CHARTERED SEMICONDUCTOR MANUFACTURING LTD, F-1/A, 1999-10-21

CHARTERED SEMICONDUCTOR MANUFACTURING LTD
F-1/A, 1999-10-21
SEMICONDUCTORS & RELATED DEVICES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 21, 1999

Registration No. 333-88397

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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

AMENDMENT NO. 1

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

CHARTERED SEMICONDUCTOR MANUFACTURING LTD
(Exact name of registrant as specified in its charter)

NOT APPLICABLE
(Translation of Registrant's name into English)

<TABLE>
<S> <C> <C>
REPUBLIC OF SINGAPORE 3674 NOT APPLICABLE
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>

60 WOODLANDS INDUSTRIAL PARK D
STREET 2, SINGAPORE 738406
(65) 362-2838
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

CHARTERED SEMICONDUCTOR MANUFACTURING, INC.
1450 MCCANDLESS DRIVE
MILPITAS, CALIFORNIA 95035
(408) 941-1100
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

Copies to:

<TABLE>
<S> <C> <C>
CHRISTOPHER L. KAUFMAN, ESQ. CHRISTINA ONG, ESQ. RICHARD S. LINCER, ESQ.
MICHAEL W. STURROCK, ESQ. TAN TZE GAY, ESQ. DAVID W. HIRSCH, ESQ.
LATHAM & WATKINS ALLEN & GLEDHILL CLEARY, GOTTLIEB, STEEN & HAMILTON
20 CECIL STREET 36 ROBINSON ROAD 39TH FLOOR, BANK OF CHINA TOWER
#25-02/03/04 THE EXCHANGE #18-01 CITY HOUSE ONE GARDEN ROAD
SINGAPORE 049705 SINGAPORE 068877 CENTRAL, HONG KONG, S.A.R., CHINA
(65) 536-1161 (65) 225-1611 (852) 2521-4122
</TABLE>

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

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 this Form is a post-effective amendment filed pursuant to Rule 462(d)
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,
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 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

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION, DATED OCTOBER 21, 1999

PROSPECTUS
225,000,000 ORDINARY SHARES
DIRECTLY OR IN THE FORM OF AMERICAN DEPOSITARY SHARES

CHARTERED LOGO
S$ PER ORDINARY SHARE
US$ PER ADS
------------------

We are offering 225,000,000 ordinary shares, directly or in the form of
American Depositary Shares. Each American Depositary Share, or ADS, represents
the right to receive ten ordinary shares. The ADSs will be offered in U.S.
dollars and the ordinary shares will be offered in Singapore dollars. Of the
225,000,000 ordinary shares that we are offering, 150,000,000 are being offered
in the United States and Canada and 75,000,000 are being offered outside the
United States and Canada, in each case, directly or in the form of ADSs. We are
also offering 25,000,000 ordinary shares in Singapore through a separate
offering.

This is our initial public offering. We currently expect the initial public
offering price to be between US$16.00 and US$18.00 per ADS and S$2.71 and S$3.05
per ordinary share (the equivalent of US$1.60 and US$1.80 per ordinary share
based on an exchange rate of S$1.6940 to US$1.00 on October 1, 1999). We expect
the ADSs to be approved for quotation on the Nasdaq National Market under the
symbol "CHRT" and the ordinary shares to be approved for listing on the Stock
Exchange of Singapore Limited, in each case subject to official notice of
issuance.
------------------

INVESTING IN OUR ORDINARY SHARES AND ADSS INVOLVES A HIGH DEGREE OF RISK.
PLEASE SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF THOSE RISKS.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
------------------

<TABLE>
<CAPTION>
PER ORDINARY
SHARE PER ADS TOTAL
-------------- -------------- --------------
<S> <C> <C> <C>
Public Offering Price S$ US$ US$
Underwriting Discount S$ US$ US$
Proceeds to Chartered (before expenses) S$ US$ US$
</TABLE>

We have granted the U.S., international and Singapore underwriters a 30-day
option to purchase from us up to an aggregate of 37,500,000 additional ordinary
shares, directly or in the form of ADSs, to cover overallotments, if any.

The underwriters are offering the ordinary shares and the ADSs subject to
various conditions. The underwriters expect to deliver the ordinary shares and
the ADSs to purchasers on or about , 1999.
------------------

SALOMON SMITH BARNEY CREDIT SUISSE FIRST BOSTON
HAMBRECHT & QUIST
SG COWEN
SOUNDVIEW TECHNOLOGY GROUP
, 1999
<PAGE> 3

[Description of inside cover artwork: The inside front cover will have our
logo and the logos of our customers, strategic and EDA/IP partners.]
<PAGE> 4

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT
MAKING AN OFFER OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT
PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION PROVIDED BY THIS
PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THIS
PROSPECTUS.
------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUMMARY.......................................... 1
RISK FACTORS................................................ 7
USE OF PROCEEDS............................................. 20
DIVIDEND POLICY............................................. 21
CAPITALIZATION.............................................. 22
EXCHANGE RATES.............................................. 23
DILUTION.................................................... 24
SELECTED FINANCIAL DATA..................................... 25
UNAUDITED PRO FORMA FINANCIAL INFORMATION................... 27
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS................................. 29
BUSINESS.................................................... 44
MANAGEMENT.................................................. 57
PRINCIPAL SHAREHOLDERS...................................... 65
RELATIONSHIP WITH SINGAPORE TECHNOLOGIES.................... 66
DESCRIPTION OF ORDINARY SHARES.............................. 69
DESCRIPTION OF AMERICAN DEPOSITARY SHARES................... 73
TAXATION.................................................... 80
SHARES ELIGIBLE FOR FUTURE SALE............................. 84
UNDERWRITING................................................ 86
LEGAL MATTERS............................................... 89
EXPERTS..................................................... 89
WHERE YOU CAN FIND MORE INFORMATION......................... 89
INDEX TO FINANCIAL STATEMENTS............................... F-1
ANNEX A: THE REPUBLIC OF SINGAPORE.......................... A-1
ANNEX B: THE SECURITIES MARKET OF SINGAPORE................. B-1
</TABLE>

UNTIL , 1999, ALL DEALERS THAT BUY, SELL OR TRADE THESE SECURITIES,
WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE DEALER'S OBLIGATION TO DELIVER A
PROSPECTUS WHEN ACTING AS AN UNDERWRITER AND WITH RESPECT TO UNSOLD ALLOTMENTS
OR SUBSCRIPTIONS.

THIS PROSPECTUS HAS NOT BEEN REGISTERED AS A PROSPECTUS, NOR HAS IT BEEN
LODGED AS AN INFORMATION MEMORANDUM FOR THE PURPOSES OF SECTION 106D OF THE
COMPANIES ACT (CHAPTER 50) OF SINGAPORE, WITH THE REGISTRAR OF COMPANIES IN
SINGAPORE. ACCORDINGLY, THIS PROSPECTUS MAY NOT BE CIRCULATED OR DISTRIBUTED,
DIRECTLY OR INDIRECTLY, IN SINGAPORE. THE REGISTRAR OF COMPANIES TAKES NO
RESPONSIBILITY FOR THE CONTENTS OF THIS PROSPECTUS.

IT IS EXPECTED THAT DELIVERY OF THE ORDINARY SHARES, DIRECTLY OR IN THE
FORM OF ADSs, WILL BE MADE AGAINST PAYMENT THEREFOR ON OR ABOUT THE DATE
SPECIFIED IN THE LAST PARAGRAPH OF THE COVER PAGE OF THIS PROSPECTUS, WHICH IS
THE FIFTH BUSINESS DAY FOLLOWING THE DATE HEREOF (SUCH SETTLEMENT CYCLE BEING
HEREIN REFERRED TO AS "T+5"). PURCHASERS OF ORDINARY SHARES, DIRECTLY OR IN THE
FORM OF ADSs, SHOULD NOTE THAT TRADING OF THE ORDINARY SHARES, DIRECTLY OR IN
THE FORM OF ADSs, ON THE DATE HEREOF AND THE NEXT SUCCEEDING BUSINESS DAY MAY BE
AFFECTED BY THE T+5 SETTLEMENT.

i
<PAGE> 5

(This Page Intentionally Left Blank)
<PAGE> 6

PROSPECTUS SUMMARY

This summary highlights certain information found in greater detail
elsewhere in this prospectus. In addition to this summary, we urge you to read
the entire prospectus carefully, especially the discussion of the risks of
investing in our ADSs or ordinary shares under "Risk Factors," before deciding
to buy our ADSs or ordinary shares. References in this prospectus to
"Chartered," "our company," "we," "our" and "us" refer to Chartered
Semiconductor Manufacturing Ltd, a limited liability company formed in the
Republic of Singapore, and its subsidiary.

THE COMPANY

Chartered is one of the world's leading independent semiconductor
foundries. We provide comprehensive wafer fabrication services and technologies
to semiconductor suppliers and manufacturers of electronic systems. We focus on
providing foundry services to customers that serve high growth, technologically
advanced applications, including communications applications such as cable
modems, data networking and telecommunications equipment. Our top five customers
are Hewlett-Packard, Lucent Technologies, Level One Communications, Broadcom and
Conexant.

We offer a broad array of leading digital and analog technologies,
including standard complementary metal oxide silicon, or CMOS, mixed-signal and
embedded memory processes. We are also developing additional high performance
technologies such as advanced embedded memory technologies and specialized CMOS
for wireless applications. In order to augment our internal development efforts,
we have entered into technology alliances with leading semiconductor companies
such as Lucent and Motorola. Our alliance with Lucent includes an agreement to
jointly develop 0.18 micron (u) process geometries for high density, low power
and cost-effective applications. Our alliance with Motorola includes the
licensing and process transfer of Motorola's leading edge copper interconnect
technology for 0.15u, 0.13u and 0.10u process geometries.

We continue to expand the range of services we provide as our customers'
needs evolve. We partner with leading providers of semiconductor electronic
design automation, or EDA, software tools and intellectual property, or IP, and
design services. Our partnerships and range of services enable our customers to
integrate an increasing number of functions in their products while accelerating
time-to-market and reducing design and manufacturing risk. Our EDA development
and IP partners include Artisan Components, Avant!, Cadence, MIPS and Synopsys.
We also offer our customers turnkey services, which incorporate wafer
fabrication services and assembly and test, by partnering with assembly and test
providers, principally our sister company ST Assembly Test Services Ltd.

We currently own, or have an interest in, five fabrication facilities,
which are located in Singapore. Fabs 1, 2 and 3 are wholly-owned by our company.
Fab 5 is operated by Silicon Manufacturing Partners, known as SMP, which is
jointly-owned with a subsidiary of Lucent. Fab 6, known as Chartered Silicon
Partners, or CSP, is jointly-owned with an affiliate of the Government of
Singapore and a subsidiary of Hewlett-Packard. We plan to increase our total
production capacity from approximately 60,000 eight-inch equivalent wafers per
month in June 1999 to an estimated 134,000 eight-inch equivalent wafers per
month (which figure includes 100% of the production capacity of our
jointly-owned fabs) by December 2002.

We believe that Chartered is a trusted, customer-oriented service provider.
We have service operations in 12 cities in nine countries in North America,
Europe and Asia. All of our manufacturing operations are located in Singapore, a
politically and economically stable nation with laws that protect our customers'
proprietary technology.

We were incorporated in Singapore in 1987. We are 89.8% owned by Singapore
Technologies Pte Ltd and its affiliates (71.9% following the global offering,
assuming the underwriters do not exercise their overallotment option). The
remainder of our shares are owned by customers, directors, officers and
employees of our company and our affiliates. Singapore Technologies is one of
Singapore's largest industrial conglomerates and is indirectly wholly-owned by
the Government of Singapore.

1
<PAGE> 7

Our principal executive and registered offices are located at 60 Woodlands
Industrial Park D, Street 2, Singapore 738406. Our telephone number is (65)
362-2838. Our internet address is www.charteredsemi.com. INFORMATION CONTAINED
ON OUR WEB SITES DOES NOT CONSTITUTE A PART OF THIS PROSPECTUS.

Please see "Annex A -- The Republic of Singapore" for additional
information regarding the Republic of Singapore where we are located.

RECENT DEVELOPMENTS

The Company's net revenue for the three months ended September 30, 1999 was
$183.3 million, a 118.4% increase over the $83.9 million net revenue reported in
the corresponding period of 1998 and a 11.8% increase over the $163.9 million
recorded in the June 30, 1999 quarter. Gross profit was $48.4 million, or 26.4%
of net revenue, in the third quarter versus a gross loss of $19.3 million
reported in the corresponding period of 1998 and a gross profit of $34.8 million
in the June 30, 1999 quarter. Operating income totaled $7.1 million, or 3.9% of
net revenue, in the September 30, 1999 quarter against an operating loss of
$48.5 million in the corresponding period of 1998 and an operating loss of $0.6
million in the June 30, 1999 quarter. Operating income or loss included a charge
for stock-based compensation, which for the three months ended September 30,
1999 totaled $8.8 million, compared with a credit of $0.7 million in the
corresponding period of 1998 and $1.6 million charged in the June 30, 1999
quarter. Equity in loss of SMP and CSP for the three months ended September 30,
1999 totaled $10.2 million, compared with $7.4 million in the corresponding
period of 1998 and $9.5 million in the June 30, 1999 quarter. Net loss for the
three month period ended September 30, 1999 was $6.2 million, or -3.4% of net
revenue, versus a net loss of $52.7 million reported in the corresponding period
of 1998 and a net loss of $13.8 million recorded in the June 30, 1999 quarter.

<TABLE>
<CAPTION>
THREE MONTHS ENDED (UNAUDITED)
------------------------------------------
SEPTEMBER 30, JUNE 30, SEPTEMBER 30,
1998 1999 1999
------------- -------- -------------
(IN MILLIONS)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenue............................. $ 83.9 $163.9 $183.3
Gross profit (loss)..................... (19.3) 34.8 48.4
Charge for stock-based compensation..... (0.7) 1.6 8.8
Operating income (loss)................. (48.5) (0.6) 7.1
Equity in loss of SMP and CSP........... 7.4 9.5 10.2
Net loss................................ (52.7) (13.8) (6.2)
</TABLE>

<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30, 1999
-------
(UNAUDITED)
(IN MILLIONS)
<S> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 17.1
Short-term borrowings and current portion of long-term
debt...................................................... 86.1
Current installments of obligations under capital leases.... 5.2
Obligations under capital leases, excluding current
installments.............................................. 10.7
Other long-term debt........................................ 320.6
Shareholders' equity........................................ 561.1
</TABLE>

2
<PAGE> 8

THE GLOBAL OFFERING

THE GLOBAL OFFERING........... The global offering consists of the U.S.
offering, the international offering and the
Singapore offering, each of which is described
below. In connection with the global offering,
we restructured our capital effective October
14, 1999. Please see "Capitalization" for
additional information regarding our capital
restructuring. Unless we indicate otherwise,
all share information and financial data in
this prospectus gives effect to the capital
restructuring. Following the global offering, a
total of 1,238,847,853 ordinary shares
(including ordinary shares represented by ADSs)
will be issued and outstanding.

U.S. OFFERING................. An offering in the United States and Canada of
150,000,000 ordinary shares, directly or in the
form of ADSs.

INTERNATIONAL OFFERING........ An offering outside the United States and
Canada of 75,000,000 ordinary shares, directly
or in the form of ADSs. The international
offering will occur at the same time as the
U.S. offering. In this prospectus, we
collectively refer to the U.S. offering and the
international offering as the Combined
Offering.

SINGAPORE OFFERING............ A public offering in Singapore of 25,000,000
ordinary shares. The Singapore offering will be
underwritten and will occur at the same time as
the Combined Offering.

RESERVED SHARES............... Up to 12,500,000 ordinary shares (including
ordinary shares represented by ADSs) offered in
the global offering are subject to priority
allocation to our employees and business
associates, and one of our directors, to
directors, officers and employees of our
affiliates and to certain charitable
organizations in Singapore.

OFFERING PRICE................ We currently expect the initial public offering
price to be between US$16.00 and US$18.00 per
ADS and S$2.71 and S$3.05 per ordinary share.

USE OF PROCEEDS FROM THE
GLOBAL OFFERING............... The net proceeds of the global offering will be
used to fund a portion of our capital
expenditure requirements in connection with the
expansion of our manufacturing facilities, to
make equity contributions to our jointly-owned
fabs, for working capital and for general
corporate purposes. Please see "Use of
Proceeds" for further discussion of how we
intend to use the proceeds from the global
offering.

OVERALLOTMENT OPTIONS......... We have granted our U.S., international and
Singapore underwriters a 30-day option to
purchase up to an aggregate of 37,500,000
additional ordinary shares (including ordinary
shares represented by ADSs) in the global
offering, solely to cover overallotments, if
any. Unless we indicate otherwise, all
information in this prospectus assumes the
underwriters have not exercised their
overallotment option.

SHARES OUTSTANDING AFTER THE
GLOBAL OFFERING............... 1,238,847,853 ordinary shares (including
ordinary shares represented by ADSs) will be
outstanding after the global offering. If the
underwriters exercise their overallotment
option

3
<PAGE> 9

in full, 1,276,347,853 ordinary shares
(including ordinary shares represented by ADSs)
will be outstanding.

AMERICAN DEPOSITARY SHARES.... Each ADS represents ten ordinary shares. The
ADSs are evidenced by American Depositary
Receipts, or ADRs. Please see "Description of
American Depositary Shares" for a summary of
the material features of the ADSs and ADRs.

LISTING....................... We expect the ADSs to be approved for quotation
on the Nasdaq National Market under the symbol
"CHRT" and the ordinary shares to be approved
for listing on the Stock Exchange of Singapore
Limited, in each case subject to official
notice of issuance.

4
<PAGE> 10

SUMMARY FINANCIAL AND OTHER DATA

You should read the following summary financial data in conjunction with
our consolidated financial statements and the related notes, "Selected Financial
Data," "Unaudited Pro Forma Financial Information" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" included
elsewhere in this prospectus. Our financial statements are reported in U.S.
dollars and presented in accordance with U.S. generally accepted accounting
principles, or U.S. GAAP, for the fiscal years ended December 31, 1994, 1995,
1996, 1997 and 1998 and for the six month periods ended June 30, 1998 and 1999.
The pro forma data set forth below reflect a subsequent change to our strategic
alliance agreement relating to CSP that results in CSP being consolidated and
presents our balance sheet data as if such change had occurred on June 30, 1999.
The pro forma as adjusted data set forth below adjust the pro forma data to give
effect to the issuance by our company of 250,000,000 ordinary shares in the
global offering (including ordinary shares represented by ADSs), and the
application of the net proceeds from such offering at an assumed initial public
offering price of $17.00 per ADS and S$2.88 per ordinary share.

When we refer to "Singapore dollars" and "S$" in this prospectus, we are
referring to Singapore dollars, the legal currency of Singapore. When we refer
to "U.S. dollars," "dollars," "$" and "US$" in this prospectus, we are referring
to United States dollars, the legal currency of the United States. For your
convenience, we have included in this prospectus translations of certain
Singapore dollar amounts into U.S. dollars amounts. These translations should
not be construed as a representation that those Singapore dollar or U.S. dollar
amounts could have been, or could be, converted into U.S. dollars or Singapore
dollars, as the case may be, at any particular rate, the rate stated below, or
at all.

5
<PAGE> 11

<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
-------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
---------- ---------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 47,548 $ 53,431 $ 457,069
Working capital (deficit)................................... (49,633) (49,483) 354,155
Total assets................................................ 1,229,847 1,340,278 1,743,916
Short-term borrowings and current portion of long-term
debt...................................................... 87,601 87,601 87,601
Current installments of obligations under capital leases.... 4,914 4,914 4,914
Obligations under capital leases, excluding current
installments.............................................. 10,698 10,698 10,698
Other long-term debt........................................ 364,903 440,903 440,903
Shareholders' equity........................................ 556,339 556,339 959,977
</TABLE>

- ---------------
(1) In 1996, gross profit and operating income included $23.2 million relating
to a reduction in accrued liabilities for a change in estimate of cost to
obtain certain licenses. Please see note 22(g) to our consolidated financial
statements.

(2) Effective July 1, 1998, we changed our functional currency from the
Singapore dollar to the U.S. dollar. Please see note 2(e) to our
consolidated financial statements.

(3) In 1998 we recorded a charge of $31.8 million relating to the write-down of
equipment in connection with the termination of a development program.
Please see note 8 to our consolidated financial statements.

(4) In the first six months of 1999, we recorded a charge of $6.5 million in
connection with the termination of a development program. Please see note 8
to our consolidated financial statements.

6
<PAGE> 12

RISK FACTORS

An investment in our ADSs or ordinary shares involves a high degree of
risk. You should carefully consider the following information about these risks,
together with the other information contained in this prospectus, including our
consolidated financial statements and related notes, before you decide to buy
our ADSs or ordinary shares. If any of the following risks actually occur, our
business, results of operations and financial condition would likely suffer. In
any such case, the market price of our ADSs or ordinary shares could decline,
and you may lose all or part of the money you paid to buy our ADSs or ordinary
shares.

RISKS RELATED TO OUR FINANCIAL CONDITION

WE HAVE A HISTORY OF LOSSES AND NEGATIVE CASH FLOWS AND THIS MAY CONTINUE.

Since our inception in 1987, we have incurred significant operating losses
and negative cash flows. This was true even in years in which our revenues
increased. For example, in 1998, revenue increased 11.3% over 1997 but operating
losses were 203.9% higher. The increase in revenue in 1998 was driven by higher
shipment volumes but was offset by a 12.0% decline from 1997 in our average
selling price of silicon wafers, higher production costs on increased volume and
under utilization of capacity at our fabrication facilities.

As of June 30, 1999, we had a retained deficit of approximately $293.6
million. We cannot assure you that our operating losses or negative cash flows
will not continue or increase in the future or that we will become profitable.
Please see "Selected Financial Data" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" for information regarding our
financial condition.

WE NEED TO CONTINUOUSLY IMPROVE OUR DEVICE YIELDS, MAINTAIN HIGH CAPACITY
UTILIZATION AND OPTIMIZE THE TECHNOLOGY MIX OF OUR SILICON WAFER PRODUCTION TO
ACHIEVE OUR PROFIT TARGETS.

The key factors that affect our profit margin are our ability to:

- continuously improve our device yields;

- maintain high capacity utilization; and

- optimize the technology mix of our silicon wafer production.

The term "device yields" means the actual number of usable semiconductor
devices on a wafer in relation to the total number of devices on the wafer. Our
device yields directly affect our ability to attract and retain customers, as
well as the price of our services.

The term "capacity utilization" means the actual number of silicon wafers
we are processing at a fabrication facility, or fab, in relation to the total
number of wafers we have the capacity to process. Our capacity utilization
affects our operating results because a large percentage of our operating costs
are fixed. For example, in 1996, 1997 and 1998, a worldwide overcapacity of
semiconductor wafer supply resulted in lower utilization rates at our fabs. This
had a negative effect on our company during such period. Other factors
potentially affecting capacity utilization rates are the complexity and mix of
the wafers produced, overall industry conditions, operating efficiencies, the
level of customer orders, mechanical failure, disruption of operations due to
expansion of operations or relocation of equipment and fire or natural disaster.

Because the price of wafers varies significantly, the mix of wafers
produced affects revenue and profitability. The value of a wafer is determined
by the complexity of the device on the wafer. Production of devices with higher
level functionality and greater system-level integration requires more
manufacturing steps than the production of less complex devices and commands
higher wafer prices.

If we are unable to continuously improve our device yields, maintain high
capacity utilization or optimize the technology mix of our wafer production, we
may not be able to achieve our profit targets in which case the market price of
our ADSs or ordinary shares could fall.

7
<PAGE> 13

OUR OPERATING RESULTS FLUCTUATE FROM QUARTER-TO-QUARTER WHICH MAKES IT DIFFICULT
TO PREDICT OUR FUTURE PERFORMANCE.

Our revenues, expenses and operating results have varied significantly in
the past and may fluctuate significantly from quarter-to-quarter in the future
due to a number of factors, many of which are outside our control. These factors
include, among others:

- the cyclical nature of both the semiconductor industry and the markets
served by our customers;

- shifts by integrated device manufacturers, or IDMs, between internal and
outsourced production;

- our customers' adjustments in their inventory;

- the loss of a key customer or the postponement of an order from a key
customer;

- the rescheduling and cancellation of large orders;

- the timing and volume of orders relative to our available production
capacity;

- our ability to obtain raw materials on a timely and economic basis;

- environmental events or industrial accidents such as fires;

- currency and interest rate fluctuations that may not be adequately
hedged; and

- technological changes.

Due to the factors noted above and other risks discussed in this section,
many of which are beyond our control, you should not rely on quarter-to-quarter
comparisons to predict our future performance. Unfavorable changes in any of the
above factors may seriously harm our company. In addition, it is possible that
in some future periods our operating results may be below the expectations of
public market analysts and investors. In this event, the price of our ADSs or
ordinary shares may underperform or fall.

WE EXPECT TO INCUR SUBSTANTIAL CAPITAL EXPENDITURES IN CONNECTION WITH OUR
GROWTH PLANS AND MAY REQUIRE ADDITIONAL FINANCING THAT MAY NOT BE AVAILABLE.

Our business and the nature of our industry require us to make substantial
capital expenditures leading to a high level of fixed costs. We expect to incur
significant capital expenditures in connection with our growth plans. We are
currently expanding and equipping three fabs, two of which are jointly-owned
with third parties, and expect to require additional financing to complete the
equipping. These capital expenditures, including the expenditures for the three
fabs being expanded and equipped, will be made in advance of sales. Given the
fixed cost nature of our business, we may incur operating losses if our revenue
does not adequately offset the level of our capital expenditures, which occurred
in 1996, 1997 and 1998. Additionally, our actual expenditures may exceed our
planned expenditures for a variety of reasons, including changes in our growth
plan, our process technology, market conditions, interest rates and other
factors. We expect to finance our capital expenditure requirements with the
proceeds of the global offering, additional debt and equity financing and cash
from operations. We anticipate that Chartered Silicon Partners, or CSP, our
strategic alliance that owns and will operate Fab 6, will need to raise at least
an additional $450 million of debt during the first half of 2000 for the
financing of Fab 6. In addition, we may require additional financing to fund our
current growth plan. Currently, a substantial portion of our borrowings is
guaranteed by our controlling shareholder, Singapore Technologies Pte Ltd, or
ST, and its affiliates. Following our initial public offering, we may not
receive similar credit guarantees. We cannot assure you that any additional
financing we may need will be available or, if available, will be available on
terms satisfactory to us.

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WE HAVE A HIGH LEVEL OF DEBT. IF WE ARE UNABLE TO MAKE INTEREST AND PRINCIPAL
PAYMENTS ON OUR DEBT, IT COULD SERIOUSLY HARM OUR COMPANY.

We have now and will continue to have a significant amount of debt. Our
high level of debt and the covenants contained in our financing documents could
have important consequences to you. For example, they could:

- increase our vulnerability to general adverse economic and industry
conditions;

- limit our ability to pursue our growth plan;

- require us to seek the lender's consent prior to paying dividends on our
ordinary shares;

- require us to dedicate a substantial portion of our cash flow from
operations to payments on our debt, thereby reducing the availability of
our cash flow to fund capital expenditures, working capital and other
general corporate purposes; and

- limit our flexibility in planning for, or reacting to, changes in our
business and the semiconductor industry.

We cannot assure you that we will be able to make interest and principal
payments on debt incurred in connection with our growth if the average selling
prices or demand for our semiconductor wafers are lower than expected.

RISKS RELATED TO OUR OPERATIONS

THE CYCLICAL NATURE OF THE SEMICONDUCTOR INDUSTRY AND THE PERIODIC OVERCAPACITY
THAT RESULTS FROM THIS MAY SERIOUSLY HARM OUR COMPANY.

The semiconductor industry has historically been highly cyclical and, at
various times, has experienced significant economic downturns characterized by
production overcapacity, reduced product demand, and rapid erosion of average
selling prices. Historically, companies in the semiconductor industry have
expanded aggressively during periods of increased demand. As a result, periods
of overcapacity in the semiconductor industry have frequently followed periods
of increased demand. We expect this pattern to be repeated in the future. In
addition, the markets for semiconductors are characterized by rapid
technological change, evolving industry standards, intense competition and
fluctuations in end-user demand. Our operating results for 1996, 1997 and 1998
were seriously harmed by a downturn in the semiconductor market. Future
downturns in the semiconductor industry may be severe and could seriously harm
our company.

A DECREASE IN DEMAND FOR COMMUNICATIONS EQUIPMENT AND PERSONAL COMPUTERS MAY
SIGNIFICANTLY DECREASE THE DEMAND FOR OUR SERVICES.

A significant percentage of our sales revenue is derived from customers who
use our manufacturing services to make semiconductors for communications
equipment and personal computers. Any significant decrease in the demand for
communications equipment or personal computers may decrease the demand for our
services and could seriously harm our company. In addition, the declining
average selling price of communications equipment and personal computers places
significant pressure on the prices of the components that are used in this
equipment. If the average selling prices of communications equipment and
personal computers continue to decrease, the pricing pressure on components
produced by our company may reduce our revenue and therefore reduce our gross
profit margin significantly.

WE DEPEND ON A SMALL NUMBER OF CUSTOMERS FOR A SIGNIFICANT PORTION OF OUR
REVENUES.

We have been largely dependent on a small number of customers for a
substantial portion of our business. Our top ten customers accounted for 65.7%
and 62.8% of our total net revenue in 1997 and 1998, respectively and 65.0%
during the first six months of 1999. In 1998, our two largest customers
accounted for approximately 9.6% and 9.3% of our total net revenue,
respectively. During the first six months of 1999,

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<PAGE> 15

our two largest customers accounted for 12.4% and 10.0% of our total net
revenue, respectively. We expect that we will continue to be dependent upon a
relatively limited number of customers for a significant portion of our revenue.
We cannot assure you that revenue generated from these customers, individually
or in the aggregate, will reach or exceed historical levels in any future
period. Loss or cancellation of business from, significant changes in scheduled
deliveries to, or decreases in the prices of services sold to, any of these
customers could seriously harm our company. Please see "Business -- Customers
and Markets" for additional information regarding our customers.

OUR CUSTOMERS DO NOT PLACE PURCHASE ORDERS FAR IN ADVANCE. THEREFORE, WE DO NOT
HAVE ANY SIGNIFICANT BACKLOG.

Our customers generally do not place purchase orders far in advance. In
addition, due to the cyclical nature of the semiconductor industry, our
customers' purchase orders have varied significantly from period-to-period. As a
result, we do not typically operate with any significant backlog. The lack of a
significant backlog makes it difficult for us to forecast our net revenue in
future periods. Moreover, our expense levels are based in part on our
expectations of future revenue and we may be unable to adjust costs in a timely
manner to compensate for revenue shortfalls. We expect that in the future our
revenue in any quarter will continue to be substantially dependent upon purchase
orders received in that quarter. We cannot assure you that any of our customers
will continue to place orders with us in the future at the same levels as in
prior periods.

WE MAY NOT BE ABLE TO IMPLEMENT NEW TECHNOLOGY AS IT BECOMES AVAILABLE WHICH MAY
AFFECT OUR ABILITY TO PRODUCE ADVANCED PRODUCTS AT COMPETITIVE PRICES.

The semiconductor industry is rapidly developing and the technology used is
constantly evolving. If we do not anticipate the technology evolution and
rapidly adopt new and innovative technology, we may not be able to produce
sufficiently advanced products at competitive prices. There is a risk that our
competitors may adopt new technology before we do, resulting in our loss of
market share. If we do not continue to produce the most advanced products at
competitive prices, our customers may use the services of our competitors
instead of our services, which could seriously harm our company.

WE DEPEND ON OUR TECHNOLOGY PARTNERS TO ADVANCE OUR PORTFOLIO OF PROCESS
TECHNOLOGIES.

Enhancing our manufacturing process technologies is critical to our ability
to provide services for our customers. We intend to continue to advance our
process technologies through internal research and development efforts and
technology alliances with leading semiconductor suppliers. Although we have an
internal research and development team focused on developing new semiconductor
manufacturing process technologies, we are dependent on our technology partners
to advance our portfolio of process technologies. We currently have joint
development and technology sharing agreements with Lucent and Hewlett-Packard,
and a technology transfer and licensing agreement with Motorola. If we are
unable to continue our technology alliances with Lucent, Hewlett-Packard and
Motorola on mutually beneficial economic terms, or are unable to enter into new
technology alliances with other leading semiconductor suppliers, we may not be
able to continue providing our customers with leading edge process technologies,
which could seriously harm our company. Please see "Business -- Research and
Development" for additional information regarding our internal research and
development efforts.

WE DEPEND ON OUR STRATEGIC ALLIANCES RELATING TO FAB 5 AND FAB 6. TERMINATION OF
EITHER OF THESE ALLIANCES COULD SERIOUSLY HARM OUR COMPANY.

We currently have two strategic alliances relating to the development and
operation of Fab 5 and Fab 6. Silicon Manufacturing Partners, or SMP, which will
operate Fab 5, is jointly-owned with a subsidiary of Lucent. CSP, which will own
and operate Fab 6, is jointly-owned with EDB Investments Pte Ltd and a
subsidiary of Hewlett-Packard. We believe our alliances with these companies
give us access to select leading edge process technologies, moderate our
development costs and capital expenditures and increase our fab utilization
rates. The termination of either of these alliances could

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seriously harm our company. Please see "Business -- Chartered Silicon Partners"
and "-- Silicon Manufacturing Partners" for a more detailed description of these
alliances and for certain recent developments regarding Hewlett-Packard.

WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY IN OUR INDUSTRY.

The worldwide semiconductor foundry industry is highly competitive. We
compete with dedicated foundry service providers such as Taiwan Semiconductor
Manufacturing Corporation, or TSMC, and United Microelectronics, or UMC, as well
as the foundry operation services of some IDMs such as International Business
Machines, or IBM. IDMs principally manufacture and sell their own proprietary
semiconductor products, but may offer foundry services. Our competitors have
greater access to capital and substantially greater production, research and
development, marketing and other resources than we do. As a result, these
companies may be able to compete more aggressively over a longer period of time
than we can.

A number of semiconductor manufacturers, including our primary competitors,
have recently announced plans to increase their manufacturing capacity and, as a
result, we expect that there will be a significant increase in worldwide
semiconductor capacity over the next five years. If growth in demand for this
capacity fails to match the growth in supply, or occurs more slowly than
anticipated, there may be more intense competition and pressure on the pricing
of our services may result. Any significant increase in competition may erode
our profit margins and weaken our earnings.

The principal elements of competition in the wafer foundry market include
technical competence, time-to-market, research and development quality,
available capacity, device yields, customer service and price. We cannot assure
you that we will be able to compete successfully in the future, which could
seriously harm our company.

OUR BUSINESS DEPENDS IN PART ON OUR ABILITY TO OBTAIN AND PRESERVE INTELLECTUAL
PROPERTY RIGHTS.

Our ability to compete successfully and achieve future growth will depend,
in part, on our ability to protect our proprietary technology. We currently hold
147 patents worldwide, 114 of which are U.S. patents, related to our production
processes. We intend to continue to file patent applications when appropriate to
protect our proprietary technologies. The process of seeking patent protection
may take a long time and be expensive. We cannot assure you 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 the rights granted
under the patents will provide us with meaningful protection or any commercial
advantage. In addition, we cannot assure you that the Asian countries in which
we market our products, such as Taiwan and China, will protect our intellectual
property rights to the same extent as the United States. Please see
"Business -- Intellectual Property" for a more detailed description of our
proprietary technology.

WE MAY BE SUBJECT TO INTELLECTUAL PROPERTY RIGHTS DISPUTES.

Our ability to compete successfully depends on our ability to operate
without infringing the proprietary rights of others. We have no means of knowing
what patent applications have been filed in the United States until they are
granted. Although we are not currently a party to any material litigation
involving patent infringement, the semiconductor industry is characterized by
frequent litigation regarding patent and other intellectual property rights. As
is typical in the semiconductor industry, we have from time to time received
communications from third parties asserting patents that cover certain of our
technologies and alleging infringement of certain intellectual property rights
of others. We expect to receive similar communications in the future. In the
event any third party were to make a valid claim against us or our customers we
could be required to:

- discontinue using certain process technologies which could cause us to
stop manufacturing certain semiconductors;

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<PAGE> 17

- pay substantial monetary damages;

- seek to develop non-infringing technologies, which may not be feasible;
or

- seek to acquire licenses to the infringed technology which may not be
available on commercially reasonable terms, if at all.

Our company could be seriously harmed by such developments. Litigation,
which could result in substantial costs to us and diversion of our resources,
may also be necessary to enforce our patents or other intellectual property
rights or to defend us against claimed infringement of the rights of others. If
we fail to obtain necessary licenses or if litigation relating to patent
infringement or other intellectual property matters occurs, it could seriously
harm our company.

RISKS RELATING TO MANUFACTURING

WE MAY EXPERIENCE DIFFICULTY IN ACHIEVING ACCEPTABLE DEVICE YIELDS, PRODUCT
PERFORMANCE AND DELIVERY TIMES AS A RESULT OF MANUFACTURING PROBLEMS.

The process technology for the manufacture of semiconductor wafers is
highly complex, requires advanced and costly equipment and is continuously being
modified in an effort to improve device yields and product performance.
Microscopic impurities such as dust and other contaminants, difficulties in the
production process or defects in the key materials and tools used to manufacture
a particular wafer can cause a percentage of the wafers to be rejected or
individual semiconductors on specific wafers to be non-functional, which in each
case negatively affects our device yields. We have, from time to time,
experienced production difficulties that have caused delivery delays, lower than
expected device yields and the replacement of certain vendors of manufacturing
equipment used in our production processes. We may also experience difficulty
achieving acceptable device yields, product performance and product delivery
times in the future as a result of manufacturing problems. These problems may
result from, among other things, capacity constraints, construction delays,
increasing production at new facilities, upgrading or expanding existing
facilities or changing our process technologies. Any of these problems could
seriously harm our company.

WE DEPEND ON OUR SUPPLIERS OF RAW MATERIALS AND EQUIPMENT AND DO NOT TYPICALLY
HAVE LONG-TERM SUPPLY CONTRACTS WITH THEM.

We depend on our suppliers of raw materials. To maintain competitive
manufacturing operations, we must obtain from our suppliers, in a timely manner,
sufficient quantities of quality materials at acceptable prices. We obtain most
of our materials, including critical materials such as raw silicon wafers, from
a limited number of suppliers. We purchase all of our materials on a blanket
purchase order basis. With the exception of one multi-year contract for the
purchase of raw wafers, we do not have long-term contracts with any of our
suppliers. From time to time, vendors have extended lead times or limited the
supply of required materials to us because of capacity constraints.
Consequently, from time to time, we have experienced difficulty obtaining
quantities of raw materials we need on a timely basis.

In addition, from time to time, we may reject materials that do not meet
our specifications, resulting in declines in output or device yields. We cannot
assure you that we will be able to obtain sufficient quantities of raw materials
and other supplies of an acceptable quality. If our ability to obtain sufficient
quantities of raw materials and other supplies in a timely manner is
substantially diminished or if there are significant increases in the costs of
raw materials, it could seriously harm our company.

We also depend on a limited number of manufacturers and vendors that make
and sell the complex equipment we use in our manufacturing processes. In periods
of high market demand, the lead times from order to delivery of this equipment
could be as long as 12 to 18 months. If there are delays in the delivery of this
equipment or if there are increases in the cost of this equipment, it could
seriously harm our company. Please see "Business -- Equipment and Materials" for
additional information regarding our relationships with our suppliers of
materials and equipment.

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WE DEPEND ON ST ASSEMBLY TEST SERVICES LTD FOR MOST OF OUR SEMICONDUCTOR
ASSEMBLY AND TESTING REQUIREMENTS.

Semiconductor assembly and testing are complex processes which involve
significant technological expertise and specialized equipment. Although we are
in the process of evaluating additional sources of supply, we currently depend
on our affiliate ST Assembly Test Services Ltd, or STATS, for almost all of the
assembly and test services we offer our customers. We do not have a long-term
contract with STATS and retain its services on a purchase order basis. STATS
may, from time to time, experience production interruption due to, among other
things, technical problems occurring during the assembly and testing processes.
Because STATS is our major provider of these services, any prolonged
interruption in STATS' operations or the termination of our affiliation with
STATS could seriously harm our company.

WE ARE SUBJECT TO THE RISK OF LOSS DUE TO FIRE BECAUSE THE MATERIALS WE USE IN
OUR MANUFACTURING PROCESSES ARE HIGHLY FLAMMABLE.

We use highly flammable materials such as silane and hydrogen in our
manufacturing processes and are therefore subject to the risk of loss arising
from fires. Although we have implemented industry acceptable risk management
controls at our manufacturing locations, the risk of fire associated with these
materials cannot be completely eliminated and, in the past, we have had minor
interruptions in production as a result of fire. We maintain insurance policies
to guard against losses caused by fire. While we believe our insurance coverage
for damage to our property and disruption of our business due to fire is
adequate, we cannot assure you that it would be sufficient to cover all of our
potential losses. If any of our fabs were to be damaged or cease operations as a
result of a fire, it would temporarily reduce manufacturing capacity and
seriously harm our company.

OUR FAILURE TO COMPLY WITH CERTAIN ENVIRONMENTAL REGULATIONS COULD SERIOUSLY
HARM OUR COMPANY.

We are subject to a variety of laws and governmental regulations in
Singapore relating to the use, discharge and disposal of toxic or otherwise
hazardous materials used in our production process. While we believe that we are
currently in compliance in all material respects with such laws and regulations,
if we fail to use, discharge or dispose of hazardous materials appropriately,
our company could be subject to substantial liability or could be required to
suspend or adversely modify our manufacturing operations. In addition, we could
be required to pay for the cleanup of our properties if they are found to be
contaminated even if we are not responsible for the contamination. We maintain
insurance policies to guard against losses resulting from environmental harm
caused by our company. While we believe our insurance coverage is adequate, we
cannot assure you that it would be sufficient to cover all our potential losses.

RISKS RELATING TO OUR INFRASTRUCTURE

WE DEPEND ON KEY PERSONNEL AND, DUE TO THE STRONG DEMAND IN SINGAPORE FOR
SKILLED LABOR, MAY HAVE DIFFICULTY ATTRACTING SUFFICIENT NUMBERS OF SKILLED
EMPLOYEES.

Our success depends to a significant extent upon the continued service of
our key senior executives and our engineering, marketing, sales, manufacturing,
support and other personnel. In addition, in connection with our growth plans,
we are likely to need a greater number of experienced engineers and other
employees in the future. The competition for skilled employees is intense. Due
to the current shortage of experienced personnel in Singapore, we must recruit
our personnel internationally. This is more expensive than hiring personnel
locally, and therefore increases our operating costs. As of June 30, 1999, a
majority of our total number of employees were citizens of countries other than
Singapore. We expect demand for personnel in Singapore to increase significantly
in the future as new wafer fabrication facilities are established in Singapore.
If we were to lose the services of any of our existing key personnel without
adequate replacements, or were unable to attract and retain new experienced
personnel as we grow, it could seriously harm our company. We do not carry "key
person" life insurance on any of our personnel.

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WE MAY NOT BE ABLE TO MANAGE OUR GROWTH, WHICH COULD SERIOUSLY HARM OUR COMPANY.

We have experienced and are currently experiencing a period of significant
growth. This growth has placed, and the future growth will continue to place, a
significant strain on our managerial, technical, financial, production,
operational and other resources. In particular, by expanding our manufacturing
facilities and equipping new facilities we may create additional capacity at our
fabs, which, if not utilized, would reduce our profitability and could seriously
harm our company.

THE YEAR 2000 PROBLEM MAY SERIOUSLY HARM OUR COMPANY.

Many currently installed computer systems and software products are coded
to accept only two-digit year entries in the date code field. Consequently, on
January 1, 2000, many of these systems could malfunction because they may not be
able to distinguish twenty-first century dates from twentieth century dates. In
1997, we organized a Year 2000 committee to focus on, among other things, Year
2000 readiness of our information technology systems, facility equipment,
production equipment, fab support areas and vendors. Our information technology
systems have been assessed and we have established a timeline to upgrade and
test all of our equipment, including quality and reliability assurance, research
and development and facility equipment. We have communicated with our equipment
suppliers to understand whether the equipment we have purchased from them is
Year 2000 ready. We have also worked with our raw material suppliers to
understand whether the information technology systems used by them will be Year
2000 ready. We have identified several potential problems relating to Year 2000.
We believe that the most likely worst case scenario would be an external power
surge or dip, or a power trip which could cause our equipment to malfunction. An
equipment malfunction could cause the semiconductors we are processing at the
time of the malfunction to be misprocessed. In addition, certain machines may
fail despite having been tested to be Year 2000 ready. We are currently
preparing a contingency plan to address this worst case scenario. If we are
unable to develop such a plan, or if we or our suppliers fail to make the
necessary modifications and upgrades in a timely manner, the Year 2000 problem
could seriously harm our company.

RISKS RELATED TO INVESTMENTS IN A CONTROLLED CORPORATION

SINGAPORE TECHNOLOGIES WILL CONTINUE TO CONTROL OUR COMPANY FOLLOWING COMPLETION
OF THE GLOBAL OFFERING AND ITS INTERESTS MAY CONFLICT WITH THE INTERESTS OF OUR
OTHER SHAREHOLDERS.

ST and its affiliates will beneficially own approximately 72.5% of our
outstanding ordinary shares following completion of the global offering, or
70.3% if the underwriters exercise their overallotment option in full. As a
result, ST will be able to exercise control over many matters requiring approval
by our shareholders, including the election of directors and approval of
significant corporate transactions.

ST also provides us with financing, guarantees some of our debt and enters
into forward foreign exchange contracts with us relating to some of our
equipment purchase commitments with foreign vendors. While we believe that ST
will continue to provide us credit and other support, ST has no obligation to do
so and the availability and amount of its support will depend on various
factors, including our ability to raise funds without such support and the
expenses relating to such fundraising.

After completion of the global offering, we will continue to have
contractual and other business relationships with ST and its affiliates and may
engage in transactions from time to time that are material to us. Although the
Audit Committee of our Board of Directors will review all material transactions
between our company and ST, circumstances may arise in which the interests of ST
and its affiliates could conflict with the interests of our other shareholders.
Because ST and its affiliates own a significant portion of our ordinary shares,
they could delay or prevent a change in control of our company, even if a
transaction of that nature would be beneficial to our other shareholders. Our
Articles of Association, and the Articles of Association we will adopt prior to
closing the global offering, do not and will not contain a provision requiring
that ST and its affiliates own at least a majority of our ordinary shares.
Please see

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"Relationship with Singapore Technologies" for additional information regarding
our relationship with ST and its affiliates.

RISKS RELATED TO INVESTMENT IN A FOREIGN CORPORATION

WE OPERATE INTERNATIONALLY AND ARE THEREFORE AFFECTED BY PROBLEMS IN OTHER
COUNTRIES.

Our principal customers are located in the United States and Taiwan and our
principal suppliers are located in the United States, Japan, Korea and Germany.
As a result, we are affected by economic and political conditions in those
countries, including:

- fluctuations in the value of currencies;

- changes in labor conditions;

- longer payment cycles;

- greater difficulty in collecting accounts receivable;

- burdens and costs of compliance with a variety of foreign laws;

- political and economic instability;

- increases in duties and taxation;

- imposition of restrictions on currency conversion or the transfer of
funds;

- limitations on imports or exports;

- expropriation of private enterprises; and

- reversal of the current policies (including favorable tax and lending
policies) encouraging foreign investment or foreign trade by our host
countries.

The geographical distances between Asia, the Americas and Europe also
create a number of logistical and communications challenges. Although we have
not experienced any serious harm in connection with our international
operations, we cannot assure you that such problems will not arise in the
future.

EXCHANGE RATE FLUCTUATIONS MAY AFFECT THE VALUE OF OUR ADSS OR ORDINARY SHARES.

Our financial statements are prepared in U.S. dollars. Our net revenue is
generally denominated in U.S. dollars and our operating expenses are generally
incurred in U.S. dollars and Singapore dollars. Our capital expenditures are
generally denominated in U.S. dollars, Japanese yen, Singapore dollars and other
currencies. Although we hedge a portion of the resulting net foreign exchange
position through the use of forward exchange contracts, we are still affected by
fluctuations in exchange rates among the U.S. dollar, the Japanese yen, the
Singapore dollar and other currencies. We are particularly affected by
fluctuations in the exchange rate between the U.S. dollar and the Singapore
dollar. For example, substantially all of our revenue and approximately 76.0% of
our cost of revenue is denominated in U.S. dollars. If the Singapore dollar
strengthens against the U.S. dollar by 2.0%, our cost of revenue will increase
by 0.5%, likewise, if the Singapore dollar weakens against the U.S. dollar by
2.0%, our cost of revenue will decrease by 0.5%. Any significant fluctuation in
exchange rates may harm our company. In addition, fluctuations in the exchange
rate between the U.S. dollar and the Singapore dollar will affect the U.S.
dollar value of our ordinary shares and ADSs, and the value of any cash
dividends if paid in U.S. or Singapore dollars.

ECONOMIC CONDITIONS IN THE ASIA PACIFIC REGION MAY HAVE A NEGATIVE IMPACT ON OUR
REVENUE.

A significant portion of our revenue is derived from sales to customers
whose semiconductors are used in products that are sold in Japan, Taiwan and
other countries in East and Southeast Asia. In 1998, many countries in Asia
experienced considerable currency volatility and depreciation, high interest
rates and declining asset values. As a result, there was a general decline in
business and consumer spending and a

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decrease in economic growth as compared with prior years. Although Singapore was
not materially affected by these events, our results of operations in 1998 were
affected by overall regional economic conditions because demand for
semiconductor products generally rises as the overall level of economic activity
increases and falls as activity decreases. Our results of operations could be
further impacted if the economic environment in these countries fails to improve
or worsens in 1999 or 2000.

OUR PUBLIC SHAREHOLDERS MAY HAVE MORE DIFFICULTY PROTECTING THEIR INTERESTS THAN
THEY WOULD AS SHAREHOLDERS OF A U.S. CORPORATION.

Our corporate affairs are governed by our Memorandum and Articles of
Association and by the laws governing corporations incorporated in Singapore.
The rights of our shareholders and the responsibilities of the members of our
Board of Directors under Singapore law may be different from those applicable to
a corporation incorporated in the United States. Therefore, our public
shareholders may have more difficulty in protecting their interests in
connection with actions taken by our management, members of our Board of
Directors or our controlling shareholders than they would as shareholders of a
corporation incorporated in the United States. For example, controlling
shareholders in United States corporations are subject to fiduciary duties while
controlling shareholders in Singapore corporations are not subject to such
duties. Please see "-- Singapore Technologies will continue to control our
company following completion of the global offering and its interests may
conflict with the interests of our other shareholders" for a discussion relating
to our controlling shareholders, ST and its affiliates.

IT MAY BE DIFFICULT FOR YOU TO ENFORCE ANY JUDGMENT OBTAINED IN THE UNITED
STATES AGAINST US OR OUR AFFILIATES.

Our company is incorporated under the laws of the Republic of Singapore.
Many of our directors and executive officers, and some of the experts named in
this prospectus, reside outside the United States. In addition, virtually all of
our assets and the assets of those persons are located outside the United
States. As a result, it may be difficult to enforce in or out of the United
States any judgment obtained in the United States against us or any of these
persons, including judgments based upon the civil liability provisions of the
United States securities laws. In addition, in original actions brought in
courts in jurisdictions located outside the United States, it may be difficult
for investors to enforce liabilities based upon United States securities laws.

We have been advised by Allen & Gledhill, our Singapore legal counsel, that
judgments of U.S. courts based on the civil liability provisions of the federal
securities laws of the United States are not enforceable in Singapore courts.
Allen & Gledhill has also advised us that there is doubt as to whether Singapore
courts will enter judgments in original actions brought in Singapore courts
based solely upon the civil liability provisions of the federal securities laws
of the United States.

SINGAPORE LAW CONTAINS PROVISIONS THAT COULD DISCOURAGE A TAKEOVER OF OUR
COMPANY.

The Companies Act (Chapter 50) of Singapore and the Singapore Code on
Takeovers and Mergers contain certain provisions that may delay, deter or
prevent a future takeover or change in control of our company. Any person
acquiring an interest, either on his or her own or together with parties acting
in concert with him or her, in 25% or more of our voting shares must extend a
takeover offer for the remaining voting shares in accordance with the Singapore
Code on Takeovers and Mergers. A takeover offer is also required to be made if a
person holding between 25% and 50% (both inclusive) of the voting rights (either
on his or her own or together with parties acting in concert with him or her)
acquires an additional 3% of our voting shares in any 12-month period. The
preceding provisions may discourage or prevent certain types of transactions
involving an actual or threatened change of control of our company. This may
harm you because a transaction of that kind may allow you to sell your shares at
a price above the prevailing market price.

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RISKS RELATED TO OUR ADSS AND ORDINARY SHARES AND OUR TRADING MARKET

THERE HAS BEEN NO PRIOR MARKET FOR OUR ADSS OR ORDINARY SHARES AND THE GLOBAL
OFFERING MAY NOT RESULT IN AN ACTIVE OR LIQUID MARKET FOR THESE SECURITIES.

Prior to the global offering, there has not been a public market for our
ADSs or ordinary shares. We expect the ADSs to be approved for quotation on the
Nasdaq National Market, subject to official notice of issuance. The Singapore
stock exchange has approved our application to list our ordinary shares, subject
to official notice of issuance. However, we cannot assure you that an active
public market will develop or be sustained after the global offering. The
initial public offering price for the ordinary shares and the ADSs will be
determined by negotiations between us and the representatives of the
underwriters and may not be indicative of prices that will prevail in the
trading market. Investors may not be able to resell their ordinary shares or
ADSs at or above the initial public offering price. The financial markets in the
United States and other countries have experienced significant price and volume
fluctuations and market prices of technology companies have been and continue to
be extremely volatile. Volatility in the price of our ordinary shares and ADSs
may be caused by factors outside of our control and may be unrelated or
disproportionate to our operating results. In the past, following periods of
volatility in the market price of a public company's securities, securities
class action litigation has often been instituted against that company. Such
litigation could result in substantial costs and a diversion of our management's
attention and resources.

THE SINGAPORE SECURITIES MARKET IS RELATIVELY SMALL AND MORE VOLATILE THAN U.S.
MARKETS AND MAY CAUSE THE MARKET PRICE OF OUR ADSS AND ORDINARY SHARES TO
FLUCTUATE.

The Stock Exchange of Singapore Limited is relatively small and more
volatile than stock exchanges in the United States and certain other European
countries. As of June 30, 1999, there were 308 Singapore companies listed on the
Main Board of the Singapore stock exchange and the aggregate market
capitalization of listed equity securities of these companies was approximately
US$226 billion. For the year ended December 31, 1998, the average daily equity
trading value on the Singapore stock exchange (including shares traded on the
CLOB International trading system) was approximately US$229 million, with an
annualized aggregate trading value of approximately US$57 billion. The
relatively small market capitalization of, and trading volume on, the Singapore
stock exchange may cause the market price of securities of Singapore companies,
including our ADSs and our ordinary shares, to fluctuate in both the domestic
and the international markets. Please see "Annex B -- The Securities Market of
Singapore" for additional information regarding the Singapore securities market.

NEW INVESTORS IN OUR COMPANY WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION.

The purchase price of the ordinary shares and ADSs offered by this
prospectus will be substantially higher than the net tangible book value of our
outstanding ordinary shares. Investors who purchase ordinary shares or ADSs in
the global offering will therefore experience immediate and significant dilution
in the tangible net book value of their investment. Based on the anticipated
initial public offering price of our ordinary shares and ADSs, we expect our
current shareholders to have an aggregate unrealized gain of approximately $885
million as a result of the global offering. Please see "Dilution" for additional
information regarding the dilutive effect of the global offering.

THE GLOBAL OFFERING MAY NOT RESULT IN AN ACTIVE OR LIQUID MARKET FOR OUR ADSS OR
ORDINARY SHARES.

We cannot predict the extent to which the global offering will result in
the development of an active, liquid public trading market for our ADSs or
ordinary shares offered by this prospectus or how liquid that market will be.
Active, liquid trading markets generally result in lower price volatility and
more efficient execution of buy and sell orders for investors. Liquidity of a
securities market is often a function of the volume of the underlying shares
that are publicly held by unrelated parties. Although ADS holders are entitled
to withdraw the ordinary shares underlying the ADSs from the depositary at any
time, there is no public market for our ordinary shares in the United States.

17
<PAGE> 23

YOUR VOTING RIGHTS WITH RESPECT TO THE ADSS ARE LIMITED BY THE TERMS OF THE
DEPOSIT AGREEMENT FOR THE ADSS.

Holders may exercise voting rights with respect to the ordinary shares
represented by ADSs only in accordance with the provisions of the deposit
agreement relating to the ADSs. There are no provisions under Singapore law or
under our Articles of Association that limit ADS holders' ability to exercise
their voting rights through the depositary with respect to the underlying
ordinary shares. However, there are practical limitations upon the ability of
ADS holders to exercise their voting rights due to the additional procedural
steps involved in communicating with such holders. For example, our Articles of
Association require us to notify our shareholders at least 14 days in advance of
any annual general meeting unless a special resolution is to be passed at that
meeting, in which case at least 21 days' notice must be given. Our ordinary
shareholders will receive notice directly from us and will be able to exercise
their voting rights by either attending the meeting in person or voting by
proxy.

ADS holders, by comparison, will not receive notice directly from us.
Rather, in accordance with the deposit agreement, we will provide the notice to
the depositary, which will in turn, as soon as practicable thereafter, mail to
holders of ADSs:

- the notice of such meeting;

- voting instruction forms; and

- a statement as to the manner in which instructions may be given by
holders.

To exercise their voting rights, ADS holders must then instruct the
depositary how to vote their shares. Because of this extra procedural step
involving the depositary, the process for exercising voting rights will take
longer for ADS holders than for holders of ordinary shares. ADSs for which the
depositary does not receive timely voting instructions will not be voted at any
meeting.

Except as described in this prospectus, holders will not be able to
exercise voting rights attaching to the ADSs. Please see "Description of
Ordinary Shares" for additional information relating to our ordinary shares.

YOUR ABILITY TO PARTICIPATE IN ANY RIGHTS OFFERING OF OUR COMPANY IS LIMITED.

We may, from time to time, distribute rights to our shareholders, including
rights to acquire securities under the deposit agreement relating to the ADSs.
The depositary will not offer rights to holders unless both the rights and the
securities to which such rights relate are either exempt from registration under
the Securities Act or are registered under provisions of the Securities Act.
However, we are under no obligation to file a registration statement with
respect to any such rights or underlying securities or to endeavor to cause such
a registration statement to be declared effective. Accordingly, holders of our
ordinary shares may be unable to participate in rights offerings by us and may
experience dilution of their holdings as a result.

THE FUTURE SALES OF SECURITIES BY OUR COMPANY OR EXISTING SHAREHOLDERS MAY HURT
THE PRICE OF OUR ADSS AND OUR ORDINARY SHARES.

The market price of our ADSs could decline as a result of sales of a large
number of ordinary shares or ADSs after the global offering or the perception
that such sales could occur. Such sales also might make it more difficult for us
to sell ordinary shares in the future at a time and at a price that we deem
appropriate. Upon completion of the global offering, we will have an aggregate
of 1,238,847,853 ordinary shares issued and outstanding (including ordinary
shares represented by ADSs). ST and its affiliates will own, directly and
indirectly, 897,632,876 ordinary shares constituting approximately 72.5% of the
outstanding ordinary shares. The 250,000,000 ordinary shares sold in the global
offering (including ordinary shares represented by ADSs) will be freely
tradable, other than ordinary shares purchased by our affiliates. The remaining
988,847,853 ordinary shares will be "restricted securities" and may be sold in
the United States only pursuant to a registration statement under the Securities
Act or an exemption from the

18
<PAGE> 24

registration requirements of the Securities Act. We have, and each of our
directors, executive officers and equity investor customers, ST and its
affiliates and certain other existing shareholders, has agreed that he, she or
it will not offer, sell or agree to sell, directly or indirectly, or otherwise
dispose of any ordinary shares without the prior written consent of Salomon
Smith Barney Inc. for a period of 180 days from the date of this prospectus,
subject to certain exceptions. Please see "Underwriting" and "Shares Eligible
for Future Sale" for additional information regarding resale restrictions.

FORWARD-LOOKING STATEMENTS CONTAINED IN THIS PROSPECTUS MAY NOT BE REALIZED

This prospectus contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of the risks faced by us
described above and elsewhere in this prospectus. We undertake no obligation
after the date of this prospectus to update publicly any forward-looking
statements for any reason, even if new information becomes available or other
events occur in the future.

19
<PAGE> 25

USE OF PROCEEDS

The net proceeds from the global offering, after deducting underwriting
discounts and the estimated offering expenses payable by us, are estimated to be
approximately $403.6 million, or $464.7 million if the underwriters exercise
their overallotment option in full, assuming an initial public offering price of
$17.00 per ADS and S$2.88 per ordinary share. We intend to use the proceeds from
the global offering for the following purposes:

- to fund approximately $230 million in capital expenditures in connection
with the expansion of our manufacturing facilities;

- to make approximately $170 million in equity contributions to SMP and
CSP;

- for working capital; and

- for general corporate purposes.

We may also use a portion of the proceeds for strategic investments and
acquisitions. While we have from time to time had preliminary discussions
regarding potential investments and acquisitions in the ordinary course of our
business, we do not currently have any agreements or understandings to make any
such investment or acquisition. Please see "Management's Discussion and Analysis
of Financial Condition and Results of Operation" for information regarding our
future liquidity needs.

Except as indicated above, we have not yet determined the amount of net
proceeds to be used specifically for the purposes specified above. Accordingly,
management will have significant flexibility in applying the net proceeds of the
global offering. Pending any use, as described above, we intend to invest the
net proceeds in high quality, interest-bearing instruments.

20
<PAGE> 26

DIVIDEND POLICY

In December 1995 and January 1997, we paid a cash dividend on our ordinary
shares in an amount equivalent to US$87,000 and US$93,000, respectively, for the
purpose of qualifying our ordinary shares as "trustee stock" eligible for
investment by account holders of the Central Provident Fund, a mandatory
employee pension plan administered by the Government of Singapore. Except for
these dividends, we have not, since our inception, declared or paid any cash
dividends on our ordinary shares. We do not currently anticipate paying any cash
dividends in 1999. We may, by ordinary resolution, declare dividends at a
general meeting, but we may not pay dividends in excess of the amount
recommended by our Board of Directors. Our Board of Directors may also declare
interim dividends without seeking shareholder approval. We must pay all
dividends out of our profits or pursuant to Section 69 of the Companies Act of
Singapore. In making its recommendation, our Board of Directors will consider,
among other things, our future earnings, operations, capital requirements and
general financial condition, as well as general business conditions and other
factors which our Board of Directors may determine are appropriate. Some of our
loan agreements restrict the payment of dividends without the consent of the
lender. We currently intend to retain future earnings, if any, to finance the
expansion of our business.

21
<PAGE> 27

CAPITALIZATION

The following table sets forth, as of June 30, 1999, the capitalization of
our company on an actual, pro forma and pro forma as adjusted basis. The pro
forma data set forth below reflect a subsequent change to our strategic alliance
agreement relating to CSP that results in CSP being consolidated and presents
our balance sheet data as if such change had occurred on June 30, 1999. The pro
forma as adjusted data set forth below adjust the pro forma data to give effect
to the issuance of 250,000,000 ordinary shares in the global offering (including
ordinary shares represented by ADSs), and the application of the net proceeds
from such offering at an assumed initial public offering price of $17.00 per ADS
and S$2.88 per ordinary share. You should read this information in conjunction
with:

- our consolidated financial statements and the related notes included
elsewhere in this prospectus; and

- "Management's Discussion and Analysis of Financial Condition and Results
of Operations."

<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
-------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
---------- ---------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalents............................... $ 47,548 $ 53,431 $ 457,069
========== ========== ==========
Short-term borrowings, including current portion of
long-term debt........................................ $ 87,601 $ 87,601 $ 87,601
Long-term debt.......................................... 364,903 440,903 440,903
Shareholders' equity:
Ordinary shares, S$0.26 par value per share,
3,076,923,079 shares authorized; 1,001,425,308
shares issued and outstanding, actual;
1,251,425,308 shares issued and outstanding, as
adjusted......................................... 221,636 221,636 259,543
Subscription receivables........................... (12,731) (12,731) (12,731)
Additional paid-in capital......................... 694,752 694,752 1,060,483
Unearned compensation.............................. (982) (982) (982)
Accumulated other comprehensive income (loss)...... (52,696) (52,696) (52,696)
Retained deficit................................... (293,640) (293,640) (293,640)
---------- ---------- ----------
Total shareholders' equity.................... 556,339 556,339 959,977
---------- ---------- ----------
Total capitalization..................... $1,008,843 $1,084,843 $1,488,481
========== ========== ==========
</TABLE>

In connection with the global offering, we restructured our capital
effective October 14, 1999. We currently have one class of ordinary shares with
a par value of S$0.26.

In our capital restructuring, we:

- issued one additional fully paid "A" ordinary share for every 20 partly
paid "A" ordinary shares and cancelled the partly paid shares;

- cancelled all unissued "A" ordinary shares and "B" ordinary shares;

- cancelled the special rights attached to the "B" ordinary shares;

- redesignated the "A" ordinary shares and "B" ordinary shares as one class
of ordinary shares;

- effected a share split such that each ordinary share with a par value of
S$0.4888 was sub-divided into 1.88 ordinary shares with a par value of
S$0.26;

- adopted new Articles of Association; and

- will issue new ordinary shares in connection with the global offering
which will rank equal in all respects with our existing ordinary shares.

22
<PAGE> 28

EXCHANGE RATES

Fluctuations in the exchange rate between the Singapore dollar and the U.S.
dollar will affect the U.S. dollar equivalent of the Singapore dollar price of
the ordinary shares on the Singapore stock exchange and, as a result, are
expected to affect the market price of the ADSs. These fluctuations will also
affect the U.S. dollar conversion by the depositary of any cash dividends paid
in Singapore dollars on the ordinary shares represented by ADSs or any other
distribution received by the depositary in connection with the payment of
dividends on the ordinary shares. Currently, there are no restrictions in
Singapore on the conversion of Singapore dollars into U.S. dollars and vice
versa.

The following table sets forth, for the fiscal years indicated, information
concerning the exchange rates between Singapore dollars and U.S. dollars based
on the average of the noon buying rate in the City of New York on the last
business day of each month during the period for cable transfers in Singapore
dollars as certified for customs purposes by the Federal Reserve Bank of New
York. The table illustrates how many Singapore dollars it would take to buy one
U.S. dollar.

<TABLE>
<CAPTION>
S$ PER US$1.00
NOON BUYING RATE
----------------------------------------
FISCAL YEAR ENDED DECEMBER 31, AVERAGE(1) LOW HIGH PERIOD END
------------------------------ ---------- ---- ---- ----------
<S> <C> <C> <C> <C>
1994............................................... 1.53 1.46 1.61 1.46
1995............................................... 1.42 1.39 1.47 1.42
1996............................................... 1.41 1.40 1.43 1.40
1997............................................... 1.49 1.40 1.71 1.61
1998............................................... 1.67 1.58 1.80 1.65
1999 (through June 30, 1999)....................... 1.71 1.66 1.74 1.70
</TABLE>

- ---------------
(1) The average of the daily Noon Buying Rates on the last business day of each
month during the year.

Unless we indicate otherwise, all translations from Singapore dollars to
U.S. dollars contained in this prospectus have been based on the noon buying
rate in the City of New York on June 30, 1999 for cable transfers in Singapore
dollars as certified for customs purposes by the Federal Reserve Bank of New
York. The noon buying rate on June 30, 1999 was S$1.70 per $1.00.

