CHARTERED SEMICONDUCTOR MANUFACTURING LTD, F-1/A, 2000-05-01

CHARTERED SEMICONDUCTOR MANUFACTURING LTD
F-1/A, 2000-05-01
SEMICONDUCTORS & RELATED DEVICES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 1, 2000

REGISTRATION NO. 333-34194

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

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>
MICHAEL W. STURROCK, ESQ. CHRISTINA ONG, ESQ. RICHARD S. LINCER, ESQ.
LATHAM & WATKINS TAN TZE GAY, ESQ. DAVID W. HIRSCH, ESQ.
80 RAFFLES PLACE ALLEN & GLEDHILL CLEARY, GOTTLIEB, STEEN & HAMILTON
#14-20 UOB PLAZA 2 36 ROBINSON ROAD 39TH FLOOR, BANK OF CHINA TOWER
SINGAPORE 048624 #18-01 CITY HOUSE ONE GARDEN ROAD
(65) 536-1161 SINGAPORE 068877 CENTRAL, HONG KONG, S.A.R., CHINA
(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 MAY 1, 2000

PROSPECTUS

175,000,000 ORDINARY SHARES

DIRECTLY OR IN THE FORM OF AMERICAN DEPOSITARY SHARES

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

We are offering 78,000,000 ordinary shares, directly or in the form of
American Depositary Shares, or ADSs. Some of our shareholders are also offering
an aggregate of 97,000,000 ordinary shares, directly or in the form of ADSs. We
will not receive any proceeds from the sale of ordinary shares by these
shareholders. Of the 175,000,000 ordinary shares that are being offered,
105,000,000 are being offered in the United States and Canada and 70,000,000 are
being offered outside the United States and Canada, in each case, directly or in
the form of ADSs. Each 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.

Our ADSs are quoted on the Nasdaq National Market under the symbol "CHRT"
and our ordinary shares are listed on the Singapore Exchange Securities Trading
Limited under the symbol "Chartered". The last reported sale price of our ADSs
on the Nasdaq National Market on April 28, 2000 was $87.375 per ADS, and the
last reported sale price of our ordinary shares on the Singapore Exchange
Securities Trading Limited on April 28, 2000 was S$14.70 per ordinary share.

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

INVESTING IN OUR ORDINARY SHARES AND ADSS INVOLVES A HIGH DEGREE OF RISK.
PLEASE SEE "RISK FACTORS" BEGINNING ON PAGE 8 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$
Proceeds to Selling Shareholders (before
expenses)...................................... S$ US$ US$
</TABLE>

We and one of the selling shareholders have granted the U.S. and
international underwriters a 30-day option to purchase up to an aggregate of
26,250,000 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 , 2000.
------------------

SALOMON SMITH BARNEY CREDIT SUISSE FIRST BOSTON
CHASE H&Q
SG COWEN
WIT SOUNDVIEW
, 2000
<PAGE> 3

[Description of inside front cover artwork: The inside front cover will contain
a photograph of a fabrication operator visually inspecting a wafer during the
fabrication process. It will also contain our logo.]
<PAGE> 4

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT. 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 DOCUMENT
IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THIS DOCUMENT.
-------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary..................................................... 1
Risk Factors................................................ 8
Use of Proceeds............................................. 22
Price Range of our ADSs and Ordinary Shares................. 23
Dividend Policy............................................. 23
Capitalization.............................................. 24
Exchange Rates.............................................. 25
Dilution.................................................... 26
Selected Financial Data..................................... 27
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 29
Business.................................................... 42
Management.................................................. 55
Principal and Selling Shareholders.......................... 63
Relationship with Singapore Technologies.................... 65
Description of Ordinary Shares.............................. 68
Description of American Depositary Shares................... 72
Taxation.................................................... 79
Shares Eligible for Future Sale............................. 83
Underwriting................................................ 85
Legal Matters............................................... 88
Experts..................................................... 88
Where You Can Find More Information......................... 88
Index to Financial Statements............................... F-1
Annex A: The Republic of Singapore.......................... A-1
Annex B: The Securities Market of Singapore................. B-1
</TABLE>

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 DOCUMENT, WHICH IS THE
THIRD BUSINESS DAY FOLLOWING THE DATE HEREOF (SUCH SETTLEMENT CYCLE BEING HEREIN
REFERRED TO AS "T+3").

THIS DOCUMENT HAS NOT BEEN REGISTERED AS A PROSPECTUS WITH THE REGISTRAR OF
COMPANIES AND BUSINESSES IN SINGAPORE AND MAY ONLY BE CIRCULATED OR DISTRIBUTED
IN SINGAPORE TO (I) AN INSTITUTIONAL INVESTOR OR OTHER PERSON SPECIFIED IN
SECTION 106C OF THE COMPANIES ACT, CHAPTER 50 OF SINGAPORE (THE "SINGAPORE
COMPANIES ACT") AND (II) A SOPHISTICATED INVESTOR, AND IN ACCORDANCE WITH THE
CONDITIONS, SPECIFIED IN SECTION 106D OF THE SINGAPORE COMPANIES ACT. THE
REGISTRAR OF COMPANIES AND BUSINESSES TAKES NO RESPONSIBILITY FOR THE CONTENTS
OF THIS DOCUMENT.

THE COMPANY AND ITS SUBSIDIARIES ARE SUBJECT TO THE CONTINUING NASDAQ
LISTING RULES AND APPLICABLE U.S. FEDERAL SECURITIES LAWS AND WILL NOT BE
SUBJECT TO THE CONTINUING LISTING RULES OF THE SINGAPORE EXCHANGE SECURITIES
TRADING LIMITED.

i
<PAGE> 5

SUMMARY

This summary highlights certain information found in greater detail
elsewhere in this document. In addition to this summary, we urge you to read the
entire document 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 document 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
in 1999 were Agilent Technologies (a subsidiary of Hewlett-Packard), Ericsson,
Lucent Technologies, Broadcom and Silicon Integration Systems.

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, Motorola and Ericsson. Our alliance with Lucent includes an
agreement to jointly develop 0.18 micron ( micron) 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 0.15 micron, 0.13 micron and 0.10 micron process
geometries. Our alliance with Ericsson involves the joint development of radio
frequency CMOS, or RFCMOS, and bipolar CMOS, or BiCMOS, process technologies.

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, all
of which are located in Singapore. We are currently in the process of
constructing a sixth fabrication facility 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 Agilent
Technologies. Fab 7, which is also wholly-owned by our company, is in the design
and initial construction phase. We plan to increase our total production
capacity from approximately 68,000 eight-inch equivalent wafers per month in
December 1999 to an estimated 171,000 eight-inch equivalent wafers per month
(which figures include 49% of the production capacity of Fab 5 and 100% of the
production capacity of Fab 6) by December 2002. On an aggregate annual basis, we
expect our production capacity to increase from approximately 712,000 eight-inch
equivalent wafers in 1999, to approximately 970,000, 1,400,000 and 1,780,000
eight-inch equivalent wafers in years 2000, 2001 and 2002, respectively (which
figures include 49% of the production capacity of Fab 5 and 100% of the
production capacity of Fab 6).

We believe that Chartered is a trusted, customer-oriented service provider.
We have service operations in 10 cities in seven 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.

1
<PAGE> 6

We were incorporated in Singapore in 1987. As of March 31, 2000, we were
70.1% owned by Singapore Technologies Pte Ltd and its affiliates (60.3%
following the global offering). Singapore Technologies is one of Singapore's
largest industrial conglomerates and is indirectly wholly-owned by the
Government of Singapore.

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 SITE DOES NOT CONSTITUTE A PART OF THIS DOCUMENT.

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

2
<PAGE> 7

RECENT DEVELOPMENTS

On April 19, 2000, we announced our financial results for the first quarter
ended March 31, 2000. These results are set forth below.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS OF US DOLLARS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1999 2000
-------- --------
<S> <C> <C>
Net revenue................................................. $130,812 $238,409
Cost of revenue............................................. 118,127 154,340
-------- --------
Gross profit................................................ 12,685 84,069
-------- --------
Operating expenses:
Research and development.................................. 12,081 17,306
Fab start-up costs........................................ -- 11,668
Sales and marketing....................................... 10,070 9,319
General and administrative................................ 10,302 15,509
Costs incurred on termination of development program...... 6,500 --
Stock-based compensation.................................. 1,644 1,109
-------- --------
Total operating expenses.......................... 40,597 54,911
-------- --------
Operating income (loss)..................................... (27,912) 29,158
Equity in loss of CSP(1).................................... (2,654) --
Equity in loss of SMP....................................... (5,838) (2,252)
Other income................................................ 1,883 8,261
-------- --------
Income (loss) before income taxes........................... (34,521) 35,167
Income tax expenses......................................... (356) (3,770)
-------- --------
Income (loss) before minority interest...................... (34,877) 31,397
Minority interest in loss of CSP(1)......................... -- 6,420
-------- --------
Net income (loss)........................................... $(34,877) $ 37,817
======== ========
Net income (loss) per share and ADS
Basic net income (loss) per share......................... $ (0.04) $ 0.03
Diluted net income (loss) per share....................... (0.04) 0.03
Basic net income (loss) per ADS........................... $ (0.35) $ 0.30
Diluted net income (loss) per ADS......................... (0.35) 0.29
Number of shares (in millions) used in computing:
- basic net income (loss) per share....................... 985.7 1,279.9
- diluted net income (loss) per share..................... 985.7 1,307.8
Number of ADS (in millions) used in computing:
- basic net income (loss) per ADS......................... 98.6 128.0
- diluted net income (loss) per ADS....................... 98.6 130.8
Other Data:
Wafer shipped (8-inch equivalent)......................... 153.8 210.1
Depreciation and amortization............................. $ 64,810 $ 71,292
Capital expenditures...................................... $ 20,882 $203,715
</TABLE>

Note (1): The equity accounting method was applied for the investment in CSP in
the period prior to October 1, 1999. From October 1, 1999 forward, CSP
was treated as a consolidated subsidiary.

3
<PAGE> 8

UNAUDITED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS OF US DOLLARS)

<TABLE>
<CAPTION>
AS OF
--------------------------
DECEMBER 31, MARCH 31,
1999 2000
------------ ----------
<S> <C> <C>
ASSETS
Cash and cash equivalents................................. $ 544,996 $ 509,396
Accounts receivable....................................... 141,226 130,942
Inventories............................................... 33,619 34,646
Other current assets...................................... 9,946 15,493
---------- ----------
Total current assets.............................. 729,787 690,477
Property, plant and equipment, net........................ 1,282,106 1,414,213
Investment in SMP......................................... 47,036 53,569
Other non-current assets.................................. 73,979 59,469
---------- ----------
Total assets...................................... $2,132,908 $2,217,728
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable.......................................... $ 152,401 $ 148,776
Current installments of obligations under capital
leases................................................. 5,767 5,973
Current installments of long-term debt.................... 119,991 118,083
Accrued operating expenses................................ 127,147 158,654
Other current liabilities................................. 29,919 36,333
---------- ----------
Total current liabilities......................... 435,225 467,819
Obligations under capital leases, excluding current
installments........................................... 7,822 7,793
Long-term debt, excluding current installments............ 423,668 431,980
Other liabilities......................................... 67,279 54,135
---------- ----------
Total liabilities................................. 933,994 961,727
Minority interest......................................... 57,164 74,170
Shareholders' equity...................................... 1,141,750 1,181,831
---------- ----------
Total liabilities and shareholders' equity........ $2,132,908 $2,217,728
========== ==========
</TABLE>

4
<PAGE> 9

THE GLOBAL OFFERING

SHARES OFFERED BY THE COMPANY...... 78,000,000 ordinary shares.

SHARES OFFERED BY THE SELLING
SHAREHOLDERS....................... 97,000,000 ordinary shares.

THE GLOBAL OFFERING................ The global offering consists of the U.S.
offering and the international offering,
each of which is described below.

U.S. OFFERING...................... An offering in the United States and
Canada of 105,000,000 ordinary shares,
directly or in the form of ADSs.

INTERNATIONAL OFFERING............. An offering outside the United States and
Canada of 70,000,000 ordinary shares,
directly or in the form of ADSs. The
international offering will occur at the
same time as the U.S. offering.

USE OF PROCEEDS FROM THE GLOBAL
OFFERING........................... The net proceeds to us from the global
offering will be used to fund a portion
of our year 2001 capital expenditure
requirements, principally in connection
with the construction and equipping of
our new fabrication facility, Fab 7, and
for general corporate purposes. We will
not receive any of the proceeds from the
sale of ordinary shares (including
ordinary shares represented by ADSs) by
the selling shareholders. Please see "Use
of Proceeds" for further discussion of
how we intend to use the proceeds from
the global offering.

OVERALLOTMENT OPTIONS.............. We and one of the selling shareholders
have granted the U.S. and international
underwriters a 30-day option to purchase
up to an aggregate of 26,250,000
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 document assumes the underwriters
have not exercised their overallotment
option.

SHARES OUTSTANDING AFTER THE GLOBAL
OFFERING........................... 1,358,760,547 ordinary shares (including
ordinary shares represented by ADSs) will
be outstanding after the global offering.
If the underwriters exercise their
overallotment option in full,
1,370,460,547 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............................ Our ADSs are quoted on the Nasdaq
National Market under the symbol "CHRT"
and our ordinary shares are listed on the
Singapore Exchange Securities Trading
Limited under the symbol "Chartered".

5
<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" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included elsewhere in this document. 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, 1995, 1996, 1997, 1998 and 1999. The as adjusted data set
forth below give effect to the issuance by our company of 78,000,000 ordinary
shares in the global offering (including ordinary shares represented by ADSs)
and the application of the net proceeds to us from such offering at an assumed
public offering price of $87.375 per ADS (the equivalent of S$14.893 per
ordinary share based on an exchange rate of S$1.7045 to US$1.00.)

When we refer to "Singapore dollars" and "S$" in this document, we are
referring to Singapore dollars, the legal currency of Singapore. When we refer
to "U.S. dollars," "dollars," "$" and "US$" in this document, we are referring
to United States dollars, the legal currency of the United States. For your
convenience, we have included in this document 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.

6
<PAGE> 11

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999
-------------------------
ACTUAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 544,996 $1,207,696
Working capital............................................. 294,562 957,262
Total assets................................................ 2,132,908 2,795,608
Short-term borrowings and current portion of long-term
debt...................................................... 119,991 119,991
Current installments of obligations under capital leases.... 5,767 5,767
Obligations under capital leases, excluding current
installments.............................................. 7,822 7,822
Other long-term debt........................................ 423,668 423,668
Shareholders' equity........................................ 1,141,750 1,804,450
</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.

(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 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.

(5) CSP was treated as a consolidated subsidiary from October 1, 1999 forward.
Please see notes 1 and 6 to our consolidated financial statements.

7
<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 document, 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 103.9% 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 December 31, 1999, we had a retained deficit of approximately $277.7
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.

8
<PAGE> 13

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.

