silicon Storage
Cirrus Logic, Inc. Maxim Integrated Circuits Technology, Inc.
Cypress Semiconductor Corp. Microchip Technology Inc. Symbios Logic
Dallas Semiconductor Microlinear TEMIC Semiconductors
Delco Electronics Corporation Motorola, Inc. Texas Instruments
Digital Equipment Corp. National Semiconductor Incorporated
Harris Corporation Corporation VLSI Technology, Inc.
Hewlett-Packard Company NeoMagic Corporation VTC Inc.
International Business Machines Waferscale Integration, Inc.
Corporation Xilinx, Inc.
</TABLE>

The Company's five largest customers collectively accounted for approximately
22.5%, 31.0%, and 28.3% of the Company's total revenues in 1995, 1996, and the
first six months of 1997, respectively. The Company anticipates that this
customer concentration will continue at least for the foreseeable future. See
"Risk Factors -- Customer Concentration; Absence of Backlog."

MARKETING AND SALES

The Company sells to and supports its customers through an international
network of offices located in close proximity to its largest customers and
concentration of customers, including offices in the United States (Santa Clara,
California; Dallas, Texas; Austin, Texas; Chandler, Arizona; West Chester,
Pennsylvania), France, Singapore, Taiwan, and the Philippines. A substantial
majority of the Company's sales have historically been derived from U.S.-based
customers. See Note 14 of Notes to the Consolidated Financial Statements. The
Company assigns each of its customers a sales and customer support team
consisting of an account manager, a technical program manager, and one or more
customer support representatives. The largest multinational customers are
typically supported from multiple offices. The Company's worldwide force of
account managers, customer service representatives and technical product
managers exceeds 200 personnel. In addition, an extended staff of product
management, process and reliability engineering, marketing and advertising,
information systems, and factory personnel supports the direct account teams.
Together, these direct and extended teams deliver an array of services to the
Company's customers including providing information and expert advice on
packaging solutions and trends, managing the start-up of specific packaging and
test programs, providing a continuous flow of information to the customers
regarding products and programs in process, and researching and helping to
resolve technical and logistical issues.

47
<PAGE> 49

FACILITIES AND MANUFACTURING

Facilities

The Company provides packaging and test services through its factories in
the Philippines as well as its test facility in the U.S. A new packaging factory
is currently under construction at the Company's Chandler, Arizona site with
expected start-up in the second half of 1998. In addition, the Company provides
packaging and test services through AICL's four factories in Korea, pursuant to
the Supply Agreement with AICL. In 1996 and the first six months of 1997, AICL
provided packaging and test services which accounted for approximately 72% and
68%, respectively, of the Company's revenues. In addition to providing
world-class manufacturing services, these factories provide purchasing,
engineering, and customer service support. In the first half of 1998, the
Company is scheduled to begin offering wafer fabrication services through AICL's
new state-of-the-art .25 micron wafer foundry in Korea pursuant to the Supply
Agreement. The size, location, and manufacturing services provided by each of
the Company's and AICL's primary facilities is set forth in the table below. See
"Risk Factors -- Dependence on Relationship With AICL; Potential Conflicts of
Interest," "-- Expansion of Manufacturing Capacity; Profitability Affected by
Capacity Utilization Rates," "-- Risks Associated with New Wafer Fabrication
Business" and "-- Inability to Obtain Packaging and Test Equipment in a Timely
Fashion."

<TABLE>
<CAPTION>
APPROXIMATE
PLANT SIZE
FACILITY LOCATION (SQUARE FEET) MANUFACTURING SERVICES
- ------------------ ---------------------------------- ------------- ------------------------------------
<S> <C> <C> <C>
Company Facilities
P1 Muntilupa, Philippines 579,000 Packaging and test services;
packaging and process development
P2 Muntilupa, Philippines 115,000 Packaging services
P3 Province of Laguna, Philippines 249,000 Packaging and test services
AATS Santa Clara, California 3,000 Final testing services; test program
development; central shipping and
logistics
A1 (1998) Chandler, Arizona 106,000 Packaging services for laminate
products; package and process
development

AICL Facilities
K1 Seoul, Korea 646,000 Packaging services, package and
process development
K2 Buchon, Korea 264,000 Packaging services
K3 Bupyung, Korea 404,000 Packaging and test services
K4 Kwangju, Korea 597,000 Packaging services

Wafer Foundry Buchon, Korea 480,000 Wafer fabrication services
</TABLE>

The Company's operational headquarters is located in Chandler, Arizona
while its administrative headquarters is located in West Chester, Pennsylvania.
In addition to an executive staff, the Chandler, Arizona campus houses sales and
customer service for the southwest region, product management, a technical
design center, planning, marketing and research and development. The West
Chester location houses finance and accounting, legal, personnel administration,
information systems, and serves as a satellite sales office for the Company's
eastern sales region.

Raw Materials and Equipment

The Company's packaging operations depend upon obtaining adequate supplies
of raw materials on a timely basis. The principal raw materials used in the
Company's packaging process are leadframes or laminate substrates, along with
gold wire and molding compound. The Company purchases raw materials based on the
stated demand requirements of its customers and its customers are generally
responsible for any unused materials that result from an overstatement of
demand. The Company works closely with

48
<PAGE> 50

its primary raw material suppliers to insure the availability and timeliness of
raw material supplies. In addition, the Company negotiates worldwide pricing
agreements with its major suppliers to take advantage of the scale of its
operations. The Company is not dependent on any one supplier for a substantial
portion of its raw material requirements.

The Company's packaging operations and expansion plans also depend on
obtaining adequate supplies of manufacturing equipment on a timely basis. To
that end, the Company works closely with its major equipment suppliers to insure
that equipment deliveries are on time and the equipment meets the Company's
stringent performance specifications. In addition, an affiliate of AICL
manufactures semiconductor packaging equipment exclusively for the Company and
AICL at locations in close proximity to the Company's and AICL's packaging
facilities in the Philippines and Korea, respectively. See "Risk
Factors -- Dependence on Raw Materials Suppliers and Subcontractors."

Total Quality Management

The Company believes that total quality management is a vital component of
its manufacturing strategy. To that end, the Company has established a
comprehensive Quality Operating System designed to promote continuous
improvement and maximize manufacturing yields at high volume production while
maintaining the highest quality standards. Each of the Company's and AICL's
factories is ISO9002 and QS-9000 certified.

COMPETITION

The independent semiconductor packaging and test industry is very
competitive, being comprised of approximately 50 companies, with about 15 of
those companies having sales of $100 million per year or more. The Company faces
substantial competition from established packaging companies primarily located
in Asia, such as Advanced Semiconductor Engineering, Inc. (Taiwan), ASE Test
Limited (Taiwan and Malaysia), ASAT Ltd. (Hong Kong), Hana Microelectronics
Public Co. Ltd. (Hong Kong and Thailand), Astra International (Indonesia),
Carsem (Malaysia), Hyundai Corporation (Korea), Siliconware Precision Industries
Co., Ltd. (Taiwan), and Shinko Electric Industries Co., Ltd. (Japan). Each of
these companies has significant manufacturing capacity, financial resources,
research and development operations, marketing and other capabilities, and have
been operating for some time. Such companies have also established relationships
with many large semiconductor companies which are current customers of the
Company. The principal elements of competition in the independent semiconductor
packaging market include time to market, breadth of package offering, technical
competence, design services, quality, production yields, customer service, and
price. The Company believes it generally competes favorably with respect to
these factors. On a larger scale, the Company also competes with the internal
manufacturing capabilities of many of its largest customers.

The independent wafer fabrication business is also highly competitive. The
Company expects its wafer fabrication services to compete primarily with
independent wafer foundries such as Chartered Semiconductor Manufacturing, Ltd.,
Taiwan Semiconductor Manufacturing Company, Ltd. and United Microelectic
Corporation, as well as with device manufacturers such as LG Semicon Co., Ltd.,
Hitachi, Ltd., Toshiba Corp. and Winbond Electronics Corporation, who provide
foundry services for other semiconductor companies. Each of these companies has
significant manufacturing capacity, financial resources, research and
development operations, marketing and other capabilities and have been operating
for some time. Many of these companies have also established relationships with
many large semiconductor companies which are current or potential customers of
the Company. The principal elements of competition in the wafer foundry market
include technology, delivery cycle times, price, product performance, quality,
production yield, responsiveness and flexibility, reliability and the ability to
design and incorporate product improvements. See "Risk Factors -- Competition."

49
<PAGE> 51

RESEARCH AND DEVELOPMENT

The Company's research and development efforts are focused on developing
new package designs and process capabilities, and on improving the efficiency
and capabilities of its existing production processes and materials. The Company
believes that technology development is one of the key success factors in the
packaging market and believes that it has a distinct advantage in this area. In
addition to its internal development work, and its co-development work with
AICL, the Company also works closely with its packaging equipment and raw
material suppliers in developing advanced processing capabilities and materials
for use in the Company's production process. Currently, the Company is focusing
on development programs that extend the capability and applicability of the BGA
packaging format. These include high performance BGAs for microprocessors and
other high-end devices, and a chip size package for memory. In addition, the
Company is aggressively developing a flip-chip die attach and connect process
for its laminate packages that has the potential to reduce packaging size and
cost and improve package performance significantly. The flip-chip packaging
process involves attaching the die I/O terminals directly to the lead circuits
on the substrate without the use of gold wires. In addition to providing a
smaller package size, this process is expected to result in significant
improvements in packaging yields by eliminating the delicate wire bonds from the
package.

As of June 30, 1997, the Company employed approximately 138 persons in
research and development activities. In addition, other management and
operational personnel are involved in research and development activities. In
1994, 1995 and 1996 and the first six months of 1997, the Company's research and
development expenses were approximately $3.1 million, $8.7 million, $10.9
million and $3.5 million, respectively. The Company expects to continue to
invest significant resources in research and development.

INTELLECTUAL PROPERTY

The Company currently holds 24 U.S. patents, five of which are jointly held
with AICL, related to various IC packaging technologies, in addition to other
pending patents. These patents will expire at various dates from 2012 through
2016. With respect to development work undertaken jointly with AICL, the Company
and AICL share intellectual property rights under the terms of the Supply
Agreement between the Company and AICL. Such Supply Agreement also provides for
the cross-licensing of intellectual property rights between the Company and
AICL. In addition, the Company enters into agreements with other developers of
packaging technology to license or otherwise obtain certain process or packaging
technologies.

50
<PAGE> 52

condition and results of operations. In addition, the agreement between AICL and
TI pursuant to which AICL received the technology to produce wafers does not
grant any license to AICL, and explicitly provides that TI reserves the right to
bring a patent infringement suit against AICL if TI is then generally bringing
similar suits against other wafer manufacturers. As a result, the Company could
similarly be subject to patent litigation by TI in connection with its sale of
wafers produced by AICL. Any such litigation could materially and adversely
affect AICL's ability to continue to manufacture wafers and AICL's and the
Company's business, financial condition and results of operations.

ENVIRONMENTAL MATTERS

Federal, state and local regulations in the United States, as well as
environmental regulations in Korea and the Phillippines, impose various controls
on the storage, handling, discharge and disposal of chemicals used in the
Company's and AICL's manufacturing processes and on the facilities occupied by
the Company and AICL. The Company believes that its activities, as well as those
of AICL, conform to present environmental and land use regulations applicable to
their respective operations and current facilities. Increasing public attention
has, however, been focused on the environmental impact of semiconductor
manufacturing operations and the risk to neighbors of chemical releases from
such operations. There can be no assurance that applicable land use and
environmental regulations will not in the future impose the need for additional
capital equipment or other process requirements upon the Company or AICL or
restrict the Company's or AICL's ability to expand their respective operations.
The adoption of new ordinances or similar measures or any failure by the Company
or AICL to comply with applicable environment and land use regulations or to
restrict the discharge of hazardous substances could subject the Company or AICL
to future liability or cause their respective manufacturing operations to be
curtailed or suspended.

EMPLOYEES

As of June 30, 1997, the Company had approximately 8,180 full-time
employees, 5,642 of whom were engaged in manufacturing, 2,043 in manufacturing
support, 138 in research and development, 214 in marketing and sales, and 143 in
finance, business management, and administration. The Company's employees are
not represented by any collective bargaining agreement, and the Company has
never experienced a work stoppage. The Company believes that its relations with
its employees are good. See "Risk Factors -- Dependence on Key Personnel and
Availability of Skilled Workforce."

51
<PAGE> 53

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The executive officers and directors of the Company and their ages as of
September 30, 1997 are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------- --- ---------------------------------------------------
<S> <C> <C>
James J. Kim....................... 61 Chief Executive Officer and Chairman
John N. Boruch..................... 55 President and Director
Frank J. Marcucci.................. 62 Chief Financial Officer
Eric R. Larson..................... 42 Vice President
Michael D. O'Brien................. 65 Vice President
Louis J. Siana(1).................. 65 Director
</TABLE>

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

(1) Member of Compensation Committee.

The Company is currently identifying additional nonemployee directors and
intends to have two additional directors join the Board of Directors prior to
the Offerings.

James J. Kim. James Kim has served as the Company's Chief Executive Officer
since September 1997. Mr. Kim founded AEI in 1968 and has served as its Chairman
since 1970. He has also served as the Chairman of the Anam group of companies
and a director of AICL since 1992. Mr. Kim is a director of CFM Technologies,
Inc. Mr. Kim earned B.S. and M.A. degrees in Economics from the University of
Pennsylvania. Mr. Kim is Chairman and Chief Executive Officer of The Electronics
Boutique, Inc., an electronics retail chain, and Forte Systems, Inc., a computer
software company.

John N. Boruch. John Boruch has served as President and a director of the
Company since September 1997. Mr. Boruch has served as President of AEI since
February 1992. From 1991 to 1992 he served as AEI Corporate Vice President in
charge of Sales. Mr. Boruch earned a B.A. in Economics from Cornell University.
Mr. Boruch joined the Company in 1984.

Frank J. Marcucci. Frank Marcucci has served as the Chief Financial Officer
of the Company since September 1997. Mr. Marcucci has served as the Chief
Financial Officer of AEI since joining AEI in 1980. Mr. Marcucci earned a B.S.
in Business Administration from Duquesne University and an MBA from the
University of Pittsburgh. Mr. Marcucci is a Certified Public Accountant.

Eric R. Larson. Eric Larson has served as Vice President of the Wafer
Fabrication business of the Company since September 1997. Mr. Larson has served
as President of Amkor/Anam Semiconductor, a division of AEI, since December
1996. From 1979 to 1996 he worked for the Hewlett-Packard Company ("HP") in
various management capacities, most recently as Worldwide Marketing Manager for
disk products. In addition, Mr. Larson was the worldwide Sales and Marketing of
the IC Business Division of HP from July 1985 to May 1993. Mr. Larson earned a
B.A. in Political Science from Colorado State University and an MBA from the
University of Denver.

Michael D. O'Brien. Michael O'Brien has served as the Vice President of
Packaging and Testing Operations of the Company since September 1997. Mr.
O'Brien has served as Corporate Vice President of AEI since 1990. Mr. O'Brien
earned a B.S. from Texas A&M University. Mr. O'Brien joined the Company in 1988.

Louis J. Siana. Louis Siana has served as a director of the Company since
September 1997. Mr. Siana is a partner in Siana, Carr & O'Connor, CPA, an
accounting firm. Until June, 1997, Siana, Carr & O'Connor served as the
accountants to AEI.

52
<PAGE> 54

DIRECTOR COMPENSATION

Directors who are also employees or officers of the Company do not receive
compensation for their services as directors. Non-employee directors are
eligible to receive an annual retainer of $15,000 plus per meeting fees of
$1,000 per board meeting and $1,000 per committee meeting attended. Directors
are reimbursed for travel and related expenses incurred by them in attending
board and committee meetings.

1997 Director Option Plan. The Company's 1997 Director Option Plan (the
"Director Plan") was adopted by the Board of Directors in October 1997 and
approved by the Company's stockholders in October 1997. A total of
shares of Common Stock have been reserved for issuance under the
Director Plan. The option grants under the Director Plan are automatic and
non-discretionary, and the exercise price of the options is 100% of the fair
market value of the Common Stock on the grant date. The Director Plan provides
for an initial grant of options to purchase 10,000 shares of Common Stock to
each new nonemployee director of the Company (an "Outside Director") upon the
later of the effective date of the Director Plan or the date which such
individual first becomes an Outside Director. In addition, each Outside Director
will automatically be granted subsequent options to purchase 3,000 shares of
Common Stock on each date on which such Outside Director is re-elected by the
stockholders of the Company, provided that as of such date such Outside Director
has served on the Board of Directors for at least six months. The term of each
option is ten years. Each option granted to an Outside Director vests as to 25%
of the optioned stock one year after the date of grant, and as to an additional
25% of the optioned stock on each anniversary of the date of grant, so that 100%
of the optioned stock shall be exercisable four years after the date of grant.
In the event of the sale of all or substantially all the Company's assets or the
merger of the company with or into another corporation, all outstanding options
under the Director Plan may either be assumed or an equivalent option may be
substituted by the surviving entity. Following such assumption or substitution,
if the director is terminated other than upon a voluntary resignation, such
options will vest and become exercisable in full. If no assumption or
substitution occurs, each such option will vest and become exercisable in full.
The Director Plan will terminate in September 2007 unless sooner terminated by
the Board of Directors.

BOARD COMMITTEES

The Board of Directors will have a Compensation Committee and an Audit
Committee. The Company is currently identifying additional nonemployee directors
and intends to have two additional directors join the Board of Directors prior
to the Offerings. The Compensation Committee will be composed of at least two
nonemployee directors. The functions of the Compensation Committee are to review
and approve annual salaries, bonuses, and grants of stock options pursuant to
the Company's 1997 Stock Plan and to review and approve the terms and conditions
of all employee benefit plans or changes thereto. The Audit Committee will be
composed of at least two nonemployee directors. The functions of the Audit
Committee will be to recommend annually to the Board of Directors the
appointment of the independent auditors of the Company, discuss and review in
advance the scope and the fees of the annual audit and review the results
thereof with the independent auditors, review and approve nonaudit services of
the independent auditors, review compliance with existing auditors, review and
approve non-audit services of the independent auditors, review compliance with
existing major accounting and financial reporting policies of the Company,
review the adequacy of the financial organization of the Company, and review
management's procedures and policies relating to the adequacy of the Company's
internal accounting controls and compliance with applicable laws relating to
accounting practices.

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<PAGE> 55

EXECUTIVE COMPENSATION

Summary Compensation. The following table sets forth compensation earned
during the fiscal year ended December 31, 1996, by the Company's Chief Executive
Officer and the three other most highly compensated executive officers whose
total salary and bonus during such year exceeded $100,000 (collectively, the
"Named Executive Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------- ALL OTHER
NAME AND PRINCIPAL POSITIONS SALARY BONUS COMPENSATION
- ------------------------------------------------------ -------- -------- ------------
<S> <C> <C> <C>
James J. Kim, Chief Executive Officer and
Chairman(1)......................................... $500,000 $ -- $101,716
John N. Boruch, President............................. 400,000 375,000 --
Frank J. Marcucci, Chief Financial Officer............ 216,731 100,000 --
Michael D. O'Brien, Vice President.................... 198,460 100,000 --
</TABLE>

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

(1) All other compensation for Mr. Kim represents compensation to Mr. Kim in the
form of interest free loans.

STOCK PLANS

1997 Stock Plan. The Company's 1997 Stock Plan (the "1997 Plan") provides
for the grant to employees of incentive stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986 (the "Code"), and for the grant
to employees, directors and consultants of nonstatutory stock options and stock
purchase rights. The 1997 Plan was adopted by the Board of Directors in October
1997 and approved by the Company's stockholders in October 1997. Unless
terminated sooner, the 1997 Plan will terminate automatically in October 2007. A
total of shares of Common Stock have been reserved for issuance under
the 1997 Plan. The maximum aggregate number of shares which may be optioned and
sold under the 1997 Plan is , plus an annual increase to be added on each
anniversary date of the adoption of the 1997 Plan equal to the lesser of (i) the
number of shares of Common Stock needed to restore the maximum aggregate number
of shares of Common Stock which may be optioned and sold under the 1997 to
, or (ii) a lesser amount determined by the board of directors.

The 1997 Plan may be administered by a committee appointed by the board of
directors (the "Committee"), which Committee shall, in the case of options
intended to qualify as "performance-based compensation" within the meaning of
Section 162(m) of the Code, consist of two or more "outside directors" within
the meaning of Section 162(m) of the Code. The Committee has the power to
determine the terms of options granted, including the exercise price, to reduce
the exercise price of any option to the then current fair market price if the
fair market value of the Common Stock covered by such option shall have declined
since the date the option was granted, number of shares subject to the option,
and the exercisability thereof, the form of consideration payable upon such
exercise. In addition, the board of directors has the authority to amend,
suspend or terminate the 1997 Plan, provided that no such action may affect any
share of Common Stock previously issued and sold or any option previously
granted under the 1997 Plan.

Unless determined otherwise by the administrators, options and stock
purchase rights granted under the 1997 Plan are not transferable by the
optionee, and each option and stock purchase right is generally exercisable
during the lifetime of the optionee only by such optionee. Options granted under
the 1997 Plan must generally be exercised within three months following
termination of an optionee's status as an employee, director or consultant of
the Company, within twelve months after an optionee's termination by disability,
and within twelve months after an optionee's termination by death, but in no
event later than the expiration of the option. In the case of stock purchase
rights, unless the administrator determines otherwise, a restricted stock
purchase agreement shall grant the Company a repurchase option exercisable upon
the voluntary or involuntary termination of the purchaser's employment with the
Company for any reason (including death or disability). The purchase price for
shares repurchased

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<PAGE> 56

pursuant to a restricted stock purchase agreement shall be the original price
paid by the purchaser and may be paid by cancellation of any indebtedness of the
purchaser to the Company. The repurchase option shall lapse at a rate determined
by the administrator. The exercise price of all incentive stock options granted
under the 1997 Plan must be at least equal to the fair market value of the
shares on the date of grant. The exercise price of nonstatutory stock options
granted under the 1997 Plan is determined by the Committee, but with respect to
nonstatutory stock options intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the exercise
price must be at least equal to the fair market value of the Common Stock on the
date of grant. With respect to any employee who owns stock possessing more than
ten percent of the voting power of all classes of the Company's, or any parent
or subsidiary of the Company's outstanding capital stock, the exercise price of
any incentive stock option granted to such person must equal at least 110% of
the fair market value of the Common Stock on the date of grant and the term of
such incentive stock option must not exceed five years. The term of all other
options granted under the 1997 Plan may not exceed ten years.