23
<PAGE> 29

DILUTION

The net tangible book value of our company as of June 30, 1999 was $552.4
million or S$0.93 per ordinary share, the equivalent of $5.52 per ADS. Net
tangible book value per ordinary share is determined by dividing our net
tangible book value (total tangible assets less total liabilities) as of June
30, 1999 by the number of outstanding ordinary shares at that date.

Based on the issuance by us of 250,000,000 ordinary shares in the global
offering (including ordinary shares represented by ADSs), at an initial public
offering price of S$2.88 per ordinary share (or $17.00 per ADS), after deducting
underwriting discounts and estimated offering expenses paid by us, the net
tangible book value of our company as of June 30, 1999 would have been S$1.29
per ordinary share (the equivalent of $7.63 per ADS). This represents an
immediate increase in net tangible book value of S$0.36 per ordinary share (the
equivalent of $2.11 per ADS) to our existing shareholders and an immediate
dilution in net tangible book value of S$1.59 per ordinary share (the equivalent
of $9.37 per ADS) to new investors. The following table illustrates this per
ordinary share and per ADS dilution:

<TABLE>
<CAPTION>
PER SHARE PER ADS
--------- -------
<S> <C> <C> <C> <C>
Assumed initial public offering price per ordinary share and
per ADS................................................... S$2.88 $17.00
Net tangible book value per ordinary share and per ADS as of
June 30, 1999............................................. S$0.93 $5.52
Increase in net tangible book value per ordinary share and
per ADS attributable to new
public investors.......................................... 0.36 2.11
------ -----
Net tangible book value per ordinary share and per ADS after
the global offering....................................... 1.29 7.63
------ ------
Dilution in net tangible book value per ordinary share and
per ADS to new public investors........................... S$1.59 $ 9.37
====== ======
</TABLE>

The following table summarizes as of June 30, 1999, the total number of
ordinary shares purchased from us, the total consideration paid to us and the
average price paid per ordinary share by our existing shareholders and by our
new public investors in the global offering. For purposes of this table, we have
assumed that all new public investors purchase ordinary shares rather than ADSs.

<TABLE>
<CAPTION>
ORDINARY SHARES
PURCHASED TOTAL CONSIDERATION AVERAGE
------------------ ------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT ORDINARY SHARE
------- ------- -------- ------- --------------
(IN MILLIONS, EXCEPT PERCENTAGE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Existing shareholders................ 1,001.4 80.0% $ 904.0 68.0% $0.90
New public investors................. 250.0 20.0% $ 425.0 32.0% $1.70
------- ----- -------- ----- -----
Total...................... 1,251.4 100.0% $1,329.0 100.0% $1.06
======= ===== ======== ===== =====
</TABLE>

The tables above assume:

- the underwriters have not exercised their overallotment option; and

- outstanding share options have not been exercised.

To the extent that the overallotment or outstanding share options are
exercised there will be further dilution to new investors. Please see
"Management" for a description of our share option plans.

24
<PAGE> 30

SELECTED FINANCIAL DATA

You should read the following selected financial data in conjunction with
our consolidated financial statements and the related notes and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this prospectus. The selected financial data for the
fiscal years ended December 31, 1994 and 1995 are derived from our audited
financial statements, however, we have not included our audited financial
statements for those periods in this prospectus. The selected financial data for
the fiscal years ended December 31, 1996, 1997 and 1998 and the six month
periods ended June 30, 1998 and 1999 are derived from our audited financial
statements included elsewhere in this prospectus which have been audited by
KPMG, independent accountants. Our financial statements are prepared in
accordance with U.S. GAAP for the fiscal years ended December 31, 1994, 1995,
1996, 1997 and 1998 and the six month periods ended June 30, 1998 and 1999.
Historical results are not indicative of the results to be expected in the
future.

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------------- -------------------
1994 1995 1996(1) 1997 1998(2)(3) 1998 1999(4)
-------- -------- -------- --------- ---------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenue....................... $152,373 $287,026 $406,936 $ 379,761 $ 422,622 $232,771 $294,738
Cost of revenue................... 94,496 187,168 289,435 368,521 439,668 224,105 247,257
-------- -------- -------- --------- --------- -------- --------
Gross profit (loss)............... 57,877 99,858 117,501 11,240 (17,046) 8,666 47,481
Operating expenses:
Research and development........ 4,737 9,069 13,018 26,553 43,419 20,642 22,955
Fab start-up costs.............. 8,381 11,236 13,132 10,908 1,455 1,455 --
Sales and marketing............. 3,557 5,550 16,233 20,184 31,872 13,609 20,568
General and administrative...... 9,444 20,097 32,615 30,144 37,389 15,089 22,701
Costs incurred on termination of
development program........... -- -- -- -- 31,776 -- 6,500
Stock-based compensation........ -- 2,799 332 2,024 (2,780) (1,333) 3,289
-------- -------- -------- --------- --------- -------- --------
Total operating
expenses............... 26,119 48,751 75,330 89,813 143,131 49,462 76,013
-------- -------- -------- --------- --------- -------- --------
Operating income (loss)........... 31,758 51,107 42,171 (78,573) (160,177) (40,796) (28,532)
Other income (expense):
Equity in loss of SMP and CSP... -- -- -- (1,272) (20,434) (6,829) (17,988)
Other income (loss)............. 1,319 2,982 3,850 4,860 4,680 330 650
Interest income................. 929 2,944 973 179 1,690 811 1,207
Interest expense................ (3,562) (1,297) (1,144) (12,782) (20,137) (10,100) (9,094)
Exchange gain (loss)............ 2,318 (22) 1,963 (31,678) 5,237 (3,139) 5,065
-------- -------- -------- --------- --------- -------- --------
Income (loss) before income
taxes........................... 32,762 55,714 47,813 (119,266) (189,141) (59,723) (48,692)
Income tax benefit (expense)...... (251) (832) (337) (355) (865) (543) 172
-------- -------- -------- --------- --------- -------- --------
Net income (loss)................. $ 32,762 $ 54,882 $ 47,476 $(119,621) $(190,006) $(60,266) $(48,520)
======== ======== ======== ========= ========= ======== ========
Net income (loss) per common
share:
Basic........................... $ 0.11 $ 0.13 $ 0.10 $ (0.24) $ (0.24) $ (0.09) $ (0.05)
======== ======== ======== ========= ========= ======== ========
Diluted......................... $ 0.11 $ 0.13 $ 0.10 $ (0.24) $ (0.24) $ (0.09) $ (0.05)
======== ======== ======== ========= ========= ======== ========
Shares used in per share
calculation:
Basic........................... 305,412 418,661 488,296 490,407 784,541 685,871 985,816
Diluted......................... 305,412 418,661 488,824 490,407 784,541 685,871 985,816
Net income (loss) per ADS:
Basic........................... $ 1.06 $ 1.31 $ 0.97 $ (2.44) $ (2.42) $ (0.88) $ (0.49)
======== ======== ======== ========= ========= ======== ========
Diluted......................... $ 1.06 $ 1.31 $ 0.97 $ (2.44) $ (2.42) $ (0.88) $ (0.49)
======== ======== ======== ========= ========= ======== ========
ADSs used in per ADS calculation:
Basic........................... 30,541 41,866 48,830 49,041 78,454 68,587 98,582
Diluted......................... 30,541 41,866 48,882 49,041 78,454 68,587 98,582
</TABLE>

25
<PAGE> 31

<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF
---------------------------------------------------------- JUNE 30,
1994 1995 1996 1997 1998 1999
-------- -------- ---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.............. $ 664 $ 2,273 $ 2,736 $ 23,785 $ 99,619 $ 47,548
Working capital (deficit).............. (33,632) (30,010) (199,149) (328,927) 13,099 (49,633)
Total assets........................... 362,280 607,318 1,036,810 1,278,968 1,321,510 1,229,847
Short-term borrowings and current
portion of long-term debt............ 83,473 28,456 29,156 10,591 52,128 87,601
Current installments of obligations
under capital leases................. -- 3,620 3,842 4,078 4,329 4,914
Obligations under capital leases,
excluding current installments....... -- 25,665 21,823 17,745 13,414 10,698
Other long-term debt................... 28,767 16,961 65,934 273,008 419,545 364,903
Shareholders' equity................... 182,876 374,717 465,274 310,806 601,246 556,339
</TABLE>

(2) Effective July 1, 1998, we changed our functional currency from the
Singapore dollar to the U.S. dollar. Please see note 2(e) to our
consolidated financial statements.

(4) In the first six months of 1999, we recorded a charge of $6.5 million in
connection with the termination of a development program. Please see note 8
to our consolidated financial statements.

26
<PAGE> 32

UNAUDITED PRO FORMA FINANCIAL INFORMATION

We believe that recent changes to our strategic alliance agreement with
respect to CSP will have a material impact on the basis of presentation of our
financial information. U.S. GAAP generally requires consolidation of all
majority owned (greater than 50%) subsidiaries. However, as a result of certain
provisions contained in the strategic alliance agreement, the minority
shareholders of CSP were deemed to have substantive participative rights which
overcame the presumption that we should consolidate CSP. Therefore, CSP has
historically been accounted for under the equity method in our financial
statements. As a result of an amendment to the strategic alliance agreement, we
will treat CSP as a consolidated subsidiary from October 1, 1999 forward. Please
see "Business -- Strategic Alliances -- Chartered Silicon Partners" for a
discussion of this amendment.

The unaudited pro forma consolidated balance sheet as of June 30, 1999 and
unaudited pro forma consolidated statement of operations for the year ended
December 31, 1998 and the six months ended June 30, 1999 have been prepared
based on our historical consolidated financial statements after giving effect to
the subsequent change to our strategic alliance agreement relating to CSP that
resulted in CSP being consolidated. The unaudited pro forma financial
information presents our financial condition as if such change had occurred on
June 30, 1999 and presents our results of operations data as if such change had
occurred on January 1, 1998.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998 SIX MONTHS ENDED JUNE 30, 1999
------------------------------------ ------------------------------------
HISTORICAL ADJUSTMENTS PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- --------- ---------- ----------- ---------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Net revenue........................ $ 422,622 $ 422,622 $294,738 $ (605) $294,133
Cost of revenue.................... 439,668 439,668 247,257 247,257
--------- --------- -------- --------
Gross profit (loss)................ (17,046) (17,046) 47,481 46,876
--------- --------- -------- --------
Operating Expenses: Research and
development...................... 43,419 $ 4,668 48,087 22,955 4,256 27,211
Fab start-up costs............... 1,455 6,911 8,366 -- 6,239 6,239
Sales and marketing.............. 31,872 31,872 20,568 20,568
General and administrative....... 37,389 37,389 22,701 514 23,215
Costs incurred on termination of
development program........... 31,776 31,776 6,500 6,500
Stock-based compensation......... (2,780) (2,780) 3,289 3,289
--------- --------- -------- --------
Total operating
expenses............... 143,131 154,710 76,013 87,022
--------- --------- -------- --------
Operating income (loss)............ (160,177) (171,756) (28,532) (40,146)
Other income (expense):
Equity in loss of CSP and SMP.... (20,434) 5,577 (14,857) (17,988) 5,937 (12,051)
Other income (loss).............. 4,680 4,680 650 650
Interest income.................. 1,690 1,562 3,252 1,207 83 1,290
Interest expense................. (20,137) (20,137) (9,094) (9,094)
Exchange gain (loss)............. 5,237 (513) 4,724 5,065 (89) 4,976
--------- --------- -------- --------
Income (loss) before income
taxes............................ (189,141) (194,094) (48,692) (54,375)
Income tax benefit (expense)....... (865) (406) (1,271) 172 (21) 151
--------- --------- -------- --------
Income (loss) before minority
interests........................ (190,006) (195,365) (48,520) (54,224)
Minority interest in loss of CSP... -- 5,359 5,359 -- 5,704 5,704
--------- --------- -------- --------
Net income (loss).................. $(190,006) $(190,006) $(48,520) $(48,520)
========= ========= ======== ========
</TABLE>

27
<PAGE> 33

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
-------------------------------------
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents................................... $ 47,548 $ 5,883 $ 53,431
Accounts receivable
Trade..................................................... 86,274 6,558 92,832
Others.................................................... 7,073 979 8,052
Amounts due from ST and ST affiliates....................... 2,137 440 2,577
Amounts due from CSP and SMP................................ 10,441 (6,787) 3,654
Inventories................................................. 26,943 26,943
Prepaid expenses............................................ 2,468 395 2,863
---------- ----------
Total current assets.............................. 182,884 190,352
Investment in CSP and SMP................................... 60,376 (28,220) 32,156
Other assets................................................ 41,505 41,505
Technology license agreements............................... 3,974 9,167 13,141
Property, plant and equipment, net.......................... 941,108 122,016 1,063,124
---------- ----------
Total Assets...................................... $1,229,847 $1,340,278
========== ==========

LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable
Trade..................................................... $ 5,656 $ 5,656
Fixed asset purchases..................................... 32,458 $ 3,910 36,368
Current installments of obligations under capital leases.... 4,914 4,914
Current installments of long-term debt...................... 86,391 86,391
Bank overdrafts............................................. 1,210 1,210
Accrued operating expenses.................................. 87,612 3,885 91,497
Amounts due to ST and ST affiliates......................... 8,574 (609) 7,965
Income taxes payable........................................ 793 132 925
Other current liabilities................................... 4,909 4,909
---------- ----------
Total current liabilities......................... 232,517 239,835
Obligations under capital leases, excluding current
installments.............................................. 10,698 10,698
Long-term debt, excluding current installments.............. 364,903 76,000 440,903
Customer deposits........................................... 42,805 42,805
Other liabilities........................................... 22,585 22,585
---------- ----------
Total liabilities................................. 673,508 756,826
---------- ----------
Minority interest........................................... -- 27,113 27,113
Share capital
Ordinary shares of S$0.26 each............................ 221,636 221,636
Subscription receivables.................................... (12,731) (12,731)
Additional paid-in capital.................................. 694,752 694,752
Unearned compensation....................................... (982) (982)
Accumulated other comprehensive income (loss)............... (52,696) (52,696)
Retained earnings (deficit)................................. (293,640) (293,640)
---------- ----------
Total shareholders' equity........................ 556,339 556,339
---------- ----------
Total liabilities and shareholders' equity........ $1,229,847 $1,340,278
========== ==========
</TABLE>

28
<PAGE> 34

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

The following discussion of our financial condition and results of
operations should be read in conjunction with the consolidated financial
statements and the related notes included elsewhere in this prospectus. This
discussion contains forward-looking statements that involve risks and
uncertainties. Our actual results may differ significantly from those projected
in the forward-looking statements. Factors that might cause future results to
differ significantly from those projected in the forward-looking statements
include, but are not limited to, those discussed below and elsewhere in this
prospectus, particularly in "Risk Factors."

OVERVIEW

Chartered is one of the world's leading independent semiconductor
foundries. We provide comprehensive wafer fabrication services and technologies
to semiconductor suppliers and manufacturers of electronic systems. We operate
three wholly-owned fabs in Singapore and hold interests in two strategic
alliances for fabs in Singapore. We hold a 51% equity interest in CSP, which
owns and will operate Fab 6, and a 49% equity interest in SMP, which operates
Fab 5. We account for SMP on a minority interest equity basis.

U.S. GAAP generally requires consolidation of all majority owned (greater
than 50%) subsidiaries. However, as a result of certain provisions contained in
our strategic alliance agreement with respect to CSP the minority shareholders
of CSP are deemed to have substantive participative rights which would overcome
the presumption that we should consolidate CSP. Therefore, CSP has been
historically accounted for under the equity method in our financial statements.
As a result of an amendment to the strategic alliance agreement, we will treat
CSP as a consolidated subsidiary from October 1, 1999 forward. Please see
"Business -- Strategic Alliances -- Chartered Silicon Partners" for a discussion
of this amendment.

We are 90.8% owned by ST and its affiliates (72.5% following the global
offering). We have a service agreement with ST pursuant to which we currently
pay ST an annual management fee for certain management and corporate support
services. This fee is based on certain percentages of capital employed, sales,
manpower and payroll. We expect to amend the service agreement prior to closing
the global offering to convert from a formula based fee arrangement to a service
based fee arrangement.

According to the World Semiconductor Trade Statistics, the traditional
long-term growth rate for the worldwide semiconductor industry has been more
than 15%. However, the semiconductor industry is highly cyclical. Fabs can take
several years to plan, construct and begin operations. Therefore, during periods
of favorable market conditions, semiconductor manufacturers often begin building
new fabs in response to anticipated demand growth for semiconductors. In
addition, upon operation, fabs increase production volumes rapidly. As a result,
large amounts of semiconductor manufacturing capacity typically become available
during the same time period. Absent growth in demand, this sudden increase in
supply results in semiconductor manufacturing overcapacity, which leads to sharp
drops in semiconductor prices.

From 1996 through the second quarter of 1998, a number of sectors of the
semiconductor industry were in a state of overcapacity resulting in sharp
declines in the average selling price of semiconductor wafers and completed
semiconductor devices. However, since the third quarter of 1998, global
semiconductor demand has been growing at an accelerated pace.

Semiconductor manufacturing is very capital intensive in nature. A high
percentage of the cost of a fab is fixed, therefore increases or decreases in
capacity utilization rates can have a significant effect on profitability. The
unit cost of wafer fabrication generally decreases as fixed charges, such as
depreciation expense on the facility and semiconductor manufacturing equipment,
are allocated over a larger number of units produced.

of devices with higher level functionality and greater system-level integration
requires more manufacturing steps and commands higher wafer prices.

Since prices for wafers of a given level of technology decline over the
product life cycle, a fab must continue to migrate to increasingly sophisticated
technologies to maintain the same level of profitability. This requires
continuous capital investment.

In our first two fabs, we initially focused on manufacturing semiconductor
wafers for the computer industry. Production commenced in Fab 1 in 1989 and in
Fab 2 in 1995. We achieved profitability in 1993 and continued to increase our
profitability through the first half of 1996. Conditions in the semiconductor
industry began to deteriorate in the second half of 1996. At the same time, our
capacity utilization declined from 90.7% in the first half of 1996 to 57.2% in
the second half of 1996 and average selling price per wafer declined
significantly. Consistent with our long-term view of the growth of the
semiconductor industry, we continued to invest in new process technologies and
the expansion of our manufacturing capacity. During 1997, Fab 3 commenced
production and we entered into strategic alliances to form CSP and SMP. Because
we begin amortizing the capitalized costs associated with a new fab as soon as
the fab commences operation, we incur large depreciation expenses related to the
fab prior to the time the fab reaches volume production. In addition, we expense
all non-capitalized costs as incurred related to the start-up of the fab such as
personnel training costs and payroll and employee related costs.

Our production generally begins upon receipt of purchase orders from our
customers. Some of our customers are entitled to a discount on a fixed number of
wafers per period. Sales subject to these discounts were approximately 16% of
total revenue during the first six months of 1999.

Our 1995 and 1997 share ownership plans are accounted for in accordance
with variable plan accounting. As a consequence, we recognize share compensation
expense for options granted to employees under these plans. For each reporting
period, compensation cost for shares granted under these plans to employees is
recorded over the requisite vesting periods based on the current market value of
our ordinary shares at the end of the relevant period. We recognized
approximately $3.3 million of related compensation expense during the six months
ended June 30, 1999. We terminated these plans effective September 30, 1999 and
replaced all unpaid portions of partly paid shares under these plans with share
options under our 1999 plan. These options have the same exercise price and
vesting schedule as the replaced partly paid shares.

In addition, we account for our 1999 plan as a fixed option plan. Reported
share compensation expense represents the difference between the exercise price
of employee share option grants and the deemed fair value of our ordinary shares
at the date of the grant, amortized over the vesting period of the applicable
options.

Effective July 1, 1998, we changed our functional currency from the
Singapore dollar to the U.S. dollar. Significant changes in economic facts
necessitated this change in functional currency. These changes included
increased financing in U.S. dollars along with increasing sales to companies
based outside of Singapore, principally in the United States. In addition, there
continues to be less financial dependence by us on our parent.

The change in functional currency was recognized through the translation of
Singapore dollar amounts of our non-monetary assets, principally property, plant
and equipment at June 30, 1998, to U.S. dollars on July 1, 1998 with those U.S.
dollar amounts becoming the accounting basis for those assets at July 1, 1998
and for subsequent periods. The $52.7 million cumulative translation adjustment
at July 1, 1998 in shareholders' equity prior to the change remains as a
separate component of accumulated comprehensive income. Please see note 2(e) to
our consolidated financial statements for additional information regarding our
change in functional currency.

30
<PAGE> 36

RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------- ----------------
1996 1997 1998 1998 1999
----- ----- ----- ------ ------
<S> <C> <C> <C> <C> <C>
Net revenue........................................ 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenue.................................... 71.1 97.0 104.0 96.3 83.9
----- ----- ----- ----- -----
Gross profit (loss)................................ 28.9 3.0 (4.0) 3.7 16.1
Operating Expenses:
Research and development......................... 3.2 7.0 10.3 8.9 7.8
Fab start-up costs............................... 3.2 2.9 0.3 0.6 --
Sales and marketing.............................. 4.0 5.3 7.5 5.8 7.0
General and administrative....................... 8.0 7.9 8.8 6.5 7.7
Costs incurred on termination of development
program....................................... -- -- 7.5 -- 2.2
Stock-based compensation......................... 0.1 0.5 (0.7) (0.6) 1.1
----- ----- ----- ----- -----
Total operating expenses...................... 18.5 23.6 33.7 21.2 25.8
----- ----- ----- ----- -----
Operating income (loss)............................ 10.4 (20.6) (37.7) (17.5) (9.7)
Other income (expense):
Equity in loss of SMP and CSP.................... -- (0.3) (4.8) (2.9) (6.1)
Other income (loss).............................. 0.9 1.3 1.1 0.1 0.2
Interest income.................................. 0.2 0.0 0.4 0.3 0.4
Interest expense................................. (0.3) (3.4) (4.8) (4.3) (3.1)
Exchange gain (loss)............................. 0.5 (8.3) 1.2 (1.3) 1.7
----- ----- ----- ----- -----
Income (loss) before income taxes.................. 11.7 (31.3) (44.6) (25.6) (16.6)
Income tax benefit (expense)....................... (0.1) (0.1) (0.2) (0.2) 0.0
----- ----- ----- ----- -----
Net income (loss).................................. 11.6% (31.4)% (44.8)% (25.8)% (16.6)%
===== ===== ===== ===== =====
</TABLE>

SIX MONTHS ENDED JUNE 30, 1998 AND JUNE 30, 1999

Net revenue. We generate revenue primarily from fabricating semiconductor
wafers. In addition, we derive revenue from associated subcontracted assembly
and test services. Revenue is recognized upon shipment of goods to our
customers. Substantially all revenue is in U.S. dollars. Net revenue increased
26.6%, from $232.8 million in the first half of 1998 to $294.7 million in the
first half of 1999. This increase in revenue was due primarily to an increase in
the number of wafers shipped resulting from increased worldwide market demand
and additional manufacturing capacity in our fabs. The number of eight-inch
equivalent wafers shipped increased from 213,500 in the first half of 1998 to
327,300 in the first half of 1999, an increase of 113,800 or 53.3%. Of the
increase, 25.0% resulted from the sale of semiconductor wafers with line
geometries of 0.35 micron, or 0.35u, and below and 31.4% was derived from the
sale of print head chips which commenced shipment in the second half of 1998 and
ceased production in July 1999. We do not expect the cessation in production of
print head chips to have a material impact on our results of operations, capital
resources or cash flows, as the net revenue from sales of such chips was only
4.5% of our total net revenue in the first half of 1999.

Average selling prices decreased from $1,090 per wafer in the first half of
1998 to $900 per wafer in the first half of 1999 due primarily to the lower
selling price for the less complex print head chips and worldwide declines in
average selling prices of semiconductor wafers. Excluding print head chips, the
average selling price per wafer for the first half of 1999 was $965.

Cost of revenue and gross profit (loss). Cost of revenue includes
depreciation expense, attributed overhead, cost of materials and subcontracted
expenses for assembly and test services. Cost of revenue increased 10.3% from
$224.1 million in the first half of 1998 to $247.3 million in the first half of
1999,

31
<PAGE> 37

principally due to the incremental depreciation on additional equipment
installed to increase capacity of Fab 3 and an increase in production volumes.
Cost per wafer decreased from $1,050 in the first half of 1998 to $755 in the
first half of 1999. A significant portion of this decline was due to the lower
cost of wafers for print head chips, as well as an improvement in capacity
utilization from 73.8% to 94.8% and a slightly reduced cost of materials per
wafer. These factors resulted in an improvement in gross margins from 3.7% in
the first half of 1998 to 16.1% in the first half of 1999.

Research and development expenses. Research and development expenses
consist primarily of salaries and benefits for research and development
personnel, depreciation of research and development equipment and material
expenses for development wafers. Research and development expenses increased by
11.2% from $20.6 million in the first half of 1998 to $23.0 million in the first
half of 1999. This was due principally to expenses for the development of 0.25u
and 0.18u process technologies, as well as other advanced processes. We expect
our research and development expenses to increase in the future as we continue
to develop new process technologies.

Fab start-up costs. Fab start-up costs constitute all expenses (other than
capitalized interest related to acquisition or construction of property, plant
and equipment) in connection with the establishment of new fabs and operations.
There were no fab start-up costs in the first half of 1999 compared to $1.5
million in the first half of 1998 due primarily to start-up activities for print
head operations.

Sales and marketing expenses. Sales and marketing expenses consist
primarily of salaries and benefits for sales and marketing personnel, contract
expenses paid to providers of EDA software, expenses associated with overseas
offices, wafer samples, promotions and receivables provisions. Sales and
marketing expenses increased by 51.1% from $13.6 million in the first half of
1998 to $20.6 million in the first half of 1999, due principally to costs of
expanding our EDA partnership program. Sales and marketing expenses as a
percentage of net sales increased from 5.8% to 7.0% over these same periods.

General and administrative expenses. General and administrative expenses
consist primarily of salaries and benefits for administrative personnel,
depreciation of non-production equipment and recruitment and training expenses.
General and administrative expenses increased 50.4% from $15.1 million in the
first half of 1998 to $22.7 million in the first half of 1999. The increase was
due primarily to higher administrative headcount which resulted in higher
payroll and staff related expenses. Administrative, payroll and other expenses
relating to the print head chip business (that previously were allocated to fab
start-up costs) also contributed to the increase in general and administrative
expenses following the commencement of production in the second half of 1998.

Cost relating to termination of development program. During 1998, we
decided to discontinue a technology transfer and licensing arrangement related
to a development program. The program involved the transfer of two generation
(geometry) process technologies from the licensor and further enhancing them for
application by us. The process technologies were intended for a specific market
requiring embedding applications on to memory chips. The program started in
mid-1997 and by the later half of 1998, extreme weakness and volatility of the
market and adverse customer perceptions on the cost of the application, together
with customer views of the long and complicated product development cycle, led
to difficulties in both Chartered and the licensor fulfilling the original
intent of the agreement. All program transfer, development and marketing
activities were terminated in 1998.

In connection with the discontinuation of this development program, certain
equipment previously purchased and yet to be placed into service was identified
by management in 1998 as redundant and to be disposed of in the near term. We
recorded a $31.8 million loss in 1998 to reduce the carrying amount of certain
identified equipment and a technology license agreement to their estimated fair
value less costs to sell. This loss comprised $30.9 million for the write-down
of plant and equipment to fair value less costs to sell and $0.8 million to
reduce the carrying amount of the related technology license agreement to zero.
The equipment was unique to or specifically configured to the requirements of
the transferred process technologies and could not be re-deployed effectively.
The technology license agreement written off represented the unamortized amount
paid in 1997 for the acquisition of the technology. As of

32
<PAGE> 38

December 31, 1998, management did not expect to incur any further costs with
respect to the decision to discontinue the development program.

In February 1999, we reached an agreement in principle with the licensor to
terminate the program. As part of the settlement, we paid the licensor $6.5
million. The termination agreement was signed in August 1999. No further
payments will be made with respect to this program.

Other income. Other income increased from $0.3 million in the first half
of 1998 to $0.7 million in the first half of 1999 due to the increase in grants
received from the Government of Singapore for both research and development and
staff training.

Interest income. Interest income increased from $0.8 million in the first
half of 1998 to $1.3 million in the first half of 1999 due to higher cash
balances.

Interest expense. Interest expense decreased from $10.1 million in the
first half of 1998 to $9.1 million in the first half of 1999 due to lower
interest rates.

Exchange gain (loss). Exchange gains and losses result from movements in
the exchange rates of foreign currencies between the date a monetary asset or
liability arises and the balance sheet date or the date of settlement, to the
extent it has not been hedged. We recognized an exchange loss of $3.1 million in
the first half of 1998 and an exchange gain of $5.1 million in the first half of
1999 primarily related to currency fluctuations between the U.S. dollar and the
Singapore dollar.

Income tax benefit (expense). Each of our fabs has been exempted from
income tax on profits from the sale of manufactured goods for ten years
following the date specified production milestones are achieved. Currently, we
pay tax only on interest income. We had a provision for taxes of $0.5 million in
the first half of 1998 compared with a net tax refund of $0.2 million, which
included a tax refund of $0.8 million offset by a charge of $0.6 million, in the
first half of 1999. The tax refund was for allowed interest expense that was
offset against interest income for the period from 1992 to 1995.

Equity in loss of SMP and CSP. Our share of the losses in SMP and CSP was
$6.8 million in the first half of 1998 and $18.0 million in the first half of
1999. This increase in loss represents the increase in start-up activities for
Fab 5 and Fab 6 during the first half of 1999. Fab 5 and Fab 6 have not yet
commenced volume production.

YEARS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1998

Net revenue. Net revenue increased 11.3%, from $379.8 million in 1997 to
$422.6 million in 1998. This increase in revenue was due primarily to an
increase in the number of wafers shipped. The number of eight-inch equivalent
wafers shipped increased from 344,100 in 1997 to 439,700 in 1998, an increase of
95,600 or 27.8%. This was primarily the result of increased shipment of 0.35u
products and, to a lesser extent, the sale of print head chips.

The increase in wafers shipped was offset by a 12.9% decrease in average
selling prices, from $1,104 per wafer in 1997 to $961 per wafer in 1998. This
decrease was due primarily to worldwide semiconductor overcapacity and a
resulting decrease in average prices.

Cost of revenue and gross profit (loss). Cost of revenue increased 19.3%
from $368.5 million in 1997 to $439.7 million in 1998, principally due to higher
depreciation cost as a result of additional capacity installed in Fabs 1, 2 and
3. The increase in the number of wafers produced resulted in average cost per
wafer decreasing 6.6% from $1,071 in 1997 to $1,000 in 1998. We suffered a gross
loss of $17.0 million in 1998 compared with gross profit of $11.2 million in
1997. This was the result of declining average selling price and higher cost of
revenue including higher depreciation cost.

Research and development expenses. The 63.5% increase in research and
development expenses from $26.6 million in 1997 to $43.4 million in 1998 was due
primarily to activities in improving process technology and the development of
new technology, in particular the development of 0.25u and 0.35u process
technologies. To support these activities, we increased the number of personnel
engaged in

33
<PAGE> 39

research and development by 28 during 1998. In addition, we moved our research
and development operations from Fab 2, which was in commercial production, to
Fab 3, which was then being equipped with our latest production equipment and
was only producing a limited number of wafers. This caused a significant
increase in absorption of fixed costs by our research and development activity.

Fab start-up costs. Fab start-up costs decreased 86.7% from $10.9 million
in 1997 to $1.5 million in 1998. Fab 3 commenced operations in August 1997,
after which Fab 3 expenses were no longer classified as start-up costs.

Sales and marketing expenses. Sales and marketing expenses increased by
57.9% from $20.2 million in 1997 to $31.9 million in 1998 as we expanded our EDA
partnership programs, increased our presence in Europe and the eastern United
States and increased our use of wafer samples for prospective business. As a
percentage of net revenue, sales and marketing expenses increased from 5.3% in
1997 to 7.5% in 1998.

General and administrative expenses. General and administrative expenses
increased 24.0% from $30.1 million in 1997 to $37.4 million in 1998. As a
percentage of net revenue, general and administrative expenses increased from
7.9% in 1997 to 8.8% in 1998. This increase was due to administrative, payroll
and other expenses in connection with the commencement of production in Fab 3 in
1997.

Cost relating to termination of development program. In connection with
the discontinuation of the development program described above under "-- Six
months ended June 30, 1998 and June 30, 1999 -- Cost relating to termination of
development program," certain equipment previously purchased and yet to be
placed into service was identified by management in 1998 as redundant and to be
disposed of in the near term. We recorded a $31.8 million loss in 1998 to reduce
the carrying amount of certain identified equipment and technology license
agreements to their estimated fair value less costs to sell. This loss comprised
$30.9 million for the write-down of plant and equipment to fair value less costs
to sell and $0.8 million to reduce the carrying amount of the related technology
license agreement to zero. The equipment was unique to or specifically
configured to the requirements of the transferred process technologies and could
not be re-deployed effectively. The technology license agreement written off
represented the unamortized amount paid in 1997 for the acquisition of the
technology. As of December 31, 1998, management did not expect to incur any
further costs with respect to the decision to discontinue the development
program.

In 1999, as a result of subsequent discussions with the licensor regarding
the termination of the development program, we recorded a $6.5 million charge
representing a final cash settlement amount that allowed an in-principle
agreement to be reached on the termination of the license agreement. The
termination agreement was signed in August 1999. No further payments will be
made with respect to this program.

Equity in loss of SMP and CSP. Our share of the losses in SMP and CSP was
$20.4 million in 1998 compared to $1.3 million in 1997. The increase in loss was
primarily attributable to pre-operating costs for SMP and CSP. SMP was formed in
January 1998 and CSP was formed in March 1997.

Interest income. Interest income increased from $0.2 million in 1997 to
$1.7 million in 1998 due to the additional equity investments in March and
October 1998 by existing shareholders. This capital was temporarily deposited in
fixed rate interest bearing accounts, before being drawn down for the repayment
of indebtedness and purchase of new equipment.

Interest expense. Interest expense increased 57.5% from $12.8 million in
1997 to $20.1 million in 1998 due primarily to the higher level of borrowings to
finance the expansion of Fab 3. Outstanding loan balances increased from $282.2
million at December 31, 1997 to $468.6 million at December 31, 1998.

Exchange gain (loss). In 1997, we incurred a loss of $31.7 million due to
the significant strengthening of the U.S. dollar against the Singapore dollar
and its effect on our U.S. dollar denominated liabilities. In 1998, we
recognized an exchange gain of $5.2 million in 1998 in a period of relative
stability between the U.S. dollar and the Singapore dollar, primarily as a
result of the amortization of gains on certain hedging transactions.

34
<PAGE> 40

Income tax benefit (expense). Income tax expense increased from $0.4
million in 1997 to $0.9 million in 1998 due primarily to an increase in non-tax
exempt interest income.

YEARS ENDED DECEMBER 31, 1996 AND DECEMBER 31, 1997

Net revenue. Net revenue decreased 6.7% from $406.9 million in 1996 to
$379.8 million in 1997. This was primarily due to a reduction in average selling
price per wafer from $1,603 in 1996 to $1,104 in 1997. This decrease was caused
by overcapacity in the worldwide semiconductor market.

The decrease in revenue caused by lower average selling prices was
substantially offset by a 35.5% increase in the number of eight-inch equivalent
wafers shipped, from 253,900 in 1996 to 344,100 in 1997.

Cost of revenue and gross profit. Cost of revenue increased 27.3% from
$289.4 million in 1996 to $368.5 million in 1997. The main increase came from
depreciation as a result of increased production capacity at Fab 2. Cost per
wafer decreased from $1,140 in 1996 to $1,071 in 1997, a decrease of 6.1%.

Gross profit decreased 90.4%, from $117.5 million in 1996 to $11.2 million
in 1997 due to declining average selling prices and higher costs of revenue,
offset to a limited extent by a decrease in per wafer costs. In 1996, 19.8% of
gross profit, representing $23.2 million, was attributable to a reduction in the
reserves for technology liabilities. We use numerous manufacturing processes
that are developed internally or licensed from third parties. We have no means
of knowing what patent applications have been filed in various countries until
they are granted. As is typical in the semiconductor industry, third parties
have from time to time asserted patents that cover certain of our technologies
and alleged infringement of certain intellectual property rights.

We accrue for probable and estimable technology liabilities expected to be
incurred at each balance sheet date. Such accruals are estimated on the basis of
our historical experience in dealing with such claims, and are established when
we have been approached by or are negotiating with third parties with the
intention of entering into licensing arrangements.

Beginning in 1995, we established a strategy to deal aggressively with
technology claims. We modified our business processes to limit the impact and
likelihood of such claims, and at the same time took advantage of a capacity
shortage in the wafer industry to establish business relationships with
potential claimants. Also, the establishment of our own patent portfolio further
strengthened our negotiating position. As a result, a number of expected claims
for which accruals had been previously established did not materialize, and we
released the accruals for technology liabilities of $23.2 million in 1996.

Gross margin decreased from 28.9% in 1996 to 3.0% in 1997.

Research and development expenses. There was a 104.0% increase in research
and development expenses from $13.0 million in 1996 to $26.6 million in 1997. As
a percentage of net revenue, research and development expenses increased from
3.2% to 7.0%. This increase was primarily due to efforts related to improvement
of existing process technologies and the development of new process
technologies.

Fab start-up costs. Fab start-up costs decreased from $13.1 million in
1996 to $10.9 million in 1997. For both 1996 and 1997, the majority of fab
start-up costs expenses were related to start-up costs at Fab 3. Fab 3 began
commercial production in August 1997, at which point the Fab 3 costs were no
longer classified as fab start-up costs.

Sales and marketing expenses. Sales and marketing expenses increased by
24.3% from $16.2 million in 1996 to $20.2 million in 1997. As a percentage of
net revenue, sales and marketing expense increased from 4.0% to 5.3% . The
increase was primarily due to the establishment of overseas offices in Japan,
Israel and Germany during the second half of 1996.

General and administrative expenses. General and administrative expenses
decreased 7.6% from $32.6 million in 1996 to $30.1 million in 1997. This expense
reduction was a result of lower bonus

35
<PAGE> 41

payments in 1997 compared to 1996. As a percentage of net revenue, general and
administrative expenses decreased from 8.0% to 7.9%.

Equity in loss of SMP and CSP. Our share of the losses in CSP was $1.3
million in 1997, which was primarily attributable to pre-operating costs.

Interest income. Interest income declined from $1.0 million in 1996 to
$0.2 million in 1997 primarily due to lower average cash balances in 1997.

Interest expense. Interest expense net of capitalized interest increased
from $1.1 million in 1996 to $12.8 million in 1997 due to higher borrowing
related to the expansion of wafer capacity. Outstanding loans increased from
$95.1 million at December 31, 1996 to $282.2 million at December 31, 1997.

Exchange gain (loss). We recognized an exchange gain of $2.0 million in
1996 in a period of relative stability between the U.S. dollar and the Singapore
dollar. In 1997, we incurred a loss of $31.7 million due to the significant
strengthening of the U.S. dollar against the Singapore dollar and its effects on
our U.S. dollar denominated liabilities.

Income tax benefit (expense). Income tax expense increased from $0.3
million in 1996 to $0.4 million in 1997.

QUARTERLY RESULTS

The following table sets forth certain unaudited consolidated financial
information, including as a percentage of net revenue, for the eight fiscal
quarters ended June 30, 1999. We believe 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 our consolidated financial statements and the related
notes included elsewhere in the prospectus. Our 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 our recent growth, we believe that period-to-period comparisons should
not be relied upon as an indication of future performance.

<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------------------------------------------------------------
SEP. 30, DEC. 31, MAR. 31, JUN. 30, SEP. 30, DEC. 31, MAR. 31, JUN. 30,
1997 1997 1998 1998 1998 1998 1999 1999
-------- -------- -------- -------- -------- -------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenue............................ $ 86.9 $157.8 $145.7 $ 87.1 $ 83.9 $106.0 $130.8 $163.9
Cost of revenue........................ 85.7 116.1 115.5 108.6 103.2 112.4 118.1 129.1
------ ------ ------ ------ ------ ------ ------ ------
Gross profit (loss).................... 1.2 41.7 30.2 (21.5) (19.3) (6.4) 12.7 34.8
Operating expenses:
Research and development............. 8.0 9.3 9.4 11.3 13.3 9.5 12.1 10.9
Fab start-up costs................... 3.0 (1.4) 0.9 0.6 0.0 0.0 -- 0.0
Sales and marketing.................. 4.8 7.6 4.3 9.3 8.8 9.5 10.1 10.5
General and administrative........... 8.7 3.2 6.5 8.6 7.8 14.5 10.3 12.4
Costs incurred on termination of
development program................ -- -- -- -- -- 31.8 6.5 --
Stock-based compensation............. 0.5 0.5 (0.7) (0.7) (0.7) (0.7) 1.6 1.6
------ ------ ------ ------ ------ ------ ------ ------
Total operating expenses....... 25.0 19.2 20.4 29.1 29.2 64.6 40.6 35.4
------ ------ ------ ------ ------ ------ ------ ------
Operating income (loss)................ (23.8) 22.5 9.8 (50.6) (48.5) (71.0) (27.9) (0.6)
Other income (expense):
Equity in loss of SMP and CSP........ (0.4) (0.6) (0.9) (5.9) (7.4) (6.2) (8.5) (9.5)
Other income (loss).................. 1.1 1.3 0.0 0.3 1.9 2.4 0.3 0.3
Interest income...................... 0.0 0.1 0.5 0.3 0.1 0.7 0.7 0.5
Interest expense..................... (3.3) (6.0) (5.7) (4.4) (5.3) (4.7) (4.6) (4.5)
Exchange gain (loss)................. (12.8) (15.9) (1.3) (1.8) 6.6 1.8 5.5 (0.5)
------ ------ ------ ------ ------ ------ ------ ------
Income (loss) before income taxes...... (39.2) 1.4 2.4 (62.1) (52.6) (77.0) (34.5) (14.3)
Income tax benefit (expense)........... 0.0 (0.1) (0.3) (0.3) (0.1) (0.2) (0.4) 0.5
------ ------ ------ ------ ------ ------ ------ ------
Net income (loss)...................... $(39.2) $ 1.3 $ 2.1 $(62.4) $(52.7) $(77.2) $(34.9) $(13.8)
====== ====== ====== ====== ====== ====== ====== ======
</TABLE>

36
<PAGE> 42

<TABLE>
<CAPTION>
AS A PERCENTAGE OF NET REVENUES
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenue............................ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenue........................ 98.5 73.6 79.3 124.7 123.0 106.0 90.3 78.8
------ ------ ------ ------ ------ ------ ------ ------
Gross profit (loss).................... 1.5 26.4 20.7 (24.7) (23.0) (6.0) 9.7 21.2
Operating expenses:
Research and development............. 9.2 5.9 6.4 12.9 15.8 9.0 9.2 6.6
Fab start-up costs................... 3.4 (0.9) 0.6 0.6 0.0 0.0 0.0 0.0
Sales and marketing.................. 5.6 4.8 3.0 10.6 10.5 8.9 7.7 6.4
General and administrative........... 10.0 2.0 4.4 9.9 9.3 13.7 7.9 7.6
Costs incurred on termination of
development program................ -- -- -- -- -- 30.0 5.0 --
Stock-based compensation............. 0.6 0.3 (0.5) (0.8) (0.9) (0.7) 1.3 1.0
------ ------ ------ ------ ------ ------ ------ ------
Total operating expenses....... 28.8 12.1 13.9 33.2 34.7 60.9 31.1 21.6
------ ------ ------ ------ ------ ------ ------ ------
Operating income (loss)................ (27.3) 14.3 6.8 (57.9) (57.7) (66.9) (21.4) (0.4)
Other income (expense):
Equity in loss of SMP and CSP........ (0.4) (0.4) (0.6) (6.8) (8.8) (5.8) (6.5) (5.8)
Other income (loss).................. 1.3 0.8 0.0 0.4 2.3 2.3 0.2 0.2
Interest income...................... 0.0 0.1 0.3 0.4 0.2 0.7 0.5 0.3
Interest expense..................... (3.8) (3.8) (3.9) (5.0) (6.3) (4.5) (3.5) (2.7)
Exchange gain (loss)................. (14.7) (10.1) (0.9) (2.1) 7.9 1.7 4.2 (0.3)
------ ------ ------ ------ ------ ------ ------ ------
Income (loss) before income taxes...... (44.9) 0.9 1.7 (71.0) (62.4) (72.5) (26.5) (8.7)
Income tax benefit (expense)........... 0.0 (0.1) (0.2) (0.3) (0.1) (0.2) (0.3) 0.3
------ ------ ------ ------ ------ ------ ------ ------
Net income (loss)...................... (44.9)% 0.8% 1.5% (71.3)% (62.5)% (72.7)% (26.8)% (8.4)%
====== ====== ====== ====== ====== ====== ====== ======
</TABLE>

The worldwide semiconductor industry suffered from reduced demand in the
second and third quarters of 1998, due in part to excess inventories. As a
result, we shipped fewer wafers during these periods, at lower average selling
prices. Industry demand began to increase in the fourth quarter of 1998 and has
continued to increase in each of the quarters of 1999. Our wafer shipments
increased significantly during each of these periods. These increases have
resulted in higher net revenues, despite decreases in average selling price per
wafer.

Gross margins improved in each of the quarters beginning in the third
quarter of 1998, primarily due to higher capacity utilization.

Research and development costs vary from quarter-to-quarter as the level of
our research and development activity varies based on, among other things, the
commencement and termination of specific programs.

General and administrative expenses increased in the second through fourth
quarters of 1998 as we increased infrastructure and management resources to
support future growth.

In 1998, we recorded a charge of $31.8 million relating to the termination
of a development program. In the first six months of 1999, we recorded a charge
of $6.5 million in connection with the termination of a development program.

LIQUIDITY AND CAPITAL RESOURCES

We have funded our cash requirements primarily through capital infusions
from, and loans guaranteed by, ST. To date, we have raised approximately $722
million from ST and $182 million through equity financing from equity investor
customers, strategic partners and stock purchases by employees.

At June 30, 1999, our principal sources of liquidity included $47.5 million
in cash and cash equivalents and $119.0 million of unutilized banking and credit
facilities consisting of short-term advances and bank guarantees.

Net cash provided by operating activities totaled $156.9 million in 1998
and $95.8 million in the six months ended June 30, 1999. The $156.9 million of
cash generated in 1998 was attributable to a decrease in accounts receivable and
inventories and an increase in accrued operating expenses, as well as cash
generated by other operating activities. The $95.8 million of cash generated in
the first six months of 1999 is attributable to a decrease in inventories and an
increase in accrued operating expenses, as well as other

37
<PAGE> 43

cash generated by operating activities, offset by an increase in accounts
receivable and decreases in other current liabilities and amounts due to ST and
its affiliates.

Net cash used in investing activities totaled $358.6 million in 1998 and
$114.7 million in the six months ended June 30, 1999. Through June 30, 1999, our
investing activities have consisted primarily of capital expenditures totaling
$279.4 million in 1998 and $89.8 million in the six months ended June 30, 1999.
Capital expenditures have been principally comprised of the purchase of
semiconductor equipment for the equipping of fabs. We have also had significant
cash outflows relating to our investment in SMP and CSP.

Net cash provided by financing activities totaled $284.9 million in 1998,
net cash used was $33.5 million in the six months ended June 30, 1999. Cash
generated from financing activities in 1998 was principally generated from the
issuance of ordinary shares totaling $492.9 million, offset by the repayment of
loans and reduction of customer deposits. In the six months ended June 30, 1999,
cash outflow from financing activities was principally due to the return of
customer deposits.

We have an oral multi-currency $100 million short-term credit facility with
ST. Interest on the facility accrues at the monthly average interest rate of
three specific banks as indicated by ST. The current monthly average interest
rate for Singapore dollar borrowings under the facility is 2.43%. Borrowings are
unsecured. As of June 30, 1999, there were $1.9 million of unsecured borrowings
outstanding under this facility.

As of June 30, 1999, we had three loans for capital expenditures and
equipment with outstanding principal amounts of $40.6 million, $176.0 million
and $176.0 million. Each of the loans is denominated in Singapore dollars and we
fully hedge both interest and principal payments against fluctuations in foreign
exchange rates. The loans bear interest at rates between 4.0 and 4.25%. The
three loan agreements are unsecured and guaranteed by ST.

- The first loan matures on September 1, 2003. Interest is payable
semiannually and principal will be amortized in equal semi-annual
installments commencing on September 1, 1997.

- The second loan matures on September 1, 2005. Interest is payable
semiannually and principal will be amortized in equal semi-annual
installments commencing on September 1, 1999.

- The third loan matures on September 1, 2002. Interest is payable
semi-annually and principal will be amortized in equal semi-annual
installments commencing on September 1, 1999.

As of June 30, 1999, we had two bank loans with outstanding amounts of
S$50.0 million (U.S.$29.3 million) each. The loans are due February 13, 2002 and
June 17, 2002, respectively. The loans carry interest rates of 2.0% above the
bank's first tier savings rate and 1.0% above the arithmetic mean of SIBOR for
deposits quoted by specified banks to the lender, respectively. Interest is
payable semi-annually in Singapore dollars for both loans. The loans are
unsecured. During 1998, we entered into foreign currency forward contracts to
hedge the principal and interest cash flows related to all of our Singapore
dollar borrowings.

Our affiliate CSP has a term loan facility of $143.2 million with several
banks and financial institutions for capital expenditures and equipment. At June
30, 1999, $76.0 million had been drawn on this facility. The loan matures June
30, 2002 and carries an interest rate of 0.5625% above the arithmetic mean of
SIBOR rates for U.S. dollars deposits quoted by specified banks to the lender.
Interest is payable semi-annually in U.S. dollars and principal will be
amortized in four equal semi-annual installments commencing December 31, 2000.
Borrowings under this facility are unsecured.

We have been awarded cumulative grants from various agencies of the
Government of Singapore totaling $56.4 million at June 30, 1999. The grants
support research and development activities and training activities and are paid
to reimburse us for specified research and development expenses, training costs
and achievement of certain milestones. At June 30, 1999, $16.1 million had been
disbursed under these grants. The grants are disbursed based on the amount of
expenditures incurred. There are no conditions attached to the grants other than
completion of the project to which the grant relates and the certification of
the costs incurred.
38
<PAGE> 44

We anticipate use of proceeds from this offering primarily to fund equity
contributions to our joint ventures, capital expenditures in connection with the
expansion of our manufacturing facilities, for working capital and general
corporate purposes.

We expect our aggregate capital expenditures, including CSP and investments
in SMP, to be approximately $530 million in the second half of 1999 and
approximately $770 million in 2000 (CSP accounted for on a consolidated basis).
We expect that CSP will fund a portion of these expenditures through the
incurrence of at least $450 million of debt during the first half of 2000. We
believe that the net proceeds of the global offering, together with cash on
hand, cash equivalents and credit facilities with our equipment vendors will be
sufficient to meet our working capital needs for at least the next 12 months.
Thereafter, we may require additional funds to support our working capital
requirements or for other purposes and may seek to raise additional funds
through public or private equity financing or from other sources. There can be
no assurance that additional financing will be available at all or, if
available, that such financing will be obtainable on terms favorable to us or
that any additional financing will not be dilutive.

YEAR 2000 READINESS

IMPACT OF THE YEAR 2000 COMPUTER PROBLEM

The Year 2000 computer problem refers to the potential for system and
processing failures of date-related data as a result of computer-controlled
systems using two digits rather than four to define the applicable year. For
example, computer programs that have time-sensitive software may recognize a
date represented as "00" as the year 1900 rather than the year 2000. This could
result in a system failure or miscalculations causing disruptions of operations,
including among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities.

STATE OF READINESS

As of August 1999, more than 99% of our fab equipment and internal systems
had been tested and upgraded and found to be Year 2000 ready.

We have received assurances from our third-party vendors that all material
business and manufacturing systems supplied by them and used by us are Year 2000
ready. We are in the final stages of our testing and expect to complete it prior
to closing the global offering. We do not believe that we have any significant
systems that contain embedded chips that are not Year 2000 ready. Our internal
operations and business are also dependent upon the computer-controlled systems
of third parties such as our equipment manufacturers, suppliers, customers and
other service providers. If our manufacturers, suppliers, vendors, partners,
customers and service providers fail to correct their Year 2000 problems, these
failures could result in an interruption in, or a failure of, our normal
business activities or operations. If a Year 2000 problem occurs, it may be
difficult to determine which party's products have caused the problem. These
failures could interrupt our operations and damage our relationships with our
customers. Due to the general uncertainty regarding the readiness of third-party
manufacturers, suppliers and vendors, we are unable to determine at this time
whether Year 2000 failures could harm our business and our financial results.

EXPENSES

Based on our assessment to date, we anticipate that expenses associated
with testing and remediating our internal systems will be approximately $3.0
million.

RISKS

Failures of our internal systems to be Year 2000 ready could temporarily
prevent us from processing orders, issuing invoices and developing products and
could require us to devote significant resources to correcting these problems.
Due to the general uncertainty regarding the Year 2000 readiness of third-party

39
<PAGE> 45

suppliers and vendors, we are unable to determine at this time whether the
consequences of Year 2000 failures will have a material impact on our business,
results of operations or financial condition.

Contingency plan. We have identified several potential problems relating
to the millennium cross-over. We believe the worst case scenario would be an
external related power surge or dip, or a power trip which could cause our
equipment to malfunction. An equipment malfunction could cause the
semiconductors we are processing at the time of the malfunction to be
misprocessed. In addition, certain machines may fail despite having been
previously tested to be Year 2000 ready. To mitigate these problems, we plan to
shut down all of our information technology applications and databases and stop
all of our production equipment from 10:00 p.m. December 31, 1999 until 12:30
a.m. January 1, 2000. Over the last few days of 1999, we will perform thorough
backups of all of our applications and databases. We will make hard copies of
certain critical finance and manufacturing reports. We have established a team
of management, critical fab operations staff, information technology staff and
vendors that will be in our factories during the millennium cross-over to handle
any problems that may arise.

All of our fab operations and support organizations are developing
contingency plans to address the Year 2000 problem. Each fab will have an
operations command center during the millennium cross-over that will monitor and
track any Year 2000 related issues. There will be a central Year 2000 command
center that will consolidate all of our Year 2000 issues. All of these
contingency plans are being compiled and reviewed by management.

All of our raw material suppliers have agreed to increase the amount of
buffer stock kept at their warehouses from 1.5 months to 2 months supply. This
will help mitigate any potential Year 2000 problems at the supplier level.

SPECIAL TAX STATUS

We have been granted pioneer status under the Economic Expansion Incentives
(Relief from Income Tax) Act (Chapter 86) of Singapore for:

- the manufacture of large scale integrated circuits at Fab 1 for a
ten-year period beginning January 1, 1991;

- the manufacture of integrated circuits using submicron (smaller than one
micron) technology at Fab 2 for a ten-year period beginning July 1, 1996;
and

- the manufacture of integrated circuits using submicron technology at Fab
3 for a ten-year period beginning January 1, 1998.

We have also been granted post-pioneer status under the Economic Expansion
Incentives (Relief from Income Tax) Act for the manufacture of integrated
circuits using submicron technology at Fab 2 for a five-year period beginning
July 1, 2006 and development and expansion company status for the manufacture of
integrated circuits using submicron technology at Fab 3 for a five-year period
beginning January 1, 2008.

During the period for which our pioneer status is effective, subject to our
compliance with certain conditions, income from our pioneer trade (that is, sale
of integrated circuits) is exempt from Singapore income tax. During the periods
for which our post-pioneer status and development and expansion company status
are effective, subject to our compliance with certain conditions, income from
our post-pioneer trade and development and expansion is taxed at a concessionary
rate of 10%. The income tax exempt profits arising from the pioneer trade may be
distributed as tax-exempt dividends, and holders of ordinary shares are not
subject to Singapore income tax on such dividends. Please see
"Taxation -- Singapore Taxation -- Dividend Distribution" for information
regarding the taxation of dividends. Losses accumulated before the pioneer
status period cannot be carried forward. Losses accumulated in the pioneer
status period may be carried forward and may be offset against profits from the
same pioneer trade arising after the expiration of the pioneer status period,
subject to our compliance with certain conditions. Profits arising during
pioneer status offset any accumulated pioneer loss carryforward balance. Without
this exemption from income tax

40
<PAGE> 46

or the concessionary tax rate of 10%, we would be subject to income tax at the
applicable corporate income tax rate (which is currently 26%). Interest income
is not exempt from taxation during the pioneer status period or entitled to the
concessionary tax rate during the post-pioneer status period or the development
and expansion company status period.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (SFAS 133). SFAS 133, as recently amended, is effective
for fiscal years beginning after June 15, 2000. This statement establishes
accounting and reporting standards requiring that every derivative instrument be
recorded in the balance sheet as either an asset or liability measured at its
fair value. We believe the adoption of SFAS 133 will not have a material effect
on our financial position or results of operations.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to financial market risks derives primarily from the changes
in interest rates and foreign exchange rates. To mitigate these risks, the
Company utilizes derivative financial instruments, the application of which is
primarily for hedging purposes and not for speculative purposes.

INTEREST RATE RISK

Our cash equivalents and short-term investments are exposed to financial
market risk due to fluctuation in interest rates, which may affect our interest
income and the fair market value of our investments. We manage the exposure to
financial market risk by performing ongoing evaluations of our investment
portfolio and investing in short-term investment-grade corporate securities.
These securities are highly liquid and generally mature within 12 months from
our purchase date. Due to the short maturities of our investments, the carrying
value approximates the fair value. In addition, we do not use our investments
for trading or other speculative purposes.

We are exposed to interest rate risk on our existing floating rate debt and
as additional debt financing is periodically needed due to the capital
expenditures associated with our new fabs. The interest rate that we will be
able to obtain on debt financing will depend on market conditions at that time,
and may differ from the rates we have secured on our current debt.

41
<PAGE> 47

As of June 30, 1999, our debt obligations are as follows:

<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
--------------------------------------------------------------------------------------------------
EXPECTED MATURITY DATE
(IN THOUSANDS) WEIGHTED
----------------------------------------------------------------- FAIR INTEREST
1999 2000 2001 2002 2003 THEREAFTER TOTAL VALUE RATE
-------- -------- -------- -------- -------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHORT-TERM DEBT
Singapore dollar at
floating rate...... $ 3,087 $ 3,087 $ 3,087 3.83%
LONG-TERM DEBT
Singapore dollar at
fixed rate(1)...... 43,195 $ 86,391 $ 86,391 $ 86,391 $ 36,104 $ 54,154 392,626 385,740 4.11
Singapore dollar at
floating rate(1)... 58,668 58,668 58,668 3.19
-------- -------- -------- -------- -------- -------- -------- --------
Total Debt
Maturing.... $ 46,282 $ 86,391 $ 86,391 $145,059 $ 36,104 $ 54,154 $454,381 $447,495
======== ======== ======== ======== ======== ======== ======== ========
ACCOUNTS PAYABLE
U.S. dollar.......... $ 25,311
Singapore
dollar(1).......... 2,956
Japanese yen(1)...... 9,126
Others............... 721
--------
Total.......... $ 38,114
========
</TABLE>

- ---------------
(1) We have entered into forward foreign currency contracts related to these
amounts to exchange the related cash flows to U.S. dollars. Please see
"-- Foreign Currency Risk" below.

86.4% of our outstanding debt obligations bear fixed interest rates. We
have no cash flow or earnings exposure due to market interest rate changes for
our fixed debt obligations. 13.6% of our outstanding debt obligations bear
floating interest rates. We have cash flow and earnings exposure due to market
interest rate changes for our floating debt obligations. A half percentage point
change in interest rates would affect our interest payments by 3% annually.

FOREIGN CURRENCY RISK

Our foreign currency exposures give rise to market risk associated with
exchange rate movements against the Japanese yen, the Singapore dollar and the
U.S. dollar, our functional currency. Substantially all of our revenue was
denominated in U.S. dollars during the six months ended June 30, 1999 and as a
result, we have relatively little foreign currency exchange risk with respect to
any of our revenue. During the six months ended June 30, 1999, approximately 24%
of our cost of revenue was denominated in Singapore dollars. In addition,
approximately 40% of our capital expenditures were denominated in U.S. dollars,
approximately 32% were denominated in Japanese yen and approximately 28% were
denominated in Singapore dollars. In addition, a substantial part of our debt is
denominated in foreign currency, primarily Singapore dollars.

To protect against reductions in value and the volatility of future cash
flows caused by changes in foreign exchange rates, we utilize currency forward
contracts to minimize the impact of foreign currency fluctuations on our results
of operations. We utilize, from time to time, currency forward contracts to
hedge specific currency risks related to equipment purchase commitments,
primarily in Japanese yen. In addition, we minimize our currency risk by
purchasing certain raw materials and equipment in U.S. dollars and borrowing in
U.S. dollars. Prior to July 1, 1998, our exposure to foreign currency risk was
viewed as exposure to non-Singapore dollar assets and liabilities. On July 1,
1998, we changed our functional currency to the U.S. dollar as described in note
2(e) to our consolidated financial statements. In

42
<PAGE> 48

connection with the change, we entered into foreign currency forward contracts
to mitigate the effects to us of exchange rate fluctuations between the U.S.
dollar and the Singapore dollar related to our non-U.S. dollar denominated
borrowings. The table below provides information about our derivative financial
instruments and presents the information in U.S. dollar equivalents.

<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
------------------------------------------------------------------------------------
EXPECTED MATURITY DATES (IN THOUSANDS)
------------------------------------------------------------------------------------
FAIR
1999 2000 2001 2002 2003 THEREAFTER TOTAL VALUE
------- -------- -------- -------- ------- ---------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FORWARD EXCHANGE AGREEMENTS
(Receive Y/Pay US$)
Contract Amount............... $ 4,362 $ 5,728 $ 8,106 $ 18,196 $(4,226)
Average Contractual Exchange
Rate........................ 117.05 78.35 76.22
(Receive S$/Pay US$) Contract
Amount...................... 51,788 101,568 97,247 $148,370 $38,245 $55,701 492,918 39,529
Average Contractual Exchange
Rate........................ 1.7290 1.7404 1.7541 1.7606 1.7538 1.7401
------- -------- -------- -------- ------- ------- -------- -------
Total Contract Amount..... $56,150 $107,296 $105,353 $148,370 $38,245 $55,701 $511,114 $35,303
======= ======== ======== ======== ======= ======= ======== =======
</TABLE>

As of June 30, 1999, the extent of our forward foreign currency contract
transactions were as follows:

<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
-----------------------------------------------------
CARRYING
CARRYING AMOUNT AMOUNT HEDGED PERCENTAGE HEDGED
--------------- ------------- -----------------
<S> <C> <C> <C>
ACCOUNTS PAYABLE
Japanese yen............................... $ 9,141 $ 4,217 46.1%
Singapore dollars.......................... 2,956 -- --
Others..................................... 721 -- --
Capital lease
Japanese yen............................... 13,979 13,979 100.0
Foreign currency debt
Singapore dollar........................... 454,381 451,294 99.3
Future interest payable on debt
Singapore dollar........................... 41,623 41,623 100.0
--------------- ------------- -----------------
Total.............................. $522,801 $511,113 97.7%
=============== ============= =================
</TABLE>

43
<PAGE> 49

BUSINESS

COMPANY

We currently own, or have an interest in, five fabs, which are located in
Singapore. We have service operations in 12 cities in nine countries in North
America, Europe and Asia. We were incorporated in Singapore in 1987. We are
89.8% owned by ST and its affiliates (71.9% following the global offering). ST
is one of Singapore's largest industrial conglomerates and is indirectly
wholly-owned by the Government of Singapore. Please see "Relationship with
Singapore Technologies" for additional information regarding ST.

INDUSTRY BACKGROUND

Semiconductors are critical components used in an increasingly wide variety
of applications, such as computer systems, communications equipment and systems,
automobiles, consumer products and industrial automation and control systems. As
performance has increased and size and cost have decreased, the use of
semiconductors in these applications has grown significantly. According to the
Semiconductor Industry Association, or SIA, increased sales of communication
semiconductors used in applications such as computer modems, networks, cellular
phones and Internet and electronic commerce hardware and appliances will drive
growth in the semiconductor industry during the next several years. The SIA
estimates that worldwide semiconductor device market revenue will grow from
$125.6 billion in 1998 to $215.7 billion in 2002.

Historically, the semiconductor industry was composed primarily of
companies which designed and manufactured semiconductors in their own
fabrication facilities. These companies are known as integrated device
manufacturers, or IDMs. In the mid-1980s, fabless semiconductor companies, which
focused on design and marketing and utilized external manufacturing capacity,
began to emerge. Fabless companies initially relied on the excess capacity
provided by IDMs. As the semiconductor industry continued to grow, fabless
companies and IDMs began to seek reliable and dedicated sources of wafer
fabrication services. This need is being met by the development of independent
companies, known as foundries, that focus primarily on providing wafer
fabrication services to semiconductor suppliers.

THE GROWTH OF THE SEMICONDUCTOR FOUNDRY INDUSTRY

Semiconductor suppliers presently face increasing demands to offer new
products that provide higher performance and greater functionality at lower
prices. To compete successfully, they must also minimize the time it takes to
bring a product to market. High performance semiconductors, which contain
millions of transistors, are extraordinarily challenging to design and even more
challenging to manufacture. Additionally, these high performance semiconductors
can only be produced in fabs that employ the most advanced semiconductor process
technologies.

According to a Dataquest report in May 1999, the cost of a state-of-the-art
fab has grown from approximately $200 million in 1983 to $1.8 billion in 1999.
Today, only large and well-capitalized companies can support the substantial
technology and investment requirements of building state-of-the-art fabs. In
addition, for companies to justify the enormous cost of a new fab, a high level
of capacity utilization is essential to ensure that fixed costs are fully
absorbed. These trends have led to the rapid growth in demand for advanced
semiconductor manufacturing services provided by semiconductor foundries.

44
<PAGE> 50

Foundry services are now utilized by nearly every major semiconductor
company in the world. Dataquest estimates in a July 1999 report that in 1998
IDMs comprised 93% of the worldwide semiconductor market. Historically, IDMs
have used foundry services for their incremental manufacturing needs. Given the
mounting pressure on them to improve profit margins and accelerate
time-to-market, we expect IDMs to utilize foundries more extensively in the
future for their core manufacturing needs. For example, IDMs such as Motorola
and Toshiba have recently announced their intentions to outsource an increasing
proportion of their manufacturing needs. In addition, Dataquest estimates in an
August 1999 report that demand from fabless semiconductor companies for foundry
services will grow from $3.6 billion in 1998 to $8.5 billion in 2003.
Manufacturers of electronic systems, or systems companies, who design
semiconductors for use in their own products are also beginning to utilize
foundry services. According to an August 1999 Dataquest report, the growth of
the foundry market is expected to outpace growth of the semiconductor industry
overall, with foundry services expected to grow from $5.3 billion in 1998 to
$13.6 billion in 2003, representing a compound annual growth rate of over 20%.

THE REQUIREMENTS OF A FULL SERVICE FOUNDRY

As demand for foundry services has grown, many semiconductor suppliers are
seeking highly committed partners that meet their manufacturing technology
requirements. These partners must be able to provide the following:

Systems Integration Expertise. In recent years, business and consumer
demand for high performance data transmission, processing and storage has
increased dramatically. Fueling this demand has been growth in the data
communications, telecommunications, wireless and consumer markets. This has
resulted in greater demand for faster, smaller semiconductors that integrate an
increasing number of functions onto a single device at a lower cost. This need
for increased system-level integration requires semiconductor foundries to offer
specialized expertise in a number of areas. These include the integration of
logic, which processes data, and memory, which stores data, into a single device
and mixed-signal technologies which translate data between analog and digital
form.

Leading Edge Process Technologies. Semiconductor foundries must also
provide a range of manufacturing process technologies from standard CMOS to
technologies that enable extremely fast transmission and processing speeds, such
as specialized CMOS for wireless applications and the use of copper interconnect
for very high speed devices. Foundries must also continue to offer smaller
process geometries which allows for the integration of more functions in the
same size device or more devices per wafer.