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 and equipment 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. For
example, in February 2000, we commenced construction of Fab 7 and expect to
require additional financing to complete its construction and equipping. We are
also currently expanding and adding additional equipment to increase the
capacity of our fabs, two of which are jointly-owned with third parties, and
expect to require additional financing to complete such equipping. These capital
expenditures 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, as occurred in 1997, 1998 and the
first three quarters of 1999. 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.

CSP, our strategic alliance that owns and will operate Fab 6, intends to
enter into a credit facility providing for borrowings of approximately $820
million to finance its capital expenditure requirements, including approximately
$480 million for its planned capital expenditures for 2000. The actual amount of
debt to be incurred under the facility will be influenced by several factors,
including without limitation, the speed and timing of the ramp up of operations
at Fab 6 and the terms of such debt.

We will require additional financing to fund our current growth plan. There
can be no assurance that additional financing will be available at all or, if
available, that such financing will be obtained on terms

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favorable to us or that any additional financing will not be dilutive to our
shareholders. In addition, a substantial portion of our borrowings is guaranteed
by our controlling shareholder, ST, and its affiliates. We may not be able to
obtain similar credit guarantees from ST in the future.

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 we and our
competitors are doing currently. 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 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.

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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 62.8%
and 62.3% of our total net revenue in 1998 and 1999, respectively. In 1998, our
two largest customers accounted for approximately 9.6% and 9.3% of our total net
revenue, respectively, and, in 1999, our two largest customers accounted for
11.1% and 7.4% 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 Agilent
Technologies, a subsidiary of Hewlett-Packard, a technology transfer and
licensing agreement with Motorola and a joint development agreement with
Ericsson Microelectronics AB, or Ericsson. If we are unable to continue our
technology alliances with Lucent, Agilent Technologies 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.

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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
operates Fab 5, is jointly-owned with a subsidiary of Lucent. CSP, which owns
and will operate Fab 6, is jointly-owned with EDB Investments Pte Ltd and a
subsidiary of Agilent Technologies. 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 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 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.

A number of semiconductor manufacturers, including our primary competitors
and our company, 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. As of December
31, 1999, we held 179 patents worldwide, 141 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 services, 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
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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;

- 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, disruptions in the supply of utilities 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

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<PAGE> 18

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 which the industry is currently facing, 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.

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. 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.

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RISKS RELATING TO OUR INFRASTRUCTURE

WE ARE IN THE PROCESS OF CONSTRUCTING A NEW FABRICATION PLANT.

Fab 7 is in its design and initial construction phase. While we have taken
the project management and planning steps we believe are necessary to complete
Fab 7 on schedule and within budget, there are certain uncontrollable events
that could delay the project or increase the cost of Fab 7. Such potential
events include:

- a major design and/or construction change caused by changes to the
initial building space utilization plan or equipment layout;

- shortages and late delivery of building materials and facility equipment;

- a long and intensive wet season that limits construction;

- a shortage of foreign construction workers or a change in immigration
laws preventing such workers from entering Singapore;

- strikes and labor disputes;

- on-site construction problems such as industrial accidents, fires and
structural collapse; and

- delays in securing the necessary governmental approvals and land lease.

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 December 31, 1999, a
majority of our 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.

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.

YEAR 2000 UPDATE.

We crossed over from December 31, 1999 into January 1, 2000 without
experiencing any Year 2000-related incidents or disruptions that were harmful to
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 60.3% of our
outstanding ordinary shares following completion of the global offering, or
58.7% if the underwriters exercise their overallotment option

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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 do not contain a provision requiring that ST and its
affiliates own at least a majority of our ordinary shares. Please see
"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

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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, in 1999
substantially all of our revenue and approximately 72.5% of our cost of revenue
were 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 0.6%. Likewise, if
the Singapore dollar weakens against the U.S. dollar by 2.0%, our cost of
revenue will decrease by 0.6%. 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 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 in the future could be negatively impacted
if the economic environment in these countries deteriorates.

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 document, 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.
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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.

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

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 Singapore Exchange Securities Trading Limited, or the Singapore
Exchange, is relatively small and more volatile than stock exchanges in the
United States and certain other European countries. As of December 31, 1999,
there were over 370 Singapore companies listed on the Main Board and SESDAQ of
the Singapore Exchange and the aggregate market capitalization of listed equity
securities of these companies was approximately US$260 billion. For the year
ended December 31, 1998, the average daily equity trading value on the Singapore
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 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 in the global
offering is 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 assumed public
offering price of our ordinary shares and ADSs, our current shareholders will
have an aggregate unrealized gain of approximately $9.7 billion as a result of
the global offering. Please see "Dilution" for additional information regarding
the dilutive effect of the global offering.

AN ACTIVE OR LIQUID MARKET FOR THE ADSS AND ORDINARY SHARES IS NOT ASSURED.

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 in the global offering 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.

18
<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 document, 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
ADSs may be unable to participate in rights offerings by us and may experience
dilution of their holdings as a result.

THE MARKET PRICES OF OUR ADSS AND ORDINARY SHARES HAVE BEEN AND MAY CONTINUE TO
BE HIGHLY VOLATILE.

The market prices of our ADSs and ordinary shares have fluctuated widely
and may continue to do so. For example, from our initial public offering in
October 1999 through April 28, 2000, the trading price of our ADSs has ranged
from a high of $105.75 per ADS to a low of $31.25 per ADS. During the same
period, the trading price of our ordinary shares has ranged from a high of
S$18.50 per ordinary share to a low of S$5.15 per ordinary share. Many factors
could cause the market prices of our ADSs and ordinary shares to rise and fall.
Some of these factors include:

- actual or anticipated variations in our quarterly operating results;

- announcements of technological innovations;

- changes in estimates of our performance or recommendations by financial
analysts;

19
<PAGE> 24

- market conditions in the semiconductor industry and economy as a whole;

- introduction of new services by us or our competitors;

- changes in market valuations of other foundries and semiconductor
companies;

- announcements by us or our competitors of significant acquisitions,
strategic partnerships or joint ventures;

- additions or departures of key personnel; and

- other events or factors, many of which are beyond our control.

The financial markets in the United States, Singapore 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 prices of our ADSs and ordinary shares 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 FUTURE SALES OF SECURITIES BY OUR COMPANY OR EXISTING SHAREHOLDERS MAY HURT
THE PRICE OF OUR ADSS AND OUR ORDINARY SHARES.

Each of our directors and executive officers, ST and its affiliates, our
equity investor customers and certain existing shareholders who collectively
held 979,231,742 ordinary shares after our initial public offering entered into
a 180-day lock-up agreement with Salomon Smith Barney Inc. By its terms, the
lock-up agreement expired on April 26, 2000. Of the 979,231,742 ordinary shares
subject to the initial lock-up, 835,833,046 ordinary shares will be subject to a
new 90-day lock-up as described below, 97,000,000 ordinary shares are being sold
by the selling shareholders in the global offering and 46,398,696 ordinary
shares are currently available for sale.

The market price of our ADSs and ordinary shares could decline after the
global offering as a result of sales of a large number of ADSs or ordinary
shares or the perception that such sales could occur. Such sales also might make
it more difficult for us to sell ADSs or 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 1,358,760,547 ordinary shares issued and
outstanding (including ordinary shares represented by ADSs). After giving effect
to the global offering, ST and its affiliates will own, directly and indirectly,
819,537,684 ordinary shares constituting approximately 60.3% of the outstanding
ordinary shares. The ordinary shares sold in the global offering, as well as the
287,500,000 ordinary shares sold in our initial public offering (in each case,
including ordinary shares represented by ADSs), will be freely tradable, except
that any such shares held by our affiliates may only be sold in the United
States in compliance with Rule 144 under the Securities Act. The remaining
896,260,547 ordinary shares are freely tradable in Singapore, but may only be
sold in the United States 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.

ST and ST Semiconductors, who will collectively hold 819,537,684 ordinary
shares after the global offering, and the Company have agreed not to 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 120 days from the date of this document, subject to certain
exceptions. The selling shareholders (other than ST Semiconductors), who will
collectively hold 16,295,362 ordinary shares after the global offering, have
agreed not to sell or otherwise dispose of any ordinary shares or securities
convertible into or exchangeable for ordinary shares during the 90-day period
following the date of this offering document, without the prior written consent
of Salomon Smith Barney Inc. Please see "Underwriting" and "Shares Eligible for
Future Sale" for additional information regarding resale restrictions.

20
<PAGE> 25

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

This document contains forward-looking statements, as defined in the safe
harbor provisions of the United States Private Securities Litigation Reform Act
of 1995. These forward-looking statements, including without limitation,
statements relating to our capital expenditures, financings, production
capacity, expansion plans and the construction and equipping of our new
fabrication facility, reflect our current views with respect to future events
and financial performance, and are subject to certain risks and uncertainties,
which could cause actual results to differ materially from historical results or
those anticipated. For example, changes in the market outlook, customer demands,
availability of materials, equipment, manpower and timely regulatory approvals,
as well as the availability of financings and the terms thereof, could affect
our capital expenditures, financings, production capacity, expansion plans and
the construction and equipping of our new fabrication facility. Although we
believe the expectations reflected in such forward-looking statements are based
upon reasonable assumptions, we can give no assurance that our expectations will
be attained. We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.

21
<PAGE> 26

USE OF PROCEEDS

The net proceeds from the ordinary shares (including ordinary shares
represented by ADSs) we are offering in the global offering, after deducting
underwriting discounts and the estimated offering expenses payable by us, are
estimated to be approximately $662.7 million, or $762.2 million if the
underwriters exercise their overallotment option in full, assuming a public
offering price of $87.375 per ADS (the equivalent of S$14.893 per ordinary
share.) We will not receive any of the proceeds from the sale of ordinary shares
(including ordinary shares represented by ADSs) by the selling shareholders.

We intend to use the proceeds from the global offering for the following
purposes:

- to fund a portion of our year 2001 capital expenditure requirements,
principally in connection with the construction and equipping of Fab 7;
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 from
the global offering. Pending any use, as described above, we intend to invest
the net proceeds in high quality, interest-bearing instruments.

22
<PAGE> 27

PRICE RANGE OF OUR ADSS AND ORDINARY SHARES

The following table sets forth, for the periods indicated, the high and low
last reported sales prices per ADS and ordinary share since trading on October
29, 1999 as furnished by the Nasdaq National Market, or Nasdaq, and the
Singapore Exchange. The initial public offering price of our ADSs on October 29,
1999 was $20.00 per ADS and S$3.344 per ordinary share.

PRICE RANGE FOR ADSS QUOTED ON NASDAQ NATIONAL MARKET

<TABLE>
<CAPTION>
HIGH LOW
------- ------
<S> <C> <C>
October 29 through December 31, 1999...................... $ 73.00 $31.25
January 1 through March 31, 2000.......................... $105.75 $59.50
April 1 through April 28, 2000............................ $ 89.88 $55.00
</TABLE>

PRICE RANGE FOR ORDINARY SHARES LISTED ON SINGAPORE EXCHANGE

<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
November 1 through December 31, 1999.................... S$10.10 S$ 5.15
January 1 through March 31, 2000........................ S$18.50 S$ 9.95
April 1 through April 28, 2000.......................... S$15.70 S$10.20
</TABLE>

The last reported sale price of the ADSs as quoted on Nasdaq on April 28,
2000 was $87.375 per ADS. The last reported sale price of the ordinary shares as
quoted on the Singapore Exchange on April 28, 2000 was S$14.70 per ordinary
share.

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 2000. 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.

23
<PAGE> 28

CAPITALIZATION

The following table sets forth, as of December 31, 1999, the capitalization
of our company on an actual and as adjusted basis. The as adjusted data set
forth below give effect to the issuance by us of 78,000,000 ordinary shares in
the global offering (including ordinary shares represented by ADSs), and the
application of the net proceeds to the Company from such offering at an assumed
public offering price of $87.375 per ADS (the equivalent of S$14.893 per
ordinary share). You should read this information in conjunction with:

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

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

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999
-------------------------
ACTUAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents................................... $ 544,996 $1,207,696
========== ==========
Short-term borrowings, including current portion of
long-term debt............................................ $ 119,991 $ 119,991
Long-term debt, excluding current installments.............. 423,668 423,668
---------- ----------
Shareholders' equity:
Ordinary shares, S$0.26 par value per share, 3,076,923,079
shares authorized; 1,278,977,923 shares issued and
outstanding, actual; 1,356,977,923 shares issued and
outstanding, as adjusted............................... 264,529 276,427
Additional paid-in capital................................ 1,207,656 1,858,458
Accumulated other comprehensive income (loss)............. (52,696) (52,696)
Retained deficit.......................................... (277,739) (277,739)
---------- ----------
Total shareholders' equity............................. 1,141,750 1,804,450
---------- ----------
Total capitalization................................... $1,685,409 $2,348,109
========== ==========
</TABLE>

24
<PAGE> 29

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 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>
SINGAPORE DOLLARS PER UNITED STATES $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................................... 1.70 1.66 1.74 1.67
2000 (through April 28)................ 1.71 1.65 1.73 1.71
</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 document have been based on the noon buying rate
in the City of New York on December 31, 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 December 31, 1999 was S$1.67 per $1.00.

25
<PAGE> 30

DILUTION

The net tangible book value of our company as of December 31, 1999 was
$1,113 million or S$1.484 per ordinary share, the equivalent of $8.704 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
December 31, 1999 by the number of outstanding ordinary shares at that date.

Based on the issuance by us of 78,000,000 ordinary shares in the global
offering (including ordinary shares represented by ADSs), at an assumed public
offering price of S$14.893 per ordinary share and $87.375 per ADS, after
deducting underwriting discounts and estimated offering expenses paid by us, the
net tangible book value of our company as of December 31, 1999 would have been
S$2.231 per ordinary share and $13.087 per ADS. This represents an immediate
increase in net tangible book value of S$0.747 per ordinary share and $4.383 per
ADS to our existing shareholders and an immediate dilution in net tangible book
value of S$12.662 per ordinary share and $74.288 per ADS to new investors. The
following table illustrates this per ordinary share and per ADS dilution:

<TABLE>
<CAPTION>
PER PER
SHARE ADS
-------- -------
<S> <C> <C> <C> <C>
Assumed public offering price per ordinary share and per
ADS....................................................... S$14.893 $87.375
Net tangible book value per ordinary share and per ADS as of
December 31, 1999......................................... S$1.484 $8.704
Increase in net tangible book value per ordinary share and
per ADS attributable to new public investors.............. 0.747 4.383
------- ------
Net tangible book value per ordinary share and per ADS after
the global offering....................................... 2.231 13.087
-------- -------
Dilution in net tangible book value per ordinary share and
per ADS to new public investors........................... S$12.662 $74.288
======== =======
</TABLE>

The following table summarizes as of December 31, 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....................... 1,279.0 94.3% $1,472.2 69.0% $1.15
New public investors........................ 78.0 5.7 662.7 31.0 8.50
------- ----- -------- ----- -----
Total..................................... 1,357.0 100.0% 2,134.9 100.0% 1.57
======= ===== ======== ===== =====
</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.