The 1997 Plan provides that in the event of a merger of the Company with or
into another corporation, or a sale of substantially all of the Company's
assets, each outstanding option and stock purchase right will be assumed or
substituted for by the successor corporation. In the event the successor
corporation refuses to assume or substitute for the option or stock purchase
right, the optionee shall have the right to exercise all of the optioned stock,
including shares as to which it would not otherwise be exercisable.

401(K) PLAN

The Company participates in a tax-qualified employee savings and retirement
plan (the "401(k) Plan") which covers certain of the Company's full-time
employees who are at least 21 years of age. Pursuant to the 401(k) Plan,
employees may elect to reduce their current compensation by up to 13% of
compensation or the statutorily prescribed annual limit, whichever is lower, and
have the amount of such reduction contributed to the 401(k) Plan. After an
employee completes one year of service and has attained age 21, he or she will
become eligible for the Company matching contributions effective as of the
quarterly entry date after meeting these service and age requirements. The
matching contribution amount is a discretionary amount as determined from time
to time by the Company. The 401(k) Plan is intended to qualify under Section 401
of the Internal Revenue Code of 1986, as amended, so that contributions by
employees or by the Company to the 401(k) Plan, and income earned on plan
contributions, are not taxable to employees until withdrawn from the 401(k)
Plan, and so that contributions by the Company, if any, will be deductible by
the Company when made. The trustee under the 401(k) Plan, at the direction of
each participant, invests the assets of the 401(k) Plan in any of a number of
designated investment options.

PHILIPPINE PENSION PLANS

The Company adopted a retirement plan for its eligible Philippine employees
and those eligible employees of designated affiliated companies and subsidiaries
of the Company, the Amkor/Anam Pilipinas, Incorporated Employees' Retirement
Benefit Plan (the "Plan"), originally effective January 1, 1988, and most
recently amended on January 1, 1997. Eligible employees are employees with
regular and permanent status that have been employed continuously for one (1)
year by a participating company. Currently, the companies participating in the
Plan are AMI, AAAP, and Anam Amkor Precision Machine Company (Phils.),
Incorporated. At normal retirement age (age 60), death, or upon total and
permanent disability, a participant will receive a lump sum benefit payment
based on a percentage of his or her final base monthly salary, as determined by
his or her years of credited service. A participant who retires at age 50 with
at least ten (10) years of service will receive a reduced payment based on the
same formula. Company contributions to the Plan are held in trust. The Plan is
presently underfunded by $5,000,000. See Note 9 of Consolidated Financial
Statements.

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<PAGE> 57

LIMITATIONS ON LIABILITY AND INDEMNIFICATION MATTERS

The Company has adopted provisions in its Certificate of Incorporation that
eliminate to the fullest extent permissible under Delaware law the liability of
its directors to the Company for monetary damages. Such limitation of liability
does not affect the availability of equitable remedies such as injunctive relief
or rescission. The Bylaws provide that the Company shall indemnify its directors
and officers, and may indemnify its other employees and agents, to the fullest
extent permitted by Delaware law, including in circumstances in which
indemnification is otherwise discretionary under Delaware law. The Company has
entered into indemnification agreements with its officers and directors
containing provisions which may require the Company, among other things, to
indemnify the officers and directors against certain liabilities that may arise
by reason of their status or service as directors or officers (other than
liabilities arising from willful misconduct of a culpable nature), and to
advance their expenses incurred as a result of any proceeding against them as to
which they could be indemnified.

There is no currently pending litigation or proceeding involving a
director, officer, employee or other agent of the Company in which
indemnification would be required or permitted.

CERTAIN TRANSACTIONS

AICL was founded in 1956 by Mr. Hyang-Soo Kim, who currently serves as the
honorary Chairman and a Representative Director of AICL. AICL is a member of the
Anam Group of companies (the "Anam Group"), consisting principally of companies
in Korea in the electronics industries. The management of AICL and the other
companies in the Anam Group are influenced to a significant degree by the family
of Hyang-Soo Kim, which, together with the Company, collectively owned
approximately 21% of the outstanding common stock of AICL as of June 30, 1997.
James Kim, the founder of the Company and currently its Chairman and Chief
Executive Officer, is the eldest son of Hyang-Soo Kim. Since January 1992, in
addition to his other responsibilities, James Kim has been serving as acting
Chairman of the Anam Group and a director of AICL. Mr. In-Kil Hwang, the
President and a Representative Director of AICL, is the brother-in-law of James
Kim and a director of AICL. After the Offerings, James Kim and the Kim Family
Trusts will own approximately % of the Company's outstanding Common Stock
and James Kim and members of his family will continue to exercise significant
control over the Company. The Company and AICL have had a long-standing
relationship. In 1996 and the six months ended June 30, 1997, approximately 72%
and 68%, respectively, of the Company's revenues were derived from sales of
services performed for the Company by AICL. In addition, substantially all of
the revenues of AICL in 1996 and the six months ended June 30, 1997 were derived
from services sold by the Company. The Company expects that the businesses of
the Company and AICL will continue to remain highly interdependent by virtue of
their supply relationship, family ties between their respective shareholders and
management, financial relationships, coordination of product and operation
plans, joint research and development activities and shared intellectual
property rights. See "Relationship with Anam Industrial Co., Ltd."

The Company was formed in September 1997 as a holding company for the Amkor
Companies. In connection with the Reorganization, Mr. James Kim, Chairman and
Chief Executive Officer of the Company, and the Kim Family Trusts will exchange
their interests in each of the Amkor Companies in return for shares of the
Company's Common Stock. Following the Offerings, Mr. Kim and the Kim Family
Trusts are expected to own shares of the Company's Common Stock
representing approximately % of the outstanding shares of Common Stock. See
"Reorganization."

The Company proposes to enter into an indemnification agreement with each
of the directors of the Company pursuant to which the Company will indemnify
such directors for all matters arising out of their membership on the Company's
Board of Directors to the maximum extent permissible under Delaware law.

In connection with the Reorganization, the Company proposes to enter into a
tax indemnification agreement with AEI, Mr. Kim and the Kim Family Trusts
pursuant to which the Company and AEI will be

56
<PAGE> 58

indemnified by such stockholders with respect to their proportionate share of
any U.S. federal or state corporate income taxes attributable to the failure of
AEI to qualify as an S Corporation for any period or in any jurisdiction for
which S Corporation status was claimed through the Termination Date. The
indemnification agreement will also provide that the Company and AEI will
indemnify Mr. Kim and such stockholders if such stockholders are required to pay
additional taxes or other amounts attributable to taxable years on or before the
Termination Date as to which AEI filed or files tax returns claiming status as
an S Corporation. AEI has made various distributions to Mr. Kim and the Kim
Family Trusts which have enabled them to pay their income taxes on their
allocable portions of the income of AEI. Such distributions totaled
approximately $13.0 million and $5.0 million in 1996 and the first six months of
1997, respectively. The Company expects to make additional distributions to such
stockholders prior to the consummation of the Reorganization, which represents
AEI's cumulative net income in all periods prior to the Termination Date less
the aggregate amount of distributions previously made to such stockholders. This
final distribution is intended to provide such stockholders with the balance of
AEI's net income for which they have already recognized income taxes. See
"Reorganization and Notes 1 and 10 of Notes to Consolidated Financial
Statements. Through June 30, 1997, the amount of such undistributed net earnings
was $11.8 million.

Mr. Kim has executed certain guarantees to lenders in connection with
certain debt instruments of the Amkor Companies that remain outstanding. The
total contingent liability under such guarantees equals approximately $88.0
million. See Note 11 of Notes to Consolidated Financial Statements.

AEI and Mr. Kim currently are parties to a loan agreement under which Mr.
Kim may borrow funds from AEI, subject to AEI's consent. Mr. Kim has recognized
compensation in 1996 in the amount of $101,716 of imputed interest for loans
under this agreement. Since the beginning of the 1996 fiscal year, the maximum
amount outstanding under such agreement has been $6.5 million. Mr. Kim intends
to use the proceeds from the sales of shares by him to repay amounts outstanding
under the agreement. See Note 11 of Notes to Consolidated Financial Statements.

In connection with the Reorganization, Mr. Kim sold his interest in Amkor
Anam Test Services, Inc. representing half of its outstanding capital stock to
AEI for $910,350. Amkor Anam Test Services, Inc. has been merged into AEI.

AK Investments, Inc. a company owned by Mr. James Kim and the Kim Family
Trusts, purchased certain securities held by AEI for $49.8 million, which
consideration was paid by assuming from AEI certain non-current payables from
AUSA. See Note 11 of Notes to Consolidated Financial Statements.

In 1996, the Kim Family Trusts borrowed $5.3 million at market interest
rates from AEI to purchase the real estate and develop the facilities that
comprise the Company's Chandler, Arizona plant and offices. In 1997, the Kim
Family Trusts, after making improvements, sold the real estate and facilities
back to AEI for $5.7 million which was used to repay the original loan from AEI.
See Note 11 of Notes to Consolidated Financial Statements.

Members of the Kim family own all the outstanding shares of Forte Systems,
Inc. ("Forte"). AEI and Forte currently are parties to a loan agreement under
which Forte may borrow funds at market interest rates from AEI, subject to AEI's
consent. Since the beginning of the 1996 fiscal year, the maximum amount
outstanding under such agreement has been $3.7 million. See Note 11 of Notes to
Consolidated Financial Statements.

Members of the Kim family own all the outstanding shares of The Electronics
Boutique, Inc. (the "Electronics Boutique"). AEI and the Electronics Boutique
currently are parties to a loan agreement under which the Electronics Boutique
may borrow funds at market rates from AEI, subject to AEI's consent. Since the
beginning of the 1996 fiscal year, the maximum amount outstanding under such
agreement in the ordinary course of business of the Electronics Boutique's
business has been $3 million. In addition, in 1996, the Electronics Boutique
borrowed $50 million from AEI in connection with a

57
<PAGE> 59

contemplated acquisition. However, this acquisition was abandoned by the
Electronics Boutique and the $50 million was repaid to AEI within eleven working
days of the date it was borrowed. Finally, AEI has guaranteed certain vendor
obligations and a line of credit of the Electronics Boutique, which total
approximately $11 million and $15 million, respectively. See Note 11 of Notes to
Consolidated Financial Statements.

The Company leases office space located in West Chester, Pennsylvania from
the Kim Family Trusts. The monthly rent pursuant to such lease is $69,000. The
Company sub-leases a portion of this office space to Forte for which the monthly
rent is $43,000. See Note 11 of Notes to Consolidated Financial Statements.

Louis J. Siana is a partner in the accounting firm of Siana Carr &
O'Connor, LLP which, prior to the appointment of Arthur Andersen LLP, served as
the independent auditors for certain of the Company's subsidiaries. These
subsidiaries collectively paid Siana Carr & O'Connor, LLP $225,000 for such
service in fiscal 1996 and 1997.

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<PAGE> 60

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of September 30, 1997, and as
adjusted to reflect the sale of the shares of Common Stock offered
hereby, by (i) each person or entity who is known by the Company to own
beneficially 5% or more of the Company's outstanding Common Stock; (ii) each
director of the Company; (iii) each of the Named Executive Officers; and (iv)
all directors and executive officers of the Company as a group.

<TABLE>
<CAPTION>
BENEFICIAL
OWNERSHIP
BENEFICIAL OWNERSHIP AFTER
PRIOR TO OFFERING NUMBER OF OFFERING(1)
-------------------- SHARES ----------------
NAME AND ADDRESS NUMBER PERCENT OFFERED NUMBER PERCENT
- ---------------------------------------------- ---------- ------- --------- ------ -------
<S> <C> <C> <C> <C> <C>
James J. Kim.................................. 29,750,000 35.0%
1345 Enterprise Drive
West Chester, PA 19380
David D. Kim Trust of December 31, 1987(2).... 17,620,000 20.7
1500 E. Lancaster Avenue
Paoli, PA 19301
John T. Kim Trust of December 31, 1987(2)..... 17,620,000 20.7
1500 E. Lancaster Avenue
Paoli, PA 19301
Susan Y. Kim Trust of December 31,
1987(2)(3).................................. 17,620,000 20.7
1500 E. Lancaster Avenue
Paoli, PA 19301
Louis J. Siana................................ -- --
John N. Boruch................................ -- --
Eric R. Larson................................ -- --
Frank J. Marcucci............................. -- --
Michael D. O'Brien............................
All directors and executive officers as a
group (6 persons)........................... 29,750,000 35.0%
</TABLE>

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

(1) Assumes no exercise of the Underwriters' over-allotment options. The number
and percentage of shares beneficially owned is determined in accordance with
Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the information is not necessarily indicative of beneficial
ownership for any other purpose. Under such rule, beneficial ownership
includes any share as to which the individual or entity has voting power or
investment power. Unless otherwise indicated, each person or entity has sole
voting and investment power with respect to shares shown as beneficially
owned.

(2) David D. Kim, John T. Kim and Susan Y. Kim are children of James J. Kim.

(3) Includes 8,330,000 shares held by two trusts established for the benefit of
Susan Y. Kim's children.

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<PAGE> 61

DESCRIPTION OF CAPITAL STOCK

GENERAL

Upon the closing of the Offerings, the Company will be authorized to issue
500,000,000 shares of Common Stock, $.001 par value, and 10,000,000 shares of
undesignated Preferred Stock, $.001 par value. Immediately after the closing of
the Offerings and assuming no exercise of the Underwriters' over-allotment
options, the Company estimates there will be an aggregate of shares
of Common Stock outstanding, shares of Common Stock will be issuable
upon exercise of outstanding options and no shares of Preferred Stock will be
issued and outstanding.

The following description of the Company's capital stock does not purport
to be complete and is subject to and qualified in its entirety by the
Certificate of Incorporation and the Bylaws, which are included as exhibits to
the Registration Statement of which this Prospectus forms a part, and by the
provisions of applicable Delaware law.

The Certificate of Incorporation and the Bylaws contain certain provisions
that are intended to enhance the likelihood of continuity and stability in the
composition of the Board of Directors and which may have the effect of delaying,
deferring, or preventing a future takeover or change in control of the Company
unless such takeover or change in control is approved by the Board of Directors.

COMMON STOCK

Holders of Common Stock are entitled to one vote per share on all matters
to be voted upon by the stockholders. Holders of Common Stock do not have
cumulative voting rights, and, therefore, holders of a majority of the shares
voting for the election of directors can elect all of the directors. In such
event, the holders of the remaining shares will not be able to elect any
directors. See "Risk Factors -- Benefits of the Offerings to Existing
Stockholders; Continued Control by Existing Stockholders."

Holders of the Common Stock are entitled to receive such dividends as may
be declared from time to time by the Board of Directors out of funds legally
available therefor, subject to the terms of any existing or future agreements
between the Company and its debtholders. The Company has never declared or paid
cash dividends on its capital stock, expects to retain future earnings, if any,
for use in the operation and expansion of its business, and does not anticipate
paying any cash dividends in the foreseeable future. See "Dividend Policy." In
the event of the liquidation, dissolution or winding up of the Company, the
holders of Common Stock are entitled to share ratably in all assets legally
available for distribution after payment of all debts and other liabilities and
subject to the prior rights of any holders of Preferred Stock then outstanding.

PREFERRED STOCK

The Company's Board of Directors is authorized to issue 10,000,000 shares
of Preferred Stock in one or more series and to fix the price, rights,
preferences, privileges and restrictions thereof, including dividend rights,
dividend rates, conversion rights, voting rights, terms of redemption,
redemption prices, liquidation preferences and the number of shares constituting
a series or the designation of such series, without any further vote or action
by the Company's stockholders. The issuance of Preferred Stock, while providing
desirable flexibility in connection with possible acquisitions and other
corporate purposes, could have the effect of delaying, deferring or making more
difficult a change in control of the Company and may adversely affect the market
price of, and the voting and other rights of, the holders of Common Stock. The
issuance of Preferred Stock with voting and conversion rights may adversely
affect the voting power of the holders of Common Stock, including the loss of
voting control to others. The Company has no current plans to issue any shares
of Preferred Stock.

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<PAGE> 62

EFFECT OF DELAWARE ANTITAKEOVER STATUTE

The Company is subject to Section 203 of the Delaware General Corporation
Law (the "Antitakeover Law"), which regulates corporate acquisitions. The
Antitakeover Law prevents certain Delaware corporations, including those whose
securities are listed for trading on the Nasdaq National Market System, from
engaging, under certain circumstances in a "business combination" with any
"interested stockholder" for three years following the date that such
stockholder became an interested stockholder. For purposes of the Antitakeover
Law, a "business combination" includes, among other things, a merger or
consolidation involving the Company and the interested shareholder and the sale
of more than ten percent (10%) of the Company's assets. In general, the
Antitakeover Law defines an "interested stockholder" as any entity or person
beneficially owning 15% or more the outstanding voting stock of the Company and
any entity or person affiliated with or controlling or controlled by such entity
or person. A Delaware corporation may "opt out" of the Antitakeover Law with an
express provision in its original certificate of incorporation or an express
provision in its certificate of incorporation or bylaws resulting from
amendments approved by the holders of at least a majority of the Company's
outstanding voting shares. The Company has not "opted out" of the provisions of
the Antitakeover Law. See "Risk Factors -- Antitakeover Effects of Delaware
Law."

TRANSFER AGENT

The Transfer Agent and Registrar for the Common Stock is First Chicago
Trust Company of New York Shareholder Services, 525 Washington Boulevard, Jersey
City, NJ 07310; telephone (201) 324-0014.

SHARES ELIGIBLE FOR FUTURE SALE

Prior to the Offerings, there has been no market for the Common Stock and
there is no assurance that a significant public market for the Common Stock will
develop or be sustained after the Offerings. Sales of substantial amounts of
Common Stock in the public market could adversely affect the market price of the
Common Stock and could impair the Company's future ability to raise capital
through the sale of its equity securities.

Upon the closing of the Offerings, the Company will have outstanding
shares of Common Stock based upon shares outstanding as of
, 1997. In addition to the shares of Common Stock
offered hereby ( if the Underwriters' over-allotment options are
exercised in full), as of the effective date of the Registration Statement (the
"Effective Date"), there will be shares of Common Stock outstanding
(excluding shares issuable upon the exercise of outstanding
options), all of which are "restricted" shares (the "Restricted Shares") under
the Securities Act of 1933, as amended (the "Securities Act"). Such Restricted
Shares may be sold only if registered under the Securities Act or sold in
accordance with an available exemption from such registration.

Under Rule 144, a person (or persons whose shares are aggregated in
accordance with the Rule) who has beneficially owned his or her shares for at
least one year, including persons who are affiliates of the Company, will be
entitled to sell, within any three month period a number of shares of Common
Stock that does not exceed the greater of (i) one percent of the then
outstanding number of shares of Common Stock (up to shares of Common
Stock immediately after the consummation of the Offerings) or (ii) the average
weekly trading volume of the shares during the four calendar weeks preceding
each such sale. In addition, sales under Rule 144 are also subject to certain
manner of sale provisions and notice requirements and to the availability of
current public information about the Company. After shares are held for two
years, a person who is not an affiliate of the Company is entitled to sell such
shares under Rule 144 without regard to such volume limitations, or manner of
sale, notice or public information requirements under Rule 144. Sales of shares
by affiliates will continue to be subject to such volume limitations, and manner
of sale, notice and public information requirements.

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<PAGE> 63

The Company has agreed with the Underwriters not to offer, pledge, sell,
contract to sell, or otherwise dispose of (or enter into any transaction which
is designed to, or could be expected to, result in the disposition (whether by
actual disposition or effective economic disposition due to cash settlement or
otherwise) by the Company or any affiliate of the Company or any person in
privity with the Company or any affiliate of the Company), directly or
indirectly, or announce the offering of, any other shares of Common Stock or any
securities or options convertible into, or exchangeable or exercisable for,
shares of Common Stock for a period of 180 days following the date hereof
without the prior written consent of Salomon Brothers Inc., subject to certain
limited exceptions. In addition, each of the Company's officers, directors and
stockholders has agreed with the Underwriters not to offer, sell, contract to
sell, pledge or otherwise dispose of, or file a registration statement with the
Securities and Exchange Commission in respect of, or establish or increase a put
equivalent position or liquidate or decrease a call equivalent position within
the meaning of Section 16 of the Securities Exchange Act of 1934, as amended,
(the "Exchange Act") with respect to, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for shares of Common
Stock, or publicly announce an intention to effect any such transaction, for a
period of 180 days after the date hereof without the prior written consent of
Salomon Brothers Inc, subject to certain limited exceptions. See "Underwriting."

Beginning one year from the date of the Reorganization, approximately
Restricted Shares of Common Stock subject to the lock-up agreements
will become eligible for sale in the public market pursuant to Rule 144.

The Company plans to grant options to purchase shares prior to
the Offerings. See "Management -- 1997 Stock Plan." The Company intends to file,
within days after the date of this Prospectus, a Form S-8
registration statement under the Securities Act to register shares reserved for
issuance under this stock option plan and shares issuable upon exercise of
outstanding options. Shares of Common Stock issued upon exercise of options
after the effective date of the Form S-8 will be available for sale in the
public market, subject to Rule 144 volume limitations applicable to affiliates
and lock-up agreements.