Long-Term Relationships. As foundries become more integral to the overall
manufacturing strategies of their customers, it has become increasingly
important for foundries to form long-term relationships with them. Semiconductor
suppliers and systems companies need assurance that their foundry suppliers will
continue to provide sufficient advanced manufacturing capacity to keep pace with
their customers' growth, and develop and make available advanced process
technologies capable of producing next generation products.

Security. When using foundry services, semiconductor suppliers, systems
companies and their partners entrust highly valuable and proprietary
intellectual property to the foundries manufacturing their devices. These
customers demand foundry partners who understand the importance of protecting
intellectual property.

THE CHARTERED SOLUTION

Chartered is one of the world's leading independent semiconductor
foundries. We provide comprehensive wafer fabrication services and technologies
to semiconductor suppliers and systems companies and enable seamless integration
of the semiconductor design and manufacturing processes. By doing so, we enable
our customers to bring high performance, highly-integrated products to market
rapidly and cost effectively.

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<PAGE> 51

We enable system-level integration for our customers, many of which serve
high growth markets. For example, to meet the needs of customers serving the
communications markets, we offer a broad array of leading digital and analog
technologies, including standard CMOS, mixed-signal and embedded memory
processes. We are also developing additional leading high performance
technologies such as advanced embedded memory technologies and specialized CMOS
for wireless applications. In order to augment our internal development efforts,
we have entered into strategic alliances and technology alliances with leading
semiconductor companies such as Lucent and Motorola. SMP, our strategic alliance
with a subsidiary of Lucent, operates Fab 5. Our technology alliance with Lucent
includes an agreement to jointly develop 0.18u process geometries for high
density, low power and cost-effective applications. Our technology alliance with
Motorola includes the licensing and process transfer of Motorola's leading edge
copper interconnect HiPerMOS technology for 0.15u, 0.13u and 0.10u process
geometries.

We partner with leading providers of EDA, software tools, design
intellectual property, or IP, and design services to enable our customers to
integrate system-level functionality in their products with accelerated
time-to-market and reduced design and manufacturing risk. Our partners' EDA
tools, design IP and processes are proven and have been validated for
Chartered's manufacturing processes. Our EDA development and IP partners include
Artisan Components, Avant!, Cadence, MIPS and Synopsys. We also partner with
assembly and test providers, principally STATS, to offer our customers turnkey
services, which incorporate wafer fabrication, assembly and test. Our turnkey
service enables our customers to interface solely with Chartered for the entire
manufacturing process, from wafer manufacturing to drop shipment of completed
devices directly to their customers.

We believe that Chartered is a trusted, customer-oriented service provider.
We have service operations in 12 cities in nine countries in North America,
Europe and Asia. In addition, our proprietary Customer On-Line Access System
provides our customers with easy, secure access through the Internet to
information pertaining to the services we render for them, including the status
of their wafers in our manufacturing process. All of our manufacturing
operations are located in Singapore, a politically and economically stable
nation with laws that protect our customers' proprietary technology.

BUSINESS STRATEGY

Our objective is to be the leading worldwide, full service provider of
wafer foundry services to semiconductor suppliers and systems companies focused
on high growth applications that require a high degree of system-level
integration. Key elements of our strategy include:

FOCUS ON SEMICONDUCTOR DEVICES FOR HIGH GROWTH APPLICATIONS SUCH AS
COMMUNICATIONS

We are focused on providing foundry services to customers that serve high
growth applications and require a high degree of functional integration. These
customers compete based on differentiated products, rapid time-to-market and
device performance, as opposed to suppliers of less complex commodity
semiconductor products, which compete primarily on price and manufacturing
capacity. Many of our customers, including Broadcom, Conexant, Hewlett-Packard,
Level One, Lucent, Motorola and PMC-Sierra, use our services to manufacture
their communications products for applications such as cable modems, wireless,
Gigabit Ethernet, ATM and ADSL.

PROVIDE A COMPLETE RANGE OF SERVICES

We are continuing to expand our range of services so that we can
effectively meet our customers' evolving needs. Our goal is to seamlessly
integrate the design and manufacturing process with a wide array of services,
tools and technologies. The services we currently make available to our
customers, in conjunction with our partners, include an increasing number of EDA
design tools, design IP and process technologies that have been validated for
our manufacturing process. We also offer our customers full turnkey services
which include wafer fabrication, assembly and test.

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<PAGE> 52

INCREASE FOUNDRY CAPACITY

We intend to expand our production capacity to meet the anticipated needs
of our customers. We plan to increase our total production capacity from
approximately 60,000 eight-inch equivalent wafers per month in June 1999 to an
estimated 134,000 eight-inch equivalent wafers per month (which figure includes
100% of the production capacity of our jointly-owned fabs) by December 2002. We
believe that increasing our foundry capacity is critical to ensuring that we can
satisfy our customers' volume requirements as they continue to grow.

OFFER LEADING PROCESS TECHNOLOGY

We intend to continually expand our portfolio of process technologies
through internal development, technology alliances, strategic alliances and
licensing agreements. We believe that offering leading process technologies is
critical to attracting and retaining customers that design highly sophisticated
semiconductors. We are currently developing new digital and mixed-signal
technologies, such as specialized CMOS for wireless communications applications
and additional embedded memory technologies. Our research and development team
is comprised of 197 professionals, 55 of whom have Ph.D.s. We are jointly
developing 0.18u copper and aluminum processes with Lucent for high density, low
power and cost-effective applications. Our alliance with Motorola includes the
technology transfer and licensing of Motorola's leading edge copper interconnect
HiPerMOS technology for 0.15u 0.13u and 0.10u processes.

ENHANCE AND EXPAND ALLIANCES

We intend to leverage and expand our existing alliances and to establish
new alliances with leading companies that offer complementary technologies,
products and services. We believe that our alliances with semiconductor
technology leaders and providers of design tools, intellectual property and
assembly and test services have given us access to select leading edge system
technologies. These alliances have also enhanced our development efforts and
increased our fab utilization rates. We also believe that by establishing these
alliances and working closely with IDMs such as Lucent and Motorola, who are
also customers, we are better positioned to win future business with them.

MANUFACTURING FACILITIES

We currently own or have an interest in five fabs which are located in
Singapore. Fabs 1, 2 and 3 are wholly-owned and operated by our company. Fab 5
is operated by SMP which we jointly own with a

47
<PAGE> 53

subsidiary of Lucent. Fab 6, which we jointly own with EDB Investments and a
subsidiary of Hewlett-Packard, is currently being equipped and will be operated
by CSP. We do not have a Fab 4.

<TABLE>
<CAPTION>
FAB 1 FAB 2 FAB 3 FAB 5 FAB 6
----------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
PRODUCTION COMMENCED......... 1989 1995 1997 1999 Expected 2000
CURRENT OUTPUT(1)............ 23,000 wafers(2) 35,000 wafers per 8,500 wafers per 2,000 wafers per --
per month month month month
ESTIMATED FULL CAPACITY(3)... 23,000 wafers(2) 40,000 wafers per 20,000 wafers per 26,000 wafers per 35,000 wafers per
per month; month; expected month; expected month; expected month; expected
achieved 1995 1999 2000 2000 2002
WAFER SIZE................... Six-inch (150mm) Eight-inch Eight-inch Eight-inch Eight-inch
(200mm) (200mm) (200mm) (200mm)
PROCESS TECHNOLOGIES......... 1.2 to 0.5u 0.6 to 0.3u(4) 0.35 to 0.22u(4) 0.25 to 0.15u(4) 0.25 to 0.13u(4)
MANUFACTURING TECHNOLOGIES... Digital; Analog; Digital; Analog; Digital; SRAM; 0.25u Digital; High performance,
ROM; EEPROM(5) SRAM; Flash ROM(5) BiCMOS; Analog; high-density
Memory(5) eSRAM(5) CMOS; high
density SRAM(5)
CLEAN ROOM................... 35,000 sq. ft. 70,000 sq. ft. 46,000 sq. ft. 46,000 sq. ft. 85,000 sq. ft.
Class 10(6) Class-1 Class-1 Class-1 Class-1
SMIF(6) SMIF(6) SMIF(6) SMIF(6)
</TABLE>

- ---------------
(1) Current output is as of June 30, 1999.

(2) Equivalent to 13,000 eight-inch wafers per month.

(3) Estimated capacity is based on our current and anticipated process
technology mix, which may vary and includes, with respect to Fab 5 and Fab
6, capacity to which our strategic partners are entitled. Please see
"-- Strategic Alliances" for additional information regarding our alliances
with these partners.

(4) These numbers are preliminary and their successful implementation depend on
various factors, including our ability to achieve advances in process
technology or to obtain access to advanced process technology developed by
others. These fabs can be retrofitted to achieve smaller geometries than
those shown above.

(5) ROMs are read-only memory devices. EEPROMs are electronically erasable
programmable read-only devices. SRAMs are static random access memory
devices. eSRAMs are embedded static random access memory devices.

(6) Class 10 means a standard of air purity under which the amount of dust is
limited to fewer than ten particles of dust per cubic foot of air. Class 1
means a standard of air purity under which the amount of dust is limited to
fewer than one particle of dust per cubic foot of air. SMIF means standard
mechanical interface.

All of our fabs in production currently operate 24 hours per day, seven
days per week. Maintenance at each of the fabs is performed concurrently with
production.

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<PAGE> 54

The following table sets forth information regarding the total wafer output
by each of our fabs during the past five years:

<TABLE>
<CAPTION>
TOTAL OUTPUT(1)
(IN THOUSANDS)
---------------------------------------
FAB 1995 1996 1997 1998 1999(2)
--- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C>
Fab 1.......................................... 159 140 103 142 100
Fab 2(3)....................................... 27 114 220 265 195
Fab 3(3)....................................... -- -- 21 33 33
Fab 5(3)....................................... -- -- -- -- 2
</TABLE>

- ---------------
(1) Total output of revenue generating eight-inch equivalents for the fiscal
year end.

(2) Output figures for 1999 are as of June 30, 1999.

(3) Fab 2 commenced production in 1995, Fab 3 commenced production in 1997 and
Fab 5 commenced production in 1999.

QUALITY ASSURANCE PROGRAMS

We have implemented systems to ensure high quality service to customers and
manufacturing reliability at our facilities in Singapore. Our in-house
laboratory is equipped with advanced analytical tools and provides the necessary
equipment and resources for our research and development and engineering staff
to continuously enhance product quality and our manufacturing processes. Our
quality assurance staff is comprised of engineers, technicians and other
employees who monitor and control our manufacturing processes.

Our production facilities in Singapore have been certified by the
International Standards Organization, or ISO, to meet ISO 9002 standards. ISO
9002 standards set forth what is required to ensure the production of quality
products and services. There are a total of 20 requirements, including
management responsibility, quality systems, and process control. The ISO
certification process involves periodically subjecting production processes and
quality management systems to stringent third-party review and verification. Our
customers often look to an ISO certification as a threshold indication of our
quality control standards.

STRATEGIC ALLIANCES

CHARTERED SILICON PARTNERS

In March 1997, we entered into the CSP strategic alliance with
Hewlett-Packard Europe B.V., a subsidiary of Hewlett-Packard, or HP Europe, and
EDB Investments Pte Ltd relating to the joint ownership of Fab 6. We, HP Europe
and EDB Investments have a 51%, 30% and 19% equity interest in CSP,
respectively. We are obligated to make a total of S$367.2 million ($215.4
million) in equity contributions to CSP through the end of 2000. We and HP
Europe also each have an option to purchase additional shares in CSP from EDB
Investments at a formula-driven price. Pursuant to an agreement with CSP,
Hewlett-Packard is required to purchase a minimum number of wafers per year and
is entitled to purchase a maximum number of wafers per year from CSP. If HP
Europe's ownership interest in CSP changes, the number of wafers Hewlett-Packard
is required to purchase, as well as the number of wafers it is entitled to
purchase, changes accordingly.

CSP's Board of Directors is comprised of seven directors. As long as we own
at least 50% of CSP, we can elect four of the directors. HP Europe can elect two
directors as long as it owns more than 15% of CSP and EDB Investments can elect
one director as long as it holds any ownership interest in CSP.

Pursuant to our agreement, the CSP strategic alliance continues
indefinitely until it is terminated by either party upon the transfer by the
party of its entire interest in CSP. Neither we nor HP Europe may transfer our
interests in CSP until 2001. Before any transfer can occur, the non-transferring
party may exercise a right of first refusal with respect to the transferred
interests. Upon a serious, uncured default,

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<PAGE> 55

the non-defaulting party has the right to purchase all of the defaulting party's
interest for fair value, as defined in the agreement. Upon a change of control
of a party, the other parties have the right to purchase, at fair value, all of
such party's interest.

CSP owns and will operate Fab 6. Pursuant to a service support agreement,
we provide CSP with management and corporate support services including
accounting, financial, sales and marketing. Under this agreement, CSP is
allocated a portion of our costs in providing such services. Although such
agreement may be terminated by either party in certain instances, we expect the
services support agreement to remain in place during the term of this strategic
alliance.

Pursuant to a technology transfer and license agreement, both we and
Hewlett-Packard contribute the process technologies needed by CSP. Such process
technologies are licensed to CSP for its own use and CSP cannot sublicense them
to others. In addition, we and Hewlett-Packard cross-license the rights to use
such technologies to one another. These cross-licenses allow our respective
companies and subsidiaries to use the process technologies and related
intellectual property licensed to CSP in our respective manufacturing facilities
for our general businesses even if such uses are not related to CSP.

U.S. GAAP generally requires consolidation at all majority owned (greater
than 50%) subsidiaries. However, as a result of certain provisions contained in
the strategic alliance agreement, the minority shareholders of CSP are deemed to
have substantive participative rights which would overcome the presumption that
we should consolidate CSP. Therefore, CSP has been historically accounted for
under the equity method in our financial statements. As a result of the
amendment described below, we will treat CSP as a consolidated subsidiary from
October 1, 1999 forward.

Effective October 1, 1999, we, HP Europe and EDB Investments amended our
strategic alliance agreement. The amendment eliminated some of CSP's minority
shareholders' approval rights over CSP's annual business plan. It also increased
the thresholds for asset dispositions, borrowings and capital expenditures that
would require the approval of CSP's minority shareholders. We believe that these
changes eliminate CSP's minority shareholders' substantive participating rights
in CSP.

Hewlett-Packard has publicly announced that it is in the process of
spinning-off certain of its businesses into a new company, called Agilent
Technologies, Inc. Agilent is expected to assume the following Hewlett-Packard
businesses -- test and measurement, semiconductor products, healthcare solutions
and chemical analysis. Hewlett-Packard has informed us that it expects to assign
its rights and obligations under the agreements it has entered into with us,
including the agreements of its subsidiaries (including HP Europe), to Agilent.
Hewlett-Packard expects this assignment to occur in November 1999. We intend to
consent to the assignment.

SILICON MANUFACTURING PARTNERS

In December 1997, we entered into the SMP strategic alliance with Lucent
Technologies Microelectronics Pte Ltd, or Lucent Microelectronics, relating to
the joint ownership of Fab 5. Lucent Microelectronics has a 51% equity interest
in SMP and we have a 49% equity interest. We are obligated to make S$208.3
million ($122.2 million) in equity contributions to SMP through the end of 2000.
SMP's Board of Directors is comprised of five directors, three of which are
elected by Lucent Microelectronics and two of which are elected by us. We also
nominate the chairman of the Board of Directors and the general manager, while
Lucent Microelectronics names the financial controller.

SMP operates Fab 5, which is adjacent to our Fab 3 building. SMP owns the
equipment used in Fab 5 and leases the space in Fab 3 from us. Please see
"Relationship with Singapore Technologies" for a description of this lease.
Pursuant to our agreement, we are each required to purchase a specified
percentage of Fab 5's output. However, if one party does not purchase its share
of wafers, the other party is entitled to utilize that unused capacity. In the
event such other party does not utilize the unused capacity, the party who does
not purchase its entitlement will be required to compensate SMP for any costs it
incurs in connection with such unused capacity.

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<PAGE> 56

Pursuant to our agreement, the SMP strategic alliance continues
indefinitely until it is terminated. Neither party may terminate the alliance
until 2006, at which time a party must give two years advance notice in order to
terminate. In addition, the parties may only transfer their interests to their
respective affiliates. Upon our dissolution, winding up or liquidation, Lucent
Microelectronics can purchase all of our interests in SMP for fair value, as
defined in the agreement. Upon our serious, uncured breach, Lucent
Microelectronics has the right to sell all of its interest in SMP to us for the
higher of fair value and the value of its interest based on SMP's net book
value, as defined in the agreement. Upon Lucent Microelectronics' dissolution,
winding up or liquidation, we have the right to purchase all of its interest in
SMP for fair value. Upon Lucent Microelectronics' serious, uncured breach, we
have the right to purchase all of its interest in SMP for 90% of fair value.
Upon a change of control of a party, the other party has the right to purchase,
at fair value, all of such party's interest in SMP.

Pursuant to a services support agreement, we provide SMP management and
corporate support services such as accounting, financial and human resources.
Under this agreement, SMP is allocated a portion of our costs in providing such
services. Although such agreement may be terminated by either party in certain
instances, we expect the services agreement to remain in place during the term
of this strategic alliance.

Pursuant to a technology transfer and license agreement, both we and Lucent
Microelectronics contribute the process technologies needed by SMP. Such process
technologies are licensed to SMP for its own use and SMP cannot sublicense them
to others. We and Lucent Microelectronics categorize our licensed technologies
as restricted and unrestricted technologies. We and Lucent cross-license the
unrestricted technologies to one another. These cross-licenses allow our
respective companies and subsidiaries to use certain process technologies and
related intellectual property licensed to SMP in our respective manufacturing
facilities for our general businesses even if such uses are not related to SMP.
We do not cross-license the restricted technologies with one another, which
means that only SMP can use such restricted process technologies and
intellectual property.

WAFER FABRICATION SERVICES

OVERVIEW

Wafer fabrication is an intricate process that requires many distinct
steps. Each step in the manufacturing process must be completed with extreme
accuracy in order for finished semiconductor devices to work as intended. The
processes required to take raw wafers and turn them into finished semiconductor
devices are accomplished through a series of steps that can be summarized as
follows:

Circuit Design. Producing a semiconductor begins with designing the layout
of the semiconductor's components and designating the interconnections between
each component on the semiconductor. The result is a pattern of components and
connections that defines the function of the semiconductor. In highly complex
circuits, there may be more than 35 layers of electronic patterns.

We do not design semiconductors for our customers. If requested, we assist
our customers in the design process by providing them with access to our
partners' EDA tools, design IP and design services which are proven and have
been qualified for our manufacturing processes. Our design engineers assist our
customers during the development process to ensure that their designs can be
successfully manufactured in volume.

Mask Making. The design for each layer of a semiconductor is imprinted on
a photographic negative, called a semiconductor mask. The mask is the blueprint
for each specific layer of the semiconductor. We do not manufacture masks for
our customers.

Wafer Fabrication. Transistors and other circuit elements comprising a
semiconductor are formed by repeating a series of processes in which a
photosensitive material is deposited on the wafer and exposed to light through
the mask. The unwanted material is then etched away, leaving only the desired
circuit pattern on the wafer. This process is repeated for each mask layer. The
final step in the wafer fabrication

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<PAGE> 57

process is to visually and electronically inspect each individual semiconductor,
known as wafer probe, in order to identify the operable semiconductors for
assembly.

We provide all aspects of the wafer fabrication process except for wafer
probe, which we outsource principally to STATS. All steps in the wafer
manufacturing process are controlled by our computer-integrated manufacturing,
or CIM, system. The CIM system allows us to monitor equipment performance, wafer
processing steps, and the wafers themselves throughout the fabrication process.

Assembly and Test. After fabrication, the wafers are transferred to
assembly and test facilities. Assembly protects the semiconductor, facilitates
its integration into electronic systems and enables the dissipation of heat.
Following assembly, each semiconductor's functionality, voltage, current and
timing are tested. After testing, the completed semiconductor is either shipped
to the semiconductor supplier or directly to its final destination. We outsource
assembly and test services to independent assembly and test providers, primarily
STATS.

MANUFACTURING PROCESSES

We manufacture semiconductors using CMOS, bipolar and BiCMOS processes.
CMOS is the most widely used process technology because it requires lower power
than other technologies and allows dense placement of components onto a single
semiconductor. The low power consumption and high density characteristics of the
CMOS process allow the continued development of high performance semiconductors
that are smaller and faster. Bipolar technology enables very high speed but is
used only in analog semiconductors. BiCMOS process technology combines bipolar's
attribute of high speed with the high density and low power consumption of CMOS.
We use CMOS or a combination of CMOS and BiCMOS for the fabrication of logic,
mixed-signal and memory semiconductors.

We manufacture a variety of semiconductors for a full range of end market
applications including communications, computing, and consumer electronics.
Examples of the types of semiconductors we manufacture are as follows:

Logic. All digital electronic systems, such as computing devices, are
controlled by logic semiconductors, which process data. Microcontrollers,
microprocessors, digital signal processors, and graphics chipsets are all
logic devices. We manufacture logic semiconductors primarily for the
computing, consumer and communications markets.

Mixed-Signal. Mixed-signal semiconductors combine analog and digital
devices on a single semiconductor to process both analog signals and
digital data. Mixed-signal semiconductors are used in applications
including wireless equipment, fiber optic communications and data
networking. We make mixed-signal semiconductors using both CMOS and BiCMOS
processes.

Memory. Memory devices store data and can be manufactured as
stand-alone devices or embedded in system semiconductors, which combine a
number of functions, such as logic and memory components. We manufacture
stand-alone memory devices including EPROM, EEPROM, ROM, SRAM and Flash
memory and embedded memory including eSRAM, eEEPROM, and eFLASH memories.
Memory is used in a range of products from computers and mobile phones to
"smart" chip cards.

TURNKEY SERVICES

Although we are an independent foundry specializing in wafer fabrication,
we offer our customers the option to purchase from us finished semiconductor
products that have been assembled and tested. We principally subcontract
assembly and testing of the fabricated semiconductors to STATS. Testing includes
wafer probe and final testing of assembled semiconductors. After final testing,
the semiconductors are returned to the customer or drop-shipped according to our
customers' specifications.

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CUSTOMERS AND MARKETS

We manufactured semiconductors for over 125 different customers in each of
1998 and the first six months in 1999. Our top five customers accounted for
approximately 43.3% and 44.7% of our revenue in 1998 and the first six months in
1999, respectively. In 1998, no customer individually accounted for more than
10% of our revenue. In the first six months in 1999, Hewlett-Packard and Lucent
each accounted for more than 10% of our revenue.

The following table sets forth our top five customers for the first six
months of 1999 in order of revenue:

<TABLE>
<CAPTION>
CUSTOMER REPRESENTATIVE PRODUCTS OR APPLICATIONS
-------- ---------------------------------------
<S> <C>
Hewlett-Packard....................................... Computer peripherals and networking
Lucent................................................ Communication ASICs, DSPs, LAN ICs
Level One Communications.............................. Ethernet Transceivers
Broadcom.............................................. Cable modem/set-top box, Ethernet
Conexant.............................................. xDSL and datacom
</TABLE>

We categorize a sale geographically based on the country in which the
customer is headquartered. The following table sets forth the geographical
distribution, by percentage, of our net sales for the periods indicated:

<TABLE>
<CAPTION>
PERCENTAGE OF NET SALES
--------------------------------
SIX MONTHS ENDED
1997 1998 JUNE 30, 1999
---- ---- ----------------
<S> <C> <C> <C>
REGION
United States............................................... 52% 63% 78%
Asia/Pacific................................................ 47 35 18
Europe...................................................... 1 2 4
--- --- ---
Total..................................................... 100% 100% 100%
=== === ===
</TABLE>

We expect that the majority of our sales will continue to be made to
companies headquartered in the United States or to overseas affiliates of United
States companies. All of our sales are direct sales to our customers with
delivery in Singapore. We provide customer support in the United States through
a wholly-owned subsidiary located in Milpitas, California which has additional
offices in Irvine, California; Boston, Massachusetts and Austin, Texas. We also
maintain customer support offices in Hsin-Chu, Taiwan; Tokyo, Japan; Paris,
France; London, England; Munich, Germany; Tel Aviv, Israel and Shanghai, China.

Our customers generally do not place their purchase orders far in advance.
As a result, we do not typically operate with any significant backlog.

We currently allocate a portion of our wafer manufacturing capacity to
certain customers under several types of agreements. Some of these customers
have invested equity in us, placed deposits to secure wafer capacity, or prepaid
for our services. We are also obligated to make available capacity to customers
under certain other agreements.

CUSTOMER SERVICE

We focus on providing a high level of customer service in order to attract
customers and maintain their ongoing loyalty. Our culture emphasizes
responsiveness to customer needs, flexibility and delivery accuracy. Our
customer-oriented approach is especially evident in two prime functional areas
of customer interaction, customer design development and manufacturing services.

We emphasize very close interaction with customers throughout the design
development and prototyping process. We provide for an account manager to be
assigned early in the design development
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process who coordinates an account team composed of local marketing, EDA,
silicon engineering, third-party partner and customer service/logistical
support. The local account team is supported by additional marketing and
customer engineering staff in Singapore.

After the design moves into manufacturing production, ongoing customer
support is provided through all phases of the manufacturing process. The local
account manager teams with a dedicated customer service representative, along
with marketing and customer engineering support teams at the factory.

In 1996, we introduced our Customer On-Line Access System, through which
our customers are provided secure access via the Internet to critical
manufacturing data as their products move through the fab. We are currently
developing our eFab(TM) system which will provide our customers information
access, data exchange and e-commerce functionality over the Internet. eFab(TM)
will implement a solution based on industry standards that will enable effective
and timely communication of manufacturing data between our information systems
and those of our customers and suppliers.

RESEARCH AND DEVELOPMENT

The semiconductor industry is characterized by rapid technological changes.
We believe effective research and development is essential to our success. Our
research and development activities are focused on developing new CMOS
manufacturing process technologies. In 1996, 1997 and 1998, we invested
approximately $13.0 million, $26.6 million and $43.4 million, respectively, in
research and development. Those investments represented approximately 3.2%, 7.0%
and 10.3% of our net sales for the respective period. As of June 30, 1999, we
employed 197 professionals in our research and development department, 55 of
whom have Ph.Ds.

We also enter into technology license and cross-license agreements. Our
technology alliances with leading semiconductor suppliers have contributed to
our development of new process technologies. For example, we have joint
development and technology sharing agreements with Lucent and Hewlett-Packard
and a technology transfer and licensing agreement with Motorola. We intend to
expand our existing relationships and establish new relationships to further
develop new technologies.

We are currently involved in several process technology development
projects. We are working to develop mixed-signal, core logic and embedded memory
(SRAM and Flash). We are jointly developing 0.18u copper and aluminum processes
with Lucent for high density, low power and cost-effective applications. Our
alliance with Motorola includes the technology transfer and licensing of
Motorola's leading edge copper interconnect HiPerMOS technology for 0.15u, 0.13u
and 0.10u processes.

We have received research grants totaling $56.4 million from various
agencies of the Government of Singapore. These grants provide funding for a
portion of our research and development related capital expenditures and for the
training and staffing costs associated with some of our process technology
development programs. Funds from these grants are disbursed upon the achievement
of program milestones. As of June 30, 1999, $16.1 million of the grants
currently in effect has been disbursed to us.

EQUIPMENT AND MATERIALS

We depend on a limited number of manufacturers that make and sell the
complex equipment that we use in our manufacturing processes. The principal
pieces of equipment we use to manufacture semiconductors are steppers, tracks,
etchers, furnaces, wet stations and implanters and sputtering, chemical vapor
deposition and chemical mechanical planarization equipment. In periods of high
market demand, the lead times from order to delivery of such equipment can be as
long as 12 to 18 months. We seek to manage this process through early
reservation of appropriate delivery slots and constant communication with our
suppliers.

Our manufacturing processes use highly specialized materials, including
silicon wafers, chemicals, gases, targets and masks. We depend on our suppliers
of these materials and seek to have more than one supplier for our material
requirements. To maintain competitive manufacturing operations, we must obtain
from our suppliers, in a timely manner, sufficient quantities of quality
materials at acceptable prices. We
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source most of our materials, including critical items such as silicon wafers,
from a limited group of suppliers. We have a multi-year contract with MEMC
Electronics Materials Inc. to purchase raw wafers, pursuant to which we have
made deposits to secure future supply. We purchase all of our materials on a
blanket purchase order basis and are currently in negotiations with certain key
suppliers to develop long-term contracts. For those materials that are wholly
procured from one source, we identify and qualify alternative sources of supply.
We have agreements with key material suppliers under which they hold inventory
on consignment for us. We are not under any obligation to purchase inventory
that is held on consignment until we actually use it. We typically work with our
suppliers to forecast our raw material requirements one to three years in
advance, although pricing commitments are made on a semi-annual basis.

INTELLECTUAL PROPERTY

Our success depends in part on our ability to obtain patents, licenses and
other intellectual property rights covering our production processes. To that
end, we have acquired certain patents and patent licenses and intend to continue
to seek patents on our production processes. We have not federally registered
any of our trademarks or copyrights, but are in the process of doing so. As of
June 30, 1999, we had filed an aggregate of 469 patent applications worldwide,
241 of which had been filed in the United States. Of the 241 applications filed
in the United States, 114 had been issued as of June 30, 1999 and 17 had been
allowed but not issued. Those 17 patents will be issued if and when we pay the
applicable issuance fee. Our issued patents have expiration dates ranging from
2011 to 2017. All of the allowed and pending patents will expire after 2018. We
have also entered into various patent licenses and cross-licenses with major
semiconductor companies. We may choose to renew our present licenses or to
obtain additional technology licenses in the future. There can be no assurance
that any such licenses could be obtained on commercially reasonable terms.

Our ability to compete also depends on our ability to operate without
infringing the proprietary rights of others. The semiconductor industry is
generally characterized by frequent litigation regarding patent and other
intellectual property rights. We market products in several countries in Asia,
such as Taiwan and China, which may not protect our intellectual property rights
to the same extent as the United States. We have from time to time received
communications from third parties asserting patents that cover certain of our
technologies and alleging infringement of certain intellectual property rights
of others. We expect that we will receive similar communications in the future.
Irrespective of the validity or the successful assertion of such claims, we
could incur significant costs and devote significant management resources to the
defense of these claims which could seriously harm our company. There is no
material litigation currently pending against us.

COMPETITION

The worldwide semiconductor foundry industry is highly competitive. Our
principal competitors are TSMC, UMC and IBM. Our competitors may have greater
access to capital and substantially greater production, research and
development, marketing and other resources than we do. As a result, these
companies may be able to compete more aggressively over a longer period of time
than we can. In addition, several new dedicated foundries have commenced
operations and compete directly with us. Any significant increase in competition
may erode our profit margins and weaken our earnings.

A number of semiconductor manufacturers, including our primary competitors,
have recently announced plans to increase their manufacturing capacity and, as a
result, we expect that there will be a significant increase in worldwide
semiconductor capacity during the next five years. If growth in demand for this
capacity fails to match the growth in supply occur or occurs more slowly than
anticipated, there may be more intense competition and pressure on the pricing
of our services may result.

The principal elements of competition in the wafer foundry market include
technical competence, time-to-market, research and development, quality,
available capacity, device yields, customer service and price.

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ENVIRONMENTAL MATTERS AND COMPLIANCE

We have implemented an extensive environmental management system. This
system is third party certified through internationally recognized ISO 14001.
This system enables our operations to identify applicable environmental
regulations and assist in evaluating compliance status. Programs are established
at manufacturing locations to ensure that all accidental spills and discharges
are properly addressed.

We are subject to a variety of laws and governmental regulations in
Singapore relating to the use, discharge and disposal of toxic or otherwise
hazardous materials used in our production process. While we believe that we are
currently in compliance in all material respects with such laws and regulations
and have management systems in place to continue to be in compliance, if we fail
to use, discharge or dispose of hazardous materials appropriately, we could
subject our company to substantial liability or could be required to suspend or
adversely modify our manufacturing operations. In addition, we could be liable
for remedial measures if our properties were found to be contaminated even if we
were not responsible for such contamination.

EMPLOYEES

As of June 30, 1999, we had 3,319 employees, with 1,108 in process and
equipment engineering, 1,185 in manufacturing operations, 500 in manufacturing
support, 197 in research and development and 329 in administration, marketing
and finance. We consider our relationship with our employees to be good. In
addition, certain corporate support services, such as treasury, cash management,
internal audit, training, executive resources and corporate secretarial
services, are carried out by employees of ST on our behalf. Please see
"Relationship with Singapore Technologies" for a discussion of the services
provided to us by ST.

We provide our employees with customary compensation and benefit plans,
including an employee bonus plan and an employee share ownership plan. Please
see "Management -- Compensation" for a discussion of those compensation plans.

Our employees are not covered by any collective bargaining agreements. We
have not experienced any strikes or work stoppages by our employees.

INSURANCE

We maintain industrial special risk insurance for our facilities, equipment
and inventories. The insurance for fabs (including our strategic alliance fabs)
and their equipment covers physical damage and consequential losses from natural
disaster, business interruption and certain other risks up to their respective
policy limits except for exclusions as defined in the policy. We also maintain
public liability insurance for losses to others arising from our business
operations and carry insurance for business interruption resulting from such
events. Our insurance policies covering public liability and actions by
employees are held by ST through its group insurance policy. We pay our pro rata
share of the costs of such policies based on the industrial all risk amount
insured and the number of its employees, respectively. Some of our insurance
coverage is provided through affiliates of ST. Some of our insurance coverage
for Fab 5 is under Lucent's global group insurance program.

While we believe that our insurance coverage is adequate, significant
damage to any of our production facilities, whether as a result of fire or other
causes, could seriously harm our company. We do not insure against the loss of
key personnel.

LEGAL PROCEEDINGS

We are not involved in any legal proceedings that we believe would be
harmful to our company.

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MANAGEMENT

The following table sets forth, as of October 15, 1999, the name, age and
position of each director and executive officer of our company.

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
BOARD OF DIRECTORS
Ho Ching(1)............................... 46 Chairman of the Board
Lim Ming Seong(1)(3)...................... 52 Deputy Chairman of the Board
Barry Waite............................... 51 Director
Sum Soon Lim(1)(2)(3)..................... 56 Director
James H. Van Tassel(3).................... 70 Director
Aubrey C. Tobey(1)(2)..................... 74 Director
Robert Edmund La Blanc(2)................. 65 Director
Andre Borrel(1)(3)........................ 63 Director
Charles E. Thompson(1).................... 70 Director
Koh Beng Seng(2).......................... 49 Director
Tsugio Makimoto........................... 62 Director
Premod Paul Thomas(4)..................... 42 Alternate Director to Sum Soon Lim
Liow Voon Kheong(4)(5).................... 48 Alternate Director to Lim Ming Seong

EXECUTIVE OFFICERS
Barry Waite............................... 51 President and Chief Executive Officer
Chia Song Hwee............................ 36 Chief Financial Officer
Robert Baxter............................. 44 Senior Vice President, Business Operations
John Docherty............................. 47 Senior Vice President, Manufacturing Operations
Brian Klene............................... 42 Vice President, Strategic Development
John Martin............................... 56 Vice President, Technology Development
Lau Chi Kwan.............................. 48 Vice President, Quality, Reliability and Assurance
Justin Lim................................ 42 Vice President, Information Technology
Tan Seng Chai............................. 37 Vice President, Human Resources
Michael J. Rekuc.......................... 50 President, North America
</TABLE>

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

(1) Member of the Executive Resource and Compensation Committee.

(2) Member of the Audit Committee.

(3) Member of the Budget Committee.

(4) Under our Articles of Association, a director is entitled to designate an
alternate director to take his place when he is absent from a meeting. An
alternate director, when serving in place of an absent director, may
exercise all of the powers and authority of the absent director, except the
power to appoint an alternate director. When not acting in place of an
absent director for whom he has been appointed alternate director, an
alternate director is not entitled to attend, participate or vote in any
board meetings.

(5) Liow Voon Kheong was nominated as an alternate director by EDB Investments
Pte Ltd. We have granted EDB Investments the right to nominate an alternate
director for so long as EDB Investments owns any of our ordinary shares.

BIOGRAPHICAL INFORMATION

HO CHING

Ho Ching has served on our Board of Directors since November 1987 and as
our Chairman of the Board since August 1995. Ms. Ho is the President and Chief
Executive Officer of Singapore Technologies Pte Ltd, our controlling
shareholder, Chairman of Singapore Technologies Engineering Ltd and Vice

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Chairman of SembCorp Industries Ltd. Ms. Ho also serves on the boards of
directors of various companies in the Singapore Technologies group. Before
joining Singapore Technologies in 1987, Ms. Ho was with the Ministry of Defence
of Singapore where she held various senior positions. Ms. Ho received a Master
of Science (Electrical Engineering) Degree from Stanford University. For her
public service, she was awarded the Public Service Star in 1996.

LIM MING SEONG

Lim Ming Seong has served on our Board of Directors since November 1987 and
as our Deputy Chairman of the Board since August 1995. Mr. Lim is the Group
Director of Singapore Technologies Pte Ltd, Deputy Chairman of ST Assembly Test
Services Ltd and Chairman of CSE Systems & Engineering Ltd. After joining
Singapore Technologies in December 1986, Mr. Lim has held various senior
positions in the Singapore Technologies group. Prior to joining Singapore
Technologies, Mr. Lim was with the Ministry of Defence of Singapore. Mr. Lim
received his Bachelor of Science (Honors) in Mechanical Engineering from the
University of Toronto and his Diploma in Business Administration from the
University of Singapore. Mr. Lim also participated in the Advanced Management
Programs at INSEAD and Harvard University.

BARRY WAITE

Barry Waite has served on our Board of Directors and as our President and
Chief Executive Officer since May 1998. Mr. Waite has more than 29 years of
experience in the semiconductor industry. Prior to joining our company, Mr.
Waite held various positions at Motorola Inc. Semiconductor Products Sector,
including Senior Vice President and General Manager of its microprocessor and
memory technology group and Senior Vice President and General Manager of the
European, Middle East and Africa region. Mr. Waite was with Texas Instruments
from 1970 to 1982. Mr. Waite has been Chairman of Silicon Manufacturing Partners
Pte Ltd and Chartered Silicon Partners Pte Ltd since May 1998. Mr. Waite
received his BA (Economics) (Honours) Degree from the University of Sheffield,
England and is an Officer of the Order of the British Empire.

SUM SOON LIM

Sum Soon Lim has served on our Board of Directors since February 1994 and
is currently a part time corporate advisor to Singapore Technologies Pte Ltd.
Prior to accepting his position with Singapore Technologies, Mr. Sum had worked
with the Singapore Economic Development Board, DBS Bank, J.P. Morgan Inc.,
Overseas Union Bank and Nuri Holdings (S) Pte Ltd, a private investment holding
company. Mr. Sum is also a member of the Securities Industry Council. Mr. Sum
received his B.Sc (Honors) in Production Engineering from the University of
Nottingham, England.

JAMES H. VAN TASSEL

James H. Van Tassel has served on our Board of Directors since June 1993.
He is a consultant in the semiconductor industry and has been involved in the
electronics and microelectronics industry since 1960. From 1980 to 1991, Dr. Van
Tassel was Vice President (Microelectronics) with NCR Corporation. Dr. Van
Tassel received his Bachelor of Science degree from the University of Wisconsin
at La Crosse, and his Master of Science Degree (Inorganic Chemistry) and Doctor
of Philosophy from Texas Technological University.

AUBREY C. TOBEY

Aubrey C. Tobey has served on our Board of Directors since March 1998 and
is currently the President of ACT International providing consultancy in the
management and marketing of high technology. From 1983 to 1987, Mr. Tobey was
Vice President of Micronix Corporation and from 1965 to 1983 was Corporate Vice
President at GCA Corporation. Mr. Tobey was with Arthur D. Little, Inc., a
management, science and technology consulting firm from 1959 to 1965. Mr. Tobey
received his Bachelor

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of Science degree in Mechanical Engineering from Tufts University and his Master
of Science degree in Mechanical Engineering from the University of Connecticut.

ROBERT EDMUND LA BLANC

Robert Edmund La Blanc has served on our Board of Directors since May 1998
and is the President of Robert E. La Blanc Associates, Inc., an information
technologies consulting and investment banking firm. From 1979 to 1981, Mr. La
Blanc was Vice Chairman of Continental Telecom, Inc. and from 1969 to 1979, a
General Partner of Salomon Brothers Inc. Mr. La Blanc has also held various
senior positions within companies in the telecommunications industry including
AT&T, Bell Telephone Laboratories and New York Telephone Company. Mr. La Blanc
received his B.E.E. from Manhattan College and his MBA from New York University.
Mr. La Blanc also is a graduate of the Operating Engineers Program at Bell
Telephone Laboratories and the USAF Communications Officers School.

ANDRE BORREL

Andre Borrel has served on our Board of Directors since July 1998 and is
currently working as a consultant in the semiconductor industry. Prior to
joining Chartered, Mr. Borrel was Senior Vice Present and General Manager of
Communications, Power and Signal Technology Group at Motorola Inc. Mr. Borrel is
also an Officer of the French National Order of Merit and holds a Master Degree
in Electronics from "Ecole Nationale Superieure des Telecommunications" in
Paris, France.

CHARLES E. THOMPSON

Charles E. Thompson has served on our Board of Directors since September
1998 and is currently working as a consultant in the information
technology/semiconductor technology industry. From 1973 to 1996, Mr. Thompson
was World Marketing Senior Vice President at Motorola Inc. Prior thereto, Mr.
Thompson was Computer Department Sales Director at General Electric. Mr.
Thompson received his Bachelor of Science in Mathematics from the University of
Washington.

KOH BENG SENG

Koh Beng Seng has served on our Board of Directors since February 1999. He
is currently Senior Advisor to Asia Pulp & Paper Co. Ltd and an advisor to the
International Monetary Fund. Mr. Koh is active in the financial services sector
and was with the Monetary Authority of Singapore from 1973 to 1998, where he
served as Deputy Managing Director from 1988 to 1998. Mr. Koh received his
Bachelor of Commerce (First Class Honors) from Nanyang University and his MBA
from Columbia University. Mr. Koh was awarded an Overseas Postgraduate
Scholarship by the Monetary Authority of Singapore in 1978. In 1987, the
President of the Republic of Singapore awarded him a Meritorious Service Medal.

TSUGIO MAKIMOTO

Tsugio Makimoto has served on our Board of Directors since September 1999
and has 40 years of working experience in the semiconductor industry. Dr.
Makimoto has worked for Hitachi Ltd since 1959 where he has held various senior
positions, including Executive Managing Director in 1993 and Senior Executive
Managing Director in 1997. Dr. Makimoto is currently Hitachi's Corporate Chief
Technologist. Dr. Makimoto is a member of the Advisory Committee of the NAIST
(Nara Institute of Science and Technology) and the International Advisory Panel
of the NSTB (National Science and Technology Board) of Singapore. Dr. Makimoto
is also a visiting professor at Toyo University.

PREMOD PAUL THOMAS

Premod Paul Thomas was appointed to our Board of Directors as the Alternate
Director to Sum Soon Lim in July 1999. Mr. Thomas is Director (Finance) of
Singapore Technologies Pte Ltd. Before joining Singapore Technologies Pte Ltd he
was with Tirtamas Group, Jakarta, as Group Executive Advisor from 1995 to 1998
and with Bank of America from 1983 to 1995. Mr. Thomas received his B.Com.
(First
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Class Honors) from Loyola College, India in 1977. He is a Certified Associate of
the Indian Institute of Bankers, Bombay, and has an MBA from the Indian
Institute of Management, Ahmedabad.

LIOW VOON KHEONG

Liow Voon Kheong was appointed to our Board of Directors as the Alternate
Director to Lim Ming Seong in July 1998. Mr. Liow was previously an Alternate
Director from May 1995 to July 1998. Mr. Liow is presently Assistant Managing
Director (Operations) of the Singapore Economic Development Board, General
Manager of EDB Investments Pte Ltd, Director/General Manager of EDB Ventures Pte
Ltd and EDB Ventures 2 Pte Ltd and General Manager of PLE Investments Pte Ltd.
Mr. Liow started his career with the Singapore Economic Development Board in
1976. He received his B.E. (Electrical & Electronics) and his Diploma in
Business Administration from the University of Singapore.

CHIA SONG HWEE

Chia Song Hwee has served as our Chief Financial Officer since December
1997 and served as our Director of Finance from April 1996 to December 1997. Mr.
Chia has more than 12 years of experience in financial accounting and has
overall responsibility for our company's finance and legal matters. From May
1992 through December 1994, Mr. Chia was Regional Financial Controller (Asia and
Middle East) for Anadrill Technical Services, Inc. From January 1995 to April
1996, Mr. Chia was Regional Controller (Asia, Australia and Middle East) for
Sedco Forex Technical Services, Inc. Mr. Chia has been an Alternate Director on
the Board of Directors of Chartered Silicon Partners Pte Ltd since July 1998 and
was appointed to its Board of Directors in April 1999. He has also been an
Alternate Director on the Board of Directors of Silicon Manufacturing Partners
Pte Ltd since October 1998. Mr. Chia received his Bachelor of Business
(Accountancy), with distinction, from Edith Cowan University, Australia and is a
Certified Practicing Accountant by the Australian Society of CPAs.

MICHAEL J. REKUC

Michael J. Rekuc has served as President of our North American operations
since March 1999. From 1976 until March 1999, Mr. Rekuc held sales, management
and director positions in the semiconductor product sector of Motorola Inc. His
most recent positions at Motorola Inc. included worldwide responsibilities as
global sales director for wireless subscriber systems and a two year role as
vice president and sales director for PC, computing and peripherals. Mr. Rekuc
holds a BSc in Electrical Engineering from Lawrence University of Michigan.

ROBERT BAXTER

Robert Baxter has served as our Senior Vice President, Business Operations
since July 1998 with overall responsibility for regional sales, worldwide
marketing, customer engineering and EDA teams in planning and executing business
strategies. Mr. Baxter has more than 23 years of working experience in the
semiconductor industry. He started his career with Texas Instruments in 1976 and
later joined Motorola Corporation in 1982. Prior to joining Chartered, Mr.
Baxter was Vice President and General Manager of Motorola's Advanced Digital
Consumer Division based in Tokyo. He also ran Microcontroller Business Divisions
based in Europe and in Austin, Texas for Motorola Inc. He has served on the
Board of Directors of Chartered Silicon Partners Pte Ltd since October 1998. Mr.
Baxter holds a BSc (Hons) in Applied Physics and Electronics from Durham
University, United Kingdom.

JOHN DOCHERTY

John Docherty has served as our Senior Vice President, Manufacturing
Operations since September 1998 and has overall responsibility for wafer fab
manufacturing operations, and leading our fab operations, turnkey services and
supply management activities. Mr. Docherty has more than 24 years experience in
the semiconductor industry. Prior to joining Chartered, Mr. Docherty was the
Vice President and Director of European Manufacturing for Motorola Inc.'s wafer
fabrication facilities in Scotland and France.

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Mr. Docherty has served on the Boards of Directors of Chartered Silicon Partners
Pte Ltd and Silicon Manufacturing Partners Pte Ltd since October 1998. Mr.
Docherty graduated from Napier University, Edinburgh, United Kingdom and holds a
Business Diploma from Strathclyde University, Glasgow.

BRIAN KLENE

Brian Klene has served as our Vice President, Strategic Development since
October 1998 and has overall responsibility for strategic business development
and planning activities and intellectual property management. Mr. Klene has also
served as Vice President, Worldwide Marketing. Mr. Klene has more than 20 years
of working experience in the semiconductor and communications industry. Prior to
joining Chartered, Mr. Klene was Executive Vice President of Sales and Marketing
at Micron Technology and was with IBM from 1979 to 1989. Mr. Klene received an
MBA from the University of Southern California and his BA from The Citadel.

JOHN MARTIN

John Martin has served as our Vice President, Technology Development since
January 1998 and has overall responsibility for our internal and external
technology development activities. Dr. Martin has more than 25 years of
experience in the semiconductor industry. He began his semiconductor career with
Rockwell International Microelectronics in 1973. From 1981 to 1997, Dr. Martin
held various positions in Motorola Inc.'s Semiconductor Products Sector. Dr.
Martin holds a Ph.D. in Inorganic Chemistry from the University of Arkansas and
a BA (Chemistry) from DePauw University.

LAU CHI KWAN

Lau Chi Kwan has served as our Vice President, Reliability and Quality
Assurance since January 1998 and has overall responsibility for our quality
operations, total quality management and quality engineering support, which
includes failure analysis and reliability engineering. From 1994 to 1997, Dr.
Lau was our Yield Engineering Manager and subsequently our Research and
Development Director. Dr. Lau has 23 years of experience in the semiconductor
industry, largely in research and development. Prior to joining Chartered, Dr.
Lau was a project manager for Hewlett-Packard's Circuit Technology Business
Division. He began his career in 1976 with Microwave Acoustics Lab of the
University of Southern California and subsequently continued his research and
engineering work at Texas Instruments for three years and Hewlett-Packard for 11
years. Dr. Lau received a BSc from the University of Hawaii and MSc from the
University of Wisconsin. Dr. Lau received his Ph.D. from the University of
Southern California.

JUSTIN LIM

Justin Lim has served as our Vice President, Information Technology since
February 1998 and has overall responsibility for the development and application
of information technology for our business, operational and strategic needs. Dr.
Lim has 16 years of experience in the semiconductor industry, largely in
information technology support and development work. He began his career in 1983
with Fairchild Semiconductor which was later acquired by National Semiconductor
Pte Ltd in 1988. Dr. Lim was with National Semiconductor from 1988 to 1995. From
1995 to 1998, Dr. Lim was the Director of Services for FASTech Integration Asia
for three years. Dr. Lim received his Ph.D. in Electrical Engineering from the
University of Swansea, UK in 1983 after obtaining his BSC (Electro-Mechanical
Eng) (1st Class Hons) there in 1980. He also holds a MBA from the National
University of Singapore.

TAN SENG CHAI

Seng Chai Tan has served as our Vice President, Human Resources since July
1999 and has overall responsibility for the development and implementation of
policies and processes in our human resource management system. From October
1997 to June 1999, Mr. Tan was our Human Resource Director. Mr. Tan joined our
company as human resource manager in April 1996. He has more than 12 years of

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experience in the semiconductor industry. He began his career at National
Semiconductor in 1987 where he held various positions in engineering, production
and human resource management. Mr. Tan later joined Creative Technology Ltd in
1994 and prior to joining Chartered, he was Creative's Senior Manager, Human
Resource. Mr. Tan holds a Bachelor of Engineering (Hons) from the National
University of Singapore in 1987 and a MSc (Industrial and System Eng) from the
National University of Singapore in 1991.

BOARD COMPOSITION AND COMMITTEES

Our Articles of Association set the minimum number of directors at two. We
currently have 11 directors and two alternate directors. A portion of our
directors are elected at each annual general meeting of shareholders. The number
of directors retiring and eligible to stand for reelection each year varies, but
generally it is equal to one-third of the board, with the directors who have
been in office longest since their reelection or appointment standing for
reelection. Our Chief Executive Officer and President will not be required to
stand for reelection as a director while he or she is in office. Because ST and
its affiliates will own approximately 71.9% of our outstanding ordinary shares
upon completion of the global offering, it will be able to control actions over
many matters requiring approval by our shareholders, including the election of
directors.

The Executive Resource and Compensation Committee, or ERCC, of our Board of
Directors oversees executive compensation and development in our company with
the goal of building capable and committed management teams through competitive
compensation, focused management and progressive policies which can attract,
motivate and retain a pool of talented executives to meet our current and future
growth plans. Specifically, the ERCC:

- establishes compensation policies for key executives;

- approves salary reviews, bonuses and incentives for key executives;

- approves share incentives, including share options and share ownership
for executives;

- approves key appointments and reviews succession plans for key positions;
and

- oversees the development of key executives and younger executives.

The members of the ERCC are Ms. Ho (chairman) and Messrs. Borrel, Lim,
Thompson, Sum and Tobey.

The Audit Committee of our Board of Directors consists of four members, of
which a majority may not be officers or employees of our company. The Audit
Committee reviews, acts on and reports to the Board of Directors regarding
various auditing and accounting matters, including the scope and results of
annual audits and the recommendation of our independent auditors. The Audit
Committee also reviews all material transactions between us and the Singapore
Technologies group. Please see "Relationship with Singapore Technologies" for a
description of our relationship with ST. The members of the Audit Committee are
Messrs. Sum (chairman), Koh, La Blanc and Tobey.

The Budget Committee of our Board of Directors is responsible for reviewing
our annual budget and our quarterly financial performance in relation to our
budget. The members of the Budget Committee are Messrs. Borrel (chairman), Lim,
Van Tassel and Sum.

DIRECTOR AND OFFICER COMPENSATION

The aggregate compensation we paid to all of our directors and executive
officers for services rendered to us and our subsidiaries during the fiscal year
ended December 31, 1998 was approximately $3.8 million.

The aggregate amount we set aside or accrued for all of our directors and
executive officers to provide for pension, retirement or similar benefits during
the fiscal year ended December 31, 1998 was approximately $5.0 million.

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ISSUANCES OF SHARE OPTIONS

As of October 15, 1999, options to purchase 17,273,481 ordinary shares were
issued and outstanding, of which 5,324,348 were held by our officers and
directors. The outstanding options were granted under our 1999 Share Option
Plan. The exercise prices of these options range from S$0.9309 to S$1.3830. The
expiration dates of the options range from April 2004 to April 2009.
Contemporaneously with the effectiveness of the registration statement of which
this prospectus is a part, we plan to grant to our officers, directors and
employees options under our 1999 share option plan to purchase approximately
20,000,000 ordinary shares, including 8,560,000 to our President and Chief
Executive Officer and 3,010,000 to our other directors and executive officers.
The exercise price of such options will be the same as the initial public
offering price of our ordinary shares, except for options issuable for
approximately 2,100,000 ordinary shares that will have exercise prices below the
initial public offering price (for which we will accrue a compensation charge).

EMPLOYEE BENEFIT PLANS

1995 Employees' Share Ownership Scheme

Effective as of September 28, 1995, we adopted our 1995 Employees' Share
Ownership Scheme. The 1995 scheme, as amended, generally provided for the grant
of options to subscribe for ordinary shares. The objectives of the 1995 scheme
were to motivate, retain and recognize employees and directors whose
contributions have been essential to our well-being and prosperity and who have
contributed to our growth.

In connection with the global offering, we terminated the 1995 scheme
effective September 30, 1999 and replaced all unpaid portions of partly paid
shares with share options under our 1999 Share Option Plan. These options have
the same exercise price and vesting schedule as the replaced options.

1997 Employees' Share Ownership Scheme

Effective as of November 27, 1997, we adopted our 1997 Employees' Share
Ownership Scheme. The provisions of the 1997 scheme, as amended, were
substantially similar to those with respect to the 1995 scheme.

In connection with the global offering, we also terminated the 1997 scheme
effective September 30, 1999 and replaced all unpaid portions of partly paid
shares with share options under our 1999 Share Option Plan. These options have
the same exercise price and vesting schedule as the replaced options.

1999 SHARE OPTION PLAN

Effective as of March 30, 1999, we adopted our 1999 Share Option Plan. The
purpose of the plan is to offer selected individuals an opportunity to acquire
or increase a proprietary interest in our company by purchasing our ordinary
shares. Options granted under the 1999 plan may be nonstatutory options or
incentive share options intended to qualify under Section 422 of the United
States Internal Revenue Code.

The 1999 plan is administered by the ERCC. Our employees, outside directors
and consultants are eligible to receive option grants except as follows:

- employees of our affiliates and our outside directors and consultants are
not eligible for the grant of incentive share options;

- employees, outside directors and consultants of our affiliates who are
residents or citizens of the United States are not eligible for the grant
of options; and

- employees of SMP who are residents or citizens of the United States are
not eligible for the grant of options.

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An individual who owns more than 10% of the total combined voting power of
all classes of our outstanding shares is not eligible for the grant of options
unless:

- the exercise price of the option is at least 110% of the fair market
value of a share on the date of grant; and

- in the case of an incentive stock option, such option by its terms is not
exercisable after the expiration of five years from the date of grant.

The aggregate number of shares that may be issued under the 1999 plan and
under any other share incentive and option schemes or agreements may not exceed
107,200,000 shares (subject to adjustment pursuant to the plan). If an
outstanding option expires for any reason or is cancelled or otherwise
terminated, the shares allocable to the unexercised portion of such option will
again be available for the purposes of the plan and all other share incentive
and option schemes approved by the ERCC.

The exercise price of an incentive stock option shall not be less than 100%
of the fair market value of a share on the date of grant. In no event will the
exercise price for a share be below the par value of that share.

Options granted to persons other than officers, outside directors and
consultants shall become exercisable at least as rapidly as 20% per year over
the five year period commencing on the date of grant. The exercisability of
options outstanding under the 1999 plan may be fully or partially accelerated
under certain circumstances such as a change in control of our company, as
defined in the 1999 plan. In addition, outstanding options will accelerate by 12
months upon the closing of the global offering if the optionee's service has not
been terminated and his or her option agreement does not provide otherwise.

Each grant under the 1999 plan is evidenced by a share option agreement and
the term of options granted may not exceed 10 years from the date of grant. If
the optionee's service with us is terminated, the optionee's outstanding
options, to the extent then exercisable, remain exercisable for a specified
period (which is based on the reason for the termination) following the date of
termination. All options which are not exercisable at the date of termination
lapse when the optionee's service terminates.

The ERCC may modify, extend or assume outstanding options or may accept the
cancellation of outstanding options in return for the grant of new options for
the same or a different number of shares and at the same or a different exercise
price. No modification of an option shall, without the consent of the optionee,
impair the optionee's rights or increase the optionee's obligations under such
option.

Options are generally not transferable under the plan. Shares issued upon
the exercise of an option are subject to such rights of first refusal as the
ERCC may determine.

In the event of certain changes in our capitalization, our Board of
Directors will make appropriate adjustments in one or more of the number of
shares available for future grants under the 1999 plan, the number of shares
covered by each outstanding option or the exercise price of each outstanding
option. If we are a party to a merger or consolidation, outstanding options will
be subject to the agreement of merger or consolidation.

The 1999 plan will terminate automatically on March 30, 2009. The ERCC may
amend, suspend or terminate the 1999 plan at any time and for any reason,
provided that any amendment which increases the number of shares available for
issuance under the 1999 plan, or which materially changes the class of persons
who are eligible for the grant of incentive share options, will be subject to
the approval of our shareholders.

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PRINCIPAL SHAREHOLDERS

The following table sets forth certain information with respect to the
beneficial ownership of our ordinary shares as of October 15, 1999, based on an
aggregate of 988,847,853 ordinary shares outstanding as of such date, and as
adjusted to reflect the sale of the ordinary shares offered hereby, by:

- each person or group of affiliated persons who is known by us to
beneficially own 10% or more of our ordinary shares;

- each of our directors;

- our chief executive officer; and

- all of our directors and executive officers as a group.

<TABLE>
<CAPTION>
ORDINARY SHARES ORDINARY SHARES
BENEFICIALLY OWNED BENEFICIALLY OWNED
PRIOR TO THE GLOBAL AFTER THE GLOBAL
OFFERING(1) OFFERING(1)(2)
--------------------- ---------------------
BENEFICIAL OWNER NUMBER PERCENT NUMBER PERCENT
---------------- ----------- ------- ----------- -------
<S> <C> <C> <C> <C>
Singapore Technologies Pte Ltd(3)................ 499,116,152 50.5 499,116,152 40.3
Singapore Technologies Semiconductors
Pte Ltd(3)..................................... 398,516,724 40.3 398,516,724 32.2
Ho Ching......................................... -- * -- *
Lim Ming Seong................................... -- * -- *
Barry Waite...................................... 1,692,000 * 1,692,000 *
Sum Soon Lim..................................... 65,847 * 65,847 *
James H. Van Tassel.............................. 89,849 * 89,849 *
Aubrey C. Tobey.................................. 19,928 * 19,928 *
Robert E. La Blanc............................... 16,168 * 16,168 *
Andre Borrel..................................... 16,168 * 16,168 *
Charles E. Thompson.............................. 16,168 * 16,168 *
Koh Beng Seng.................................... 7,520 * 7,520 *
Tsugio Makimoto.................................. -- * -- *
All directors and executive officers as a group
(20 persons)................................... 3,358,747 * 358,747 *
</TABLE>

- ---------------
* Less than 1% of total.

(1) Gives effect to the ordinary shares issuable within 60 days of October 15,
1999 upon the exercise of all options and other rights beneficially owned by
the indicated shareholders on that date. Beneficial ownership is determined
in accordance with the rules of the SEC and includes voting and investment
power with respect to ordinary shares. Unless otherwise indicated, the
persons named in the table have sole voting and sole investment control with
respect to all ordinary shares beneficially owned.

(2) Assumes the issuance of 250,000,000 ordinary shares (including ordinary
shares represented by ADSs) and the underwriters' overallotment option is
not exercised.

(3) Temasek Holdings (Private) Limited, the principal holding company of the
Government of Singapore, owns 77.6% of Singapore Technologies Pte Ltd, or
ST, and 100% of Singapore Technologies Holdings Pte Ltd, or ST Holdings. ST
Holdings owns 22.4% of ST which, in turn, owns 100% of Singapore
Technologies Semiconductors Pte Ltd, or ST Semiconductors. Temasek may be
deemed to beneficially own the shares directly owned by ST and ST
Semiconductors because it is the parent of ST and ST Holdings.

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RELATIONSHIP WITH SINGAPORE TECHNOLOGIES

WHAT IS THE SINGAPORE TECHNOLOGIES GROUP

Singapore Technologies Pte Ltd, or ST, is a holding company for a group of
high-technology companies. ST is 22.4% owned by Singapore Technologies Holdings
Pte Ltd, or ST Holdings. ST and ST Holdings are 77.6% and 100% owned,
respectively, by Temasek Holdings (Private) Limited through which the corporate
investments of the Government of Singapore are held. Temasek is owned by the
Minister for Finance (Incorporated) of Singapore. ST owns 100% of Singapore
Technologies Semiconductors Pte Ltd, or ST Semiconductors. ST and ST
Semiconductors currently hold a 50.5% and 40.3% interest in our company,
respectively. ST Semiconductors holds interests in our sister companies, STATS
and Tritech Microelectronics Ltd (for which provisional liquidators were
appointed effective September 1, 1999), or Tritech. In 1998, our revenues
represented 12% of ST's revenues and our assets represented 22% of ST's assets.

ST has five principal business groups: engineering, technology,
infrastructure, property and financial services. ST has three operating
subsidiaries that are engaged in the semiconductor business, namely:

- Chartered Semiconductor Manufacturing Ltd;

- STATS; and

- Tritech (under provisional liquidation).

STATS specializes in assembly and testing of semiconductors. Tritech, which
is expected to be liquidated prior to closing the global offering, was in the
business of designing, developing and marketing application specific standard
products as well as customer specific semiconductors. ST may in the future
establish other subsidiaries, or form strategic alliances with companies, which
are engaged in the semiconductor business.

ST and its affiliates will beneficially own approximately 72.5% of our
outstanding ordinary shares upon completion of the global offering, or 70.3% if
the underwriters exercise their overallotment option in full. As a result, it
will be able to control actions over many matters requiring approval by our
shareholders, including the election of directors and approval of significant
corporate transactions. In addition, Ms. Ho and Messrs. Lim, Sum, Koh and Liow,
each a member of our Board of Directors (other than Mr. Liow who serves as an
alternate member), serve as directors of companies in the Singapore Technologies
group. Ms. Ho and Mr. Lim, each a member of our Board of Directors, are employed
by companies in the Singapore Technologies group.

In 1996, our Board of Directors established an Audit Committee that, among
other things, reviews all material transactions between us and the Singapore
Technologies group. Please see "Management -- Board Composition and Committees"
for a summary of the function and composition of the Audit Committee. Mr. Sum,
the chairman of the Audit Committee, also serves as a consultant to ST and
serves as a director for other ST affiliates.

After completion of the global offering, we will continue to have
contractual and other business relationships with ST and its affiliates and we
may engage in material transactions with ST from time to time. Although our
Audit Committee will review all material transactions between our company and
the Singapore Technologies group, conflicts of interest may arise between us in
certain circumstances. We are not obligated to conduct any business with members
of the ST group if the costs of doing so are greater than for unaffiliated third
parties.

FINANCIAL SUPPORT PROVIDED TO US BY SINGAPORE TECHNOLOGIES GROUP

Through its subsidiary, ST Treasury Services Ltd, ST currently provides us
with short-term financing and guarantees some of our debt. Certain of our loan
agreements require ST to own at least a majority of our outstanding ordinary
shares. ST Treasury Services Ltd has also in the past provided loans to us and
has entered into forward foreign exchange contracts with us to provide a hedge
for certain of our
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equipment purchase commitments with foreign vendors. As of June 30, 1999, $1.9
million of our short-term financing was provided by ST at a weighted average
interest rate of 2.43% and approximately $216.6 million of our debt was
guaranteed by ST at no cost. In addition, $75.1 million, $71.6 million and $29.3
million of our debt was guaranteed by The Bank of Tokoyo-Mitsubishi, Ltd, Royal
Bank of Canada and The Dai-ichi Kangyo Bank, Ltd, respectively, at the request
of ST, at a weighted average cost to us of 0.29%.

In addition, from time to time we advance funds to, or borrow funds from,
ST Treasury Services Ltd. (and from ST prior to the second half of 1998). In
general, advances to and borrowings from ST and ST Treasury bear interest at
rates comparable to the rates offered by commercial banks in Singapore, are
unsecured and are repayable within three to six months on a renewable basis. The
amount of interest income received from ST in 1996, 1997 and 1998 was $0.9
million, $0.2 million and $0.8 million, respectively. The amount of interest
income received from ST Treasury in 1998 was $0.9 million. The amount of
interest expense paid to ST was $4.2 million, $12.7 million and $6.6 million in
1996, 1997, 1998, respectively. The amount of interest expense paid to ST
Treasury in 1998 was $2.3 million. The average rate of interest payable in 1996,
1997 and 1998 to ST and ST Treasury for our Singapore dollar denominated
borrowings was 3.83%, 4.89% and 7.13%, respectively, and 5.84%, 6.06% and 6.33%,
respectively, for our U.S. dollar denominated borrowings.

We have also entered into an oral multi-currency credit facility with ST
Treasury in connection with our borrowing arrangements with it. Under this
facility, ST Treasury has agreed to make available to us funds of up to $100
million. We may, upon notice to ST Treasury, draw down at any time any amount
available under the facility. We are not restricted in our utilization of drawn
funds. Funds drawn under the facility are required to be repaid within one year
of the date on which they are drawn. Payment schedules and directions will be as
agreed to by us and ST Treasury at the time of the draw down. Unless otherwise
agreed to, amounts drawn under the facility are unsecured and neither we nor ST
Treasury are subject to conditions or events of default. Interest on drawn funds
accrues at a rate based on the monthly average interest rate of three banks, as
chosen by ST Treasury. The current monthly average interest rate for Singapore
dollar borrowings under the agreement is 2.43%. As of June 30, 1999, there were
$1.9 million of unsecured borrowings outstanding under this facility.

While ST has historically provided credit and other support to us, ST has
no obligation to continue doing so and the availability and amount of such
support will depend on various factors, including our ability to raise funds
without such support and the expenses relating to such fundraising.

CORPORATE SERVICES PROVIDED TO US BY SINGAPORE TECHNOLOGIES

In March 1997, we entered into a service agreement with ST pursuant to
which it provides us with services and support which are tangible as well as
intangible in nature. The services provided by ST include management and
corporate support services, such as treasury, cash management, internal audit,
training, executive resources and corporate secretarial services. In addition,
ST is able to offer us the benefits of a global network and the "Singapore
Technologies" name and ST's wide spectrum of industries provide us with
operational and financial leverages in our dealings with external third parties.
In return for those services, support and benefits, we currently pay ST an
annual management fee based on certain percentages of capital employed, sales,
manpower and payroll. We expect to amend the service agreement prior to the
consummation of the global offering to convert from a formula based fee
arrangement to a service based fee arrangement. In addition, we reimburse ST for
the third-party costs and expenses it incurs on our behalf.