26
<PAGE> 31

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 document. The selected financial data as of December
31, 1995, 1996 and 1997 and for the years ended December 31, 1995 and 1996 are
derived from our audited financial statements, however, we have not included our
audited financial statements for those periods in this document. The selected
financial data as of December 31, 1998 and 1999 and for the years ended December
31, 1997, 1998 and 1999 are derived from our audited financial statements
included elsewhere in this document which have been audited by KPMG, independent
accountants. Our financial statements are prepared in accordance with U.S. GAAP.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
1995 1996(1) 1997 1998(2)(3) 1999(4)(5)
-------- -------- --------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenue.............................. $287,026 $406,936 $ 379,761 $ 422,622 $ 694,258
Cost of revenue.......................... 187,168 289,435 368,521 439,668 527,023
-------- -------- --------- --------- ----------
Gross profit (loss)...................... 99,858 117,501 11,240 (17,046) 167,235
-------- -------- --------- --------- ----------
Operating expenses:
Research and development............... 9,069 13,018 26,553 43,419 58,894
Fab start-up costs..................... 11,236 13,132 10,908 1,455 8,442
Sales and marketing.................... 5,550 16,233 20,184 31,872 34,359
General and administrative............. 20,097 32,615 30,144 37,389 44,619
Costs incurred on termination of
development program................. -- -- -- 31,776 6,500
Stock-based compensation............... 2,799 332 2,024 (2,780) 20,094
-------- -------- --------- --------- ----------
Total operating expenses............ 48,751 75,330 89,813 143,131 172,908
-------- -------- --------- --------- ----------
Operating income (loss).................. 51,107 42,171 (78,573) (160,177) (5,673)
Other income (expense):
Equity in loss of CSP.................. -- -- (1,272) (5,577) (9,528)
Equity in loss of SMP.................. -- -- -- (14,857) (23,282)
Other income........................... 2,982 3,850 4,860 4,680 5,739
Interest income........................ 2,944 973 179 1,690 6,733
Interest expense....................... (1,297) (1,144) (12,782) (20,137) (17,822)
Exchange gain (loss)................... (22) 1,963 (31,678) 5,237 5,862
-------- -------- --------- --------- ----------
Income (loss) before income taxes........ 55,714 47,813 (119,266) (189,141) (37,971)
Income tax expense....................... (832) (337) (355) (865) (2,131)
-------- -------- --------- --------- ----------
Income (loss) before minority interest... 54,882 47,476 (119,621) (190,006) (40,102)
Minority interest in loss of CSP......... -- -- -- -- 7,483
-------- -------- --------- --------- ----------
Net income (loss)........................ $ 54,882 $ 47,476 $(119,621) $(190,006) $ (32,619)
======== ======== ========= ========= ==========
Net income (loss) per ordinary share:
Basic.................................. $ 0.13 $ 0.10 $ (0.24) $ (0.24) $ (0.03)
======== ======== ========= ========= ==========
Diluted................................ $ 0.13 $ 0.10 $ (0.24) $ (0.24) $ (0.03)
======== ======== ========= ========= ==========
Shares used in per ordinary share
calculation:
Basic.................................. 418,661 488,296 490,407 784,541 1,035,181
Diluted................................ 418,661 488,824 490,407 784,541 1,035,181
Net income (loss) per ADS:
Basic.................................. $ 1.31 $ 0.97 $ (2.44) $ (2.42) $ (0.32)
======== ======== ========= ========= ==========
Diluted................................ $ 1.31 $ 0.97 $ (2.44) $ (2.42) $ (0.32)
======== ======== ========= ========= ==========
ADSs used in per ADS calculation:
Basic.................................. 41,866 48,830 49,041 78,454 103,518
Diluted................................ 41,866 48,882 49,041 78,454 103,518
</TABLE>

27
<PAGE> 32

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------------------------------------------------
1995 1996 1997 1998 1999
-------- ---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............. $ 41,925 $ 7,064 $ 23,785 $ 99,619 $ 544,996
Working capital (deficit)............. (29,917) (173,937) (328,927) 13,099 294,562
Total assets.......................... 618,043 1,035,561 1,278,968 1,321,510 2,132,908
Short-term borrowings and current
portion of long-term debt........... 28,456 29,155 10,591 52,128 119,991
Current installments of obligations
under capital leases................ 3,620 3,842 4,078 4,329 5,767
Obligations under capital leases,
excluding current installments...... 25,665 21,823 17,745 13,414 7,822
Other long-term debt.................. 16,961 65,934 273,008 419,545 423,668
Shareholders' equity.................. 377,609 489,237 310,806 601,246 1,141,750
</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.

(2) Effective July 1, 1998, we changed our functional currency from the
Singapore dollar to the U.S. dollar.

(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.

(4) In 1999, we recorded a charge of $6.5 million in connection with the
termination of a development program.

(5) CSP was treated as a consolidated subsidiary from October 1, 1999 forward.

28
<PAGE> 33

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 document. 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
document, 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 currently
own, or have an interest in, five fabrication facilities, all of which are
located in Singapore. We are currently in the process of constructing a sixth
fabrication facility in Singapore. Fabs 1, 2 and 3 are wholly-owned by our
company. Fab 5 is operated by SMP, of which we hold a 49% equity interest and
account for as a minority equity interest. Fab 6 is owned and will be operated
by CSP, of which we own a 51% equity interest and account for as a consolidated
subsidiary. Fab 7, which is wholly-owned by our company, is in the design and
initial construction phase.

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

As of March 31, 2000, we were 70.1% owned by ST and its affiliates (60.3%
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 based on 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.

29
<PAGE> 34

Because 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 17% of
total revenue in 1999.

Our 1999 share option plan is accounted for 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.

We expect that a significant change to the rate of inflation and the
changing prices of our equipment and materials may affect our cost of operations
and impact our net income. For the years ended December 31, 1997, 1998, and
1999, we believe that changes in inflation did not have a material impact on our
cost of operations or net income.

30
<PAGE> 35

RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1997 1998 1999
----- ----- -----
<S> <C> <C> <C>
Net revenue................................................. 100.0% 100.0% 100.0%
Cost of revenue............................................. 97.0 104.0 75.9
----- ----- -----
Gross profit (loss)......................................... 3.0 (4.0) 24.1
----- ----- -----
Operating expenses:
Research and development.................................. 7.0 10.3 8.5
Fab start-up costs........................................ 2.9 0.3 1.2
Sales and marketing....................................... 5.3 7.5 4.9
General and administrative................................ 7.9 8.8 6.4
Costs incurred on termination of development program...... -- 7.5 0.9
Stock-based compensation.................................. 0.5 (0.7) 2.9
----- ----- -----
Total operating expenses............................... 23.6 33.7 24.8
----- ----- -----
Operating loss.............................................. (20.6) (37.7) (0.7)
Other income (expense):
Equity in loss of CSP..................................... (0.3) (1.3) (1.4)
Equity in loss of SMP..................................... -- (3.5) (3.4)
Other income.............................................. 1.3 1.1 0.8
Interest income........................................... -- 0.4 1.0
Interest expense.......................................... (3.4) (4.8) (2.6)
Exchange gain (loss)...................................... (8.3) 1.2 0.8
----- ----- -----
Loss before income taxes.................................... (31.3) (44.6) (5.5)
Income tax expense.......................................... (0.1) (0.2) (0.3)
----- ----- -----
Loss before minority interest............................... (31.4) (44.8) (5.8)
Minority interest in loss of CSP............................ -- -- 1.1
----- ----- -----
Net loss.................................................... (31.4)% (44.8)% (4.7)%
===== ===== =====
</TABLE>

YEARS ENDED DECEMBER 31, 1998 AND DECEMBER 31, 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
64.3% from $422.6 million in 1998 to $694.3 million in 1999. The higher revenue
was due to improved customer demand led by the U.S. region which increased
$211.8 million to $477.2 million in 1999, and the addition of new customers in
Europe, our fastest growing region, which increased $82.2 million to $89.1
million in 1999.

The combined factors of new customers and increased wafer demand spurred
wafer shipments from 439,700 in 1998 to 695,300 in 1999, an increase of 255,600,
or 58.1%. The improvement in average selling prices also contributed to net
revenue improvement. Average selling prices increased by 4% from $961 per wafer
in 1998 to $999 per wafer in 1999. Adjusted to exclude the print-head business
that was terminated in 1998, average selling prices increased 2% from 1998 to
1999. The average selling price improvement was mainly due to shipment of wafers
with higher mix of advanced technology.

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 19.9% from
$439.7 million in 1998 to $527.0 million in 1999, principally due to the
increase in production volumes. The increase in the number of wafers produced
resulted in a 24.2% decrease in

31
<PAGE> 36

average cost per wafer from $1,000 in 1998 to $758 in 1999. As a result of
higher volume of shipments and improved capacity utilization, gross profit for
1999 improved to $167.2 million, or 24.1% of net revenue, from gross loss of
$17.0 million, or negative 4.0% of net revenue, in 1998.

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
35.6% from $43.4 million in 1998 to $58.9 million in 1999. The increase was due
principally to expenses for the development of 0.25 micron and 0.18 micron
process technologies, as well as other advanced processes.

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.
As a result of the amendment to the strategic alliance agreement with Agilent
Technologies Europe B.V. and EDB Investments Pte Ltd, the Company has treated
CSP as a consolidated subsidiary from October 1, 1999 forward. The fab start-up
costs for 1998 were due primarily to start-up activities for print head
operations (since terminated) and for 1999 were related to start-up costs at
CSP.

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 7.8% from $31.9 million in 1998 to $34.4 million
in 1999 due principally to costs of expanding our EDA partnership program and
customer support structure in the region.

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 by 19.3% from $37.4 million in
1998 to $44.6 million in 1999. The increase was due primarily to higher
administrative headcount which resulted in higher payroll and staff related
expenses.

Costs incurred on 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. 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. We
sold one item of equipment in 1999 and we are in the process of evaluating bids
to purchase the remaining equipment and expect to sell it in 2000. The
technology license agreement written off represented the unamortized amount paid
in 1997 for the acquisition of the technology.

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.

Equity in loss of CSP. Prior to October 1, 1999, CSP was accounted for
using the equity method. Effective October 1, 1999, as a result of an amendment
to the CSP strategic alliance agreement, we have
32
<PAGE> 37

treated CSP as a consolidated subsidiary. Our share of the losses in CSP was
$5.6 million in 1998 and $9.5 million for the first nine months of 1999 (the
period of time in 1999 for which CSP was accounted for using the equity method).

Equity in loss of SMP. Our share of the losses in SMP was $14.9 million in
1998 compared to $23.3 million in 1999. This increase in loss represents the
increase in start-up activities for SMP in 1999.

Other income. As a result of higher recognizable grants from the Government
of Singapore for both research and development and staff training, other income
increased from $4.7 million in 1998 to $5.7 million in 1999.

Interest income. Interest income increased from $1.7 million in 1998 to
$6.7 million in 1999. The increase was due to interest earned from cash proceeds
from our initial public offering which were placed in fixed deposits.

Interest expense. Interest expense decreased 11.5% from $20.1 million in
1998 to $17.8 million in 1999 due primarily to lower average outstanding loan
balances in 1999 compared to 1998.

Exchange gain (loss). Exchange gain increased 13.5% from $5.2 million in
1998 to $5.9 million in 1999 due primarily to the strengthening of the U.S.
dollar against the Singapore dollar and the resulting effect on our accrual for
operating expenses that were denominated in Singapore dollars.

Income tax expense. Each of our existing 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 $0.9 million in 1998 compared
to $2.1 million in 1999. The higher tax provision in 1999 was the result of tax
payable on interest earned from cash proceeds from our initial public offering
which were placed in fixed deposits.

Minority interest in loss of CSP. The line item for minority interest in
loss of CSP of $7.5 million in 1999 results from the consolidation of CSP as a
subsidiary from October 1, 1999.

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 0.35
micron 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 0.25 micron and 0.35 micron
process technologies. To support these activities, we increased the number of
personnel engaged in 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.

33
<PAGE> 38

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 "-- Years ended
December 31, 1998 and December 31, 1999 -- Costs incurred on 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 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 December 31, 1998, management did not expect to incur any
further costs with respect to the decision to discontinue the development
program.

Equity in loss of CSP. Our share of the losses in CSP was $5.6 million in
1998 compared to $1.3 million in 1997. The increase in loss was primarily
attributable to the increase in pre-operating costs at CSP, which was formed in
1997.

Equity in loss of SMP. Our share of the losses in SMP was $14.9 million in
1998 and was attributable to the pre-operating costs of SMP, which was formed in
January 1998.

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.