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CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
TO NON-UNITED STATES HOLDERS OF COMMON STOCK

GENERAL

The following is a general discussion of certain United States federal
income and estate tax considerations relating to the ownership and disposition
of Common Stock by a holder who is not a United States person (a "Non-U.S.
Holder"), and who acquires and owns such Common Stock as a capital asset within
the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended
(the "Code"). For this purpose, the term "Non-U.S. Holder" is defined as any
person other than (i) a citizen or resident (within the meaning of Section
7701(a)(30) of the Code) of the United States, (ii) a corporation, partnership
or other entity created or organized in the United States or under the laws of
the United States or of any state, (iii) an estate whose income is includible in
gross income for United States federal income tax purposes, regardless of its
source, or (iv) in general, a trust subject to the primary supervision of a
court within the United States and the control of a United States person as
described in Section 7701(b) of the Code. This discussion does not consider
specific facts and circumstances that may be relevant to a particular Non-U.S.
Holder's tax position, does not address all aspects of United States federal
income and estate taxes and does not deal with foreign, state, and local
consequences and United States federal gift taxes that may be relevant to such
Non-U.S. Holders in light of their personal circumstances. Further, it does not
discuss the rules applicable to Non-U.S. Holders subject to special tax
treatment under the federal income tax laws (including but not limited to,
banks, insurance companies, dealers in securities, holders of securities held as
part of a "straddle," "hedge," or "conversion transaction," and persons who
undertake a constructive sale of Common Stock. Furthermore, this discussion is
based on current provisions of the Code, existing and proposed regulations
promulgated thereunder and administrative and judicial interpretations thereof,
all of which are subject to change, possibly on a retroactive basis.
Accordingly, each prospective purchaser of Common Stock is advised to consult a
tax advisor with respect to current and possible future tax consequences of
acquiring, holding, and disposing of Common Stock.

DIVIDENDS

In general, dividends paid to a Non-U.S. Holder of Common Stock will be
subject to withholding of United States federal income tax at a 30% rate or such
lower rate as may be specified by an applicable income tax treaty, unless the
dividends are effectively connected with the conduct of a trade or business of
the Non-U.S. Holder within the United States ("United States trade or business
income"). If the dividend is United States trade or business income, the
dividend would be subject to United States federal income tax on a net income
basis at applicable graduated individual or corporate rates and would be exempt
from the 30% withholding tax described above. Any such dividends that are United
States trade or business income received by a foreign corporation may, under
certain circumstances, be subject to an additional "branch profits tax" at a 30%
rate or such lower rate as may be specified by an applicable income tax treaty.
Certain certification and disclosure requirements must be complied with in order
to be exempt from withholding under the United States trade or business income
exemption discussed above.

Under current United States Treasury regulations, dividends paid to a
stockholder at an address in a foreign country are presumed to be paid to a
resident of such country for purposes of the withholding discussed above (unless
the payor has knowledge to the contrary) and, under the current interpretation
of United States Treasury regulations, for purposes of determining the
applicability of a tax treaty rate, unless an applicable tax treaty requires
some other method for determining a stockholder's residence.

Under United States Treasury regulations that are proposed to be effective
for distributions after December 31, 1997 (the "Proposed Regulations"), to
obtain a reduced rate of withholding under a treaty, a Non-U.S. Holder would
generally be required to provide an Internal Revenue Service Form W-8 certifying
such Non-U.S. Holder's entitlement to benefits under a treaty. The Proposed
Regulations would also provide special rules to determine whether, for purposes
of determining the applicability of a tax

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treaty, dividends paid to a Non-U.S. Holder that is an entity should be treated
as paid to the entity or those holding an interest in that entity. It is not
certain whether, or in what form, the Proposed Regulations will be adopted as
final regulations.

A Non-U.S. Holder of Common Stock eligible for a reduced rate of United
States withholding tax pursuant to a tax treaty or whose dividends have
otherwise been subjected to withholding in an amount which exceeds such holder's
United States federal income tax liability, may obtain a refund or credit of any
excess amounts withheld by filing an appropriate claim for refund with the
United States Internal Revenue Service (the "Service").

GAIN ON DISPOSITION OF COMMON STOCK

A Non-U.S. Holder generally will not be subject to United States federal
income tax with respect to gain recognized on a sale or other disposition of
Common Stock unless (i) the gain is effectively connected with a trade or
business of such holder in the United States, (ii) in the case of a Non-U.S.
Holder who is a nonresident alien individual and holds the Common Stock as a
capital asset, such holder is present in the United States for 183 or more days
in the taxable year of the sale or other disposition and certain other
conditions are met, (iii) the Non-U.S. Holder is subject to tax pursuant to
provisions of United States tax law that apply to certain expatriates, or (iv)
under certain circumstances, if the Company is or has been during certain time
periods a "U.S. real property holding corporation" for United States federal
income tax purposes. The Company is not and does not anticipate becoming a "U.S.
real property holding corporation" for United States federal income tax
purposes.

FEDERAL ESTATE TAXES

Common Stock that is owned, or treated as owned, by a non-resident alien
individual (as specifically determined under residence rules for United States
federal estate tax purposes) at the time of death or that has been the subject
of certain lifetime transfers will be included in such holder's gross estate for
United States federal estate tax purposes, unless an applicable estate tax
treaty provides otherwise.

UNITED STATES INFORMATION REPORTING AND BACKUP WITHHOLDING TAX

The Company must report annually to the Service and to each Non-U.S. Holder
the amount of dividends paid to such holder and any tax withheld with respect to
such dividends. These information reporting requirements apply regardless of
whether withholding is required. Copies of the information returns reporting
such dividends and withholding may also be made available under the provisions
of an applicable treaty or agreement, to the tax authorities in the country in
which such holder resides.

United States backup withholding tax (which generally is a withholding tax
imposed at the rate of thirty-one percent (31%) on certain payments to persons
that fail to furnish certain information under the United States information
reporting requirements) generally will not apply to dividends paid on Common
Stock to a Non-U.S. Holder at an address outside the United States. Except as
provided below, Non-U.S. Holders will not be subject to backup withholding with
respect to the payment of proceeds from the disposition of Common Stock effected
by the foreign office of a broker; except that if the broker is a United States
person or a "U.S. related person," information reporting (but not backup
withholding) is required with respect to the payment, unless the broker has
documentary evidence in its files that the owner is a Non-U.S. Holder (and the
broker has no actual knowledge to the contrary) and certain other requirements
are met or the holder otherwise establishes an exemption. For this purpose, a
"U.S. related person" is (i) a "controlled foreign corporation" for United
States federal income tax purposes, or (ii) a foreign person 50% or more of
whose gross income from all sources for the three-year period ending with the
close of its taxable year preceding the collection or payment of such proceeds
(or for such part of the period that the broker has been in existence) is
derived from activities that are effectively connected with the conduct of a
United States trade or business. The payment of the proceeds of a sale of shares
of Common Stock to or through a United States office of a broker is subject to
information reporting and possible backup withholding unless the owner certifies
its non-United States status under penalties of

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<PAGE> 66

perjury or otherwise establishes an exemption. Backup withholding is not an
additional tax. Any amounts withheld under the backup withholding rules from a
payment to a Non-U.S. Holder will be allowed as a refund or a credit against
such Non-U.S. Holder's United States federal income tax liability, provided that
the required information is furnished to the Service.

The Proposed Regulations would, if adopted, alter the foregoing rules in
certain respects. Among other things, the Proposed Regulations would provide
certain presumptions under which a Non-United States Holder would be subject to
backup withholding in the absence of the required certification.

THE FOREGOING DISCUSSION IS INCLUDED FOR GENERAL INFORMATION ONLY.
ACCORDINGLY, EACH PROSPECTIVE PURCHASER IS URGED TO CONSULT WITH HIS TAX ADVISOR
WITH RESPECT TO THE UNITED STATES FEDERAL INCOME TAX AND FEDERAL ESTATE TAX
CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF COMMON STOCK, INCLUDING THE
APPLICATION AND EFFECT OF THE LAWS OF ANY STATE, LOCAL, FOREIGN, OR OTHER TAXING
JURISDICTION.

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UNDERWRITING

Subject to the terms and conditions set forth in an underwriting agreement
(the "U.S. Underwriting Agreement") among the Company, the Selling Stockholders
and each of the underwriters named below (the "U.S. Underwriters"), for whom
Salomon Brothers Inc, BancAmerica Robertson Stephens and Cowen & Company are
acting as representatives (the "U.S. Representatives"), the Company and the
Selling Stockholders have agreed to sell to each of the U.S. Underwriters and
each of the U.S. Underwriters has severally agreed to purchase from the Company
and the Selling Stockholders the aggregate number of Shares set forth opposite
its name in the table below.

<TABLE>
<CAPTION>
NUMBER OF
U.S. UNDERWRITERS SHARES
-------------------------------------------------------- ---------
<S> <C>
Salomon Brothers Inc ...................................
BancAmerica Robertson Stephens..........................
Cowen & Company.........................................
---------
Total.........................................
=========
</TABLE>

The U.S. Underwriting Agreement provides that the obligations of the U.S.
Underwriters to purchase the Shares listed above are subject to certain
conditions set forth therein. The U.S. Underwriters are committed to purchase
all of the Shares offered by this Prospectus (other than those covered by the
over-allotment options described below), if any are purchased. In the event of
default by any U.S. Underwriter, the U.S. Underwriting Agreement provides that,
in certain circumstances, the purchase commitments of the non-defaulting U.S.
Underwriters may be increased or the U.S. Underwriting Agreement may be
terminated.

The U.S. Representatives have advised the Company and the Selling
Stockholders that the U.S. Underwriters propose initially to offer such Shares
to the public at the initial public offering price set forth on the cover page
of this Prospectus, and to certain dealers at such price less a discount not in
excess of $ per share. The U.S. Underwriters may allow, and such
dealers may reallow, a discount not in excess of $ per share on sales
to certain other dealers. After the Offerings, the public offering price and
such discounts may be changed.

The Company and the Selling Stockholders also have entered into an
underwriting agreement (the "International Underwriting Agreement") with the
International Underwriters named therein, for whom Salomon Brothers
International Limited, BancAmerica Robertson Stephens and Cowen & Company are
acting as representatives (the "International Representatives" and, together
with the U.S. Representatives, the "Representatives"), providing for the
concurrent offer and sale of of the Shares outside the U.S. and
Canada.

The closing with respect to the sale of the Shares pursuant to the U.S.
Underwriting Agreement is a condition to the closing with respect to the sale of
the Shares pursuant to the International Underwriting Agreement, and the closing
with respect to the sale of Shares pursuant to the International Underwriting
Agreement is a condition to the closing with respect to the sale of the Shares
pursuant to the U.S. Underwriting Agreement. The initial public offering price
and underwriting discounts per share for the U.S. Offering and the International
Offering will be identical.

Each U.S. Underwriter has severally agreed that, as part of the
distribution of the Shares by the U.S. Underwriters, (i) it is not purchasing
any Shares for the account of anyone other than a United States or Canadian
Person, (ii) it has not offered or sold, and will not offer or sell, directly or
indirectly, any Shares or distribute any Prospectus relating to the U.S.
Offering to any person outside of the United States or Canada, or to anyone
other than a United States or Canadian Person and (iii) any dealer to whom it
may sell any Shares will represent that it is not purchasing for the account of
anyone other than a United States or Canadian Person and agree that it will not
offer or resell, directly or indirectly, any Shares outside of the United States
or Canada, or to anyone other than a United States or Canadian Person or to any
other dealer who does not so represent and agree.

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Each International Underwriter has severally agreed that, as part of the
distribution of the Shares by the International Underwriters, (i) it
is not purchasing any Shares for the account of any United States or Canadian
Person, (ii) it has not offered or sold, and will not offer or sell, directly or
indirectly, any Shares or distribute any Prospectus to any person in the United
States or Canada, or to any United States or Canadian Person and (iii) any
dealer to whom it may sell any Shares will represent that it is not purchasing
for the account of any United States or Canadian Person and agree that it will
not offer or resell, directly or indirectly, any Shares in the United States or
Canada, or to any United States or Canadian Person or to any other dealer who
does not so represent and agree.

The foregoing limitations do not apply to stabilization transactions or to
certain other transactions specified in the Agreement Between U.S. Underwriters
and International Underwriters. "United States or Canadian Persons" means any
person who is a national or resident of the United States or Canada, any
corporation, partnership or other entity created or organized in or under the
laws of the United States or Canada or of any political subdivision thereof, and
any estate or trust the income of which is subject to United States or Canadian
federal income taxation, regardless of its source (other than a foreign branch
of such entity) and includes any United States or Canadian branch of a person
other than a United States or Canadian Person.

Each U.S. Underwriter that will offer or sell shares of Common Stock in
Canada as part of the distribution has severally agreed that such offers and
sales will be made only pursuant to an exemption from the prospectus
requirements in each jurisdiction in Canada in which such offers and sales are
made.

Pursuant to the Agreement Between U.S. Underwriters and International
Underwriters, sales may be made between the U.S. Underwriters and the
International Underwriters of such number of Shares as may be mutually agreed.
The price of any Shares so sold shall be the initial public offering price set
forth on the cover page of this Prospectus, less an amount not greater than the
concession to securities dealers set forth above. To the extent that there are
sales between the International Underwriters and the U.S. Underwriters pursuant
to the Agreement Between U.S. Underwriters and International Underwriters, the
number of Shares initially available for sale by the U.S. Underwriters or by the
International Underwriters may be more or less than the amount specified on the
cover page of this Prospectus.

Each International Underwriter has severally represented and agreed that
(i) it has not offered or sold and, prior to the expiration of six months from
the closing of the International Offering, will not offer or sell any
International Securities in the United Kingdom other than to persons whose
ordinary activities involve them in acquiring, holding, managing or disposing of
investments (whether as principal or agent) for the purposes of their businesses
or otherwise in circumstances which have not resulted in and will not result in
an offer to the public within the meaning of the Public Offers of Securities
Regulations 1995; (ii) it has complied and will comply with all applicable
provisions of the Financial Services Act of 1986 with respect to anything done
by it in relation to the International Securities in, from or otherwise
involving the United Kingdom; and (iii) it has only issued or passed on and will
only issue or pass on in the United Kingdom any document received by it in
connection with the issue of the International Securities to a person who is of
a kind described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom such document may
otherwise lawfully be issued or passed on.

The Company has granted to the U.S. Underwriters and the International
Underwriters options to purchase up to an additional and
Shares, respectively, at the price to public less the underwriting discount set
forth on the cover page of this Prospectus, solely to cover over-allotments, if
any. Such options may be exercised at any time up to 30 days after the date of
this Prospectus. To the extent such options are exercised, each of the U.S.
Underwriters and the International Underwriters will become obligated, subject
to certain conditions, to purchase approximately the same percentage of such
additional shares of Common Stock as the percentage it was obligated to purchase
pursuant to the U.S. Underwriting Agreement or the International Underwriting
Agreement, as applicable.

The Company has agreed with the Underwriters not to offer, pledge, sell,
contract to sell, or otherwise dispose of (or enter into any transaction which
is designed to, or could be expected to, result

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in the disposition (whether by actual disposition or effective economic
disposition due to cash settlement or otherwise) by the Company or any affiliate
of the Company or any person in privity with the Company or any affiliate of the
Company), directly or indirectly, or announce the offering of, any other shares
of Common Stock or any securities or options convertible into, or exchangeable
or exercisable for, shares of Common Stock for a period of 180 days following
the date hereof without the prior written consent of Salomon Brothers Inc,
subject to certain limited exceptions. In addition, each of the Company's
officers, directors and stockholders has agreed with the Underwriters not to
offer, sell, contract to sell, pledge or otherwise dispose of, or file a
registration statement with the Securities and Exchange Commission in respect
of, or establish or increase a put equivalent position or liquidate or decrease
a call equivalent position within the meaning of Section 16 of the Exchange Act
with respect to any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for shares of Common Stock, or publicly announce an
intention to effect any such transaction, for a period of 180 days after the
date hereof without the prior written consent of Salomon Brothers Inc, subject
to certain limited exceptions. Salomon Brothers Inc currently does not intend to
release any securities subject to such lock-up agreements, but may, in its sole
discretion and at any time without notice, release all or any portion of the
securities subject to such lock-up agreements.

The U.S. Underwriting Agreement and the International Underwriting
Agreement provide that the Company and the Selling Stockholders will indemnify
the several U.S. Underwriters and International Underwriters against certain
liabilities under the Securities Act, or contribute to payments the U.S.
Underwriters and the International Underwriters may be required to make in
respect thereof.

Salomon Brothers Inc, an affiliate thereof, Mr. James Kim and AICL are
among the principal shareholders to a securities and investment banking firm in
Korea. In addition, certain of the Underwriters and their affiliates have been
engaged from time to time, and may in the future be engaged, to perform
investment banking and other advisory-related services to the Company and its
affiliates, including certain of the Selling Stockholders, in the ordinary
course of business. In connection with rendering such services in the past, such
Underwriters and affiliates have received customary compensation, including
reimbursement of related expenses.

In connection with the Offerings, certain Underwriters and selling group
members and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the market price of the Common Stock.
Such transactions may include stabilization transactions effected in accordance
with Rule 104 of Regulation M, pursuant to which such persons may bid for or
purchase Common Stock for the purpose of stabilizing its market price. The
Underwriters also may create a short position for the account of the
Underwriters by selling more Common Stock in connection with the Offerings than
they are committed to purchase from the Company and the Selling Stockholders,
and in such case may purchase Common Stock in the open market following
completion of the Offerings to cover all or a portion of such short position.
The Underwriters may also cover all or a portion of such short position, up to
shares of Common Stock, by exercising the Underwriters' over-allotment
options referred to above. In addition, the Representatives, on behalf of the
Underwriters, may impose "penalty bids" under contractual arrangements with the
Underwriters whereby it may reclaim from an Underwriter (or dealer participating
in the Offerings), for the account of the other Underwriters, the selling
concession with respect to Common Stock that is distributed in the Offerings but
subsequently purchased for the account of the Underwriters in the open market.
Any of the transactions described in this paragraph may result in the
maintenance of the price of the Common Stock at a level above that which might
otherwise prevail in the open market. None of the transactions described in this
paragraph is required, and, if they are undertaken, they may be discontinued at
any time.

The Underwriters do not intend to confirm sales to any accounts over which
they exercise discretionary authority.

Prior to the Offerings, there has been no public market for the Common
Stock. Accordingly, the initial public offering price for the Common Stock will
be determined by negotiation among the Company, the Selling Stockholders and the
Representatives. Among the factors considered in determining the initial

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public offering price will be the Company's record of operations, its current
financial condition, its future prospects, the market for its services, the
experience of management, the economic conditions of the Company's industry in
general, the general condition of the equity securities market and the demand
for similar securities of companies considered comparable to the Company and
other relevant factors. There can be no assurance, however, that the prices at
which the Common Stock will sell in the public market after the Offerings will
not be lower than the price at which the Shares are sold by the Underwriters.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for the
Company by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo
Alto, California. Cleary, Gottlieb, Steen & Hamilton, New York, New York, is
acting as counsel for the Underwriters in connection with certain legal matters
relating to the Shares of Common Stock offered hereby.

EXPERTS

The consolidated financial statements and schedule of the Company as of
December 31, 1995 and 1996 and June 30, 1997, and for each of the years in the
three-year period ended December 31, 1996 and for the six month period ended
June 30, 1997, included in this Registration Statement (as defined below) have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report dated , 1997 with respect thereto, and are
included herein, in reliance upon the authority of said firm as experts in
giving said report.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (the "Registration
Statement") under the Securities Act with respect to the securities offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto. For further
information with respect to the Company and the Common Stock, reference is made
to the Registration Statement and the exhibits and schedules filed as a part
thereof. Statements contained in this Prospectus as to the contents of any
contract or any other document referred to are not necessarily complete. In each
instance, reference is made to the copy of such contract or document filed as an
exhibit to the Registration Statement, and each such statement is qualified in
all respects by such reference. The Registration Statement, including exhibits
and schedules thereto, may be inspected without charge at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the regional offices of the Commission located at Seven World
Trade Center, Suite 1300, New York, New York 10048 and Northwestern Atrium
Center, 500 Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of
such materials may be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates
and through the National Association of Securities Dealers, Inc. located at 1735
K Street, N.W., Washington, D.C. 20006. The Commission maintains a World Wide
Web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission.
The address of the Commission's Web site is http://www.sec.gov.

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GLOSSARY

ASIC....................... Application Specific Integrated Circuit. A
custom-designed integrated circuit that performs
specific functions which would otherwise require a
number of off-the-shelf integrated circuits to
perform. The use of an ASIC in place of a
conventional integrated circuit reduces product
size and cost and also improves reliability.

BGA........................ Ball grid array.

Bus........................ A common pathway, or channel, between multiple
devices.

CMOS....................... Complementary Metal Oxide Silicon. Currently the
most common integrated circuit fabrication process
technology, CMOS is one of the latest fabrication
techniques to use metal oxide semiconductor
transistors.

DAC........................ Digital Analog Converter. A device that converts
digital pulses into analog signals.

Die........................ A piece of a semiconductor wafer containing the
circuitry of a single chip.

DRAM....................... Dynamic Random Access Memory. A type of volatile
memory product that is used in electronic systems
to store data and program instructions. It is the
most common type of RAM and must be refreshed with
electricity thousands of times per second or else
it will fade away.

DSP........................ Digital Signal Processor. A type of integrated
circuit that processes and manipulates digital
information after it has been converted from an
analog source.

EEPROM..................... Electrically Erasable and Programmable Read-Only
Memory. A form of non-volatile memory that can be
erased electronically before being reprogrammed.

EPROM...................... Erasable Programmable Read-Only Memory. A
programmable and reusable chip that holds its
content until erased under ultraviolet light.