In 1996, 1997 and 1998, we paid management fees to ST of $4.4 million, $5.7
million and $4.9 million, respectively. In addition, we reimbursed ST for costs
and expenses incurred on our behalf, principally certain of our payroll expenses
paid through ST. Those reimbursements totaled $5.9 million, $5.6 million and
$5.7 million in 1996, 1997 and 1998, respectively.

The service agreement expires in the event we cease to be a subsidiary of
ST. It can be terminated by ST upon our prolonged failure to pay the management
fees due to ST. The management fees we pay ST
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under the service agreement are not itemized to allow us to compare them with
similar services provided by unrelated third parties. We also believe that we
derive economic benefits from the corporate services and support ST provides us.
For example, ST guarantees a portion of our debt without fees or covenants and
provides standby credit facilities without charge. In addition, we have used
ST's leverage to secure loans and terms (including interest rates and covenants)
that we would not otherwise have obtained.

In the event that the service agreement is terminated, however, we will be
required to provide the corporate services previously provided by ST either
internally or obtain them from third parties and the cost to us could be greater
than that charged by ST.

OTHER TRANSACTIONS WITH THE SINGAPORE TECHNOLOGIES GROUP

We transact business with ST and its affiliates in the normal course of our
respective businesses. We recorded sales to Tritech of $32.7 million, $20.8
million and $6.2 million in 1996, 1997 and 1998, respectively. These sales
represented 8%, 5.5% and 1.5% of our net sales for the respective periods. We
have not made any sales to Tritech since it was placed under judicial management
on July 2, 1999.

We paid STATS $8.4 million, $13.3 million and $22.7 million in 1996, 1997
and 1998, respectively, for services rendered in those years. We also paid
affiliates of ST $2.3 million, $3.0 million and $1.4 million in 1996, 1997 and
1998, respectively, for services rendered in those years. We purchased $8.7
million, $1.0 million and $0.9 million in assets from affiliates of ST in 1996,
1997 and 1998, respectively. We also paid ST Construction and ST Architects
$50.8 million, $2.6 million and $1.1 million in 1996, 1997 and 1998,
respectively, for construction costs rendered in those years.

Fabs 2 and 3 and our corporate offices are located on land leased to ST by
Jurong Town Corporation, or JTC, a statutory board established by the Government
of Singapore to develop and manage industrial estates in Singapore. These leases
run until 2024 with conditional options to extend for another 30 years. We have
entered into sub-leases with ST for the entire term of the leases for Fabs 2 and
3. The sub-leases for Fab 2 and Fab 3 require us to make rental payments to ST
at rates equal to the rent paid by ST to JTC for the subject land through 2006
for Fab 2 and 2024 for Fab 3. The rental rates may be re-negotiated thereafter.
In total, we paid ST $1.4 million, $2.1 million and $1.6 million, respectively,
in lease payments for 1996, 1997 and 1998.

CSP leases the land on which Fab 6 is located from ST, which in turn leases
it from JTC. The agreement provides for the land to be leased to ST until 2027,
with a conditional option to extend for an additional 30 years. CSP makes rental
payments to ST at rates equal to the rent paid by ST to JTC for the subject land
through 2027. CSP paid ST $0.5 million and $0.9 million in lease payments for
1997 and 1998, respectively.

Some of our insurance coverage is held under various insurance policies
which are negotiated and maintained by ST but billed directly to us. This
enables us to benefit from the group rates negotiated by ST.

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DESCRIPTION OF ORDINARY SHARES

Set forth below is a description of our share capital and a brief summary
of the basic rights and privileges of our shareholders conferred by our Articles
of Association and the laws of Singapore. This description is only a summary and
is qualified by reference to Singapore law and our Articles of Association, as
amended, a copy of which is filed as an exhibit to the registration statement of
which this prospectus is a part. This description gives effect to the capital
restructuring which occurred effective October 14, 1999.

ORDINARY SHARES

Our authorized capital is S$800,000,000.540 consisting of 3,076,923,079
ordinary shares of par value S$0.26 each. We have only one class of shares,
namely, the ordinary shares, which have identical rights in all respects and
rank equally with one another. Our Articles of Association provide that we may
issue shares of a different class with preferential, deferred, qualified or
other special rights, privileges or conditions as our Board of Directors may
determine and may issue preference shares which are, or at our option are,
subject to redemption, subject to certain limitations. Our directors may issue
shares at a premium. If shares are issued at a premium, a sum equal to the
aggregate amount or value of the premium will, subject to certain exceptions, be
transferred to a share premium account.

As of October 15, 1999, 988,847,853 ordinary shares were issued and
outstanding. All of our ordinary shares are in registered form. We may, subject
to the provisions of the Companies Act and the rules of the Singapore stock
exchange, purchase our own ordinary shares. However, we may not, except in
circumstances permitted by the Companies Act, grant any financial assistance for
the acquisition or proposed acquisition of our own ordinary shares.

NEW ORDINARY SHARES

New ordinary shares may only be issued with the prior approval in a general
meeting of our shareholders. The approval, if granted, will lapse at the
conclusion of the annual general meeting following the date on which the
approval was granted. Our shareholders have given us general authority to issue
any remaining approved but unissued ordinary shares prior to our next annual
general meeting. Subject to the foregoing, the provisions of the Companies Act
and any special rights attached to any class of shares currently issued, all new
ordinary shares are under the control of our Board of Directors who may allot
and issue the same with such rights and restrictions as it may think fit. Our
shareholders are not entitled to pre-emptive rights under the Articles of
Association or Singapore law.

SHAREHOLDERS

Only persons who are registered in our register of shareholders and, in
cases in which the person so registered is The Central Depository (Pte) Limited,
or the CDP, the persons named as the depositors in the depository register
maintained by the CDP for our ordinary shares, are recognized as shareholders.
We will not, except as required by law, recognize any equitable, contingent,
future or partial interest in any ordinary share or other rights for any
ordinary share other than the absolute right thereto of the registered holder of
the ordinary share or of the person whose name is entered in the depository
register for that ordinary share. We may close the register of shareholders for
any time or times if we provide the Registrar of Companies and Business of
Singapore at least 14 days' notice. However, the register may not be closed for
more than 30 days in aggregate in any calendar year. We typically close the
register to determine shareholders' entitlement to receive dividends and other
distributions for no more than 10 days a year.

TRANSFER OF ORDINARY SHARES

There is no restriction on the transfer of fully paid ordinary shares
except where required by law. Our Board of Directors may only decline to
register any transfer of ordinary shares which are not fully paid shares or
ordinary shares on which we have a lien. Ordinary shares may be transferred by a
duly signed instrument of transfer in any form acceptable to our Board of
Directors. Our Board of Directors may also decline to register any instrument of
transfer unless, among other things, it has been duly stamped and is
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presented for registration together with the share certificate and such other
evidence of title as they may require. We will replace lost or destroyed
certificates for ordinary shares if we are properly notified and if the
applicant pays a fee which will not exceed S$2 and furnishes any evidence and
indemnity that our Board of Directors may require.

GENERAL MEETINGS OF SHAREHOLDERS

We are required to hold an annual general meeting every year. Our Board of
Directors may convene an extraordinary general meeting whenever it thinks fit
and must do so if shareholders representing not less than 10% of the total
voting rights of all shareholders request in writing that such a meeting be
held. In addition, two or more shareholders holding not less than 10% of our
issued share capital may call a meeting. Unless otherwise required by law or by
our Articles of Association, voting at general meetings is by ordinary
resolution, requiring an affirmative vote of a simple majority of the votes cast
at that meeting. An ordinary resolution suffices, for example, for the
appointment of directors. A special resolution, requiring the affirmative vote
of at least 75% of the votes cast at the meeting, is necessary for certain
matters under Singapore law, including the voluntary winding up of the company,
amendments to our Memorandum and Articles of Association, a change of our
corporate name and a reduction in our share capital, share premium account or
capital redemption reserve fund. We must give at least 21 days' notice in
writing for every general meeting convened for the purpose of passing a special
resolution. Ordinary resolutions generally require at least 14 days' notice in
writing. The notice must be given to every shareholder who has supplied us with
an address in Singapore for the giving of notices and must set forth the place,
the day and the hour of the meeting and, in the case of special business, the
general nature of that business.

VOTING RIGHTS

A shareholder is entitled to attend, speak and vote at any general meeting,
in person or by proxy. A proxy need not be a shareholder. A person who holds
ordinary shares through the CDP book-entry clearance system will only be
entitled to vote at a general meeting as a shareholder if his name appears on
the depository register maintained by CDP 48 hours before the general meeting.
Except as otherwise provided in our Articles of Association, two or more
shareholders holding at least 33 1/3% of our issued and outstanding ordinary
shares must be present in person or by proxy to constitute a quorum at any
general meeting. Under our Articles of Association, on a show of hands, every
shareholder present in person and each proxy shall have one vote, and on a poll,
every shareholder present in person or by proxy shall have one vote for each
ordinary share held. A poll may be demanded in certain circumstances, including
by the chairman of the meeting or by any shareholder present in person or by
proxy and representing not less than 10% of the total voting rights of all
shareholders having the right to attend and vote at the meeting or by any two
shareholders present in person or by proxy and entitled to vote.

DIVIDENDS

We may, by ordinary resolution, declare dividends at a general meeting, but
we may not pay dividends in excess of the amount recommended by our Board of
Directors. We must pay all dividends out of our profits or pursuant to Section
69 of the Companies Act. Our Board of Directors may also declare an interim
dividend. All dividends are paid pro rata among the shareholders in proportion
to the amount paid up on each shareholder's ordinary shares, unless the rights
attaching to an issue of any ordinary share provides otherwise. Unless otherwise
directed, dividends are paid by cheque or warrant sent through the post to each
shareholder at his registered address. Notwithstanding the foregoing, our
payment to the CDP of any dividend payable to a shareholder whose name is
entered in the depository register shall, to the extent of payment made to the
CDP, discharge us from any liability to that shareholder in respect of that
payment.

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BONUS AND RIGHTS ISSUE

Our Board of Directors may, with the approval of our shareholders at a
general meeting, capitalize any reserves or profits (including profit or monies
carried and standing to any reserve or to the share premium account) and
distribute the same as bonus shares credited as paid-up to the shareholders in
proportion to their shareholdings. Our Board of Directors may also issue rights
to take up additional ordinary shares to shareholders in proportion to their
shareholdings. Such rights are subject to any conditions attached to such issue.

TAKEOVERS

The Companies Act and the Singapore Code on Takeovers and Mergers regulate
the acquisition of ordinary shares of public companies and contain certain
provisions that may delay, deter or prevent a future takeover or change in
control of our company. Any person acquiring an interest, either on his own or
together with parties acting in concert with him, in 25% or more of our voting
shares must extend a takeover offer for the remaining voting shares in
accordance with the provisions of the Singapore Code on Takeovers and Mergers.
"Parties acting in concert" include a company and its related and associated
companies, a company and its directors (including their relatives), a company
and its pension funds, a person and any investment company, unit trust or other
fund whose investment such person manages on a discretionary basis, and a
financial advisor and its client in respect of shares held by the financial
advisor and shares in the client held by funds managed by the financial advisor
on a discretionary basis. An offer for consideration other than cash must be
accompanied by a cash alternative at not less than the highest price paid by the
offeror or parties acting in concert with the offeror within the preceding 12
months. A mandatory takeover offer is also required to be made if a person
holding, either on his own or together with parties acting in concert with him,
between 25% and 50% of the voting shares acquires additional voting shares
representing more than 3% of the voting shares in any 12 month period.

LIQUIDATION OR OTHER RETURN OF CAPITAL

If our company liquidates or in the event of any other return of capital,
holders of ordinary shares will be entitled to participate in any surplus assets
in proportion to their shareholdings, subject to any special rights attaching to
any other class of shares.

INDEMNITY

As permitted by Singapore law, our Articles of Association provide that,
subject to the Companies Act, we will indemnify our Board of Directors and
officers against any liability incurred in defending any proceedings, whether
civil or criminal, which relate to anything done or omitted to have been done as
an officer, director or employee. We may not indemnify directors and officers
against any liability which by law would otherwise attach to them in respect of
any negligence, default, breach of duty or breach of trust of which they may be
guilty in relation to our company.

LIMITATIONS ON RIGHTS TO HOLD OR VOTE SHARES

Except as described in "-- Voting Rights" and "-- Takeovers" above, there
are no limitations imposed by Singapore law or by our Articles of Association on
the rights of non-resident shareholders to hold or vote ordinary shares.

MINORITY RIGHTS

The rights of minority shareholders of Singapore-incorporated companies are
protected under Section 216 of the Companies Act, which gives the Singapore
courts a general power to make any order,

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upon application by any shareholder of our company, as they think fit to remedy
any of the following situations:

- our affairs are being conducted or the powers of our Board of Directors
are being exercised in a manner oppressive to, or in disregard of the
interests of, one or more of our shareholders; or

- we take an action, or threaten to take an action, or the shareholders
pass a resolution, or threaten to pass a resolution, which unfairly
discriminates against, or is otherwise prejudicial to, one or more of our
shareholders, including the applicant.

Singapore courts have wide discretion as to the reliefs they may grant and
those reliefs are in no way limited to those listed in the Companies Act itself.
Without prejudice to the foregoing, Singapore courts may:

- direct or prohibit any act or cancel or vary any transaction or
resolution;

- regulate our affairs in the future;

- authorize civil proceedings to be brought in the name of, or on behalf
of, the company by a person or persons and on such terms as the court may
direct;

- provide for the purchase of a minority shareholder's shares by our other
shareholders or by our company and, in the case of a purchase of shares
by us, a corresponding reduction of our share capital;

- provide that our Memorandum or Articles of Association be amended; or

- provide that our company be wound up.

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DESCRIPTION OF AMERICAN DEPOSITARY SHARES

ADSs represent ownership interests in securities that are on deposit with a
depositary bank. Citibank, N.A., located at 111 Wall Street, New York, New York
10043, will act as the depositary bank for our ADSs. ADSs are normally
represented by certificates that are commonly known as American Depositary
Receipts, or ADRs. The depositary typically appoints a custodian to safekeep the
securities on deposit. In this case, our custodian is Citibank Nominees
Singapore Pte Ltd, located at 300 Tampines Avenue #07-00, Tampines Junction,
Singapore 529653.

We have appointed Citibank, N.A. as our depositary pursuant to a deposit
agreement. A copy of the deposit agreement is on file with the SEC under cover
of a registration statement on Form F-6. You may obtain a copy of the deposit
agreement from the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Citicorp Investment Bank (Singapore) Limited, an
affiliate of Citibank, N.A., is acting as a co-lead manager and underwriter in
the Singapore offering and is receiving customary compensation in connection
with such transaction.

The following is a summary description of the ADSs and your rights as an
owner of ADSs. Please note that your rights and obligations as an owner of ADSs
will be determined by the deposit agreement and not by this summary. We urge you
to review the deposit agreement in its entirety as well as the form of ADR
attached to the deposit agreement.

Each ADS represents ten ordinary shares on deposit with the custodian bank.
An ADS also represents any other property received by the depositary or the
custodian on behalf of the owner of the ADS that has not been distributed to the
owners of ADSs because of legal restrictions or practical considerations.

If you become an owner of an ADS, you will become a party to the deposit
agreement and therefore will be bound to its terms and to the terms of the ADR
that represents your ADSs. The deposit agreement and the ADR specify our rights
and obligations as well as your rights and obligations as owner of ADSs and
those of the depositary bank. As an ADS holder you appoint the depositary to act
on your behalf in certain circumstances. Although the deposit agreement is
governed by New York law, our obligations to the holders of our ordinary shares
will continue to be governed by the laws of Singapore, which may be different
from the laws in the United States.

As an owner of ADSs, you may hold your ADSs either by means of an ADR
registered in your name or through a brokerage or safekeeping account. If you
decide to hold your ADSs through your brokerage or safekeeping account, you must
rely on the procedures of your broker or bank to assert your rights as ADS
owner. Please consult with your broker or bank to determine what those
procedures are. This summary description assumes you have opted to own the ADSs
directly by means of an ADR registered in your name.

ISSUANCE OF ADSs UPON DEPOSIT OF ORDINARY SHARES

The depositary may create ADSs on your behalf if you or your broker deposit
ordinary shares with the custodian. The depositary will deliver these ADSs to
the person you indicate only after you pay any applicable issuance fees and any
charges and taxes payable for the transfer of the ordinary shares to the
custodian.

The issuance of ADSs may be delayed until the depositary or the custodian
receives confirmation that all required approvals have been given and that the
ordinary shares have been duly transferred to the custodian. The depositary will
only issue ADSs in whole numbers.

When you make a deposit of ordinary shares, you will be responsible for
transferring good and valid title to the depositary. As such, you will be deemed
to represent and warrant that:

- your ordinary shares are duly authorized, validly issued, fully paid,
non-assessable and legally obtained;

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- all preemptive and similar rights, if any, with respect to your ordinary
shares have been validly waived or exercised;

- you are duly authorized to deposit the ordinary shares;

- your ordinary shares presented for deposit are free and clear of any
lien, encumbrance, security interest, charge, mortgage or adverse claim
and are not, and the ADSs issuable upon such deposit will not be, except
as provided in the deposit agreement, "restricted securities" (as defined
in the deposit agreement); and

- the ordinary shares presented for deposit have not been stripped of any
rights or entitlements.

If any of the representations or warranties are false in any way, we and
the depositary may, at your cost and expense, take any and all actions necessary
to correct the consequences of the misrepresentations.

WITHDRAWAL OF ORDINARY SHARES UPON CANCELLATION OF ADSS

As a holder of ADSs, you will be entitled to present your ADSs to the
depositary for cancellation and then receive the underlying ordinary shares at
the custodian's offices. In order to withdraw the ordinary shares represented by
your ADSs, you will be required to pay to the depositary the fees for
cancellation of ADSs and any charges and taxes payable upon the transfer of the
ordinary shares being withdrawn. You assume the risk for delivery of all funds
and securities upon withdrawal. Once canceled, the ADSs will not have any rights
under the deposit agreement.

If you hold an ADR registered in your name, the depositary bank may ask you
to provide proof of identity and genuineness of any signature and certain other
documents as the depositary bank may deem appropriate before it will cancel your
ADSs. The withdrawal of the ordinary shares represented by your ADSs may be
delayed until the depositary receives satisfactory evidence of compliance with
all applicable laws and regulations. As noted above, the depositary bank will
only accept ADSs for cancellation that represent a whole number of securities on
deposit.

You will have the right to withdraw the ordinary shares represented by your
ADSs at any time subject to:

- temporary delays that may arise because the transfer books for the
ordinary shares or the ADSs are closed or when ordinary shares are
immobilized as a result of a shareholders' meeting or a payment of
dividends, if any;

- your obligation to pay fees, taxes and similar charges; and

- restrictions imposed because of laws or regulations applicable to ADSs or
the withdrawal of securities on deposit.

The deposit agreement may not be modified to impair your right to withdraw
the securities represented by your ADSs except to comply with mandatory
provisions of law.

DIVIDENDS AND DISTRIBUTIONS

As a holder, you generally have the right to receive the distributions we
make on the securities deposited with the custodian bank. Your receipt of these
distributions may be limited, however, by practical considerations and legal
limitations. Holders will receive such distributions under the terms of the
deposit agreement in proportion to the number of ADSs held as of a specified
record date.

DISTRIBUTIONS OF CASH

Whenever we make a cash distribution for the securities on deposit with the
custodian, we will notify the depositary. Upon receipt of such notice, the
depositary will arrange for the funds to be converted into U.S. dollars and for
the distribution of the U.S. dollars to holders.

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The conversion into U.S. dollars will take place only if practicable and if
the U.S. dollars are transferable to the United States. The amounts distributed
to holders will be net of the fees, expenses, taxes and governmental charges
payable by holders under the terms of the deposit agreement. The depositary will
apply the same method for distributing the proceeds of the sale of any property,
such as undistributed rights, held by the custodian in respect of securities on
deposit.

DISTRIBUTIONS OF ORDINARY SHARES

Whenever we make a free distribution of ordinary shares for the securities
on deposit with the custodian, we will notify the depositary bank. Upon receipt
of such notice, the depositary bank will either distribute to holders new ADSs
representing the ordinary shares deposited or modify the ADS-to-ordinary share
ratio, in which case each ADS you hold will represent rights and interests in
the additional ordinary shares so deposited. Only whole new ADSs will be
distributed. Fractional entitlements will be sold and the proceeds of such sale
will be distributed as in the case of a cash distribution.

The distribution of new ADSs or the modification of the ADS-to-ordinary
share ratio upon a distribution of ordinary shares will be made net of the fees,
expenses, taxes and governmental charges payable by holders under the terms of
the deposit agreement. In order to pay such taxes or governmental charges, the
depositary bank may sell all or a portion of the new ordinary shares so
distributed.

New ADSs will not be distributed if it would violate a law (i.e., the U.S.
securities laws) or if it is not operationally practicable. If the depositary
bank does not distribute new ADSs as described above, it will use its best
efforts to sell the ordinary shares received and will distribute the proceeds of
the sale as in the case of a distribution of cash.

ELECTIVE DISTRIBUTIONS

Whenever we intend to distribute a dividend payable at the election of
shareholders, either in cash or in additional shares, we will give prior notice
of the distribution to the depositary and will indicate whether we wish the
distribution to be made available to you. In such case, we will assist the
depositary in determining whether such distribution is lawful and reasonably
practical.

The depositary will make the election available to you only if it is
reasonably practical and if we have provided the depositary all of the
documentation contemplated in the deposit agreement. In such case, the
depositary will establish procedures to enable you to elect to receive either
cash or additional ADSs, in each case as described in the deposit agreement.

If the election is not made available to you, you will receive either cash
or additional ADSs, depending on what a shareholder in Singapore would receive
for failing to make an election, as more fully described in the deposit
agreement.

DISTRIBUTIONS OF RIGHTS

Whenever we intend to distribute rights to purchase additional ordinary
shares, we will give prior notice to the depositary and we will assist the
depositary in determining whether it is lawful and reasonably practicable to
distribute rights to purchase additional ADSs to holders.

The depositary will establish procedures to distribute rights to purchase
additional ADSs to holders and to enable such holders to exercise such rights if
it is lawful and reasonably practicable to make the rights available to holders
of ADSs. Upon the exercise of any such rights, you may have to pay fees,
expenses, taxes and other governmental charges to subscribe for the new ADSs.
Please note that the depositary bank is not obligated to establish procedures to
facilitate the distribution and exercise of such rights.

The depositary will not distribute the rights to you if:

- we do not request that the rights be distributed to you or we ask that
the rights not be distributed to you; or
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- we fail to deliver satisfactory documents to the depositary bank, such as
opinions addressing the lawfulness of the transaction; or

- it is not reasonably practicable to distribute the rights.

The depositary will sell any rights that are not exercised or not
distributed if such sale is lawful and reasonably practicable. The proceeds of
the sale will be distributed to holders as in the case of a cash distribution.
If the depositary bank is unable to sell the rights, it will allow the rights to
lapse, in which case you will receive no value for such rights.

OTHER DISTRIBUTIONS

Whenever we intend to distribute property other than cash, ordinary shares
or rights to purchase additional ordinary shares, we will notify the depositary
bank in advance and will indicate whether we wish such distribution to be made
to you. If so, we will assist the depositary bank in determining whether such
distribution to holders is lawful and reasonably practicable.

If it is reasonably practicable to distribute such property to you and if
we provide the depositary bank all of the documentation contemplated in the
deposit agreement, it will distribute the property to you in a manner it deems
practicable.

The distribution will be made net of fees, expenses, taxes and governmental
charges payable by holders under the terms of the deposit agreement. In order to
pay such taxes and governmental charges, the depositary may sell all or a
portion of the property received.

The depositary will not distribute the property to you and will sell the
property if:

- we do not request that the property be distributed to you or if we ask
that the property not be distributed to you; or

- we do not deliver satisfactory documents to the depositary bank; or

- the depositary determines that all or a portion of the distribution to
you is not reasonably practicable.

The proceeds of such a sale will be distributed to holders as in the case
of a cash distribution.

REDEMPTION

Whenever we decide to redeem any of the securities on deposit with the
custodian, we will notify the depositary. If it is reasonably practicable and if
we provide the depositary bank all of the documentation contemplated in the
deposit agreement, the depositary will mail notice of the redemption to the
holders.

The custodian will be instructed to surrender the shares being redeemed
against payment of the applicable redemption price. The depositary will convert
the redemption funds received into U.S. dollars upon the terms of the deposit
agreement and will establish procedures to enable holders to receive the net
proceeds from the redemption upon surrender of their ADSs to the depositary. You
may have to pay fees, expenses, taxes and other governmental charges upon the
redemption of your ADSs. If less than all ADSs are being redeemed, the ADSs to
be retired will be selected by lot or on a pro rata basis, as the depositary may
determine.

CHANGES AFFECTING ORDINARY SHARES

The ordinary shares held on deposit for your ADSs may change from time to
time. For example, there may be a change in nominal or par value, a split-up,
cancellation, consolidation or reclassification of such ordinary shares or a
recapitalization, reorganization, merger, consolidation or sale of assets.

If any such change were to occur, your ADSs would, to the extent permitted
by law, represent the right to receive the property received or exchanged in
respect of the ordinary shares held on deposit. The depositary bank may in such
circumstances deliver new ADSs to you or call for the exchange of your
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existing ADSs for new ADSs. If the depositary bank may not lawfully distribute
such property to you, the depositary bank may sell such property and distribute
the net proceeds to you as in the case of a cash distribution.

VOTING RIGHTS

As a holder, you generally have the right under the deposit agreement to
instruct the depositary bank to exercise the voting rights for the ordinary
shares represented by your ADSs. The voting rights of holders of ordinary shares
are described under the heading "Description of Ordinary Shares" in this
prospectus.

The depositary will mail to you any notice of shareholders' meeting
received from us, together with information explaining how to instruct the
depositary to exercise the voting rights of the securities represented by ADSs.

If the depositary timely receives voting instructions from a holder of
ADSs, it will endeavor to vote the securities represented by the holder's ADSs
in accordance with such voting instructions.

Please note that the ability of the depositary to carry out voting
instructions may be limited by practical and legal limitations and the terms of
the securities on deposit. We cannot assure you that you will receive voting
materials in time to enable you to return voting instructions to the depositary
in a timely manner. Securities for which no voting instructions have been
received will not be voted.

FEES AND CHARGES

As an ADS holder, you will be required to pay the following service fees to
the depositary:

<TABLE>
<CAPTION>
SERVICE FEES
------- --------------------------
<S> <C>
Issuance of ADSs............................................ Up to 5c per ADS issued
Cancellation of ADSs........................................ Up to 5c per ADS canceled
Exercise of rights to purchase additional ADSs.............. Up to 5c per ADS issued
Distribution of stock or other free distributions........... Up to 5c per ADS held
Distribution of cash upon sale of rights and other
entitlements.............................................. Up to 2c per ADS held
</TABLE>

As an ADS holder, you will also be responsible to pay certain fees and
expenses incurred by the depositary bank and certain taxes and governmental
charges such as:

- fees for the transfer and registration of ordinary shares (i.e., upon
deposit and withdrawal of ordinary shares);

- expenses incurred for converting foreign currency into U.S. dollars;

- expenses for cable, telex and fax transmissions and for delivery of
securities; and

- taxes and duties upon the transfer of securities (i.e., when ordinary
shares are deposited or withdrawn from deposit).

We have agreed to pay certain other charges and expenses of the depositary.
Please note that the fees and charges you may be required to pay may vary over
time and may be changed by us and by the depositary. You will receive prior
notice of such changes.

AMENDMENTS AND TERMINATION

We may agree with the depositary to modify the deposit agreement at any
time without your consent. Except in very limited circumstances enumerated in
the deposit agreement, we have agreed to give holders 30 days' prior notice of
any modifications that would prejudice any of their substantial rights under the
deposit agreement.

You will be bound by any modifications to the deposit agreement if you
continue to hold your ADSs after the modifications to the deposit agreement
become effective. The deposit agreement cannot be

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amended to prevent you from withdrawing the ordinary shares represented by your
ADSs, except as permitted by law.

We have the right to direct the depositary to terminate the deposit
agreement. Similarly, the depositary may in certain circumstances on its own
initiative terminate the deposit agreement. In either case, the depositary must
give notice to the holders at least 30 days before termination.

Upon termination of the deposit agreement, the following will occur:

- for a period of six months after termination, you will be able to request
the cancellation of your ADSs and the withdrawal of the ordinary shares
represented by your ADSs and the delivery of all other property held by
the depositary in respect of those ordinary shares on the same terms as
prior to the termination. During such six month period, the depositary
bank will continue to collect all distributions received on the ordinary
shares on deposit (i.e., dividends) but will not distribute any such
property to you until you request the cancellation of your ADSs; and

- after the expiration of such six month period, the depositary may sell
the securities held on deposit. The depositary will hold the proceeds
from such sale and any other funds then held for the holders of ADSs in a
non-interest bearing account. At that point, the depositary will have no
further obligations to holders other than to account for the funds then
held for the holders of ADSs still outstanding.

BOOKS OF DEPOSITARY

The depositary will maintain ADS holder records at its depositary office.
You may inspect these records at the depositary's office during regular business
hours but solely for the purpose of communicating with other holders in the
interest of business matters relating to the ADSs and the deposit agreement.

The depositary will maintain in New York facilities to record and process
the issuance, cancellation, combination, split-up and transfer of ADRs. These
facilities may be closed from time to time, to the extent not prohibited by law.

LIMITATIONS ON OBLIGATIONS AND LIABILITIES

The deposit agreement limits our obligations and the depositary's
obligations to you. We and the depositary are obligated only to take the actions
specifically stated in the deposit agreement without negligence or bad faith.
Please note the following:

- The depositary disclaims any liability for any failure to carry out
voting instructions, for any manner in which a vote is cast or for the
effect of any vote, provided it acts in good faith and in accordance with
the terms of the deposit agreement.

- The depositary disclaims any liability for any failure to determine the
lawfulness or practicality of any action, for the content of any document
forwarded to you on our behalf or for the accuracy of any translation of
such a document, for the investment risks associated with investing in
ordinary shares, for the validity or worth of the ordinary shares, for
any tax consequences that result from the ownership of ADSs, for the
credit worthiness of any third party, for allowing any rights to lapse
under the terms of the deposit agreement, for the timeliness of any of
our notices or for our failure to give notice.

- We and the depositary will not be obligated to perform any act that is
inconsistent with the terms of the deposit agreement.

- We and the depositary disclaim any liability if we are prevented or
forbidden from acting on account of any law or regulation, any provision
of our Memorandum and Articles of Association, any provision of any
securities on deposit or by reason of any act of God or war or other
circumstances beyond our control.

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- We and the depositary disclaim any liability by reason of any exercise
of, or failure to exercise, any discretion provided for the deposit
agreement or in our Memorandum and Articles of Association or in any
provisions of securities on deposit.

- We and the depositary further disclaim any liability for any action or
inaction in reliance on the advice or information received from legal
counsel, accountants, any person presenting ordinary shares for deposit,
any holder of ADSs or authorized representative thereof, or any other
person believed by either of us in good faith to be competent to give
such advice or information.

- We and the depositary also disclaim liability for the inability by a
holder to benefit from any distribution, offering, right or other benefit
which is made available to holders ordinary shares but is not, under the
terms of the deposit agreement, made available to you.

- We and the depositary may rely without any liability upon any written
notice, request or other document believed to be genuine and to have been
signed or presented by the proper parties.

PRE-RELEASE TRANSACTIONS

The depositary may, under certain circumstances, issue ADSs before
receiving a deposit of ordinary shares or release ordinary shares before
receiving ADSs. These transactions are commonly referred to as "pre-release
transactions." The deposit agreement limits the aggregate size of pre-release
transactions and imposes a number of conditions on such transactions (i.e., the
need to receive collateral, the type of collateral required, the representations
required from brokers, etc.). The deposit agreement requires that the ADSs be
fully collateralized before any ADSs are pre-released. The depositary may retain
the compensation received from the pre-release transactions.

TAXES

You will be responsible for the taxes and other governmental charges
payable on the ADSs and the securities represented by the ADSs. We, the
depositary and the custodian may deduct from any distribution the taxes and
governmental charges payable by holders and may sell any and all property on
deposit to pay the taxes and governmental charges payable by holders. You will
be liable for any deficiency if the sale proceeds do not cover the taxes that
are due.

The depositary may refuse to issue ADSs, to deliver, transfer, split and
combine ADRs or to release securities on deposit until all taxes and charges are
paid by the applicable holder. The depositary and the custodian may take
reasonable administrative actions to obtain tax refunds and reduced tax
withholding for any distributions on your behalf. However, you may be required
to provide to the depositary bank and to the custodian proof of taxpayer status
and residence and such other information as the depositary and the custodian may
require to fulfill legal obligations. You are required to indemnify us, the
depositary and the custodian for any claims with respect to taxes based on any
tax benefit obtained by you.

FOREIGN CURRENCY CONVERSION

The depositary will arrange for the conversion of all foreign currency
received into U.S. dollars if such conversion is practical, and it will
distribute the U.S. dollars in accordance with the terms of the deposit
agreement. You may have to pay fees and expenses incurred in converting foreign
currency, such as fees and expenses incurred in complying with currency exchange
controls and other governmental requirements.

If the conversion of foreign currency is not practical or lawful, or if any
required approvals are denied or not obtainable at a reasonable cost or within a
reasonable period, the depositary may take the following actions in its
discretion:

- convert the foreign currency to the extent practical and lawful and
distribute the U.S. dollars to the holders for whom the conversion and
distribution is lawful and practical;

- distribute the foreign currency to holders for whom the distribution is
lawful and practical; and

- hold the foreign currency, without liability for interest, for the
applicable holders.

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TAXATION

SINGAPORE TAXATION

The following discussion describes the material Singapore income tax, stamp
duty and estate duty consequences of the purchase, ownership and disposal of the
ordinary shares or ADSs (collectively the "securities") to a holder of the
securities that is not resident in Singapore. This discussion, insofar as it
relates to matters of Singapore tax law, constitutes the opinion of Allen &
Gledhill, Singapore tax advisor to Chartered. This discussion does not purport
to be a comprehensive description of all of the tax considerations that may be
relevant to a decision to purchase, own or dispose of the securities and does
not purport to deal with the tax consequences applicable to all categories of
investors.

This discussion is based on tax laws in effect in Singapore and on
administrative and judicial interpretations of these tax laws, as of the date of
this prospectus, all of which are subject to change, possibly on a retroactive
basis.

INCOME TAX

General. Non-resident corporate taxpayers are subject to income tax on
income that is accrued in or derived from Singapore, and on foreign income
received in Singapore, subject to certain exceptions. A non-resident individual
is subject to income tax on the income accrued in or derived from Singapore.

Subject to the provisions of any applicable double taxation treaty,
non-resident taxpayers who derive certain types of income from Singapore are
subject to a withholding tax on that income at a rate of 26%, or generally 15%
in the case of interest, royalty and rental of movable equipment.

A corporation will be regarded as being resident in Singapore if the
control and management of its business is exercised there (for example, if the
corporation's board of directors meets and conducts the business of the
corporation in Singapore). An individual will be regarded as being resident in
Singapore in a year of assessment if, in the preceding year, he or she was
physically present in Singapore or exercised an employment in Singapore (other
than as a director of a company) for 183 days or more, or if he or she resides
in Singapore.

Dividend Distributions. If we pay dividends on the ordinary shares or ADSs
out of the tax exempt income received because of our pioneer status or out of
our income subject to a concessionary tax rate, if any, such dividends will be
free of Singapore tax in the hands of the holders of the ordinary shares and
ADSs. Please see "Management's Discussion and Analysis of Financial Condition
and Results of Operation -- Special Tax Status" for a discussion of our pioneer
status.

Where the dividend is declared out of the above tax exempt income or income
subject to tax at a concessionary rate, we would have to obtain agreement from
the Inland Revenue Authority of Singapore confirming the amount of income
available for distribution of tax exempt dividends. Before this agreement has
been obtained, the Comptroller of Income Tax in Singapore may issue a
provisional assessment of our tax exempt income, and we will be able to
distribute tax exempt dividends based on this provisional assessment. Exempt
dividends paid by us in excess of our finalized tax exempt income will be deemed
distributed out of our ordinary income and will be subject to the treatment
outlined below.

We pay tax on our non-tax exempt income at the prevailing corporate tax
rate, which is currently 26%. This tax paid by us is in effect imputed to, and
deemed paid on behalf of, our shareholders. Thus, if we pay dividends on our
ordinary shares out of our non-tax exempt income, our shareholders receive the
dividends net of the tax paid by us. Dividends received by either a resident or
non-resident of Singapore are not subject to withholding tax. Shareholders are
taxed in Singapore on the gross amount of dividends, which is the cash amount of
the dividend plus an amount normally equivalent to the corporate income tax rate
paid by us on the dividend. The tax paid by us effectively becomes available to
shareholders as a tax credit to offset the Singapore income tax liability on
their overall income, including the gross amount of dividends.

A non-resident shareholder is effectively taxed on non-tax exempt dividends
at the corporate income tax rate. Thus, because tax deducted from the dividend
and paid by us at the corporate income tax rate is
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in effect imputed to, and deemed paid on behalf of, our shareholders (as
discussed in the preceding paragraph), no further Singapore income tax will be
imposed on the net dividend received by a non-resident holder of ordinary shares
or ADSs. Further, the non-resident shareholder will normally not receive any tax
refund from the Inland Revenue Authority of Singapore.

No comprehensive tax treaty currently exists between Singapore and the
United States.

Gains on Disposal of the Ordinary Shares or ADSs. Singapore does not
impose tax on capital gains. However, gains or profits may be construed to be of
an income nature and subject to tax, especially if they arise from activities
which the Inland Revenue Authority of Singapore regards as the carrying on of a
trade in Singapore, or if they are short-term gains from the sale of real
property or shares in unlisted companies with substantial real property or real
property-related assets in Singapore. Thus, any gains or profits from the
disposal of the ordinary shares or ADSs are not taxable in Singapore unless the
seller is regarded as carrying on a trade in securities in Singapore, in which
case the disposal profits would be taxable as trading profits rather than
capital gains.

STAMP DUTY

There is no stamp duty payable in respect of the issuance and holding of
new ordinary shares or ADSs. Where existing ordinary shares or ADSs evidenced in
certificated form are acquired in Singapore, stamp duty is payable on the
instrument of transfer of the ordinary shares or ADSs at the rate of S$2.00 for
every S$1,000 of the consideration for, or market value of, the ordinary shares
or ADSs, whichever is higher. The stamp duty is borne by the purchaser unless
there is an agreement to the contrary. Where an instrument of transfer is
executed outside Singapore or no instrument of transfer is executed, no stamp
duty is payable on the acquisition of existing ordinary shares or ADSs. Stamp
duty may be payable if the instrument of transfer is received in Singapore.

ESTATE DUTY

In the case of an individual who is not domiciled in Singapore, Singapore
estate duty is imposed on the value of most movable and immovable properties
situated in Singapore. Thus, an individual holder of the ordinary shares who is
not domiciled in Singapore at the time of his or her death will be subject to
Singapore estate duty on the value of any ordinary shares held by the individual
upon the individual's death. Such a shareholder will be required to pay
Singapore estate duty to the extent that the value of the ordinary shares, and
any other assets subject to Singapore estate duty, exceeds S$600,000. Unless
other exemptions apply to the other assets (for example, the separate exemption
limit for residential properties), any excess will be taxed at a rate equal to
5% on the first S$12 million of the individual's Singapore chargeable assets and
thereafter at a rate equal to 10%. However, an individual who holds ADSs and is
not domiciled in Singapore at the time of his or her death should not be subject
to Singapore estate tax duty on such ADSs because such ADSs are registered
outside Singapore and hence should not be considered as movable properties in
Singapore.

Prospective purchasers or ordinary shares or ADSs who are individuals,
whether or not domiciled in Singapore, should consult their own tax advisors
regarding the Singapore estate duty consequences of their investment.

UNITED STATES FEDERAL TAXATION

The following is a summary of the opinion of Latham & Watkins as to the
material U.S. federal income and estate tax consequences that may be relevant to
a U.S. holder with respect to the acquisition, ownership and disposition of
ordinary shares or ADSs. For purposes of this summary, a "U.S. holder" includes
the following:

- citizens or residents of the United States for United States federal
income tax purposes,

- corporations or other entities created or organized under the laws of the
United States or of any political subdivision thereof,
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<PAGE> 87

- persons otherwise subject to United States federal income taxation on
their worldwide income regardless of its source,

- estates the income of which is subject to United States federal income
taxation regardless of source,

- any trust the administration of which is subject to the primary
supervision of a United States court and which has one or more United
States persons who have the authority to control all substantial
decisions of the trust, or, if the trust was in existence on August 20,
1996, has elected to continue to be treated as a United States person, or

- any other person that is subject to U.S. federal income tax on a net
income basis in respect of an investment in ordinary shares or ADSs.

This summary deals only with ordinary shares and ADSs held as capital
assets (within the meaning of section 1221 of the Internal Revenue Code of 1986,
as amended (the "Code")) and does not address the tax consequences applicable to
holders that may be subject to special tax rules, including without limitation
financial institutions, insurance companies, regulated investment companies,
dealers in securities or currencies, persons holding ordinary shares or ADSs as
a hedge against currency risks or as a position in a "straddle" or "conversion
transaction" or other integrated investment transaction for tax purposes,
persons whose "functional currency" is not the U.S. dollar, or holders of 10% or
more, by voting power or value, of the stock of our company. It also does not
deal with holders other than original purchasers (except where otherwise
specifically noted). This summary is based upon the Code, existing temporary and
proposed Treasury Regulations, Internal Revenue Service ("IRS") rulings and
judicial decisions as now in effect and as currently interpreted and does not
take into account possible changes in such tax laws or interpretations, any of
which may be applied retroactively and could affect the tax consequences
described below. This summary further is based in part on the assumption that
each obligation in the deposit agreement and any related agreement will be
performed in accordance with its terms.

EACH PROSPECTIVE PURCHASER SHOULD CONSULT A TAX ADVISOR WITH RESPECT TO THE
U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF ACQUIRING, OWNING OR
DISPOSING OF ORDINARY SHARES OR ADSS.

OWNERSHIP OF ADSS

For U.S. federal income tax purposes, U.S. holders of ADSs will be treated
as the owners of the ordinary shares represented by such ADSs.

DIVIDENDS

Distributions of cash or property (other than ordinary shares, if any,
distributed pro rata to all shareholders of our company, including holders of
ADSs) with respect to ordinary shares will be included in income by a U.S.
holder as foreign source dividend income at the time of receipt, which in the
case of a U.S. holder of ADSs generally will be the date of receipt by the
depositary, to the extent such distributions are made from the current and
accumulated earnings and profits of our company. Such dividends will not be
eligible for the dividends received deduction generally allowed to corporate
U.S. holders. To the extent, if any, that the amount of any distribution by our
company exceeds our company's current and accumulated earnings and profits as
determined under U.S. federal income tax principles, it will be treated first as
a tax-free return of the U.S. holder's tax basis in the ordinary shares or ADSs
and thereafter as capital gain.

A U.S. holder will not be eligible for a foreign tax credit against its
U.S. federal income tax liability for Singapore dividend distribution taxes paid
by our company. U.S. holders should be aware that dividends paid by our company
generally will constitute "passive income" or, in the case of certain U.S.
holders, "financial services income" for purposes of the foreign tax credit.

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<PAGE> 88

If dividends are paid in Singapore dollars, the amount of the dividend
distribution includible in the income of a U.S. holder will be the U.S. dollar
value of the payments made in Singapore dollars, determined at a spot exchange
rate between Singapore dollars and U.S. dollars on the date such dividend is
includible in the income of the U.S. holder, regardless of whether the payment
is in fact converted into U.S. dollars. Generally, gain or loss, if any,
resulting from currency exchange fluctuations during the period from the date
the dividend is paid to the date such payment is converted into U.S. dollars
will be treated as ordinary income or loss.

Sale or exchange of ordinary shares or ADSs. A U.S. holder generally will
recognize gain or loss on the sale or exchange of ordinary shares or ADSs equal
to the difference between the amount realized on such sale or exchange and the
U.S. holder's tax basis in the ordinary shares or ADSs, as the case may be. Such
gain or loss will be capital gain or loss, and will be long-term capital gain or
loss if the ordinary shares or ADSs, as the case may be, were held for more than
one year. Gain or loss, if any, recognized by a U.S. holder generally will be
treated as U.S. source passive income or loss for U.S. foreign tax credit
purposes.

ESTATE TAXES

An individual shareholder who is a citizen or resident of the United States
for U.S. federal estate tax purposes will have the value of the ordinary shares
or ADSs owned by such holder included in his or her gross estate for U.S.
federal estate tax purposes. An individual holder who actually pays Singapore
estate tax with respect to the ordinary shares or ADSs will, however, be
entitled to credit the amount of such tax against his or her U.S. federal estate
tax liability, subject to certain conditions and limitations.

BACKUP WITHHOLDING TAX AND INFORMATION REPORTING REQUIREMENTS

In general, information reporting requirements will apply to payments of
dividends in respect of the ordinary shares or ADSs or the proceeds received on
the sale, exchange or redemption of the ordinary shares or ADSs by a paying
agent within the United States to a non-corporate (or other exempt) U.S. holder,
and a 31 percent backup withholding tax may apply to such amounts if the U.S.
holder fails to provide an accurate taxpayer identification number to the paying
agent. Amounts withheld as backup withholding will be creditable against the
U.S. holder's United States federal income tax liability.

The above summary is not intended to constitute a complete analysis of all
tax consequences relating to ownership of ordinary shares or ADSs. You should
consult your tax advisor concerning the tax consequences of your particular
situation.

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<PAGE> 89

SHARES ELIGIBLE FOR FUTURE SALE

Prior to the global offering, there has not been any public market for our
ADSs or ordinary shares, and no prediction can be made as to the effect, if any,
that market sales of ADSs or ordinary shares or the availability of ADSs for
sale will have on the market price of the ADSs prevailing from time to time.
Nevertheless, sales of substantial amounts of ADSs in the public market, or the
perception that such sales could occur, could adversely affect the market price
of ADSs and could impair our future ability to raise capital through the sale of
our equity securities. Please see "Risk Factors -- The future sales of
securities by our company or existing shareholders may hurt the price of our
ADSs and our ordinary shares."

Upon the closing of the global offering, we will have an aggregate of
1,238,847,853 ordinary shares issued and outstanding (including ordinary shares
represented by ADSs), assuming the underwriters do not exercise their
overallotment option and without taking into account the exercise of any
outstanding share options . The 250,000,000 ordinary shares sold in the global
offering (including ordinary shares represented by ADSs) will be freely tradable
in the United States, except that any shares held by "affiliates" as defined
under Rule 144 under the Securities Act may only be sold in compliance with the
limitations described below. The remaining 988,847,853 ordinary shares will be
deemed "restricted securities" as defined under Rule 144. Restricted securities
may be sold in the public market only if registered or if they qualify for an
exemption from registration under the Securities Act, including Rule 144 or
Regulation S. The ordinary shares outstanding after the global offering may be
deposited with the depositary and, subject to the terms of the deposit
agreement, ADSs representing these ordinary shares will be issued.

In general, under Rule 144, as currently in effect, a person (or persons
whose shares are required to be aggregated), including an affiliate, who has
beneficially owned shares for at least one year is entitled to sell, within any
three-month period commencing 90 days after the date of this prospectus, a
number of shares that does not exceed the greater of 1.0% of the then
outstanding ordinary shares (including ordinary shares represented by ADSs)
(approximately 12,388,478 shares immediately after completion of the global
offering) or the average weekly trading volume in the ordinary shares (including
ordinary shares represented by ADSs) during the four calendar weeks preceding
the date on which notice of such sale is filed, subject to certain restrictions.
In addition, a person who is not deemed to have been an affiliate of our company
at any time during the 90 days preceding a sale and who has beneficially owned
the shares proposed to be sold for at least two years would be entitled to sell
such shares under Rule 144(k) without regard to the requirements described
above. Certain sales may be permitted pursuant to Regulation S even if the Rule
144 holding periods are not satisfied. ST and ST Semiconductors may be deemed
affiliates of our company. Therefore, sales by them in the United States of the
897,632,876 ordinary shares owned by them following the global offering may
continue to be subject to the volume limitations of Rule 144.

Each of our directors and executive officers, ST and its affiliates, our
equity investor customers and certain other existing shareholders who will
collectively hold at least 979,231,742 ordinary shares after the global offering
will be subject to lock-up agreements following the completion of the global
offering. Pursuant to the lock-up agreements, these shareholders will agree that
they will not, without the prior written consent of Salomon Smith Barney Inc.,
offer, sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, or announce the offering of, any ordinary shares or ADSs or any
securities convertible into or exercisable or exchangeable for, ordinary shares
or ADSs for a period of 180 days from the date of this prospectus, other than
ordinary shares disposed of as bona fide gifts approved by Salomon Smith Barney
Inc. and shares subject to priority allocation in the global offering. Following
the 180 day lock-up period, the ordinary shares held by these shareholders will
be eligible for resale, subject to the registration requirements under the
Securities Act. Please see "Underwriting" for additional information regarding
resale restrictions.

In addition, we have agreed not to sell or otherwise dispose of any
ordinary shares or securities convertible into or exchangeable for ordinary
shares during the 180-day period following the date of the prospectus, without
the prior written consent of Salomon Smith Barney Inc. The foregoing does not

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<PAGE> 90

prevent us, however, from issuing the ordinary shares, directly or in the form
of ADSs, subject to the underwriters' overallotment option or issuing shares
pursuant to our 1999 Share Option Plan. We intend to file a registration
statement on Form S-8 under the Securities Act on the date that the registration
statement of which this prospectus is a part becomes effective to register all
of the ordinary shares that are or may become subject to options under our 1999
Share Option Plan, thus permitting the resale of such ordinary shares by
nonaffiliates in the public market without restriction under the Securities Act.
Concurrently with the effectiveness of the registration statement of which this
prospectus is a part, we also intend to grant our officers, directors and
employees options under our 1999 share option plan to purchase approximately
20,000,000 ordinary shares, including 8,560,000 to our President and Chief
Executive Officer and 3,010,000 to our other directors and executive officers.
The exercise price of such options will be the same as the initial public
offering price of our ordinary shares, except for options for approximately
2,100,000 ordinary shares that will have exercise prices below the initial
public offering price (for which we are accruing a compensation charge). In
addition, we may issue ordinary shares in connection with any acquisition of
another company if the terms of such issuance provide that such ordinary shares
shall not be resold prior to the expiration of the 180-day period referenced in
the preceding sentence. Please see "Risk Factors -- The future sales of
securities by our company or existing shareholders may hurt the price of our
ADSs and our ordinary shares."

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<PAGE> 91

UNDERWRITING

Subject to the terms and conditions stated in the underwriting agreement to
be dated as of the date of the final prospectus, each of the U.S. underwriters
named below, for whom Salomon Smith Barney Inc., Credit Suisse First Boston
Corporation, Hambrecht & Quist LLC, SG Cowen Securities Corporation and
SoundView Technology Group, Inc. are acting as the U.S. representatives, has
severally agreed to purchase, and we have agreed to sell to such U.S.
underwriter, the number of ordinary shares (including ordinary shares
represented by ADSs) set forth opposite the name of such U.S. underwriter.

<TABLE>
<CAPTION>
NUMBER OF
U.S. UNDERWRITERS ORDINARY SHARES
----------------- ---------------
<S> <C>
Salomon Smith Barney Inc. ..................................
Credit Suisse First Boston Corporation......................
Hambrecht & Quist LLC.......................................
SG Cowen Securities Corporation.............................
SoundView Technology Group, Inc.............................
--------
Total.....................................................
========
</TABLE>

Subject to the terms and conditions stated in a separate underwriting
agreement to be dated as of the date of the final prospectus, each of the
international underwriters named below, for whom Salomon Brothers International
Limited, Credit Suisse First Boston (Singapore) Limited, Hambrecht & Quist LLC,
Societe Generale, SoundView Technology Group, Inc., Overseas Union Bank Limited
and Vickers Ballas & Company Pte Ltd are acting as the international
representatives, has severally agreed to purchase, and we have agreed to sell to
such international underwriter, the number of ordinary shares (including
ordinary shares represented by ADSs) set forth opposite the name of such
international underwriter.

<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL UNDERWRITERS ORDINARY SHARES
-------------------------- ---------------
<S> <C>
Salomon Brothers International Limited......................
Credit Suisse First Boston (Singapore) Limited..............
Hambrecht & Quist LLC.......................................
Societe Generale............................................
SoundView Technology Group, Inc.............................
Overseas Union Bank Limited.................................
Vickers Ballas & Company Pte Ltd............................
-------
Total.....................................................
=======
</TABLE>

Subject to the terms and conditions stated in a Singapore management and
underwriting agreement to be dated as of the date of the final prospectus, each
of the Singapore underwriters for whom Overseas Union Bank Limited is acting as
lead manager and underwriter and Citicorp Investment Bank (Singapore) Limited is
acting as co-lead manager and underwriter, has agreed to purchase and we have
agreed to sell to such Singapore underwriters 25,000,000 ordinary shares.

These offerings are part of a global offering that consists of:

- an offering of an aggregate of 150,000,000 ordinary shares, directly or
in the form of ADSs, in the United States and Canada;

- an offering of an aggregate of 75,000,000 ordinary shares, directly or in
the form of ADSs, outside the United States and Canada; and

- an offering of an aggregate of 25,000,000 ordinary shares in Singapore.

Salomon Smith Barney Inc. is acting as the sole book running manager for
the global offering.

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<PAGE> 92

The U.S. underwriting agreement, the international underwriting agreement
and the Singapore management and underwriting agreement each provide that the
obligations of the underwriters to purchase the ordinary shares (including
ordinary shares represented by ADSs) included in the global offering are subject
to approval of certain legal matters by counsel and to certain other conditions.
The U.S., international and Singapore underwriters are obligated to purchase all
the ordinary shares (including ordinary shares represented by ADSs) pursuant to
their respective agreements (other than those covered by the overallotment
option described below) if they purchase any of them. The public offering price
and underwriting discount per ADS for the U.S. offering, the international
offering and (taking into account the number of ordinary shares comprised in an
ADS) the Singapore offering will be identical. The underwriters expect that
delivery of the ordinary shares, directly or in the form of ADSs, will be made
against payment therefor on or about the date specified in the last paragraph of
the cover page of the final prospectus, which is the fifth business day
following the date of the final prospectus, or T+5. Trading of the ordinary
shares, directly or in the form of ADSs, on the date of the final prospectus and
the next succeeding business day may be affected by the T+5 settlement. The
closing of the international offering, the U.S. offering and the Singapore
offering are conditioned upon each other.

The U.S., international and Singapore underwriters propose to offer some of
the ordinary shares (including ordinary shares represented by ADSs) directly to
the public at the initial public offering price set forth on the cover page of
this prospectus and some of the ordinary shares (including ordinary shares
represented by ADSs) to certain dealers at the public offering price less a
concession not exceeding S$ per ordinary share ($ per ADS). The
underwriters may allow, and such dealers may reallow, a concession not exceeding
S$ per ordinary share ($ per ADS) on sales to certain other dealers.
If all the ordinary shares (including the ordinary shares represented by ADSs)
are not sold at the public offering price, the representatives may change the
public offering price and other selling terms. The representatives have advised
us that the underwriters do not intend to confirm sales to any accounts over
which they exercise discretionary authority.

Up to 12,500,000 ordinary shares (including ordinary shares represented by
ADSs) offered in the global offering are subject to priority allocation to our
employees and business associates and to one of our directors, to directors,
officers and employees of our affiliates, and to certain charitable
organizations in Singapore.

We have granted the U.S., international and Singapore underwriters an
option, exercisable for 30 days from the date of this prospectus, to purchase up
to an aggregate of 37,500,000 additional ordinary shares (including ordinary
shares represented by ADSs) at the applicable initial public offering price,
less the underwriting discount. The underwriters may exercise this option solely
to cover overallotments, if any, in connection with this offering. To the extent
that such option is exercised, each U.S., international and Singapore
underwriter, as the case may be, will be obligated, subject to certain
conditions, to purchase an additional number of ordinary shares (including
ordinary shares represented by ADSs) proportionate to such U.S., international
or Singapore underwriter's initial commitment.

The U.S., international and Singapore underwriters have entered an
agreement in which they agree to restrictions on where and to whom they and any
dealer purchasing from them may offer ordinary shares or ADSs. The U.S.,
international and Singapore underwriters also have agreed that they may sell
ordinary shares or ADSs, including those subject to priority allocation, among
their respective underwriting syndicates. The number of ordinary shares or ADSs
actually allocated to each offering may differ from the amount offered due to
reallocation among the U.S. offering, the international offering and the
Singapore offering.

We, ST and its affiliates, our equity investor customers, all of our
executive officers and directors and certain other existing shareholders have
agreed that, for a period of 180 days from the date of this prospectus, they
will not, without the prior written consent of Salomon Smith Barney Inc. offer,
sell, contract to sell, pledge or otherwise dispose of, directly or indirectly,
or announce the offering of, any ordinary shares or ADSs or any securities
convertible into or exchangeable for ordinary shares or ADSs, other than
ordinary shares disposed of as bona fide gifts approved by Salomon Smith Barney
Inc. and shares subject to priority allocation in the global offering. Salomon
Smith Barney Inc. in its sole discretion

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<PAGE> 93

may release any of the ordinary shares subject to the lock-up at any time
without notice. Salomon Smith Barney, Inc. has advised us that it does not
presently have any intention to release prematurely any of the shares that are
subject to the lockup agreement.

Prior to the global offering, there has been no public market for the
ordinary shares or the ADSs. Consequently, the initial public offering price for
the ordinary shares and the ADSs will be determined through negotiations between
us and the representatives. Among the factors considered in determining the
initial public offering price will be our record of operations, our current
financial condition, our future prospects, our markets, the economic conditions
in and future prospects in the semiconductor manufacturing industry, our
management and currently prevailing general conditions in the equity securities
markets, including current market valuations of publicly traded companies
considered comparable to us. There can be no assurance, however, that the prices
at which the ordinary shares or the ADSs will sell in the public market after
this offering will not be lower than the price at which they are sold by the
underwriters or that an active trading market in the ordinary shares or the ADSs
will develop and continue after this offering.

Application has been made to have the ADSs included for quotation on the
Nasdaq National Market under the symbol "CHRT" and for the ordinary shares to be
listed on the Stock Exchange of Singapore Limited.

The following table shows the underwriting discounts and commissions to be
paid to the underwriters by us in connection with the U.S. and international
offerings. These amounts are shown assuming the mid-point of the filing ranges
and both no exercise and full exercise of the underwriters' option to purchase
additional ordinary shares (including ordinary shares represented by ADSs).

<TABLE>
<CAPTION>
PAID BY CHARTERED
---------------------------
NO EXERCISE FULL EXERCISE
----------- -------------
<S> <C> <C>
Per ADS..................................................... $ $
Per Ordinary Share..........................................
Total..................................................... $ $
</TABLE>

In connection with the Singapore offering, we have agreed to pay the
Singapore underwriters discounts and commissions of $0.03 per ordinary share for
a total of $850,000 ($977,500 if the overallotment option is exercised in full).

In connection with the global offering, Salomon Smith Barney Inc. and
Salomon Brothers International Limited, on behalf of the underwriters, may
purchase and sell ADSs or ordinary shares in the open market. These transactions
may include overallotment, covering transactions and stabilizing transactions.
Overallotment involves syndicate sales of ADSs or ordinary shares in excess of
the number of ADSs to be purchased by the underwriters in the global offering,
which creates a syndicate short position. Syndicate covering transactions
involve purchases of the ADSs or ordinary shares in the open market after
distribution has been completed in order to cover syndicate short positions.
Stabilizing transactions consist of certain bids or purchases of ADSs or
ordinary shares made for the purpose of preventing or retarding a decline in the
market price of the ADSs or ordinary shares while the offering is in progress.
The underwriters also may impose a penalty bid. Penalty bids permit the
underwriters to reclaim a selling concession from an underwriter when Salomon
Smith Barney Inc., in covering syndicate short positions or making stabilizing
purchases, repurchases ADSs or ordinary shares originally sold by that
underwriter.

Any of these activities may cause the price of the ADSs or the ordinary
shares to be higher than the price that otherwise would exist in the open market
in the absence of such transactions. Subject to compliance with applicable laws,
these transactions may be effected on the Nasdaq National Market, the Stock
Exchange of Singapore Limited, in the over-the-counter market or otherwise and,
if commenced, may be discontinued at any time.

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<PAGE> 94

We estimate that the total expenses of the global offering will be $3.3
million. We have agreed to reimburse the U.S., international and Singapore
underwriters for certain expenses incurred in connection with the global
offering.

Some of the representatives have been retained to perform certain
investment banking and advisory services for us from time to time for which they
have received customary fees and expenses. The representatives may, from time to
time, engage in transactions with and perform services for us in the ordinary
course of business.

We have agreed to indemnify the several underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended,
or contribute to payments the underwriters may be required to make in respect of
any of those liabilities.

LEGAL MATTERS

Certain matters in connection with the global offering will be passed upon
for our company by Latham & Watkins. The validity of the ordinary shares
represented by the ADSs offered hereby will be passed upon by Allen & Gledhill,
our Singapore counsel. Latham & Watkins may rely upon Allen & Gledhill with
respect to certain matters governed by Singapore law. Certain matters in
connection with the global offering will be passed upon on behalf of the
underwriters by Cleary, Gottlieb, Steen & Hamilton, counsel for the
underwriters.

EXPERTS

We have included our consolidated financial statements as of December 31,
1997 and 1998 and June 30, 1998 and 1999, and for the years ended December 31,
1996, 1997 and 1998, and the six month periods ended June 30, 1998 and 1999, in
this prospectus and the related registration statement on Form F-1 in reliance
upon the report of KPMG, independent accountants, appearing elsewhere in this
prospectus, and upon the authority of said firm as experts in accounting and
auditing.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form F-1, which
includes amendments, exhibits, schedules and supplements with respect to the
ADSs and the underlying ordinary shares offered by this prospectus. Although
this prospectus, which is a part of the registration statement, contains all
material information included in the registration statement, part of the
registration statement has been omitted from this prospectus as permitted by the
SEC. A related registration statement on Form F-6 has also been filed with the
SEC to register the ADSs as represented by the ADRs. For further information
with respect to our company and the ADSs offered by this prospectus, please
refer to these registration statements. Statements contained in this prospectus
as to the contents of any contract or other document referred to in this
prospectus are not necessarily complete, and where the contract or other
document is an exhibit to the registration statement, each such statement is
qualified in all respects by the provisions of the applicable exhibit, to which
reference is now made.

Upon completion of our global offering, we will be subject to the
information requirements of the Securities Exchange Act of 1934, as amended,
applicable to foreign private issuers. As a result, we will be required to file
reports, including annual reports on Form 20-F, reports on Form 6-K and other
information with the SEC. We also intend to submit to the SEC quarterly reports
on Form 6-K which will include unaudited quarterly financial information, for
the first three quarters of each fiscal year, in addition to our annual report
on Form 20-F which will include audited annual financial information. We intend
to file these reports within the same time periods that apply to the filing by
domestic issuers of quarterly reports on Form 10-Q and annual reports on Form
10-K. The SEC's rules generally require that domestic issuers file a quarterly
report on Form 10-Q within 45 days after the end of the first three fiscal
quarters and file an annual report on Form 10-K within 90 days after the end of
each fiscal year. These reports and other

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<PAGE> 95

information filed or to be filed by us can be inspected and copied at the public
reference facilities maintained by the SEC at:

<TABLE>
<S> <C>
- - Judiciary Plaza - Seven World Trade Center
450 Fifth Street, N.W. 13th Floor
Room 1024 New York, New York 10048
Washington, D.C. 20549
</TABLE>

- Northwestern Atrium Center
500 West Madison Street
Suite 1400
Chicago, Illinois 60661-2511

Copies of these materials can also be obtained from the Public Reference
Section of the SEC, 450 Fifth Street, N.W., Washington D.C. 20549, at prescribed
rates.

The SEC maintains a website at www.sec.gov that contains reports, proxy and
information statements, and other information regarding registrants that make
electronic filings with the SEC using its EDGAR system. As a foreign private
issuer, we are not required to use the EDGAR system, but currently intend to do
so in order to make our reports available over the Internet.

Upon approval of the ADSs for quotation on the Nasdaq National Market, our
periodic reports and other information may also be inspected at the offices of
the Nasdaq National Market, Reports Section, 1735 K Street, Washington, D.C.
20006.

As a foreign private issuer, we will be exempt from the rules under the
Exchange Act prescribing the furnishing and content of proxy statements, and our
executive officers, directors and principal shareholders will be exempt from the
reporting and short-swing profit recovery provisions contained in Section 16 of
the Exchange Act.

We will furnish the depositary referred to under "Description of American
Depositary Shares" with annual reports, which will include annual audited
consolidated financial statements prepared in accordance with U.S. GAAP, and
quarterly reports, which will include unaudited quarterly consolidated financial
information prepared in accordance with U.S. GAAP. The depositary has agreed
with us that, at our request, it will promptly mail these reports to all
registered holders of ADSs. We will also furnish to the depositary all notices
of shareholders' meetings and other reports and communications that are made
generally available to our shareholders. The depositary will arrange for the
mailing of these documents to record holders of ADSs. Please see "Description of
American Depositary Shares" for further details on the responsibilities of the
depositary.

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<PAGE> 96

CHARTERED SEMICONDUCTOR MANUFACTURING LTD
AND SUBSIDIARY

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report................................ F-2
Consolidated Balance Sheets................................. F-3
Consolidated Statements of Operations and Comprehensive
Income (Loss)............................................. F-4
Consolidated Statements of Shareholders' Equity............. F-5
Consolidated Statements of Cash Flows....................... F-6
Notes to the Financial Statements........................... F-8
</TABLE>

F-1
<PAGE> 97

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholders
Chartered Semiconductor Manufacturing Ltd:

We have audited the accompanying consolidated balance sheets of Chartered
Semiconductor Manufacturing Ltd and subsidiary as of December 31, 1997 and 1998
and June 30, 1998 and 1999, and the related consolidated statements of
operations and comprehensive income (loss), shareholders' equity and cash flows
for the years ended December 31, 1996, 1997 and 1998 and the six months ended
June 30, 1998 and 1999. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with Statements of Auditing Standards
issued by the Institute of Certified Public Accountants of Singapore ("ICPAS"),
which statements set forth standards which are substantially similar to
generally accepted auditing standards in the United States of America. 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 the
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Chartered Semiconductor Manufacturing Ltd and subsidiary as of December 31, 1997
and 1998, and June 30, 1998 and 1999, and the consolidated results of their
operations and their cash flows for the years ended December 31, 1996, 1997 and
1998 and the six months ended June 30, 1998 and 1999, in conformity with
generally accepted accounting principles in the United States of America.