Income tax 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.
34
<PAGE> 39

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 December 31, 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 document. 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
------------------------------------------------------------------------------------
MAR 31, JUN 30, SEP 30, DEC 31, MAR 31, JUN 30, SEP 30, DEC 31,
1998 1998 1998 1998 1999 1999 1999 1999
------- ------- ------- ------- ------- ------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenue..................... $145.7 $ 87.1 $ 83.9 $106.0 $130.8 $163.9 $183.3 $216.2
Cost of revenue................. 115.5 108.6 103.2 112.4 118.1 129.1 134.9 144.8
------ ------ ------ ------ ------ ------ ------ ------
Gross profit (loss)............. 30.2 (21.5) (19.3) (6.4) 12.7 34.8 48.4 71.4
------ ------ ------ ------ ------ ------ ------ ------
Operating expenses:
Research and development...... 9.4 11.3 13.3 9.5 12.1 10.9 13.5 22.4
Fab start-up costs............ 0.9 0.6 -- -- -- -- -- 8.5
Sales and marketing........... 4.3 9.3 8.8 9.5 10.1 10.5 9.2 4.6
General and administrative.... 6.5 8.6 7.8 14.5 10.3 12.4 9.8 12.1
Costs incurred on termination
of development program...... -- -- -- 31.8 6.5 -- -- --
Stock-based compensation...... (0.7) (0.7) (0.7) (0.7) 1.6 1.6 8.8 8.0
------ ------ ------ ------ ------ ------ ------ ------
Total operating expenses.... 20.4 29.1 29.2 64.6 40.6 35.4 41.3 55.6
------ ------ ------ ------ ------ ------ ------ ------
Operating income (loss)......... 9.8 (50.6) (48.5) (71.0) (27.9) (0.6) 7.1 15.8
Other income (expense):
Equity in loss of CSP......... (0.5) (1.3) (2.0) (1.7) (2.7) (3.3) (3.6) --
Equity in loss of SMP......... (0.4) (4.6) (5.4) (4.5) (5.8) (6.2) (6.7) (4.6)
Other income.................. -- 0.3 1.9 2.4 0.3 0.3 0.1 4.9
Interest income............... 0.5 0.3 0.1 0.7 0.7 0.5 0.5 5.1
Interest expense.............. (5.7) (4.4) (5.3) (4.7) (4.6) (4.5) (4.5) (4.2)
Exchange gain (loss).......... (1.3) (1.8) 6.6 1.8 5.5 (0.5) 1.1 (0.3)
------ ------ ------ ------ ------ ------ ------ ------
Income (loss) before income
taxes......................... 2.4 (62.1) (52.6) (77.0) (34.5) (14.3) (6.0) 16.7
Income tax benefit (expense).... (0.3) (0.3) (0.1) (0.2) (0.4) 0.5 (0.2) (2.1)
------ ------ ------ ------ ------ ------ ------ ------
Income (loss) before minority
interest...................... 2.1 (62.4) (52.7) (77.2) (34.9) (13.8) (6.2) 14.6
Minority interest in loss of
CSP........................... -- -- -- -- -- -- -- 7.5
------ ------ ------ ------ ------ ------ ------ ------
Net income (loss)............... $ 2.1 $(62.4) $(52.7) $(77.2) $(34.9) $(13.8) $ (6.2) $ 22.1
====== ====== ====== ====== ====== ====== ====== ======
</TABLE>

35
<PAGE> 40

<TABLE>
<CAPTION>
QUARTER ENDED
-----------------------------------------------------------------------------
MAR 31, JUN 30, SEP 30, DEC 31, MAR 31, JUN 30, SEP 30, DEC 31,
1998 1998 1998 1998 1999 1999 1999 1999
------- ------- ------- ------- ------- ------- ------- -------
(AS A PERCENTAGE OF NET REVENUE)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenue................................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenue............................... 79.3 124.7 123.0 106.0 90.3 78.8 73.6 67.0
----- ----- ----- ----- ----- ----- ----- -----
Gross profit (loss)........................... 20.7 (24.7) (23.0) (6.0) 9.7 21.2 26.4 33.0
----- ----- ----- ----- ----- ----- ----- -----
Operating expenses:
Research and development.................... 6.4 12.9 15.8 9.0 9.2 6.6 7.4 10.4
Fab start-up costs.......................... 0.6 0.6 -- -- -- -- -- 3.9
Sales and marketing......................... 3.0 10.6 10.5 8.9 7.7 6.4 5.0 2.1
General and administrative.................. 4.4 9.9 9.3 13.7 7.9 7.6 5.3 5.6
Costs incurred on termination of development
program................................... -- -- -- 30.0 5.0 -- -- --
Stock-based compensation.................... (0.5) (0.8) (0.9) (0.7) 1.3 1.0 4.8 3.7
----- ----- ----- ----- ----- ----- ----- -----
Total operating expenses.................. 13.9 33.2 34.7 60.9 31.1 21.6 22.5 25.7
----- ----- ----- ----- ----- ----- ----- -----
Operating income (loss)....................... 6.8 (57.9) (57.7) (66.9) (21.4) (0.4) 3.9 7.3
Other income (expense):
Equity in loss of CSP....................... (0.3) (1.6) (2.4) (1.6) (2.0) (2.0) (2.0) --
Equity in loss of SMP....................... (0.3) (5.2) (6.4) (4.2) (4.5) (3.8) (3.6) (2.1)
Other income................................ -- 0.4 2.3 2.3 0.2 0.2 0.1 2.3
Interest income............................. 0.3 0.4 0.2 0.7 0.5 0.3 0.3 2.3
Interest expense............................ (3.9) (5.0) (6.3) (4.5) (3.5) (2.7) (2.5) (1.9)
Exchange gain (loss)........................ (0.9) (2.1) 7.9 1.7 4.2 (0.3) 0.6 (0.2)
----- ----- ----- ----- ----- ----- ----- -----
Income (loss) before income taxes............. 1.7 (71.0) (62.4) (72.5) (26.5) (8.7) (3.2) 7.7
Income tax benefit (expense).................. (0.2) (0.3) (0.1) (0.2) (0.3) 0.3 (0.1) (1.0)
----- ----- ----- ----- ----- ----- ----- -----
Income (loss) before minority interest........ 1.5 (71.3) (62.5) (72.7) (26.8) (8.4) (3.3) 6.7
Minority interest in loss of CSP.............. -- -- -- -- -- -- -- 3.5
----- ----- ----- ----- ----- ----- ----- -----
Net income (loss)............................. 1.5% (71.3)% (62.5)% (72.7)% (26.8)% (8.4)% (3.3)% 10.2%
===== ===== ===== ===== ===== ===== ===== =====
</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. Our average selling prices
have rebounded since the first quarter of 1999. The higher number of wafers
shipped together with improved average selling prices have resulted in higher
net revenues.

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

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.

Fourth quarter 1999 net income of $22.1 million (which included a non-cash
stock-based compensation charge of $8.0 million) reflected an improvement of
$99.3 million from a negative $77.2 million in the fourth quarter of 1998. For
the fourth quarter of 1999, higher volume of shipments, improved capacity
utilization and higher average selling prices drove the gross profit to $71.4
million, or 33.0% of net revenue, from a negative $6.4 million, or negative 6.0%
of net revenue in the same quarter in 1998. The fourth quarter of 1998 net loss
included a $31.8 million charge associated with the termination of a development
program and a credit of $0.7 million for a non-cash stock-based compensation
charge.

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<PAGE> 41

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 1999, our principal sources of liquidity included $545.0
million in cash and cash equivalents and $277.8 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 $271.1 million in 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 $271.1 million of cash generated in 1999 was
attributable to an increase in accrued operating expenses and other cash
generated by operating activities, offset by an increase in accounts receivable.

Net cash used in investing activities totaled $358.6 million in 1998 and
$377.4 million in 1999. Through December 31, 1999, our investing activities have
consisted primarily of capital expenditures totaling $279.4 million in 1998 and
$340.3 million in 1999. Capital expenditures have been principally comprised of
the purchase of semiconductor equipment for the equipping of fabs. We 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
and $551.8 million in 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.
Cash generated from financing activities in 1999 was principally generated from
our initial public offering, which raised approximately $548.1 million in net
proceeds, partly offset by a reduction of customer deposits. As of March 31,
2000, of the net proceeds from our initial public offering, approximately $24.4
million has been used for an equity injection in CSP, $8.8 million has been used
for an equity injection in SMP and $48.0 million has been used for capital
expenditures. The remaining net proceeds are invested in various time deposits
with institutions.

We have an oral agreement for a 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. Borrowings are
unsecured. As of December 31, 1999, there were no borrowings outstanding under
this facility.

As of December 31, 1999, we had three loans for capital expenditures and
equipment with outstanding principal amounts of $36.7 million, $165.5 million
and $153.7 million, respectively. 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 December 31, 1999, we had two bank loans with outstanding amounts of
S$50.0 million (US$29.9 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.

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<PAGE> 42

CSP has a term loan facility of $143.2 million with several banks and
financial institutions for capital expenditures and equipment. As of December
31, 1999, $128.0 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 received research grants totaling $66.7 million from various
agencies of the Government of Singapore as of December 31, 1999. 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 December 31, 1999, $16.3
million of the grants currently in effect had been disbursed to us. 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.

We expect our aggregate capital expenditures to be approximately $1.1
billion in 2000, including approximately $480 million relating to CSP, $40
million relating to our investment in SMP and $200 million for the design and
initial construction of Fab 7. CSP intends to enter into a credit facility
providing for borrowings of approximately $820 million to finance its capital
expenditure requirements, including approximately $480 million for its planned
capital expenditures for 2000. The actual amount of debt to be incurred under
the facility will be influenced by several factors, including without
limitation, the speed and timing of the ramp up of operations at Fab 6 and the
terms of such debt. We believe that our cash on hand, existing and pending
credit facilities and credit terms with our equipment vendors will be sufficient
to meet our capital expenditure and working capital needs for 2000.

We expect our aggregate capital expenditures to be approximately $1.5
billion in 2001, including approximately $500 million relating to CSP and $600
million for the construction and equipping of Fab 7.

Based on an assumed public offering price of $87.375 per ADS (the
equivalent of S$14.893 per ordinary share), our net proceeds from the global
offering are estimated to be approximately $662.7 million, or $762.2 million if
the underwriters exercise their overallotment option in full, after deducting
underwriting discounts and the estimated offering expenses payable by us. We
will not receive any of the proceeds from the sale of ordinary shares (including
ordinary shares represented by ADSs) by the selling shareholders.

We expect to use a portion of the net proceeds from the global offering to
fund our capital expenditures for Fab 7. We plan to fund the balance of our
capital expenditure requirements for 2001 through further public or private debt
or 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 obtained on terms favorable to us or that any additional
financing will not be dilutive to our shareholders.

YEAR 2000 UPDATE

We crossed over from December 31, 1999 into January 1, 2000 without
experiencing any Year 2000-related incidents or disruptions that were harmful to
our company.

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;

38
<PAGE> 43

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

- the wafer fabrication of Application Specific Integrated Circuits (ASIC)
and other advanced semiconductor devices at Fab 6 for a ten-year period
beginning from the initial production date on condition that such date
occurs on or before December 1, 2000.

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;

- 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; and

- development and expansion company status for the wafer fabrication of
ASICs and other advanced semiconductor devices at Fab 6 for a five-year
period beginning from the expiry of the term of the pioneer status.

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 or the concessionary tax rate of 10%, we would be
subject to income tax at the applicable corporate income tax rate which was 26%
for income earned through 1999 and which is currently 25.5% for income earned in
2000 onward. 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

39
<PAGE> 44

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
on additional debt financing that may be periodically needed for the capital
expenditures associated with our capacity expansion and 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.

As of December 31, 1999, our debt obligations are as follows:
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999
------------------------------------------------------------------------------------------------

EXPECTED MATURITY DATE
(IN THOUSANDS, EXCEPT INTEREST RATE) WEIGHTED
--------------------------------------------------------------- FAIR INTEREST
2000 2001 2002 2003 2004 THEREAFTER TOTAL VALUE RATE
-------- -------- -------- ------- ------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LONG-TERM DEBT
U.S. dollar at floating
rate(1).............. $ 32,000 $ 32,000 $ 32,000 $32,000 $128,000 $128,000 5.93%
Singapore dollar at
fixed rate(2)........ 87,991 87,991 87,991 36,772 $27,579 $27,579 355,903 350,515 4.11
Singapore dollar at
floating rate(2)..... 59,756 59,756 59,756 4.49
-------- -------- -------- ------- ------- ------- -------- --------
Total Debt
Maturing........... $119,991 $119,991 $179,747 $68,772 $27,579 $27,579 $543,659 $538,270
======== ======== ======== ======= ======= ======= ======== ========

AS OF DECEMBER 31,
1998
-------------------

FAIR
TOTAL VALUE
-------- --------
<S> <C> <C>
LONG-TERM DEBT
U.S. dollar at floating
rate(1)..............
Singapore dollar at
fixed rate(2)........ $408,277 $397,717
Singapore dollar at
floating rate(2)..... 60,314 60,314
-------- --------
Total Debt
Maturing........... $468,591 $458,031
======== ========
</TABLE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-------------------
1998 1999
------- --------
<S> <C> <C>
ACCOUNTS PAYABLE
U.S. dollar................................................. $16,895 $102,614
Singapore dollar(2)......................................... 4,337 12,382
Japanese yen(2)............................................. 10,127 29,742
Others...................................................... -- 7,663
------- --------
Total Payable............................................. $31,359 $152,401
======= ========
</TABLE>

- ---------------
(1) As a result of consolidating CSP as a subsidiary from October 1, 1999
forward, our debt obligations as of December 31, 1999 included a U.S. dollar
floating rate debt obligation amounting to US$128 million.

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

As of December 31, 1999, 65.5% of our outstanding debt obligations bore
fixed interest rates. We have no cash flow or earnings exposure due to market
interest rate changes for our fixed debt obligations. 34.5% 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 3.7% annually.

FOREIGN CURRENCY RISK

Our foreign currency exposures give rise to market risk associated with
exchange rate movements of the U.S. dollar, our functional currency, against the
Japanese yen and the Singapore dollar. Substantially all of our revenue was
denominated in U.S. dollars during the year ended December 31, 1999 and as a
result, we had relatively little foreign currency exchange risk with respect to
any of our revenue. In 1999, approximately 27% of our cost of revenue was
denominated in Singapore dollars. In addition, approximately 59% of our capital
expenditures were denominated in U.S. dollars, approximately 25% were
denominated in Japanese yen and approximately 16% were denominated in Singapore
dollars. In addition, a substantial part of our debt is denominated in foreign
currency, primarily Singapore dollars.

40
<PAGE> 45

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. Effective
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 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 DECEMBER 31, 1999
------------------------------------------------------------------------------------
EXPECTED MATURITY DATE
(IN THOUSANDS)
--------------------------------------------------------------- FAIR
2000 2001 2002 2003 2004 THEREAFTER TOTAL VALUE
-------- -------- -------- ------- ------- ---------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FORWARD EXCHANGE AGREEMENTS
(Receive Yen/Pay US$)
Contract Amount.................. $ 21,813 $ 5,992 $ 27,805 $(2,256)
Average Contractual Exchange
Rate........................... 96.57 76.22
(Receive S$/Pay US$) Contract
Amount......................... 105,629 101,931 $156,094 $40,079 $29,514 $28,404 461,651 41,415
Average Contractual Exchange
Rate........................... 1.74 1.75 1.76 1.75 1.75 1.73
(Receive US$/Pay S$) Contract
Amount......................... 23,304 23,304 (11)
Average Contractual Exchange
Rate........................... 1.66
-------- -------- -------- ------- ------- ------- -------- -------
Total Contract Amount.......... $150,746 $107,923 $156,094 $40,079 $29,514 $28,404 $512,760 $39,148
======== ======== ======== ======= ======= ======= ======== =======

AS OF DECEMBER 31,
1998
------------------
FAIR
TOTAL VALUE
-------- -------
<S> <C> <C>
FORWARD EXCHANGE AGREEMENTS
(Receive Yen/Pay US$)
Contract Amount.................. $ 18,342 $(3,415)
Average Contractual Exchange
Rate...........................
(Receive S$/Pay US$) Contract
Amount......................... 503,745 46,035
Average Contractual Exchange
Rate...........................
(Receive US$/Pay S$) Contract
Amount.........................
Average Contractual Exchange
Rate...........................
-------- -------
Total Contract Amount.......... $522,087 $42,620
======== =======
</TABLE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999
--------------------------------
CARRYING
CARRYING AMOUNT PERCENTAGE
AMOUNT HEDGED HEDGED
-------- -------- ----------
<S> <C> <C> <C>
ACCOUNTS PAYABLE
Japanese yen.............................................. $ 29,742 $ 13,971 47.0%
Singapore dollar.......................................... 12,382 -- --
Others.................................................... 7,663 -- --
Capital Lease Japanese yen.................................. 13,834 13,834 100.0
Foreign Currency Loan Singapore dollar...................... 415,659 415,659 100.0
Future Interest Payable on Debt Singapore dollar............ 5,386 5,386 100.0
-------- -------- -----
Total..................................................... $484,666 $448,850 92.6%
======== ======== =====
</TABLE>

41
<PAGE> 46

BUSINESS

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 Agilent Technologies, Ericsson, Lucent Technologies, Broadcom and Silicon
Integration Systems.