Ethernet................... A type of local area network (LAN). Most widely
used LAN access method.

Flash Memory............... A type of non-volatile memory, similar to an EEPROM
in that it is erasable and reprogrammable.

FlipChip................... Package type where silicon die is attached to the
packaging substrate using solder balls instead of
wires. See "Business -- Products."

GPS........................ Global Positioning System. A system for identifying
earth locations.

GUI........................ Graphical User Interface. A graphics-based user
interface that incorporates icons, pull-down menus
and a mouse.

IC......................... Integrated Circuit. A combination of two or more
transistors on a base material, usually silicon.
All semiconductor chips, including memory chips and
logic chips, are just very complicated ICs with
thousands of transistors.

Input/Output............... A connector which interconnects the chip to the
package or one package level to the next level in
the hierarchy. Also referred to as pin out
connections or terminals.

ISDN....................... Integrated Services Digital Network. An
international telecommunications standard for
transmitting voice, video and data over digital
lines running at 64 Kbps.

Logic Device............... A device that contains digital integrated circuits
that process, rather than store, information.

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Mask....................... A piece of glass on which an IC's circuitry design
is laid out. Integrated circuits may require up to
20 different layers of design, each with its own
mask. In the IC production process, a light shines
through the mask leaving an image of the design on
the wafer. Also known as a reticle.

Mask....................... A piece of glass on which an IC's circuitry design
is laid out. In the IC production process, a light
shines through the mask leaving an image of the
design on the wafer. Also known as a reticle.

MBGA....................... Micro Ball Grid Array. See "Business -- Products."

Micron..................... 1/25,000 of an inch. Circuitry on an IC typically
follows lines that are less than one micron wide.

MOS........................ A device which consists of three layers (metal,
oxide and semiconductors) and operates as a
transistor.

MQFP....................... Metric Quad Flat Package. See
"Business -- Products."

PBGA....................... Plastic Ball Grid Array. See
"Business -- Products."

PC......................... Personal Computer.

PCMCIA..................... Standard for connecting peripherals to computers.

PDA........................ Personal Digital Assistant.

PDIP....................... Plastic Dual In-Line Packages. See
"Business -- Products."

Photolithography........... A lithographic technique used to transfer the
design of the circuit paths and electronic elements
on a chip onto a wafer's surface.

PLCC....................... Plastic Leaded Chip Carrier. See
"Business -- Products."

PLD........................ A logic chip that is programmed at the customer's
site.

PQFP....................... Plastic Quad Flat Packages. See
"Business -- Products."

RF......................... Radio Frequency. The range of electromagnetic
frequencies above the audio range and below visible
light.

SIP........................ Single In-Line Package. See "Business -- Products."

SOIC....................... Small Outline IC Packages. See
"Business -- Products."

SRAM....................... Static Random Access Memory. A type of volatile
memory product that is used in electronic systems
to store data and program instructions. Unlike the
more common DRAM, it does not need to be refreshed.

SSOP....................... Shrink Small Outline Packages. See
"Business -- Products."

Surface Mount Technology... A circuit board packaging technique in which the
leads (pins) on the chips and components are
soldered on top of the board.

TQFP....................... Thin Quad Flat Packages. See
"Business -- Products."

TSOP....................... Thin Small Outline Packages. See
"Business -- Products."

TSSOP...................... Thin Shrink Small Outline Packages. See
"Business -- Products."

Wafer...................... Thin, round, flat piece of silicon that is the base
of most integrated circuits.

Wire Bonding............... The method used to attach very fine wire to
semiconductor components in order to provide
electrical continuity between the semiconductor die
and a terminal.

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AMKOR TECHNOLOGY, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants.............................................. F-2
Consolidated Statements of Income -- Years ended December 31, 1994, 1995 and 1996 and
Six months ended June 30, 1996 (unaudited) and 1997................................. F-3
Consolidated Balance Sheets -- December 31, 1995 and 1996 and June 30, 1997........... F-4
Consolidated Statements of Stockholders' Equity -- Years ended December 31, 1994, 1995
and 1996 and Six months ended June 30, 1997......................................... F-5
Consolidated Statements of Cash Flows -- Years ended December 31, 1994, 1995 and 1996
and Six months ended June 30, 1996 (unaudited) and 1997............................. F-6
Notes to Consolidated Financial Statements............................................ F-7
</TABLE>

F-1
<PAGE> 74

After the Exchange transaction discussed in Note 1 and the issuance of
shares of common stock of the Company to Amkor Industrial Co., Ltd. in exchange
for its 40% interest in AAPI as discussed in Note 15 to the Amkor Technology,
Inc. and subsidiaries' consolidated financial statements is effected, we expect
to be in position to render the following audit report.

October 2, 1997 ARTHUR ANDERSEN LLP

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Amkor Technology, Inc.:

We have audited the accompanying consolidated balance sheets of Amkor
Technology, Inc. and subsidiaries (see Note 1) as of December 31, 1995 and 1996,
and June 30, 1997, and the related consolidated statements of income,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1996 and the six months ended June 30, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Amkor
Technology, Inc. and subsidiaries as of December 31, 1995 and 1996, and June 30,
1997, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996 and the six months ended June
30, 1997, in conformity with generally accepted accounting principles.

Philadelphia, Pa.,
, 1997

F-2
<PAGE> 75

AMKOR TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
-------------------------------- ----------------------
1994 1995 1996 1996 1997
-------- -------- ---------- ----------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET REVENUES......................... $572,918 $932,382 $1,171,001 $ 542,590 $663,489
COST OF REVENUES..................... 514,648 783,335 1,022,078 462,346 586,541
-------- -------- ---------- -------- --------
Gross profit....................... 58,270 149,047 148,923 80,244 76,948
-------- -------- ---------- -------- --------
OPERATING EXPENSES:
Selling, general and
administrative.................. 41,337 55,459 66,625 29,700 47,265
Research and development........... 3,090 8,733 10,930 4,857 3,515
-------- -------- ---------- -------- --------
Total operating expenses........ 44,427 64,192 77,555 34,557 50,780
-------- -------- ---------- -------- --------
OPERATING INCOME..................... 13,843 84,855 71,368 45,687 26,168
-------- -------- ---------- -------- --------
OTHER (INCOME) EXPENSE:
Interest expense, net.............. 5,752 9,797 22,245 6,509 16,355
Foreign currency translation....... (4,865) 1,512 2,961 (1,845) 101
Other (income) expense, net........ (2,639) 6,523 3,150 4,705 1,287
-------- -------- ---------- -------- --------
Total other (income) expense.... (1,752) 17,832 28,356 9,369 17,743
-------- -------- ---------- -------- --------
INCOME BEFORE INCOME TAXES AND
MINORITY INTEREST.................. 15,595 67,023 43,012 36,318 8,425
PROVISION FOR INCOME TAXES........... 2,977 6,384 7,876 6,650 2,689
-------- -------- ---------- -------- --------
INCOME BEFORE MINORITY INTEREST...... 12,618 60,639 35,136 29,668 5,736
MINORITY INTEREST.................... 1,044 1,515 948 35 1,858
-------- -------- ---------- -------- --------
NET INCOME........................... $ 11,574 $ 59,124 $ 34,188 $ 29,633 $ 3,878
======== ======== ========== ======== ========
PRO FORMA DATA (UNAUDITED):
Historical income before income
taxes and minority interest..... $ 15,595 $ 67,023 $ 43,012 $ 36,318 $ 8,425
Pro forma provision for income
taxes........................... 3,177 16,784 10,776 9,150 5,389
-------- -------- ---------- -------- --------
Pro forma income before minority
interest........................ 12,418 50,239 32,236 27,168 3,036
Historical minority interest....... 1,044 1,515 948 35 1,858
-------- -------- ---------- -------- --------
Pro forma net income............... $ 11,374 $ 48,724 $ 31,288 $ 27,133 $ 1,178
======== ======== ========== ======== ========
Pro forma net income per common
share........................... $ .14 $ .59 $ .38 $ .33 $ .01
======== ======== ========== ======== ========
Shares used in computing pro forma
net income per common share..... 82,610 82,610 82,610 82,610 82,610
======== ======== ========== ======== ========
</TABLE>

The accompanying notes are an integral part of these statements.

F-3
<PAGE> 76

AMKOR TECHNOLOGY, INC.

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30, 1997
---------------------- ----------------------
1995 1996 ACTUAL PRO FORMA
-------- -------- -------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents................ $ 91,151 $ 49,664 $ 60,943 $ 49,143
Short-term investments................... -- 881 3,794 3,794
Accounts receivable --
Trade, net of allowance for doubtful
accounts of $1,043, $1,179 and
$1,979.............................. 135,174 170,892 190,250 190,250
Due from affiliates................... 13,315 26,886 20,061 20,061
Other................................. 5,464 6,426 8,153 8,153
Inventories.............................. 86,040 101,920 117,096 117,096
Other current assets..................... 10,214 8,618 14,018 14,018
-------- -------- -------- --------
Total current assets................ 341,358 365,287 414,315 402,515
-------- -------- -------- --------
PROPERTY, PLANT AND EQUIPMENT, net......... 200,426 324,895 395,793 395,793
-------- -------- -------- --------
INVESTMENTS................................ 66,613 61,993 72,903 72,903
-------- -------- -------- --------
LONG-TERM NOTES RECEIVABLE................. 1,626 8,711 12,628 12,628
-------- -------- -------- --------
OTHER ASSETS:
Due from affiliates...................... 10,090 14,638 15,566 15,566
Other.................................... 15,755 22,089 22,452 22,452
-------- -------- -------- --------
25,845 36,727 38,018 38,018
-------- -------- -------- --------
Total assets........................ $635,868 $797,613 $933,657 $ 921,857
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings and current portion
of long-term debt..................... $ 85,120 $191,813 $240,829 $ 240,829
Trade accounts payable................... 87,113 56,055 116,375 116,375
Due to affiliate......................... 18,028 33,379 17,961 17,961
Bank overdraft........................... 16,251 14,518 13,965 13,965
Accrued expenses......................... 18,250 19,899 18,093 18,093
Accrued income taxes..................... 5,404 12,838 13,553 13,553
-------- -------- -------- --------
Total current liabilities........... 230,166 328,502 420,776 420,776
-------- -------- -------- --------
LONG-TERM DEBT............................. 107,385 167,444 158,802 158,802
-------- -------- -------- --------
DUE TO AFFILIATE........................... 219,037 234,894 278,120 278,120
-------- -------- -------- --------
OTHER NONCURRENT LIABILITIES............... 10,435 9,530 9,911 19,911
-------- -------- -------- --------
COMMITMENTS AND CONTINGENCIES (Notes 1 and
13)
MINORITY INTEREST.......................... 14,067 18,683 20,500 20,500
-------- -------- -------- --------
STOCKHOLDERS' EQUITY:
Common stock............................. 46 46 46 46
Additional paid-in capital............... 16,494 16,770 22,301 34,001
Retained earnings (deficit).............. 28,338 30,798 29,615 (3,885)
Unrealized gains (losses) on
investments........................... 9,584 (7,959) (4,258) (4,258)
Cumulative translation adjustment........ 316 (1,095) (2,156) (2,156)
-------- -------- -------- --------
Total stockholders' equity.......... 54,778 38,560 45,548 23,748
-------- -------- -------- --------
Total liabilities and stockholders'
equity........................... $635,868 $797,613 $933,657 $ 921,857
======== ======== ======== ========
</TABLE>

The accompanying notes are an integral part of these statements.

F-4
<PAGE> 77

AMKOR TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
AND THE SIX MONTHS ENDED JUNE 30, 1997
(IN THOUSANDS)

<TABLE>
<CAPTION>
UNREALIZED
ADDITIONAL CUMULATIVE GAINS
COMMON PAID-IN RETAINED TRANSLATION (LOSSES) ON
STOCK CAPITAL EARNINGS ADJUSTMENT INVESTMENTS TOTAL
------ ---------- -------- ---------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1994............ $ 46 $ 16,494 $ (7,060) $ (1,410) $ -- $ 8,070
Net income.......................... -- -- 11,574 -- -- 11,574
Distributions....................... -- -- (3,120) -- -- (3,120)
Change in division equity account... -- -- (7,753) -- -- (7,753)
Unrealized loss on investments...... -- -- -- -- (35) (35)
Currency translation adjustments.... -- -- -- 881 -- 881
--- ------- -------- ------- -------- --------
BALANCE AT DECEMBER 31, 1994.......... 46 16,494 (6,359) (529) (35) 9,617
Net income.......................... -- -- 59,124 -- -- 59,124
Distributions....................... -- -- (19,922) -- -- (19,922)
Change in division equity account... -- -- (4,505) -- -- (4,505)
Unrealized gain on investments...... -- -- -- -- 9,619 9,619
Currency translation adjustments.... -- -- -- 845 -- 845
--- ------- -------- ------- -------- --------
BALANCE AT DECEMBER 31, 1995.......... 46 16,494 28,338 316 9,584 54,778
Net income.......................... -- -- 34,188 -- -- 34,188
Distributions....................... -- -- (15,123) -- -- (15,123)
Change in division equity account... -- -- (16,605) -- -- (16,605)
Unrealized loss on investments...... -- -- -- -- (17,543) (17,543)
Currency translation adjustments.... -- -- -- (1,411) -- (1,411)
Acquisition of AATS (Note 2)........ -- 276 -- -- -- 276
--- ------- -------- ------- -------- --------
BALANCE AT DECEMBER 31, 1996.......... 46 16,770 30,798 (1,095) (7,959) 38,560
Net income.......................... -- -- 3,878 -- -- 3,878
Distributions....................... -- -- (5,061) -- -- (5,061)
Change in division equity account... -- 5,531 -- -- -- 5,531
Unrealized gain on investments...... -- -- -- -- 3,701 3,701
Currency translation adjustments.... -- -- -- (1,061) -- (1,061)
--- ------- -------- ------- -------- --------
BALANCE AT JUNE 30, 1997.............. $ 46 $ 22,301 $ 29,615 $ (2,156) $(4,258) $ 45,548
=== ======= ======== ======= ======== ========
</TABLE>

The accompanying notes are an integral part of these statements.

F-5
<PAGE> 78

AMKOR TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
------------------------------------- ---------------------
1994 1995 1996 1996 1997
--------- ----------- ----------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................................. $ 11,574 $ 59,124 $ 34,188 $ 29,633 $ 3,878
Adjustments to reconcile net income to net cash
provided by (used in) operating activities --
Depreciation and amortization........................ 14,612 26,614 57,825 25,883 42,766
Provision for accounts receivable.................... 1,037 444 1,271 340 800
Provision for excess and obsolete inventory.......... 500 1,000 500 250 3,700
Deferred income taxes................................ 1,517 (1,147) (324) (286) (1,982)
Equity (gain) loss of investee....................... (2,605) 95 (661) (322) (1,022)
(Gain) loss on sale of investments................... (1,700) 126 (139) -- --
Minority interest.................................... 1,044 1,515 948 35 1,858
Changes in assets and liabilities excluding effects of
acquisitions --
Accounts receivable.................................. (31,565) (53,264) (36,695) (9,342) (20,158)
Other receivables.................................... 1,462 (2,565) (925) (5,086) (1,727)
Inventories.......................................... (18,885) (32,668) (16,380) (11,740) (18,876)
Due to/from affiliates, net.......................... (17,465) (8,375) (2,768) (25,035) (8,105)
Other current assets................................. (3,377) (4,764) 1,694 (999) (3,490)
Other non-current assets............................. (7,426) (724) (6,108) (1,762) (882)
Accounts payable..................................... 27,428 45,574 (31,065) (23,561) 60,319
Accrued expenses..................................... (3,143) 7,130 1,555 (3,332) (1,806)
Accrued taxes........................................ 1,000 404 7,433 11,226 716
Other long-term liabilities.......................... (562) 9,034 (108) (9,117) 903
Other, net............................................. 205 -- 3,750 3,750 --
--------- ----------- ----------- --------- ---------
Net cash provided by (used in) operating
activities.................................... (26,349) 47,553 13,991 (19,463) 56,892
--------- ----------- ----------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment, including
purchase of AATS..................................... (68,926) (123,645) (185,112) (65,212) (114,439)
Sale of property, plant and equipment.................. 2,429 110 2,228 -- 858
Purchases of investments and issuances of notes
receivable........................................... (15,298) (19,351) (21,068) (19,141) (14,092)
Proceeds from sale of investments...................... 8,284 351 520 -- --
--------- ----------- ----------- --------- ---------
Net cash used in investing activities........... (73,511) (142,535) (203,432) (84,353) (127,673)
--------- ----------- ----------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in bank overdrafts and current debt......... (19,483) 41,308 104,901 (5,889) 48,463
Proceeds from issuance of affiliate debt............... 820,027 1,059,759 1,205,174 610,119 432,644
Payments of affiliate debt............................. (627,056) (1,052,415) (1,189,317) (598,423) (390,834)
Proceeds from issuance of long-term debt............... 82,355 50,080 62,144 71,250 10,056
Payments of long-term debt............................. (39,029) (3,021) (3,138) (1,529) (18,698)
Distributions to stockholders.......................... (3,200) (20,003) (15,205) (103) (5,102)
Change in division equity account...................... (7,753) (4,505) (16,605) (4,136) 5,531
--------- ----------- ----------- --------- ---------
Net cash provided by financing activities....... 205,861 71,203 147,954 71,289 82,060
--------- ----------- ----------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS..... 106,001 (23,779) (41,487) (32,527) 11,279
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD........... 8,929 114,930 91,151 91,151 49,664
--------- ----------- ----------- --------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD................. $ 114,930 $ 91,151 $ 49,664 $ 58,624 $ 60,943
========= =========== =========== ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for --
Interest............................................. $ 6,641 $ 12,594 $ 24,125 $ 9,033 $ 28,696
Income taxes......................................... 364 495 2,256 2,997 329
</TABLE>

The accompanying notes are an integral part of these statements.

F-6
<PAGE> 79

AMKOR TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements of Amkor Technology, Inc. and
subsidiaries ("Amkor" or the "Company") include the accounts of the following
(these companies are referred to as the "Amkor Companies"):

- Amkor Electronics, Inc. ("AEI"), a U.S. S Corporation;

- AK Industries, Inc. (a U.S. Corporation) and its wholly-owned subsidiary,
Amkor-Anam, Inc. (a U.S. Corporation);

- T.L. Limited (a British Cayman Island Corporation) and its Philippine
subsidiaries, Amkor Anam Advanced Packaging, Inc. ("AAAP") and Amkor/Anam
Pilipinas, Inc. ("AAPI") (which is currently owned 60% by T.L. Limited
and 40% by Anam Industrial Co., Ltd. ("AICL" -- see Notes 11 and 15)) and
its wholly-owned subsidiary Automated Microelectronics, Inc. ("AMI");

- C.I.L., Limited (a British Cayman Island Corporation) and its
wholly-owned subsidiary Amkor/Anam Euroservices S.A.R.L. (a French
Corporation);

- Amkor Anam Test Services, Inc. (a U.S. Corporation) (see Note 2); and

- The semiconductor packaging and test business unit of Chamterry
Enterprises, Ltd.

Each of the Amkor Companies is under common control and management. In
connection with the Offerings (see Note 15), on September 26, 1997 the Company
was formed as a holding company for the Amkor Companies. On , 1997
prior to the effective date of the Offerings, the stockholders of the Amkor
Companies contributed all of their interests in the respective Amkor Companies
to the Company in exchange for 82,610 shares of common stock of the Company (the
"Exchange"). In addition, AICL exchanged its 40% interest in AAPI for 2,390
shares of the Company's common stock.

The financial statements reflect the elimination of all significant
intercompany accounts and transactions.

The investments in and the operating results of 20% to 50% owned companies
are included in the consolidated financial statements using the equity method of
accounting.

NATURE OF OPERATIONS

The Company provides semiconductor packaging and test services to
semiconductor and computer manufacturers located in strategic markets throughout
the world. Such services are provided by the Company and by AICL under a long
standing arrangement. Approximately 80%, 79%, 72% and 68% of the Company's
packaging and test revenues in 1994, 1995, 1996 and the six months ended June
30, 1997, respectively relate to the packaging and test services provided by
AICL.

CONCENTRATIONS OF CREDIT RISK

Financial instruments, for which the Company is subject to credit risk,
consist principally of trade receivables. This risk is mitigated by sales to
well established companies, ongoing credit evaluation and frequent contact with
customers.

F-7
<PAGE> 80

AMKOR TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

At December 31, 1995 and 1996, and June 30, 1997, the Company maintained
$79,354, $34,330 and $28,053 respectively in deposits at one U.S. financial
institution and $3,518, $1,993 and $15,688 respectively in deposits at one U.S.
bank.

Additionally, the Company maintained deposits and certificates of deposits
totaling approximately $8,166, $14,649 and $16,113 at foreign owned banks at
December 31, 1995 and 1996 and June 30, 1997, respectively.

SIGNIFICANT CUSTOMERS

The Company has a number of major customers in North America, Asia and
Europe. The Company's largest customer, Intel Corporation, accounted for 10.6%,
13.3%, 23.5% and 21.2% of net revenues in 1994, 1995 and 1996 and the six months
ended June 30, 1997, respectively. The Company's five largest customers
collectively accounted for 33.5%, 34.1%, 39.2% and 37.3% of net revenues in
1994, 1995, 1996 and for the six months ended June 30, 1997, respectively. The
Company anticipates that significant customer concentration will continue for
the foreseeable future, although the companies which constitute the Company's
largest customers may change.