/s/ KPMG
Singapore

August 12, 1999,
except as to Note 26,

which is as of October 14, 1999

F-2
<PAGE> 98

CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS

<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF JUNE 30,
----------------------- -----------------------
1997 1998 1998 1999
NOTE ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents........................... 3 $ 23,785 $ 99,619 $ 14,450 $ 47,548
Accounts receivable
Trade............................................. 4 104,635 71,285 77,674 86,274
Others............................................ 4 26,717 12,703 9,216 7,073
Amounts due from ST and ST affiliates............... 21 2,843 2,591 1,497 2,137
Amounts due from CSP and SMP........................ 666 6,663 3,852 10,441
Inventories......................................... 5 59,262 29,476 36,934 26,943
Prepaid expenses.................................... 895 895 1,324 2,468
---------- ---------- ---------- ----------
Total current assets...................... 218,803 223,232 144,947 182,884
Investment in CSP and SMP........................... 6 4,990 58,487 57,042 60,376
Other assets........................................ 25,250 50,905 32,154 41,505
Technology license agreements....................... 7 13,429 6,916 12,524 3,974
Property, plant and equipment, net.................. 9 1,016,496 981,970 1,081,840 941,108
---------- ---------- ---------- ----------
Total Assets.............................. $1,278,968 $1,321,510 $1,328,507 $1,229,847
========== ========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable
Trade............................................. $ 13,074 $ 8,530 $ 5,013 $ 5,656
Fixed asset purchases............................. 98,943 22,829 43,945 32,458
Current installments of obligations under capital
leases............................................ 10 4,078 4,329 4,201 4,914
Current installments of long-term debt.............. 11 9,213 49,046 9,280 86,391
Bank overdrafts..................................... 13 1,378 3,082 5,043 1,210
Accrued operating expenses.......................... 12 61,458 84,918 54,838 87,612
Amounts due to ST and ST affiliates................. 21 336,254 10,607 138,563 8,574
Income taxes payable................................ 301 662 520 793
Other current liabilities........................... 14 23,031 26,130 70,384 4,909
---------- ---------- ---------- ----------
Total current liabilities................. 547,730 210,133 331,787 232,517
Obligations under capital leases, excluding current
installments...................................... 10 17,745 13,414 15,609 10,698
Long-term debt, excluding current installments...... 11 273,008 419,545 366,891 364,903
Customer deposits................................... 14 121,254 47,087 47,087 42,805
Other liabilities................................... 15 8,425 30,085 8,203 22,585
---------- ---------- ---------- ----------
Total liabilities......................... 968,162 720,264 769,577 673,508
---------- ---------- ---------- ----------
Share capital
Ordinary shares of S$0.26 each.................... 17 143,384 221,433 190,996 221,636
Subscription receivable............................. (10,565) (12,341) (12,362) (12,731)
Additional paid-in capital.......................... 18 278,824 689,970 549,379 694,752
Unearned compensation............................... (1,821) -- (1,007) (982)
Accumulated other comprehensive income (loss)....... (43,902) (52,696) (52,696) (52,696)
Retained deficit.................................... 19 (55,114) (245,120) (115,380) (293,640)
---------- ---------- ---------- ----------
Total shareholders' equity................ 310,806 601,246 558,930 556,339
Commitments and contingencies....................... 22
---------- ---------- ---------- ----------
Total liabilities and shareholders'
equity.................................. $1,278,968 $1,321,510 $1,328,507 $1,229,847
========== ========== ========== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-3
<PAGE> 99

CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998,
AND SIX MONTHS ENDED JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
FOR THE YEAR ENDED DECEMBER 31, ENDED JUNE 30,
--------------------------------- ---------------------
1996 1997 1998 1998 1999
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net revenue...................................... $ 406,936 $ 379,761 $ 422,622 $ 232,771 $ 294,738
Cost of revenue.................................. (289,435) (368,521) (439,668) (224,105) (247,257)
--------- --------- --------- --------- ---------
Gross profit (loss).............................. 117,501 11,240 (17,046) 8,666 47,481
--------- --------- --------- --------- ---------
Operating Expenses:
Research and development....................... 13,018 26,553 43,419 20,642 22,955
Fab start-up costs............................. 13,132 10,908 1,455 1,455 --
Sales and marketing............................ 16,233 20,184 31,872 13,609 20,568
General and administrative..................... 32,615 30,144 37,389 15,089 22,701
Costs incurred on termination of development
program..................................... -- -- 31,776 -- 6,500
Stock-based compensation (note 23)............. 332 2,024 (2,780) (1,333) 3,289
--------- --------- --------- --------- ---------
Total operating expenses............... 75,330 89,813 143,131 49,462 76,013
--------- --------- --------- --------- ---------
Operating income (loss).......................... 42,171 (78,573) (160,177) (40,796) (28,532)
Equity in loss of CSP and SMP.................... -- (1,272) (20,434) (6,829) (17,988)
Other income..................................... 3,850 4,860 4,680 330 650
Interest income.................................. 973 179 1,690 811 1,207
Interest expense................................. (1,144) (12,782) (20,137) (10,100) (9,094)
Exchange gain (loss)............................. 1,963 (31,678) 5,237 (3,139) 5,065
--------- --------- --------- --------- ---------
Income (loss) before income taxes................ 47,813 (119,266) (189,141) (59,723) (48,692)
Income tax (expense) benefit..................... (337) (355) (865) (543) 172
--------- --------- --------- --------- ---------
Net income (loss)................................ $ 47,476 $(119,621) $(190,006) $ (60,266) $ (48,520)
========= ========= ========= ========= =========
Other comprehensive income (loss) -- foreign
currency translation........................... $ 4,622 $ (62,020) $ (8,794) $ (8,794) $ --
Comprehensive income (loss)...................... $ 52,098 $(181,641) $(198,800) $ (69,060) $ (48,520)
========= ========= ========= ========= =========
Net income (loss) per share and ADS:
Basic net income (loss) per share................ $ 0.10 $ (0.24) $ (0.24) $ (0.09) $ (0.05)
Diluted net income (loss) per share.............. $ 0.10 $ (0.24) $ (0.24) $ (0.09) $ (0.05)
Basic net income (loss) per ADS.................. $ 0.97 $ (2.44) $ (2.42) $ (0.88) $ (0.49)
Diluted net income (loss) per ADS................ $ 0.97 $ (2.44) $ (2.42) $ (0.88) $ (0.49)
Number of shares (in thousands) used in
computing:
- -- basic net income (loss) per share............. 488,296 490,407 784,541 685,871 985,816
- -- diluted net income (loss) per share........... 488,824 490,407 784,541 685,871 985,816
Number of ADS (in thousands) used in computing:
- -- basic net income (loss) per ADS............... 48,830 49,041 78,454 68,587 98,582
- -- diluted net income (loss) per ADS............. 48,882 49,041 78,454 68,587 98,582
</TABLE>

See accompanying notes to consolidated financial statements.

F-4
<PAGE> 100

CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998

AND SIX MONTHS ENDED JUNE 30, 1998 AND 1999

IN THOUSANDS

<TABLE>
<CAPTION>
ACCUMULATED
OTHER
COMPRE- TOTAL
SUBSCRIP- ADDITIONAL UNEARNED RETAINED HENSIVE SHARE-
ORDINARY SHARES TION PAID-IN COMPEN- EARNINGS INCOME HOLDERS'
NO. RECEIVABLE CAPITAL SATION (DEFICIT) (LOSS) EQUITY
-------------------- ---------- ---------- -------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1996... 471,998 $138,559 $ (5,873) $215,539 $(1,236) $ 17,124 $ 13,496 $ 377,609
Net income................... -- -- -- -- -- 47,476 -- 47,476
Other changes in unearned
compensation, net.......... -- -- -- (152) 152 -- -- --
Issuance of shares........... 30,353 4,624 (5,070) 59,644 -- -- -- 59,198
Amortization of stock
compensation............... -- -- -- -- 332 -- -- 332
Foreign currency
translation................ -- -- -- -- -- -- 4,622 4,622
--------- -------- -------- -------- ------- --------- -------- ---------
Balance at December 31,
1996....................... 502,351 143,183 (10,943) 275,031 (752) 64,600 18,118 489,237
Net loss..................... -- -- -- -- -- (119,621) -- (119,621)
Distribution................. -- -- -- -- -- (93) -- (93)
Payment of subscription
receivable................. -- -- 1,260 -- -- -- -- 1,260
Other changes in unearned
compensation, net.......... -- -- -- 3,093 (3,093) -- -- --
Issuance of shares........... 1,103 201 (882) 700 -- -- -- 19
Amortization of stock
compensation............... -- -- -- -- 2,024 -- -- 2,024
Foreign currency
translation................ -- -- -- -- -- -- (62,020) (62,020)
--------- -------- -------- -------- ------- --------- -------- ---------
Balance at December 31,
1997....................... 503,454 143,384 (10,565) 278,824 (1,821) (55,114) (43,902) 310,806
Net loss..................... -- -- -- -- -- (60,266) -- (60,266)
Payment of subscription
receivable................. -- -- 176 -- -- -- -- 176
Other changes in unearned
compensation, net.......... -- -- -- (2,147) 2,147 -- -- --
Issuance of shares........... 293,036 47,612 (1,973) 272,702 -- -- -- 318,341
Amortization of stock
compensation............... -- -- -- -- (1,333) -- -- (1,333)
Foreign currency
translation................ -- -- -- -- -- -- (8,794) (8,794)
--------- -------- -------- -------- ------- --------- -------- ---------
Balance at June 30, 1998..... 796,490 190,996 (12,362) 549,379 (1,007) (115,380) (52,696) 558,930
Net loss..................... -- -- -- -- -- (129,740) -- (129,740)
Call on partly paid shares... -- -- 1,017 -- -- -- -- 1,017
Other changes in unearned
compensation, net.......... -- -- -- (2,454) 2,454 -- -- --
Issuance of shares........... 203,617 30,437 (996) 143,045 -- -- -- 172,486
Amortization of stock
compensation............... -- -- -- -- (1,447) -- -- (1,447)
--------- -------- -------- -------- ------- --------- -------- ---------
Balance at December 31,
1998....................... 1,000,107 221,433 (12,341) 689,970 -- (245,120) (52,696) 601,246
Net loss..................... -- -- -- -- -- (48,520) -- (48,520)
Call on partly paid shares... -- -- 286 -- -- -- -- 286
Other changes in unearned
compensation, net.......... -- -- -- 4,271 (4,271) -- -- --
Issuance of shares........... 1,318 203 (676) 511 -- -- -- 38
Amortization of stock
compensation............... -- -- -- -- 3,289 -- -- 3,289
--------- -------- -------- -------- ------- --------- -------- ---------
Balance at June 30, 1999..... 1,001,425 $221,636 $(12,731) $694,752 $ (982) $(293,640) $(52,696) $ 556,339
========= ======== ======== ======== ======= ========= ======== =========
</TABLE>

See accompanying notes to consolidated financial statements.

F-5
<PAGE> 101

CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
AND SIX MONTHS ENDED JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
FOR THE YEAR ENDED DECEMBER 31, ENDED JUNE 30,
--------------------------------- ---------------------
1996 1997 1998 1998 1999
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income (loss).................. $ 47,476 $(119,621) $(190,006) $ (60,266) $ (48,520)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Equity in loss of CSP and SMP.... -- 1,272 20,434 6,829 17,988
Depreciation and amortization.... 115,545 173,762 226,903 103,577 142,617
Foreign exchange (gain) loss on
financing activities.......... (1,822) 41,734 (4,843) (1,267) (4,314)
(Gain) loss on disposal of
property, plant and
equipment..................... (219) 623 7,342 1,404 3,426
Costs on termination of
development program........... -- -- 31,776 -- --
Stock-based compensation......... 332 2,024 (2,780) (1,333) 3,289
Others........................... (1,434) (491) 475 (198) (1,120)
Change in operating working
capital:
Accounts receivable.............. 17,492 (106,390) 36,545 37,683 (14,216)
Amounts due from ST and ST
affiliates.................... (13,343) 3,166 257 1,346 454
Amounts due from CSP and SMP..... -- (666) (6,663) (2,977) (3,778)
Inventories...................... (17,740) (22,664) 28,069 22,763 2,533
Prepaid expenses................. 438 129 164 (421) (1,573)
Trade accounts payable........... (3,294) 7,189 (4,408) (8,157) (2,874)
Accrued operating expenses....... (9,823) 23,091 27,550 (9,642) 2,694
Other current liabilities........ (35,091) (1,532) (17,967) 1,118 1,398
Amounts due to ST and ST
affiliates.................... (1,309) 4,346 3,696 6,994 (3,910)
Advances to suppliers.............. (10,255) (18,875) 61 961 1,623
Income taxes payable............... (3,126) 116 325 219 131
--------- --------- --------- --------- ---------
Net cash (used in) provided by
operating activities............. 83,827 (12,787) 156,930 98,633 95,848
--------- --------- --------- --------- ---------
</TABLE>

F-6
<PAGE> 102

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
FOR THE YEAR ENDED DECEMBER 31, ENDED JUNE 30,
--------------------------------- ---------------------
1996 1997 1998 1998 1999
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM INVESTING
ACTIVITIES
Proceeds from sale of property,
plant and equipment.............. $ 5 $ 256 $ 2,246 $ 297 $ 3,513
Purchase of property, plant and
equipment........................ (481,230) (410,551) (279,368) (215,725) (89,802)
Technology license fees paid....... (5,579) (5,878) (7,790) (2,500) (8,500)
Investment in CSP and SMP.......... -- (6,108) (73,678) (58,628) (19,877)
--------- --------- --------- --------- ---------
Net cash used in investing
activities....................... (486,804) (422,281) (358,590) (276,556) (114,666)
--------- --------- --------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES
Bank overdrafts.................... (3,593) (1,502) 1,643 3,593 (1,872)
Customer deposits, net............. 53,927 79,755 (60,851) (27,931) (27,001)
Loans from ST and ST affiliates
-- borrowings.................... 523,533 824,288 410,051 242,097 5,195
-- repayments.................... (315,193) (681,235) (738,400) (446,782) (3,318)
Long term debt
-- borrowings.................... 73,758 258,245 193,900 96,513 --
-- repayments.................... (19,848) (25,615) (8,993) (4,640) (4,664)
Issuance of shares by the
Company.......................... 59,198 1,279 492,909 318,517 324
Capital lease payments............. (3,605) (3,407) (5,317) (2,012) (2,131)
--------- --------- --------- --------- ---------
Net cash provided by (used in)
financing activities............. 368,177 451,808 284,942 179,355 (33,467)
--------- --------- --------- --------- ---------
Net (decrease) increase in cash and
cash equivalents................. (34,800) 16,740 83,282 1,432 (52,285)
Effect of exchange rate changes on
cash and cash equivalents........ (61) (19) (7,448) (10,767) 214
Cash at the beginning of the
period........................... 41,925 7,064 23,785 23,785 99,619
--------- --------- --------- --------- ---------
Cash at the end of the period...... $ 7,064 $ 23,785 $ 99,619 $ 14,450 $ 47,548
========= ========= ========= ========= =========
Supplemental Cash Flow Information:
Interest paid (net of amounts
capitalized)..................... $ 1,360 $ 9,597 $ 25,451 $ 3,471 $ 12,126
Income taxes paid.................. 3,463 206 285 304 880
</TABLE>

See accompanying notes to consolidated financial statements.

F-7
<PAGE> 103

CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY

NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)

1. BUSINESS AND ORGANIZATION

Chartered Semiconductor Manufacturing Ltd (the "Company") is an independent
semiconductor foundry providing wafer fabrication services and technologies. The
Company operates in Singapore and has service operations in nine countries in
North America, Europe and Asia. Its principal markets are the United States of
America, Taiwan, Europe and Japan.

The Company is a subsidiary of Singapore Technologies Pte Ltd ("ST"), which
is itself ultimately wholly-owned by Temasek Holdings (Private) Limited
("Temasek"). Temasek is the holding company through which the corporate
investments of the government of Singapore are held.

In March 1997, the Company, Hewlett-Packard Europe B.V. and EDB Investments
Pte Ltd formed Chartered Silicon Partners Pte Ltd ("CSP"), in which the Company
has a non-controlling 51% equity interest. In January 1998, the Company and
Lucent Technologies Microelectronics Pte Ltd formed Silicon Manufacturing
Partners Pte Ltd ("SMP"), in which the Company has a 49% equity interest. The
Company accounts for CSP and SMP on an equity investment basis. See Note 2(d).

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) ACCOUNTING PRINCIPLES

The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles in the United States ("US GAAP")
consistently applied for all periods.

(b) USE OF ESTIMATES

The preparation of the consolidated financial statements in accordance with
US GAAP 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
revenues and expenses during the reporting period. Actual results could differ
from these estimates.

The consolidated financial statements reflect the consolidated accounts of
Chartered Semiconductor Manufacturing Ltd and its majority owned and controlled
affiliates. Intercompany accounts and transactions have been eliminated in
consolidation.

(d) INVESTMENT IN CSP AND SMP

The equity accounting method is applied for the investment in CSP and SMP.
The Company's share of the results of their operations is included in the
consolidated statement of operations. The Company's equity interest in these
equity affiliates, including its share of accumulated post-formation results, is
included as investment in CSP and SMP in the consolidated balance sheet.

(e) FUNCTIONAL CURRENCY

Through June 30, 1998, the Company's functional currency was Singapore
dollars. Effective July 1, 1998, the Company changed its functional currency to
US dollars.

The Singapore dollar was the functional currency of the Company because,
historically, the Singapore dollar was the currency of primary economic
environment in which the operations of the Company were conducted. However,
significant changes in economic facts necessitated a change in the Company's
functional currency from the Singapore dollar to the US dollar. The Company's
business has changed in

F-8
<PAGE> 104
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)

that a more significant portion of its revenue is derived from companies based
outside of Singapore, principally the United States. There continues to be less
financial dependence of the Company on its parent. There are ongoing changes in
sources of financing from Singapore dollars to US dollars. With more of the
Company's transactions and cash flows denominated in US dollars, the functional
currency changed effective July 1, 1998 from the Singapore dollar to the US
dollar.

Concurrently with the change in functional currency, the Company converted
the majority of its debt financing to US dollars by entering into forward
exchange contracts which had the effect of redenominating the non-US dollar
loans to US dollar loans.

The change in functional currency was recognized through the translation of
Singapore dollar amounts of the Company's non-monetary assets, principally
property, plant and equipment at June 30, 1998, to US dollars on July 1, 1998
with those US dollar amounts becoming the accounting basis for those assets at
July 1, 1998 and for subsequent periods. The $52,696 cumulative translation
adjustment at July 1, 1998 in shareholders' equity prior to the change remains
as a separate component of accumulated comprehensive income.

(f) FOREIGN CURRENCY TRANSACTIONS

Assets and liabilities which are denominated in foreign currencies are
converted into the functional currency at the rates of exchange prevailing at
the balance sheet date. Income and expenses are converted at the rates of
exchange at transaction dates prevailing during the year. Foreign currency
transaction gains or losses are included in results of operations, except as
described below with respect to forward foreign exchange contracts utilized as a
hedge against firm commitments.

(g) REVENUE RECOGNITION

Revenue represents the invoiced value of goods and services supplied,
excluding goods and services tax, less allowance for returns. Revenue is
recognized upon shipment of goods.

(h) GRANTS

Asset-related government grants consist of grants for the purchase of
equipment used for research and development activities. Asset-related grants are
presented in the consolidated balance sheet as deferred grants and are credited
to other income on the straight-line basis over the estimated useful lives of
the relevant assets.

Income-related government grants are subsidies of training and research and
development expenses. Income-related grants are credited to other income when it
becomes probable that expenditures already incurred will constitute qualifying
expenditures for purposes of reimbursement under the grants, which is typically
substantially concurrent with the expenditures. See Note 15.

(i) FAB START-UP COSTS

The Company expenses costs related to start-up activities, including fab
start-up costs, as they are incurred.

(j) RESEARCH AND DEVELOPMENT COSTS

Research and development costs, which are expensed as incurred, were
$13,018, $26,553 and $43,419 in 1996, 1997 and 1998, respectively, and $20,642
and $22,955 in the six months ended June 30, 1998 and 1999, respectively.

F-9
<PAGE> 105
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)

(k) STOCK-BASED EMPLOYEE COMPENSATION

The Company measures stock-based employee compensation cost for financial
statement purposes in accordance with Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" ("APB 25"), and its related
interpretations and includes pro forma information in Note 23 in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for
Stock-Based Compensation". Compensation cost for stock options granted to
employees in connection with the Company's fixed option plan is measured as the
excess of fair market value of the stock subject to the option at the grant date
over the exercise price of the option. Compensation cost for options granted to
employees under the Company's variable option plans is recorded over the
requisite vesting periods based upon the current market value of the Company's
stock at the end of each period.

(l) INCOME TAXES

Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the carrying amounts of
existing assets and liabilities in the financial statements and their respective
tax bases, and operating loss and tax credit carryforwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date. A valuation allowance is recorded for loss carryforwards and
other deferred tax assets where it is more likely than not that such loss
carryforwards and deferred tax assets will not be realized.

(m) DERIVATIVES

Gains and losses on hedges of existing assets or liabilities are included
in the carrying amounts of those assets or liabilities and are ultimately
recognized in income as part of those carrying amounts. Gains and losses related
to qualifying hedges of firm commitments are deferred and are recognized in
income or as adjustments of carrying amounts when the hedged transaction occurs.
Any contracts held or issued that do not meet the requirements of a hedge are
recorded at fair value in the balance sheet and any changes in that fair value
recognized in income.

(n) NET INCOME (LOSS) PER SHARE

The computation of basic net income (loss) and diluted net income (loss)
per share are presented in conformity with Statement of Financial Accounting
Standards (SFAS) No. 128, "Earnings Per Share" for all periods presented.

F-10
<PAGE> 106
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)

The following is a reconciliation of the numerators and denominators of the
basic and diluted net income (loss) per share computations prepared in
accordance with SFAS No. 128.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------------------------------
1996 1997 1998
------------------------------------ ---------------------------- ----------------------------
PER PER PER
SHARE INCOME SHARE INCOME SHARE
INCOME SHARES AMOUNT (LOSS) SHARES AMOUNT (LOSS) SHARES AMOUNT
----------- ------------- ------ --------- ------- ------ --------- ------- ------
(NUMERATOR) (DENOMINATOR)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Basic net income (loss) per
share..................... $47,476 488,296 $0.10 $(119,621) 490,407 $(0.24) $(190,006) 784,541 $(0.24)
======= ===== ========= ====== ========= ======
Effect of dilutive
securities
Stock options and shares
subject to repurchase..... 528 -- --
------- ------- -------
Diluted net income (loss)
per share................. $47,476 488,824 $0.10 $(119,621) 490,407 $(0.24) $(190,006) 784,541 $(0.24)
======= ======= ===== ========= ======= ====== ========= ======= ======
</TABLE>

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
------------------------------------------------------------------
1998 1999
------------------------------------ ---------------------------
PER PER
INCOME SHARE INCOME SHARE
(LOSS) SHARES AMOUNT (LOSS) SHARES AMOUNT
----------- ------------- ------ -------- ------- ------
(NUMERATOR) (DENOMINATOR)
<S> <C> <C> <C> <C> <C> <C>
Basic net income (loss) per share....................... $(60,266) 685,871 $(0.09) $(48,520) 985,816 $(0.05)
======== ====== ======== ======
Effect of dilutive securities
Stock options and shares subject to repurchase.......... -- --
------- -------
Diluted net income (loss) per share..................... $(60,266) 685,871 $(0.09) $(48,520) 985,816 $(0.05)
======== ======= ====== ======== ======= ======
</TABLE>

For all the periods subsequent to 1996, the Company has excluded all
outstanding stock options and shares subject to repurchase by ST from the
calculation of diluted net income (loss) per share under SFAS No. 128 because
all such securities are anti-dilutive for those periods. The total number of
shares excluded from the calculations of diluted net income (loss) per share
were 13,156,240 and 27,015,600 for the years ended December 31, 1997 and 1998,
respectively, and 14,586,920 and 16,201,840 for the six months ended June 30,
1998 and 1999, respectively. All amounts have been restated to reflect the
impact of the capital restructuring described in Note 26.

(O) COMPREHENSIVE INCOME

On January 1, 1998, the Company applied SFAS No. 130, "Reporting
Comprehensive Income" with respect to reporting and presentation of
comprehensive income and its components in a full set of financial statements.
Comprehensive income (loss) consists of net income (loss) and foreign currency
translation adjustments and is presented in the consolidated statements of
operations and comprehensive income (loss).

(P) CASH AND CASH EQUIVALENTS

Cash equivalents consist of highly liquid investments that are readily
convertible into cash and have original maturities of three months or less.

F-11
<PAGE> 107
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)

(q) INVENTORIES

Inventories are stated at the lower of cost, determined on the weighted
average basis, or market (net realizable value.

(r) TECHNOLOGY LICENSE AGREEMENTS

The Company has entered into technology license agreements requiring the
payment of licensing fees and royalties. The agreed fees and royalties are
recorded as a liability and an intangible asset. The intangible assets are
amortized to results of operations on the straight-line basis over their
estimated useful lives. See Note 7.

(s) PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost less accumulated
depreciation. Depreciation is calculated on the straight-line method over the
following periods:

<TABLE>
<S> <C> <C>
Buildings.............................. - 20 years (or, if shorter, the remaining period of the
lease of the land on which the buildings are erected)
Mechanical and electrical - 10 years
installations........................
Equipment and machinery................ - 5 years
Office and computer equipment.......... - 2 to 5 years
</TABLE>

The Company capitalizes interest with respect to major assets under
installation and construction until such assets are ready for use. See Note 9
for details of capitalized interest. Repairs and replacements of a routine
nature are expensed, while those that extend the life of an asset are
capitalized.

Plant and equipment under capital leases are stated at the present value of
minimum lease payments. Plant and equipment held under capital leases and
leasehold improvements are amortized straight-line over the shorter of the lease
term or estimated useful life of the asset.

(t) IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF

The Company reviews long-lived assets and certain identifiable intangibles
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset. If such assets
are considered to be impaired, the impairment to be recognised is measured by
the amount by which the carrying amount of the assets exceeds the fair value of
the assets. Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell.

(u) OPERATING LEASES

Rental payments under operating leases are expensed on a straight-line
basis over the periods of the respective leases.

(v) CONCENTRATION OF RISK

The Company is an independent foundry that fabricates integrated circuits
on silicon wafers for customers in the semiconductor industry. The five largest
customers of the Company accounted for

F-12
<PAGE> 108
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)

61%, 48% and 43% of net revenue in the years ended December 31, 1996, 1997 and
1998, respectively and 43% and 45% of net revenue in the six months ended June
30, 1998 and 1999, respectively (see Note 20). The Company believes that the
concentration of its credit risk in trade receivables is mitigated substantially
by its credit evaluation process, credit policies and credit control and
collection procedures.

In addition, certain of the Company's treasury management activities are
undertaken by ST or carried out together with other companies in the ST Group.
The Company participates in a pooled cash management arrangement and places
short-term advances with other companies in the ST Group. The Company also
contracts substantially all of its forward purchases of foreign exchange with
ST, where required for the purpose of hedging future foreign currency
commitments. See Notes 3 and 22(f).

(w) SEGMENT DISCLOSURES

Disclosures on business segments are made under SFAS No. 131, "Disclosures
About Segments of an Enterprise and Related Information," which meets the
requirements of SAS 23 "Reporting Financial Information by Segment". Under SFAS
No. 131, a public company reports descriptive information about its reportable
operating segments. Operating segments, as defined, are components of an
enterprise about which separate financial information is available that is
evaluated regularly by the chief operating decision maker in deciding how to
allocate resources and in assessing performance. The Company operates in a
single reportable segment.

3. CASH AND CASH EQUIVALENTS

Cash and cash equivalents at December 31, 1997 and 1998 and June 30, 1998
and 1999 consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------ ------------------
1997 1998 1998 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Cash at banks and in hand........................... $14,362 $ 6,747 $ 6,247 $13,015
Cash equivalents -- ST pooled cash.................. 9,423 92,872 8,203 34,533
------- ------- ------- -------
$23,785 $99,619 $14,450 $47,548
======= ======= ======= =======
</TABLE>

Certain of the Company's treasury management activities are undertaken by
ST or its affiliates. The Company participates in a pooled cash management
arrangement under which the Company may place surplus cash with ST as short-term
advances of less than three months.

4. ACCOUNTS RECEIVABLE

Trade accounts receivable at December 31, 1997 and 1998 and June 30, 1998
and 1999 consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------- ------------------
1997 1998 1998 1999
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Trade receivables.................................. $108,592 $76,264 $81,555 $95,718
Allowance for doubtful accounts.................... (3,957) (4,979) (3,881) (9,444)
-------- ------- ------- -------
$104,635 $71,285 $77,674 $86,274
======== ======= ======= =======
</TABLE>

F-13
<PAGE> 109
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)

Movements in the allowance for doubtful accounts are as follows:

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
FOR THE YEAR ENDED DECEMBER 31, ENDED JUNE 30,
-------------------------------- -------------------
1996 1997 1998 1998 1999
------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Beginning................................ $ -- $ 7,175 $3,957 $3,957 $4,979
Utilized in period....................... (15) -- -- -- --
Charge (credit) for the period........... 7,493 (2,058) 993 (105) 4,465
Translation adjustment................... (303) (1,160) 29 29 --
------ ------- ------ ------ ------
Ending................................... $7,175 $ 3,957 $4,979 $3,881 $9,444
====== ======= ====== ====== ======
</TABLE>

Other receivables at December 31, 1997 and 1998 and June 30, 1998 and 1999
consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------ ----------------
1997 1998 1998 1999
------- ------- ------ ------
<S> <C> <C> <C> <C>
Advances to suppliers................................. $ 7,901 $ 4,944 $ 280 $ 87
Loans to employees.................................... 1,050 1,097 1,003 1,686
Deposits.............................................. 1,665 466 368 530
Receivable from research partners..................... 12,855 3,333 2,304 --
Others................................................ 3,246 2,863 5,261 4,770
------- ------- ------ ------
$26,717 $12,703 $9,216 $7,073
======= ======= ====== ======
</TABLE>

5. INVENTORIES

Inventories at December 31, 1997 and 1998 and June 30, 1998 and 1999
consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------ ------------------
1997 1998 1998 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Raw materials....................................... $19,737 $ 6,279 $17,726 $ 1,899
Work in process..................................... 24,271 17,206 8,630 18,787
Consumable supplies and spares...................... 15,712 10,184 12,744 6,597
------- ------- ------- -------
59,720 33,669 39,100 27,283
Allowance for inventory obsolescence................ (458) (4,193) (2,166) (340)
------- ------- ------- -------
$59,262 $29,476 $36,934 $26,943
======= ======= ======= =======
</TABLE>

F-14
<PAGE> 110
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)

Movements in the allowance for inventory obsolescence are as follows:

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
FOR THE YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------- -------------------
1996 1997 1998 1998 1999
-------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Beginning.................................. $ 20 $ 654 $ 458 $ 458 $ 4,193
Utilized in period......................... (2,751) (1,467) -- -- (3,859)
Charge for the period...................... 3,380 1,114 3,744 1,717 6
Translation adjustment..................... 5 157 (9) (9) --
------- ------- ------ ------ -------
Ending..................................... $ 654 $ 458 $4,193 $2,166 $ 340
======= ======= ====== ====== =======
</TABLE>

6. INVESTMENT IN CSP AND SMP

The investment in CSP and SMP at December 31, 1997 and 1998 and June 30,
1998 and 1999 consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------- -------------------
1997 1998 1998 1999
------- -------- ------- --------
<S> <C> <C> <C> <C>
Cost.............................................. $ 6,108 $ 79,786 $64,736 $ 99,663
Share of retained post-formation loss............. (1,272) (21,706) (8,101) (39,694)
Translation adjustments........................... 154 407 407 407
------- -------- ------- --------
$ 4,990 $ 58,487 $57,042 $ 60,376
======= ======== ======= ========
</TABLE>

CSP and SMP are semiconductor foundries providing wafer fabrication
services and technologies. The Company accounts for its 51% investment in CSP
and its 49% investment in SMP using the equity method. Because the minority
owners of CSP have certain approval or veto rights which allow them to
participate in management, CSP is not consolidated. Under the terms of the
shareholders agreements, the Company is committed to making an equity investment
in CSP of up to $215,429, of which $40,600 has been invested, and in SMP of up
to $122,200, of which $59,063 has been invested.

Under the shareholders' agreement with the majority shareholder of SMP, in
arriving at the share of net income attributable to the Company, the Company is
entitled to the margins from sales to customers directed to SMP by the Company,
after deducting 49% share of the overhead costs of SMP. Accordingly, SMP's net
results are not expected to be shared in the same ratio as the equity holding.
The Company accounts for its due share of SMP's net results in accordance with
the terms in the foregoing agreement.

CSP and SMP commenced recording of sales in the quarter ended June 30, 1999
which amounted to $17,894 and $3,512, respectively in that quarter.

F-15
<PAGE> 111
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)

Shown below is aggregated summarized financial information for CSP and SMP:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------- ---------------------
1997 1998 1998 1999
------- -------- -------- ---------
<S> <C> <C> <C> <C>
Current assets.................................. $ 596 $ 21,151 $ 56,082 $ 22,680
Technology license agreements................... -- -- -- 9,167
Property, plant and equipment................... 12,992 240,574 169,804 329,919
Short-term debt................................. -- (75,460) (65,925) (122,475)
Other current liabilities....................... (3,804) (38,642) (46,268) (42,339)
Long-term debt.................................. -- (31,000) -- (76,000)
Shareholders' equity............................ 9,784 116,623 113,693 120,952
</TABLE>

<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
----------------------- -------------------
1996 1997 1998 1998 1999
---- ------ ------- -------- --------
<S> <C> <C> <C> <C> <C>
Net revenue...................................... $-- $ -- $ -- $ -- $21,406
Gross loss....................................... -- -- -- -- 11,366
Operating loss................................... -- 2,571 42,430 12,719 34,703
Net loss......................................... -- 2,494 41,256 13,788 36,234
</TABLE>

7. TECHNOLOGY LICENSE AGREEMENTS

Technology license agreements at December 31, 1997 and 1998 and June 30,
1998 and 1999 consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
-------------------- --------------------
1997 1998 1998 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Technology licenses, at cost.................... $ 31,660 $ 32,284 $ 34,412 $ 38,784
Accumulated amortization........................ (18,231) (25,368) (21,888) (34,810)
-------- -------- -------- --------
$ 13,429 $ 6,916 $ 12,524 $ 3,974
======== ======== ======== ========
</TABLE>

Future payments under the agreements are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
-------------------- --------------------
1997 1998 1998 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Unconditional fixed obligations payable......... $ 36,750 $ 39,250 $ 39,250 $ 45,750
Total payments to date.......................... (22,980) (30,770) (25,480) (39,270)
-------- -------- -------- --------
13,770 8,480 13,770 6,480
-------- -------- -------- --------
Current installments (see note 14).............. 6,570 1,280 6,570 1,380
Non-current installments (see note 15).......... 7,200 7,200 7,200 5,100
-------- -------- -------- --------
$ 13,770 $ 8,480 $ 13,770 $ 6,480
======== ======== ======== ========
</TABLE>

8. DEVELOPMENT PROGRAM TERMINATION COSTS

During 1998, the Company discontinued its technology transfer and licensing
arrangement entered into for a development program which the Company decided to
terminate. In connection with the discontinuation of this development program,
certain equipment previously purchased and yet to be placed

F-16
<PAGE> 112
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)

into production was identified by management in 1998 as redundant and to be
disposed of in the near term. The Company recorded a non-cash impairment loss of
$30,938 to adjust the carrying value of such equipment to $5,961, the estimated
fair value of such equipment less selling costs, and wrote off all unamortized
technology license costs of $838. The impaired equipment was removed from
service for all purposes at the time the impairment charge was recognized. The
Company is in the process of evaluating bids to purchase such equipment and
expects to sell it before the end of 1999. Additionally, the Company recorded a
$6,500 charge for a final cash settlement amount in 1999 for the termination of
the licensing arrangement.

9. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment at December 31, 1997 and 1998 and June 30,
1998 and 1999 consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------------ ------------------------
1997 1998 1998 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
COST
Buildings................................. $ 93,782 $ 147,685 $ 146,671 $ 149,371
Mechanical and electrical installations... 198,641 268,606 260,008 266,233
Equipment and machinery................... 801,897 1,048,744 989,293 1,063,989
Office and computer equipment............. 59,336 63,112 64,072 64,322
Assets under installation and
construction............................ 215,738 11,555 70,897 75,011
---------- ---------- ---------- ----------
Total cost........................... 1,369,394 1,539,702 1,530,941 1,618,926
---------- ---------- ---------- ----------
ACCUMULATED DEPRECIATION
Buildings................................. 9,681 16,153 12,818 19,469
Mechanical and electrical installations... 41,273 70,502 54,627 81,374
Equipment and machinery................... 282,693 441,815 356,796 543,712
Office and computer equipment............. 19,251 29,262 24,860 33,263
---------- ---------- ---------- ----------
Total accumulated depreciation....... 352,898 557,732 449,101 677,818
---------- ---------- ---------- ----------
Property, plant and equipment (net)....... $1,016,496 $ 981,970 $1,081,840 $ 941,108
========== ========== ========== ==========
</TABLE>

Depreciation charged to results of operations amounted to $166,844 and
$219,900 for 1997 and 1998, and $100,054 and $133,174 for the six months ended
June 30, 1998 and 1999, respectively. Buildings consists of wafer plants,
including administrative offices, built on land licensed to ST and Technology
Parks Pte Ltd, and sub-leased to the Company. See Note 21.

Included in property, plant and equipment are assets acquired under capital
lease obligations with a cost and related accumulated depreciation of
approximately $25,300 and $11,900, respectively, at December 31, 1997, $24,000
and $16,000, respectively, at December 31, 1998, $25,600 and $14,600,
respectively, at June 30, 1998 and $24,000 and $18,500, respectively, at June
30, 1999.

Capitalized interest relating to property, plant and equipment amounted to
$6,300, $10,500 and $5,970 in the years ended December 31, 1996, 1997 and 1998,
respectively and $4,700 and $526 in the six months ended June 30, 1998 and 1999,
respectively.

F-17
<PAGE> 113
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)

10. CAPITAL LEASES

Future minimum lease payments under the US dollar denominated capital
leases for equipment and machinery as of December 31, 1998 and June 30, 1999 are
as follows:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------ ------------------
1997 1998 1998 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Payable in year ending December 31,
1998.............................................. $ 5,338 $ -- $ 2,669 $ --
1999.............................................. 5,363 5,363 5,363 2,694
2000.............................................. 6,387 6,387 6,387 6,387
2001.............................................. 8,106 8,106 8,106 8,106
------- ------- ------- -------
Total minimum lease payments........................ 25,194 19,856 22,525 17,187
Amounts representing interest at rates ranging from
5.90% to 6.06% per annum.......................... (3,371) (2,113) (2,715) (1,575)
------- ------- ------- -------
Present value of minimum lease payments............. 21,823 17,743 19,810 15,612
Less current installments of capital lease
obligations....................................... (4,078) (4,329) (4,201) (4,914)
------- ------- ------- -------
Obligations under capital leases, excluding current
installments...................................... $17,745 $13,414 $15,609 $10,698
======= ======= ======= =======
</TABLE>

The minimum lease payments are guaranteed by ST.

11. LONG-TERM DEBT

Long-term debt at December 31, 1997 and 1998 and June 30, 1998 and 1999
consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
-------------------- --------------------
1997 1998 1998 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Singapore dollar loans at fixed rates of 4% to
4.25%......................................... $222,341 $408,277 $315,850 $392,626
Singapore dollar loans at floating rates........ 59,880 60,314 60,321 58,668
-------- -------- -------- --------
282,221 468,591 376,171 451,294
Less current installments....................... (9,213) (49,046) (9,280) (86,391)
-------- -------- -------- --------
Long-term debt, excluding current
installments.................................. $273,008 $419,545 $366,891 $364,903
======== ======== ======== ========
</TABLE>

All long-term debts are unsecured.

The fixed rate Singapore dollar loans are guaranteed by ST and contain
certain covenants which restrict the ability of the Company to pay dividends
without prior approval from the lender. The Company is not separately charged
for the guarantees by ST. The loans are repayable in semi-annual installments
and mature between 2002 and 2005.

The floating rate Singapore dollar loans comprise two loans of equal
amounts. Interest is charged at 2% above the lending bank's first tier savings
rate in respect of one loan (3.50% as of December 31, 1998; 3.13% as of June 30,
1999) and 1% above the arithmetic mean of Singapore inter-bank rates for
deposits quoted by specified banks to the lender (6.44% as of December 31, 1998;
3.25% as of June 30, 1999), respectively. The loans are repayable in June 2002
and February 2002 respectively. See note 22(f).

F-18
<PAGE> 114
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)

Annual maturities of long-term loans as of December 31, 1998 and June 30,
1999 are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1998 1999
------------ --------
<S> <C> <C>
Payable in year ending December 31, 1999.................... $ 49,046 $ 43,195
2000...................................................... 88,814 86,391
2001...................................................... 88,814 86,391
2002...................................................... 149,127 145,059
2003...................................................... 37,116 36,104
2004...................................................... 27,837 27,077
Thereafter................................................ 27,837 27,077
-------- --------
$468,591 $451,294
======== ========
</TABLE>

12. ACCRUED OPERATING EXPENSES

Accrued operating expenses at December 31, 1997 and 1998 and June 30, 1998
and 1999 consist of the following:

<TABLE>
<CAPTION>
1997 1998 1998 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Accrual for employee bonuses and related expenses... $19,680 $14,732 $14,386 $22,606
Accrual for vacation liability...................... 1,942 2,237 2,313 2,409
Accrual for technology costs (see Note 22(g))....... 5,847 7,853 6,920 9,819
Unbilled raw materials.............................. 27,458 52,113 17,985 39,099
Accrual for interest costs.......................... 3,891 5,971 4,822 5,789
Others.............................................. 2,640 2,012 8,412 7,890
------- ------- ------- -------
$61,458 $84,918 $54,838 $87,612
======= ======= ======= =======
</TABLE>

Movements in accrual for technology costs are as follows:

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
FOR THE YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------- ------------------
1996 1997 1998 1998 1999
--------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Beginning................................... $ 27,505 $4,261 $5,847 $5,847 $7,853
Charge (credit) for the period.............. (23,244) 1,586 2,006 1,073 1,966
-------- ------ ------ ------ ------
Ending...................................... $ 4,261 $5,847 $7,853 $6,920 $9,819
======== ====== ====== ====== ======
</TABLE>

13. ADDITIONAL CREDIT FACILITIES AND BANK OVERDRAFTS

As of June 30, 1999, the Company has unutilized banking facilities of
approximately $20,923 for short-term advances and bankers' guarantees and an
unutilized facility with ST of approximately $98,123.

The weighted average rate of interest payable on the bank overdrafts was
7.0% and 6.0% as of December 31, 1997 and 1998, and 8.0% and 6.0% as of June 30,
1998 and 1999, respectively.

F-19
<PAGE> 115
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)

14. OTHER CURRENT LIABILITIES

Other current liabilities at December 31, 1997 and 1998 and June 30, 1998
and 1999 consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------ -----------------
1997 1998 1998 1999
------- ------- ------- ------
<S> <C> <C> <C> <C>
Obligations payable under technology license
agreements......................................... $ 6,570 $ 1,280 $ 6,570 $1,380
Customer deposits.................................... 16,277 22,795 62,513 76
Others............................................... 184 2,055 1,301 3,453
------- ------- ------- ------
$23,031 $26,130 $70,384 $4,909
======= ======= ======= ======
</TABLE>

Deposits are received from customers to secure the allocation of agreed
levels of wafer capacity. These non-interest bearing deposits are refundable at
the end of the agreed period of such allocated capacity, typically about five
years.

15. OTHER LIABILITIES

Other liabilities at December 31, 1997 and 1998 and June 30, 1998 and 1999
consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
----------------- -----------------
1997 1998 1998 1999
------ ------- ------ -------
<S> <C> <C> <C> <C>
Obligations payable under technology license
agreements.......................................... $7,200 $ 7,200 $7,200 $ 5,100
Deferred grants (see below)........................... 1,225 2,873 1,003 1,753
Deferred gain on forward contracts.................... -- 20,012 -- 15,732
------ ------- ------ -------
$8,425 $30,085 $8,203 $22,585
====== ======= ====== =======
</TABLE>

The Company has obtained approval for funding of certain research and
development projects from the Economic Development Board of Singapore ("EDB"),
under the Research and Development Assistance Scheme ("RDAS") administered by
EDB. The program provides for funds to be disbursed to the Company over the
terms of the projects.

16. INCOME TAXES

The Company has been granted pioneer status under the Economic Expansion
Incentives (Relief from Income Tax) Act, Chapter 86 of Singapore (the "Act"),
for sub-micron technology manufacturing in four of its fabs, effective for ten
years from January 1, 1991, July 1, 1996 and January 1, 1998, and the earlier of
initial fab production date and December 31, 1999, respectively.

During the pioneer status period, the Singapore-resident income from
pioneer trade is exempt from income tax, subject to compliance with the
conditions stated in the certificate and the Act. Income derived from
non-pioneer trade during the pioneer period, however, is subject to income tax
at the prevailing enacted rate of tax.

In addition, two fabs have been granted post-pioneer status, which entitles
them to a concessionary tax rate of 10% for five years after the expiration of
their pioneer status in 2007 and 2008, respectively.

The tax-exempt profits arising from the pioneer trade can be distributed as
tax-exempt dividends which are not subject to Singapore income tax in the hands
of the holders of ordinary shares. Losses arising in the pioneer status period
are available for carryforward to be offset against profits arising in

F-20
<PAGE> 116
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)

subsequent periods, including profits arising after the pioneer status period.
Profits arising during the pioneer status period offset any accumulated pioneer
loss carryforward balance. Pioneer loss carryforwards are available
indefinitely, subject to more than 50% of the Company's equity staying with the
same shareholders from the incurrence of the tax loss to its utilization.
However, there is no consolidated group taxation offset allowed between the
fabs. As of June 30, 1999, the Company has pioneer loss carryforwards of
$176,762.

The income tax expense for the years ended December 31, 1996, 1997 and 1998
and the six months ended June 30, 1998 and 1999 represents income tax payable on
non-pioneer trade income, principally interest income.

A reconciliation of the expected tax expense at the statutory rate of tax
to the actual tax expense is as follows:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------ -------------------
1996 1997 1998 1998 1999
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Income taxes computed at Singapore
statutory tax rate of 26%............. $ 12,431 $(31,009) $(49,177) $(15,528) $(12,660)
Pioneer status relief................... (12,110) -- -- -- --
Pioneer losses not recognized as
deferred benefit...................... -- 30,534 45,893 14,551 9,804
Non-deductible investee losses.......... -- -- 3,561 1,268 3,150
Settlement of prior years' tax claims... -- -- -- -- (880)
All other items, net.................... 16 830 588 252 414
-------- -------- -------- -------- --------
Income tax expense (benefit)............ $ 337 $ 355 $ 865 $ 543 $ (172)
======== ======== ======== ======== ========
</TABLE>

The pioneer status relief had the effect of increasing net income per
ordinary share by $0.02 for the year ended December 31, 1996.

As of December 31, 1997 and 1998 and as of June 30, 1998 and 1999, there
are no material deferred tax assets or liabilities since profits during the
pioneer status period are not taxable and all temporary differences are expected
to reverse within the pioneer status period. Accordingly, no deferred tax assets
or liabilities have been recognized.

17. SHARE CAPITAL

The Company's authorized share capital at June 30, 1999 was comprised of
3,076,923,079 ordinary shares of Singapore dollars S$0.26 par value each.

Share capital at December 31, 1997 and 1998 and June 30, 1998 and 1999
consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
-------------------- --------------------
1997 1998 1998 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Issued share capital............................ $ 82,223 $160,272 $129,835 $160,475
Capital reduction (see below)................... 61,161 61,161 61,161 61,161
-------- -------- -------- --------
$143,384 $221,433 $190,996 $221,636
======== ======== ======== ========
</TABLE>

F-21
<PAGE> 117
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)

On November 6, 1992, the Company reorganized its paid-up share capital by
the extinguishment of accumulated losses of $61,161 against the paid-up share
capital in a capital reduction sanctioned by the High Court of Singapore. The
capital reduction does not qualify as a quasi-reorganization under US GAAP and
accordingly has not been reflected in the financial statements.

Under Singapore law, all increases in share capital (including rights
issues) require prior shareholders' approval. Singapore law does not provide for
the issue of shares of no par value and, except with court approval, prohibits
the issue of shares at a discount to par value.

As of 30 June, 1999, the Company had 16,350,063 outstanding partly-paid
shares issued at an average price of S$1.20 under employee stock plans. See note
23.

The partly paid ordinary shares were issued under the 1995 and 1997
Employees' Share Ownership Plans. The subscription price of these partly paid
ordinary shares range from Singapore dollars S$0.93 to S$1.38 per share. The
expiration dates of the installment payments for these partly paid ordinary
shares range from November 2002 to April 2009.

18. ADDITIONAL PAID-IN CAPITAL

Additional paid-in capital as of December 31, 1997 and 1998 and June 30,
1998 and 1999 represents principally the excess of proceeds received from issues
of share capital (net of the costs of issue) over the par value of shares
issued, which under Singapore law must be credited to the share premium account.
The share premium may only be applied in paying up unissued shares to be issued
to shareholders, paying up in whole or in part the balance unpaid on shares in
issue, in writing off preliminary expenses and share and debenture issue
expenses and by provision for premiums payable on the redemption of redeemable
preferred shares. The Company has not utilized any amounts in the share premium
account for the above mentioned purposes.

19. RETAINED EARNINGS

Singapore law allows dividends to be paid only out of profits of the
Company, determined in accordance with Singapore GAAP. Shareholders of ordinary
shares are not liable for Singapore income tax on dividends paid by the Company
out of its tax exempt profits from pioneer activities.

20. BUSINESS SEGMENT DATA AND MAJOR CUSTOMERS

The Company operates in a single reportable segment, providing wafer
foundry services. All of the Company's products are manufactured and delivered
in Singapore.

The following table presents revenues by country of domicile of customer:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------- --------------------
1996 1997 1998 1998 1999
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
USA............................... $303,532 $198,288 $265,398 $127,825 $230,080
Taiwan............................ 65,927 140,799 134,171 94,529 40,356
Singapore......................... 34,900 25,385 6,409 3,056 1,416
Others............................ 2,577 15,289 16,644 7,361 22,886
-------- -------- -------- -------- --------
$406,936 $379,761 $422,622 $232,771 $294,738
======== ======== ======== ======== ========
</TABLE>

F-22
<PAGE> 118
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)

Revenues from major customers, as a percentage of total revenue, were as
follows:

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------- --------------
1996 1997 1998 1998 1999
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Customer A......................................... 0.1% 1.0% 9.6% 3.3% 12.4%
Customer B......................................... 9.8 14.0 7.6 9.7 10.0
Customer C......................................... 25.7 10.4 1.0 1.4 0.7
Customer D......................................... 3.1 14.6 9.3 15.8 1.3
Others............................................. 61.3 60.0 72.5 69.8 75.6
----- ----- ----- ----- -----
100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== =====
</TABLE>

The top five customers of the Company accounted for 61%, 48% and 43% of the
Company's net revenue in the years ended December 31, 1996, 1997 and 1998,
respectively and 43% and 45% of the Company's net revenue in the six months
ended June 30, 1998 and 1999, respectively.

As a result of such concentration of the customer base, loss or
cancellation of business from, or significant changes in scheduled deliveries or
decreases in the prices of products sold to, any of these customers could
materially and adversely affect the Company's results of operations or financial
position.

21. RELATED PARTY TRANSACTIONS

(a) ST

ST, one of Singapore's largest industrial conglomerates, is indirectly
wholly-owned by the Government of Singapore.

The Company transacts business with ST and its affiliates in the normal
course of their respective businesses, including ST Assembly Test Services Ltd
("STATS").

F-23
<PAGE> 119
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)

In addition to the transactions with related parties disclosed in Notes 11,
the Company had the following significant transactions with related parties:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
--------------------------- -----------------
1996 1997 1998 1998 1999
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
ST
Management fees.............................. $ 4,428 $ 5,719 $ 4,897 $2,306 $4,767
Reimbursement of expenses incurred on behalf
of the Company............................ 5,940 5,594 5,697 2,390 2,791
Rental for leasehold land from ST............ 1,435 2,128 2,020 740 1,164
Interest expense............................. 4,177 12,729 6,552 5,788 --
Affiliates of ST
Services purchased from STATS................ 8,376 13,261 22,700 7,964 8,648
Other services purchased..................... 2,297 3,034 1,362 1,484 717
Net revenue.................................. 33,597 20,917 6,247 1,713 1,313
Property, plant and equipment purchased...... 8,662 1,051 924 523 --
Other service income......................... 50 -- -- -- --
Building construction costs.................. 50,805 2,575 1,101 397 --
Interest expense............................. -- -- 2,310 -- 1
======= ======= ======= ====== ======
</TABLE>

The fabs of the Company are built on land held on long-term operating
leases from entities controlled by the Government of Singapore. Fab 1 is built
on land leased by the Company from Technology Parks Pte Ltd ("TPPL"), a private
company wholly-owned by Jurong Town Corporation ("JTC"), under a long-term lease
which expires in 2017, with an option, subject to certain conditions, to extend
by another 30 years. JTC is a statutory board established by the Singapore
government to develop and manage industrial estates in Singapore.

Fabs 2 and 3 occupy land leased by ST from JTC. The Company has entered
into sub-leases with ST in respect of the underlying land for the entire term of
the lease between ST and JTC. The leases expire in 2024 with an option, subject
to certain conditions, to extend for another 30 years. CSP's fab occupies land
leased by ST from JTC.

Rental rates on JTC and TPPL leases are subject to revisions at market
rates at periodic intervals in accordance with the rental agreements, with such
increases generally capped at 8% to 10% per annum.

ST provides management and corporate services to the Company. ST also
provides staff loans to senior management staff of the Company, including loans
related to subscription amounts associated with the employee share plans
described in Note 23. Management fees and expenses incurred on behalf of, or
allocated to, the Company by ST are charged to the Company under a service
agreement pursuant to which ST provides corporate support services to the
Company. The service agreement provides for the payment of an annual management
fee computed based on certain percentages of capital employed, revenue, manpower
and payroll. Short term financing is also provided by ST to the Company
(generally on 3 to 6 months renewable basis) using ST's cost competitive
corporate banking advantage in the banking community. Surplus funds are placed
with ST from time to time. Advances to and from ST bear interest at rates
comparable to rates offered by commercial banks in Singapore. The Company also
participates with ST in a cash management program managed by a bank. Under the
program, cash balances are pooled and daily cash surpluses or shortfalls may, on
a short-term basis, be lent to or borrowed from other ST

F-24
<PAGE> 120
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)

affiliates participating in the arrangement at prevailing inter-bank rates. The
Company controls its bank accounts, subject to such program.

Tritech Microelectronics Ltd ("Tritech"), an ST affiliate and a fabless
designer of semiconductor products, was previously a major customer of the
Company. The sales to Tritech were made on substantially the same terms as those
available to third parties for similar products and volumes committed. The
Company has not made sales to Tritech since it was placed under judicial
management on July 2, 1999.

At December 31, 1997 and 1998 and June 30, 1998 and 1999, there were the
following amounts due from or to ST and its affiliates.

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------- ------------------
1997 1998 1998 1999
-------- ------- -------- ------
<S> <C> <C> <C> <C>
Amounts due from ST
Other receivables.............................. $ -- $ -- $ -- $ 8
Amounts due from ST affiliates
Accounts receivable
Trade, net of allowance for doubtful
accounts.................................. 2,038 1,481 265 856
Others...................................... 805 1,110 1,232 1,273
-------- ------- -------- ------
$ 2,843 $ 2,591 $ 1,497 $2,137
======== ======= ======== ======
Amounts due to ST
Short-term debt................................ 326,799 -- 123,765 1,877
Other current liabilities...................... 4,713 4,654 10,030 411
Amounts due to ST affiliates
Accounts payable, trade........................ 3,249 4,916 4,238 5,278
Other current liabilities...................... 1,493 1,037 530 1,008
-------- ------- -------- ------
$336,254 $10,607 $138,563 $8,574
======== ======= ======== ======
</TABLE>

The weighted average rate of interest payable on the short-term debt from
ST was 4.63% as of December 31, 1997, and 6.00% and 2.43% as of June 30, 1998
and 1999, respectively.

(b) LEASES

Rental expense paid to ST for the years ended December 31, 1996, 1997 and
1998 was $1,435, $2,128 and $1,646, respectively, and $740 and $1,164 for the
six months ended June 30, 1998 and 1999, respectively.

F-25
<PAGE> 121
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)

Minimum future rental payments on non-cancellable operating leases of
factory land leased from ST as of December 31, 1998 and June 30, 1999 are as
follows:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1998 1999
------------ --------
<S> <C> <C>
Payable in year ending December 31,
1999...................................................... $ 1,494 $ 726
2000...................................................... 1,494 1,453
2001...................................................... 1,494 1,453
2002...................................................... 1,494 1,453
2003...................................................... 1,494 1,453
2004...................................................... 1,494 1,453
Thereafter................................................ 28,697 27,844
------- -------
$37,601 $35,835
======= =======
</TABLE>

22. COMMITMENTS AND CONTINGENCIES

(a) LEASES

Rental expense, excluding amounts payable to ST disclosed in Note 21(a),
for the years ended December 31, 1996, 1997 and 1998 was $711, $2,058 and
$1,949, respectively, and $948 and $1,199 for the six months ended June 30, 1998
and 1999, respectively.

Minimum future rental payments on non-cancellable operating leases of
apartments, excluding amounts payable to ST disclosed in Note 21(b), as of
December 31, 1998 and June 30, 1999 are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1998 1999
------------ --------
<S> <C> <C>
Payable in year ending December 31,
1999...................................................... $1,794 $ 775
2000...................................................... 1,168 1,725
2001...................................................... 859 986
2002...................................................... 211 238
2003...................................................... 211 238
2004...................................................... 211 238
Thereafter................................................ 2,750 3,035
------ --------
$7,204 $ 7,235
====== ========
</TABLE>

(b) TECHNOLOGY PARTNER AGREEMENT

In addition to the technology license agreements described in Note 7, the
Company has entered into an agreement with a technology partner under which the
Company is required to allocate wafer capacity, as part of the consideration for
the process technology the partner transferred and licensed to the Company. The
agreement will expire in 2002.

F-26
<PAGE> 122
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)

The Company entered into subscription and participation agreements with
seven customers (the "Equity Investor Customers"), a technology partner and an
investor to raise equity for the establishment of a fab. Under the agreements,
the Equity Investor Customers, technology partner and the investor subscribed
for shares with the right to subscribe for new shares pro-rata to their interest
in the Company. The technology partner has the right to subscribe for $6,000
worth of shares in the Company, at a subscription price and on terms to be
mutually agreed between the Company and the technology partner. These rights,
which are still unexercised, will terminate upon the termination of the
subscription agreement. The Company and the technology partner intend to
terminate the subscription rights upon the initial public offering of the
Company. As of December 31, 1998 and June 30, 1999, the Company had 72,470,983
shares outstanding under these agreements, which had been exercised between
$2.03 and $2.44 per share in cash. 69,339,367 of these shares were issued with
an option to require ST to repurchase outstanding shares at a purchase price
based on the net tangible asset value of the Company at the date of exercise of
the option. The option is exercisable after the tenth anniversary of the date of
the subscription agreement, where no initial public offering has taken place by
that date.

The agreements provide the Equity Investor Customers and technology partner
with rights to wafer capacity.

(d) DEPOSIT AGREEMENTS

The Company entered into deposit and supply agreements with six customers
under which the customers are required to maintain deposits with the Company to
secure wafer capacity. As of June 30, 1999, deposits held by the Company
amounted to $42,805. These agreements, expiring on December 31, 2000 and
December 31, 2002, require the Company to make available capacity to customers
over the terms of the agreements.

(e) CAPITAL EXPENDITURE

The Company had the following capital commitments as of December 31, 1997
and 1998 and June 30, 1998 and 1999:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
-------------------- --------------------
1997 1998 1998 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Contracts for capital expenditure............... $399,954 $362,761 $649,165 $407,078
</TABLE>

(f) FORWARD FOREIGN EXCHANGE CONTRACTS

The Company had the following notional amounts of forward foreign exchange
contracts as of December 31, 1997 and 1998 and June 30, 1998 and 1999:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------- -------------------
1997 1998 1998 1999
------- -------- ------- --------
<S> <C> <C> <C> <C>
Forward foreign exchange contracts................ $42,550 $522,087 $21,329 $511,113
</TABLE>

In conjunction with the change in the functional currency effective July 1,
1998, the Company entered into forward foreign exchange contracts to hedge the
principal and interest obligations associated with its Singapore dollar
denominated loans with the effect of redenominating them to US dollars.

F-27
<PAGE> 123
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)

The Company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. They are used to manage
identified foreign currency risks (prior to July 1, 1998, principally Japanese
yen and US dollars; subsequent to June 30, 1998, principally Japanese yen and
Singapore dollars). See Note 2(e). Foreign currency forward contracts are
generally used to reduce the potential impact of increases in foreign currency
exchange rates on existing long-term debt, and to a lesser extent are used to
hedge foreign currency purchase commitments. The term of forward contracts
rarely exceeds five years. Foreign currency forward contracts used to hedge firm
commitments are carried at market value and are recorded as other assets or
other liabilities in the accompanying consolidated balance sheet. Changes in
market values of these agreements are deferred, and included in the basis of the
hedged asset upon purchase.

The Company is exposed to credit losses in the event of nonperformance by
the counterparties to its foreign currency exchange contracts. The Company
anticipates, however, that counterparties will be able to fully satisfy their
obligations under the contracts. The Company does not obtain collateral or other
security to support financial instruments subject to credit risk but monitors
the credit standing of counterparties. See also Note 2(v).

(g) CONTINGENCIES

As is typical in the semiconductor industry, the Company has from time to
time received communications from third parties asserting patents that cover
certain of the Company's technologies and alleging infringement of certain
intellectual property rights of others. The Company has acquired certain
technology licenses for use in its business and may seek to obtain other
licenses in the future. There can be no assurance that the Company will be able
to obtain such future licenses on commercially reasonable terms, or at all.

The Company has accrued a liability for, and charged to its results of
operations in the periods presented, the estimated costs of obtaining such
licenses for third party technology. During 1996, the Company changed its
estimate of costs to obtain certain licenses and recorded a reduction in accrued
liabilities for technology licences of $23,244. The amounts so accrued were
$5,847 and $7,853 as of December 31, 1997 and 1998, respectively and $6,920 and
$9,819 as of June 30, 1998 and 1999, respectively. No assurance can be given
that such provisions are adequate.

23. SHARE OPTIONS AND INCENTIVE PLANS

The Company determines the fair market values of the ordinary shares
underlying each option grant by averaging (i) discounted cashflow valuation;
(ii) last twelve months' revenue multiplied by a composite industry comparable
revenue to market capitalization factor and (iii) book value at each grant date
multiplied by a composite industry comparable book value to market
capitalization factor.

(a) 1995 OWNERSHIP PLAN

Effective September 28, 1995, the Company adopted the Chartered
Semiconductor Manufacturing Employees' Share Ownership Plan (the "1995 Ownership
Plan"). The plan is administered by a committee nominated by the directors and
provides for the grant of options to employees and directors of the Company and
certain of its affiliates. The exercise period of the options was 30 days and
the subscription price for each share which may be purchased upon exercise of
the options was determined by the committee but could not be less than Singapore
dollars S$0.80. The subscription price was payable in installments, the first
installment of 5% of the subscription price being payable upon exercise of the
option, the second installment of 95% of the subscription price being payable
over a period between the second

F-28
<PAGE> 124
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)

and fifth years following the date the option is granted, however, such
cumulative second installment due may be deferred and payable at each successive
anniversary date. Interest was payable on outstanding installments at 8% per
annum, but in 1997, the plan was revised to allow ST to bear all interest on
behalf of the employees.

Where employees failed to pay the second installment within seven years of
the date of grant of the option, the employees were required to sell their
shares to an ST affiliate at the greater of 5% of the market value of the
shares, as determined by the committee, or 5% of the net asset value of the
shares. Employees leaving the employment of the Company were entitled to retain
those shares which had been fully paid for, while shares not fully paid for were
either required to be sold to the ST affiliate or, in certain circumstances,
were allowed to be fully paid. Shares which were not fully paid for could not be
sold. Shares which were fully paid for were required to be offered to the ST
affiliate at the greater of the market value of the shares, as determined by the
committee, or net asset value of the shares before they could be sold to any
other party.

The 1995 Ownership Plan was accounted for in accordance with variable plan
accounting.

Total compensation expense (income) recognized for stock-based compensation
under the plan for the years ended December 31, 1996, 1997 and 1998 were $332,
$1,853 and $(2,609) respectively and for the six months ended June 30, 1998 and
1999 were $(1,362) and $2,765 respectively.

Information for December 31, 1996, 1997 and 1998 and June 30, 1998 and 1999
is as follows:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
--------------------------- -----------------
1996 1997 1998 1998 1999
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Shares outstanding at beginning of period (in
thousands)..................................... 7,898 13,451 12,859 12,859 11,436
Shares granted during period (in thousands)...... 5,553 1,103 -- -- --
Shares outstanding at period end (in
thousands)..................................... 13,451 12,859 11,436 12,658 11,009
Subscription price for shares issued in 1995
at............................................. $ 0.77 $ 0.77 $ 0.77 $ 0.77 $ 0.77
Subscription price for shares issued in 1996
from........................................... $ 0.92 $ 0.92 $ 0.92 $ 0.92 $ 0.92
to............................................. $ 0.98 $ 0.98 $ 0.98 $ 0.98 $ 0.98
Subscription price for shares issued in 1997
at............................................. $ -- $ 0.83 $ 0.83 $ 0.83 $ 0.83
Weighted average grant date fair value of
options........................................ $ 1.36 $ 1.31 $ -- $ -- $ --
Subscription receivable at period end............ $10,943 $10,565 $ 9,247 $10,307 $ 8,866
</TABLE>

The fair value of option grants is estimated using the Black-Scholes option
pricing model with the following assumptions used: dividend yield of 0% and
expected lives of 10 years. The weighted average expected volatility used for
option grants was 60.0% and 57.0% in 1996 and 1997, respectively. The weighted
average risk free interest rate used was 6.59% and 6.84% in 1996 and 1997,
respectively.

(b) 1997 OWNERSHIP PLAN

Effective November 27, 1997, the Company adopted the Chartered
Semiconductor Manufacturing Employees' Share Ownership Plan 1997 (the "1997
Ownership Plan"). The terms of the 1997 Ownership Plan are substantially similar
to the 1995 Ownership Plan except that (i) interest was not charged on
outstanding and unpaid installments and (ii) the cumulative unpaid second
installments due could be deferred and paid at each successive anniversary date
but were not due until ten years after the date of grant of the option.

The 1997 Ownership Plan was accounted for in accordance with variable plan
accounting.

F-29
<PAGE> 125
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)

Total compensation expense (income) recognized for stock-based compensation
under the plan for the years ended December 31, 1997 and 1998 were $171 and
$(171) respectively and for the six months ended June 30, 1998 and 1999 were $29
and $485 respectively.

Information for December 31, 1997 and 1998 and June 30, 1998 and 1999 is as
follows:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
--------------- ---------------
1997 1998 1998 1999
------ ------ ------ ------
<S> <C> <C> <C> <C>
Shares outstanding at beginning of period (in thousands).... -- -- -- 4,021
Shares granted during period (in thousands)................. 2,792 2,549 1,231 1,207
Shares outstanding at period end (in thousands)............. -- 4,021 2,790 5,339
Subscription price for shares issued in 1997 at............. $ 0.74 $ 0.74 $ 0.74 $ 0.74
Subscription price for shares issued in 1998 from........... -- $ 0.59 $ 0.84 $ 0.59
to........................................................ -- $ 0.84 $ 0.84 $ 0.84
Subscription price for shares issued in 1999 at............. -- -- -- $ 0.55
Weighted average grant date fair value of options........... $ 1.50 $ 1.13 $ 1.30 $ 1.05
Subscription receivable at period end....................... -- $3,094 $2,055 $3,865
</TABLE>

The fair value of option grants is estimated using the Black-Scholes option
pricing model with the following assumptions used: dividend yield of 0% and
expected lives of 10 years. The weighted average expected volatility used for
option grants was 55.0% and 70.0% in 1997 and 1998, respectively, and 67.0% and
71.0% in the six months ended June 30, 1998 and 1999, respectively. The weighted
average risk free interest rate used was 5.96% and 5.29% in 1997 and 1998,
respectively and 5.84% and 5.52% in the six months ended June 30, 1998 and 1999,
respectively.