We currently own, or have an interest in, five fabrication facilities, all
of which are located in Singapore. We are currently in the process of
constructing a sixth fabrication facility in Singapore. We have service
operations in 10 cities in seven countries in North America, Europe and Asia. We
were incorporated in Singapore in 1987. As of March 31, 2000, we were 70.1%
owned by ST and its affiliates (60.3% 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
$149.4 billion in 1999 to $233.7 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 May 1999 report by GartnerGroup/Dataquest, or Dataquest, the
cost of a state-of-the-art fab had 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.

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<PAGE> 47

Foundry services are now utilized by nearly every major semiconductor
company in the world. Dataquest estimates that in 1999, IDMs comprised 92% 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, in March 2000 Dataquest estimated that demand from fabless
semiconductor companies for foundry services will grow from $4.7 billion in 1999
to $10.5 billion in 2004. 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 a March 2000 Dataquest
estimate, the growth of the foundry market is expected to outpace growth of the
semiconductor industry overall, with foundry services expected to grow from $7.0
billion in 1999 to $19.1 billion in 2004, representing a compound annual growth
rate of over 22%.

In addition to Dataquest, another research group, International Data
Corporation, or IDC, has recently begun publishing reports on the foundry
market. In IDC's February 2000 report, or the IDC Report, IDC estimated that in
1999, sales of semiconductors produced in foundries comprised 12.3% of the
worldwide semiconductor market. The IDC Report also estimated that continuing
demand from the fabless segment and rapidly growing demand from IDMs and system
companies will drive the foundry market from $6.8 billion in 1999 to $36.3
billion in 2004, a 40% compound annual growth rate.

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.

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<PAGE> 48

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.

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, Motorola and Ericsson Microelectronics
AB, or Ericsson. Silicon Manufacturing Partners, or SMP, our strategic alliance
with a subsidiary of Lucent, operates Fab 5. Our technology alliance with Lucent
includes an agreement to jointly develop 0.18 micron 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 0.15 micron, 0.13 micron and 0.10
micron process geometries. Our technology alliance with Ericsson involves the
joint development of RFCMOS and BiCMOS process technologies. The resulting
manufacturing processes will support wireless communications applications,
including the Bluetooth specification for pervasive wireless networks.

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 ST Assembly Test Services Ltd, or
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 10 cities in seven 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, Agilent
Technologies, Level One, Motorola and PMC-Sierra, use our services to
manufacture their communications products for applications such as cable modems,
wireless, Gigabit Ethernet, ATM and ADSL.
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<PAGE> 49

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.

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 68,000 eight-inch equivalent wafers per month in December 1999 to
an estimated 171,000 eight-inch equivalent wafers per month (which figures
include 49% of the production capacity of Fab 5 and 100% of the production
capacity of Fab 6) by December 2002. On an aggregate annual basis, we expect our
production capacity to increase from approximately 712,000 eight-inch equivalent
wafers in 1999, to approximately 970,000, 1,400,000 and 1,780,000 eight-inch
equivalent wafers in years 2000, 2001 and 2002, respectively (which figures
include 49% of the production capacity of Fab 5 and 100% of the production
capacity of Fab 6).

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. As of December 31, 1999, our
research and development team was comprised of 208 professionals, 57 of whom
have Ph.D.s. We are jointly developing 0.18 micron 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 0.15 micron
0.13 micron and 0.10 micron processes. Our technology alliance with Ericsson
involves the joint development of RFCMOS and BiCMOS process technologies.

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, Motorola and Ericsson,
who are also customers, we are better positioned to win future business with
them.

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<PAGE> 50

MANUFACTURING FACILITIES

We currently own or have an interest in five fabs, all of which are located
in Singapore. We are currently in the process of constructing a sixth
fabrication facility 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 subsidiary
of Lucent. Fab 6, which we jointly own with EDB Investments and a subsidiary of
Agilent Technologies, is currently being equipped and will be operated by CSP.
In February 2000, we commenced construction of a new fab, Fab 7. First wafer
output from Fab 7 is expected to occur in mid 2001. We do not have a Fab 4.

<TABLE>
<CAPTION>
FAB 1 FAB 2 FAB 3 FAB 5 FAB 6 FAB 7
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Production commenced...... 1989 1995 1997 1999 Expected Fall Expected 2001
2000
Current output(1)......... 23,000 40,000 wafers 12,000 wafers 6,000 wafers -- --
wafers(2) per per month per month per month
month
Estimated full 26,000 47,000 wafers 26,000 wafers 32,000 wafers 35,000 wafers 60,000 wafers
capacity(3)............. wafers(2) per per month; per month; per month; per month; per month;
month; expected 2000 expected 2000 expected 2001 expected 2001 expected 2003
expected 2000
Wafer size................ Six-inch Eight-inch Eight-inch Eight-inch Eight-inch Eight-inch
(150mm) (200mm) (200mm) (200mm) (200mm) (200mm)
Process Technologies...... 1.2 to 0.5 0.6 to 0.3 0.35 to 0.22 0.25 to 0.15 0.25 to 0.13 0.15 micron
micron micron(4) micron(4) micron(4) micron(4) and
smaller(4)
Manufacturing Digital; Digital; Digital; 0.25 micron High High
Technologies............ Analog; ROM; Analog; SRAM; SRAM; ROM(5) Digital; performance, performance,
EEPROM(5) Flash BiCMOS; high-density high-density
Memory(5) Analog; CMOS; high CMOS; high
eSRAM(5) density density
SRAM(5) SRAM(5)
Clean room................ 35,000 sq. 70,000 sq. 46,000 sq. 46,000 sq. 85,000 sq. 170,000 sq.
ft. Class ft. Class-1 ft. Class-1 ft. Class-1 ft. Class-1 ft. Class-1
10(6) SMIF(6) SMIF(6) SMIF(6) SMIF(6) SMIF(6)
</TABLE>

- -------------------------
(1) Current output is as of December 31, 1999.

(2) Equivalent to 13,000 eight-inch wafers per month for current output and
15,000 eight-inch wafers per month for estimated full capacity.

(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.

(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. CMOS means
complementary metal oxide silicon. BiCMOS means bipolar complementary metal
oxide silicon.

(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> 51

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
--- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Fab 1............................................. 159 140 103 142 181
Fab 2(2).......................................... 27 114 220 265 419
Fab 3(2).......................................... -- -- 21 33 96
Fab 5(2).......................................... -- -- -- -- 16
</TABLE>

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

(2) 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., or HP Europe, a subsidiary of Hewlett-Packard, and
EDB Investments Pte Ltd relating to the joint ownership of Fab 6. In 1999,
Hewlett-Packard spun-off certain of its businesses, including its semiconductor
business, to a new subsidiary, called Agilent Technologies, Inc. In connection
with the spin-off, Hewlett-Packard assigned its rights and obligations under the
agreements it had entered into with us, including the agreements of its
subsidiaries (including HP Europe), to Agilent Technologies or its subsidiary,
Agilent Technologies Europe B.V., or Agilent Technologies Europe. In particular,
HP Europe assigned the strategic alliance agreement to Agilent Technologies
Europe. We, Agilent Technologies 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 Agilent Technologies 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, Agilent Technologies 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 Agilent Technologies Europe's ownership interest
in CSP changes, the number of wafers Agilent Technologies 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
more than 50% of CSP, we can elect four of the directors. Agilent Technologies
Europe can elect two directors as long as it owns

47
<PAGE> 52

at least 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 so long as there are two or more parties to the alliance. Neither
we nor Agilent Technologies 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, 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
Agilent Technologies 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 Agilent Technologies
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 of all majority owned (greater
than 50%) subsidiaries. However, as a result of certain provisions that were
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 had been historically
accounted for under the equity method in our financial statements. As a result
of the amendment described below, we have treated CSP as a consolidated
subsidiary from October 1, 1999 forward.

Effective October 1, 1999, we, Agilent Technologies 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.

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.

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
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<PAGE> 53

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

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<PAGE> 54

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.

CUSTOMERS AND MARKETS

We manufactured semiconductors for over 125 different customers in each of
1998 and in 1999. Our top five customers accounted for approximately 43.3% and
38.2% of our revenue in 1998 and 1999,

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<PAGE> 55

respectively. In 1998, no customer individually accounted for more than 10% of
our revenue. In 1999, only Agilent Technologies accounted for more than 10% of
our revenue.

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

<TABLE>
<CAPTION>
CUSTOMER REPRESENTATIVE PRODUCTS OR APPLICATIONS
-------- ---------------------------------------
<S> <C>
Agilent Technologies........ Computer peripherals, networking and wireless
communication
Ericsson.................... Mobile phone network equipment, mobile phones and
mobile internet
Lucent...................... Wireless communication and networking
Broadcom.................... Cable modem/set-top box and ethernet transceivers
Silicon Integrated Core logic, multimedia and data communications
Systems...................
</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
-------------------------
REGION 1997 1998 1999
------ ----- ----- -----
<S> <C> <C> <C>
United States............................................... 52% 63% 69%
Europe...................................................... 1 2 13
Asia/Pacific................................................ 47 34 15
Japan....................................................... 0 1 3
--- --- ---
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; and Munich, Germany.

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 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.

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<PAGE> 56

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 1997 and 1998, we invested approximately
$26.6 million and $43.4 million, respectively, in research and development.
Those investments represented approximately 7.0% and 10.3% of our net revenue
for the respective period. In 1999, we invested approximately $58.9 million in
research and development which represented approximately 8.5% of our net revenue
for the year. Our investment in research and development allowed us to continue
developing new and advanced processes, with line width geometries down to 0.15
micron, as well as to fund research activities below 0.15 micron. These
strategic research and development programs ensure that our baseline
manufacturing process accommodates new technology modules that are the heart of
highly differentiated system-level applications. As of December 31, 1999, we
employed 208 professionals in our research and development department, 57 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 Agilent
Technologies 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 0.18 micron 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
0.15 micron, 0.13 micron and 0.10 micron processes. We have launched a joint
development program with Ericsson for the development of RFCMOS and BiCMOS
process technologies.

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 such as the industry is currently facing, 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.

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<PAGE> 57

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 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
December 31, 1999, we had filed an aggregate of 587 patent applications
worldwide, 353 of which had been filed in the United States. Of the 353
applications filed in the United States, 141 had been issued as of December 31,
1999 and 22 had been allowed but not issued. Those 22 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 services 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 such
material litigation currently pending against us.

COMPETITION

The worldwide semiconductor foundry industry is highly competitive. Our
principal competitors are Taiwan Semiconductor Manufacturing Corporation, or
TSMC, United Microelectronics Corporation, or UMC, and International Business
Machines, or 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

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<PAGE> 58

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.

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.

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 December 31, 1999, we had 3,388 employees, with 1,135 in process and
equipment engineering, 1,176 in manufacturing operations, 521 in manufacturing
support, 208 in research and development and 348 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 employee bonus plans and an employee share option plan. Please see
"Management" for a discussion of our share option plan.

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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<PAGE> 59

MANAGEMENT

The following table sets forth, as of December 31, 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.................... 37 Senior Vice President and 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....................... 57 Vice President, Technology Development
Lau Chi Kwan...................... 49 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, or the ERCC.

(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
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

55
<PAGE> 60

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

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<PAGE> 61

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 has served as the Director
(Finance) of Singapore Technologies Pte Ltd since February 1998. 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 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.
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<PAGE> 62

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 Senior Vice President since February 2000
and as our Chief Financial Officer since December 1997. Mr. Chia was our
Director of Finance from April 1996 to December 1997. Mr. Chia has more than 13
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. Mr. Docherty has served on the
Boards of Directors of Chartered Silicon Partners Pte Ltd and Silicon

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<PAGE> 63

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, Quality, Reliability and
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

Tan Seng Chai 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
experience in the semiconductor industry. He began his career at National
Semiconductor in 1987 where

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<PAGE> 64

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 60.3% 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 the 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. Nasdaq has recently adopted new
rules in connection with audit committees. We are in the process of reviewing
our Audit Committee charter, structure and membership requirements and will
amend them as necessary to comply with Nasdaq's new rules.

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 or accrued for all of our directors
and executive officers for services rendered to us and our subsidiaries during
the fiscal year ended December 31, 1999 was approximately $5.0 million. We did
not set aside any provision for pension, retirement or similar benefits

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<PAGE> 65

for any director or officer during the fiscal year ended December 31, 1999. We
also provide our directors and certain of our officers with customary director
or officer insurance, as appropriate.

All of our officers and employees are eligible to participate in our
employee bonus plans. The plans provide for bonus payments based upon our
achievement of certain operational, financial and customer satisfaction targets.
Upon achievement of these targets, the participants in our plans are awarded
bonuses based on a percentage of their annual salary. Our President and Chief
Executive Officer is entitled to a guaranteed minimum annual bonus pursuant to
his employment agreement.

ISSUANCE OF SHARE OPTIONS

As of March 31, 2000, options to purchase approximately 31,994,307 ordinary
shares were issued and outstanding, of which approximately 15,737,296 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$0.93
to S$3.344. The expiration dates of the options range from April 2004 to October
2009. In April 2000, we granted to our officers, directors and employees options
under our 1999 Share Option Plan to purchase 18,406,200 ordinary shares. The
exercise price of such options was the fair market value of our ordinary shares
at the time of the grant.

EMPLOYEE BENEFIT PLANS

1999 SHARE OPTION PLAN

Effective 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.

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
107,160,000 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 an option be below par value.

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

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<PAGE> 66

addition, the vesting periods of 17,273,481 outstanding options were accelerated
by 12 months upon the closing of our initial public offering.

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.

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.

We amended the plan in connection with our initial public offering to
enable the plan and, at the ERCC's discretion, awards granted thereunder, to
comply with Section 162(m) of the United States Internal Revenue Code.

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<PAGE> 67

PRINCIPAL AND SELLING SHAREHOLDERS

The following table sets forth certain information with respect to the
beneficial ownership of our ordinary shares as of March 31, 2000, based on an
aggregate of 1,280,760,547 ordinary shares outstanding as of such date, and as
adjusted to reflect the sale of the ordinary shares offered by us, 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 and our chief executive officer;

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

- each of the selling shareholders.