RISKS AND UNCERTAINTIES

The Company's future results of operations involve a number of risks and
uncertainties. Factors that could affect the Company's future operating results
and cause actual results to vary materially from expectations include, but are
not limited to, dependence on the highly cyclical nature of both the
semiconductor and the personal computer industries, competitive pricing and
declines in average selling prices, risks associated with leverage, dependence
on the Company's relationship with AICL (see Note 11), reliance on a small group
of principal customers, timing and volume of orders relative to the Company's
production capacity, availability of manufacturing capacity and fluctuations in
manufacturing yields, availability of financing, competition, dependence on
international operations and sales, dependence on raw material and equipment
suppliers, exchange rate fluctuations, dependence on key personnel, difficulties
in managing growth, enforcement of intellectual property rights, environmental
regulations and fluctuations in quarterly operating results.

FOREIGN CURRENCY TRANSLATION

All of the Company's foreign subsidiaries use the U.S. dollar as their
functional currency. Accordingly, their monetary assets and liabilities are
translated into U.S. dollars at year-end exchange rates and non-monetary items
are translated at historical rates. Certain expenses are translated at the
average monthly exchange rates during the year, however, revenues, cost of
revenues and depreciation are translated at historical rates. Transaction gains
and losses for transactions denominated in local currency are included in Other
(income) expense, net. The cumulative translation adjustment reflected in
Stockholders' Equity in the consolidated balance sheets relates to investments
in unconsolidated companies which use the local currency as the functional
currency (see Note 6).

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.

F-8
<PAGE> 81

AMKOR TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

INVENTORIES

Inventories are stated at the lower of cost or market. Cost is determined
principally by using a moving average method.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost. Depreciation is
calculated by the straight-line method over the estimated useful lives of
depreciable assets. Accelerated methods are used for tax purposes. Depreciable
lives follow:

<TABLE>
<S> <C>
Building improvements....................................... 10 to 15 years
Machinery and equipment..................................... 3 to 5 years
Furniture, fixtures, and other equipment.................... 3 to 10 years
</TABLE>

Cost and accumulated depreciation for property retired or disposed of are
removed from the accounts and any resulting gain or loss is included in
earnings. Expenditures for maintenance and repairs are charged to expense as
incurred. Depreciation expense was $15,349, $27,381, $58,497 and $42,620 for
1994, 1995 and 1996 and for the six months ended June 30, 1997, respectively.

OTHER NONCURRENT ASSETS

Other noncurrent assets consist principally of security deposits, deferred
income taxes and the cash surrender value of life insurance.

OTHER NONCURRENT LIABILITIES

Other noncurrent liabilities consist primarily of pension obligations and
noncurrent income taxes payable.

INCOME TAXES

The Company accounts for income taxes following the provisions of Statement
of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes,"
which requires the use of the liability method. If it is more likely than not
that some portion or all of a deferred tax asset will not be realized, a
valuation allowance is provided.

The Company reports certain income and expense items for income tax
purposes on a basis different from that reflected in the accompanying
consolidated financial statements. The principal differences relate to the
timing of the recognition of accrued expenses which are not deductible for
federal income tax purposes until paid and the use of accelerated methods of
depreciation for income tax purposes.

AEI elected to be taxed as an S Corporation under the provisions of the
Internal Revenue Code of 1986 and comparable state tax provisions. As a result,
AEI does not recognize U.S. federal corporate income taxes. Instead, the
stockholders of AEI are taxed on their proportionate share of the Company's
taxable income. Accordingly, no provision for U.S. federal income taxes was
recorded for AEI . Given the pending Offerings (see Note 15), for informational
purposes, the accompanying consolidated statements of income include an
unaudited pro forma adjustment to reflect income taxes which would have been
recorded if AEI had not been an S Corporation, based on the tax laws in effect
during the respective periods (see Note 16).

F-9
<PAGE> 82

AMKOR TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

EARNINGS PER SHARE

The pro forma net income per common share was calculated by dividing the
pro forma net income by the weighted average number of shares outstanding for
the respective periods, adjusted for the effect of the Exchange (see Note 15).

In February 1997, the Financial Accounting Standards Board (FASB) issued
SFAS No. 128, "Earnings Per Share", which will be effective for the Company in
1997. Primary and fully diluted earnings per share will be replaced by basic and
diluted earnings per share. Prior period results will be restated. The most
significant difference is that the computation of basic earnings per share no
longer assumes potentially dilutive securities are outstanding.

REVENUE RECOGNITION AND RISK OF LOSS

The Company records revenues upon shipment of packaged semiconductors to
its customers. The Company does not take ownership of customer-supplied
semiconductors. Title and risk of loss remains with the customer for these
materials at all times. Risk of loss for Amkor packaging costs passes upon
completion of the packaging process and shipment to the customer. Accordingly,
the cost of the customer-supplied materials is not included in the statement of
income.

RESEARCH AND DEVELOPMENT COSTS

Research and development costs are charged to expenses as incurred.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1996, the FASB issued SFAS No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities." This
statement was effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after December 31, 1996. SFAS No. 125
provides accounting and reporting standards based on consistent application of a
financial-components approach that focuses on control. Under that approach,
after a transfer of financial assets, an entity recognizes the financial and
servicing assets it controls and the liabilities it has incurred, and
derecognizes liabilities when extinguished. The Company entered into a
Receivables Sale Agreement subsequent to June 30, 1997 and accounted for the
transaction as a sale under SFAS No. 125 (see Note 15).

INTERIM FINANCIAL STATEMENTS

The financial statements for the six months ended June 30, 1996 are
unaudited and, in the opinion of management of the Company, include all
adjustments (consisting only of normal recurring adjustments) necessary for the
fair presentation of the results for the interim period. The results of
operations for the six months ended June 30, 1997 are not necessarily indicative
of the results to be expected for the full year.

F-10
<PAGE> 83

AMKOR TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

2. ACQUISITION OF AMKOR ANAM TEST SERVICES, INC.:

On September 30, 1996, AEI and a principal stockholder each acquired 50% of
the outstanding common stock of Amkor Anam Test Services, Inc. (AATS), formerly
Navell Test Consultants, Inc., a provider of test engineering services for the
semiconductor industry located in San Jose, California, for approximately
$2,860. The acquisition was accounted for using the purchase method of
accounting and the results of AATS' operations are included in the Company's
consolidated statements of income effective October 1, 1996. Accordingly, the
total purchase cost has been allocated to the consolidated assets and
liabilities based upon their estimated respective fair values. This acquisition
resulted in goodwill of approximately $2,356, which is being amortized over 20
years.

3. PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- JUNE 30,
1995 1996 1997
-------- -------- --------
<S> <C> <C> <C>
Land.................................... $ -- $ -- $ 1,263
Building improvements................... 20,248 81,602 87,208
Machinery and equipment................. 204,750 333,188 403,758
Furniture, fixtures and other
equipment............................. 23,613 31,330 29,952
Construction in progress................ 20,371 5,240 23,480
-------- -------- --------
268,982 451,360 545,661
Less -- Accumulated depreciation and
amortization.......................... 68,556 126,465 149,868
-------- -------- --------
$200,426 $324,895 $395,793
======== ======== ========
</TABLE>

4. COMMON STOCK AND ADDITIONAL PAID IN CAPITAL:

The common stock and additional paid-in-capital of the Company are
reflected at the original cost of the Amkor Companies. In connection with the
Exchange, the Company authorized 500,000 shares of $.001 par value common stock,
of which 82,610 shares will be issued to the stockholders of the Amkor Companies
in exchange for their interest in these Companies.

In addition, the Company authorized 10,000 shares of $.001 par value
preferred stock, none of which are outstanding.

Changes in the division equity account reflected in the consolidated
statement of stockholders' equity represent the net cash flow of the
semiconductor packaging and test business unit of Chamterry Enterprises, Ltd.
(see Note 1).

F-11
<PAGE> 84

AMKOR TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

5. INVENTORIES:

Inventories consist of raw materials and purchased components which are
used in the semiconductor packaging process. The Company's inventories are
located at its facilities in the Philippines or at AICL on a consignment basis.
Components of inventories follow:

<TABLE>
<CAPTION>
DECEMBER 31
-------------------- JUNE 30,
1995 1996 1997
------- -------- --------
<S> <C> <C> <C>
Raw materials......................... $79,495 $ 93,112 $108,367
Work-in-process....................... 6,545 8,808 8,729
------- -------- --------
$86,040 $101,920 $117,096
======= ======== ========
</TABLE>

6. INVESTMENTS:

The Company's investments include investments in affiliated companies which
provide services to the Company (see Note 11) and certain other technology based
companies. Investments are summarized as follows:

<TABLE>
<CAPTION>
DECEMBER 31 JUNE
------------------- 30,
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
Equity Investments (20%-50% owned) --
Anam Semiconductor & Technology Co.,
Ltd.................................... $ 8,737 $10,700 $11,197
Datacom International, Inc................ -- 1,335 1,887
Sunrise Capital Fund...................... 1,500 1,328 3,229
------- ------- -------
10,237 13,363 16,313
------- ------- -------
Available for Sale (cost based
investments) --
Anam Industrial Company, Ltd. (AICL)...... 37,127 23,903 30,125
Other..................................... 19,249 24,727 26,465
------- ------- -------
56,376 48,630 56,590
------- ------- -------
$66,613 $61,993 $72,903
======= ======= =======
</TABLE>

The Company had net unamortized investment costs in excess of the
proportionate share of the investee companies' net assets of approximately $347,
$1,284 and $2,118 at December 31, 1995 and 1996 and the six months ended June
30, 1997, respectively. The Company is amortizing this excess amount over
periods between 10 and 40 years.

Subsequent to June 30, 1997, the Company sold its equity investment in Anam
Semiconductor & Technology Co., Ltd. and certain investments and notes
receivable from companies unrelated to the semiconductor packaging and test
business to AK Investments, Inc., an unconsolidated affiliate owned by James J.
Kim, at cost ($49,740) and AK Investments, Inc. assumed $49,740 of the Company's
long-term borrowings from Anam USA, Inc. Management estimates that the fair
value of these investments and notes receivable exceeded the carrying value by
approximately $25,000 at June 30, 1997.

7. SHORT-TERM CREDIT FACILITIES:

At December 31, 1995 and 1996 and June 30, 1997, short-term borrowings
consisted of various operating lines of credit and working capital facilities
maintained by the Company. These borrowings are secured by receivables,
inventories or property. These facilities, which are typically for one-year
renewable terms, generally bear interest at current market rates (approximately
8% at June 30, 1997).

F-12
<PAGE> 85

AMKOR TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

For the years and six month period ended December 31, 1995 and 1996 and June 30,
1997, the weighted average interest rate on these borrowings was 8.0%, 7.8% and
8.3%, respectively. Included in cash and cash equivalents is $1,200 of
certificates of deposit pledged as collateral for certain of these lines. The
unused portion of lines of credit total $17,764 at June 30, 1997.

8. DEBT:

Following is a summary of the Company's short-term borrowings and long-term
debt:

<TABLE>
<CAPTION>
DECEMBER 31
--------------------- JUNE 30,
1995 1996 1997
-------- -------- --------
<S> <C> <C> <C>
Short-term borrowings (see Note 7).................... $ 84,620 $150,513 $189,657
Korean Development Bank (KDB) Loan, interest at LIBOR
plus annual spread (6.74% at June 30, 1997), due
October, 2000....................................... 50,000 50,000 50,000
KDB loan, interest at LIBOR plus annual spread (6.9%
at June 30, 1997), due in installments beginning
March, 1998 through April, 2000..................... -- 71,250 71,250
Floating rate notes, interest at LIBOR plus annual
spread (7.38% at June 30, 1997), due February,
2000................................................ 40,000 40,000 40,000
Bank debt, interest at LIBOR plus annual spread (8.54%
at June 30, 1997), due December, 2001............... -- 20,000 20,000
Bank debt, interest at LIBOR plus annual spread (8.54%
at June 30, 1997), due October, 1997................ -- 5,000 5,000
Bank debt, interest at LIBOR plus annual spread (9.14%
at June 30, 1997), due September, 1999.............. -- 4,000 3,750
Bank debt, interest at LIBOR plus annual spread (8.69%
at June 30, 1997), due in equal installments through
January, 2001....................................... -- 5,926 5,926
Note payable, interest at Prime (8.5% at June 30,
1997), due April, 2004.............................. -- -- 3,464
Note payable, interest at LIBOR plus 0.75% (7.31% at
June 30, 1997), due January, 1998................... 12,800 11,000 --
Note payable interest at LIBOR (6.56% at June 30,
1997), due July, 1998............................... -- -- 4,500
Notes payable, interest at LIBOR (6.56% at June 30,
1997), due December, 1999........................... -- -- 5,500
Other, primarily capital lease obligations and other
debt................................................ $ 5,085 $ 1,568 $ 584
--------- --------- ---------
192,505 359,257 399,631
Less -- Current maturities and short-term
borrowings.......................................... (85,120) (191,813) (240,829)
--------- --------- ---------
$107,385 $167,444 $158,802
========= ========= =========
</TABLE>

The KDB loans were obtained to finance the expansion of the Company's
factories in the Philippines. The Company has the option to prepay all or part
of the loans on any interest payment date.

The issued and outstanding Floating Rate Notes (FRNs) were used to repay
then existing short-term foreign currency denominated loans and to finance the
expansion of the Company's factories in the Philippines. The FRNs, which are due
on February 1, 2000, are listed on the Luxembourg Stock Exchange and were issued
in denominations of $500. Interest on the FRNs is payable semi-annually in
arrears in February and August of each year at six-months LIBOR plus an annual
spread. The loans and notes constitute direct, unconditional and unsecured
obligations of the Company which rank pari passu among

F-13
<PAGE> 86

AMKOR TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

themselves and will rank at least pari passu with all other present and future
unsecured and unsubordinated obligations of the Company except for such as may
be preferred by mandatory provisions of applicable law. The FRNs are classified
as current debt because the holder of the FRNs has announced its intention to
redeem, and the Company will repay the FRNs in August, 1997 at their principal
amount. In August, 1997 the Company entered into a three month bridge loan with
a bank for $55,000. The bridge loan was used to repay the FRNs as well as other
debt that was due. The Company expects to enter into a term loan with this bank
prior to the expiration of the bridge loan, which term loan would be used to pay
off the bridge loan.

The KDB loans and FRNs are unconditionally and irrevocably guaranteed by
AICL.

Other bank debt instruments were obtained at interest based on Singapore
interbank rates and LIBOR plus an annual spread. The loans are secured by the
assets of the Company and assets acquired through proceeds from the loans.

Certain instruments contain, among others, provisions pertaining to the
maintenance of specified debt to equity ratios, restrictions with respect to
corporate reorganization, acquisition of capital stock and disposition of all or
a substantial portion of its assets, except in the ordinary course of business.

Annual principal payments required under long-term debt and short-term
borrowings at June 30, 1997 are as follows:

<TABLE>
<CAPTION>
AMOUNT
--------
<S> <C>
Current.......................................... $240,829
1998............................................. 16,706
1999............................................. 37,475
2000............................................. 87,742
2001............................................. 13,051
2002............................................. 49
Thereafter....................................... 3,779
--------
Total.................................. $399,631
========
</TABLE>

F-14
<PAGE> 87

AMKOR TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

9. EMPLOYEE BENEFIT PLANS:

U.S. PENSION PLANS

AEI has a defined contribution benefit plan covering substantially all U.S.
employees under which AEI matches 75% of the employee's contributions of between
6% and 10% of salary, up to a defined maximum on an annual basis. The pension
expense for this plan was $108, $483, $776 and $455 in 1994, 1995, 1996 and the
six months ended June 30, 1997. The pension plan assets are invested primarily
in equity and fixed income securities.

PHILIPPINE PENSION PLANS

AAAP, AAPI and AMI sponsor several defined benefit plans that cover
substantially all employees who are not covered by statutory plans. For defined
benefit plans, charges to expense are based upon costs computed by independent
actuaries.

The components of net periodic pension cost for the defined benefit plans
follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS
---------------------------- ENDED JUNE
1994 1995 1996 30, 1997
------ ------ ------ -------------
<S> <C> <C> <C> <C>
Service cost of current period................... $ 948 $ 974 $1,542 $ 967
Interest cost on projected benefit obligation.... 623 811 1,228 726
Actual return on plan assets..................... (500) (609) (677) (412)
Net amortization and deferrals................... 97 100 98 61
------ ------ ------ ------
Total pension expense.................. $1,168 $1,276 $2,191 $ 1,342
====== ====== ====== ======
</TABLE>

It is the Company's policy to make contributions sufficient to meet the
minimum contributions required by law and regulation.

The following table sets forth the funded status and the amounts recognized
in the consolidated balance sheets for the defined benefit pension plans:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE
------------------- 30,
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
Actuarial present value of:
Vested benefit obligation......................... $ 1,280 $ 1,696 $ 2,148
======= ======= =======
Accumulated benefit obligation.................... $ 1,977 $ 2,848 $ 3,725
======= ======= =======
Actuarial present value of
Projected benefit obligation...................... $ 8,542 $12,699 $13,721
Plan assets at fair value........................... 5,765 6,077 7,832
------- ------- -------
Plan assets less than projected benefit
obligation........................................ (2,777) (6,622) (5,889)
Prior service cost.................................. 1,226 1,125 1,072
Unrecognized net loss............................... -- 1,800 1,186
------- ------- -------
Accrued pension cost................................ $(1,551) $(3,697) $(3,631)
======= ======= =======
</TABLE>

The weighted average interest rate used in determining the projected
benefit obligation was 12% as of December 31, 1995 and 1996 and for the six
months ended June 30, 1997. The rates of increase in future compensation levels
were 11% as of December 31, 1996 and June 30, 1997 and 10% as of December 31,
1995. The expected long-term rate of return on plan assets was 12% as of
December 31, 1995 and 1996 and for the six months ended June 30, 1997.

F-15
<PAGE> 88

AMKOR TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

10. INCOME TAXES:

The provision for income taxes includes federal, state and foreign taxes
currently payable and those deferred because of temporary differences between
the financial statement and the tax bases of assets and liabilities. The
components of the provision for income taxes follow:

<TABLE>
<CAPTION>
FOR THE
SIX
MONTHS
ENDED
FOR THE YEAR ENDED DECEMBER 31, JUNE
-------------------------------- 30,
1994 1995 1996 1997
------- -------- ------- -------
<S> <C> <C> <C> <C>
Current:
Federal.............................. $ 1,277 $ 6,125 $ 5,880 $ 1,235
State................................ 167 908 60 70
Foreign.............................. 16 498 2,260 3,366
------- -------- ------- -------
1,460 7,531 8,200 4,671
------- -------- ------- -------
Deferred:
Federal.............................. (60) (173) (226) (72)
Foreign.............................. 1,577 (974) (98) (1,910)
------- -------- ------- -------
1,517 (1,147) (324) (1,982)
------- -------- ------- -------
Total provision.............. $ 2,977 $ 6,384 $ 7,876 $ 2,689
======= ======== ======= =======
</TABLE>

The reconciliation between the tax payable based upon the U.S. federal
statutory income tax rate and the recorded provision follows:

<TABLE>
<CAPTION>
FOR THE
SIX
MONTHS
ENDED
JUNE
FOR THE YEAR ENDED DECEMBER 31, 30,
-------------------------------- -------
1994 1995 1996 1997
------- -------- ------- -------
<S> <C> <C> <C> <C>
Federal statutory rate................. $ 5,458 $ 23,458 $15,054 $ 2,949
State taxes, net of federal benefit.... 167 908 60 70
S Corp. status of AEI.................. (200) (10,400) (2,900) (2,700)
Difference in rates on foreign
subsidiaries......................... (2,448) (7,582) (4,338) 2,370
------- -------- ------- -------
Total........................ $ 2,977 $ 6,384 $ 7,876 $ 2,689
======= ======== ======= =======
</TABLE>

The Company has structured its global operations to take advantage of lower
tax rates in certain countries and tax incentives extended to encourage
investment. AAPI had a tax holiday in the Philippines which expired in 1995.
AAAP has a tax holiday in the Philippines which expires at the end of 2002. The
Company's tax returns have been examined through 1993 in the Philippines and
through 1994 in the U.S. The recorded provision for open years is subject to
changes upon final examination of these tax returns. Changes in the mix of
income from the Company's foreign subsidiaries, expiration of tax holidays and
changes in tax laws or regulations could result in increased effective tax rates
for the Company.

F-16
<PAGE> 89

AMKOR TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The following is a summary of the significant components of the Company's
deferred tax assets and liabilities:

<TABLE>
<CAPTION>
JUNE
DECEMBER 31, 30,
------------------ -------
1995 1996 1997
------ ------ -------
<S> <C> <C> <C>
Deferred tax assets (liabilities):
Retirement benefits................................ $ 206 $ 888 $ 1,832
Receivables........................................ 402 344 721
Inventories........................................ 890 1,057 1,230
Unrealized foreign exchange losses................. 612 398 2,056
Unrealized foreign exchange gains.................. (454) (614) (1,762)
Other.............................................. 321 225 195
------ ------ -------
Net deferred tax asset............................. $1,977 $2,298 $ 4,272
====== ====== =======
</TABLE>

Non-U.S. income (loss) before taxes and minority interest of the Company
was $14,390, $23,800, $20,420 and $(2,168) in 1994, 1995, 1996 and the six
months ended June 30, 1997, respectively.

The Company's net deferred tax assets include amounts which management
believes are realizable through future taxable income.

At June 30, 1997, the financial reporting basis of AEI's net assets
exceeded the tax basis of the net assets by approximately $25,400. In connection
with the Offerings, the Company and the stockholders of AEI will enter into a
Tax Indemnification Agreement providing that the Company and AEI will be
indemnified by such stockholders, with respect to their proportionate share of
any federal or state corporate income taxes attributable to the failure of AEI
to qualify as an S Corporation for any period or in any jurisdiction for which S
Corporation status was claimed through the date AEI terminates its S Corporation
status. The Tax Indemnification Agreement will also provide that the Company and
AEI will indemnify the stockholders if such stockholders are required to include
in income additional amounts attributable to taxable years on or before the date
AEI terminates its S Corporation status as to which AEI filed or files tax
returns claiming status as an S Corporation.