Effective March 30, 1999, the Company adopted the Chartered Semiconductor
Manufacturing Ltd Share Ownership Plan 1999 (the "1999 Ownership Plan") which
provides for a maximum of 107 million shares (subject to adjustment under the
plan) to be reserved for option grants. Options granted under the plan may
include nonstatutory options as well as incentive stock options intended to
qualify under Section 422 of the United States Internal Revenue Code.

The plan is administered by a committee appointed by the directors.
Employees, outside directors and consultants are eligible for the grant of
options except for (i) employees of affiliates, and outside directors and
consultants, who are not eligible for the grant of incentive stock options; and
(ii) employees, outside directors and consultants of affiliates resident in the
United States, who are not be eligible for the grant of options.

The exercise price of an incentive stock option is the fair market value of
the shares at the date of the grant. The exercise price of nonstatutory options
cannot be less than 85% of the fair market value of the shares at the date of
the grant. In certain circumstances, the exercise price may be higher than the
fair market value but in no event will the exercise price be below the par value
of the share.

Option periods do not exceed 10 years from the date of grant. Upon leaving
the employment of the Company, outstanding options remain exercisable for a
specified period.

During the six months ended June 30, 1999, the Company granted options to
subscribe for 6,074,017 shares at an exercise price of Singapore dollars $0.93
(U.S. $0.54). The grant date fair value of the shares was estimated to be U.S.
$0.68. The options vest over five years and expire on dates ranging from April
2004 to April 2009. All the options were outstanding as of June 30, 1999. The
1999 Ownership Plan is

F-30
<PAGE> 126
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)

accounted for in accordance with fixed-plan accounting under APB 25. Total
compensation cost with respect to this option grant was $770, which will be
recognized over the vesting period. Total compensation expense recognized for
the six months ended June 30, 1999 totalled $39.

The fair value of the 1999 option grant is estimated using the
Black-Scholes option pricing model with the following assumptions used: dividend
yield of 0% risk free interest rate of 5.52%, expected volatility of 72% and
expected lives of 10 years. The weighted average fair value of options granted
estimated on the date of grant using the Black-Scholes option pricing model was
$0.77.

Had the Company determined compensation cost based on the fair value at the
grant date for its stock options under SFAS 123, the Company's net income would
have been reduced or increased to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
FOR THE YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------- -------------------
1996 1997 1998 1998 1999
------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Net income (loss)
As reported.............................. $47,476 $(119,621) $(190,006) $(60,266) $(48,520)
Pro forma................................ 46,250 (119,790) (195,464) (62,864) (46,809)
Basic net income (loss) per share
As reported.............................. 0.10 (0.24) (0.24) (0.09) (0.05)
Pro forma................................ 0.09 (0.24) (0.25) (0.09) (0.05)
Diluted net income (loss) per share
As reported.............................. 0.10 (0.24) (0.24) (0.09) (0.05)
Pro forma................................ 0.09 (0.24) (0.25) (0.09) (0.05)
</TABLE>

24. FAIR VALUES OF FINANCIAL INSTRUMENTS

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------
1997 1998
--------------------- ---------------------
CARRYING ESTIMATED CARRYING ESTIMATED
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Assets:
Cash and cash equivalents.......................... $ 23,785 $ 23,785 $ 99,619 $ 99,619
Accounts receivable................................ 131,352 131,352 83,988 83,988
Amounts due from ST and affiliates................. 3,509 3,509 9,254 9,254
Liabilities:
Accounts payable................................... 112,017 112,017 31,359 31,359
Bank overdrafts...................................... 1,378 1,378 3,082 3,082
Amounts due to ST and affiliates................... 336,254 336,254 10,607 10,607
Long-term debt..................................... 282,221 247,687 468,591 458,031
Technology obligations payable..................... 7,200 5,920 7,200 6,879
Derivatives:
Forward foreign exchange........................... -- (4,026) 4,199 42,620
</TABLE>

F-31
<PAGE> 127
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
JUNE 30,
---------------------------------------------
1998 1999
--------------------- ---------------------
CARRYING ESTIMATED CARRYING ESTIMATED
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Assets:
Cash and cash equivalents.......................... $ 14,450 $ 14,450 $ 47,548 $ 47,548
Accounts receivable................................ 86,890 86,890 93,347 93,347
Amounts due from ST and affiliates................. 5,349 5,349 12,578 12,578
Liabilities:
Accounts payable................................... 48,958 48,958 38,114 38,114
Bank overdrafts.................................... 5,043 5,043 1,210 1,210
Amounts due to ST and affiliates................... 138,563 138,563 8,574 8,574
Long-term debt..................................... 376,171 340,212 451,294 444,408
Technology obligations payable..................... 7,200 6,118 5,100 4,921
Derivatives:
Forward foreign exchange........................... -- 7,200 4,154 35,303
</TABLE>

Cash and cash equivalents, bank overdrafts, amounts owing by ST and
affiliates, accounts receivable and accounts payable. The carrying amounts
approximate fair value in view of the short term nature of these balances.

Long-term debt. The fair value is based on current interest rates
available to the Company for issuance of debts of similar terms and remaining
maturities.

Technology obligations payable. The fair value is based on the discounted
present value of future payment obligations.

Forward foreign exchange contracts. The fair value is estimated by
reference to market quotations for forward contracts with similar terms adjusted
where necessary for maturity differences, and was a net asset (liability) of
approximately $(4,026) and $42,620, respectively, at December 31, 1997 and 1998
and $7,200 and $35,303, respectively, at June 30, 1998 and 1999.

Limitations. Fair value estimates are made at a specific point in time,
and are based on relevant market information and information about the financial
instrument. These estimates are subjective in nature and involve uncertainties
and matters of significant judgement and therefore cannot be determined with
precision. Changes in assumptions could significantly affect the estimates.

25. RECENT CHANGES IN U.S. GAAP

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". SFAS No. 133
establishes accounting and reporting standards requiring that every derivative
instrument be recorded in the balance sheet as either an asset or liability
measured at its fair value. SFAS No. 133, as recently amended, is effective for
fiscal years beginning after June 15, 2000. Management believes the adoption of
SFAS No. 133 will not have a material effect on the Company's financial position
or results of operations.

F-32
<PAGE> 128
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)

26. SUBSEQUENT EVENT

At an extraordinary general meeting of shareholders held on September 13,
1999, the first stage of a restructuring of the Company's capital was approved.
The first stage of the restructuring involves the issuance of one additional
fully paid A ordinary share and the cancellation of 20 partly-paid A ordinary
shares for every 20 partly paid A ordinary shares. The first stage of the
restructuring was approved by the High Court of Singapore and was effective on
September 30, 1999. Subsequently, as part of the second stage of the capital
restructuring, the shareholders of the Company on October 14, 1999 approved the
following:

- cancellation of unissued A ordinary shares and B ordinary shares and the
redesignation of all issued A ordinary shares and B ordinary shares as
one class of ordinary shares;

- a share split which results in each ordinary share with a par value of
S$0.4888 being sub-divided into 1.88 ordinary shares with a par value of
S$0.26 each; and

- adoption of new Articles of Association.

All share and per share amounts have been presented herein to reflect the
impact of this capital restructuring.

F-33
<PAGE> 129

ANNEX A
THE REPUBLIC OF SINGAPORE

The information in this section has been extracted from published sources
and has not been independently verified by Chartered.

THE COUNTRY

The Republic of Singapore is situated on the southern tip of the Malay
Peninsula and has a total land area of approximately 648.1 sq. km. Singapore has
a population of about 3,865,600 of which approximately 77% are Chinese, 14% are
Malays, 7.6% are Indians and 1.4% are of other ethnicities. The official
languages of Singapore are Malay, Mandarin, Tamil and English. The national
language is Malay. English is the language of administration and the predominant
language of commerce. The population has a literacy rate of approximately 93%.

Singapore was established as a trading station by Sir Thomas Stamford
Raffles of the East India Company in 1819. In 1826, Singapore, along with Penang
and Malacca, became a British Crown Colony under the name of "Straits
Settlements." Following World War II, Singapore became a separate Crown Colony
while Penang and Malacca were incorporated into the Federation of Malaya. In
June 1959, Singapore became a self-governing democracy within the British
Commonwealth and in June 1963, joined the Federation of Malaya, Sarawak and
North Borneo to form Malaysia. Singapore became a sovereign, independent nation
on August 9, 1965 after separating from Malaysia.

Singapore is a republic with a parliamentary system of government.
Singapore maintains friendly ties with many nations. It maintains close ties
with other Southeast Asian countries, through bilateral relationships and
through its membership in the economic and political association known as the
Association of Southeast Asian Nations or Asean. Singapore enjoys good relations
with the United States, China, Japan and Western European nations. Closer
relations between Singapore and Russia and other Eastern European countries are
also being developed. Singapore is a member of the United Nations as well as
such international organizations as the International Monetary Fund, the
International Bank for Reconstruction and Development, the Asian Development
Bank, the Asia-Pacific Economic Cooperation and the British Commonwealth.
Singapore is a signatory to the General Agreement on Tariffs and Trade and a
member of the World Trade Organization.

THE ECONOMY

Singapore has an urban economy whose largest sectors are manufacturing,
finance and trade. Given the small size of its economy, Singapore produces goods
and services for external markets. Exports in value terms amount to some 130% of
gross domestic product, or GDP. Singapore does not have any significant natural
resources, other than a deep water harbor. However, a strategic geographical
location, together with a well developed infrastructure and political stability,
have made it an international business and financial center.

Singapore has enjoyed strong economic growth for more than a decade. Real
GDP grew at an average annual rate of 9.3% between 1987 and 1997. The economy
was in mild recession in 1998, with output contracting about 1.5% in each of the
last two quarters of the year. But for the year, was up 0.3%. The economy's
recovery this year has been stronger and earlier than expected. GDP grew 0.8%
year-over-year in the first quarter of this year; private economists have
projected stronger growth of 4 to 5% for the second quarter.

Singapore has achieved a high level of economic development. Per capita
income, in Singapore dollar terms has risen from S$2,800 in 1970 to S$37,800 in
1997 before falling to $36,538 last year; representing annual gains of about 10%
compounded. In US dollars, the increase in per capita income has been even
greater, 12% per annum, due to the steady appreciation of the Singapore dollar
over the period.

A-1
<PAGE> 130

In 1975, it took S$2.50 to buy one US$1 and S$5.00 to buy L1 sterling.
Today, it takes about S$1.68 to buy US$1 and S$2.69 to buy L1 (i.e., Singapore's
purchasing power has gained tremendously, giving its residents greater command
over goods and services abroad).

The following table sets forth key economic indicators of the Singapore
economy for 1994 to 1998.

<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999(1)
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
GDP at 1990 market prices (S$m)........... 95,209 102,982 110,734 120,713 121,130 32,053
% change from prior year................ 11.4% 8.2% 7.5% 9.0% 0.3% 6.7%
GDP at current prices (S$m)............... 106,577 118,424 128,892 142,361 141,242 N/A
% change from prior year................ 14.6% 11.1% 8.8% 10.4% -0.8% N/A
Per capita GDP (S$)....................... 31,686 34,153 35,685 38,098 36,538 N/A
Consumer Price Index (% change)........... 3.1% 1.7% 1.4% 2.0% -0.3% 0.1%
Unemployment (%).......................... 2.0% 2.0% 2.0% 1.8% 3.2% 4.6%
Total demand (%).......................... 15.3% 12.6% 8.8% 7.9% -5.0% 6.6%
Domestic demand (%)....................... 4.0% 9.0% 12.1% 10.2% -5.1% 5.8%
External demand (%)....................... 20.5% 14.0% 7.6% 7.0% -4.9% 6.9%
</TABLE>

- ---------------
(1) Through second quarter ended, June 30, 1999.

Source: Department of Statistics; Monetary Authority of Singapore, 1999.

A-2
<PAGE> 131

ANNEX B

THE SECURITIES MARKET OF SINGAPORE

SINGAPORE STOCK EXCHANGE LIMITED

The SES was incorporated on May 24, 1973. The SES is the only securities
exchange in Singapore and is the leading organized market for debt and equity
securities of Singapore companies. The SES operates two trading facilities: the
Main Board and the Singapore Stock Exchange Dealing and Automated Quotation
System or SESDAQ. The securities of certain non-Singapore companies listed on
foreign stock exchanges are traded through the SES on an over-the-counter market
known as "CLOB International." Trading on the SES is effected on a computerized
quotation system known as the Central Limit Order Book, or CLOB, Trading System.
Most trades on the Main Board and SESDAQ are executed on a "ready" basis, which
generally requires delivery to be made seven calendar days after the transaction
date and payment to be made within 24 hours of the due date of delivery.

As of June 30, 1999, the SES had a membership of 30 stockbroking firms, 24
of which are domestic member firms and seven are international members. It also
has a governing committee composed of four elected stockbroking members and five
members who are appointed by the elected members, with the approval of the
Monetary Authority of Singapore, or MAS, to represent interests outside the
stockbroking community. The SES's rules have been instituted with the approval
of the Minister for Finance, and its policies and operations are subject to MAS
supervision.

The following table sets forth, for the periods indicated, certain
information with respect to the SES.

<TABLE>
<CAPTION>
1994 1995 1996 1997 1998
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Total capitalization(1) (S$million).......... 256,124 282,551 255,862 329,268 263,168
Annual trading value(2) (S$million).......... 123,520 83,866 86,722 110,462 96,982
Annual trading volume(2) (million shares).... 45,540 33,919 30,512 47,362 69,648
Number of listed companies (SES Main
Board)..................................... 229 248 266 294 307
</TABLE>

- ---------------
(1) SES Mainboard.

(2) Includes CLOB International, excludes SESDAQ. 1997 and 1998 figures include
non-Singapore dollar trades.

Source: SES Fact Book, 1998, 1999.

REPORTING REQUIREMENTS

An SES-listed company is required under the SES Listing Manual to make
immediate announcements on certain matters to the SES for immediate release.
These matters include: any proposed alteration in the Memorandum and Articles of
Association; any appointments or resignations of its directors, chief executive
officer, general manager (or other executive officers of equivalent rank),
registrar or auditors; the date, time and place of any general meeting and
resolutions put to the general meeting, whether or not the resolutions were
passed; certain acquisitions or disposals by the SES-listed company (for
example, acquisition of shares resulting in a company becoming a subsidiary of
the SES-listed company or acquisition or disposal of shares or assets where, for
instance, the value of the assets acquired or disposed exceeds 5% of the assets
of the SES-listed company and its subsidiaries); and any recommendation or
declaration of a dividend, the rate amount per share and date of payment. In
particular, the SES-listed company is obligated to release to the SES half
yearly consolidated financial statements and annual financial statements as soon
as available and in any event not later than three months after the expiry of
the relevant half year or financial year. The financial statements are to be
prepared in the form set out in the SES Listing Manual and, in respect of the
half year financial statements, must include a review of the performance of the
SES-listed company, setting out any material factors affecting the earnings or
turnover of the SES-listed company and the group and a commentary on

B-1
<PAGE> 132

current year prospects and, in respect of the full year financial statements,
must include a breakdown of the group turnover and profit by product or business
activity and by geographical location for the financial year reported on and the
previous year and a commentary on current year's prospects, including factors
likely to influence the future prospects of the SES-listed company.

An SES-listed company is further required to issue an annual report to its
members and the SES within six months from the end of its financial year. The
annual report must contain the information set out in the Listing Manual
including: (i) a review of the operating and financial performance of the SES-
listed company and its principal subsidiaries in the last financial year and
since the end of the last financial year; (ii) a statement of the interests of
directors in the shares of the SES-listed company and material contracts
involving directors' interests; and (iii) its annual audited accounts.

An SES-listed company is required to disclose to the SES for public release
any material information of a factual nature relating to the group which is
necessary to avoid the establishment of a false market in its shares or which
would be likely materially to affect the price of its securities (for example,
the entry into a joint venture, the borrowing of a significant amount of funds,
significant litigation).

REGULATION

The Singapore securities industry is overseen primarily by the MAS. The
Securities Industry Act, or the Act, provides that the SES must obtain the
approval of the MAS for all changes in the rules governing the SES and its
member companies and the listing rules, and that dealers, investment advisors
and their representatives may only operate under a license granted by the MAS.
The Act prohibits a variety of fraudulent trading practices.

The MAS is empowered by the Act to conduct investigations whenever it has
reason to suspect that a person has committed an offense under the Act or has
been guilty of fraud or dishonesty in relation to a dealing in securities. The
MAS has wide powers to compel, under conditions of secrecy, the production of
books and disclosure of other information.

The Securities Industry Council, or SIC, is an advisory body established in
1973 under the Act The Minister for Finance appoints representatives from both
the private and public sectors to be members of the SIC. The SIC advises the
Minister for Finance on all matters relating to the securities industry.

MARKET INDICES

There are many published indices which track the performance of securities
listed on the Main Board. The most commonly used index is the Straits Times
Industrial Index, or STII. The STII tracks 30 industrial and commercial
concerns, all of which are Singapore incorporated companies. The STII is not
weighted. Another index used to measure the performance of the SES Main Board is
the SES All Share Index. The SES All Share Index is a capitalization-weighted
index of all stocks traded on the Main Board, and is designed to provide a
measure of the overall price movement in the stock market. The Index was
developed with a base value of 100 as of January 2, 1975.

The following table sets forth the high close, low close and year-end
levels of the STII and the SES All Share Index for each of the periods
indicated.

<TABLE>
<CAPTION>
STII SES ALL SHARE INDEX
------------------------------------- -------------------------------------
PERIOD END PERIOD END
HIGH CLOSE LOW CLOSE CLOSE HIGH CLOSE LOW CLOSE CLOSE
---------- --------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
1994.................. 2,471.90 2,036.30 2,239.56 641.61 506.84 533.57
1995.................. 2,287.42 1,916.94 2,266.54 558.94 472.90 555.39
1996.................. 2,218.45 2,176.52 2,216.79 540.77 525.39 513.49
1997.................. 1,753.63 1,514.83 1.529.84 455.71 414.48 425.94
1998.................. 1,553.75 805.04 1,392.73 437.98 253.20 382.51
</TABLE>

- ---------------
Source: SES Fact Book.

B-2
<PAGE> 133

[Description of inside back cover artwork: The back cover will contain a
description of our electronic design automation ("EDA") and intellectual
property qualification process. It will also contain graphics showing our EDA
program and customer teams.]
<PAGE> 134

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

225,000,000 ORDINARY SHARES
DIRECTLY OR IN THE FORM OF AMERICAN DEPOSITARY SHARES

CHARTERED SEMICONDUCTOR MANUFACTURING LTD

[CHARTERED LOGO]

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

PROSPECTUS

, 1999
------------

SALOMON SMITH BARNEY

CREDIT SUISSE FIRST BOSTON

HAMBRECHT & QUIST

SG COWEN

SOUNDVIEW TECHNOLOGY GROUP

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 135

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 the
underwriting discounts, payable by us in connection with the sale of the
ordinary shares (including ordinary shares represented by ADSs) being
registered. All amounts are estimates except the SEC registration fee and the
NASD filing fees.

<TABLE>
<CAPTION>
AMOUNT TO
BE PAID
----------
<S> <C>
SEC registration fee........................................ $ 143,865
NASD filing fee............................................. 30,500
Nasdaq listing fee.......................................... 100,000
Legal fees and expenses..................................... 1,000,000
Accounting fees and expenses................................ 380,000
Printing and engraving...................................... 250,000
Blue sky fees and expenses (including legal fees)........... 25,000
Transfer agent fees......................................... 25,000
Miscellaneous............................................... 75,635
----------
Total............................................. $2,030,000
==========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Our Articles of Association provide that all of our directors, secretaries
and other officers shall be indemnified by our company against all costs,
charges, losses, expenses and liabilities incurred by them in the execution and
discharge of their duties or in relation thereto, including any liabilities in
defending any proceedings, civil or criminal, which relate to anything done or
omitted or alleged to have been done or omitted by them as a director, secretary
or other officer of our company. Our Articles of Association further provide
that none of our directors, secretaries or other officers shall be liable:

- for the acts, receipts, neglects or defaults of any other director or
officer,

- for joining in any receipt or other act for conformity,

- for any loss or expense happening to our company through the
insufficiency or deficiency of title to any property acquired by order of
the directors for or on behalf of our company,

- for the insufficiency or deficiency of any security in or upon which any
of the moneys of our company shall be invested,

- for any loss or damage arising from the bankruptcy, insolvency or
tortious act of any person with whom any moneys, securities or effects
shall be deposited or left, or

- for any other loss, damage or misfortune whatever which shall happen in
the execution of the duties of their office or in relation thereto,

unless the same shall happen through their own negligence, willful default,
breach of duty or breach of trust.

The indemnification provisions in our Articles of Association provide for
indemnification of our officers and directors to the maximum extent permitted
under the Companies Act (Chapter 50) of Singapore.

The form of underwriting agreements to be filed as Exhibits 1.1, 1.2 and
1.3 to this Registration Statement will also provide for indemnification by the
underwriters of our company and our officers and directors with respect to
certain matters.
II-1
<PAGE> 136

We intend to obtain directors and officers insurance providing
indemnification for certain of our directors, officers, affiliates or employees
for certain liabilities.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

During the past three years, we have issued the following securities. With
respect to the benefit plan participants, the dates provided reflect the dates
the ordinary shares were issued, and not the dates the offer to subscribe for
such shares were made, and the consideration column lists the total
consideration due with respect to the partly paid shares being issued. The
number of ordinary shares column does not give effect to the capital
restructuring which we effected on October 14, 1999.

<TABLE>
<CAPTION>
NUMBER OF
ORDINARY CONSIDERATION
PURCHASER DATE OF ISSUANCE SHARES (S$)
--------- ----------------- ---------- -------------
<S> <C> <C> <C>
1995 Benefit Plan Participants................ January 29, 1996 31,280 32,697(1)
EDB Investments Pte Ltd....................... February 9, 1996 1,850,837 11,845,357(2)
Actel Corporation............................. February 9, 1996 109,119 698,362(3)
Actel Corporation............................. February 9, 1996 789,600 4,762,500(3)
Conexant Systems, Inc. (as successor in
interest to Rockwell International
Corporation)................................ February 9, 1996 218,239 1,396,730(3)
Conexant Systems, Inc. (as successor in
interest to Rockwell International
Corporation)................................ February 9, 1996 1,579,200 9,525,000(3)
Brooktree Corporation......................... February 9, 1996 789,600 4,762,500(3)
Alliance Semiconductor Corporation............ February 9, 1996 3,637,959 23,282,937(3)
Analog Devices B.V............................ February 9, 1996 1,504,553 9,629,139(3)
Standard Microsystems Corporation............. February 9, 1996 1,321,875 8,460,000(3)
LSI Logic Hong Kong Ltd....................... February 9, 1996 1,359,375 8,700,000(3)
1995 Benefit Plan Participants................ May 30, 1996 402,000 972,438(1)
1995 Benefit Plan Participants................ May 30, 1996 473,700 1,145,880(2)
1995 Benefit Plan Participants................ May 30, 1996 200,000 483,800(2)
1995 Benefit Plan Participants................ August 7, 1996 60,000 145,140(2)
1995 Benefit Plan Participants................ December 10, 1996 1,817,880 4,708,309(1)
1995 Benefit Plan Participants................ June 10, 1997 586,800 1,326,168(1)
1997 Benefit Plan Participants................ January 27, 1998 1,484,850 3,266,670(1)
Singapore Technologies Pte Ltd................ March 23, 1998 84,523,153 278,926,405(2)
Singapore Technologies Semiconductors Pte
Ltd......................................... March 23, 1998 63,529,648 209,647,838(2)
EDB Investments Pte Ltd....................... March 23, 1998 2,307,415 7,614,470(2)
Tritech Microelectronics Ltd.................. March 23, 1998 3,469,321 11,448,759(2)
Other Shareholders............................ March 23, 1998 563,298 1,858,883(1)
1997 Benefit Plan Participants................ June 25, 1998 654,820 1,702,532(1)
Singapore Technologies Pte Ltd................ October 22, 1998 59,712,121 167,193,939(2)
Singapore Technologies Semiconductors Pte
Ltd......................................... October 22, 1998 47,430,736 132,806,061(2)
EDB Investments Pte Ltd....................... October 22, 1998 428,926 1,200,993(2)
Other Shareholders............................ October 22, 1998 79,620 222,936(1)
1997 Benefit Plan Participants................ February 5, 1999 701,290 1,318,425(1)
1997 Benefit Plan Participants................ July 1, 1999 642,140 1,123,745(4)
Employees..................................... August 2, 1999 520,000 910,000(4)
</TABLE>

<TABLE>
<CAPTION>
NUMBER OF
ORDINARY SHARES AGGREGATE
GRANTEE DATE OF GRANT UNDERLYING GRANT EXERCISE PRICE (S$)
------- ---------------- ---------------- -------------------
<S> <C> <C> <C>
1999 Benefit Plan Participants............ April 30, 1999 3,230,860(5) 5,654,005(4)
1995 and 1997 Benefit Plan Participants... October 15, 1999 11,199,457(5) 13,173,566(4)
</TABLE>

II-2
<PAGE> 137

- ---------------
(1) We believe that the subject issuance was exempt from registration under the
Securities Act in reliance on Regulation S under the Securities Act or
pursuant to Section 4(2) of the Securities Act regarding transactions not
involving a public offering.

(2) We believe that the subject issuance was exempt from registration under the
Securities Act in reliance on Regulation S under the Securities Act.

(3) We believe that the subject issuance was exempt from registration under the
Securities Act pursuant to Section 4(2) of the Securities Act regarding
transactions not involving a public offering.

(4) We believe that the subject issuance was exempt from registration under the
Securities Act in reliance on Regulation S under the Securities Act, on Rule
701 under the Securities Act or pursuant to Section 4(2) of the Securities
Act regarding transactions not involving a public offering.

(5) Represents issued but unexercised share options.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits.

<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- ------ -----------
<C> <S>
1.1 Form of U.S. Underwriting Agreement
1.2 Form of International Underwriting Agreement
*1.3 Form of Management and Underwriting Agreement for the
Singapore offering
++3 Memorandum and New Articles of Association of the Registrant
4.1 Form of deposit agreement by and among the Registrant,
Citibank, N.A. and the holders and beneficial owners of
American Depositary Shares evidenced by American Depositary
Receipts issued thereunder (including as an exhibit, the
form of American Depositary Receipt) (incorporated by
reference to Exhibit 4 of the Form F-6 Registration
Statement filed by Citibank, N.A. on October 8, 1999
(Registration No. 333-88623))
++4.2 Form of specimen certificate for ordinary shares
5 Opinion of Allen & Gledhill regarding the validity of the
ordinary shares offered hereby
8.1 Opinion of Latham & Watkins regarding certain U.S. tax
matters
8.2 Opinion of Allen & Gledhill regarding certain Singapore tax
matters (included in Exhibit 5)
+*10.1 Joint Venture Agreement dated March 13, 1997 by and among
the Registrant, Hewlett-Packard Europe B.V. and EDB
Investments Pte Ltd
*10.2 Amendment Agreement No. 1 to Joint Venture Agreement dated
July 4, 1997 by and among the Registrant, Hewlett-Packard
Europe B.V. and EDB Investments Pte Ltd
*10.3 Amendment Agreement No. 2 to Joint Venture Agreement dated
October 1, 1999 by and among the Registrant, Hewlett-Packard
Europe B.V. and EDB Investments Pte Ltd
+*10.4 Option Agreement dated July 4, 1997 by and among the
Registrant, Hewlett-Packard Europe B.V. and EDB Investments
Pte Ltd
+*10.5 Assured Supply and Demand Agreement dated July 4, 1997 by
and among the Registrant, Chartered Silicon Partners Pte Ltd
and Hewlett-Packard Company
+*10.6 Amendment Agreement No. 1 to Assured Supply and Demand
Agreement dated November 5, 1998 by and among the
Registrant, Chartered Silicon Partners Pte Ltd and
Hewlett-Packard Company
+*10.7 Amendment Agreement No. 2 to Assured Supply and Demand
Agreement dated June 17, 1999 by and among the Registrant,
Chartered Silicon Partners Pte Ltd and Hewlett Packard
Company
+*10.8 Joint Venture Agreement dated December 19, 1997 by and
between the Registrant and Lucent Technologies
Microelectronics Pte Ltd
</TABLE>

II-3
<PAGE> 138

<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- ------ -----------
<C> <S>
+*10.9 Assured Supply and Demand Agreement dated February 17, 1998
by and among the Registrant, Silicon Manufacturing Partners
Pte Ltd and Lucent Technologies Microelectronics Pte Ltd
+*10.10 Supplemental Assured Supply and Demand Agreement dated
September 3, 1999 by and among the Registrant, Silicon
Manufacturing Partners Pte Ltd and Lucent Technologies
Microelectronics Pte Ltd
+*10.11 License and Technology Transfer Agreement dated July 4, 1997
by and among the Registrant, Chartered Silicon Partners Pte
Ltd and Hewlett-Packard Company
+*10.12 License and Technology Transfer Agreement dated February 17,
1998 by and among the Registrant, Lucent Technologies
Microelectronics Pte Ltd and Silicon Manufacturing Partners
Pte Ltd
+*10.13 Technology Transfer Agreement dated February 17, 1998 by and
between the Registrant and Lucent Technologies Inc.
+*10.14 Technology Transfer and License Agreement dated May 20, 1999
by and among the Registrant, Chartered Silicon Partners Pte
Ltd and Motorola, Inc.
+*10.15 Patent License Agreement dated January 1, 1998 by and
between the Registrant and Lucent Technologies Inc.
+*10.16 Patent License Agreement dated January 1, 1995 by and
between the Registrant and International Business Machines
Corporation
+*10.17 Patent Cross License Agreement dated August 12, 1999 by and
between the Registrant and Toshiba Corporation
+*10.18 Joint Development Agreement for Process Technologies dated
February 18, 1999 by and between the Registrant and Lucent
Technologies Inc.
*10.19 ST Group Management and Support Services Agreement dated
March 3, 1997 by and between the Registrant and Singapore
Technologies Pte Ltd
++10.20 Loan Agreement dated August 1, 1995 by and between the
Registrant and the Economic Development Board of Singapore
++10.21 Loan Agreement dated April 14, 1997 by and between the
Registrant and the Economic Development Board of Singapore,
as supplemented on May 29, 1997
++10.22 Loan Agreement dated July 21, 1997 by and between the
Registrant and the Economic Development Board of Singapore
++10.23 Loan Agreement dated February 11, 1997 by and between the
Registrant and Post Office Savings Bank of Singapore
++10.24 Loan Agreement dated June 10, 1997 by and between the
Registrant and Post Office Savings Bank of Singapore
++10.25 Credit Agreement dated March 12, 1998 by and among Chartered
Silicon Partners Pte Ltd, the banks named on the signature
pages thereto, as lenders, and ABN Amro Bank N.V. (Singapore
Branch), as Agent, as supplemented on December 14, 1998
++10.26 Shareholders Undertaking dated July 1, 1998 by and among the
Registrant, Chartered Silicon Partners Pte Ltd, EDB
Investments Pte Ltd, Hewlett-Packard Europe B.V. and ABN
Amro Bank N.V. (Singapore Branch), as Agent, as supplemented
on December 16, 1998
++10.27 Syndicated Credit Facilities Agreement dated September 3,
1999 by and among Silicon Manufacturing Partners Pte Ltd,
ABN Amro Bank N.V. (Singapore Branch), Citibank, N.A.
(Singapore Branch) and Overseas Union Bank Limited, as Lead
Arrangers, the banks and financial institutions named on the
signature pages thereto, as lenders, Citicorp Investment
Bank (Singapore) Limited, as Facility Agent, and Citicorp
Investment Bank (Singapore) Limited, as Security Agent
</TABLE>

II-4
<PAGE> 139

<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- ------ -----------
<C> <S>
++10.28 Shareholders Undertaking dated September 3, 1999 by and
among the Registrant, Lucent Technologies Microelectronics
Pte Ltd, Silicon Manufacturing Partners Pte Ltd and Citicorp
Investment Bank (Singapore) Limited
++10.29 Lease of Lot 2164 Mukim 3-2 Science Park Drive dated January
18, 1995 by and between Technology Parks Private Limited and
the Registrant
++10.30 Building Agreement relating to Private Lot A12787 Mukim No.
13 Sembawang dated April 11, 1995 by and between Jurong Town
Corporation and Singapore Technologies Pte Ltd
++10.31 Agreement for Sub-License and Sub-Lease dated September 30,
1997 by and between Singapore Technologies Pte Ltd and the
Registrant relating to Private Lot A12787 Mukim No. 13
Sembawang
++10.32 Building Agreement relating to Private Lot A12787(a)
Woodlands Industrial Park D, Mukim No. 13 Sembawang dated
February 17, 1998 by and between Jurong Town Corporation and
Singapore Technologies Pte Ltd
++10.33 First Supplementary Agreement to Building Agreement relating
to Private Lot A 12787(a) Woodlands Industrial Park D, Mukim
No. 13 dated October 7, 1998 by and between Jurong Town
Corporation and Singapore Technologies Pte Ltd
++10.34 Building Agreement relating to Private Lot A12787(b)
Woodlands Industrial Park D, Mukim No. 13 Sembawang dated
February 17, 1998 by and between Jurong Town Corporation and
Singapore Technologies Pte Ltd
++10.35 First Supplementary Agreement to Building Agreement relating
to Private Lot A12787(b) Woodlands Industrial Park D, Mukim
No. 13 dated October 7, 1998 by and between Jurong Town
Corporation and Singapore Technologies Pte Ltd
++10.36 Agreement for Sub-License and Sub-Lease (Private Lot
A12787(a)) dated February 17, 1998 by and between Singapore
Technologies Pte Ltd and the Registrant
++10.37 Agreement for Sub-License and Sub-Lease (Private Lot
A12787(b)) dated February 17, 1998 by and between Singapore
Technologies Pte Ltd and the Registrant
++10.38 Sub-Lease dated February 17, 1998 by and between the
Registrant and Silicon Manufacturing Partners Pte Ltd
++10.39 Building Agreement relating to Private Lot A12787(d)
Woodlands Industrial Park D, Mokim No. 13 Sembawang dated
September 24, 1999 by and between Jurong Town Corporation
and Singapore Technologies Pte Ltd
++10.40 Agreement for Sub-License and Sub-Lease (Private Lot
A12787(d)) dated September 24, 1999 by and between Singapore
Technologies Pte Ltd and Chartered Silicon Partners Pte Ltd
++21 Subsidiaries of Chartered Semiconductor Manufacturing Ltd
23.1 Consent of Latham & Watkins (included in Exhibit 8.1)
23.2 Consent of Allen & Gledhill (included in Exhibit 5)
23.3 Consent of KPMG
++24 Power of Attorney (included on Page S-1)
</TABLE>

- ---------------
* To be filed by amendment.

+Certain portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Commission. The omitted portions have
been filed separately with the Commission.

++ Previously filed.

(b) Financial Statement Schedules.

None.

II-5
<PAGE> 140

ITEM 17. UNDERTAKINGS

The undersigned registrant hereby undertakes to provide to 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 foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the 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 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 Act and will
be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424 (b)(1) or (4),
or 497(h) under the Securities Act of 1933, shall be deemed to be part of
this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Act, 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 this offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.

II-6
<PAGE> 141

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the Republic of
Singapore, on this 21st day of October, 1999.

CHARTERED SEMICONDUCTOR MANUFACTURING
LTD

By: /s/ CHIA SONG HWEE
------------------------------------
Name: Chia Song Hwee
Title: Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated:

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

* Chairman of the Board October 21, 1999
- -----------------------------------------------------
Ho Ching

* Deputy Chairman of the Board October 21, 1999
- -----------------------------------------------------
Lim Ming Seong

* President and Chief October 21, 1999
- ----------------------------------------------------- Executive Officer (principal
Barry Waite executive officer)

/s/ CHIA SONG HWEE Chief Financial Officer October 21, 1999
- ----------------------------------------------------- (principal financial and
Chia Song Hwee accounting officer)

* Director October 21, 1999
- -----------------------------------------------------
Sum Soon Lim

* Director October 21, 1999
- -----------------------------------------------------
James H. Van Tassel

* Director October 21, 1999
- -----------------------------------------------------
Aubrey C. Tobey

* Director October 21, 1999
- -----------------------------------------------------
Robert Edmund La Blanc

* Director October 21, 1999
- -----------------------------------------------------
Andre Borrel

* Director October 21, 1999
- -----------------------------------------------------
Charles E. Thompson

* Director October 21, 1999
- -----------------------------------------------------
Koh Beng Seng
</TABLE>

II-7
<PAGE> 142

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Director October 21, 1999
- -----------------------------------------------------
Tsugio Makimoto

* Authorized Representative in October 21, 1999
- ----------------------------------------------------- the United States
Thomas H.R. Gurnee
</TABLE>

*By: /s/ CHIA SONG HWEE

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

Chia Song Hwee

Attorney-in-fact

II-8

<PAGE> 1
EXHIBIT 1.1

Chartered Semiconductor Manufacturing Ltd.
150,000,000 Ordinary Shares*
directly or in the form of American Depositary Shares
(S$0.26 par value)

Each American Depositary Share representing
the right to receive ten Ordinary Shares

Form of U.S. Underwriting Agreement

New York, New York
__________, 1999

Salomon Smith Barney Inc.
Credit Suisse First Boston Corporation
Hambrecht & Quist LLC
SG Cowen Securities Corporation
SoundView Technology Group, Inc.
As U.S. Representatives of the several U.S. Underwriters

c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
U.S.A.

Ladies and Gentlemen:

Chartered Semiconductor Manufacturing Ltd, a corporation organized
under the laws of Singapore (the "Company"), proposes to sell to the several
U.S. underwriters named in Schedule I hereto (the "U.S. Underwriters"), for whom
you (the "U.S. Representatives") are acting as representatives, ordinary shares
(the "Ordinary Shares"), S$0.26 par value per share, of the Company directly or
in the form of American Depositary Shares (the "ADSs") (said Ordinary Shares to
be issued and sold by the Company being hereinafter called the "U.S.
Underwritten Shares"). The Company also proposes to grant to the U.S.
Underwriters an option to purchase up to 22,500,000 additional Ordinary Shares
directly or in the form of ADSs to cover overallotments (the "U.S. Option
Shares" and together with the U.S. Underwritten Shares, the "U.S. Shares" or the
"U.S. Securities").

It is understood that the Company is concurrently entering into the
International Underwriting Agreement, (together with this U.S. Underwriting
Agreement, the "Underwriting Agreements") providing for the sale by the Company
of an aggregate of 75,000,000 Ordinary Shares directly or in the form of ADSs
(said Ordinary Shares to be sold by the Company

- ----------
* Plus an option to purchase from Chartered Semiconductor Manufacturing
Ltd up to 22,500,000 additional Ordinary Shares directly or in the form
of American Depositary Shares to cover overallotments.

<PAGE> 2

pursuant to the International Underwriting Agreement being hereinafter called
the "International Underwritten Shares", and together with the U.S. Underwritten
Shares, the "Underwritten Shares") and providing for the grant to the
International Underwriters of an option to purchase from the Company up to
11,250,000 additional Ordinary Shares directly or in the form of ADSs to cover
overallotments (the "International Option Shares" and together with the
International Underwritten Shares, the "International Shares" or the
"International Securities", and the International Securities together with the
U.S. Securities, the "Securities").

It is also understood that the Company is concurrently entering into
the Singapore Management and Underwriting Agreement providing for the sale by
the Company of an aggregate of 25,000,000 Ordinary Shares (said Ordinary Shares
to be issued and sold by the Company pursuant to the Singapore Management and
Underwriting Agreement being hereinafter called the "Singapore Underwritten
Shares") and providing for the grant to the Singapore Underwriters of an option
to purchase from the Company up to 3,750,000 additional Ordinary Shares to cover
overallotments (the "Singapore Option Shares", and together with the Singapore
Underwritten Shares, the "Singapore Shares"). In connection to the Singapore
Offering, the Company has made a listing application with the Stock Exchange of
Singapore Limited (the "SES") and has prepared a prospectus (the "Singapore
Prospectus") for circulation to potential subscribers in Singapore.

You have also advised the Company that the Underwriters may elect to
cause the Company to deposit on their behalf all or any portion of the Ordinary
Shares to be purchased by them under the Underwriting Agreements pursuant to the
Deposit Agreement, dated as of [ ], 1999 (the "Deposit Agreement"), to be
entered into among the Company, Citibank, N.A., as depositary (the "Depositary")
and all holders from time to time of the ADSs. Upon any such deposit of Ordinary
Shares, the Depositary will issue ADSs representing the Shares so deposited. The
ADSs will be evidenced by American Depositary Receipts (the "ADRs"). Each ADS
will represent ten Ordinary Shares and each ADR may represent any number of
ADSs.

Unless the context otherwise requires, the terms "Underwritten
Securities", "Option Securities", "U.S. Underwritten Securities", "U.S. Option
Securities", "U.S. Securities", "International Underwritten Securities",
"International Option Securities", "International Securities", "Singapore
Underwritten Securities", and "Securities" shall be deemed to refer,
respectively, to Underwritten Shares, Option Shares, U.S. Underwritten Shares,
U.S. Option Shares, U.S. Shares, International Underwritten Shares,
International Option Shares, International Shares, Singapore Underwritten
Shares, and Shares, as well as, in each case, to any ADSs representing such
securities.

It is further understood and agreed that the U.S. Underwriters, the
International Underwriters and the Singapore Underwriters have entered into an
Agreement Among U.S. Underwriters, International Underwriters and Singapore
Underwriters, dated the date hereof (the "Agreement Among U.S. Underwriters,
International Underwriters and Singapore Underwriters"), pursuant to which,
among other things, the International Underwriters and the Singapore
Underwriters may purchase from the U.S. Underwriters a portion of the U.S.
Securities to be sold pursuant to this U.S. Underwriting Agreement, the U.S.
Underwriters and the Singapore Underwriters may purchase from the International
Underwriters a portion of the International Securities to be sold pursuant to
the International Underwriting Agreement and the

2
<PAGE> 3
U.S. Underwriters and the International Underwriters may purchase from the
Singapore Underwriters a portion of the Singapore Securities to be sold pursuant
to the Singapore Management and Underwriting Agreement.

The offering of the U.S. Shares, directly or in the form of ADSs, is
referred to herein as the "U.S. Offering"; the offering of the International
Shares, directly or in the form of ADSs, is referred to herein as the
"International Offering"; together with the U.S. Offering, the "Combined
Offering"; and the offering of the Singapore Shares (which will be only in the
form of Ordinary Shares) is referred to herein as the "Singapore Offering". The
U.S. Offering, International Offering and Singapore Offering are referred to
collectively as the "Global Offering".

As part of the Global Offering contemplated by this U.S.
Underwriting Agreement, the U.S. Underwriters, the International Underwriters
and the Singapore Underwriters have agreed to reserve up to 5% of the Ordinary
Shares (including Ordinary Shares represented by ADSs) out of the Global
Offering for sale to the Company's employees, business associates and one of its
directors, the directors, officers and employees of the Company's affiliates and
to certain charitable organizations in Singapore (collectively, "Participants"),
as set forth in the Prospectuses under the heading "Underwriting" (the "Directed
Share Program"). The Shares to be sold by the U.S. Underwriters, the
International Underwriters and the Singapore Underwriters pursuant to the
Directed Share Program (the "Directed Shares") will be sold by them at the
initial public offering price. The Directed Shares may be sold by the U.S.
Underwriters, the International Underwriters and the Singapore Underwriters
among their respective underwriting syndicates, and in such event, any
commissions may be adjusted upon agreement of the Company and the
representatives of the U.S. Underwriters, the International Underwriters and the
Singapore Underwriters. Any Directed Shares not orally confirmed for purchase by
any Participants by the end of the Business Day on which the Underwriting
Agreements and the Singapore Management and Underwriting Agreement are executed
will be offered to the public by the U.S. Underwriters, the International
Underwriters and the Singapore Underwriters as set forth in the Prospectuses and
the Agreement Among U.S. Underwriters, International Underwriters and Singapore
Underwriters.

To the extent there are no additional U.S. Underwriters listed on
Schedule I other than you, the term U.S. Representatives as used in this U.S.
Underwriting Agreement shall mean you, as U.S. Underwriters, and the terms U.S.
Representatives and U.S. Underwriters shall mean either the singular or plural
as the context requires. The use of the neuter in this U.S. Underwriting
Agreement shall include the feminine and masculine wherever appropriate.

Certain terms used in this U.S. Underwriting Agreement are defined
in Section 21 hereof.

1. Representations and Warranties. The Company represents and
warrants to, and agrees with, each U.S. Underwriter as set forth below in this
Section 1.

3
<PAGE> 4
may have filed one or more amendments thereto, including the related U.S.
Preliminary Prospectus, which has previously been furnished to you. The
Company will next file with the Commission either (1) prior to the
Effective Date of the Registration Statement, a further amendment to the
Registration Statement (including the form of U.S. Prospectus) or (2)
after the Effective Date of the Registration Statement, the U.S.
Prospectus in accordance with Rules 430A and 424(b). In the case of clause
(2), the Company has included in the Registration Statement, as amended at
the Effective Date, all information (other than Rule 430A Information)
required by the Act and the rules thereunder to be included in the
Registration Statement and the U.S. Prospectus with respect to the
Ordinary Shares and the offering thereof directly or in the form of ADSs.
As filed, such amendment and form of final U.S. Prospectus, or such U.S.
Prospectus, as the case may be, shall contain all Rule 430A Information,
together with all other such required information, with respect to the
underlying Ordinary Shares and the offering thereof directly or in the
form of ADSs, and, except to the extent the U.S. Representatives shall
agree to a modification, shall be in all substantive respects in the form
furnished to you prior to the Execution Time or, to the extent not
completed at the Execution Time, shall contain only such specific
additional information and other changes (beyond that contained in the
latest U.S. Preliminary Prospectus) as the Company has advised you, prior
to the Execution Time, will be included or made therein.

It is understood that two forms of prospectuses are to be used in
connection with the Combined Offering and sale of the Securities: one form
of prospectus relating to the U.S. Securities, which are to be offered and
sold to United States and Canadian Persons, and one form of prospectus
relating to the International Securities, which are to be offered and sold
to persons other than United States and Canadian Persons. The U.S.
Prospectus and the International Prospectus are identical except for the
outside front cover page and the outside back cover page. In addition, the
Singapore Prospectus will be used in connection with the Singapore
Offering.

(b) On the Effective Date, the Registration Statement did or will,
and when the U.S. Prospectus is first filed (if required) in accordance
with Rule 424(b) and on the Closing Date (as defined in this U.S.
Underwriting Agreement) and on any date on which Option Securities are
purchased, if such date is not the Closing Date (a "settlement date"),
each U.S. Prospectus (and any supplements thereto) will comply in all
material respects with the applicable requirements of the Act and the
rules thereunder; on the Effective Date and at the Execution Time, the
Registration Statement did not or will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading; and, on the Effective Date, each Prospectus, if not filed
pursuant to Rule 424(b), did not and will not, and on the date of any
filing pursuant to Rule 424(b) and on the Closing Date and any settlement
date, each Prospectus (together with any supplement thereto) will not,
include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no representations or warranties
as to the information contained in or omitted from the Registration
Statement, or the Prospectuses (or any supplement thereto), in reliance
upon and in conformity with information furnished herein or in writing to
the Company by or

4
<PAGE> 5
on behalf of any Underwriter through the Representatives specifically for
inclusion in the Registration Statement or the Prospectuses (or any
supplement thereto). It is understood that the information that has been
furnished in writing by or on behalf of the several Underwriters for
inclusion in the Registration Statement, Preliminary Prospectuses or the
Prospectuses is limited to (A) the names of the Underwriters and their
respective participation in the sale of the Securities as set forth in the
two charts under the heading "Underwriting" in the Preliminary
Prospectuses or Prospectuses, (B) the statements set forth in the last
paragraph on the front cover page of the Preliminary Prospectuses or
Prospectuses regarding delivery of the Securities (and the ADSs
representing such Securities) and (C) the statements set forth in the
seventh, tenth and sixteenth paragraphs under the heading "Underwriting"
in the Preliminary Prospectuses or Prospectuses.

(c) The Company has filed with the Commission a registration
statement (file number 333-88623) on Form F-6 (the "ADR Registration
Statement") for the registration under the Act of the offering and sale of
the ADSs. The Company may have filed one or more amendments thereto, each
of which has previously been furnished to you. Such ADR Registration
Statement at the time of its effectiveness did or will comply and on the
Closing Date, will comply, in all material respects with the applicable
requirements of the Act and the rules thereunder and at the time of its
Effective Date and at the Execution Time, did not and will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading.

(d) Each of the Company and the Subsidiaries has been duly
incorporated and is validly existing as a corporation under the laws of
the jurisdiction in which it is incorporated with full corporate power to
own or lease, as the case may be, and to operate its properties and
conduct its business as described in the Prospectuses, and is duly
qualified to do business as a foreign corporation and is in good standing
under the laws of each jurisdiction which requires such qualification,
except where the failure to be so qualified or be in good standing would
not, individually or in the aggregate, have a material adverse effect on
the condition (financial or otherwise), prospects, earnings, business or
properties of the Company and the Subsidiaries, taken as a whole.

(e) All the outstanding share capital of each Subsidiary has been
duly and validly authorized and issued and is fully paid and
non-assessable and, except for such shares of Chartered Silicon Partners
Pte Ltd ("CSP") as are owned by Hewlett-Packard Europe B.V., or EDB
Investments Pte Ltd which shares do not exceed 49% of the outstanding
voting shares of CSP, all the outstanding shares of capital stock of the
Subsidiaries are owned by the Company directly free and clear of any
perfected security interests, liens or encumbrances.

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<PAGE> 6

duly and validly authorized, and, when issued and delivered to the
Depositary or its nominee in accordance with the Deposit Agreement, the
U.S. Underwriters in accordance with this U.S. Underwriting Agreement and
the International Underwriters in accordance with the International
Underwriting Agreement, will be validly issued, fully paid and
non-assessable. The certificates for the Shares and the ADRs are in valid
form. The holders of outstanding shares of capital stock of the Company
are not entitled to any preemptive or other rights to subscribe for the
Shares and the Securities except for such rights that have been
effectively waived. Except as disclosed in the Prospectuses, no options,
warrants or other rights to purchase, agreements or other obligations to
issue, or rights to convert any obligations into or exchange any
securities for, shares of capital stock of or ownership interests in the
Company are outstanding. The Securities are freely transferable by the
Company to or for the account of the several Underwriters, their designees
and the initial purchasers thereof, and except as set forth in the
Prospectuses there are no restrictions on subsequent transfers of the
Securities under the laws of Singapore and of the United States.

(g) The capital stock of the Company conforms in all material
respects to the description thereof contained in the Prospectuses. The
capital restructuring was approved by the Company's shareholders at an
extraordinary general meeting on October 14, 1999 (the "EGM") and has
become effective and has been completed as described in the Prospectuses
under the heading "Capitalization." The Articles of Association described
in the Prospectuses under the heading "Description of Ordinary Shares"
were adopted by the Company's shareholders at the EGM and are in full
force and effect.

(h) Each of this U.S. Underwriting Agreement, the International
Underwriting Agreement, the Singapore Management and Underwriting
Agreement and the Deposit Agreement has been duly authorized, executed and
delivered by the Company.

(i) There is no franchise, contract or other document of a character
required to be described in the Registration Statement, ADR Registration
Statement or Prospectuses, or to be filed as an exhibit thereto, which is
not described or filed as required; and the description of each such
contract, franchise or document in the Prospectuses is a fair description
thereof in all material respects; and each such franchise, contract or
other document to which the Company is a party, assuming due
authorization, execution and delivery thereof by all parties thereto, is
enforceable against the Company, in accordance with its terms, and is in
full force and effect and to the Company's knowledge, is a legal, valid
and binding obligation of the other parties thereto. The statements in the
Prospectuses under the heading "Taxation", fairly summarize the matters
therein described.

(j) Upon deposit of the underlying U.S. Shares with the Depositary
or its nominee pursuant to the Deposit Agreement in accordance with the
terms thereof, all right, title and interest in such U.S. Shares will be
transferred to the Depositary on behalf of the U.S. Underwriters, free and
clear of all pledges, liens, security interests, charges, claims or
encumbrances of any kind. Upon issuance by the Depositary of the ADRs
evidencing the ADSs against deposit of underlying Ordinary Shares in
accordance with the provisions of the Deposit Agreement, such ADRs will be
duly and validly issued and

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<PAGE> 7

persons in whose names the ADRs are duly registered will be entitled to
the rights specified in the ADRs and in the Deposit Agreement; and upon
the sale and delivery to the U.S. Underwriters of the U.S. Securities, and
payment therefor in accordance with this U.S. Underwriting Agreement, the
U.S. Underwriters will acquire good, marketable and valid title to such
U.S. Securities subject to the terms of the Deposit Agreement, free and
clear of all pledges, liens, security interests, charges, claims or
encumbrances of any kind, other than those arising in favor of the persons
purchasing through the U.S. Underwriters.

(k) No stamp or other issuance or transfer taxes or duties and no
capital gains, income, withholding or other taxes are payable by or on
behalf of the Underwriters to the Singapore government or any political
subdivision or taxing authority thereof in connection with (A) the
execution and delivery of the Underwriting Agreements, (B) the issuance
of the Shares or the ADSs in the manner contemplated by the Underwriting
Agreements, (C) the deposit with the Depositary of the underlying Ordinary
Shares against issuance of ADRs evidencing the ADSs, (D) the sale and
delivery of the Ordinary Shares and the ADSs to the Underwriters, or (E)
except as disclosed in the Prospectuses under the heading
"Taxation--Singapore Taxation", the resale and delivery of such Ordinary
Shares and ADSs by the U.S. Underwriters or the International Underwriters
in the manner contemplated in the Prospectuses.

(l) Except as described in the Prospectuses, all dividends and other
distributions declared and payable on the Ordinary Shares may under
current Singapore law and regulations be paid to the Depositary and to the
holders of Securities, as the case may be, in Singapore dollars and may be
converted into foreign currency that may be transferred out of Singapore
in accordance with the Deposit Agreement.

(m) No consent, approval (including exchange control approval),
authorization, filing with or order of any court or governmental or
regulatory agency or body is required under Singapore or U.S. federal law
or the laws of any state or political subdivision thereof in connection
with the transactions contemplated in this U.S. Underwriting Agreement,
the International Underwriting Agreement, the Singapore Management and
Underwriting Agreement and the Deposit Agreement, except such as have been
obtained under the Act, the Exchange Act, the Companies Act, Chapter 50 of
Singapore, and such as may be required under the blue sky or similar laws
of any jurisdiction in connection with the purchase and distribution of
the Securities by the Underwriters in the manner contemplated in the
Underwriting Agreements and the Prospectuses except as may be required
pursuant to the National Association of Securities Dealers, Inc. rules,
The Nasdaq Stock Market, Inc. rules or the letter from the SES dated
September 15, 1999 granting approval in principle for the listing and
quotation of the entire issued and share capital of the Company on the
Main Board of the SES, as have been obtained.

(n) Neither the issue and sale of the Securities nor the
consummation of any other of the transactions contemplated in this U.S.
Underwriting Agreement, the International Underwriting Agreement, the
Singapore Management and Underwriting Agreement or the Deposit Agreement,
nor the fulfillment of the terms hereof or thereof

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<PAGE> 8
will conflict with, result in a breach or violation of, or imposition of
any lien, charge or encumbrance upon any property or assets of the Company
or any of the Subsidiaries pursuant to, (i) the memorandum and articles of
association of the Company or the constituent documents of any of the
Subsidiaries, (ii) the terms of any indenture, contract, lease, mortgage,
deed of trust, note agreement, loan agreement, permit, license, franchise
or other agreement, obligation, condition, covenant or instrument to which
the Company or any of the Subsidiaries is a party or bound or to which its
or their property is subject, or (iii) any statute, law, rule, regulation,
judgment, order or decree applicable to the Company or any of the
Subsidiaries of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction over
the Company or any of the Subsidiaries or any of its or their properties,
except, with respect to clause (ii) or (iii) above, such as would not
individually or in the aggregate, have a material adverse effect on (A)
the performance of this U.S. Underwriting Agreement or the consummation of
any of the transactions contemplated herein or (B) the condition
(financial or otherwise), prospects, earnings, business or properties of
the Company and the Subsidiaries, taken as a whole.

(o) The Company is not and, after giving effect to the offering and
sale of the Securities and the application of the proceeds thereof as
described in the Prospectuses, will not be an "investment company" as
defined in the Investment Company Act of 1940, as amended (the "1940
Act").

(p) No holders of securities of the Company have rights to the
registration of such securities under the Registration Statement or the
ADR Registration Statement except for such rights that have been
effectively waived.

(q) The consolidated historical financial statements and schedules
of the Company and the Subsidiaries (including the related notes) included
in the Registration Statement and the Prospectuses present fairly in all
material respects the financial condition, results of operations, changes
in financial position and cash flows as of the dates and for the periods
indicated, comply as to form with the applicable accounting requirements
of the Act and have been prepared in conformity with United States
generally accepted accounting principles ("U.S. GAAP") applied on a
consistent basis throughout the periods indicated (except as otherwise
noted therein). The summary and selected financial data included in the
Registration Statement and the Prospectuses fairly present in all material
respects, on the basis stated in the Registration Statement and the
Prospectuses, the information included therein. The pro forma financial
statements included in the Prospectuses and the Registration Statement
include assumptions that provide a reasonable basis for presenting the
significant effects directly attributable to the transactions and the
events described therein, the related pro forma adjustments give
appropriate effect to those assumptions, and the pro forma adjustments
reflect proper application of those adjustments to the historical
financial statement amounts in the pro forma financial statements included
in the Prospectuses and the Registration Statement. The pro forma
financial statements included in the Prospectuses and the Registration
Statement comply as to form in all material respects with the applicable
accounting requirements of Regulation S-X under the Act and the pro forma
adjustments have been properly applied to the historical amounts in the
compilation of those statements.

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<PAGE> 9
(r) No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of the Subsidiaries or its or their property is pending or,
to the knowledge of the Company, threatened that (i) could reasonably be
expected to have a material adverse effect on the performance of this U.S.
Underwriting Agreement or the consummation of any of the transactions
contemplated hereby or (ii) could reasonably be expected to have a
material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and the
Subsidiaries, taken as a whole, whether or not arising from transactions
in the ordinary course of business, except as set forth or contemplated in
the Prospectuses (exclusive of any supplement thereto).

(s) Each of the Company and the Subsidiaries owns or leases all such
properties as are necessary to the conduct of its operations as presently
conducted. Any real property and buildings held under lease by the Company
or any of the Subsidiaries are held under valid, subsisting and
enforceable leases, with such exceptions as are not material and do not
interfere with the use made or proposed to be made of such property and
buildings by the Company or any of the Subsidiaries, in each case except
as described in or contemplated in the Prospectuses.

(t) Neither the Company nor any of the Subsidiaries is in violation
or default of (i) any provision of its Memorandum and Articles of
Association or other constituent documents, (ii) the terms of any
indenture, contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, condition, covenant or
instrument to which it is a party or bound or to which its property is
subject, or (iii) any statute, law, rule, regulation, judgment, order or
decree applicable to the Company or any of the Subsidiaries of any court,
regulatory body, administrative agency, governmental body, arbitrator or
other authority having jurisdiction over the Company or any of the
Subsidiaries or any of its or their properties, except, with respect to
clause (ii) or (iii) above, such as would not individually or in the
aggregate, have a material adverse effect on (A) the performance of this
U.S. Underwriting Agreement or the consummation of any of the transactions
contemplated herein or (B) the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and the
Subsidiaries, taken as a whole.

(u) KPMG Peat Marwick ("KPMG"), who have certified certain financial
statements of the Company and the Subsidiaries and delivered their report
with respect to the audited consolidated financial statements and
schedules included in the Registration Statement and the Prospectuses, are
independent public accountants with respect to the Company within the
meaning of the Act and the applicable published rules and regulations
thereunder.

(v) The Company has not taken, directly or indirectly, any action
designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute under the Exchange Act or otherwise,
the stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities, provided,
however, that this provision shall not apply to any trading or
stabilization activities conducted by the Underwriters.

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<PAGE> 10
(w) Each of the Company and the Subsidiaries possesses all licenses,
permits, certificates and other authorizations issued by the appropriate
Singapore, U.S., foreign, federal, state or local regulatory authorities
necessary to conduct its business as currently conducted, except in any
case in which the failure so to possess any such license, permit,
certificate or other authorization would not, individually or in the
aggregate, have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company and
the Subsidiaries, taken as a whole. Neither the Company nor any of the
Subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such license, permit, certificate or
authorization which, singly or in the aggregate, if the subject of an
unfavorable decision ruling or findings, would have a material adverse
effect on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and the Subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary course of
business, except as set forth in the Prospectuses (exclusive of any
supplement thereto).

(x) [Intentionally Omitted]

(y) No labor dispute with the employees of the Company or any of the
Subsidiaries exists or to the Company's best knowledge, threatened, and
the Company is not aware of any existing labor disturbance by the
employees of any of its or any of the Subsidiaries', that could have a
material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and the
Subsidiaries, taken as a whole, whether or not arising from transactions
in the ordinary course of business, except as set forth in or contemplated
in the Prospectuses (exclusive of any supplement thereto).

(z) Each of the Company and the Subsidiaries is insured by insurers
of recognized financial responsibility against such losses and risks and
in such amounts as are prudent and customary in the businesses in which it
is engaged. All policies of insurance insuring the Company or any of the
Subsidiaries or their respective businesses, assets, employees, officers
and directors are in full force and effect; each of the Company and the
Subsidiaries is in compliance with the terms of such policies and
instruments in all material respects; and there are no claims by the
Company or any of the Subsidiaries under any such policy or instrument as
to which any insurance company is denying liability or defending under a
reservation of rights clause. Neither the Company nor any of the
Subsidiaries has been refused any insurance coverage sought or applied
for. The Company has no reason to believe that either the Company or any
of the Subsidiaries will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage
from similar insurers as may be necessary to continue its business at a
cost that would not have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or properties of
the Company and the Subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business, except as set forth
in or contemplated in the Prospectuses (exclusive of any supplement
thereto).

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<PAGE> 11
(aa) None of the Company's Subsidiaries is currently prohibited,
directly or indirectly, from paying any dividends to the Company, from
making any other distribution on its capital stock, from repaying to the
Company any loans or advances to it from the Company or from transferring
any of its property or assets to the Company or the other Subsidiary,
except for certain restrictions as set forth in the Joint Venture
Agreement dated July 4, 1997 by and among the Company, Hewlett-Packard
Europe B.V. and EDB Investments Pte Ltd (as amended) or as described in or
contemplated in the Prospectuses.

(bb) The Company and the Subsidiaries own, possess, license or have
other rights to use, on reasonable terms, all patents, patent
applications, trademarks, service marks, trade and service mark
registrations, trade names, licenses, copyrights, inventions, trade
secrets, technology, know-how and other intellectual property
(collectively, the "Intellectual Property") necessary for the conduct of
the Company's business as now conducted, and as described in the
Prospectuses, except where the failure to so own, possess, license or have
other rights to use would not have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company and the Subsidiaries, taken as a whole, whether
or not arising from the ordinary course of business. Except as set forth
in the Prospectuses under the captions "Risk Factors" or "Business -
Intellectual Property," to the Company's best knowledge, (a) there are no
rights of third parties to any such Intellectual Property; (b) there is no
material unauthorized use, infringement or misappropriation by third
parties of any such Intellectual Property; (c) there is no pending or
threatened action, suit, proceeding or claim by others challenging the
Company's rights in or to any such Intellectual Property, and the Company
is unaware of any facts which would form a reasonable basis for any such
claim; (d) there is no pending or threatened action, suit, proceeding or
claim by others challenging the validity or scope of any such Intellectual
Property, and the Company is unaware of any facts which would form a
reasonable basis for any such claim; (e) there is no pending or threatened
action, suit, proceeding or claim by others that the Company infringes or
otherwise violates any patent, trademark, copyright, trade secret or other
proprietary right of others in any Intellectual Property, and the Company
is unaware of any other fact which would form a reasonable basis for any
such claim; and (f) there is no prior art of which the Company is aware
that may render any U.S. patent held by the Company invalid or any U.S.
patent application held by the Company unpatentable which has not been
disclosed to the U.S. Patent and Trademark Office, in the case of any of
(a) through (f) above, which would have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company and the Subsidiaries, taken as a whole, whether
or not arising from the ordinary course of business.

(cc) Each of the Company and the Subsidiaries have implemented a
comprehensive, detailed program to analyze and address the risk that the
computer hardware and software used by them may be unable to operate
correctly with respect to calendar dates falling on or after January 1,
2000 in the same manner, and with the same functionality, as with respect
to calendar dates falling on or before December 31, 1999 (the "Year 2000
Problem"), and the Company and each of the Subsidiaries reasonably
believes that such program will address the Year 2000 Problem with respect
to the material operations of the Company on a timely basis and will not
have a material adverse effect upon the condition (financial or
otherwise), prospects, earnings, business or properties of the Company and
the Subsidiaries, taken as a whole.

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<PAGE> 12
(dd) The Company has filed all Singapore, U.S., foreign, federal,
state and local tax returns that are required to be filed or has requested
extensions thereof, except in any case in which the failure so to file
would not have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company and
the Subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in or
contemplated in the Prospectuses (exclusive of any supplement thereto) and
has paid all taxes required to be paid by it and any other assessment,
fine or penalty levied against it, to the extent that any of the foregoing
is due and payable, except for any such assessment, fine or penalty that
is currently being contested in good faith or as would not have a material
adverse effect on the condition (financial or otherwise), prospects,
earnings, business or properties of the Company and the Subsidiaries,
taken as a whole, whether or not arising from transactions in the ordinary
course of business, except as set forth in or contemplated in the
Prospectuses (exclusive of any supplement thereto).

(ee) No Underwriter or holder of Securities is or will be deemed to
be resident, domiciled, carrying on business or subject to taxation in
Singapore solely by reason of the execution, delivery, consummation or
enforcement of this U.S. Underwriting Agreement.

(ff) Each of the Company and the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with U.S.
generally accepted accounting principles and to maintain asset
accountability; (iii) access to assets is permitted only in accordance
with management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

[(gg) The Company represents and warrants that (i) the Registration
Statement, the ADR Registration Statement, the Prospectuses and the
Preliminary Prospectuses comply, and any further amendments or supplements
thereto will comply, with any applicable laws or regulations of foreign
jurisdictions in which the Prospectuses or Preliminary Prospectuses, as
amended or supplemented, if applicable, are distributed in connection with
the Directed Share Program, and that (ii) no authorization, approval,
consent, license, order, registration or qualification of or with any
government, governmental instrumentality or court, other than such as have
been obtained, is necessary under the securities laws and regulations of
foreign jurisdictions in which the Directed Shares are offered outside the
United States.]

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<PAGE> 13
their respective businesses and (iii) have not received notice of any
actual or potential liability for the investigation or remediation of any
disposal or release of hazardous or toxic substances or wastes, pollutants
or contaminants, except where such non-compliance with Environmental Laws,
failure to receive required permits, licenses or other approvals, or
liability would not, individually or in the aggregate, have a material
adverse change in the condition (financial or otherwise), prospects,
earnings, business or properties of the Company and the Subsidiaries,
taken as a whole, whether or not arising from transactions in the ordinary
course of business, except as set forth in the Prospectuses (exclusive of
any supplement thereto).