<TABLE>
<CAPTION>
ORDINARY SHARES NUMBER OF ORDINARY SHARES
BENEFICIALLY OWNED ORDINARY BENEFICIALLY OWNED
PRIOR TO THE GLOBAL SHARES AFTER THE GLOBAL
OFFERING(1) OFFERED OFFERING(1)(2)
10% SHAREHOLDERS, DIRECTORS, EXECUTIVE OFFICERS AS --------------------- ---------- ---------------------
A GROUP AND SELLING SHAREHOLDERS(3) NUMBER PERCENT NUMBER NUMBER PERCENT
- -------------------------------------------------- ----------- ------- ---------- ----------- -------
<S> <C> <C> <C> <C> <C>
Singapore Technologies Pte Ltd(4)............ 499,116,152 39.0% ** 499,116,152 36.7
Singapore Technologies Semiconductors Pte
Ltd(4)..................................... 398,518,228 31.1% 78,096,696(5) 320,421,532 23.6
Ho Ching..................................... 40,000 * ** 40,000 *
Lim Ming Seong............................... 0 * ** 0 *
Barry Waite.................................. 5,116,000 * ** 5,116,000 *
Sum Soon Lim................................. 247,001 * ** 247,001 *
James H. Van Tassel.......................... 131,929 * ** 131,929 *
Aubrey C. Tobey.............................. 46,968 * ** 46,968 *
Robert E. La Blanc........................... 45,168 * ** 45,168 *
Andre Borrel................................. 40,168 * ** 40,168 *
Charles E. Thompson.......................... 60,168 * ** 60,168 *
Koh Beng Seng................................ 41,600 * ** 41,600 *
Tsugio Makimoto.............................. 4,000 * ** 4,000 *
Premod Paul Thomas........................... 18,000 * ** 18,000 *
Liow Voon Kheong............................. 4,000 * ** 4,000 *
All directors and executive officers as a group
(22 persons)............................... 8,058,709 * ** 8,058,709 *
</TABLE>

<TABLE>
<CAPTION>
OTHER SELLING SHAREHOLDERS
--------------------------
<S> <C> <C> <C> <C> <C>
Alliance Semiconductor Corporation...... 21,418,177 1.7% 6,000,000(6) 15,418,177 1.1
Analog Devices, Inc..................... 8,627,185 * 7,750,000(6) 877,185 *
Actel Corporation....................... 5,153,304 * 5,153,304(6) 0 *
</TABLE>

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

** No shares are being offered in the global offering.

(1) Gives effect to the ordinary shares issuable within 60 days of March 31,
2000 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 by us of 78,000,000 ordinary shares (including ordinary
shares represented by ADSs) and the underwriters' overallotment option is
not exercised.

(3) The number of ordinary shares listed in this table includes ordinary shares
held directly or in the form of ADSs.

(4) As of December 31, 1999, Temasek Holdings (Private) Limited, the principal
holding company of the Government of Singapore, owned 78.3% of Singapore
Technologies Pte Ltd, or ST, and 100% of Singapore Technologies Holdings Pte
Ltd, or ST Holdings. ST Holdings owned 21.7% 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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(5) Depending upon market conditions, Singapore Technologies Semiconductors may
elect to sell the full 113,346,696 ordinary shares, directly or in the form
of ADSs, which were registered in the initial filing of the registration
statement of which the U.S. Prospectus is a part. If such shares are sold,
then Singapore Technologies Semiconductors would beneficially own 21.0% of
the outstanding ordinary shares after the global offering and Singapore
Technologies and Singapore Technologies Semiconductors together would
beneficially own 57.7% of the outstanding ordinary shares after the global
offering.

(6) Depending upon market conditions, the selling shareholder may sell less than
the number of shares indicated.

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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. As of December 31, 1999, ST was 21.7% owned by
Singapore Technologies Holdings Pte Ltd, or ST Holdings. ST and ST Holdings were
78.3% 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. After giving effect to the global offering, ST and ST
Semiconductors will hold approximately a 36.7% and 23.6% 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 1999,
our revenues represented approximately 21% of ST's revenues and our assets
represented approximately 19% of ST's assets (in each case, based on unaudited
numbers).

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 (in liquidation).

STATS specializes in assembly and testing of semiconductors. STATS
consummated its initial public offering on February 8, 2000. Tritech, which is
in liquidation, 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.

After giving effect to the global offering, ST and its affiliates own
approximately 60.3% of our outstanding ordinary shares and, as a result, are
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, Thomas
and Liow, each a member of our Board of Directors (other than Messrs. Thomas and
Liow who serve as alternate members), serve as directors of companies in the
Singapore Technologies group. Ms. Ho and Messrs. Lim and Thomas, each a member
(or alternate 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.

We also have contractual and other business relationships with ST and its
affiliates and we engage in material transactions with ST from time to time.
Although our Audit Committee reviews 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 December 31, 1999,
approximately $202.2 million of our debt was guaranteed by ST at no cost. In
addition, $153.7 million of our debt was guaranteed by commercial banks 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 1997 and 1998 was $0.2 million and
$0.8 million respectively. The amount of interest income received from ST
Treasury in 1998 and 1999 was $0.9 million and $2.8 million, respectively. The
amount of interest expense paid to ST was $12.7 million and $6.6 million in 1997
and 1998 respectively. The amount of interest expense paid to ST Treasury in
1998 and 1999 was $2.3 million and $0.1 million, respectively. The average rate
of interest payable in 1997, 1998 and 1999 to ST and ST Treasury for our
Singapore dollar denominated borrowings was 4.89%, 7.13% and 2.74% respectively,
and 6.06%, 6.33% and 6.13% 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. As of December 31, 1999, there were no 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

We have 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 a service based
fee arrangement. In addition, we reimburse ST for the third-party costs and
expenses it incurs on our behalf.

In 1997, 1998 and 1999, we paid management fees to ST of $5.7 million, $4.9
million and $3.8 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 $5.6 million, $5.7 million and
$6.5 million in 1997, 1998 and 1999, 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 under the service agreement are
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.

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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 $20.8 million, $6.2
million and $1.3 million in 1997, 1998 and 1999, respectively. These sales
represented 5.5%, 1.5% and 0.2% of our net sales for the respective periods.
Tritech was placed under judicial management on July 2, 1999 and commenced
winding-up proceedings on October 15, 1999.

We paid STATS $13.3 million, $22.7 million and $33.9 million in 1997, 1998
and 1999, respectively, for services rendered in those years. We recently
entered into a long-term contract with STATS. We also paid affiliates of ST $3.0
million, $1.4 million and $7.6 million in 1997, 1998 and 1999, respectively, for
services rendered in those years. We purchased $1.0 million, $0.9 million and
$0.6 million in assets from affiliates of ST in 1997, 1998 and 1999,
respectively. We also paid ST Construction and ST Architects $2.6 million, $1.1
million and $0.1 million in 1997, 1998 and 1999, 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 $2.1 million, $1.6 million and $2.5 million, respectively,
in lease payments for 1997, 1998 and 1999.

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, $0.9 million and $1.1 million in lease
payments for 1997, 1998 and 1999, respectively. We expect ST to lease the land
on which Fab 7 is being built from JTC and to sublease that land to us on terms
similar to those of our other leases with ST.

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 on
Form F-1 of which the U.S. Prospectus is a part, and is incorporated herein by
reference.

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 March 31, 2000, 1,280,760,547 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 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.

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 check 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.

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
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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.

SUBSTANTIAL SHAREHOLDINGS

Under the Companies Act, a person has a substantial shareholding in a
company if he has an interest (or interests) in one or more voting shares in the
company and the nominal amount of that share (or the aggregate amount of the
nominal amounts of those shares) is not less than 5 per cent. of the aggregate
of the nominal amount of all voting shares in the company. A person having a
substantial shareholding in a company is required to make certain disclosures
under the Companies Act, including the particulars of his interests in that
company and the circumstances by which he has such interests.

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, is 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. Our custodian is Citibank Nominees Singapore Pte Ltd, located at 300
Tampines Avenue #07-00, Tampines Junction, Singapore 529653.

We 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.

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;

- 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;
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- 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.

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.
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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

- 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.

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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 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.

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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
document.

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

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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.

- 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.

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- 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 document, 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% for income earned
through 1999 (and 25.5% for income earned thereafter), 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 applicable corporate tax
rate, which was 26% for income through 1999 and which is currently 25.5% for
income earned in 2000 onward. 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.
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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 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,

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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,

- 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.
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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.

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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SHARES ELIGIBLE FOR FUTURE SALE

We cannot predict the effect, if any, that market sales of ADSs or ordinary
shares or the availability of ADSs or ordinary shares for sale will have on the
market price of the ADSs and ordinary shares prevailing from time to time.
Nevertheless, sales of substantial amounts of ADSs or ordinary shares in the
public market, or the perception that such sales could occur, could adversely
affect the market price of ADSs and ordinary shares 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
1,358,760,547 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 ordinary shares sold in the global offering, as
well as the 287,500,000 ordinary shares sold in our initial public offering (in
each case, including ordinary shares represented by ADSs), will be freely
tradable, except that any such shares held by "affiliates" as defined under Rule
144 under the Securities Act may only be sold in the United States in compliance
with the limitations described below. The remaining 896,260,547 ordinary shares
are freely tradable in Singapore, but may only be sold in the United States 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 document, 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
13,587,605 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. Ordinary
shares (including ordinary shares represented by ADSs) issued pursuant to
Regulation S and held by non-affiliates may immediately be resold in the United
States. ST and ST Semiconductors may be deemed affiliates of our company.
Therefore, sales by them in the United States of 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 existing shareholders who collectively
held 979,231,742 ordinary shares after our initial public offering entered into
a 180-day lock-up agreement with Salomon Smith Barney Inc. By its terms, the
lock-up agreement expired on April 26, 2000. Of the 979,231,742 ordinary shares
subject to the initial lock-up, 819,537,684 ordinary shares will be subject to a
new 120-day lock-up and 16,295,362 ordinary shares will be subject to a new
90-day lock-up as described below, 97,000,000 ordinary shares are being sold by
the selling shareholders in the global offering and 46,398,696 ordinary shares
are currently available for sale.

ST and ST Semiconductors, who will collectively hold 819,537,684 ordinary
shares after the global offering, and the Company have agreed not to sell or
otherwise dispose of any ordinary shares or securities convertible into or
exchangeable for ordinary shares during the 120-day period following the date of
this offering document, without the prior written consent of Salomon Smith
Barney Inc. The selling shareholders (other than ST Semiconductors), who will
collectively hold 16,295,362 ordinary shares after the global offering, have
agreed not to sell or otherwise dispose of any ordinary shares or securities
convertible into or exchangeable for ordinary shares during the 90-day period
following the date of this

83
<PAGE> 88

offering document, without the prior written consent of Salomon Smith Barney
Inc. The foregoing does not prevent us and the selling shareholders, however,
from issuing or selling, as the case may be, the ordinary shares, directly or in
the form of ADSs, subject to the underwriters' overallotment option nor does it
prevent us from issuing shares pursuant to our 1999 Share Option Plan. We filed
a registration statement on Form S-8 under the Securities Act on October 29,
1999 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. In April 2000, we granted to our officers, directors and
employees options under our 1999 Share Option Plan to purchase 18,406,200
ordinary shares. The exercise price of such options was the fair market value of
our ordinary shares at the time of the grant. 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 90-day period referenced in the first sentence of this
paragraph. 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."

84
<PAGE> 89

UNDERWRITING

Subject to the terms and conditions stated in the underwriting agreement to
be dated as of the date of the final offering document, each of the U.S.
underwriters named below, for whom Salomon Smith Barney Inc., Credit Suisse
First Boston Corporation, Chase Securities Inc., SG Cowen Securities Corporation
and Wit SoundView Corporation are acting as the U.S. representatives, has
severally agreed to purchase, and we and the selling shareholders 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......................
Chase Securities Inc. ......................................
SG Cowen Securities Corporation.............................
Wit SoundView Corporation...................................
----------
Total.....................................................
</TABLE>

Subject to the terms and conditions stated in a separate underwriting
agreement dated as of the date of the final offering document, each of the
international underwriters named below, for whom Salomon Brothers International
Limited, Credit Suisse First Boston (Singapore) Limited, Chase Securities Inc.,
Overseas Union Bank Limited, SG Securities (Singapore) Pte. Ltd., Vickers Ballas
& Company Pte Ltd and Wit SoundView Corporation are acting as the international
representatives, has severally agreed to purchase, and we and the selling
shareholders 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..............
Chase Securities Inc. ......................................
Overseas Union Bank Limited.................................
SG Securities (Singapore) Pte. Ltd. ........................
Vickers Ballas & Company Pte Ltd............................
Wit SoundView Corporation...................................
----------
Total.....................................................
</TABLE>

ST, our controlling shareholder, indirectly owns 40% of Vickers Ballas &
Company Pte Ltd.

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

- an offering of an aggregate of 105,000,000 ordinary shares, directly or
in the form of ADSs, in the United States and Canada; and

- an offering of an aggregate of 70,000,000 ordinary shares, directly or in
the form of ADSs, outside the United States and Canada.

Salomon Smith Barney Inc. is acting as the sole book running manager for
the global offering. Overseas Union Bank Limited is acting as lead coordinator
for the ordinary shares sold to retail investors in Singapore.

The U.S. underwriting agreement and the international 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. and international underwriters are
obligated to purchase all the ordinary

85
<PAGE> 90

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 ordinary share and ADS for the U.S. offering and the
international offering will be identical. The closing of the international
offering and the U.S. offering are conditioned upon each other.

The U.S. and international underwriters (except Overseas Union Bank Limited
and Vickers Ballas & Company Pte Ltd with respect to the offering to Singapore
retail investors) propose to offer some of the ordinary shares (including
ordinary shares represented by ADSs) directly to the public at the public
offering price set forth on the cover page of this document 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. With
respect to the offering to Singapore retail investors, Overseas Union Bank
Limited and Vickers Ballas & Company Pte Ltd propose to offer some of the
ordinary shares directly to Singapore retail investors at the public offering
price set forth on the cover page of this document and some of the ordinary
shares to certain dealers at the public offering price less a concession not
exceeding S$ per ordinary share. If all the ordinary shares (including the
ordinary shares represented by ADSs) are not sold at the public offering price,
the representatives of the U.S. and international underwriters may change the
public offering price and other selling terms.

We and the selling shareholders have granted the U.S. and international
underwriters an option, exercisable for 30 days from the date of this document,
to purchase up to an aggregate of 26,250,000 additional ordinary shares
(including ordinary shares represented by ADSs) at the applicable public
offering price, less the underwriting discount. The underwriters may exercise
this option solely to cover overallotments, if any, in connection with the
global offering. To the extent that such option is exercised, each U.S. and
international 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. and
international underwriter's initial commitment.

The U.S. and international 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. and international
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 and the international offering.

We, ST and ST Semiconductors have agreed, for a period of 120 days from the
date of this document, not to, 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 or ADSs disposed of as bona fide gifts approved
by Salomon Smith Barney Inc. The selling shareholders (other than ST
Semiconductors) have agreed, for a period of 90 days from the date of this
document, not to, 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 or ADSs disposed of as bona fide gifts approved by Salomon
Smith Barney Inc. or in the acquisition of the equity capital or substantially
all of the assets of any other person or entity if it agrees to enter into a
substantially similar lock-up agreement for the remaining portion of the 90 days
and the acquisition is approved by Salomon Smith Barney Inc. Salomon Smith
Barney Inc. in its sole discretion may release any of the ordinary shares or
ADSs 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 lock-up agreement.