11. RELATED-PARTY TRANSACTIONS:

At June 30, 1997, the Company owned 10.2% of the outstanding stock of AICL
(see Note 6), and AICL owned 40% of AAPI. In connection with the Exchange in
________ , 1997 (see Note 1), AICL exchanged its ownership of AAPI for 2,390
shares of the Company. In 1996 and the six months ended June 30, 1997,
approximately 72% and 68% of the Company's net revenues (see Note 1) were
derived from services performed for the Company by AICL, a Korean public company
in which the Company and certain of the Company's principal stockholders hold a
minority interest. By the terms of a long-standing agreement the Company has
been responsible for marketing and selling AICL's semiconductor packaging and
test services, except to customers in Korea and Japan to whom AICL has
historically sold such services directly. The Company has worked closely with
AICL in developing new technologies and products. The Company has recently
entered into a five year supply agreement with AICL giving the Company the right
to market and sell AICL's packaging and test services and the wafer output of
AICL's new wafer foundry. The Company's business, financial condition and
operating results have been and will continue to be significantly dependent on
the ability of AICL to effectively provide the contracted services on a cost-
efficient and timely basis. The termination of the Company's relationship with
AICL for any reason, or any material adverse change in AICL's business resulting
from underutilization of its capacity, the level of its debt, labor disruptions,
fluctuations in foreign exchange rates, changes in governmental

F-17
<PAGE> 90

AMKOR TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

policies, economic or political conditions in Korea or any other reason could
have a material adverse effect on the Company's business, financial condition
and results of operations.

The Company has met a significant portion of its financing needs through
financing arrangements provided by Anam USA, Inc. ("Anam USA"), AICL's
wholly-owned financing subsidiary. A majority of the amount due to Anam USA
represents outstanding amounts under financing obtained by Anam USA for the
benefit of the Company with the balance representing payables to Anam USA for
packaging and service charges paid to AICL. Based on guarantees provided by
AICL, Anam USA obtains for the benefit of the Company a continuous series of
short-term financing arrangements which generally are less than six months in
duration, and typically are less than two months in duration. Because of the
short term nature of these loans, the flows of cash to and from Anam USA under
this arrangement are significant. Purchases from AICL through Anam USA were
$254,266, $354,062, $460,282 and $251,344 for 1994, 1995, 1996 and the six
months ended June 30, 1997. Charges from ANAM USA for interest and bank charges
were $3,181, $4,484, $7,074 and $4,583 for 1994, 1995, 1996 and the six months
ended June 30, 1997. Amounts payable to AICL and Anam USA were $232,608,
$252,221, and $289,634 at December 31, 1995, 1996 and June 30, 1997,
respectively.

AICL's ability to continue to provide services to the Company will depend
on AICL's financial condition and performance. AICL currently has a significant
amount of debt relative to its equity, which debt the Company expects will
continue to increase in the foreseeable future. As of June 30, 1997, on the
basis of Korean generally accepted accounting principles (unaudited) and
translated for convenience at the June 30, 1997 exchange rate of Korean Won (W)
888 to 1 U.S. dollar, AICL had current liabilities of approximately W749 billion
($843 million), including approximately W443 billion ($499 million) of current
maturities of long-term debt, and had long-term liabilities of approximately
W839 billion ($945 million). There can be no assurance that AICL will be able to
refinance its existing loans or obtain net loans, particularly in light of
recent initiatives by Korean banks to reduce their exposure to highly leveraged
companies. In addition, there can be no assurance that AICL will be able to
continue to make required interest and principal payments on such loans or
otherwise comply with the terms of its loan agreements. Any inability of AICL to
obtain financing or generate cash flows from operations sufficient to fund its
capital expenditure, debt service and repayment and other working capital and
liquidity requirements could have a material adverse effect on AICL's ability to
continue to provide services and otherwise fulfill its obligations to the
Company.

As of June 30, 1997, AICL was contingently liable under guarantees in
respect of debt of its subsidiaries and affiliates in the aggregate amount of
approximately W935 billion ($1.05 billion). Such guarantees included those in
respect of all of Anam USA's debt, as well as approximately $161 million of the
Company's debt to banks and the Company's obligations under a receivables sale.
The Company has met a significant portion of its financing needs through
financing arrangements obtained by Anam USA for the benefit of the Company,
based on guarantees provided by AICL. As a result of AICL's debt position, there
can be no assurance that Anam USA will be able to obtain additional guarantees,
if necessary, from AICL. Further, a deterioration in AICL's financial condition
could trigger defaults under AICL's guarantees, causing acceleration of such
loans. In addition, if any relevant subsidiaries or affiliates of AICL were to
fail to make interest or principal payments or otherwise default under their
debt obligations guaranteed by AICL, AICL could be required under its guarantees
to repay such debt, which event could have a material adverse effect on its
financial condition and results of operations.

Anam Engineering and Construction, an affiliate of AICL, built the
packaging facility for AAP in the Philippines. Payments to Anam Engineering and
Construction were $6,542, $22,167 and $3,130 in 1995, 1996 and the six months
ended June 30, 1997, respectively. Anam Precision Equipment and Anam Instruments
manufactures certain equipment used by the Philippine operations. Payments to
Anam

F-18
<PAGE> 91

AMKOR TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Precision Equipment and Anam Instruments were $6,652 and $357 in 1996 and the
six months ended June 30, 1997.

During 1996, the Company extended guarantees on behalf of an affiliate to
vendors used by this affiliate. Outstanding guarantees as of December 31, 1996
and June 30, 1997 were $25,079 and $11,236, respectively. Amounts guaranteed
under this agreement fluctuate due to the cyclical nature of the affiliate's
retail business. Balances guaranteed at December 31 are generally the largest.

The Company has executed a surety and guarantee agreement on behalf of an
affiliate. The Company has unconditionally guaranteed the affiliate's obligation
under a $17,000 line of credit and a $13,000 term loan note. As of June 30,
1997, there were no amounts outstanding under the line of credit and $10,500 was
outstanding under the term loan note. The Company has also unconditionally
guaranteed another affiliate's obligation under a $4,000 term loan agreement and
a $1,000 line of credit. As of June 30, 1997, there was $4,000 outstanding under
the term loan and no amounts outstanding under the line of credit.

A principal stockholder of the Company has extended guarantees on behalf of
the Company in the amount of $88,000 at June 30, 1997.

The Company leases office space in West Chester, PA and Chandler, AZ from
certain shareholders of Amkor Electronics. These leases expire in 2006 and 2001
respectively. The Company has the option to extend the West Chester lease for an
additional 10 years through 2016. Amounts paid in 1996 and for the six months
ended June 30, 1997 were $1,343 and $823, respectively (see Note 15).

At December 31, 1995 and 1996 and for the six months ended June 30, 1997,
the Company has long-term notes receivable from affiliates of $626, $6,711 and
$10,128, respectively. Realization of these notes is dependent upon the ability
of the affiliates to repay the notes. In management's opinion, these receivables
are recorded at the net realizable value. In September 1997, $5,710 of these
notes were satisfied as a result of the purchase of the Chandler facility (see
Note 15).

12. FAIR VALUE OF FINANCIAL INSTRUMENTS:

The estimated fair value of financial instruments has been determined by
the Company using available market information and appropriate methodologies;
however, considerable judgment is required in interpreting market data to
develop the estimates for fair value. Accordingly, these estimates are not
necessarily indicative of the amounts that the Company could realize in a
current market exchange. Certain of these financial instruments are with major
financial institutions and expose the Company to market and credit risks and may
at times be concentrated with certain counterparties or groups of
counterparties. The creditworthiness of counterparties is continually reviewed,
and full performance is anticipated.

The methods and assumptions used to estimate the fair value of significant
classes of financial instruments is set forth below:

Available for sale investments -- The fair value of these financial
instruments was estimated based on market quotes, recent offerings of
similar securities, current and projected financial performance of the
Company and net asset positions.

Short-term borrowings -- Short-term borrowings have variable rates
that reflect currently available terms and conditions for similar
borrowings. The carrying amount of this debt is a reasonable estimate of
fair value.

Long-term debt and due to affiliates -- Long-term debt and due to
affiliates have variable rates that reflect currently available terms and
conditions for similar debt. The carrying amount of this debt is a
reasonable estimate of fair value.

F-19
<PAGE> 92

AMKOR TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

13. COMMITMENTS AND CONTINGENCIES:

The Company is involved in various claims and litigation incidental to the
conduct of its business. Based on consultation with legal counsel, management
does not believe that any claims or litigation to which the Company is a party
will have a material adverse effect on the Company's financial condition or
results of operations.

Future minimum lease payments under operating leases that have initial or
remaining noncancelable lease terms in excess of one year at June 30, 1997, are:

<TABLE>
<S> <C>
1997(6 months)..................................... $3,162
1998............................................... 5,948
1999............................................... 5,762
2000............................................... 5,532
2001............................................... 5,136
2002............................................... 5,214
</TABLE>

Rent expense amounted to $2,742, $3,692, $5,520 and $3,863 for 1994, 1995,
1996 and the six months ended June 30, 1997, respectively.

The Company has various purchase commitments for materials, supplies and
capital equipment incident to the ordinary conduct of business. As of June 30,
1997 the Company had commitments for capital equipment of approximately $60,000.
In the aggregate, such commitments are not at prices in excess of current
market.

14. BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION:

The Company is primarily engaged in one industry segment, namely, the
packaging and testing of integrated circuits. Financial information, summarized
by geographic area, is as follows:

<TABLE>
<CAPTION>
UNITED
STATES EUROPE PHILIPPINES ELIMINATIONS CONSOLIDATED
---------- -------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Six months ended June 30, 1997:
Net revenues from unaffiliated
customers...................... $ 577,640 $ 85,849 $ -- $ -- $ 663,489
Net revenues from affiliates..... -- -- 125,460 (125,460) --
---------- -------- -------- --------- ----------
Total net revenues............... 577,640 88,968 125,460 (125,460) 663,489
Income before income taxes and
minority interest.............. 10,593 11,628 (13,796) -- 8,425
Identifiable assets.............. 451,858 27,400 509,921 (209,942) 779,237
Corporate assets................. 154,420
----------
Total assets..................... $ 933,657
==========
Year ended December 31, 1996:
Net revenues from unaffiliated
customers...................... $1,013,182 $157,819.. $ -- $ -- $1,171,001
Net revenues from affiliates..... -- -- 198,637 (198,637) --
---------- -------- -------- --------- ----------
Total net revenues............... 1,013,182 157,819 198,637 (198,637) 1,171,001
Income before income taxes and
minority interest.............. 22,592 12,473 7,947 -- 43,012
Identifiable assets.............. 350,988 19,806 424,653 (183,255) 612,192
Corporate assets................. 185,421
----------
Total assets..................... $ 797,613
==========
</TABLE>

F-20
<PAGE> 93

AMKOR TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
UNITED
STATES EUROPE PHILIPPINES ELIMINATIONS CONSOLIDATED
---------- -------- -------- --------- ----------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1995:
Net revenues from unaffiliated
customers...................... $ 792,285 $140,097.. $ -- $ -- $ 932,382
Net revenues from affiliates..... -- -- 128,164 (128,164) --
---------- -------- -------- --------- ----------
Total net revenues............... 792,285 140,097 128,164 (128,164) 932,382
Income before income taxes and
minority interest.............. 43,223 13,019 10,781 -- 67,023
Identifiable assets.............. 323,886 19,014 270,185 (179,166) 433,919
Corporate assets................. 201,949
----------
Total assets..................... $ 635,868
==========
Year ended December 31, 1994:
Net revenues from unaffiliated
customers...................... $ 488,329 $84,589.. $ -- $ -- $ 572,918
Net revenues from affiliates..... -- -- 76,591 (76,591) --
---------- -------- -------- --------- ----------
Total net revenues............... 488,329 84,589 76,591 (76,591) 572,918
Income before income taxes and
minority interest.............. 1,205 9,118 5,272 -- 15,595
Identifiable assets.............. 267,615 17,436 134,704 (89,081) 330,674
Corporate assets................. 95,848
----------
Total assets..................... $ 426,522
==========
</TABLE>

Sales between affiliates are priced at customer selling price less material
costs provided by the segment, less a sales commission. Net revenues from
unaffiliated customers for the United States include $109,532, $160,507 and
$101,939 of revenues from unaffiliated foreign customers for the years and six
months ended December 31, 1995, 1996 and June 30, 1997, respectively. No other
periods presented had sales to unaffiliated foreign customers from the United
States of 10% or more of total consolidated net revenues. Identifiable assets
are those assets that can be directly associated with a particular geographic
area. Corporate assets are those assets which are not directly associated with a
particular geographic area and consist primarily of cash and cash equivalents,
investments and advances or loans to another geographic segment.

15. SUBSEQUENT EVENTS:

Effective July 7, 1997, the Company entered into a Receivables Sale
Agreement (the "Agreement") with a bank (the "Purchaser"), and under the
Agreement, the Purchaser has committed to purchase, with limited recourse, all
right, title and interest in selected accounts receivable of the Company, up to
a maximum of $100,000. In connection with the Agreement, the Company established
a wholly owned, bankruptcy remote subsidiary, Amkor Receivables Corp., to
purchase accounts receivable at a discount from the Company on a continuous
basis, subject to certain limitations as described in the Agreement. Amkor
Receivables Corp. simultaneously sells the accounts receivable at the same
discount to the Purchasers.

On September 11, 1997, the office being leased in Chandler, Arizona was
purchased from certain stockholders of the Company. The total purchase price of
the building ($5,710) represents the carrying value to the stockholders.

On October , 1997, the stockholders of each of the Amkor Companies
described in Note 1 exchanged all of their shares of these companies for 82,610
newly issued shares of Amkor Technology, Inc. ("ATI") a holding company
established for this purpose. ATI filed a registration statement on October ,
1997 with the Securities and Exchange Commission as part of a proposed plan to
reduce outstanding borrowings and to increase the stockholders' equity. ATI
intends to raise approximately $ (after deducting the underwriting
discount and estimated offering expenses) from the sale of

F-21
<PAGE> 94

AMKOR TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

shares of common stock (the "Offerings"). Approximately $ of
the proceeds will be used to reduce short-term borrowings and long-term debt. In
connection with the Offerings, certain existing stockholders intend to sell
approximately of their shares.

The Company plans on establishing stock option plans in October 1997
pursuant to which 2,600,000 shares of common stock will be reserved for future
issuance upon the exercise of stock options granted to employees, consultants
and directors. The options will be issued at fair value and generally will vest
over five years.

Concurrently with the Exchange, the Company intends to issue 2,390 shares
of common stock to AICL in exchange for its 40% interest in AAPI. The Company
will account for this transaction as a purchase and eliminate the minority
interest liability and recognize goodwill of approximately $ .

16. PRO FORMA ADJUSTMENTS:

STATEMENT OF INCOME

Pro forma adjustments are presented to reflect a provision for income taxes
as if AEI had not been an S Corporation for all of the periods presented. Pro
forma net income per common share is based on the weighted average number of
shares outstanding as if the Reorganization had occurred at the beginning of the
period presented.

BALANCE SHEET

As discussed in Note 1, the Company intends to reorganize prior to the
effective date of the contemplated offering. AEI will terminate its S
Corporation status at which time additional deferred tax liabilities of $10,000
will be recorded for existing temporary differences between the book and tax
bases of assets and liabilities. If the termination of AEI's S Corporation
status would have occurred on June 30, 1997, AEI would have declared a
distribution of $11,800 of previously taxed income. Any amounts remaining in
retained earnings related to AEI will be reclassified to additional paid in
capital. The pro forma balance sheet is presented to reflect these changes as if
they occurred on June 30, 1997.

F-22
<PAGE> 95

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

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDERS OR ANY OF THE UNDERWRITERS.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATES AS OF WHICH THE INFORMATION IS GIVEN IN
THIS PROSPECTUS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH SOLICITATION.
------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary..................... 3
Risk Factors........................... 6
Reorganization......................... 18
Relationship with Anam Industrial Co.,
Ltd.................................. 19
Use of Proceeds........................ 22
Dividend Policy........................ 22
Capitalization......................... 23
Dilution............................... 24
Selected Consolidated Financial Data... 25
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 27
Business............................... 37
Management............................. 52
Certain Transactions................... 56
Principal and Selling Stockholders..... 59
Description of Capital Stock........... 60
Shares Eligible for Future Sale........ 61
Certain United States Federal Tax
Consequences to Non-United States
Holders of Common Stock.............. 63
Underwriting........................... 66
Legal Matters.......................... 69
Experts................................ 69
Additional Information................. 69
Glossary............................... 70
Index to Consolidated Financial
Statements........................... F-1
</TABLE>

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

UNTIL , 1997 (25 DAYS AFTER THE COMMENCEMENT OF THE OFFERINGS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
======================================================
======================================================

AMKOR
TECHNOLOGY, INC.

COMMON STOCK
($.001 PAR VALUE)

LOGO
SALOMON BROTHERS INC

BANCAMERICA
ROBERTSON STEPHENS

COWEN & COMPANY
PROSPECTUS

DATED , 1997
======================================================
<PAGE> 96

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses, other than
underwriting discounts, commissions and certain accountable expenses, payable by
the Company in connection with the sale of Common Stock being registered. All
amounts are estimates except the SEC registration fee and the NASD filing fee.

<TABLE>
<S> <C>
SEC Registration Fee............................................. $121,970
NASD Filing Fee.................................................. 30,500
Nasdaq National Market System Listing Fee........................ 50,000
Printing Fees and Expenses....................................... *
Legal Fees and Expenses.......................................... *
Accounting Fees and Expenses..................................... *
Blue Sky Fees and Expenses....................................... 5,000
Transfer Agent and Registrar Fees................................ *
Miscellaneous.................................................... *
----------
Total.................................................. $ *
==========
</TABLE>

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

* To be provided by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law permits a corporation
to include in its charter documents, and in agreements between the corporation
and its directors and officers, provisions expanding the scope of
indemnification beyond that specifically provided by the current law.

The Registrant's Amended and Restated Certificate of Incorporation provides
for the indemnification of directors to the fullest extent permissible under
Delaware law.

The Registrant's Bylaws provide for the indemnification of officers,
directors and third parties acting on behalf of the Registrant if such person
acted in good faith and in a manner reasonably believed to be in and not opposed
to the best interest of the Registrant, and, with respect to any criminal action
or proceeding, the indemnified party had no reason to believe his conduct was
unlawful.

The Registrant has entered into indemnification agreements with its
directors and executive officers, in addition to indemnification provided for in
the Registrant's Bylaws, and intends to enter into indemnification agreements
with any new directors and executive officers in the future.

The form of Underwriting Agreement filed as Exhibit 1.1 hereto provides for
the indemnification of the Registrant's directors and officers in certain
circumstances as provided therein.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

In , 1997, shares of the Company's Common Stock were
issued to Mr. James Kim and members of his family in exchange for their
outstanding interests in AEI and certain other Amkor Companies. In addition, in
, 1997 shares of Common Stock were issued to AICL
in exchange for its 40% interest in Amkor/Anam Pilipinas, Inc. Such issuances
were made pursuant to an exemption from registration under Section 4(2) of the
Securities Act of 1933, as amended. See "Reorganization" in Part I hereof. The
recipients of securities in each such transaction represented their intention to
acquire the securities for investment only and not with a view to or for sale in
connection with any distribution thereof and appropriate legends were affixed to
the share certificates

II-1
<PAGE> 97

issued in such transactions. All recipients had adequate access, through their
relationships with the Company, to information about the Registrant.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE

(a) Exhibits

<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement.*
3.1 Certificate of Incorporation.+
3.2 Bylaws.+
4.1 Specimen Common Stock Certificate.*
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation, as to the
legality of the securities being registered.*
10.1 Form of Indemnification Agreement for directors and officers.*
10.2 1997 Stock Plan and form of agreement thereunder.*
10.3 Receivables Purchase Agreement between Amkor Electronics, Inc. and Amkor
Receivables Corp., dated June 20, 1997.+
10.4 Tax Indemnification Agreement dated , 1997 between Amkor Technology,
Inc., Amkor Electronics, Inc. and certain stockholders of Amkor Technology, Inc.*
10.5 Bridge Loan Agreement between Amkor/Anam Pilipinas, Inc., Anam Industrial Co.,
Ltd. and the Korea Development Bank for $55,000,000, dated July 1997.+
10.6 Loan Agreement between Amkor/Anam Pilipinas, Inc. and the Korea Development Bank
for $71,000,000, dated March 28, 1996.+
10.7 Loan Agreement between Amkor/Anam Pilipinas, Inc. and the Korea Development Bank
for $50,000,000, dated September 7, 1995.+
10.8 Commercial Office Lease between Chandler Corporate Center Phase II, G.P. and
Amkor Electronics, Inc., dated September 6, 1993.+
10.9 Commercial Office Lease between the 12/31/87 Trusts of Susan Y., David D. and
John T. Kim and Amkor Electronics, Inc., dated October 1, 1996.+
10.10 Commercial Office Lease between the 12/31/87 Trusts of Susan Y., David D., and
John T. Kim and Amkor Electronics, Inc., dated June 14, 1996.+
10.11 Contract of Lease between Corinthian Commercial Corporation and Amkor/Anam
Pilipinas Inc., dated October 1, 1990.+
10.12 Contract of Lease between Salcedo Sunvar Realty Corporation and Automated
Microelectronics, Inc., dated May 6, 1994.+
10.13 Lease Contract between AAPI Realty Corporation and Amkor/Anam Advanced Packaging,
Inc., dated November 6, 1996.+
10.14 Immunity Agreement between Amkor Electronics, Inc. and Motorola, Inc., dated June
30, 1993.++
10.15 Assembly Agreement between Amkor Electronics, Inc. and Intel Corporation, dated
July 17, 1991.++
10.16 1997 Director Stock Option Plan and form of agreement thereunder.*
10.17 Amkor Electronics, Inc. 401(k) Plan.*
21.1 List of Subsidiaries of the Registrant.*
23.1 Consent of Independent Public Accountants.
23.2 Consent of Counsel (included in Exhibit 5.1).*
</TABLE>

II-2
<PAGE> 98

<TABLE>
<C> <S>
24.1 Power of Attorney.+
27.1 Financial Data Schedule+
</TABLE>

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

* To be filed by amendment.