(ii) Each of the Company and the Subsidiaries has fulfilled its
obligations, if any, under the minimum funding standards of Section 302 of
the United States Employee Retirement Income Security Act of 1974
("ERISA") and the regulations and published interpretations thereunder
with respect to each "plan" (as defined in Section 3(3) of ERISA and such
regulations and published interpretations) in which employees of the
Company and the Subsidiaries are eligible to participate (other than any
"multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA)
and each such plan (other than any "multiemployer plan" within the meaning
of Section 4001(a)(3) of ERISA) is in compliance in all material respects
with the presently applicable provisions of ERISA and the United States
Internal Federal Revenue Code of 1986, as amended and such regulations and
published interpretations, except where such failure to fulfill or such
non-compliance would not, individually or in the aggregate, have a
material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and the
Subsidiaries, taken as a whole. The Company and the Subsidiaries have not
incurred any unpaid liability to the Pension Benefit Guaranty Corporation
(other than for the payment of premiums in the ordinary course) or to any
such plan under Title IV of ERISA, except such as would not, individually
or in the aggregate, have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or properties of
the Company and the Subsidiaries, taken as a whole.

(jj) The Subsidiaries are the only significant subsidiaries of the
Company as defined by Rule 1.02 of Regulation S-X.

(kk) [Intentionally Omitted]

Any certificate signed by any officer of the Company or any of the
Subsidiaries, in his or her capacity as an officer of the Company or any
of the Subsidiaries, and delivered to you or counsel for the U.S.
Underwriters in connection with this U.S. Underwriting Agreement shall be
deemed to be a representation and warranty by the Company to each U.S.
Underwriter as to the matters covered thereby.

2. Purchase and Sale.

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<PAGE> 14
(a) Subject to the terms and conditions and in reliance upon the
representations and warranties set forth in this U.S. Underwriting
Agreement, the Company agrees to sell to each U.S. Underwriter, and each
U.S. Underwriter agrees, severally and not jointly, to purchase from the
Company, at a purchase price of US$[ ] per ADS and US$[ ] per Ordinary
Share (which has been determined by converting the equity price in
Singapore dollars per Ordinary Share to U.S. dollars according to the
exchange rate set forth in [ ] on the date
hereof), the amount of U.S. Underwritten Shares set forth opposite such
U.S. Underwriter's name in Schedule I to this U.S. Underwriting Agreement.

(b) Subject to the terms and conditions and in reliance upon the
representations and warranties set forth in this U.S. Underwriting
Agreement, the Company hereby grants an option to the several U.S.
Underwriters to purchase, severally and not jointly, up to 22,500,000 U.S.
Option Securities at the same purchase price per ADS and per Ordinary
Share as the U.S. Underwriters shall pay for the U.S. Underwritten
Securities. Said option may be exercised to cover overallotments in the
sale of the U.S. Underwritten Securities by the U.S. Underwriters. Said
option may be exercised in whole or in part at any time (but not more than
once) on or before the 30th day after the date of the Prospectuses upon
written or telegraphic notice by the U.S. Representatives to the Company
setting forth the number of shares of the U.S. Option Securities as to
which the several U.S. Underwriters are exercising the option and the
settlement date. The number of U.S. Option Securities to be purchased by
each U.S. Underwriter shall be the same percentage of the total number of
shares of the U.S. Option Securities to be purchased by the several U.S.
Underwriters as such U.S. Underwriter is purchasing of the U.S.
Underwritten Securities, subject to such adjustments as you in your
absolute discretion shall make to eliminate any fractional shares.

3. Delivery and Payment. Delivery of and payment for the U.S.
Underwritten Securities and the U.S. Option Securities (if the option provided
for in Section 2(b) hereof shall have been exercised on or before the fifth
Business Day prior to the Closing Date) shall be made at 10:00 AM, New York City
time, on [ ], 1999, or such later date not later than five Business Days after
the foregoing date as the U.S. Representatives shall designate, which date and
time may be postponed by agreement among the U.S. Representatives and the
Company or as provided in Section 9 hereof (such date and time of delivery and
payment for the U.S. Securities being herein called in this U.S. Underwriting
Agreement, the "Closing Date"). Delivery of the U.S. Securities shall be made to
the U.S. Representatives for the respective accounts of the several U.S.
Underwriters, or if the U.S. Underwriters so elect, to the Depositary or its
nominee pursuant to the Deposit Agreement, in either case, against payment by
the several U.S. Underwriters through the U.S. Representatives of the respective
aggregate purchase prices of the U.S. Securities being sold by the Company to or
upon the order of the Company by wire transfer payable in same day funds to the
accounts specified by the Company. Delivery of the ADRs representing U.S.
Underwritten Securities and the U.S. Option Securities shall be made through the
facilities of The Depository Trust Company unless the U.S. Representatives shall
otherwise instruct at least one Business Day in advance of the Closing Date.
ADRs representing the U.S. Securities and any U.S. Shares not delivered to the
Depositary or its nominee pursuant to the Deposit Agreement shall be registered
in such names and in such denominations as

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<PAGE> 15
Salomon Smith Barney Inc. ("Salomon Smith Barney") may request not less than two
Business Days in advance of the Closing Date.

It is understood and agreed that the Closing Date shall occur
simultaneously with the "Closing Date" under the International Underwriting
Agreement and the Singapore Management and Underwriting Agreement and that the
settlement date for any U.S. Option Securities occurring after the Closing Date,
shall occur simultaneously with the settlement date under the International
Underwriting Agreement and the Singapore Management and Underwriting Agreement
for any International Option Securities and Singapore Option Securities
occurring after the Closing Date.

If the option provided for in Section 2(b) hereof is exercised after
the fifth Business Day prior to the Closing Date, the Company will deliver (at
the expense of the Company) to the U.S. Representatives, c/o Salomon Smith
Barney at 388 Greenwich Street, New York, New York 10013, on the date specified
by the U.S. Representatives (which shall be within five Business Days after
exercise of said option), ADRs representing the U.S. Option Securities and any
U.S. Option Shares not delivered to the Depositary or its nominee pursuant to
the Deposit Agreement in such names and denominations as the U.S.
Representatives shall have requested against payment by the several U.S.
Underwriters through the U.S. Representatives of the purchase price thereof to
or upon the order of the Company by wire transfer of U.S. dollars and payable in
same day funds to the accounts specified by the Company. If settlement for the
U.S. Option Securities occurs after the Closing Date, the Company will deliver
to the U.S. Representatives on the settlement date for the U.S. Option
Securities, and the obligation of the U.S. Underwriters to purchase the U.S.
Option Securities shall be conditioned upon receipt of, supplemental opinions,
certificates and letters confirming as of such date the opinions, certificates
and letters delivered on the Closing Date pursuant to Section 6 hereof.

4. Offering by Underwriters. It is understood that the several U.S.
Underwriters propose to offer the U.S. Securities for sale to the public as set
forth in the Prospectuses.

5. Agreements. (I) The Company agrees with the several U.S.
Underwriters that:

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<PAGE> 16
the ADR Registration Statement has become or becomes effective pursuant to
Rule 430A, or filing of the U.S. Prospectus is otherwise required under
Rule 424(b), the Company will cause the U.S. Prospectus, properly
completed, and any supplement thereto to be filed with the Commission
pursuant to the applicable paragraph of Rule 424(b) within the time period
prescribed and will provide evidence satisfactory to the U.S.
Representatives of such timely filing. The Company will promptly advise
the U.S. Representatives (1) when the Registration Statement and the ADR
Registration Statement, if not effective at the Execution Time, shall have
become effective, (2) when the U.S. Prospectus, and any supplement
thereto, shall have been filed (if required) with the Commission pursuant
to Rule 424(b) or when any Rule 462(b) Registration Statement or ADR
Registration Statement shall have been filed with the Commission, (3)
when, prior to termination of the offering of the Securities, any
amendment to the Registration Statement or the ADR Registration Statement
shall have been filed or become effective, (4) of any request by the
Commission or its staff for any amendment of the Registration Statement,
or any Rule 462(b) Registration Statement or ADR Registration Statement,
or for any supplement to the U.S. Prospectus or for any additional
information, (5) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the ADR
Registration Statement or the institution or threatening of any proceeding
for that purpose and (6) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Securities for
sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose. The Company will use its best efforts to
prevent the issuance of any such stop order and, if issued, to obtain as
soon as possible the withdrawal thereof.

(b) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of
which the U.S. Prospectus as then supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein in the light of the circumstances under
which they were made not misleading, or if it shall be necessary to amend
the Registration Statement or the ADR Registration Statement or supplement
the U.S. Prospectus to comply with the Act or the rules thereunder, the
Company promptly will (1) notify the U.S. Representatives of any such
event; (2) prepare and file with the Commission, subject to the second
sentence of paragraph (i)(a) of this Section 5, an amendment or supplement
which will correct such statement or omission or effect such compliance;
and (3) supply any supplemental U.S. Prospectus to you in such quantities
as you may reasonably request.

(c) As soon as practicable, the Company will timely file such
reports pursuant to the Exchange Act as are necessary in order to make
generally available to its security holders and to the U.S.
Representatives an earnings statement or statements covering the 12 month
period ending December 31, 2000 of the Company and the Subsidiaries which
will satisfy the provisions of Section 11(a) of the Act and Rule 158 under
the Act.

(d) The Company will furnish to the U.S. Representatives and counsel
for the U.S. Underwriters, without charge, signed copies of the
Registration Statement and the ADR Registration Statement (including
exhibits thereto) and to each other U.S. Underwriter a copy of the
Registration Statement and the ADR Registration Statement

16
<PAGE> 17
(without exhibits thereto) and, so long as delivery of a prospectus by an
U.S. Underwriter or dealer may be required by the Act, as many copies of
each U.S. Preliminary Prospectus and U.S. Prospectus and any supplement
thereto as the U.S. Representatives may reasonably request.

(e) The Company will arrange, if necessary, for the qualification of
the Securities for sale under the laws of such jurisdictions as the U.S.
Representatives may designate and will maintain such qualifications in
effect so long as required for the distribution of the U.S. Securities,
provided, however, that in no event shall the Company be obligated to
qualify to do business in any jurisdiction where it is not now so
qualified or to take any action that would subject it to service of
process in suits, other than those arising out of the offering or sale of
the Securities, in any jurisdiction where it is not now so subject.

(f) Except pursuant to the Underwriting Agreements, the Company will
not, without the prior written consent of Salomon Smith Barney offer,
sell, contract to sell, pledge, or otherwise dispose of, (or enter into
any transaction which is designed to, or might reasonably be expected to,
result in the disposition (whether by actual disposition or effective
economic disposition due to cash settlement or otherwise) by the Company)
directly or indirectly, including the filing (or participation in the
filing) of a registration statement with the 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, any Ordinary Shares or ADSs or any securities convertible into, or
exercisable, or exchangeable for, Ordinary Shares or ADSs; or publicly
announce an intention to effect any such transaction, for a period of 180
days after the date of the Underwriting Agreements, provided, however,
that the Company may issue and sell Ordinary Shares pursuant to any
employee stock option plan or stock ownership plan and may file a Form
S-8 with respect thereto.

(g) The Company will not take, directly or indirectly, any action
designed to or which has constituted or which might reasonably be expected
to cause or result, under the Exchange Act or otherwise, in stabilization
or manipulation of the price of any security of the Company to facilitate
the sale or resale of the Ordinary Shares or the ADSs.

17
<PAGE> 18
the Depositary; (iv) all expenses relating to the road show for the
offering of the Securities, including the transportation and other
expenses incurred by or on behalf of Company representatives in connection
with presentations to prospective purchasers of the Securities; (v) the
preparation, printing, authentication, issuance and delivery of
certificates for the Securities, including any stamp or transfer taxes in
connection with the original issuance and sale of the Securities; (vi) the
registration of the Securities under the Exchange Act and the listing of
the Ordinary Shares and the ADSs on the SES and The Nasdaq National
Market, Inc., respectively; (vii) any filings required to be made with the
National Association of Securities Dealers, Inc. (the "NASD") (including
filing fees and the reasonable fees and expenses of counsel for the
Underwriters relating to such filings); (viii) the fees and expenses of
the Authorized Agent (as defined in Section 15 hereof); (ix) the cost and
charges of any transfer agent or registrar; and (x) all other costs and
expenses incident to the performance by the Company of its obligations
under the Underwriting Agreements.

(i) Each U.S. Underwriter agrees that (i) it is not purchasing any
of the U.S. Securities 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 of the U.S. Securities or
distribute any U.S. Prospectus to any person outside 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 of the U.S. Securities 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 of the U.S. Securities outside 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; provided, however, that the foregoing shall not restrict (A)
purchases and sales among the International Underwriters, the U.S.
Underwriters and the Singapore Underwriters pursuant to the Agreement
Among U.S. Underwriters, International Underwriters and Singapore
Underwriters, (B) stabilization transactions contemplated under the
Agreement Among U.S. Underwriters, International Underwriters and
Singapore Underwriters, conducted through Salomon Smith Barney (or through
the U.S. Representatives, International Representatives and Singapore
Representatives) as part of the distribution of the Securities, and (C)
sales to or through (or distributions of U.S. Prospectuses or U.S.
Preliminary Prospectuses to) United States or Canadian Persons who are
investment advisors, or who otherwise exercise investment discretion, and
who are purchasing for the account of anyone other than a United States or
Canadian Person.

[(j) The Company agrees that, in connection with the Directed Share
Program, the Company will ensure that the Directed Shares will be
restricted to the extent required by the NASD or the NASD rules from sale,
transfer, assignment, pledge or hypothecation for a period of three months
following the date of the effectiveness of the Registration Statement.
Salomon Smith Barney will notify the Company in writing as to which
Participants will need to be so restricted. The Company will direct the
removal of the transfer restrictions upon the expiration of such period of
time.]

(k) The Company covenants with Salomon Smith Barney that the Company
will comply with all applicable securities and other applicable laws,
rules and regulations

18
<PAGE> 19
in each foreign jurisdiction in which the Directed Shares are offered in
connection with the Directed Share Program.

(II) The agreements of the U.S. Underwriters set forth in paragraph
(I)(i) of this Section 5 shall terminate upon the earlier of the following
events:

[(a) a mutual agreement of the U.S. Representatives and the
International Representatives to terminate the selling restrictions set
forth in paragraph I(i) of this Section 5 and paragraph I(i) of Section 5
of the International Underwriting Agreement; or]

(b) the expiration of a period of 30 days after the Closing Date,
unless (i) the U.S. Representatives shall have given notice to the
Company, the International Representatives and the Singapore
Representatives that the distribution of the U.S. Securities by the U.S.
Underwriters has not yet been completed, or (ii) the International
Representatives shall have given notice to the Company, the U.S.
Representatives and the Singapore Representatives that the distribution of
the International Securities by the International Underwriters has not yet
been completed, or (iii) the Singapore Representatives shall have given
notice to the Company, the U.S. Representatives and the International
Representatives that the distribution of the Singapore Securities by the
Singapore Underwriters has not yet been completed. If such notice by the
U.S. Representatives or the International Representatives or the Singapore
Representatives is given, the agreements set forth in such paragraph I(i)
shall survive until the earlier of (1) the event referred to in clause (a)
of this subsection (II) or (2) the expiration of an additional period of
30 days from the date of any such notice.

6. Conditions to the Obligations of the U.S. Underwriters. The
obligations of the U.S. Underwriters to purchase the U.S. Underwritten
Securities and the U.S. Option Securities, as the case may be, shall be subject
to the accuracy of the representations and warranties on the part of the Company
contained in this U.S. Underwriting Agreement as of the Execution Time, the
Closing Date and any settlement date pursuant to Section 3 hereof, to the
accuracy of the statements of the Company and made in any certificates pursuant
to the provisions hereof, to the performance by the Company of its obligations
under this U.S. Underwriting Agreement and to the following additional
conditions:

(a) If the Registration Statement and the ADR Registration Statement
have not become effective prior to the Execution Time, unless the U.S.
Representatives and the International Representatives agree in writing to
a later time, the Registration Statement and the ADR Registration
Statement will become effective not later than (i) 6:00 PM New York City
time on the date of determination of the public offering price, if such
determination occurred at or prior to 3:00 PM New York City time on such
date or (ii) 9:30 AM New York City time on the Business Day following the
day on which the public offering price was determined, if such
determination occurred after 3:00 PM New York City time on such date; if
filing of the U.S. Prospectus, or any supplement thereto, is required
pursuant to Rule 424(b), the U.S. Prospectus, and any such supplement,
will be filed in the manner and within the time period required by Rule
424(b); and no stop order suspending the effectiveness of the Registration
Statement or the ADR Registration

19
<PAGE> 20
Statement shall have been issued and no proceedings for that purpose shall
have been instituted or threatened.

(b) The Company shall have requested and caused Allen & Gledhill,
Singapore counsel for the Company, to have furnished to the
Representatives their opinion, dated the Closing Date and addressed to the
Representatives substantially in the form set forth in Appendix A.

In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than Singapore, the
State of New York laws, to the extent they deem proper and specified in such
opinion, upon the opinion of Latham & Watkins and (B) as to matters of fact, to
the extent they deem proper, on certificates of responsible officers of the
Company and public officials. References to the Prospectuses in this paragraph
(b) include any supplements thereto at the Closing Date.

(c) The Company shall have furnished to the Representatives the
opinion of Latham & Watkins, United States counsel for the Company, dated
the Closing Date substantially in the form of Appendix B.

In rendering such opinion, such counsel may rely as to matters of
fact, to the extent they deem proper, on certificates of responsible officers of
the Company and public officials. References to the Prospectuses in this
paragraph (c) include any supplements thereto at the Closing Date.

(d) The Depositary shall have requested and caused Skadden, Arps,
Slate, Meagher & Flom, counsel for the Depositary, to have furnished to
the Representatives their opinion dated the Closing Date and addressed to
the Representatives stating in effect that:

(i) the Deposit Agreement has been duly authorized, executed
and delivered by the Depositary and constitutes a legal, valid and
binding instrument enforceable against the Depositary in accordance
with its terms, except to the extent that enforcement thereof may be
limited by (a) bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or other similar laws now or hereafter in
effect relating to or affecting creditors' rights generally and (b)
general principles of equity (regardless of whether enforcement is
considered in a proceeding at law or in equity); the statements in
the Prospectuses under the heading "Description of American
Depositary Shares", insofar as such statements purport to describe
the Depositary and summarize certain provisions of the Deposit
Agreement, the ADSs and the ADRs are fair and accurate;

(ii) the Depositary has full power and authority and legal
right to execute and deliver the Deposit Agreement and to perform
its obligations thereunder;

(iii) upon due issuance and delivery by the Depositary of the
ADRs evidencing the ADSs against the deposit of the Shares in
accordance with the

20
<PAGE> 21
terms of the Deposit Agreement, such ADRs will be validly issued and
will entitle the person in whose name each ADR is registered to the
rights specified therein and in the Deposit Agreement; and

(iv) the ADR Registration Statement has become effective under
the Act and, to the knowledge of such counsel, no stop order
suspending the effectiveness of the ADR Registration Statement has
been issued, no proceedings for that purpose have been instituted or
threatened, and the ADR Registration Statement, and each amendment
comply as to form in all material respects with the applicable
requirements of the Act and the rules thereunder.

(e) The Representatives shall have received from Cleary, Gottlieb,
Steen & Hamilton, counsel for the Underwriters, such opinion or opinions,
dated the Closing Date and addressed to the Representatives, with respect
to the issuance and sale of the Securities, the Registration Statement,
the ADR Registration Statement, the Prospectuses (together with any
supplement thereto) and other related matters as the U.S. Representatives
may reasonably require, and the Company shall have furnished to such
counsel such documents as they request for the purpose of enabling them to
pass upon such matters.

(f) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of the
Company, dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Registration Statement, the ADR
Registration Statement, the Prospectuses, any supplements to the
Prospectuses and the Underwriting Agreements and that:

(i) the representations and warranties of the Company in the
Underwriting Agreements are true and correct in all material
respects on and as of the Closing Date with the same effect as if
made on the Closing Date and the Company has complied with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing Date;

(ii) no stop order suspending the effectiveness of the
Registration Statement or the ADR Registration Statement has been
issued and no proceedings for that purpose have been instituted or,
to the Company's knowledge, threatened; and

(iii) since the date of the most recent financial statements
included in the Prospectuses (exclusive of any supplement thereto),
there has been no material adverse change in the condition
(financial or otherwise), earnings, business or properties of the
Company and the Subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business, except
as set forth in or contemplated in the Prospectuses (exclusive of
any supplement thereto).

(g) The Company shall have requested and caused KPMG to have
furnished to the Representatives at the Execution Time and at the Closing
Date a letter or letters,

21
<PAGE> 22
dated respectively as of the Execution Time and as of the Closing Date, in
form and substance satisfactory to the Representatives, confirming that
they are independent accountants within the meaning of the Act and the
applicable rules and regulations adopted by the Commission thereunder and
stating in effect that:

(i) in their opinion the audited financial statements and
financial statement schedules included in the Registration Statement
and the Prospectuses and reported on by them comply as to form in
all material respects with the applicable accounting requirements of
the Act and the related rules and regulations adopted by the
Commission;

(ii) on the basis of a reading of the latest unaudited
financial statements made available by the Company and the
Subsidiaries; their limited review, in accordance with United States
generally accepted auditing standards under Statement on Auditing
Standards No. 71 of the nine-month period ended September 30, 1999,
and as at September 30, 1999; carrying out certain specified
procedures (but not an examination in accordance with U.S. GAAP)
which would not necessarily reveal matters of significance with
respect to the comments set forth in such letter; a reading of the
minutes of the meetings of the shareholders, Board of Directors and
Audit Committee of the Company and each of the Subsidiaries; and
inquiries of certain officials of the Company who have
responsibility for financial and accounting matters of the Company
and each of the Subsidiaries as to transactions and events
subsequent to June 30, 1999, nothing came to their attention which
caused them to believe that:

(1) any unaudited financial statements included in the
Registration Statement and the Prospectuses do not comply as
to form in all material respects with the applicable
accounting requirements of the Act and with the related rules
and regulations adopted by the Commission with respect to
registration statements on Form F-1; and said unaudited
financial statements are not in conformity with generally
accepted accounting principles applied on a basis
substantially consistent with that of the audited financial
statements included in the Registration Statement and the
Prospectuses;

(2) with respect to the period subsequent to September 30,
1999, there were any changes, at a specified date not more
than five Business Days prior to the date of the letter, in
the capital stock of the Company (except as disclosed in the
Prospectuses under the caption "Capitalization") or increase
in long-term debt of the Company and the Subsidiaries or any
decrease in the consolidated net current assets or
shareholders' equity of the Company and the Subsidiaries as
compared with the amounts shown on the September 30, 1999
unaudited condensed consolidated balance sheet, or for the
period from October 1, 1999 to October [ ], 1999 there were
any decrease, as compared with the corresponding period in the
preceding year, in total revenue, consolidated net sales or in
total or per share amounts of consolidated net income of the
Company and the

22
<PAGE> 23
Subsidiaries, except in all instances for changes or decreases
set forth in such letter, in which case the letter shall be
accompanied by an explanation by the Company as to the
significance thereof unless said explanation is not deemed
necessary by the Representatives; or

(3) the information included in the Registration Statement and
Prospectuses in response to Form 20-F, Item 8 (Selected
Financial Data) and Item 11 (Compensation of Directors and
Officers) is not in conformity with the applicable disclosure
requirements of Form 20-F; and

(iii) they have performed certain other specified procedures
as a result of which they determined that certain information of an
accounting, financial or statistical nature derived from the general
accounting records of the Company and the Subsidiaries set forth in
the Registration Statement and the Prospectuses, including the
information set forth under the captions "Prospectus Summary," "Risk
Factors," "Capitalization," "Dilution," "Selected Financial Data,"
"Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Business," "Principal Shareholders,"
"Relationship with Singapore Technologies" and "Management," agrees
with the accounting records of the Company and the Subsidiaries,
excluding any questions of legal interpretation.

References to the Prospectuses in this paragraph (g) include any
supplement thereto at the date of the letter.

(h) Subsequent to the Execution Time or, if earlier, the dates as
of which information is given in the Registration Statement (exclusive of
any amendment thereof), and the Prospectuses (exclusive of any supplement
thereto), there shall not have been (i) any change or decrease specified
in the letter or letters referred to in paragraph (g) of this Section 6 or
(ii) any change, or any development involving a prospective change, in or
affecting the condition (financial or otherwise), earnings, business or
properties of the Company and the Subsidiaries, taken as a whole, whether
or not arising from transactions in the ordinary course of business,
except as set forth in or contemplated in the Prospectuses (inclusive of
any supplement thereto) the effect of which, in any case referred to in
clause (i) or (ii) above, is, in the sole judgment of the Representatives,
so material and adverse as to make it impractical or inadvisable to
proceed with the offering or delivery of the Securities as contemplated by
the Registration Statement (exclusive of any amendment thereof), the ADR
Registration Statement and the Prospectuses (exclusive of any supplement
thereto).

(i) At the Execution Time, the Company shall have furnished to the
Representatives a letter substantially in the form of Exhibit A hereto
from each officer and director of the Company and each shareholder of the
Company listed in Schedule II hereto.

(j) The Company and the Depositary shall have executed and delivered
the Deposit Agreement in form and substance satisfactory to the
Representatives and the Deposit Agreement shall be in full force and
effect.

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<PAGE> 24
(k) The Depositary shall have furnished or caused to be furnished to
the Representatives certificates satisfactory to the Representatives
evidencing the deposit with the Depositary or its nominee of the Ordinary
Shares in respect of which ADSs to be purchased by the Underwriters on
such Closing Date are to be issued, and the execution, issuance,
countersignature (if applicable) and delivery of the ADRs evidencing such
ADSs pursuant to the Deposit Agreement and such other matters related
thereto as the Representatives shall reasonably request.

(l) The closing of the purchase of the International Underwritten
Securities and the Singapore Underwritten Securities to be issued and sold
by the Company pursuant to the International Underwriting Agreement and
the Singapore Management and Underwriting Agreement, respectively, shall
occur substantially concurrently (giving effect to the time difference
between New York and Singapore) with the closing of the purchase of the
U.S. Underwritten Securities described herein.

(m) The Ordinary Shares shall have been listed and admitted and
authorized for trading on the SES, and the ADSs shall have been included
for quotation on The Nasdaq National Market, Inc., and satisfactory
evidence of all such actions shall have been provided to the
Representatives.

(n) Prior to the Closing Date, the Company shall have furnished to
the Representatives such further information, certificates and documents
as the Representatives may reasonably request.

If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this U.S.
Underwriting Agreement and the International Underwriting Agreement, or if any
of the opinions and certificates mentioned above or elsewhere in this U.S.
Underwriting Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representatives and counsel for the
Underwriters, this U.S. Underwriting Agreement and all obligations of the U.S.
Underwriters hereunder may be canceled at, or at any time prior to, the Closing
Date by the Representatives. Notice of such cancellation shall be given to the
Company in writing or by telephone or facsimile confirmed in writing.

The documents required to be delivered by this Section 6 will be
delivered at the offices of Cleary, Gottlieb, Steen & Hamilton, counsel for the
Underwriters at One Liberty Plaza, New York, New York 10006, on the Closing
Date.

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<PAGE> 25
7. Commissions, Costs and Expenses. In consideration of the
agreement by the U.S. Underwriters to subscribe for the U.S. Underwritten Shares
and the U.S. Option Shares (subject to the option for the U.S. Option Shares
referred to in the preamble above being duly exercised in accordance with
Section 3 of this U.S. Underwriting Agreement), the Company shall pay to the
U.S. Underwriters on the Closing Date, or on the date on which such Option
Securities are purchased, as the case may be, a combined management and
underwriting commission of [ ]% per cent of the principal amount of the U.S.
Underwritten Shares or the U.S. Option Shares, as the case may be.

8. Reimbursement of Underwriters' Expenses. The Company has agreed
to reimburse the Underwriters severally through Salomon Smith Barney on demand
for out-of-pocket expenses (including reasonable fees and disbursements of
counsel) that shall have been incurred by them in connection with the proposed
purchase and sale of the Securities (including all fees and disbursements of
counsel and any stamp duties, similar taxes or duties or other taxes, if any,
incurred by the Underwriters in connection with the Directed Share Program) up
to an aggregate maximum of $500,000. In addition, if the sale of the Securities
provided for under the Underwriting Agreements is not consummated because any
condition to the obligations of the U.S. Underwriters or the International
Underwriters set forth in Section 6 of the Underwriting Agreements is not
satisfied, because of any termination pursuant to Section 11 of the Underwriting
Agreements or because of any refusal, inability or failure on the part of the
Company to perform any agreement under the Underwriting Agreements or comply
with any provision of the Underwriting Agreements other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters
severally through Salomon Smith Barney on demand for all out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that shall have been
reasonably incurred by them in connection with the proposed purchase and sale of
the Securities, up to an aggregate maximum of $500,000.

9. Indemnification and Contribution.

[(a) The Company agrees to indemnify and hold harmless each U.S.
Underwriter, the directors, officers, employees and agents of each U.S.
Underwriter and each person who controls any U.S. Underwriter within the
meaning of either the Act or the Exchange Act against any and all losses,
claims, damages or liabilities, joint or several, to which they or any of
them may become subject under the Act, the Exchange Act or other Federal
or state statutory law or regulation, at common law or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement originally filed or in any amendment thereof, or in the ADR
Registration Statement as originally filed in any amendment thereof, or in
any U.S. or International Preliminary Prospectus or in either of the
Prospectuses, or in any amendment thereof or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the
Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based

25
<PAGE> 26
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with
written information furnished to the Company by or on behalf of any U.S.
Underwriter through the U.S. Representatives specifically for inclusion
therein. This indemnity agreement will be in addition to any liability
which the Company may otherwise have ; provided further, that with respect
to any untrue statement or omission of material fact made in any
Preliminary Prospectus, the indemnity agreement contained in this Section
9(a) shall not inure to the benefit of any U.S. Underwriter from whom the
person asserting any such loss, claim, damage or liability purchased the
Securities concerned to the extent that any such loss, claim, damage or
liability of such U.S. Underwriter occurs under the circumstance where it
shall have been determined by a court of competent jurisdiction by final
and nonappealable judgment that (w) the Company had previously furnished
copies of the Prospectus to the Representatives, (x) delivery of the
Prospectus was required by the Act to be made to such person, (y) the
untrue statement or omission of a material fact contained in the
Preliminary Prospectus was corrected in the Prospectus and (z) there was
not sent or given to such person, at or prior to the written confirmation
of the sale of such Securities to such person, a copy of the Prospectus.]

(b) The Company agrees to indemnify and hold harmless Salomon Smith
Barney and each person, if any, who controls Salomon Smith Barney within
the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act ("Salomon Smith Barney Entities") from and against any
and all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred in connection
with defending or investigating any such action or claim) (i) caused by
any untrue statement or alleged untrue statement of a material fact
contained in the prospectus wrapper material prepared by or with the
consent of the Company for distribution outside of Singapore in connection
with the Directed Share Program attached to the Prospectuses or any
Preliminary Prospectus, or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary
to make the statement therein, when considered in conjunction with the
Prospectuses or any applicable Preliminary Prospectus, not misleading; or
(ii) related to, arising out of, or in connection with the Directed Share
Program, provided that, the Company shall not be responsible under this
subparagraph (ii) for any losses, claim, damages or liabilities (or
expenses relating thereto) that are finally judicially determined to have
resulted from the bad faith or gross negligence of any Salomon Smith
Barney Entities.

(c) Each U.S. Underwriter severally and not jointly agrees to
indemnify and hold harmless the Company, each of its directors, each of
its officers who signs the Registration Statement, or the ADR Registration
Statement, and each person who controls the Company within the meaning of
either the Act or Exchange Act, to the same extent as the foregoing
indemnity to each U.S. Underwriter, but only with reference to written
information relating to such U.S. Underwriter furnished to the Company by
or on behalf of such U.S. Underwriter through the U.S. Representatives
specifically for inclusion in the documents referred to in the foregoing
indemnity. This indemnity agreement will be in addition to any liability
which any U.S. Underwriter may otherwise have. The Company acknowledges
that (A) the names of the Underwriters contained in any U.S. Prospectus or
International Prospectus or the Prospectuses and their

<PAGE> 27
respective participation in the sale of the Securities as set forth in the
two charts under the heading "Underwriting" in any U.S. or International
Prospectus or the Prospectuses, (B) the statements set forth in the last
paragraph on the front cover page of any U.S. or International Prospectus
regarding delivery of the Securities (and the ADSs representing such
Securities) and (C) the statements set forth in the seventh, tenth and
sixteenth paragraphs under the heading "Underwriting" in any U.S. or
International Preliminary Prospectus and the Prospectuses constitute the
only information furnished in writing by or on behalf of the several U.S.
Underwriters for inclusion in any U.S. or International Preliminary
Prospectus or the Prospectuses.

(d) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 9, notify the indemnifying party in
writing of the commencement thereof; but the failure so to notify the
indemnifying party (i) will not relieve it from liability under paragraph
(a), (b) or (c) above unless and to the extent it did not otherwise learn
of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not,
in any event, relieve the indemnifying party from any obligations to any
indemnified party other than the indemnification obligation provided in
paragraph (a), (b) or (c) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate
counsel retained by the indemnified party or parties except as set forth
below); provided, however, that such counsel shall be reasonably
satisfactory to the indemnified party. Notwithstanding the indemnifying
party's election to appoint counsel to represent the indemnified party in
an action, the indemnified party shall have the right to employ separate
counsel (including local counsel), and the indemnifying party shall bear
the reasonable fees, costs and expenses of such separate counsel if (i)
the use of counsel chosen by the indemnifying party to represent the
indemnified party would present such counsel with a conflict of interest,
(ii) the actual or potential defendants in, or targets of any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party,
(iii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of the institution of such action or
(iv) the indemnifying party shall authorize the indemnified party to
employ separate counsel at the expense of the indemnifying party.
Notwithstanding anything contained herein to the contrary, if indemnity
may be sought pursuant to paragraph (b) above hereof in respect of such
action or proceeding, then in addition to such separate firm for the
indemnified parties, the indemnifying party shall be liable for the
reasonable fees and expenses of not more than one separate firm (in
addition to any local counsel) for Salomon Smith Barney for the defense of
any losses, claims, damages and liabilities arising out of the Directed
Share Program, and all persons, if any, who control such U.S. Underwriters
within the meaning of either Section 15 of the Act or Section 20 of the
Exchange Act. It is understood, however, that the Company shall, in
connection with any one such action or separate but

27
<PAGE> 28
substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
fees and expenses of only one separate firm of attorneys (in addition to
any local counsel) at any time for all such Underwriters and controlling
persons, which firm shall be designated in writing by Salomon Smith
Barney. An indemnifying party will not, without the prior written consent
of the indemnified parties, settle or compromise or consent to the entry
of any judgment with respect to any pending or threatened claim, action,
suit or proceeding in respect of which indemnification or contribution may
be sought under this U.S. Underwriting Agreement (whether or not the
indemnified parties are actual or potential parties to such claim or
action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from liability arising out
of such claim, action, suit or proceeding. The indemnifying party shall
not be liable for any settlement of any proceeding effected without its
written consent.

(e) In the event that the indemnity provided in paragraph (a), (b)
or (c) of this Section 9 is unavailable to or insufficient to hold
harmless an indemnified party for any reason, the Company and the U.S.
Underwriters severally agree to contribute to the aggregate losses,
claims, damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigating or defending same)
(collectively "Losses") to which the Company and one or more of the U.S.
Underwriters may be subject in such proportion as is appropriate to
reflect the relative benefits received by the Company and by the U.S.
Underwriters from the offering of the U.S. Securities; provided, however,
that in no case shall any U.S. Underwriter (except as may be provided in
any agreement among underwriters relating to the offering of the U.S.
Securities) be responsible for any amount in excess of the underwriting
discount or commission applicable to the Securities purchased by such U.S.
Underwriter hereunder. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, the Company and the U.S.
Underwriters shall contribute in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company and of the U.S. Underwriters in connection with the statements or
omissions which resulted in such Losses as well as any other relevant
equitable considerations. Benefits received by the Company shall be deemed
to be equal to the total net proceeds from the offering (before deducting
expenses) received by it, and benefits received by the U.S. Underwriters
shall be deemed to be equal to the total underwriting discounts and
commissions, in each case as set forth on the cover page of the U.S.
Prospectus. Relative fault shall be determined by reference to, among
other things, whether any alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information provided by the Company or the U.S. Underwriters, the intent
of the parties and their relative knowledge access to information and
opportunity to correct or prevent such untrue statement or omission. The
Company and the U.S. Underwriters agree that it would not be just and
equitable if contribution were determined by pro rata allocation or any
other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
paragraph (e), no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 9, each person who controls an U.S.
Underwriter within the meaning of either the Act or the Exchange Act and
each

28
<PAGE> 29
director, officer, employee and agent of an U.S. Underwriter shall have
the same rights to contribution as such U.S. Underwriter, and each person
who controls the Company within the meaning of either the Act or the
Exchange Act, each officer of the Company who shall have signed the
Registration Statement and the ADR Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to the applicable terms and conditions of
this paragraph (e).

10. Default by an Underwriter. If any one or more U.S. Underwriters
shall fail to purchase and pay for any of the U.S. Securities agreed to be
purchased by such U.S. Underwriter or U.S. Underwriters under this U.S.
Underwriting Agreement and such failure to purchase shall constitute a default
in the performance of its or their obligations under this Agreement, the
remaining U.S. Underwriters shall be obligated severally to take up and pay for
(in the respective proportions which the amount of U.S. Securities set forth
opposite their names in Schedule I hereto bears to the aggregate amount of U.S.
Securities set forth opposite the names of all the remaining U.S. Underwriters)
the U.S. Securities which the defaulting U.S. Underwriter or U.S. Underwriters
agreed but failed to purchase; provided, however, that in the event that the
aggregate amount of U.S. Securities which the defaulting U.S. Underwriter or
U.S. Underwriters agreed but failed to purchase shall exceed 10% of the
aggregate amount of Securities set forth in Schedule I hereto, the remaining
U.S. Underwriters shall have the right to purchase all, but shall not be under
any obligation to purchase any, of the U.S. Securities, and if such
nondefaulting U.S. Underwriters do not purchase all the U.S. Securities, this
Agreement will terminate without liability to any nondefaulting U.S. Underwriter
or the Company. In the event of a default by any U.S. Underwriter as set forth
in this Section 10, the Closing Date shall be postponed for such period, not
exceeding five Business Days, as the U.S. Representatives shall determine in
order that the required changes in the Registration Statement, the ADR
Registration Statement and the Prospectuses or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall relieve
any defaulting U.S. Underwriter of its liability, if any, to the Company and any
nondefaulting U.S. Underwriter for damages occasioned by its default under this
U.S. Underwriting Agreement.

11. Termination. This U.S. Underwriting Agreement shall be subject
to termination in the absolute discretion of the U.S. Representatives, by notice
given to the Company prior to delivery of and payment for the U.S. Securities,
if prior to such time (i) trading in the Company's ADSs shall have been
suspended by the Commission or the Nasdaq National Market, Inc., trading in the
Company's Ordinary Shares shall have been suspended by the SES, trading in
securities generally on the New York Stock Exchange, The Nasdaq National Market,
Inc. or the SES shall have been suspended or limited or minimum prices shall
have been established on such exchange or The Nasdaq National Market, Inc., (ii)
a banking moratorium shall have been declared either by U.S. Federal, New York
State or Singapore authorities or (iii) there shall have occurred any outbreak
or escalation of hostilities involving the United States or Singapore,
declaration by the United States or Singapore of a national emergency or war or
other calamity or crisis the effect of which on financial markets is such as to
make it, in the sole judgment of the U.S. Representatives, impracticable or
inadvisable to proceed with the offering or delivery of the prospectus as
contemplated by the U.S. Prospectus (exclusive of any supplement thereto).

29
<PAGE> 30
12. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the U.S. Underwriters set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of any U.S. Underwriter or the Company or
any of the officers, directors or controlling persons referred to in Section 9
hereof, and will survive delivery of and payment for the U.S. Securities. The
provisions of Sections 8 and 9 hereof shall survive the termination or
cancellation of this U.S. Underwriting Agreement.

13. Notices. All communications under this U.S. Underwriting
Agreement will be in writing and effective only on receipt, and, if sent to the
U.S. Representatives, will be mailed, delivered or telefaxed c/o Salomon Smith
Barney Inc. General Counsel (fax no.: (212) 816-7912 and confirmed to such
General Counsel at Salomon Smith Barney Inc., 388 Greenwich Street, New York,
New York 10013, U.S.A., Attention: General Counsel; or, if sent to the Company,
will be mailed, delivered or telefaxed to [ ] and confirmed to it at 60
Woodlands Industrial Park D, Street 2, Singapore 738406, Attention: Legal
Department.

14. Successors. This U.S. Underwriting Agreement will inure to the
benefit of and be binding upon the parties hereto and their respective
successors and the officers and directors and controlling persons referred to in
Section 9 hereof, and no other person will have any right or obligation under
this U.S. Underwriting Agreement.

15. Jurisdiction. The Company agrees that any suit, action or
proceeding against the Company brought by any U.S. Underwriter, by the
directors, officers, employees and agents of any U.S. Underwriter or by any
person who controls any U.S. Underwriter, arising out of or based upon this U.S.
Underwriting Agreement or the transactions contemplated hereby may be instituted
in any New York Court; and waives any objection which it may now or hereafter
have to the laying of venue of any such proceeding, and irrevocably accepts and
submits to the non-exclusive jurisdiction of such courts in any suit, action or
proceeding. The Company has appointed [ ] as its authorized agent, (the
"Authorized Agent") upon whom process may be served in any suit, action or
proceeding arising out of or based upon this Agreement or the transactions
contemplated herein which may be instituted in any New York by any U.S.
Underwriter, by the directors, officers, employees and agents of any U.S.
Underwriter or by any person who controls any U.S. Underwriter and expressly
accepts the non-exclusive jurisdiction of any such court in respect of any such
suit, action or proceeding. The Company hereby represents and warrants that the
Authorized Agent has accepted such appointment and has agreed to act as said
agent for service of process, and the Company agrees to take any and all action,
including the filing of any and all documents that may be necessary to continue
such appointment in full force and effect as aforesaid. Service of process upon
the Authorized Agent shall be deemed, in every respect, effective service of
process upon the Company. Notwithstanding the foregoing, any action arising out
of or based upon this Agreement may be instituted by any U.S. Underwriter, by
the directors, officers, employees and agents of any U.S. Underwriter or by any
person who controls any U.S. Underwriter, in any other court of competent
jurisdiction, including those in Singapore.

The provisions of this Section 15 shall survive any termination of
the U.S. Underwriting Agreement, in whole or in part.

30
<PAGE> 31
16. Applicable Law. This U.S. Underwriting Agreement will be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed within the State of New York.

17. Currency. Each reference in this U.S. Underwriting Agreement to
U.S. dollars (the "relevant currency") is of the essence. To the fullest extent
permitted by law, the obligations of the Company in respect of any amount due
under this U.S. Underwriting Agreement will, notwithstanding any payment in any
other currency (whether pursuant to a judgment or otherwise), be discharged only
to the extent of the amount in the relevant currency that the party entitled to
receive such payment may, in accordance with its normal procedures, purchase
with the sum paid in such other currency (after any premium and costs of
exchange) on the Business Day immediately following the day on which such party
receives such payment. If the amount in the relevant currency that may be so
purchased for any reason falls short of the amount originally due, the Company
will pay such additional amounts, in the relevant currency, as may be necessary
to compensate for the shortfall. If, alternatively, the amount in the relevant
currency that may be so purchased for any reason exceeds the amount originally
due, the party entitled to receive such original amount will return such excess
amounts, in the relevant currency, to the Company. Any obligation of the Company
not discharged by such payment will, to the fullest extent permitted by
applicable law, be due as a separate and independent obligation and, until
discharged as provided herein, will continue in full force and effect.

18. Waiver of Immunity. To the extent that the Company has or
hereafter may acquire any immunity (sovereign or otherwise) from any legal
action, suit or proceeding, from jurisdiction of any court or from set-off or
any legal process (whether service or notice, attachment in aid or otherwise)
with respect to itself or any of its property, the Company hereby irrevocably
waives and agrees not to plead or claim such immunity in respect of its
obligations under this Agreement.

19. Counterparts. This U.S. Underwriting Agreement may be signed in
one or more counterparts, each of which shall constitute an original, and all of
which together shall constitute one and the same agreement.

20. Headings. The section headings used in this U.S. Underwriting
Agreement are for convenience only and shall not affect the construction hereof.

21. Definitions. The terms which follow, when used in this U.S.
Underwriting Agreement, shall have the meanings indicated.

"Act" shall mean the United States Securities Act of 1933, as
amended, and the rules and regulations of the Commission promulgated
thereunder.

"ADR" shall mean the certificate(s) issued by the Depositary to
evidence the American Depositary Shares issued under the terms of the
Deposit Agreement.

"ADR Registration Statement" shall mean the registration statement
referred to in paragraph 1(c) above, including all exhibits thereto, each
as amended at the time such part of the registration statement became
effective.

31
<PAGE> 32
"Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday
and Friday that is not a day on which banking institutions in The City of
New York, New York and Singapore are authorized or obligated by law,
executive order or regulation to close.

"Commission" shall mean the Securities and Exchange Commission.

"Effective Date" shall mean each date and time that the Registration
Statement and the ADR Registration Statement, any post-effective amendment
or amendments thereto and any Rule 462(b) Registration Statement became or
becomes effective.

"Exchange Act" shall mean the United States Securities Exchange Act
of 1934, as amended, and the rules and regulations of the Commission
promulgated thereunder.

"Execution Time" shall mean the date and time that this U.S.
Underwriting Agreement is executed and delivered by the parties hereto.

"International Preliminary Prospectus" shall mean any preliminary
prospectus with respect to the offering of the International Securities.

"International Prospectus" shall mean such form of prospectus
relating to the International Securities.

"International Representatives" shall mean the addressees of the
International Underwriting Agreement.

"International Securities" shall mean the International Underwritten
Securities and the International Option Securities.

"International Underwriters" shall mean the several Underwriters
named in Schedule I to the International Underwriting Agreement.

"International Underwriting Agreement" shall mean the International
Underwriting Agreement dated the date hereof related to the sale of the
International Securities by the Company to the International Underwriters.

"New York Courts" shall mean the U.S. Federal or State courts
located in the State of New York, County of New York.

"Option Securities" shall mean the U.S. Option Securities and the
International Option Securities.

32
<PAGE> 33
"Option Shares" shall mean the U.S. Option Shares and the
International Option Shares.

"Preliminary Prospectuses" and each "Preliminary Prospectus"
shall mean the U.S. Preliminary Prospectus and the International
Preliminary Prospectus.

"Prospectuses" and "each Prospectus" shall mean the U.S.
Prospectus and the International Prospectus.

"Registration Statement" shall mean the registration statement
referred to in paragraph 1(a) above, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at the
Execution Time, in the form in which it shall become effective) and, in
the event any post-effective amendment thereto or any Rule 462(b)
Registration Statement becomes effective prior to the Closing Date, shall
also mean such registration statement as so amended or such Rule 462(b)
Registration Statement, as the case may be. Such term shall include any
Rule 430A Information deemed to be included therein at the Effective Date
as provided by Rule 430A.

"Representatives" shall mean the U.S. Representatives and the
International Representatives.

"Rule 424", "Rule 430A" and "Rule 462" refer to such rules under
the Act.

"Rule 430A Information" shall mean information with respect to the
Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.

"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b)
relating to the offering covered by the registration statement referred to
in Section 1(a) hereof.

"Securities" shall mean the U.S. Securities and the International
Securities.

"Shares" shall mean the U.S. Shares and the International Shares.

"Singapore Management and Underwriting Agreement" shall mean the
Singapore Management and Underwriting Agreement dated the date hereof
related to the sale of the Singapore Securities by the Company to the
Singapore Underwriters.

"Singapore Underwriters" shall mean the several underwriters named
in the Singapore Underwriting Agreement.

"Subsidiary" shall mean each of Chartered Semiconductor
Manufacturing Inc. and Chartered Silicon Partners Pte Ltd.

"Underwriter" and "Underwriters" shall mean the U.S. Underwriters
and the International Underwriters.

33
<PAGE> 34
"Underwritten Securities" shall mean the U.S. Underwritten
Securities and the International Underwritten Securities.

"Underwritten Shares" shall mean the U.S. Underwritten Shares,
the International Underwritten Shares and the Singapore Underwritten
Shares.

"United States or Canadian Person" shall mean 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, or
any estate or trust the income of which is subject to United States or
Canadian Federal income taxation, regardless of its source (other than any
non-United States or non-Canadian branch of any United States or Canadian
Person), and shall include any United States or Canadian branch of a
person other than a United States or Canadian Person.

"U.S." or "United States" shall mean the United States of America
(including the states thereof and the District of Columbia), its
territories, its possessions and other areas subject to its jurisdiction.

"U.S. Preliminary Prospectus" shall mean any preliminary prospectus
with respect to the offering of the U.S. Securities referred to in
paragraph 1(a) above and any preliminary prospectus with respect to the
offering of the U.S. Securities, as the case may be, included in the
Registration Statement at the Effective Date that omits Rule 430A
Information.

"U.S. Prospectus" shall mean the prospectus relating to the U.S.
Securities that is first filed pursuant to Rule 424(b) after the Execution
Time or, if no filing pursuant to Rule 424(b) is required, shall mean the
form of final prospectus relating to the Securities included in the
Registration Statement at the Effective Date.

"U.S. Representatives" shall mean the addressees of the U.S.
Underwriting Agreement.

"U.S. Securities" shall mean the U.S. Underwritten Securities and
the U.S. Option Securities.

"U.S. Underwriters" shall mean the several Underwriters named in
Schedule I to the U.S. Underwriting Agreement.

"U.S. Underwriting Agreement" shall mean this agreement relating
to the sale of the U.S. Securities by the Company to the U.S.
Underwriters.

If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the several U.S. Underwriters.

34
<PAGE> 35
Very truly yours,

Chartered Semiconductor Manufacturing
Ltd

By:________________________________________
Name:
Title:

The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.

Salomon Smith Barney Inc.

By:_______________________________
Name:
Title:

For itself and the other several U.S.
Representatives and U.S. Underwriters
named in Schedule I
to the foregoing Agreement.

35
<PAGE> 36
Annex A

List of Subsidiaries

Chartered Semiconductor Manufacturing, Inc.

Chartered Silicon Partners Pte Ltd

36
<PAGE> 37
SCHEDULE I

<TABLE>
<CAPTION>
U.S. Underwriter Number of U.S. Underwritten Shares
- ---------------- ----------------------------------
Total
Ordinary (in the form of
ADSs Shares Ordinary Shares)
---- -------- ----------------
<S> <C> <C> <C>
Salomon Smith Barney Inc...................
Credit Suisse First Boston Corporation.....
Hambrecht & Quist LLC......................
SG Cowen Securities Corporation............
SoundView Technology Group, Inc............

Total......................................
</TABLE>

37
<PAGE> 38
SCHEDULE II

[LIST OF SIGNATORIES TO LETTER ATTACHED AS EXHIBIT A]

38
<PAGE> 39
EXHIBIT A

Chartered Semiconductor Manufacturing Ltd
Public Offering of Ordinary Shares

, 1999

Salomon Smith Barney Inc.
Salomon Brothers International Limited
Credit Suisse First Boston Corporation
Credit Suisse First Boston (Singapore) Limited
Hambrecht & Quist LLC
SG Cowen Securities Corporation
Societe Generale
SoundView Technology Group, Inc.
Overseas Union Bank Limited
Vickers Ballas & Company Pte Ltd

As Representatives of the several U.S. Underwriters
and International Underwriters

c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
U.S.A.

Ladies and Gentlemen:

This letter is being delivered to you in connection with the
proposed U.S. Underwriting Agreement and International Underwriting Agreement
(the "Underwriting Agreements"), between Chartered Semiconductor Manufacturing
Ltd, a corporation organized under the laws of Singapore (the "Company"), and
you as representatives of the group of U.S. and International Underwriters named
therein, relating to an underwritten public offering of ordinary shares (the
"Ordinary Shares"), of the Company, directly or in the form of American
Depositary Shares ("ADSs").

In order to induce you and the other U.S. Underwriters and
International Underwriters to enter into the Underwriting Agreements, the
undersigned will not, without the prior consent of Salomon Smith Barney Inc.,
offer, sell, contract to sell, pledge or otherwise dispose of (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise), directly or indirectly, or announce the offering, of any Ordinary
Shares or ADSs or any securities convertible into, or exercisable or
exchangeable for, Ordinary Shares or ADSs, for a period of 180 days following
the date of the Underwriting Agreements, other than

<PAGE> 40
Directed Shares(1) (as defined in the Underwriting Agreements), or
Ordinary Shares disposed of as bona fide gifts approved by Salomon Smith Barney
Inc.

If for any reason the Underwriting Agreements shall be terminated
prior to the Closing Date (as defined in the Underwriting Agreements), the
agreement set forth above shall likewise be terminated.

Yours very truly,

[Signature of officer, director, employee
or shareholder]

[Name and address of officer,
director, employee or shareholder]

- ----------
(1) Directed Shares are Ordinary Shares from the offering that are expected
to be subject to priority allocation to the Company's officers,
employees and business associates, directors, officers and employees of
the Company's affiliates and to certain charitable organizations in
Singapore.

40
<PAGE> 41
APPENDIX A

[LEGAL OPINION OF ALLEN & GLEDHILL]

41
<PAGE> 42
APPENDIX B

[LEGAL OPINION OF LATHAM & WATKINS]

<PAGE> 1
EXHIBIT 1.2

Chartered Semiconductor Manufacturing Ltd

75,000,000 Ordinary Shares*
directly or in the form of American Depositary Shares
(S$0.26 par value)

Each American Depository Share representing
the right to receive ten Ordinary Shares

Form of International Underwriting Agreement

London, England
___________, 1999

Salomon Brothers International Limited
Credit Suisse First Boston (Singapore) Limited
Hambrecht & Quist LLC
Socitete Generale
SoundView Technology Group, Inc.
Overseas Union Bank Limited
Vickers Ballas & Company Pte Ltd
As International Representatives of the several International Underwriters

c/o Salomon Brothers International Limited
Victoria Plaza
111 Buckingham Palace Road
London SWIW OSB
ENGLAND

Ladies and Gentlemen:

Chartered Semiconductor Manufacturing Ltd, a corporation
organized under the laws of Singapore (the "Company"), proposes to sell to the
several international underwriters named in Schedule I hereto (the
"International Underwriters"), for whom you (the "International
Representatives") are acting as representatives, ordinary shares (the "Ordinary
Shares"), S$0.26

- --------
* Plus an option to purchase from Chartered Semiconductor Manufacturing Ltd up
to 11,250,000 additional Ordinary Shares directly or in the form of American
Depositary Shares to cover overallotments.

<PAGE> 2

par value per share, of the Company directly or in the form of American
Depositary Shares (the "ADSs") (said Ordinary Shares to be issued and sold by
the Company being hereinafter called the "International Underwritten Shares").
The Company also proposes to grant to the International Underwriters an option
to purchase up to 11,250,000 additional Ordinary Shares directly or in the form
of ADSs to cover overallotments (the "International Option Shares" and together
with the International Underwritten Shares, the "International Shares" or the
"International Securities").

It is understood that the Company is concurrently entering into
the U.S. Underwriting Agreement, (together with this International Underwriting
Agreement, the "Underwriting Agreements") providing for the sale by the Company
of an aggregate of 150,000,000 Ordinary Shares directly or in the form of ADSs
(said Ordinary Shares to be sold by the Company pursuant to the U.S.
Underwriting Agreement being hereinafter called the "U.S. Underwritten Shares",
and together with the International Underwritten Shares, the "Underwritten
Shares") and providing for the grant to the U.S. Underwriters of an option to
purchase from the Company up to 22,500,000 additional Ordinary Shares directly
or in the form of ADSs to cover overallotments (the "U.S. Option Shares" and
together with the U.S. Underwritten Shares, the "U.S. Shares" or the "U.S.
Securities", and the U.S. Securities together with the International Securities,
the "Securities").

It is also understood that the Company is concurrently entering
into the Singapore Management and Underwriting Agreement providing for the sale
by the Company of an aggregate of 25,000,000 Ordinary Shares (said Ordinary
Shares to be issued and sold by the Company pursuant to the Singapore Management
and Underwriting Agreement being hereinafter called the "Singapore Underwritten
Shares") and providing for the grant to the Singapore Underwriters of an option
to purchase from the Company up to 3,750,000 additional Ordinary Shares to cover
overallotments (the "Singapore Option Shares", and together with the Singapore
Underwritten Shares, the "Singapore Shares"). In connection with the Singapore
Offering, the Company has made a listing application to the Stock Exchange of
Singapore Limited (the "SES") and has prepared a prospectus (the "Singapore
Prospectus") for circulation to potential subscribers in Singapore.

You have also advised the Company that the Underwriters may
elect to cause the Company to deposit on their behalf all or any portion of the
Ordinary Shares to be purchased by them under the Underwriting Agreements
pursuant to the Deposit Agreement, dated as of [ ], 1999 (the "Deposit
Agreement"), to be entered into among the Company, Citibank, N.A., as depositary
(the "Depositary") and all holders from time to time of the ADSs. Upon any such
deposit of Ordinary Shares, the Depositary will issue ADSs representing the
Shares so deposited. The ADSs will be evidenced by American Depositary Receipts
(the "ADRs"). Each ADS will represent ten Ordinary Shares and each ADR may
represent any number of ADSs.

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<PAGE> 3

Shares, Singapore Underwritten Shares, and Shares, as well as, in each case, to
any ADSs representing such securities.

It is further understood and agreed that the U.S. Underwriters,
the International Underwriters and the Singapore Underwriters have entered into
an Agreement Among U.S. Underwriters, International Underwriters and Singapore
Underwriters, dated the date hereof (the "Agreement Among U.S. Underwriters,
International Underwriters and Singapore Underwriters"), pursuant to which,
among other things, the U.S. Underwriters and the Singapore Underwriters may
purchase from the International Underwriters a portion of the International
Securities to be sold pursuant to this International Underwriting Agreement, the
International Underwriters and the Singapore Underwriters may purchase from the
U.S. Underwriters a portion of the U.S. Securities to be sold pursuant to the
U.S. Underwriting Agreement and the U.S. Underwriters and the International
Underwriters may purchase from the Singapore Underwriters a portion of the
Singapore Securities to be sold pursuant to the Singapore Management and
Underwriting Agreement.

The offering of the U.S. Shares, directly or in the form of
ADSs, is referred to herein as the "U.S. Offering"; the offering of the
International Shares, directly or in the form of ADSs, is referred to herein as
the "International Offering"; together with the U.S. Offering, the "Combined
Offering"; and the offering of the Singapore Shares (which will be only in the
form of Ordinary Shares) is referred to herein as the "Singapore Offering". The
U.S. Offering, International Offering and Singapore Offering are referred to
collectively as the "Global Offering".

As part of the Global Offering contemplated by this
International Underwriting Agreement, the U.S. Underwriters, the International
Underwriters and the Singapore Underwriters have agreed to reserve up to 5% of
the Ordinary Shares (including Ordinary Shares represented by ADSs) out of the
Global Offering for sale to the Company's employees, business associates and one
of its directors, the directors, officers and employees of the Company's
affiliates and to certain charitable organizations in Singapore (collectively,
"Participants"), as set forth in the Prospectuses under the heading
"Underwriting" (the "Directed Share Program"). The Shares to be sold by the U.S.
Underwriters, the International Underwriters and the Singapore Underwriters
pursuant to the Directed Share Program (the "Directed Shares") will be sold by
them at the initial public offering price. The Directed Shares may be sold by
the U.S. Underwriters, the International Underwriters and the Singapore
Underwriters among their respective underwriting syndicates, and in such event,
any commissions may be adjusted upon agreement of the Company and the
representatives of the U.S. Underwriters, the International Underwriters and the
Singapore Underwriters. Any Directed Shares not orally confirmed for purchase by
any Participants by the end of the Business Day on which the Underwriting
Agreements and the Singapore Management and Underwriting Agreement are executed
will be offered to the public by the U.S. Underwriters, the International
Underwriters and the Singapore Underwriters as set forth in the Prospectuses and
the Agreement Among U.S. Underwriters, International Underwriters and Singapore
Underwriters.

To the extent there are no additional International Underwriters
listed on Schedule I other than you, the term International Representatives as
used in this International

3
<PAGE> 4
Underwriting Agreement shall mean you, as International Underwriters, and the
terms International Representatives and International Underwriters shall mean
either the singular or plural as the context requires. The use of the neuter in
this International Underwriting Agreement shall include the feminine and
masculine wherever appropriate.

Certain terms used in this International Underwriting Agreement
are defined in Section 21 hereof.

1. Representations and Warranties. The Company represents and
warrants to, and agrees with, each International Underwriter as set forth below
in this Section 1.

(a) The Company has filed with the Commission a registration
statement (file number 333-88397) on Form F-1, including the related
U.S. Preliminary Prospectus, for the registration under the Act of the
offering and sale of the U.S. Securities. The Company may have filed one
or more amendments thereto, including the related U.S. Preliminary
Prospectus, which has previously been furnished to you. The Company will
next file with the Commission either (1) prior to the Effective Date of
the Registration Statement, a further amendment to the Registration
Statement (including the form of U.S. Prospectus) or (2) after the
Effective Date of the Registration Statement, the U.S. Prospectus in
accordance with Rules 430A and 424(b). In the case of clause (2), the
Company has included in the Registration Statement, as amended at the
Effective Date, all information (other than Rule 430A Information)
required by the Act and the rules thereunder to be included in the
Registration Statement and the U.S. Prospectus with respect to the
Ordinary Shares and the offering thereof directly or in the form of
ADSs. As filed, such amendment and form of final U.S. Prospectus, or
such U.S. Prospectus, as the case may be, shall contain all Rule 430A
Information, together with all other such required information, with
respect to the underlying Ordinary Shares and the offering thereof
directly or in the form of ADSs, and, except to the extent the
International Representatives shall agree to a modification, shall be in
all substantive respects in the form furnished to you prior to the
Execution Time or, to the extent not completed at the Execution Time,
shall contain only such specific additional information and other
changes (beyond that contained in the latest U.S. Preliminary
Prospectus) as the Company has advised you, prior to the Execution Time,
will be included or made therein.

It is understood that two forms of prospectuses are to be used
in connection with the Combined Offering and sale of the Securities: one
form of prospectus relating to the U.S. Securities, which are to be
offered and sold to United States and Canadian Persons, and one form of
prospectus relating to the International Securities, which are to be
offered and sold to persons other than United States and Canadian
Persons. The U.S. Prospectus and the International Prospectus are
identical except for the outside front cover page and the outside back
cover page. In addition, the Singapore Prospectus will be used in
connection with the Singapore Offering.

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<PAGE> 5

on which Option Securities are purchased, if such date is not the
Closing Date (a "settlement date"), each U.S. Prospectus (and any
supplements thereto) will comply in all material respects with the
applicable requirements of the Act and the rules thereunder; on the
Effective Date and at the Execution Time, the Registration Statement did
not or will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading; and, on the
Effective Date, each Prospectus, if not filed pursuant to Rule 424(b),
did not and will not, and on the date of any filing pursuant to Rule
424(b) and on the Closing Date and any settlement date, each Prospectus
(together with any supplement thereto) will not, include any untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the Company makes no representations or warranties as to
the information contained in or omitted from the Registration Statement,
or the Prospectuses (or any supplement thereto), in reliance upon and in
conformity with information furnished herein or in writing to the
Company by or on behalf of any Underwriter through the Representatives
specifically for inclusion in the Registration Statement or the
Prospectuses (or any supplement thereto). It is understood that the
information that has been furnished in writing by or on behalf of the
several Underwriters for inclusion in the Registration Statement,
Preliminary Prospectuses or the Prospectuses is limited to (A) the names
of the Underwriters and their respective participation in the sale of
the Securities as set forth in the two charts under the heading
"Underwriting" in the Preliminary Prospectuses or Prospectuses, (B) the
statements set forth in the last paragraph on the front cover page of
the Preliminary Prospectuses or Prospectuses regarding delivery of the
Securities (and the ADSs representing such Securities) and (C) the
statements set forth in the seventh, tenth and sixteenth paragraphs
under the heading "Underwriting" in the Preliminary Prospectuses or
Prospectuses.

(c) The Company has filed with the Commission a registration
statement (file number 333-88623) on Form F-6 (the "ADR Registration
Statement") for the registration under the Act of the offering and sale
of the ADSs. The Company may have filed one or more amendments thereto,
each of which has previously been furnished to you. Such ADR
Registration Statement at the time of its effectiveness did or will
comply and on the Closing Date, will comply, in all material respects
with the applicable requirements of the Act and the rules thereunder and
at the time of its Effective Date and at the Execution Time, did not and
will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading.

(d) Each of the Company and the Subsidiaries has been duly
incorporated and is validly existing as a corporation under the laws of
the jurisdiction in which it is incorporated with full corporate power
to own or lease, as the case may be, and to operate its properties and
conduct its business as described in the Prospectuses, and is duly
qualified to do business as a foreign corporation and is in good
standing under the laws of each jurisdiction which requires such
qualification, except where the failure to be so qualified or be in good
standing would not, individually or in the aggregate, have a

5
<PAGE> 6

material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and the
Subsidiaries, taken as a whole.

(e) All the outstanding share capital of each Subsidiary has
been duly and validly authorized and issued and is fully paid and
non-assessable and, except for such shares of Chartered Silicon Partners
Pte Ltd ("CSP") as are owned by Hewlett-Packard Europe B.V., or EDB
Investments Pte Ltd which shares do not exceed 49% of the outstanding
voting shares of CSP, all the outstanding shares of capital stock of the
Subsidiaries are owned by the Company directly free and clear of any
perfected security interests, liens or encumbrances.

(f) The Company's authorized, issued and outstanding equity
capitalization is as set forth in the Prospectuses. The outstanding
Ordinary Shares have been duly and validly authorized and issued and are
fully paid and non-assessable. The Securities being sold under the
Underwriting Agreements by the Company have been duly and validly
authorized, and, when issued and delivered to the Depositary or its
nominee in accordance with the Deposit Agreement, the U.S. Underwriters
in accordance with the U.S. Underwriting Agreement and the International
Underwriters in accordance with this International Underwriting
Agreement, will be validly issued, fully paid and non-assessable. The
certificates for the Shares and the ADRs are in valid form. The holders
of outstanding shares of capital stock of the Company are not entitled
to any preemptive or other rights to subscribe for the Shares and the
Securities except for such rights that have been effectively waived.
Except as disclosed in the Prospectuses, no options, warrants or other
rights to purchase, agreements or other obligations to issue, or rights
to convert any obligations into or exchange any securities for, shares
of capital stock of or ownership interests in the Company are
outstanding. The Securities are freely transferable by the Company to or
for the account of the several Underwriters, their designees and the
initial purchasers thereof, and except as set forth in the Prospectuses
there are no restrictions on subsequent transfers of the Securities
under the laws of Singapore and of the United States.

(g) The capital stock of the Company conforms in all material
respects to the description thereof contained in the Prospectuses. The
capital restructuring was approved by the Company's shareholders at an
extraordinary general meeting on October 14, 1999 (the "EGM") and has
become effective and has been completed as described in the Prospectuses
under the heading "Capitalization." The Articles of Association
described in the Prospectuses under the heading "Description of Ordinary
Shares" were adopted by the Company's shareholders at the EGM and are in
full force and effect.

(h) Each of the U.S. Underwriting Agreement, this International
Underwriting Agreement, the Singapore Management and Underwriting
Agreement and the Deposit Agreement has been duly authorized, executed
and delivered by the Company.

(i) There is no franchise, contract or other document of a
character required

6
<PAGE> 7
to be described in the Registration Statement, ADR Registration
Statement or Prospectuses, or to be filed as an exhibit thereto, which
is not described or filed as required; and the description of each such
contract, franchise or document in the Prospectuses is a fair
description thereof in all material respects; and each such franchise,
contract or other document to which the Company is a party, assuming due
authorization, execution and delivery thereof by all parties thereto, is
enforceable against the Company in accordance with its terms, and is in
full force and effect and to the Company's knowledge, is a legal and
binding obligation of the parties thereto. The statements in the
Prospectuses under the heading "Taxation", fairly summarize the matters
therein described.