86
<PAGE> 91

Our ADSs are quoted on the Nasdaq National Market under the symbol "CHRT"
and our ordinary shares are listed on the Singapore Exchange Securities Trading
Limited under the symbol "Chartered".

This offering document may be used in connection with ordinary shares
(including ordinary shares represented by American Depositary Shares) initially
offered outside the United States insofar as such ordinary shares (including
ordinary shares represented by American Depositary Shares) are resold from time
to time in the United States in transactions that require registration under the
Securities Act.

An offering document in electronic format is being made available on an
Internet web site maintained by Wit SoundView Corporation's affiliate, Wit
Capital Corporation. Other than the offering document in electronic format, the
information on Wit Capital's web site and any information contained on any other
web site maintained by Wit Capital Corporation is not part of the offering
document or the registration statement of which this offering document forms a
part, has not been approved and/or endorsed by Wit SoundView Corporation or any
underwriter in its capacity as underwriter and should not be relied upon by
investors.

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 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 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 Singapore
Exchange, in the over-the-counter market or otherwise and, if commenced, may be
discontinued at any time.

We estimate that the total expenses of the global offering will be $1.8
million. We and the selling shareholders have agreed to reimburse the U.S. and
international 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.

87
<PAGE> 92

We and one of the selling shareholders 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 us and one of the selling shareholders by Latham & Watkins. The validity of
the ordinary shares represented by the ADSs offered hereby will be passed upon
by Allen & Gledhill, Singapore counsel to us and the selling shareholders.
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 for the years ended
December 31, 1997, 1998 and 1999 in this document and the related registration
statement on Form F-1 in reliance upon the report of KPMG, independent
accountants, appearing elsewhere in this document, 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 in the global offering. Although
this document contains all material information included in the registration
statement, part of the registration statement has been omitted from this
document 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
in the global offering, please refer to these registration statements.
Statements contained in this document as to the contents of any contract or
other document referred to in this document 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.

We are subject to the information requirements of the Securities Exchange
Act of 1934, as amended, applicable to foreign private issuers. As a result, we
file reports, including annual reports on Form 20-F, reports on Form 6-K and
other information with the SEC. We also submit to the SEC quarterly reports on
Form 6-K which 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 includes audited annual financial information. We 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 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> <C>
- Judiciary Plaza - Seven World Trade Center - Northwestern Atrium Center
450 Fifth Street, N.W. 13th Floor 500 West Madison Street
Room 1024 New York, New York 10048 Suite 1400
Washington, D.C. 20549 Chicago, Illinois 60661-2511
</TABLE>

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.

88
<PAGE> 93

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 we do so in order to
make our reports available over the Internet.

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.

We are exempt from the rules under the Exchange Act prescribing the
furnishing and content of proxy statements, and our executive officers,
directors and principal shareholders are exempt from the reporting and
short-swing profit recovery provisions contained in Section 16 of the Exchange
Act.

We furnish the depositary of our ADSs with annual reports, which include
annual audited consolidated financial statements prepared in accordance with
U.S. GAAP, and quarterly reports, which include unaudited quarterly consolidated
financial information prepared in accordance with U.S. GAAP. The depositary, at
our request, promptly mails these reports to all registered holders of ADSs. We
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 arranges 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.

89
<PAGE> 94

CHARTERED SEMICONDUCTOR MANUFACTURING LTD.
AND SUBSIDIARIES

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-7
</TABLE>

F-1
<PAGE> 95

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 subsidiaries as of December 31, 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, 1997, 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 Singapore Standards on Auditing
issued by the Institute of Certified Public Accountants of Singapore ("ICPAS"),
which 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 subsidiaries as of December 31,
1998 and 1999, and the consolidated results of their operations and their cash
flows for the years ended December 31, 1997, 1998 and 1999, in conformity with
generally accepted accounting principles in the United States of America.

/s/ KPMG

Singapore
February 8, 2000

F-2
<PAGE> 96

CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
NOTE 1998 1999
---- ---------- ----------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents................................... 3 $ 99,619 $ 544,996
Accounts receivable
Trade..................................................... 4 71,285 117,165
Others.................................................... 4 12,703 24,061
Amounts due from ST and ST affiliates....................... 22 2,591 1,622
Amounts due from CSP........................................ 1,095 --
Amounts due from SMP........................................ 5,568 6,324
Inventories................................................. 5 29,476 33,619
Prepaid expenses............................................ 895 2,000
---------- ----------
Total current assets.................................... 223,232 729,787
Investment in CSP........................................... 6 34,158 --
Investment in SMP........................................... 6 24,329 47,036
Other assets................................................ 50,905 45,453
Technology license agreements............................... 7 6,916 28,526
Property, plant and equipment, net.......................... 9 981,970 1,282,106
---------- ----------
Total assets............................................ $1,321,510 $2,132,908
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable
Trade..................................................... $ 8,530 $ 10,560
Fixed asset purchases..................................... 22,829 141,841
Current installments of obligations under capital leases.... 10 4,329 5,767
Current installments of long-term debt...................... 11 49,046 119,991
Bank overdrafts............................................. 12 3,082 --
Accrued operating expenses.................................. 13 84,918 127,147
Amounts due to ST and ST affiliates......................... 22 10,607 9,775
Income taxes payable........................................ 662 2,921
Other current liabilities................................... 14 26,130 17,223
---------- ----------
Total current liabilities............................... 210,133 435,225
Obligations under capital leases, excluding current
installments.............................................. 10 13,414 7,822
Long-term debt, excluding current installments.............. 11 419,545 423,668
Customer deposits........................................... 15 47,087 39,804
Other liabilities........................................... 16 30,085 27,475
---------- ----------
Total liabilities....................................... 720,264 933,994
Minority interest........................................... -- 57,164
SHAREHOLDERS' EQUITY
Share capital: ordinary shares of S$0.26 each
Authorized: 3,076,923,079 shares
Issued and outstanding: 1998 -- 1,000,106,881 shares,
1999 -- 1,278,977,923 shares............................ 18 221,433 264,529
Subscription receivable..................................... (12,341) --
Additional paid-in capital.................................. 19 689,970 1,207,656
Retained deficit............................................ 20 (245,120) (277,739)
Accumulated other comprehensive loss........................ (52,696) (52,696)
---------- ----------
Total shareholders' equity.............................. 601,246 1,141,750
---------- ----------
Commitments and contingencies............................... 23
Total liabilities and shareholders' equity.............. $1,321,510 $2,132,908
========== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-3
<PAGE> 97

CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES

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

<TABLE>
<CAPTION>
1997 1998 1999
--------- --------- ----------
<S> <C> <C> <C>
Net revenue............................................. $ 379,761 $ 422,622 $ 694,258
Cost of revenue......................................... (368,521) (439,668) (527,023)
--------- --------- ----------
Gross profit (loss)..................................... 11,240 (17,046) 167,235
--------- --------- ----------
Operating Expenses
Research and development.............................. 26,553 43,419 58,894
Fab start-up costs.................................... 10,908 1,455 8,442
Sales and marketing................................... 20,184 31,872 34,359
General and administrative............................ 30,144 37,389 44,619
Costs incurred on termination of development
program............................................ -- 31,776 6,500
Stock-based compensation (note 24).................... 2,024 (2,780) 20,094
--------- --------- ----------
Total operating expenses........................... 89,813 143,131 172,908
--------- --------- ----------
Operating loss.......................................... (78,573) (160,177) (5,673)
Equity in loss of CSP................................... (1,272) (5,577) (9,528)
Equity in loss of SMP................................... -- (14,857) (23,282)
Other income............................................ 4,860 4,680 5,739
Interest income......................................... 179 1,690 6,733
Interest expense........................................ (12,782) (20,137) (17,822)
Exchange gain (loss).................................... (31,678) 5,237 5,862
--------- --------- ----------
Loss before income taxes................................ (119,266) (189,141) (37,971)
Income tax expense...................................... (355) (865) (2,131)
--------- --------- ----------
Loss before minority interest........................... (119,621) (190,006) (40,102)
Minority interest in loss of CSP........................ -- -- 7,483
--------- --------- ----------
Net loss................................................ $(119,621) $(190,006) $ (32,619)
========= ========= ==========
Other comprehensive loss -- foreign currency
translation........................................... $ (62,020) $ (8,794) $ --
--------- --------- ----------
Comprehensive loss...................................... $(181,641) $(198,800) $ (32,619)
========= ========= ==========
Net loss per share and ADS:
Basic net loss per share................................ $ (0.24) $ (0.24) $ (0.03)
Diluted net loss per share.............................. $ (0.24) $ (0.24) $ (0.03)
Basic net loss per ADS.................................. $ (2.44) $ (2.42) $ (0.32)
Diluted net loss per ADS................................ $ (2.44) $ (2.42) $ (0.32)
Number of shares (in thousands) used in computing:
-- basic net loss per share........................... 490,407 784,541 1,035,181
-- diluted net loss per share......................... 490,407 784,541 1,035,181
Number of ADS (in thousands) used in computing:
-- basic net loss per ADS............................. 49,041 78,454 103,518
-- diluted net loss per ADS........................... 49,041 78,454 103,518
</TABLE>

See accompanying notes to consolidated financial statements.

F-4
<PAGE> 98

CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
IN THOUSANDS
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
ORDINARY SHARES ADDITIONAL RETAINED COMPREHENSIVE
-------------------- SUBSCRIPTION PAID-IN UNEARNED EARNINGS INCOME
NUMBER AMOUNT RECEIVABLE CAPITAL COMPENSATION (DEFICIT) (LOSS)
--------- -------- ------------ ---------- ------------ --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1997.... 502,351 $143,183 $(10,943) $ 275,031 $ (752) $ 64,600 $ 18,118
Net loss...................... -- -- -- -- -- (119,621) --
Distribution.................. -- -- -- -- -- (93) --
Payment of subscription
receivable................... -- -- 1,260 -- -- -- --
Other changes in unearned
compensation, net............ -- -- -- 3,093 (3,093) -- --
Issuance of shares............ 1,103 201 (882) 700 -- -- --
Amortization of stock
compensation................. -- -- -- -- 2,024 -- --
Foreign currency
translation.................. -- -- -- -- -- -- (62,020)
--------- -------- -------- ---------- -------- --------- --------
Balance at December 31,
1997......................... 503,454 143,384 (10,565) 278,824 (1,821) (55,114) (43,902)
Net loss...................... -- -- -- -- -- (190,006) --
Payment of subscription
receivable................... -- -- 1,193 -- -- -- --
Other changes in unearned
compensation, net............ -- -- -- (4,601) 4,601 -- --
Issuance of shares............ 496,653 78,049 (2,969) 415,747 -- -- --
Amortization of stock
compensation................. -- -- -- -- (2,780) -- --
Foreign currency
translation.................. -- -- -- -- -- -- (8,794)
--------- -------- -------- ---------- -------- --------- --------
Balance at December 31,
1998......................... 1,000,107 221,433 (12,341) 689,970 -- (245,120) (52,696)
Net loss...................... -- -- -- -- -- (32,619) --
Issuance of shares............ 6,133 959 (1,302) 2,991 -- -- --
Payment of subscription
receivable................... -- -- 1,801 -- -- -- --
Other changes in unearned
compensation, net............ -- -- -- 15,526 (15,526) -- --
Amortization of stock
compensation................. -- -- -- -- 12,138 -- --
Cancellation of partly paid
shares....................... (14,762) (2,570) 11,842 (11,642) 3,388 -- --
Amortization of stock
compensation................. -- -- -- 6,938 -- -- --
Initial public offering, net
of expenses.................. 287,500 44,707 -- 503,414 -- -- --
Share options issued and
charged to SMP............... -- -- -- 459 -- -- --
--------- -------- -------- ---------- -------- --------- --------
Balance at December 31,
1999......................... 1,278,978 $264,529 -- $1,207,656 -- $(277,739) $(52,696)
========= ======== ======== ========== ======== ========= ========

TOTAL
SHAREHOLDERS'
EQUITY
-------------
<S> <C>
Balance at January 1, 1997.... $ 489,237
Net loss...................... (119,621)
Distribution.................. (93)
Payment of subscription
receivable................... 1,260
Other changes in unearned
compensation, net............ --
Issuance of shares............ 19
Amortization of stock
compensation................. 2,024
Foreign currency
translation.................. (62,020)
----------
Balance at December 31,
1997......................... 310,806
Net loss...................... (190,006)
Payment of subscription
receivable................... 1,193
Other changes in unearned
compensation, net............ --
Issuance of shares............ 490,827
Amortization of stock
compensation................. (2,780)
Foreign currency
translation.................. (8,794)
----------
Balance at December 31,
1998......................... 601,246
Net loss...................... (32,619)
Issuance of shares............ 2,648
Payment of subscription
receivable................... 1,801
Other changes in unearned
compensation, net............ --
Amortization of stock
compensation................. 12,138
Cancellation of partly paid
shares....................... 1,018
Amortization of stock
compensation................. 6,938
Initial public offering, net
of expenses.................. 548,121
Share options issued and
charged to SMP............... 459
----------
Balance at December 31,
1999......................... $1,141,750
==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-5
<PAGE> 99

CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES

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

<TABLE>
<CAPTION>
1997 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss.................................................... $(119,621) $(190,006) $ (32,619)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Equity in loss of CSP..................................... 1,272 5,577 9,528
Equity in loss of SMP..................................... -- 14,857 23,282
Depreciation and amortization............................. 173,762 226,903 271,406
Foreign exchange (gain) loss.............................. 41,734 (4,843) (8,003)
Loss on disposal of property, plant and equipment......... 623 7,342 2,656
Minority interest in loss of CSP.......................... -- -- (7,483)
Costs on termination of development program............... -- 31,776 --
Stock-based compensation.................................. 2,024 (2,780) 20,094
Others.................................................... (491) 475 (2,093)
CHANGE IN OPERATING WORKING CAPITAL:
Accounts receivable....................................... $(106,390) $ 36,545 $ (49,066)
Amounts due from ST and ST affiliates..................... 3,166 257 5,407
Amounts due from CSP...................................... (666) (1,095) (8,314)
Amounts due from SMP...................................... -- (5,568) 2,224
Inventories............................................... (22,664) 28,069 (4,143)
Prepaid expenses.......................................... 129 164 (717)
Trade accounts payable.................................... 7,189 (4,408) 109
Accrued operating expenses................................ 23,091 27,550 35,763
Other current liabilities................................. (1,532) (17,967) 3,889
Amounts due to ST and ST affiliates....................... 4,346 3,696 2,165
Advances to suppliers....................................... (18,875) 61 4,884
Income taxes payable........................................ 116 325 2,085
--------- --------- ---------
Net cash (used in) provided by operating activities......... (12,787) 156,930 271,054
CASH FLOWS FROM INVESTING ACTIVITIES
Cash acquired on consolidation of CSP....................... $ -- $ -- $ 3,056
Proceeds from sale of property, plant and equipment......... 256 2,246 19,981
Purchase of property, plant and equipment................... (410,551) (279,368) (340,305)
Technology license fees paid................................ (5,878) (7,790) (5,200)
Investment in CSP........................................... (6,108) (34,492) (8,976)
Investment in SMP........................................... -- (39,186) (45,989)
--------- --------- ---------
Net cash used in investing activities....................... (422,281) (358,590) (377,433)
CASH FLOWS FROM FINANCING ACTIVITIES
Bank overdrafts............................................. $ (1,502) $ 1,643 $ (3,082)
Customer deposits, net...................................... 79,755 (60,851) (30,076)
Loans from ST and ST affiliates
- borrowings.............................................. 824,288 410,051 69,500
- repayments.............................................. (681,235) (738,400) (69,500)
Long term debt
- borrowings.............................................. 258,245 193,900 70,500
- repayments.............................................. (25,615) (8,993) (65,748)
Issuance of shares by the Company........................... 1,279 492,909 552,570
Issuance of shares by CSP to minority shareholders.......... -- -- 32,360
Capital lease payments...................................... (3,407) (5,317) (4,680)
--------- --------- ---------
Net cash provided by financing activities................... 451,808 284,942 551,844
Net increase in cash and cash equivalents................... 16,740 83,282 445,465
Effect of exchange rate changes on cash and cash
equivalents............................................... (19) (7,448) (88)
Cash and cash equivalents at the beginning of the year...... 7,064 23,785 99,619
--------- --------- ---------
Cash and cash equivalents at the end of the year............ $ 23,785 $ 99,619 $ 544,996
========= ========= =========
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid (net of amounts capitalized).................. $ 9,597 $ 25,451 $ 21,211
Income taxes paid (received)................................ 206 285 (248)
</TABLE>

See accompanying notes to consolidated financial statements.