+ Previously Filed.

++ Confidential Treatment requested as to certain portions of this exhibit.

SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS

Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.

ITEM 17. UNDERTAKINGS

The Registrant hereby undertakes to provide the Underwriters at the closing
specified in the Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriters to permit prompt
delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the provisions described in Item 14 above, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer, or
controlling person of the Registrant in the successful defense of any action,
suit, or proceeding) is asserted by such director, officer, or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933, and will be governed by the final adjudication of such
issue.

The undersigned Registrant undertakes that: (1) for purposes of determining
any liability under the Securities Act of 1933, the information omitted from the
form of prospectus as filed as part of the registration statement in reliance
upon Rule 430A and contained in the form of prospectus filed by the Registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the time it was declared
effective, and (2) for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

II-3
<PAGE> 99

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-1 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of West
Chester, State of Pennsylvania, on the 27th day of October 1997.

AMKOR TECHNOLOGY, INC.

By: /s/ FRANK J. MARCUCCI

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

Frank J. Marcucci

Chief Financial Officer and
Secretary

Pursuant to the requirements of the Securities Act of 1933, the Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- -----------------
<C> <S> <C>

/s/ JAMES J. KIM* Chief Executive Officer and October 27, 1997
- --------------------------------------------- Chairman
James J. Kim

/s/ FRANK J. MARCUCCI Chief Financial Officer and October 27, 1997
- --------------------------------------------- Secretary
Frank J. Marcucci

/s/ JOHN N. BORUCH* President and Director October 27, 1997
- ---------------------------------------------
John N. Boruch

/s/ LOUIS J. SIANA* Director October 27, 1997
- ---------------------------------------------
Louis J. Siana

*By: /s/ FRANK J. MARCUCCI
- ---------------------------------------------
Frank J. Marcucci
(Attorney-in-fact)
</TABLE>

II-4
<PAGE> 100

INDEX TO FINANCIAL STATEMENT SCHEDULES*

<TABLE>
<CAPTION>
SEQUENTIALLY
SCHEDULE NUMBERED
NUMBER DESCRIPTION OF SCHEDULES PAGE
- -------- ------------------------------------------------------------------- ------------
<C> <S> <C>
Report of Independent Public Accountants........................... S-2
VIII Valuation and Qualifying Accounts.................................. S-3
</TABLE>

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

* All other schedules are omitted as the required information is inapplicable or
the information is presented in the financial statements or related rates.

S-1
<PAGE> 101

After the Exchange transaction discussed in Note 1 and the issuance of
shares of common stock of the Company to Anam Industrial Co., Ltd. in exchange
for their 40% interest in AAPI as discussed in Note 15 to the Amkor Technology,
Inc. and subsidiaries' consolidated financial statements is effected, we expect
to be in position to render the following audit report.

October 27, 1997

ARTHUR ANDERSEN LLP

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Amkor Technology, Inc.:

We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements of Amkor Technology, Inc. and subsidiaries
included in this prospectus and have issued our report thereon dated ,
1997. Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index above is
presented for purpose of complying with the Securities and Exchange Commission
and is not a part of the basic financial statements. This schedule has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, fairly states in all material respects the
financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.

S-2
<PAGE> 102

SCHEDULE VIII

AMKOR TECHNOLOGY, INC.

VALUATION AND QUALIFYING ACCOUNTS
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
BALANCE AT ADDITIONS BALANCE AT
BEGINNING CHARGED TO END
OF PERIOD EXPENSE WRITE-OFFS OTHER OF PERIOD
---------- ---------- --------- -------- ----------
<S> <C> <C> <C> <C> <C>
Year ended December 31,
1994:
Allowance for doubtful
accounts........... $ 524 $ 500 $ (546) $ 9 $ 487
Year ended December 31,
1995:
Allowance for doubtful
accounts........... $ 487 $ 500 $ -- $ 56 $ 1,043
Year ended December 31,
1996:
Allowance for doubtful
accounts........... $ 1,043 $ 660 $ (564) $ 40 $ 1,179
Six months ended June
30, 1997:
Allowance for doubtful
accounts........... $ 1,179 $ 800 $ -- -- $ 1,979
</TABLE>

S-3
<PAGE> 103

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement.*
3.1 Certificate of Incorporation.+
3.2 Bylaws.+
4.1 Specimen Common Stock Certificate.*
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation, as to
the legality of the securities being registered.*
10.1 Form of Indemnification Agreement for directors and officers.*
10.2 1997 Stock Plan and form of agreement thereunder.*
10.3 Receivables Purchase Agreement between Amkor Electronics, Inc. and Amkor
Receivables Corp., dated June 20, 1997.+
10.4 Tax Indemnification Agreement dated , 1997 between Amkor
Technology, Inc., Amkor Electronics, Inc. and certain stockholders of Amkor
Technology, Inc.*
10.5 Bridge Loan Agreement between Amkor/Anam Pilipinas, Inc., Anam Industrial Co.,
Ltd. and the Korea Development Bank for $55,000,000, dated July 1997.+
10.6 Loan Agreement between Amkor/Anam Pilipinas, Inc. and the Korea Development
Bank for $71,000,000, dated March 28, 1996.+
10.7 Loan Agreement between Amkor/Anam Pilipinas, Inc. and the Korea Development
Bank for $50,000,000, dated September 7, 1995.+
10.8 Commercial Office Lease between Chandler Corporate Center Phase II, G.P. and
Amkor Electronics, Inc., dated September 6, 1993.+
10.9 Commercial Office Lease between the 12/31/87 Trusts of Susan Y., David D. and
John T. Kim and Amkor Electronics, Inc., dated October 1, 1996.+
10.10 Commercial Office Lease between the 12/31/87 Trusts of Susan Y., David D., and
John T. Kim and Amkor Electronics, Inc., dated June 14, 1996.+
10.11 Contract of Lease between Corinthian Commercial Corporation and Amkor/Anam
Pilipinas Inc., dated October 1, 1990.+
10.12 Contract of Lease between Salcedo Sunvar Realty Corporation and Automated
Microelectronics, Inc., dated May 6, 1994.+
10.13 Lease Contract between AAPI Realty Corporation and Amkor/Anam Advanced
Packaging, Inc., dated November 6, 1996.+
10.14 Immunity Agreement between Amkor Electronics, Inc. and Motorola, Inc., dated
June 30, 1993.++
10.15 Assembly Agreement between Amkor Electonics, Inc. and Intel Corporation, dated
July 17, 1991.++
10.16 1997 Director Stock Option Plan and form of agreement thereunder.*
10.17 Amkor Electronics, Inc. 401(k) Plan.*
21.1 List of Subsidiaries of the Registrant.*
23.1 Consent of Independent Auditors.
23.2 Consent of Counsel (included in Exhibit 5.1).*
24.1 Power of Attorney (see page II-4).+
27.1 Financial Data Schedule.+
</TABLE>

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

* To be filed by amendment.

+ Previously Filed.

++ Confidential Treatment requested as to certain portions of this exhibit.

<PAGE> 1
EXHIBIT 10.14

IMMUNITY AGREEMENT

THIS AGREEMENT is effective as of the 30 day of June, 1993 by and
between MOTOROLA, INC., a Delaware corporation having an office at 3102 North
56th Street, Phoenix, Arizona 85018, (hereinafter called "MOTOROLA"), and AMKOR
ELECTRONICS, INC., a corporation of Pennsylvania having an office at 1345
Enterprise Dr., West Chester, Pennsylvania, (hereinafter called "ASSEMBLY
HOUSE").

WHEREAS, MOTOROLA owns and has, or may have patents issued, and
applications for patents pending, in various countries of the world which relate
to ball grid array (BGA) PACKAGEs (as hereinafter defined), and

WHEREAS, ASSEMBLY HOUSE owns and has, or may have, rights in various
patents issued, and applications for patents pending, in various countries of
the world which may relate to BGA PACKAGEs, and

WHEREAS, ASSEMBLY HOUSE and MOTOROLA are engaged in continuing
research, development and engineering in regard to BGA PACKAGES and have
programs for the patenting of inventions resulting therefrom; and

WHEREAS, MOTOROLA is interested in proliferating BGA PACKAGEs as a
standard in the semiconductor industry; and

WHEREAS, ASSEMBLY HOUSE is interested in providing the service of
making BGA PACKAGEs for semiconductor manufacturers including those who are
competitors of MOTOROLA;

NOW THEREFORE, in consideration of the mutual covenants and conditions
hereinafter set forth, it is agreed as follows:

SECTION 1 - DEFINITIONS

1.1 SUBSIDIARY(IES) means a corporation, company, or other entity more than
fifty percent (50%) of whose outstanding shares or securities (representing
the right to vote for the election of directors or other managing
authority) are, now or hereafter, owned or controlled, directly or
indirectly by a party hereto, but such corporation, company, or other
entity shall be deemed to be a SUBSIDIARY only so long as such ownership or
control exists.

1.2 AFFILIATE(S) means Anam Industrial Corporation which has a manufacturing
operation in South Korea and Amkor/Anam Philippines, Inc. which has a
manufacturing operation in the Philippines both operating under common
control with ASSEMBLY HOUSE and for which ASSEMBLY HOUSE has authority to
contractually obligate to third parties.

1.3 SEMICONDUCTIVE MATERIAL means any material whose conductivity is
intermediate to that of metals and insulators at room temperature and whose
conductivity, over some temperature range, increases with increases in
temperature. Such material shall include but not be limited to refined
products, reaction products, reduced products, mixtures and compounds.

1.4 INTEGRATED CIRCUIT STRUCTURE means an integral unit consisting primarily of
a plurality of active and/or passive circuit elements associated on, or in,
a unitary body of SEMICONDUCTIVE MATERIAL for performing electrical or
electronic functions.

<PAGE> 2
1.5 BGA PACKAGE means a housing for an INTEGRATED CIRCUIT STRUCTURE or
STRUCTUREs in which the INTEGRATED CIRCUIT STRUCTURE or STRUCTUREs are
mounted on one side of a substrate of printed circuit board material or the
like and are wire bonded to the substrate, plastic overlies the INTEGRATED
CIRCUIT STRUCTURE or STRUCTUREs, and pads for receiving solder balls or the
like and providing electrical contacts to the integrated circuit device are
mounted on the substrate on the side opposite to that on which the
INTEGRATED CIRCUIT STRUCTURE or STRUCTUREs are mounted. Some BGA packages
may have some pads which are not electrically connected to the INTEGRATED
CIRCUIT STRUCTURE or STRUCTURES.

1.6 MOTOROLA PATENTS means all classes or types of patents, utility models,
design patents and applications for the aforementioned of all countries of
the world relating to BGA PACKAGEs and enhancements thereto which, prior to
the date of expiration or termination of this Agreement, are:

(i) issued, published or filed, and which arises out of inventions made
solely by one or more employees of MOTOROLA or a SUBSIDIARY thereof,
or

(ii) are acquired by MOTOROLA or a SUBSIDIARY thereof,

and under which and to the extent to which and subject to the conditions
under which MOTOROLA or a SUBSIDIARY thereof may have, as of the EFFECTIVE
DATE of this Agreement, or may thereafter during the term of this Agreement
acquire, the right to grant licenses or rights of the scope granted herein
without the payment of royalties or other consideration to third persons,
except for payments to third persons (a) for inventions made by said third
persons while engaged by MOTOROLA or a SUBSIDIARY thereof, and (b) as
consideration for the acquisition of such patents, utility models, design
patents and applications.

1.7 ASSEMBLY HOUSE PATENTS means all classes or types of patents, utility
models, design patents and applications for the aforementioned of all
countries of the world relating to BGA PACKAGEs and enhancements thereto
which, prior to the date of expiration or termination of this Agreement,
are:

(i) issued, published or filed, and which arise out of inventions made
solely by one or more employees of ASSEMBLY HOUSE or a SUBSIDIARY or
an AFFILIATE thereof, or

(ii) are acquired by ASSEMBLY HOUSE or a SUBSIDIARY or an AFFILIATE
thereof,

and under which and to the extent to which and subject to the conditions
under which ASSEMBLY HOUSE or a SUBSIDIARY or an AFFILIATE thereof may
have, as of the EFFECTIVE DATE of this Agreement, or may thereafter during
the term of this Agreement acquire, the right to grant licenses or rights
of the scope granted herein without the payment of royalties or other
consideration to third persons, except for payments to third persons (a)
for inventions made by said third persons while engaged by ASSEMBLY HOUSE
or a SUBSIDIARY or an AFFILIATE thereof and (b) as consideration for the
acquisition of such patents, utility models, design patents and
applications.

1.8 EFFECTIVE DATE means the date of the last signature hereto.

Page 2
<PAGE> 3
SECTION 2 - MUTUAL RELEASES

2.1 MOTOROLA hereby releases, acquits and forever discharges ASSEMBLY HOUSE and
its SUBSIDIARIES and AFFILIATES for any time prior to the EFFECTIVE DATE,
from any and all claims or liability for infringement or alleged
infringement of any MOTOROLA PATENTS for which immunity from suit is herein
granted by MOTOROLA.

2.2 ASSEMBLY HOUSE and its SUBSIDIARIES and AFFILIATES hereby releases, acquits
and forever discharges MOTOROLA for any time prior to the EFFECTIVE DATE,
from any and all claims or liability for infringement or alleged
infringement of any ASSEMBLY HOUSE PATENTS for which immunity from suit is
herein granted by ASSEMBLY HOUSE to MOTOROLA.

SECTION 3 - IMMUNITY FROM SUIT

3.1 MOTOROLA hereby grants to ASSEMBLY HOUSE and its SUBSIDIARIES and
AFFILIATES, for the term of this Agreement, immunity from suit under
MOTOROLA PATENTS for making BGA PACKAGES, with or without solder balls or
the like, for another and for ASSEMBLY HOUSE internal use. In no event
shall the immunity from suit apply to MOTOROLA PATENTS which are infringed
by the INTEGRATED CIRCUIT STRUCTURE or STRUCTUREs independent of being
packaged in BGA PACKAGES.

3.2 ASSEMBLY HOUSE and its SUBSIDIARIES and AFFILIATES hereby grant to MOTOROLA
and SUBSIDIARIES thereof, for the term of this Agreement, immunity from
suit under ASSEMBLY HOUSE PATENTS for making and/or having made BGA
PACKAGES, with or without solder balls or the like, and for the subsequent
sale and use thereof. In no event shall the immunity from suit apply to
ASSEMBLY HOUSE PATENTS which are infringed by the INTEGRATED CIRCUIT
STRUCTURE or STRUCTUREs independent of being packaged in BGA PACKAGEs.

3.3 No licenses under any copyrights or mask work rights of either MOTOROLA or
ASSEMBLY HOUSE or a SUBSIDIARY or an AFFILIATE thereof, are granted under
this Agreement.

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<PAGE> 4
SECTION 4 - PAYMENTS

4.1 In partial consideration of the rights granted by MOTOROLA under Section 3,
for the period beginning on the EFFECTIVE DATE and extending to December
31, 2002, ASSEMBLY HOUSE agrees to pay MOTOROLA a royalty based on the
total number of pads on BGA PACKAGEs made by ASSEMBLY HOUSE and its
SUBSIDIARIES and AFFILIATES, and shipped and invoiced to customers of
ASSEMBLY HOUSE or its SUBSIDIARIES or AFFILIATES, excluding those made for
MOTOROLA and excluding returns.

4.1.1 The royalty shall be [*] per pad until a royalty of [*] has been
accrued.

4.1.2 After a royalty of [*] has been accrued, the royalty shall be [*]
per pad.

4.2 A payment for 1993 shall be made by February 28, 1994 and shall be
determined by the total number of pads on BGA PACKAGEs subject to the
immunity from suit of section 3.1 made, shipped and invoiced during 1993 to
customers of ASSEMBLY HOUSE or its SUBSIDIARIES or AFFILIATES excluding
those made for MOTOROLA and excluding returns.

4.3 Payments for years subsequent to 1993 shall be on a quarterly basis. Within
forty-five (45) days after each calendar quarter ending March 31, June 30,
September 30, and December 31, ASSEMBLY HOUSE shall pay to MOTOROLA the
royalties payable hereunder for the respective calendar quarter ending on
such date as determined above.

4.4 Any payment hereunder which shall be delayed for more than thirty (30) days
beyond the due date shall be subject to an interest charge of one (1)
percent per month on the unpaid balance payable in United States currency
until paid. The foregoing payment of interest shall not affect MOTOROLA's
right to terminate in accordance with Section 5.

4.5 ASSEMBLY HOUSE shall keep full, clear and accurate records with respect to
BGA PACKAGEs. MOTOROLA shall have the right through a mutually agreed upon
independent auditor to examine and audit no more than once a year at a
mutually agreeable time all such records and such other records and
accounts as may under recognized accounting practices contain information
bearing upon the amount of royalty payable to MOTOROLA under this
Agreement. Prompt adjustment shall be made to compensate for any errors or
omissions disclosed by such examination or audit. ASSEMBLY HOUSE may
require the auditor to execute an agreement to hold all customer and
financial information made available to the auditor in confidence, i.e., to
not disclose such information to MOTOROLA or third parties. Thus, reporting
of the information to MOTOROLA shall not be customer specific and shall
relate only to the accuracy of the royalty payment under review. Neither
such right to examine and audit nor the right to receive such adjustment
shall be affected by any statement to the contrary appearing on a check or
otherwise. MOTOROLA shall be responsible for the compensation of the
auditor.

4.6 Within forty-five (45) days after 1993 and thereafter within forty-five
(45) days after each calendar quarter ending March 31, June 30, September
30, December 31 and continuing thereafter until all royalties payable
hereunder shall have been reported and paid, ASSEMBLY HOUSE shall furnish
to MOTOROLA a detailed and complete written statement, certified by a
responsible officer of ASSEMBLY HOUSE as

Page 4

- ----------------------------
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.
<PAGE> 5
showing all BGA PACKAGEs which were either manufactured, sold, leased, put
into use, or otherwise disposed of during such periods, and the amount
payable thereon. If no such BGA PACKAGEs have been manufactured, sold,
leased, put into use, or otherwise disposed of, that fact shall be shown on
such statement.

4.7 Payments hereunder are to be made to MOTOROLA's New York City account at
CITIBANK 38491386, 1 Citicorp Center, 399 Park Avenue, New York, New York
10043. Notice of payments shall be sent by ASSEMBLY HOUSE to MOTOROLA's
address in Section 6.9.

SECTION 5 - TERM AND TERMINATION AND ASSIGNABILITY

5.1 The term of this Agreement shall be from the EFFECTIVE DATE until December
31, 2002 unless earlier terminated as elsewhere provided in this Agreement.

5.2 In the event of any breach of this Agreement by either party hereto
(including ASSEMBLY HOUSE's obligation to make payments under Section 4),
if such breach is not corrected within forty-five (45) days after written
notice describing such breach, this Agreement may be terminated forthwith
by further written notice to that effect from the party noticing the
breach.

5.3 Either party hereto shall also have the right to terminate this Agreement
forthwith by giving written notice of termination to the other party at any
time, upon or after:

5.3.1 the filing by such other party of a petition in bankruptcy or
insolvency; or

5.3.2 any adjudication that such other party is bankrupt or insolvent; or

5.3.3 the filing by such other party of any legal action or document
seeking reorganization, readjustment or arrangement of its business
under any law relating to bankruptcy or insolvency; or

5.3.4 the appointment of a receiver for all or substantially all of the
property of such other party; or

5.3.5 the making by such other party of any assignment for the benefit of
creditors; or

5.3.6 the institution of any proceedings for the liquidation or winding up
of such other party's business or for the termination of its
corporate charter.

5.4 In the event of termination of this Agreement by one party pursuant to
Section 5.2, the licenses and rights granted to or for the benefit of that
one party hereto and its SUBSIDIARIES under MOTOROLA PATENTS or ASSEMBLY
HOUSE PATENTS, as the case may be, depending upon who is the party doing
the terminating, shall survive such termination and shall extend for the
full term of this Agreement, but the licenses and rights granted to or for
the benefit of the other party shall terminate as of the date termination
takes effect.

5.5 At such time as is mutually agreeable, at the written request of either
party hereto to the other party hereto, but in no event less than six (6)
months prior to the expiration of this Agreement, the parties agree to
enter into good faith discussions and negotiations concerning the extension
of or the renewal of the term of this Agreement, including the possible
amendment of the provisions thereof.

Page 5
<PAGE> 6
5.6 The rights or privileges provided for in this Agreement may be assigned or
transferred by either party only with the prior written consent of the
other party, which consent shall not be unreasonably withheld, and with the
authorization or approval of any governmental authority as then may be
required, except to a successor in ownership of all or substantially all of
the assets of the assigning party but such successor, before such
assignment or transfer is effective, shall expressly assume in writing to
the other party the performance of all of the terms and conditions of this
Agreement to be performed by the assigning party.

SECTION 6 - MISCELLANEOUS PROVISIONS

6.1 Each of the parties hereto represents and warrants that it has the right to
grant to or for the benefit of the other the rights and licenses granted
hereunder in Sections 2 and 3.