(j) Upon deposit of the underlying International Shares with the
Depositary or its nominee pursuant to the Deposit Agreement in
accordance with the terms thereof, all right, title and interest in such
International Shares will be transferred to the Depositary on behalf of
the International Underwriters, free and clear of all pledges, liens,
security interests, charges, claims or encumbrances of any kind. Upon
issuance by the Depositary of the ADRs evidencing the ADSs against
deposit of underlying Ordinary Shares in accordance with the provisions
of the Deposit Agreement, such ADRs will be duly and validly issued and
persons in whose names the ADRs are duly registered will be entitled to
the rights specified in the ADRs and in the Deposit Agreement; and upon
the sale and delivery to the International Underwriters of the
International Securities, and payment therefor in accordance with this
International Underwriting Agreement, the International Underwriters
will acquire good, marketable and valid title to such International
Securities subject to the terms of the Deposit Agreement, free and clear
of all pledges, liens, security interests, charges, claims or
encumbrances of any kind, other than those arising in favor of the
persons purchasing through the International Underwriters.

(k) No stamp or other issuance or transfer taxes or duties and
no capital gains, income, withholding or other taxes are payable by or
on behalf of the Underwriters to the Singapore government or any
political subdivision or taxing authority thereof in connection with (A)
the execution and delivery of the Underwriting Agreements, (B) the
issuance of the Shares or the ADSs in the manner contemplated by the
Underwriting Agreements, (C) the deposit with the Depositary of the
underlying Ordinary Shares against issuance of ADRs evidencing the ADSs,
(D) the sale and delivery of the Ordinary Shares and the ADSs to the
Underwriters, or (E) except as disclosed in the Prospectuses under the
heading "Taxation--Singapore Taxation", the resale and delivery of such
Ordinary Shares and ADSs by the U.S. Underwriters or the International
Underwriters in the manner contemplated in the Prospectuses.

(l) Except as described in the Prospectuses, all dividends and
other distributions declared and payable on the Ordinary Shares may
under current Singapore law and regulations be paid to the Depositary
and to the holders of Securities, as the case may be, in Singapore
dollars and may be converted into foreign currency that may be
transferred out of Singapore in accordance with the Deposit Agreement.

(m) No consent, approval (including exchange control approval)

7
<PAGE> 8

authorization, filing with or order of any court or governmental or
regulatory agency or body is required under Singapore or U.S. federal
law or the laws of any state or political subdivision thereof in
connection with the transactions contemplated in the U.S. Underwriting
Agreement, this International Underwriting Agreement, the Singapore
Management and Underwriting Agreement and the Deposit Agreement, except
such as have been obtained under the Act, the Exchange Act, the
Companies Act, Chapter 50 of Singapore, and such as may be required
under the blue sky or similar laws of any jurisdiction in connection
with the purchase and distribution of the Securities by the Underwriters
in the manner contemplated in the Underwriting Agreements and the
Prospectuses except as may be required pursuant to the National
Association of Securities Dealers, Inc. rules, The Nasdaq Stock Market,
Inc. rules or the letter from the SES dated September 15, 1999 granting
approval in principle for the listing and quotation of the entire issued
and share capital of the Company on the Main Board of the SES, as have
been obtained.

(n) Neither the issue and sale of the Securities nor the
consummation of any other of the transactions contemplated in the U.S.
Underwriting Agreement, this International Underwriting Agreement, the
Singapore Management and Underwriting Agreement or the Deposit
Agreement, nor the fulfillment of the terms hereof or thereof will
conflict with, result in a breach or violation of, or imposition of any
lien, charge or encumbrance upon any property or assets of the Company
or any of the Subsidiaries pursuant to, (i) the memorandum and articles
of association of the Company or the constituent documents of any of the
Subsidiaries, (ii) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement, permit,
license, franchise or other agreement, obligation, condition, covenant
or instrument to which the Company or any of the Subsidiaries is a party
or bound or to which its or their property is subject, or (iii) any
statute, law, rule, regulation, judgment, order or decree applicable to
the Company or any of the Subsidiaries of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority
having jurisdiction over the Company or any of the Subsidiaries or any
of its or their properties, except, with respect to clause (ii) or (iii)
above, such as would not individually or in the aggregate, have a
material adverse effect on (A) the performance of this International
Underwriting Agreement or the consummation of any of the transactions
contemplated herein or (B) the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and the
Subsidiaries, taken as a whole.

(o) The Company is not and, after giving effect to the offering
and sale of the Securities and the application of the proceeds thereof
as described in the Prospectuses, will not be an "investment company" as
defined in the Investment Company Act of 1940, as amended (the "1940
Act").

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<PAGE> 9

(q) The consolidated historical financial statements and
schedules of the Company and the Subsidiaries (including the related
notes) included in the Registration Statement and the Prospectuses
present fairly in all material respects the financial condition, results
of operations, changes in financial position and cash flows as of the
dates and for the periods indicated, comply as to form with the
applicable accounting requirements of the Act and have been prepared in
conformity with United States generally accepted accounting principles
("U.S. GAAP") applied on a consistent basis throughout the periods
indicated (except as otherwise noted therein). The summary and selected
financial data included in the Registration Statement and the
Prospectuses fairly present in all material respects, on the basis
stated in the Registration Statement and the Prospectuses, the
information included therein. The pro forma financial statements
included in the Prospectuses and the Registration Statement include
assumptions that provide a reasonable basis for presenting the
significant effects directly attributable to the transactions and the
events described therein, the related pro forma adjustments give
appropriate effect to those assumptions, and the pro forma adjustments
reflect proper application of those adjustments to the historical
financial statement amounts in the pro forma financial statements
included in the Prospectuses and the Registration Statement. The pro
forma financial statements included in the Prospectuses and the
Registration Statement comply as to form in all material respects with
the applicable accounting requirements of Regulation S-X under the Act
and the pro forma adjustments have been properly applied to the
historical amounts in the compilation of those statements.

(r) No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of the Subsidiaries or its or their property is pending
or, to the knowledge of the Company, threatened that (i) could
reasonably be expected to have a material adverse effect on the
performance of this International Underwriting Agreement or the
consummation of any of the transactions contemplated hereby or (ii)
could reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company and the Subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business, except as set forth or contemplated in the Prospectuses
(exclusive of any supplement thereto).

(s) Each of the Company and the Subsidiaries owns or leases all
such properties as are necessary to the conduct of its operations as
presently conducted. Any real property and buildings held under lease by
the Company or any of the Subsidiaries are held under valid, subsisting
and enforceable leases, with such exceptions as are not material and do
not interfere with the use made or proposed to be made of such property
and buildings by the Company or any of the Subsidiaries, in each case
except as described in or contemplated in the Prospectuses.

9
<PAGE> 10

applicable to the Company or any of the Subsidiaries of any court,
regulatory body, administrative agency, governmental body, arbitrator or
other authority having jurisdiction over the Company or any of the
Subsidiaries or any of its or their properties, except, with respect to
clause (ii) or (iii) above, such as would not individually or in the
aggregate, have a material adverse effect on (A) the performance of this
International Underwriting Agreement or the consummation of any of the
transactions contemplated herein or (B) the condition (financial or
otherwise), prospects, earnings, business or properties of the Company
and the Subsidiaries, taken as a whole.

(u) KPMG Peat Marwick ("KPMG"), who have certified certain
financial statements of the Company and the Subsidiaries and delivered
their report with respect to the audited consolidated financial
statements and schedules included in the Registration Statement and the
Prospectuses, are independent public accountants with respect to the
Company within the meaning of the Act and the applicable published rules
and regulations thereunder.

(v) The Company has not taken, directly or indirectly, any
action designed to cause or to result in, or that has constituted or
which might reasonably be expected to constitute under the Exchange Act
or otherwise, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Securities, provided, however, that this provision shall not apply to
any trading or stabilization activities conducted by the Underwriters.

(w) Each of the Company and the Subsidiaries possesses all
licenses, permits, certificates and other authorizations issued by the
appropriate Singapore, U.S., foreign, federal, state or local regulatory
authorities necessary to conduct its business as currently conducted,
except in any case in which the failure so to possess any such license,
permit, certificate or other authorization would not, individually or in
the aggregate, have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or properties of
the Company and the Subsidiaries, taken as a whole. Neither the Company
nor any of the Subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such license, permit,
certificate or authorization which, singly or in the aggregate, if the
subject of an unfavorable decision ruling or findings, would have a
material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and the
Subsidiaries, taken as a whole, whether or not arising from transactions
in the ordinary course of business, except as set forth in the
Prospectuses (exclusive of any supplement thereto).

(x) [Intentionally Omitted]

10
<PAGE> 11

Subsidiaries, taken as a whole, whether or not arising from transactions
in the ordinary course of business, except as set forth in or
contemplated in the Prospectuses (exclusive of any supplement thereto).

(z) Each of the Company and the Subsidiaries is insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the businesses
in which it is engaged. All policies of insurance insuring the Company
or any of the Subsidiaries or their respective businesses, assets,
employees, officers and directors are in full force and effect; each of
the Company and the Subsidiaries is in compliance with the terms of such
policies and instruments in all material respects; and there are no
claims by the Company or any of the Subsidiaries under any such policy
or instrument as to which any insurance company is denying liability or
defending under a reservation of rights clause. Neither the Company nor
any of the Subsidiaries has been refused any insurance coverage sought
or applied for. The Company has no reason to believe that either the
Company or any of the Subsidiaries will not be able to renew its
existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not have a material adverse
effect on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and the Subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary course
of business, except as set forth in or contemplated in the Prospectuses
(exclusive of any supplement thereto).

(aa) None of the Company's Subsidiaries is currently prohibited,
directly or indirectly, from paying any dividends to the Company, from
making any other distribution on its capital stock, from repaying to the
Company any loans or advances to it from the Company or from
transferring any of its property or assets to the Company or the other
Subsidiary, except for certain restrictions as set forth in the Joint
Venture Agreement dated July 4, 1997 by and among the Company,
Hewlett-Packard Europe B.V. and EDB Investments Pte Ltd (as amended) or
as described in or contemplated in the Prospectuses.

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<PAGE> 12

for any such claim; (e) there is no pending or threatened action, suit,
proceeding or claim by others that the Company infringes or otherwise
violates any patent, trademark, copyright, trade secret or other
proprietary right of others in any Intellectual Property, and the
Company is unaware of any other fact which would form a reasonable basis
for any such claim; and (f) there is no prior art of which the Company
is aware that may render any U.S. patent held by the Company invalid or
any U.S. patent application held by the Company unpatentable which has
not been disclosed to the U.S. Patent and Trademark Office, in the case
of any of (a) through (f) above, which would have a material adverse
effect on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and the Subsidiaries, taken as a
whole, whether or not arising from the ordinary course of business.

(cc) Each of the Company and the Subsidiaries have implemented a
comprehensive, detailed program to analyze and address the risk that the
computer hardware and software used by them may be unable to operate
correctly with respect to calendar dates falling on or after January 1,
2000 in the same manner, and with the same functionality, as with
respect to calendar dates falling on or before December 31, 1999 (the
"Year 2000 Problem"), and the Company and each of the Subsidiaries
reasonably believes that such program will address the Year 2000 Problem
with respect to the material operations of the Company on a timely basis
and will not have a material adverse effect upon the condition
(financial or otherwise), prospects, earnings, business or properties of
the Company and the Subsidiaries, taken as a whole.

(dd) The Company has filed all Singapore, U.S., foreign,
federal, state and local tax returns that are required to be filed or
has requested extensions thereof, except in any case in which the
failure so to file would not have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company and the Subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectuses
(exclusive of any supplement thereto) and has paid all taxes required to
be paid by it and any other assessment, fine or penalty levied against
it, to the extent that any of the foregoing is due and payable, except
for any such assessment, fine or penalty that is currently being
contested in good faith or as would not have a material adverse effect
on the condition (financial or otherwise), prospects, earnings, business
or properties of the Company and the Subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectuses
(exclusive of any supplement thereto).

(ee) No Underwriter or holder of Securities is or will be deemed
to be resident, domiciled, carrying on business or subject to taxation
in Singapore solely by reason of the execution, delivery, consummation
or enforcement of this International Underwriting Agreement.

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<PAGE> 13

transactions are recorded as necessary to permit preparation of
financial statements in conformity with U.S. generally accepted
accounting principles and to maintain asset accountability; (iii) access
to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.

[(gg) The Company represents and warrants that (i) the
Registration Statement, the ADR Registration Statement, the Prospectuses
and the Preliminary Prospectuses comply, and any further amendments or
supplements thereto will comply, with any applicable laws or regulations
of foreign jurisdictions in which the Prospectuses or Preliminary
Prospectuses, as amended or supplemented, if applicable, are distributed
in connection with the Directed Share Program, and that (ii) no
authorization, approval, consent, license, order, registration or
qualification of or with any government, governmental instrumentality or
court, other than such as have been obtained, is necessary under the
securities laws and regulations of foreign jurisdictions in which the
Directed Shares are offered outside the United States.]

(hh) The Company and the Subsidiaries are (i) in compliance with
any and all Singapore, U.S., foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws") applicable to conduct their
respective businesses, (ii) have received and are in compliance with all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) have
not received notice of any actual or potential liability for the
investigation or remediation of any disposal or release of hazardous or
toxic substances or wastes, pollutants or contaminants, except where
such non-compliance with Environmental Laws, failure to receive required
permits, licenses or other approvals, or liability would not,
individually or in the aggregate, have a material adverse change in the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company and the Subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business, except as set forth in the Prospectuses (exclusive of any
supplement thereto).

(ii) Each of the Company and the Subsidiaries has fulfilled its
obligations, if any, under the minimum funding standards of Section 302
of the United States Employee Retirement Income Security Act of 1974
("ERISA") and the regulations and published interpretations thereunder
with respect to each "plan" (as defined in Section 3(3) of ERISA and
such regulations and published interpretations) in which employees of
the Company and the Subsidiaries are eligible to participate (other than
any "multiemployer plan" within the meaning of Section 4001(a)(3) of
ERISA) and each such plan (other than any "multiemployer plan" within
the meaning of Section 4001(a)(3) of ERISA) is in compliance in all
material respects with the presently applicable provisions of ERISA and
the United States Internal Revenue Code of 1986, as amended and such
regulations and published interpretations, except where such failure to
fulfill or such non-compliance would not, individually or in the
aggregate, have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company
and the Subsidiaries, taken as a whole. The Company and the Subsidiaries
have not incurred any unpaid liability to the Pension Benefit Guaranty
Corporation (other than for the payment of premiums in the ordinary
course) or to any such plan under Title IV of ERISA, except such as
would not, individually or in the aggregate, have a material adverse
effect on the condition (financial or otherwise), prospects, earnings,
business or

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<PAGE> 14

properties of the Company and the Subsidiaries, taken as a whole.

(jj) The Subsidiaries are the only significant subsidiaries of
the Company as defined by Rule 1.02 of Regulation S-X.

(kk) [Intentionally Omitted]

Any certificate signed by any officer of the Company or any of
the Subsidiaries, in his or her capacity as an officer of the Company or
any of the Subsidiaries, and delivered to you or counsel for the
International Underwriters in connection with this International
Underwriting Agreement shall be deemed to be a representation and
warranty by the Company to each International Underwriter as to the
matters covered thereby.

2. Purchase and Sale.

(a) Subject to the terms and conditions and in reliance upon the
representations and warranties set forth in this International
Underwriting Agreement, the Company agrees to sell to each International
Underwriter, and each International Underwriter agrees, severally and
not jointly, to purchase from the Company, at a purchase price of
US$[ ] per ADS and US$[ ] per Ordinary Share (which has been
determined by converting the equity price in Singapore dollars per
Ordinary Share to U.S. dollars according to the exchange rate set forth
in [ ] on the date hereof), the amount of International
Underwritten Shares set forth opposite such International Underwriter's
name in Schedule I to this International Underwriting Agreement.

(b) Subject to the terms and conditions and in reliance upon the
representations and warranties set forth in this International
Underwriting Agreement, the Company hereby grants an option to the
several International Underwriters to purchase, severally and not
jointly, up to 11,250,000 International Option Securities at the same
purchase price per ADS and per Ordinary Share as the International
Underwriters shall pay for the International Underwritten Securities.
Said option may be exercised to cover overallotments in the sale of the
International Underwritten Securities by the International Underwriters.
Said option may be exercised in whole or in part at any time (but not
more than once) on or before the 30th day after the date of the
Prospectuses upon written or telegraphic notice by the International
Representatives to the Company setting forth the number of shares of the
International Option Securities as to which the several

14
<PAGE> 15

International Underwriters are exercising the option and the settlement
date. The number of International Option Securities to be purchased by
each International Underwriter shall be the same percentage of the total
number of shares of the International Option Securities to be purchased
by the several International Underwriters as such International
Underwriter is purchasing of the International Underwritten Securities,
subject to such adjustments as you in your absolute discretion shall
make to eliminate any fractional shares.

3. Delivery and Payment. Delivery of and payment for the
International Underwritten Securities and the International Option Securities
(if the option provided for in Section 2(b) hereof shall have been exercised on
or before the fifth Business Day prior to the Closing Date) shall be made at
10:00 AM, New York City time, on [ ], 1999, or such later date not later than
five Business Days after the foregoing date as the International Representatives
shall designate, which date and time may be postponed by agreement among the
International Representatives and the Company or as provided in Section 9 hereof
(such date and time of delivery and payment for the International Securities
being herein called in this International Underwriting Agreement, the "Closing
Date"). Delivery of the International Securities shall be made to the
International Representatives for the respective accounts of the several
International Underwriters, or if the International Underwriters so elect, to
the Depositary or its nominee pursuant to the Deposit Agreement, in either case,
against payment by the several International Underwriters through the
International Representatives of the respective aggregate purchase prices of the
International Securities being sold by the Company to or upon the order of the
Company by wire transfer payable in same day funds to the accounts specified by
the Company. Delivery of the ADRs representing International Underwritten
Securities and the International Option Securities shall be made through the
facilities of The Depository Trust Company unless the International
Representatives shall otherwise instruct at least one Business Day in advance of
the Closing Date. ADRs representing the International Securities and any
International Shares not delivered to the Depositary or its nominee pursuant to
the Deposit Agreement shall be registered in such names and in such
denominations as Salomon Smith Barney Inc. ("Salomon Smith Barney") may request
not less than two Business Days in advance of the Closing Date.

It is understood and agreed that the Closing Date shall occur
simultaneously with the "Closing Date" under the U.S. Underwriting Agreement and
the Singapore Management and Underwriting Agreement and that the settlement date
for any International Option Securities occurring after the Closing Date, shall
occur simultaneously with the settlement date under the U.S. Underwriting
Agreement and the Singapore Management and Underwriting Agreement for any U.S.
Option Securities and Singapore Option Securities occurring after the Closing
Date.

15
<PAGE> 16

Street, New York, New York 10013, on the date specified by the International
Representatives (which shall be within five Business Days after exercise of said
option), ADRs representing the International Option Securities and any
International Option Shares not delivered to the Depositary or its nominee
pursuant to the Deposit Agreement in such names and denominations as the
International Representatives shall have requested against payment by the
several International Underwriters through the International Representatives of
the purchase price thereof to or upon the order of the Company by wire transfer
of U.S. dollars and payable in same day funds to the accounts specified by the
Company. If settlement for the International Option Securities occurs after the
Closing Date, the Company will deliver to the International Representatives on
the settlement date for the International Option Securities, and the obligation
of the International Underwriters to purchase the International Option
Securities shall be conditioned upon receipt of, supplemental opinions,
certificates and letters confirming as of such date the opinions, certificates
and letters delivered on the Closing Date pursuant to Section 6 hereof.

4. Offering by Underwriters. It is understood that the several
International Underwriters propose to offer the International Securities for
sale to the public as set forth in the Prospectuses.

5. Agreements. (I) The Company agrees with the several
International Underwriters that:

(a) The Company will use its best efforts to cause the
Registration Statement and the ADR Registration Statement, if not
effective at the Execution Time, and any amendment thereof, to become
effective. Prior to the termination of the offering of the Securities,
the Company will not file any amendment of the Registration Statement or
the ADR Registration Statement or supplement to the U.S. Prospectus or
any Rule 462(b) Registration Statement unless the Company has furnished
you a copy for your review prior to filing and will not file any such
proposed amendment or supplement to which you reasonably object. Subject
to the foregoing sentence, if the Registration Statement or the ADR
Registration Statement has become or becomes effective pursuant to Rule
430A, or filing of the U.S. Prospectus is otherwise required under Rule
424(b), the Company will cause the U.S. Prospectus, properly completed,
and any supplement thereto to be filed with the Commission pursuant to
the applicable paragraph of Rule 424(b) within the time period
prescribed and will provide evidence satisfactory to the U.S.
Representatives of such timely filing. The Company will promptly advise
the International Representatives (1) when the Registration Statement
and the ADR Registration Statement, if not effective at the Execution
Time, shall have become effective, (2) when the U.S. Prospectus, and any
supplement thereto, shall have been filed (if required) with the
Commission pursuant to Rule 424(b) or when any Rule 462(b) Registration
Statement or ADR Registration Statement shall have been filed with the
Commission, (3) when, prior to termination of the offering of the
Securities, any amendment to the Registration Statement or the ADR
Registration Statement shall have been filed or become effective, (4) of
any request by the Commission or its staff for any amendment of the
Registration Statement, or any Rule 462(b) Registration Statement or ADR
Registration Statement, or for any supplement to the U.S. Prospectus or
for any additional information, (5) of the issuance by the

16
<PAGE> 17

Commission of any stop order suspending the effectiveness of the
Registration Statement or the ADR Registration Statement or the
institution or threatening of any proceeding for that purpose and (6) of
the receipt by the Company of any notification with respect to the
suspension of the qualification of the Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose. The Company will use its best efforts to prevent the issuance
of any such stop order and, if issued, to obtain as soon as possible the
withdrawal thereof.

(b) If, at any time when a prospectus relating to the Securities
is required to be delivered under the Act, any event occurs as a result
of which the U.S. Prospectus as then supplemented would include any
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or if it shall
be necessary to amend the Registration Statement or the ADR Registration
Statement or supplement the U.S. Prospectus to comply with the Act or
the rules thereunder, the Company promptly will (1) notify the
International Representatives of any such event; (2) prepare and file
with the Commission, subject to the second sentence of paragraph (i)(a)
of this Section 5, an amendment or supplement which will correct such
statement or omission or effect such compliance; and (3) supply any
supplemental Prospectuses to you in such quantities as you may
reasonably request.

(c) As soon as practicable, the Company will timely file such
reports pursuant to the Exchange Act as are necessary in order to make
generally available to its security holders and to the International
Representatives an earnings statement or statements covering the 12
month period ending December 31, 2000 of the Company and the
Subsidiaries which will satisfy the provisions of Section 11(a) of the
Act and Rule 158 under the Act.

(d) The Company will furnish to the International
Representatives and counsel for the International Underwriters, without
charge, signed copies of the Registration Statement and the ADR
Registration Statement (including exhibits thereto) and to each other
International Underwriter a copy of the Registration Statement and the
ADR Registration Statement (without exhibits thereto) and, so long as
delivery of a prospectus by an International Underwriter or dealer may
be required by the Act, as many copies of each International Preliminary
Prospectus and International Prospectus and any supplement thereto as
the International Representatives may reasonably request.

(e) The Company will arrange, if necessary, for the
qualification of the Securities for sale under the laws of such
jurisdictions as the International Representatives may designate and
will maintain such qualifications in effect so long as required for the
distribution of the International Securities, provided, however, that in
no event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action that
would subject it to service of process in suits, other than those
arising out of the offering or sale of the Securities, in any
jurisdiction where it is not now so subject.

17
<PAGE> 18

(f) Except pursuant to the Underwriting Agreements, the Company
will not, without the prior written consent of Salomon Smith Barney
offer, sell, contract to sell, pledge, or otherwise dispose of, (or
enter into any transaction which is designed to, or might reasonably be
expected to, result in the disposition (whether by actual disposition or
effective economic disposition due to cash settlement or otherwise) by
the Company) directly or indirectly, including the filing (or
participation in the filing) of a registration statement with the
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, any Ordinary Shares or ADSs
or any securities convertible into, or exercisable, or exchangeable for,
Ordinary Shares or ADSs; or publicly announce an intention to effect any
such transaction, for a period of 180 days after the date of the
Underwriting Agreements, provided, however, that the Company may issue
and sell Ordinary Shares pursuant to any employee stock option plan or
stock ownership plan and may file a Form S-8 with respect thereto.

(g) The Company will not take, directly or indirectly, any
action designed to or which has constituted or which might reasonably be
expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Ordinary Shares or the
ADSs.

(h) The Company agrees to pay the costs and expenses relating to
the following matters: (i) the fees and expenses of its counsel
(including local counsel) and accountants in connection with the issue
of the Securities, (ii) the preparation, printing or reproduction and
filing with the Commission of the Registration Statement and the ADR
Registration Statement (including financial statements and exhibits
thereto), each Preliminary Prospectus, each Prospectus, and each
amendment or supplement to any of them and mailing and delivering
(including postage, air freight charges and charges for counting and
packing) copies thereof to the initial purchasers and dealers; (iii) the
preparation of the Deposit Agreement, the deposit of the underlying
Ordinary Shares under the Deposit Agreement, the issuance thereunder of
ADSs representing such deposited Ordinary Shares, the issuance of ADRs
evidencing such ADSs and the fees of the Depositary; (iv) all expenses
relating to the road show for the offering of the Securities, including
the transportation and other expenses incurred by or on behalf of
Company representatives in connection with presentations to prospective
purchasers of the Securities; (v) the preparation, printing,
authentication, issuance and delivery of certificates for the
Securities, including any stamp or transfer taxes in connection with the
original issuance and sale of the Securities; (vi) the registration of
the Securities under the Exchange Act and the listing of the Ordinary
Shares and the ADSs on the SES and The Nasdaq National Market, Inc.,
respectively; (vii) any filings required to be made with the National
Association of Securities Dealers, Inc. (the "NASD") (including filing
fees and the reasonable fees and expenses of counsel for the
Underwriters relating to such filings); (viii) the fees and expenses of
the Authorized Agent (as defined in Section 15 hereof); (ix) the cost
and charges of any transfer agent or registrar; and (x) all other costs
and expenses incident to the performance by the Company of its
obligations under the Underwriting Agreements.

18
<PAGE> 19

(i) Each International Underwriter agrees that (i) it is not
purchasing any of the International Securities 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 of the International
Securities or distribute any International 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 of the International
Securities 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 of the International Securities 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; provided,
however, that the foregoing shall not restrict (A) purchases and sales
among the International Underwriters, the U.S. Underwriters and the
Singapore Underwriters pursuant to the Agreement Among U.S.
Underwriters, International Underwriters and Singapore Underwriters, (B)
stabilization transactions contemplated under the Agreement Among U.S.
Underwriters, International Underwriters and Singapore Underwriters,
conducted through Salomon Smith Barney (or through the U.S.
Representatives, International Representatives and Singapore
Representatives) as part of the distribution of the Securities, and (C)
sales to or through (or distributions of International Prospectuses or
International Preliminary Prospectuses to) persons not United States or
Canadian Persons who are investment advisors, or who otherwise exercise
investment discretion, and who are purchasing for the account of any
United States or Canadian Person.

[(j) The Company agrees that, in connection with the Directed
Share Program, the Company will ensure that the Directed Shares will be
restricted to the extent required by the NASD or the NASD rules from
sale, transfer, assignment, pledge or hypothecation for a period of
three months following the date of the effectiveness of the Registration
Statement. Salomon Smith Barney will notify the Company in writing as to
which Participants will need to be so restricted. The Company will
direct the removal of the transfer restrictions upon the expiration of
such period of time.]

(k) The Company covenants with Salomon Smith Barney that the
Company will comply with all applicable securities and other applicable
laws, rules and regulations in each foreign jurisdiction in which the
Directed Shares are offered in connection with the Directed Share
Program.

(II) The agreements of the International Underwriters set forth
in paragraph (I)(i) of this Section 5 shall terminate upon the earlier of the
following events:

[(a) a mutual agreement of the U.S. Representatives and the
International Representatives to terminate the selling restrictions set
forth in paragraph (I)(i) of this Section 5 and paragraph (I)(i) of
Section 5 of the U.S. Underwriting Agreement; or]

(b) the expiration of a period of 30 days after the Closing
Date, unless (i) the International Representatives shall have given
notice to the Company, the U.S. Representatives and the Singapore
Representatives that the distribution of the International Securities by
the International Underwriters has not yet been completed, or

19
<PAGE> 20

(ii) the U.S. Representatives shall have given notice to the Company,
the International Representatives and the Singapore Representatives that
the distribution of the U.S. Securities by the U.S. Underwriters has not
yet been completed, or (iii) the Singapore Representatives shall have
given notice to the Company, the U.S. Representatives and the
International Representatives that the distribution of the Singapore
Securities by the Singapore Underwriters has not yet been completed. If
such notice by the International Representatives or the U.S.
Representatives or the Singapore Representatives is given, the
agreements set forth in such paragraph (I)(i) shall survive until the
earlier of (I)(i) the event referred to in clause (a) of this subsection
(II) or (2) the expiration of an additional period of 30 days from the
date of any such notice.

(III) Each International Underwriter severally represents and agrees
that:

(a) it has not offered or sold and, prior to the expiry of six
months from the closing of the offering of the International Securities,
will not offer or sell by means of any document any International
Securities to persons in the United Kingdom except to persons whose
ordinary activities involve them in acquiring, holding, managing or
disposing of investments (whether as principal or agent) for the purpose
of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities
Regulations 1995;

(b) it has complied and will comply with all applicable
provisions of the Financial Services Act 1986 with respect to anything
done by you in relation to the International Securities in, from or
otherwise involving the United Kingdom;

(c) 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 (as amended), or a
person to whom such document may otherwise lawfully be issued or passed
on;

(d) it has not offered or sold and will not offer or sell,
directly or indirectly, in Japan or to or for the account of any
resident of Japan any International Securities, except (A) under an
exemption from the registration requirements of the Securities and
Exchange Law of Japan and (B) in compliance with any other applicable
requirements of Japanese law;

(e) it will send to any dealer who purchases from it any
International Securities a notice stating in substance that, by
purchasing such International Securities, the dealer represents and
agrees that it has not offered or sold, and will not offer or sell, any
of the Shares or ADSs, directly or indirectly, in Japan or to or for the
account of any resident thereof except pursuant to an exemption from the
registration requirements of the Securities and Exchange Law of Japan,
and that the dealer will send to any other dealer to whom it sells any
International Securities a notice containing substantially the same
statement as is contained in this sentence;

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<PAGE> 21

(f) it has not offered or sold and will not offer or sell any
International Securities in Hong Kong by means of any document, other
than to persons whose ordinary business it is to buy or sell shares or
debentures, whether as principal or agent, except in circumstances which
do not constitute an offer to the public within the meaning of the
Companies Ordinance (Chapter 32) of Hong Kong;

(g) it has not issued and will not issue any invitation or
advertisement relating to the International Securities in Hong Kong,
except if permitted to do so by the securities law of Hong Kong or to be
disposed of in Hong Kong only to persons whose business involves the
acquisition, disposal or holding of shares whether as principal or
agent; and

(h) it has not and will not offer or sell any International
Securities or distribute any document or other material relating to the
International Securities, either directly or indirectly, to the public
or any member of the public in Singapore other than (A) to an
institutional investor or other person specified in Section 106C of the
Companies Act, Chapter 50 of Singapore, (B) to a sophisticated investor
as specified in, and in accordance with the conditions, specified in
Section 106D of the Companies Act Chapter 50 of Singapore or (C)
otherwise pursuant to, and in accordance with the conditions of, any
other provision of the Companies Act Chapter 50 of Singapore.

6. Conditions to the Obligations of the International
Underwriters. The obligations of the International Underwriters to purchase the
International Underwritten Securities and the International Option Securities,
as the case may be, shall be subject to the accuracy of the representations and
warranties on the part of the Company contained in this International
Underwriting Agreement as of the Execution Time, the Closing Date and any
settlement date pursuant to Section 3 hereof, to the accuracy of the statements
of the Company and made in any certificates pursuant to the provisions hereof,
to the performance by the Company of its obligations under this International
Underwriting Agreement and to the following additional conditions:

(a) If the Registration Statement and the ADR Registration
Statement have not become effective prior to the Execution Time, unless
the U.S. Representatives and the International Representatives agree in
writing to a later time, the Registration Statement and the ADR
Registration Statement will become effective not later than (i) 6:00 PM
New York City time on the date of determination of the public offering
price, if such determination occurred at or prior to 3:00 PM New York
City time on such date or (ii) 9:30 AM New York City time on the
Business Day following the day on which the public offering price was
determined, if such determination occurred after 3:00 PM New York City
time on such date; if filing of the U.S. Prospectus, or any supplement
thereto, is required pursuant to Rule 424(b), the U.S. Prospectus, and
any such supplement, will be filed in the manner and within the time
period required by Rule 424(b); and no stop order suspending the
effectiveness of the Registration Statement or the ADR Registration
Statement shall have been issued and no proceedings for that purpose
shall have been instituted or threatened.

(b) The Company shall have requested and caused Allen &
Gledhill, Singapore

21
<PAGE> 22

counsel for the Company, to have furnished to the Representatives their
opinion, to the effect set forth in the U.S. Underwriting Agreement
under Section 6(b).

(c) The Company shall have furnished to the Representatives the
opinion of Latham & Watkins, United States counsel for the Company, to
the effect set forth in the U.S. Underwriting Agreement under Section
6(c).

(d) The Depositary shall have requested and caused Skadden,
Arps, Slate, Meagher & Flom, counsel for the Depositary, to have
furnished to the Representatives their opinion, to the effect set forth
in the U.S. Underwriting Agreement under Section 6(d).

(e) The Representatives shall have received from Cleary,
Gottlieb, Steen & Hamilton, counsel for the Underwriters, such opinion
or opinions, dated the Closing Date and addressed to the
Representatives, with respect to the issuance and sale of the
Securities, the Registration Statement, the ADR Registration Statement,
the Prospectuses (together with any supplement thereto) and other
related matters as the International Representatives may reasonably
require, and the Company shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon
such matters.

(i) the representations and warranties of the Company in
the Underwriting Agreements are true and correct in all material
respects on and as of the Closing Date with the same effect as
if made on the Closing Date and the Company has complied with
all the agreements and satisfied all the conditions on its part
to be performed or satisfied at or prior to the Closing Date;

(ii) no stop order suspending the effectiveness of the
Registration Statement or the ADR Registration Statement has
been issued and no proceedings for that purpose have been
instituted or, to the Company's knowledge, threatened; and

(iii) since the date of the most recent financial
statements included in the Prospectuses (exclusive of any
supplement thereto), there has been no material adverse change
in the condition (financial or otherwise), earnings, business or
properties of the Company and the Subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary
course of business, except as set forth in or contemplated in
the Prospectuses (exclusive of any supplement thereto).

22
<PAGE> 23

(g) The Company shall have requested and caused KPMG to have
furnished to the Representatives at the Execution Time and at the
Closing Date a letter or letters, dated respectively as of the Execution
Time and as of the Closing Date, in form and substance satisfactory to
the Representatives, to the effect set forth in Section 6(g) of the U.S.
Underwriting Agreement.

(h) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in the Registration Statement
(exclusive of any amendment thereof), and the Prospectuses (exclusive of
any supplement thereto), there shall not have been (i) any change or
decrease specified in the letter or letters referred to in paragraph (g)
of this Section 6 or (ii) any change, or any development involving a
prospective change, in or affecting the condition (financial or
otherwise), earnings, business or properties of the Company and the
Subsidiaries, taken as a whole, whether or not arising from transactions
in the ordinary course of business, except as set forth in or
contemplated in the Prospectuses (inclusive of any supplement thereto)
the effect of which, in any case referred to in clause (i) or (ii)
above, is, in the sole judgment of the Representatives, so material and
adverse as to make it impractical or inadvisable to proceed with the
offering or delivery of the Securities as contemplated by the
Registration Statement (exclusive of any amendment thereof), the ADR
Registration Statement and the Prospectuses (exclusive of any supplement
thereto).

(i) At the Execution Time, the Company shall have furnished to
the Representatives a letter substantially in the form of Exhibit A
hereto from each officer and director of the Company and each
shareholder of the Company listed in Schedule II hereto.

(j) The Company and the Depositary shall have executed and
delivered the Deposit Agreement in form and substance satisfactory to
the Representatives and the Deposit Agreement shall be in full force and
effect.

(k) The Depositary shall have furnished or caused to be
furnished to the Representatives certificates satisfactory to the
Representatives evidencing the deposit with the Depositary or its
nominee of the Ordinary Shares in respect of which ADSs to be purchased
by the Underwriters on such Closing Date are to be issued, and the
execution, issuance, countersignature (if applicable) and delivery of
the ADRs evidencing such ADSs pursuant to the Deposit Agreement and such
other matters related thereto as the Representatives shall reasonably
request.

(l) The closing of the purchase of the U.S. Underwritten
Securities and the Singapore Underwritten Securities to be issued and
sold by the Company pursuant to the U.S. Underwriting Agreement and the
Singapore Management and Underwriting Agreement, respectively, shall
occur substantially concurrently (giving effect to the time difference
between New York and Singapore) with the closing of the purchase of the
International Underwritten Securities described herein.

(m) The Ordinary Shares shall have been listed and admitted and
authorized for trading on the SES, and the ADSs shall have been included
for quotation on The Nasdaq

23
<PAGE> 24

National Market, Inc., and satisfactory evidence of all such actions
shall have been provided to the Representatives.

(n) Prior to the Closing Date, the Company shall have furnished
to the Representatives such further information, certificates and
documents as the Representatives may reasonably request.

If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
International Underwriting Agreement and the U.S. Underwriting Agreement, or if
any of the opinions and certificates mentioned above or elsewhere in this
International Underwriting Agreement shall not be in all material respects
reasonably satisfactory in form and substance to the Representatives and counsel
for the Underwriters, this International Underwriting Agreement and all
obligations of the International Underwriters hereunder may be canceled at, or
at any time prior to, the Closing Date by the Representatives. Notice of such
cancellation shall be given to the Company in writing or by telephone or
facsimile confirmed in writing.

7. Commissions, Costs and Expenses. In consideration of the
agreement by the International Underwriters to subscribe for the International
Underwritten Shares and the International Option Shares (subject to the option
for the International Option Shares referred to in the preamble above being duly
exercised in accordance with Section 3 of this International Underwriting
Agreement), the Company shall pay to the International Underwriters on the
Closing Date, or on the date on which such Option Securities are purchased, as
the case may be, a combined management and underwriting commission of [ ]% per
cent of the principal amount of the International Underwritten Shares or the
International Option Shares, as the case may be.

8. Reimbursement of Underwriters' Expenses. The Company has
agreed to reimburse the Underwriters severally through Salomon Smith Barney on
demand for out-of-pocket expenses (including reasonable fees and disbursements
of counsel) that shall have been incurred by them in connection with the
proposed purchase and sale of the Securities (including all fees and
disbursements of counsel and any stamp duties, similar taxes or duties or other
taxes, if any, incurred by the Underwriters in connection with the Directed
Share Program) up to an aggregate maximum of $500,000. In addition, if the sale
of the Securities provided for under the Underwriting Agreements is not
consummated because any condition to the obligations of the Underwriters set
forth in Section 6 of the Underwriting Agreements is not satisfied, because of
any termination pursuant to Section 11 of the Underwriting Agreements or because
of any refusal, inability or failure on the part of the Company to perform any
agreement under the Underwriting Agreements or comply with any provision of the
Underwriting Agreements other than by reason of a default by any of the
Underwriters, the Company will reimburse the Underwriters severally through
Salomon Smith Barney on demand for all out-of-pocket expenses (including
reasonable fees and disbursements of counsel) that shall have been reasonably
incurred by them in connection with the proposed purchase and sale of the
Securities, up to an aggregate maximum of $500,000.

24
<PAGE> 25

9. Indemnification and Contribution.

[(a) The Company agrees to indemnify and hold harmless each
International Underwriter, the directors, officers, employees and agents
of each International Underwriter and each person who controls any
International Underwriter within the meaning of either the Act or the
Exchange Act against any and all losses, claims, damages or liabilities,
joint or several, to which they or any of them may become subject under
the Act, the Exchange Act or other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement originally filed
or in any amendment thereof, or in the ADR Registration Statement as
originally filed in any amendment thereof, or in any U.S. or
International Preliminary Prospectus or in either of the Prospectuses,
or in any amendment thereof or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or
is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by or on
behalf of any International Underwriter through the International
Representatives specifically for inclusion therein. This indemnity
agreement will be in addition to any liability which the Company may
otherwise have; provided further, that with respect to any untrue
statement or omission of material fact made in any Preliminary
Prospectus, the indemnity agreement contained in this Section 9(a) shall
not inure to the benefit of any International Underwriter from whom the
person asserting any such loss, claim, damage or liability purchased the
Securities concerned to the extent that any such loss, claim, damage or
liability of such International Underwriter occurs under the
circumstance where it shall have been determined by a court of competent
jurisdiction by final and nonappealable judgment that (w) the Company
had previously furnished copies of the Prospectus to the
Representatives, (x) delivery of the Prospectus was required by the Act
to be made to such person, (y) the untrue statement or omission of a
material fact contained in the Preliminary Prospectus was corrected in
the Prospectus and (z) there was not sent or given to such person, at or
prior to the written confirmation of the sale of such Securities to such
person, a copy of the Prospectus.]

25
<PAGE> 26
wrapper material prepared by or with the consent of the Company for
distribution outside of Singapore in connection with the Directed Share
Program attached to the Prospectuses or any Preliminary Prospectus, or
caused by any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statement
therein, when considered in conjunction with the Prospectuses or any
applicable Preliminary Prospectus, not misleading; or (ii) related to,
arising out of, or in connection with the Directed Share Program,
provided that, the Company shall not be responsible under this
subparagraph (ii) for any losses, claim, damages or liabilities (or
expenses relating thereto) that are finally judicially determined to
have resulted from the bad faith or gross negligence of any Salomon
Smith Barney Entities.

(c) Each International Underwriter severally and not jointly
agrees to indemnify and hold harmless the Company, each of its
directors, each of its officers who signs the Registration Statement, or
the ADR Registration Statement, and each person who controls the Company
within the meaning of either the Act or Exchange Act, to the same extent
as the foregoing indemnity to each International Underwriter, but only
with reference to written information relating to such International
Underwriter furnished to the Company by or on behalf of such
International Underwriter through the International Representatives
specifically for inclusion in the documents referred to in the foregoing
indemnity. This indemnity agreement will be in addition to any liability
which any International Underwriter may otherwise have. The Company
acknowledges that (A) the names of the Underwriters contained in any
U.S. Prospectus or International Prospectus or the Prospectuses and
their respective participation in the sale of the Securities as set
forth in the two charts under the heading "Underwriting" in any U.S. or
International Prospectus or the Prospectuses, (B) the statements set
forth in the last paragraph on the front cover page of any U.S. or
International Prospectus regarding delivery of the Securities (and the
ADSs representing such Securities) and (C) the statements set forth in
the seventh, tenth and sixteenth paragraphs under the heading
"Underwriting" in any U.S. or International Preliminary Prospectus and
the Prospectuses constitute the only information furnished in writing by
or on behalf of the several International Underwriters for inclusion in
any U.S. or International Preliminary Prospectus or the Prospectuses.

26
<PAGE> 27

separate counsel retained by the indemnified party or parties except as
set forth below); provided, however, that such counsel shall be
reasonably satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the
indemnified party in an action, the indemnified party shall have the
right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such
counsel with a conflict of interest, (ii) the actual or potential
defendants in, or targets of any such action include both the
indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be legal defenses
available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii)
the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of the institution of such action
or (iv) the indemnifying party shall authorize the indemnified party to
employ separate counsel at the expense of the indemnifying party.
Notwithstanding anything contained herein to the contrary, if indemnity
may be sought pursuant to paragraph (b) above hereof in respect of such
action or proceeding, then in addition to such separate firm for the
indemnified parties, the indemnifying party shall be liable for the
reasonable fees and expenses of not more than one separate firm (in
addition to any local counsel) for Salomon Smith Barney for the defense
of any losses, claims, damages and liabilities arising out of the
Directed Share Program, and all persons, if any, who control such
International Underwriters within the meaning of either Section 15 of
the Act or Section 20 of the Exchange Act. It is understood, however,
that the Company shall, in connection with any one such action or
separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of only one separate
firm of attorneys (in addition to any local counsel) at any time for all
such Underwriters and controlling persons, which firm shall be
designated in writing by Salomon Smith Barney. An indemnifying party
will not, without the prior written consent of the indemnified parties,
settle or compromise or consent to the entry of any judgment with
respect to any pending or threatened claim, action, suit or proceeding
in respect of which indemnification or contribution may be sought under
this International Underwriting Agreement (whether or not the
indemnified parties are actual or potential parties to such claim or
action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from liability arising
out of such claim, action, suit or proceeding. The indemnifying party
shall not be liable for any settlement of any proceeding effected
without its written consent.

27
<PAGE> 28

the Company and by the International Underwriters from the offering of
the International Securities; provided, however, that in no case shall
any International Underwriter (except as may be provided in any
agreement among underwriters relating to the offering of the
International Securities) be responsible for any amount in excess of the
underwriting discount or commission applicable to the Securities
purchased by such International Underwriter hereunder. If the allocation
provided by the immediately preceding sentence is unavailable for any
reason, the Company and the International Underwriters shall contribute
in such proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Company and of the
International Underwriters in connection with the statements or
omissions which resulted in such Losses as well as any other relevant
equitable considerations. Benefits received by the Company shall be
deemed to be equal to the total net proceeds from the offering (before
deducting expenses) received by it, and benefits received by the
International Underwriters shall be deemed to be equal to the total
underwriting discounts and commissions, in each case as set forth on the
cover page of the International Prospectus. Relative fault shall be
determined by reference to, among other things, whether any alleged
untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information provided by the Company
or the International Underwriters, the intent of the parties and their
relative knowledge access to information and opportunity to correct or
prevent such untrue statement or omission. The Company and the
International Underwriters agree that it would not be just and equitable
if contribution were determined by pro rata allocation or any other
method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
paragraph (e), no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 9, each person who
controls an U.S. Underwriter within the meaning of either the Act or the
Exchange Act and each director, officer, employee and agent of an
International Underwriter shall have the same rights to contribution as
such International Underwriter, and each person who controls the Company
within the meaning of either the Act or the Exchange Act, each officer
of the Company who shall have signed the Registration Statement and the
ADR Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to
the applicable terms and conditions of this paragraph (e).

10. Default by an Underwriter. If any one or more International
Underwriters shall fail to purchase and pay for any of the International
Securities agreed to be purchased by such International Underwriter or
International Underwriters under this International Underwriting Agreement and
such failure to purchase shall constitute a default in the performance of its or
their obligations under this Agreement, the remaining International Underwriters
shall be obligated severally to take up and pay for (in the respective
proportions which the amount of International Securities set forth opposite
their names in Schedule I hereto bears to the aggregate amount of International
Securities set forth opposite the names of all the remaining International
Underwriters) the International Securities which the defaulting International
Underwriter or International Underwriters agreed but failed to purchase;
provided, however, that in the event that

28
<PAGE> 29

the aggregate amount of International Securities which the defaulting
International Underwriter or International Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate amount of Securities set forth in
Schedule I hereto, the remaining International Underwriters shall have the right
to purchase all, but shall not be under any obligation to purchase any, of the
International Securities, and if such nondefaulting International Underwriters
do not purchase all the International Securities, this Agreement will terminate
without liability to any nondefaulting International Underwriter or the Company.
In the event of a default by any International Underwriter as set forth in this
Section 10, the Closing Date shall be postponed for such period, not exceeding
five Business Days, as the International Representatives shall determine in
order that the required changes in the Registration Statement, the ADR
Registration Statement and the Prospectuses or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall relieve
any defaulting International Underwriter of its liability, if any, to the
Company and any nondefaulting International Underwriter for damages occasioned
by its default under this International Underwriting Agreement.

11. Termination. This International Underwriting Agreement shall
be subject to termination in the absolute discretion of the International
Representatives, by notice given to the Company prior to delivery of and payment
for the International Securities, if prior to such time (i) trading in the
Company's ADSs shall have been suspended by the Commission or the Nasdaq
National Market, Inc., trading in the Company's Ordinary Shares shall have been
suspended by the SES, trading in securities generally on the New York Stock
Exchange, The Nasdaq National Market, Inc. or the SES shall have been suspended
or limited or minimum prices shall have been established on such exchange or The
Nasdaq National Market, Inc., (ii) a banking moratorium shall have been declared
either by U.S. Federal, New York State or Singapore authorities or (iii) there
shall have occurred any outbreak or escalation of hostilities involving the
United States or Singapore, declaration by the United States or Singapore of a
national emergency or war or other calamity or crisis the effect of which on
financial markets is such as to make it, in the sole judgment of the
International Representatives, impracticable or inadvisable to proceed with the
offering or delivery of the prospectus as contemplated by the International
Prospectus (exclusive of any supplement thereto).

12. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the International Underwriters set forth in or
made pursuant to this Agreement will remain in full force and effect, regardless
of any investigation made by or on behalf of any International Underwriter or
the Company or any of the officers, directors or controlling persons referred to
in Section 9 hereof, and will survive delivery of and payment for the
International Securities. The provisions of Sections 8 and 9 hereof shall
survive the termination or cancellation of this International Underwriting
Agreement.

13. Notices. All communications under this International
Underwriting Agreement will be in writing and effective only on receipt, and, if
sent to the International Representatives, will be mailed, delivered or
telefaxed c/o Salomon Smith Barney Inc. General Counsel (fax no.: (212) 816-7912
and confirmed to such General Counsel at Salomon Brothers International Limited
General Counsel (fax no.:[ ]) and confirmed to such General Counsel at Salomon
Brothers International Limited, Victoria Plaza, 111 Buckingham Palace

29
<PAGE> 30

Road, London SW1W 0SB ENGLAND, Attention: General Counsel; or, if sent to the
Company, will be mailed, delivered or telefaxed to [ ] and confirmed to it at
60 Woodlands Industrial Park D, Street 2, Singapore 738406, Attention: Legal
Department.

14. Successors. This International Underwriting Agreement will
inure to the benefit of and be binding upon the parties hereto and their
respective successors and the officers and directors and controlling persons
referred to in Section 9 hereof, and no other person will have any right or
obligation under this International Underwriting Agreement.

15. Jurisdiction. The Company agrees that any suit, action or
proceeding against the Company brought by any International Underwriter, by the
directors, officers, employees and agents of any International Underwriter or by
any person who controls any International Underwriter, arising out of or based
upon this International Underwriting Agreement or the transactions contemplated
hereby may be instituted in any New York Court; and waives any objection which
it may now or hereafter have to the laying of venue of any such proceeding, and
irrevocably accepts and submits to the non-exclusive jurisdiction of such courts
in any suit, action or proceeding. The Company has appointed [ ]
as its authorized agent, (the "Authorized Agent") upon whom process may be
served in any suit, action or proceeding arising out of or based upon this
Agreement or the transactions contemplated herein which may be instituted in any
New York by any International Underwriter, by the directors, officers, employees
and agents of any International Underwriter or by any person who controls any
International Underwriter and expressly accepts the non-exclusive jurisdiction
of any such court in respect of any such suit, action or proceeding. The Company
hereby represents and warrants that the Authorized Agent has accepted such
appointment and has agreed to act as said agent for service of process, and the
Company agrees to take any and all action, including the filing of any and all
documents that may be necessary to continue such appointment in full force and
effect as aforesaid. Service of process upon the Authorized Agent shall be
deemed, in every respect, effective service of process upon the Company.
Notwithstanding the foregoing, any action arising out of or based upon this
Agreement may be instituted by any International Underwriter, by the directors,
officers, employees and agents of any International Underwriter or by any person
who controls any International Underwriter, in any other court of competent
jurisdiction, including those in Singapore.

The provisions of this Section 15 shall survive any termination
of the International Underwriting Agreement, in whole or in part.

16. Applicable Law. This International Underwriting Agreement
will be governed by and construed in accordance with the laws of the State of
New York applicable to contracts made and to be performed within the State of
New York.

17. Currency. Each reference in this International Underwriting
Agreement to U.S. dollars (the "relevant currency") is of the essence. To the
fullest extent permitted by law, the obligations of the Company in respect of
any amount due under this International Underwriting Agreement will,
notwithstanding any payment in any other currency (whether pursuant to a
judgment or otherwise), be discharged only to the extent of the amount in the
relevant currency that the party entitled to receive such payment may, in
accordance with its normal procedures,

30
<PAGE> 31

purchase with the sum paid in such other currency (after any premium and costs
of exchange) on the Business Day immediately following the day on which such
party receives such payment. If the amount in the relevant currency that may be
so purchased for any reason falls short of the amount originally due, the
Company will pay such additional amounts, in the relevant currency, as may be
necessary to compensate for the shortfall. If, alternatively, the amount in the
relevant currency that may be so purchased for any reason exceeds the amount
originally due, the party entitled to receive such original amount will return
such excess amounts, in the relevant currency, to the Company. Any obligation of
the Company not discharged by such payment will, to the fullest extent permitted
by applicable law, be due as a separate and independent obligation and, until
discharged as provided herein, will continue in full force and effect.

19. Counterparts. This International Underwriting Agreement may
be signed in one or more counterparts, each of which shall constitute an
original, and all of which together shall constitute one and the same agreement.

20. Headings. The section headings used in this International
Underwriting Agreement are for convenience only and shall not affect the
construction hereof.

21. Definitions. The terms which follow, when used in this
International Underwriting Agreement, shall have the meanings indicated.

"Act" shall mean the United States Securities Act of 1933, as
amended, and the rules and regulations of the Commission promulgated
thereunder.

"ADR" shall mean the certificate(s) issued by the Depositary to
evidence the American Depositary Shares issued under the terms of the
Deposit Agreement.

"ADR Registration Statement" shall mean the registration
statement referred to in paragraph 1(c) above, including all exhibits
thereto, each as amended at the time such part of the registration
statement became effective.

"Business Day" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday that is not a day on which banking institutions in
The City of New York, New York and Singapore are authorized or obligated
by law, executive order or regulation to close.

"Commission" shall mean the Securities and Exchange Commission.

"Effective Date" shall mean each date and time that the
Registration Statement and the ADR Registration Statement, any
post-effective amendment or amendments thereto and any Rule 462(b)
Registration Statement became or becomes effective.

31
<PAGE> 32

"Exchange Act" shall mean the United States Securities Exchange
Act of 1934, as amended, and the rules and regulations of the Commission
promulgated thereunder.

"Execution Time" shall mean the date and time that this
International Underwriting Agreement is executed and delivered by the
parties hereto.

"International Preliminary Prospectus" shall mean any
preliminary prospectus with respect to the offering of the International
Securities.

"International Prospectus" shall mean such form of prospectus
relating to the International Securities.

"International Representatives" shall mean the addressees of
this International Underwriting Agreement.

"International Securities" shall mean the International
Underwritten Securities and the International Option Securities.

"International Underwriters" shall mean the several Underwriters
named in Schedule I to this International Underwriting Agreement.

"International Underwriting Agreement" shall mean this
International Underwriting Agreement related to the sale of the
International Securities by the Company to the International
Underwriters.

"New York Courts" shall mean the U.S. Federal or State courts
located in the State of New York, County of New York.

"Option Securities" shall mean the U.S. Option Securities and
the International Option Securities.

"Option Shares" shall mean the U.S. Option Shares and the
International Option Shares.

"Preliminary Prospectuses" and each "Preliminary Prospectus"
shall mean the U.S. Preliminary Prospectus and the International
Preliminary Prospectus.

"Prospectuses" and "each Prospectus" shall mean the U.S.
Prospectus and the International Prospectus.

"Registration Statement" shall mean the registration statement
referred to in paragraph 1(a) above, including exhibits and financial
statements, as amended at the

32
<PAGE> 33

Execution Time (or, if not effective at the Execution Time, in the form
in which it shall become effective) and, in the event any post-effective
amendment thereto or any Rule 462(b) Registration Statement becomes
effective prior to the Closing Date, shall also mean such registration
statement as so amended or such Rule 462(b) Registration Statement, as
the case may be. Such term shall include any Rule 430A Information
deemed to be included therein at the Effective Date as provided by Rule
430A.

"Representatives" shall mean the U.S. Representatives and the
International Representatives.

"Rule 424", "Rule 430A" and "Rule 462" refer to such rules under
the Act.

"Rule 430A Information" shall mean information with respect to
the Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.

"Securities" shall mean the U.S. Securities and the
International Securities.

"Shares" shall mean the U.S. Shares and the International
Shares.

"Singapore Underwriters" shall mean the several underwriters
named in the Singapore Underwriting Agreement.

"Subsidiary" shall mean each of Chartered Semiconductor
Manufacturing Inc. and Chartered Silicon Partners Pte Ltd.

"Underwriter" and "Underwriters" shall mean the U.S.
Underwriters and the International Underwriters.

"Underwritten Securities" shall mean the U.S. Underwritten
Securities and the International Underwritten Securities.

"Underwritten Shares" shall mean the U.S. Underwritten Shares,
the International Underwritten Shares and the Singapore Underwritten
Shares.

33
<PAGE> 34

States or Canadian Federal income taxation, regardless of its source
(other than any non-United States or non-Canadian branch of any United
States or Canadian Person), and shall include any United States or
Canadian branch of a person other than a United States or Canadian
Person.

"U.S." or "United States" shall mean the United States of
America (including the states thereof and the District of Columbia), its
territories, its possessions and other areas subject to its
jurisdiction.

"U.S. Preliminary Prospectus" shall mean any preliminary
prospectus with respect to the offering of the U.S. Securities referred
to in paragraph 1(a) above and any preliminary prospectus with respect
to the offering of the U.S. Securities, as the case may be, included in
the Registration Statement at the Effective Date that omits Rule 430A
Information.

"U.S. Prospectus" shall mean the prospectus relating to the U.S.
Securities that is first filed pursuant to Rule 424(b) after the
Execution Time or, if no filing pursuant to Rule 424(b) is required,
shall mean the form of final prospectus relating to the Securities
included in the Registration Statement at the Effective Date.

"U.S. Representatives" shall mean the addressees of the U.S.
Underwriting Agreement.

"U.S. Securities" shall mean the U.S. Underwritten Securities
and the U.S. Option Securities.

"U.S. Underwriters" shall mean the several Underwriters named in
Schedule I to the U.S. Underwriting Agreement.

"U.S. Underwriting Agreement" shall mean the U.S. Underwriting
Agreement dated the date hereof relating to the sale of the U.S.
Securities by the Company to the U.S. Underwriters.

If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding
agreement among the Company and the several International Underwriters.

Very truly yours,

Chartered Semiconductor Manufacturing
Ltd

By:
Name:
Title:

34
<PAGE> 35

The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.

Salomon Brothers International Limited

By:
Name:
Title:

For itself and the other several International
Representatives and International Underwriters
named in Schedule I
to the foregoing Agreement.

35
<PAGE> 36

Annex A

List of Subsidiaries

Chartered Semiconductor Manufacturing, Inc.

Chartered Silicon Partners Pte Ltd

36
<PAGE> 37

SCHEDULE I

<TABLE>
<CAPTION>
Number of International
International Underwriter Underwritten Shares
- ------------------------- -----------------------
<S> <C>
Salomon Brothers International Limited
Credit Suisse First Boston (Singapore) Limited
Hambrecht & Quist LLC
Societe Generale
SoundView Technology Group, Inc.
Overseas Union Bank Limited
Vickers Ballas & Company Pte Ltd

Total
</TABLE>

37
<PAGE> 38

SCHEDULE II

LIST OF SIGNATORIES TO LETTER ATTACHED AS
EXHIBIT A

38
<PAGE> 39

EXHIBIT A

Chartered Semiconductor Manufacturing Ltd
Public Offering of Ordinary Shares

, 1999

As Representatives of the several U.S. Underwriters
and International Underwriters

c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
U.S.A.

Ladies and Gentlemen:

39
<PAGE> 40

If for any reason the Underwriting Agreements shall be
terminated prior to the Closing Date (as defined in the Underwriting
Agreements), the agreement set forth above shall likewise be terminated.

Yours very truly,

[Signature of officer, director, employee
or shareholder]

[Name and address of officer, director,
employee or shareholder]

- --------
(1) Directed Shares are Ordinary Shares from the offering that are expected to
be subject to priority allocation to the Company's officers, employees and
business associates, directors, officers and employees of the Company's
affiliates and to certain charitable organizations in Singapore.

<PAGE> 1

EXHIBIT 5

[On the letterhead of Allen & Gledhill]

Chartered Semiconductor Manufacturing Ltd,
60, Woodlands Industrial Park D,
Street 2,
Singapore 738406. October 21, 1999

Dear Sirs,

1. We have acted as Singapore legal advisers to Chartered Semiconductor
Manufacturing Ltd (the "Company"), a company organised under the laws of
Singapore, in connection with a registration statement on Form F-1 filed by the
Company with the Securities and Exchange Commission ("SEC") in the United States
on 4 October 1999 (as amended, the "Registration Statement"), for the
registration under the United States Securities Act of 1933, as amended, of
ordinary shares of the Company (the "Shares") directly or in the form of
American Depository Shares representing Ordinary Shares.

2. We have examined the Memorandum of Association and Articles of Association of
the Company, such records of the corporate proceedings of the Company as we have
deemed relevant, the Registration Statement, the proposed form of the U.S.
Underwriting Agreement (the "U.S. Underwriting Agreement") to be entered into
between (1) the Company and (2) Salomon Smith Barney Inc. (for itself and the
other several U.S. Representatives and U.S. Underwriters), the proposed form of
the International Underwriting Agreement (the "International Underwriting
Agreement") to be entered into between (1) the Company and (2) Salomon Brothers
International Limited (for itself and the other International Representatives
and International Underwriters) and such other certificates, records and
documents as we deemed necessary for the purposes of this opinion.

3. We have assumed:-

(i) the genuineness of all signatures on all documents and the
completeness, and the conformity to original documents, of all
copies submitted to us; and

(ii) that copies of the Memorandum and Articles of Association and
the Certificate of Incorporation of the Company submitted to us
for examination are true, complete and up-to-date copies.

4. Based upon and subject to the foregoing, and subject to any matters not
disclosed to us, we are of the opinion that the Shares will be duly authorised
and, upon the issue of share certificates representing the Shares in accordance
with the Articles of Association of the Company against payment for the Shares,
the Shares will be

<PAGE> 2
2

validly issued, fully paid and non-assessable. For the purposes of this opinion
we have assumed that the term "non-assessable" in relation to the Shares to be
offered means under Singapore law that holders of such Shares, having fully paid
up all amounts due on such Shares as to nominal amount and premium thereon, are
under no further personal liability to contribute to the assets or liabilities
of the Company in their capacities purely as holders of such Shares.

5. The statements in the Registration Statement under the caption "Taxation -
Singapore Taxation" insofar as such statements relate to Singapore tax matters
currently applicable to holders of Shares who are non-residents of Singapore
fairly summarises the material Singapore tax matters and consequences of owning
the shares of such holders.

6. We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and to the use of our name under the captions "Risk
Factors - It may be difficult for you to enforce any judgment obtained in the
United States against us or our affiliates", "Taxation - Singapore Taxation" and
"Legal Matters" in the Registration Statement. In giving such consent, we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the United States Securities Act of 1933, as amended or the
rules and regulations of the SEC thereunder.

Yours faithfully,
Allen & Gledhill

<PAGE> 1

EXHIBIT 8.1

[LETTERHEAD OF LATHAM & WATKINS]

October 21, 1999

Chartered Semiconductor Manufacturing Ltd
60 Woodlands Industrial Park D
Street 2, Singapore 738406

Re: Registration Statement on Form F-1

Ladies and Gentlemen:

We have acted as tax counsel to Chartered Semiconductor Manufacturing
Ltd (the "Company"), in connection with its issuance of up to 287,500,000
ordinary shares, par value S$0.26 per share (including ordinary shares
represented by American Depositary Shares) of the Company pursuant to the
registration statement filed with the Securities and Exchange Commission (the
"Commission") on Form F-1 on October 4, 1999, (file No. 333-88397) (as amended
and together with all exhibits thereto, the "Registration Statement"). You have
requested our opinion concerning the material federal income tax consequences to
certain persons acquiring the securities described above in connection with the
Registration Statement.

In formulating our opinion, we have examined such documents, corporate
records, or other instruments as we deemed necessary or appropriate for purposes
of this opinion, including, without limitation, the Registration Statement. In
addition, we have obtained such additional information as we deemed relevant and
necessary for purposes of this opinion through consultation with various
officers and representatives of the Company. We have made such further legal and
factual examinations and inquiries as we deemed necessary or appropriate for
purposes of this opinion. We have not made an independent investigation or audit
of the facts contained in the above referenced documents or otherwise discovered
through our consultation with officers and representatives of the Company.

In our examination, we have assumed the authenticity of all documents
submitted to us as originals, the genuineness of all signatures thereon, the
legal capacity of natural persons executing such documents and the conformity to
authentic original documents of all documents submitted to us as copies. Our
opinion set forth below further assumes the accuracy of (a) the statements and
facts set forth in the Registration Statement and in the other documents
examined by us, and (b) the statements made to us by the officers and
representatives of the Company, in connection with formulating our opinion.
<PAGE> 2

Chartered Semiconductor Manufacturing Ltd
October 21, 1999
Page 2

We are opining herein as to the effect on the subject transaction only
of the federal income tax laws of the United States and we express no opinion
with respect to the applicability thereto, or the effect thereon, of other
federal laws, the laws of any state or other jurisdiction or as to any matters
of municipal law or the laws of any other local agencies within any state.

Based on such facts, assumptions and representations, the information
set forth in the Registration Statement under the caption "Taxation - United
States Federal Taxation" sets forth, subject to the limitations set forth
therein, our opinion regarding the material federal income tax considerations
with respect to the acquisition, ownership and disposition of ordinary shares or
American Depositary Shares pursuant to the Registration Statement.

No opinion is expressed as to any matter not discussed herein.

This opinion is based on various statutory provisions of the Internal
Revenue Code of 1986, as amended, regulations promulgated thereunder and
interpretations thereof by the Internal Revenue Service and the courts having
jurisdiction over such matters, all of which are subject to change either
prospectively or retroactively. Also, any variation or difference in the facts
from those set forth in the Registration Statement may affect the conclusions
stated herein. This opinion is rendered to you as of the date of this letter,
and we undertake no obligation to update this opinion after the effectiveness of
the Registration Statement.

Except as provided below, this opinion is for your use in connection
with the Company's issuance of ordinary shares, including ordinary shares
represented by American Depositary Shares, pursuant to the Registration
Statement. This opinion may not be relied upon by you for any other purpose, or
furnished to, quoted to, or relied upon by any other person, firm or
corporation, for any purpose, without our prior written consent, except that
this opinion may be relied upon by the investors who acquire ordinary shares,
including ordinary shares represented by American Depositary Shares, of the
Company pursuant to the Registration Statement. We hereby consent to the filing
of this opinion as an exhibit to the Registration Statement and to the use of
our name under the caption "Taxation - United States Federal Taxation" in the
Registration Statement. In giving this consent, we do not hereby admit that we
are within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933 or the rules or regulations of the Commission
promulgated thereunder.

Very truly yours,
Latham & Watkins

<PAGE> 1
EXHIBIT 23.3

The Board of Directors and Shareholders
Chartered Semiconductor Manufacturing Ltd:

We consent to the use of our reports included herein and to the reference to
our firm under the heading "Experts" in the prospectus.

/s/ KPMG

KPMG
Singapore

October 21, 1999