6.2 Nothing contained in this Agreement shall be construed as:

6.2.1 restricting the right of MOTOROLA or any of its SUBSIDIARIES to
make, use, sell, lease or otherwise dispose of any particular
product or products not herein licensed;

6.2.2 restricting the right of ASSEMBLY HOUSE or any of its SUBSIDIARIES
or AFFILIATES to make, use, sell, lease or otherwise dispose of any
particular product or products not herein licensed;

6.2.3 an admission by ASSEMBLY HOUSE of, or a warranty or representation
by MOTOROLA as to, the validity and/or scope of the MOTOROLA
PATENTS, or a limitation on ASSEMBLY HOUSE to contest, in any
proceeding, the validity and/or scope thereof;

6.2.4 an admission by MOTOROLA of, or a warranty or representation by
ASSEMBLY HOUSE as to, the validity and/or scope of the ASSEMBLY
HOUSE PATENTS, or a limitation on MOTOROLA to contest, in any
proceeding, the validity and/or scope thereof;

6.2.5 conferring any license or other right, by implication, estoppel or
otherwise, under any patent application, patent or patent right,
except as herein expressly granted under the MOTOROLA PATENTS, and
the ASSEMBLY HOUSE PATENTS;

6.2.6 conferring any license or right with respect to any trademark, trade
or brand name, a corporate name of either party or any of their
respective SUBSIDIARIES, or any other name or mark, or contraction,
abbreviation or simulation thereof,

6.2.7 imposing on MOTOROLA any obligation to institute any suit or action
for infringement of any MOTOROLA PATENTS, or to defend any suit or
action brought by a third party which challenges or concerns the
validity of any MOTOROLA PATENTS;

6.2.8 imposing upon ASSEMBLY HOUSE any obligation to institute any suit or
action for infringement of any ASSEMBLY HOUSE PATENTS, or to defend
any suit or action brought by a third party which challenges or
concerns the validity of any ASSEMBLY HOUSE PATENTS;

Page 6
<PAGE> 7
6.2.9 imposing on either party any obligation to file any patent
application or to secure any patent or maintain any patent in force;
or

6.2.10 an obligation on either party to furnish any manufacturing or
technical information under this Agreement except as the same is
specifically provided for herein.

6.3 No express or implied waiver by either of the parties to this Agreement of
any breach of any term, condition or obligation of this Agreement by the
other party shall be construed as a waiver of any subsequent breach of that
term, condition or obligation or of any other term, condition or obligation
of this Agreement of the same or of a different nature.

6.4 Anything contained in this Agreement to the contrary notwithstanding, the
obligations of the parties hereto shall be subject to all laws, both
present and future, of any Government having jurisdiction over either party
hereto, and to orders or regulations of any such Government, or any
department, agency, or court thereof, and acts of war, acts of public
enemies, strikes, or other labor disturbances, fires, floods, acts of God,
or any causes of like or different kind beyond the control of the parties,
and the parties hereto shall be excused from any failure to perform any
obligation hereunder to the extent such failure is caused by any such law,
order, regulation, or contingency but only so long as said law, order,
regulation or contingency continues.

6.5 The captions used in this Agreement are for convenience only, and are not
to be used in interpreting the obligations of the parties under this
Agreement.

6.6 This Agreement and the performance of the parties hereunder shall be
construed in accordance with and governed by the laws of the State of
Illinois.

6.7 If any term, clause, or provision of this Agreement shall be judged to be
invalid, the validity of any other term, clause, or provision shall not be
affected; and such invalid term, clause, or provision shall be deemed
deleted from this Agreement.

6.8 This Agreement sets forth the entire Agreement and understanding between
the parties as to the subject matter hereof and merges all prior
discussions between them, and neither of the parties shall be bound by any
conditions, definitions, warranties, understandings or representations with
respect to such subject matter other than as expressly provided herein or
as duly set forth on or subsequent to the date hereof in writing and signed
by a proper and duly authorized officer or representative of the party to
be bound thereby.

6.9 All notices required or permitted to be given hereunder shall be in writing
and shall be valid and sufficient if dispatched by registered airmail,
postage prepaid, in any post office in the United States, addressed as
follows:

6.9.1 If to MOTOROLA:

Motorola Inc.
1303 East Algonquin Road
Schaumburg, Illinois 60196

Attention: Vice President for
Patents, Trademarks & Licensing

Page 7
<PAGE> 8
6.9.2 If to: AMKOR ELECTRONICS, INC.

Attention:

6.9.3 The date of receipt of such a notice shall be the date for the
commencement of the running of the period provided for in such
notice, or the date at which such notice takes effect, as the case
may be.

Page 8
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
duplicate.

MOTOROLA, INC. AMKOR ELECTRONICS, INC.

/s/ Illegible
-------------------------------- --------------------------------

Vice President & General Manager Vice President & General Manager

Semiconductor Products Sector AMKOR ELECTRONICS, INC.
Motorola, Inc.

Date: 7/1/93 Date: 6/30/93

/s/ James W. Gillman /s/ John Boruch
-------------------------------- --------------------------------
James W. Gillman

Corporate Vice President, Patents,
Trademarks, and Licensing

Motorola, Inc.

Date: 7/13/93

Page 9

<PAGE> 1
EXHIBIT 10.15

ASSEMBLY AGREEMENT

This agreement (the "Agreement") is entered into this 17th day of July, 1991, by
and between INTEL CORPORATION (3065 Bowers Avenue, Santa Clara, CA 95051) and
AMKOR ELECTRONICS INCORPORATED (1345 Enterprise Dr., West Chester, PA 19380).

DEFINITIONS OF THE PARTIES:

A. "Intel" will mean Intel Corporation, a Delaware corporation, who is in the
business of manufacturing and marketing large scale integrated circuits.

B. "Amkor" will mean Amkor Electronics Incorporated, a Pennsylvania
corporation who has entered into an independent business arrangement with
Anam Industrial Company Ltd., (Anam), whereby Amkor will act on Anam's
behalf in soliciting and entering into contract assembly arrangements with
Amkor customers to be performed at Anam.

RECITALS:

A. Intel is desirous of entering into a contract assembly arrangement with
Amkor hereto as more specifically identified herein.

B. Amkor is in the business of doing contract assembly work for integrated
circuit manufacturers.

C. The parties hereto desire to set forth below the conditions and covenants
under which such work will be performed.

NOW THEREFORE, in consideration of the mutual covenants herein contained, the
parties agree as follows:

1. TERM

This Agreement will become effective on the date first indicated above and
will continue for a period of one year, and thereafter will be extended
automatically for additional one-year periods until terminated as provided
below.

<PAGE> 2

2. STATEMENT OF WORK

a. Amkor will assemble and/or process all materials received from Intel
into completed integrated circuits, hereinafter referred to at
"Units," in accordance with Intel's specifications.

b. Intel will supply silicon dice in probed wafer form and certain
assembly materials (as outlined below). hereinafter referred to as
"Kits,"

<TABLE>
<S> <C>
CERAMIC [*]

CERDIP [*]

CERQUAD [*]

CPGA [*]

PDIP [*]

PLCC [*]

SOIC [*]

QFP [*]

TSOP [*]

DIE INSPECTION [*]

RED INKED DIE [*]
</TABLE>

c. In order to enable Amkor to provide the services required by this
Agreement, Intel may loan equipment to Amkor. Amkor agrees to use
such equipment, and any software provided therewith, solely for the
purpose of providing the services required hereunder. Amkor agrees
not to disclose any software to any third party and to use
reasonable efforts to insure all its subcontractors, including Anam,
will comply with the confidentiality provisions of this Agreement.

Intel retains ownership of and title to such equipment. Amkor will
not modify, lease, sublease, assign, or otherwise transfer or
dispose of the equipment. Amkor will not remove, move, or relocate
the equipment without Intel's prior consent. Amkor will make every
effort to ensure that Intel owned equipment is provided safe storage
and proper care at least equal to that afforded other factory-owned
equipment.

d. Amkor will provide all other parts and supplies necessary for
assembly and processing required by this Agreement.

e. Amkor will assemble kits and return completed Units within the
through-put- time outlined in Exhibit A, attached hereto.

f. All materials furnished by Intel will be held by Amkor for the
benefit of Intel. Ownership of such materials will remain with
Intel. Amkor will furnish a [*] report of all Inventories of
such materials. Intel may at any time, upon [*] notice to
Amkor, inventory all such materials in the possession of Amkor.

g. Amkor will provide Intel with a [*] report of its production
schedule, work-in-process inventory, shipments, and any and all
engineering and quality data required for yield loss analysis.

3. PRICE

a. [*]

b. [*]

c. [*]

[*]

4. QUALITY ASSURANCE

a. Amkor Obligations

Amkor will assemble all Units in accordance with Intel
specifications. Any Units not meeting said quality specifications
will be returned to Intel as scrap. Amkor will adhere to Intel's
specifications with respect to piece part control, security,
traceability, and accountability. Amkor hereby acknowledges and
agrees it is responsible to Intel for the return of all Kits
delivered to Amkor by Intel. Kits will be reconciled each month with
any variances finalized within [*] following month end. Intel die
count variances at die prep will not be considered to be a negative
variance. The Kits returned may be either completed Units or
rejects. Because it is difficult or impossible to assess actual
damages, the parties agree that a liquidated damage will be
assessed. Any Kits which Amkor cannot return to Intel as Units or
rejects in any form for any reason whatsoever will subject Amkor to
a liquidated damage of [*] per nonreturned Kits in excess of [*].
The parties further agree that this sum is reasonable and is not
assessed as a penalty. Amkor agrees that any liquidated damages may
be offset against any monies owed to Amkor by Intel.

b. Coordination and Administration

As partial consideration for Intel to enter into this Agreement, and
in order to provide Intel with assurances as to Amkor's compliance
with the quality assurance standards set forth herein, Intel will
have the right to station [*] or more quality assurance personnel at
Amkor's subcontractor's facilities at any time. Amkor and its
subcontractor will provide adequate office space and reasonable
support for the use of such personnel and will permit such personnel
access to the Intel work areas at all times for purposes of
administering the provisions of this Agreement in the areas of
planning, material flow, contract administration, auditing records
and procedures, and auditing process functions relating to the
Units. Amkor will maintain records of the qualifications of each
operator certified to work on Intel's Units and will make such
records available to Intel at Intel's request. Amkor will submit an
annual list of its subcontractor's scheduled material supplier
audits, and will allow, at Intel's prior [*] written request, [*] or
more Intel employees to observe the material supplier audits.

5. WARRANTY

Amkor warrants that the Units delivered hereunder will meet all agreed
upon specifications and will be free from defects in workmanship for a
period of [*] after receipt by Intel. Intel will perform an incoming Units
inspection within [*] of receipt per Exhibit C, attached hereto. If the
Units are rejected, the rejects will be returned to Amkor for
verification.

a. Rejection Rate

i) If, for any given shipment, the Units delivered fail to comply
with this Warranty, then at Intel's option, Intel may reject such
defective Units and return them to Amkor for rework. In the event
rework is not possible, Intel may within [*] from date of
rejection furnish to Amkor sufficient additional parts and
materials to permit Amkor to assemble replacement Units at no
cost to Intel, or reject the work on any or all Units and not pay
for such work.

ii) All rework or replacement labor will be provided by Amkor at
no additional charge as long as the assembly specifications
for the products being reworked or replaced have not
substantially changed since the original labor was provided.

iii) All rework and replacement Units will be completed and
returned to Intel within [*] from the date of receipt by
Amkor.

b. Yields, Quality DPM and Schedule Performance

Amkor agrees to participate in quality enhancement programs as
directed by Intel and to make good faith efforts to meet the goals
set forth in Exhibit D, attached hereto. Intel will establish yield,
quality DPM, and schedule performance goals annually. If such goals
are not met, Amkor agrees to submit a corrective action plan at
Intel's request within [*] of request.

c. Warranty Limitation and Disclaimer

This Warranty will not extend to any defect in the Kits delivered to
Amkor, nor to any damage caused by Intel's abuse, negligence, loss
or to any damage caused by Intel's abuse, negligence, loss or by any
damage in transit.

d. AMKOR'S SPECIFIC EXPRESS WARRANTIES SET FORTH IN THIS AGREEMENT ARE
IN LIEU OF ALL OTHER WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED
INCLUDING WITHOUT LIMITATION, WARRANTIES AS TO CONDITION,
DESCRIPTION, FITNESS FOR A PARTICULAR PURPOSE, MERCHANTABILITY OR AS
TO ANY OTHER MATTER. AMKOR'S SOLE MONETARY OBLIGATION WILL BE
LIMITED TO VALUE ADDED BY AMKOR AS IT RELATES TO THE ASSEMBLY OF
UNITS. AMKOR WILL NOT BE LIABLE OR RESPONSIBLE FOR ANY CONSEQUENTIAL
INDIRECT, INCIDENTAL, PUNITIVE, OR SPECIAL DAMAGES ARISING, DIRECTLY
OR INDIRECTLY FROM THE ASSEMBLY, DELIVERY, SALE, INSTALLATION, OR
USE OF UNITS DELIVERED TO INTEL UNDER THIS AGREEMENT EXCEPT THAT
NOTHING CONTAINED HEREIN EXCLUDES AMKOR'S LIABILITY TO INTEL FOR
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

6. TERMINATION

a. Termination for Convenience

After the first full year of this Agreement, either party may
terminate any extension of this Agreement

- ----------------------------
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.
<PAGE> 7
without reason at any time by giving to the other party [*] written
notice. [*] both parties agree to negotiate in good faith for a
gradual elimination of services provided under this Agreement.

b. Termination for Cause

In the event that Amkor fails to meet Intel's incoming rejection
rates or yield rates as set forth in Section 5, "Warrant," or
commits any other material breach of this Agreement, then Intel may
give Amkor [*] written notice of intention to terminate the
Agreement. In the event Amkor has not corrected, to Intel's
satisfaction, such deficiencies as specified by Intel within said
[*] period, then this Agreement will terminate automatically without
further notice at the end of said [*] period. If Intel's notice
specifies quality deficiencies, Amkor will discontinue Unit assembly
at Intel's request until such quality problems are corrected.

c. Return of Equipment and Materials

In the event of termination under either subsection 6.a. or 6.b.
above, Amkor will, within [*] from date of termination, account for
and return to Intel all equipment materials, software, and
specifications provided to Amkor by Intel in the same working order
as when provided to Amkor, reasonable wear and tear accepted. In the
event Amkor does not return said equipment, materials, or software
within [*] at Intel's option, Intel will invoice Amkor and Amkor
will pay Intel an amount equal to Intel's net book value.

7. PAYMENT

Amkor will render invoices with each shipment to Intel. All such invoices
will be paid by Intel in U.S. dollars, [*] from date of invoice.
The invoice will be calculated based on the dollar prices set forth in
Exhibit B. [*]

8. TRANSPORTATION AND RISK OF LOSS

Transportation charges and insurance for all equipment. Kits and Units
shipped from Intel to Amkor are to be paid by Intel, except for Units
being returned under Warranty as specified in section 6 above, in which
case Amkor will pay all transportation arrangements and prepay all
transportation charges to return Units from Amkor to Intel. Risk of loss
for all equipment, Kits and Units in transit will remain with Intel.

9. CUSTOMS AND GOVERNMENT REGULATIONS

In the event the Units are exported from the United States or reexported
from a foreign destination by Amkor, Amkor will insure that the
distribution and export/reexport of the Units is in compliance with all
laws, regulations, orders, or other restrictions of the U.S. Export
Administration Regulations. Amkor agrees that neither it nor any of its
subsidiaries or subcontractors will export/reexport any technical data,
process, Units or service, directly or indirectly, to any country for
which the United States government or any agency thereof requires an
export license or other government approval without first obtaining such
license or approval.

10. INDEMNITY

a. Amkor agrees to defend, indemnify, and hold Intel harmless from and
against any and all liability, claims, and the associated costs and
expenses (including attorney's fees), which it may hereafter incur
or become responsible for as a result of death or bodily injuries to
any person, destruction or damage to any property, caused in whole
or in part, by any acts, errors, or omissions by Amkor, its
subcontractor, including but limited to Anam, its employees or
agents.

b. Amkor assumes no obligation or liability of any kind with respect to
claims of infringement of United States or foreign patents,
copyrights, trademarks or other proprietary rights arising out of or
relating to Intel's purchase, importation, use, possession, sale or
delivery of any product or services sold to Intel by Amkor, and
Intel shall indemnify, defend and hold Amkor harmless from any and
all such claims and liabilities, damages and expenses, including
attorneys fees.

8
<PAGE> 9

11. GENERAL

a. Confidentiality

All specifications, written documentation, and other proprietary
information transferred by the providing party to the receiving
party shall be considered the confidential Information of the
providing party. The receiving party shall not use said Information
for any purpose other than the performance of this Agreement and
shall not disclose such information to any third party without the
prior written consent of the providing party.

b. Assignment

Intel may assign this Agreement or any interest herein to any Intel
affiliated company without Amkor's consent and Amkor may only assign
this Agreement to Anam Industrial Co., Ltd. with Intel's prior
written consent. Otherwise, the parties hereto will not assign this
Agreement nor any interest herein, nor any right hereunder without
the prior written consent of the other party.

c. Entire Agreement

This Agreement and the referenced exhibits set forth the entire
Agreement of the parties with respect to the subject matter hereof,
and supersedes all prior negotiations, correspondence and Agreements
pertaining thereto. No modification or waiver of any provision of
this Agreement or consent to any departure therefrom will be
effective unless made in writing by officers of the parties hereto.

d. Force Majeure

The parties hereto will not be liable for any failure to perform due
to unforeseen circumstances or causes beyond that party's reasonable
control. Examples of such causes are acts of God, war, riot,
embargoes, acts of civil or military authority, fire, flood,
accidents, or shortages of transportation facilities, fuel, labor,
or materials which cannot be reasonably replaced from other sources.

e. Controlling Law

This Agreement will be governed by, subject to, and construed
according to the laws of the State of California, United States of
America, excluding its Conflicts of Laws provisions.

9
<PAGE> 10

f. Severability

If any provision of this Agreement will be held to be invalid,
illegal, or unenforceable, the validity, legality, and
enforceability of the remaining provisions will not in any way be
affected or impaired thereby.

g. Amkor agrees to abide by the attached Record Retention Policy of
Intel.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the dates indicated by their respective signatures.

AMKOR ELECTRONICS, INCORPORATED INTEL CORPORATION

BY: /s/ illegible By: /s/ illegible
---------------------------- ------------------------------
TITLE: Vice President of Sales TITLE: General Manager
------------------------ Contracting and Random
Memory Access Division
---------------------------
DATE: August 14, 1991 DATE: August 6, 1991
------------------------- ----------------------------

10
<PAGE> 11

Exhibit A

1991 Throughout Time Goal

[*]

EXHIBIT B (Page 1 of 3)

Pricing Settlement

***Pricing Effective 4/1/91***

<TABLE>
<CAPTION>
PACKAGE
- -------------------------
<S> <C>
PDIP [*]

PLCC

OFP

PQPP

SOOP

DRAM

</TABLE>

Pricing Settlement

***Pricing Effective 4/1/91***

PACKAGE
------------------------------
<S> <C> <C>
PLATE

PGA [*]

CRQ

CQ
CL

CER-
QUAD

CER-
DIP

DIE
INSPEC-
TION

RED
INKED
DIE

DOUBLE
SAW

SHIP-
PING
TRAYS

SHIP-
PING
TUBES

</TABLE>

EXHIBIT B (PAGE 3 OF 3)

***Pricing Effective 4/1/91***

LOT CHARGES

1. Qualification lots are provided at a cost of [*] per lot, plus the Unit
price multiplied by the total number of Units. Qualification lots
include full documentation with summary report.

2. Engineering/small lots are provided at a cost of [*] per lot, plus the
Unit price multiplied by the total number of Units.

3. Mechanical samples are provided at a cost of [*] the Unit price.
Minimum lot charge is [*].

4. Fast Track lots are provided at a cost of [*] the Unit price plus a
processing lot charge of [*]. Fast Track assembly requests must be made
of and acknowledged by the factory.

EXHIBIT C

INCOMING TESTING BY CUSTOMER

<TABLE>
<CAPTION>
SAMPLE
TEST SPEC SIZE CERDIP PLASTIC
---- ---- ---- ------ -------
<S> <C> <C> <C> <C>
Package Visual 20-500 100 X X
Fine/Gross Leak 20-044 100 X
Centrifuge 15-504 112 X
PIND Test 25-310A 100 X
Open/Short 15-528 100 X X
X-ray 15-577 20 X

</TABLE>

<TABLE>
<CAPTION>
SAMPLE
TEST SPEC SIZE CERDIP PLASTIC
---- ---- ---- ------ -------
<S> <C> <C> <C> <C>
85/85 25-308 55 X
Stream Test 25-355 55 X
Temp Cycle 15-518 55 X
Solderability 15-335 30 X
Thermal Shock 25-334 100 X
Torque Test 25-350 50 X
Centrifuge 15-504 130 X

</TABLE>

Specifications and requirements for incoming package quality and reliability
monitors are more fully described in Intel's Specification Reference Number
HK-S010-0.

<PAGE> 16

EXHIBIT D

QUALITY GOALS

1991 YIELD (- OPT) GOALS
- ---------------------------
IWS 20-500 Revision 9

(%)

PACKAGE TYPE QI `91 Q2 `91 Q3 `91 Q4 `91
- ------------ ------ ------ ------ ------
<S> <C> <C> <C> <C>

[*]

</TABLE>

1991 INCOMING QUALITY GOALS
- ---------------------------
Intel Source Q.A.

<TABLE>
<CAPTION>
(DPM)

PACKAGE TYPE QI `91 Q2 `91 Q3 `91 Q4 `91
- ------------ ------ ------ ------ ------
<S> <C> <C> <C> <C>

[*]

</TABLE>

1991 Schedule Performance Goal

LIPAS (Line Item Performance Against Schedule): [*]

VOLPAS (Total Volume Performance Against Schedule): [*]

* = GREATER THAN SYMBOL

<PAGE> 1
EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our reports
and to all references to our Firm included in or made a part of this
Amendment No. 1 to the Registration Statement (no. 333-37235) on Form S-1.

ARTHUR ANDERSEN LLP

Philadelphia, Pa.
October 24, 1997