F-6
<PAGE> 100

CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1997, 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 seven 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. ("HP Europe") and
EDB Investments Pte Ltd ("EDBI") formed Chartered Silicon Partners Pte Ltd
("CSP"), in which the Company had a non-controlling 51% equity interest which
was accounted for on the equity method. Effective October 1, 1999, the Company,
HP Europe and EDBI amended their strategic alliance agreement by eliminating
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. As a result of the amendment, the Company treats CSP as a
consolidated subsidiary from October 1, 1999 forward. HP Europe has subsequently
assigned its strategic alliance agreement relating to CSP to Agilent
Technologies Europe B.V.

Effective October 1, 1999, the Company amended its strategic alliance
agreement relating to CSP. As a consequence of these changes, the Company ceased
equity-accounting of its investment in CSP and consolidated CSP from that date.
The following is a summary of the effect of the consolidation of CSP from that
date:

<TABLE>
<S> <C>
Cash and cash equivalents................................. $ 3,056
Accounts receivable....................................... 13,288
Prepaid expenses.......................................... 388
Technology license agreements............................. 8,333
Property, plant and equipment, net........................ 136,826
Accounts payable.......................................... (9,990)
Accrued operating expenses................................ (7,810)
Amount due to ST and ST affiliates........................ (1,974)
Other current liabilities................................. (171)
Long-term debt............................................ (76,000)
Minority interest......................................... (32,286)
--------
Investment in CSP......................................... $ 33,660
========
</TABLE>

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 SMP on the equity method.
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.

F-7
<PAGE> 101
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES

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

(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 SMP, as well
as for the investment in CSP in the period prior to October 1, 1999. 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,
was included as investment in CSP (prior to October 1, 1999) 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 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 other comprehensive loss.

(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

F-8
<PAGE> 102
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES

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

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 16.

(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
$26,553, $43,419 and $58,894 in 1997, 1998 and 1999, respectively.

(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 24 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.

Compensation cost for stock options granted to non-employees in connection
with the Company's fixed option plan is measured as the fair market value of the
stock options valued based upon an option pricing model over the period in which
the options vest.

(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

F-9
<PAGE> 103
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES

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

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 SFAS No. 128, "Earnings Per Share"
for all periods presented.

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,
---------------------------------------------------------------------------------------------------
1997 1998 1999
-------------------------------- ------------------------------- ------------------------------
PER PER PER
SHARE SHARE SHARE
LOSS SHARES AMOUNT LOSS SHARES AMOUNT LOSS SHARES AMOUNT
--------- ----------- ------ -------- ----------- ------ ------- ----------- ------
(THOUSANDS) (THOUSANDS) (THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Basic net loss per
share................... $(119,621) 490,407 $(0.24) (190,006) 784,541 $(0.24) (32,619) 1,035,181 $(0.03)
========= ======= ====== ======== ======= ====== ======= ========= ======
Effect of dilutive
securities.............. -- -- --
------- ------- ---------
Diluted net loss per
share................... $(119,621) 490,407 $(0.24) (190,006) 784,541 $(0.24) (32,619) 1,035,181 $(0.03)
========= ======= ====== ======== ======= ====== ======= ========= ======
</TABLE>

The Company has excluded all outstanding stock options and shares subject
to repurchase by ST from the calculation of diluted net loss per share for the
years ended December 31, 1997 and 1998 and all outstanding stock options from
the calculation of diluted net loss per share for the year ended December 31,
1999 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 loss per share were 13,156,240, 27,015,600 and 15,102,942 for the years
ended December 31, 1997, 1998 and 1999, respectively. All amounts have been
restated to reflect the impact of the capital restructuring described in Note
18.

(o) COMPREHENSIVE INCOME

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).

F-10
<PAGE> 104
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES

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

(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.

(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>
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 recognized 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.

F-11
<PAGE> 105
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES

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

(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 48%, 43% and 38% of net revenue in the
years ended December 31, 1997, 1998 and 1999, respectively (see Note 21). 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 23(f).

(w) SEGMENT DISCLOSURES

Disclosures on business segments are made under SFAS No. 131, "Disclosures
About Segments of an Enterprise and Related Information". 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, 1998 and 1999 consist of the
following:

<TABLE>
<CAPTION>
1998 1999
------- --------
<S> <C> <C>
Cash at banks and in hand............................... $ 6,747 $432,094
Cash equivalents -- ST pooled cash...................... 92,872 112,902
------- --------
$99,619 $544,996
======= ========
</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, 1998 and 1999 consist of the
following:

<TABLE>
<CAPTION>
1998 1999
------- --------
<S> <C> <C>
Trade receivables....................................... $76,264 $122,712
Allowance for doubtful accounts......................... (4,979) (5,547)
------- --------
$71,285 $117,165
======= ========
</TABLE>

F-12
<PAGE> 106
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES

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

Movements in the allowance for doubtful accounts are as follows:

<TABLE>
<CAPTION>
1997 1998 1999
------- ------ ------
<S> <C> <C> <C>
Beginning....................................... $ 7,175 $3,957 $4,979
Utilized in year................................ -- -- (322)
Charge (credit) for the year.................... (2,058) 993 890
Translation adjustment.......................... (1,160) 29 --
------- ------ ------
Ending.......................................... $ 3,957 $4,979 $5,547
======= ====== ======
</TABLE>

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

<TABLE>
<CAPTION>
1998 1999
------- -------
<S> <C> <C>
Advances to suppliers.................................... $ 4,944 $ 227
Loans to employees....................................... 1,097 1,480
Deposits................................................. 466 785
Receivable from research partners........................ 3,333 6,726
Others................................................... 2,863 14,843
------- -------
$12,703 $24,061
======= =======
</TABLE>

5. INVENTORIES

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

<TABLE>
<CAPTION>
1998 1999
------- -------
<S> <C> <C>
Raw materials............................................ $ 6,279 $ 3,908
Work in process.......................................... 17,206 21,650
Consumable supplies and spares........................... 10,184 8,186
------- -------
33,669 33,744
Allowance for inventory obsolescence..................... (4,193) (125)
------- -------
$29,476 $33,619
======= =======
</TABLE>

Movements in the allowance for inventory obsolescence are as follows:

<TABLE>
<CAPTION>
1997 1998 1999
------- ------ -------
<S> <C> <C> <C>
Beginning...................................... $ 654 $ 458 $ 4,193
Utilized in year............................... (1,467) -- (4,133)
Charge for the year............................ 1,114 3,744 65
Translation adjustment......................... 157 (9) --
------- ------ -------
Ending......................................... $ 458 $4,193 $ 125
======= ====== =======
</TABLE>

F-13
<PAGE> 107
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES

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

6. INVESTMENT IN CSP AND SMP

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

<TABLE>
<CAPTION>
1998 1999
-------- --------
<S> <C> <C>
CSP
Cost................................................... $ 40,600 $ --
Share of retained post-formation loss.................. (6,849) --
Translation adjustments................................ 407 --
-------- --------
$ 34,158 $ --
======== ========
SMP
Cost................................................... $ 39,186 $ 85,175
Share of retained post-formation loss.................. (14,857) (38,139)
-------- --------
$ 24,329 $ 47,036
======== ========
</TABLE>

CSP and SMP are semiconductor foundries providing wafer fabrication
services and technologies. The Company accounts for its 49% investment in SMP
using the equity method. Because the minority owners of CSP had certain approval
or veto rights which allowed them to participate in management, CSP was not
consolidated and was accounted for using the equity method until September 30,
1999.

On October 1, 1999, the strategic alliance agreement relating to CSP was
revised and, since then, the Company has accounted for its 51% investment in CSP
on a consolidated basis.

Under the terms of the strategic alliance agreements, the Company is
committed to making an equity investment in CSP of up to $215,429, of which
$83,259 has been invested, and in SMP of up to $122,200, of which $85,175 has
been invested.

Under the strategic alliance 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.

SMP commenced recording of sales in the quarter ended June 30, 1999 which
amounted to $27,707 in the current year ended December 31, 1999.

F-14
<PAGE> 108
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES

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

Shown below is aggregated summarized financial information for CSP (prior
to October 1, 1999) and SMP:

<TABLE>
<CAPTION>
1998 1999
-------- ---------
<S> <C> <C>
Current assets...................................... $ 21,151 $ 40,495
Property, plant and equipment....................... 240,574 300,556
Short-term debt..................................... (75,460) --
Other current liabilities........................... (38,642) (52,821)
Long-term debt...................................... (31,000) (187,000)
-------- ---------
Shareholders' equity................................ $116,623 $ 101,230
======== =========
</TABLE>

<TABLE>
<CAPTION>
1997 1998 1999
------- -------- --------
<S> <C> <C> <C>
Net revenue................................................. $ -- $ -- $ 66,143
Gross loss.................................................. -- -- (47,839)
Operating loss.............................................. (2,571) (42,430) (74,180)
Net loss.................................................... (2,494) (41,256) (66,493)
</TABLE>

7. TECHNOLOGY LICENSE AGREEMENTS

Technology license agreements at December 31, 1998 and 1999 consist of the
following:

<TABLE>
<CAPTION>
1998 1999
-------- --------
<S> <C> <C>
Technology licenses, at cost........................... $ 32,284 $ 62,284
Accumulated amortization............................... (25,368) (33,758)
-------- --------
$ 6,916 $ 28,526
======== ========
</TABLE>

Future payments under the agreements are as follows:

<TABLE>
<S> <C> <C>
Unconditional fixed obligations payable................ $ 39,250 $ 69,250
Total payments to date....................... (30,770) (45,970)
-------- --------
$ 8,480 $ 23,280
======== ========
Current installments (see note 14)..................... $ 1,280 $ 11,280
Non-current installments (see note 16)................. 7,200 12,000
-------- --------
$ 8,480 $ 23,280
======== ========
</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 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 in adjusting
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 sold one item of
equipment in 1999 and is in the process of evaluating bids to purchase the
remaining equipment and expects to complete

F-15
<PAGE> 109
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES

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

these disposals in 2000. 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, 1998 and 1999 consist of the
following:

<TABLE>
<CAPTION>
1998 1999
---------- ----------
<S> <C> <C>
COST
Buildings........................................... $ 147,685 $ 153,023
Mechanical and electrical installations............. 268,606 252,589
Equipment and machinery............................. 1,048,744 1,260,608
Office and computer equipment....................... 63,112 68,523
Assets under installation and construction.......... 11,555 360,371
---------- ----------
Total cost........................................ $1,539,702 $2,095,114
========== ==========
ACCUMULATED DEPRECIATION
Buildings........................................... $ 16,153 $ 23,961
Mechanical and electrical installations............. 70,502 87,293
Equipment and machinery............................. 441,815 664,721
Office and computer equipment....................... 29,262 37,033
---------- ----------
Total accumulated depreciation.................... $ 557,732 $ 813,008
========== ==========
Property, plant and equipment (net)................. $ 981,970 $1,282,106
========== ==========
</TABLE>

Depreciation charged to results of operations amounted to $166,844,
$219,900 and $264,683 for 1997, 1998 and 1999, respectively. Buildings consist
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 22.

Included in property, plant and equipment are assets acquired under capital
lease obligations with a cost and related accumulated depreciation of
approximately $24,000 and $16,000, respectively, at December 31, 1998 and
$31,973 and $27,691, respectively, at December 31, 1999.

Capitalized interest relating to property, plant and equipment amounted to
$10,500, $5,970 and $3,793 in the years ended December 31, 1997, 1998 and 1999,
respectively.

F-16
<PAGE> 110
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997, 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 1999 are as
follows:

<TABLE>
<CAPTION>
1998 1999
------- -------
<S> <C> <C>
Payable in year ending December 31,
1999................................................... $ 5,363 $ --
2000................................................... 6,387 6,496
2001................................................... 8,106 8,196
------- -------
Total minimum lease payments............................. 19,856 14,692
Amounts representing interest at rates ranging from 5.90%
to 6.06% per annum..................................... (2,113) (1,103)
------- -------
Present value of minimum lease payments.................. 17,743 13,589
Less current installments of capital lease obligations... (4,329) (5,767)
------- -------
Obligations under capital leases, excluding current
installments........................................... $13,414 $ 7,822
======= =======
</TABLE>

The minimum lease payments are guaranteed by ST.

11. LONG-TERM DEBT

Long-term debt at December 31, 1998 and 1999 consists of the following:

<TABLE>
<CAPTION>
1998 1999
-------- ---------
<S> <C> <C>
Singapore dollar loans at fixed rates of 4% to
4.25%............................................... $408,277 $ 355,903
Singapore dollar loans at floating rates.............. 60,314 59,756
US dollar loan at floating rates...................... -- 128,000
-------- ---------
468,591 543,659
Less current installments............................. (49,046) (119,991)
-------- ---------
Long-term debt, excluding current installments........ $419,545 $ 423,668
======== =========
</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. Effective November 1, 1999, the
Company's management and services support agreement with ST includes a charge
for such guarantees. See note 22. Prior to that date, the Company was not
separately charged for the guarantees. 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% and 3% as of December 31, 1998 and 1999),
respectively and 1% above the arithmetic mean of Singapore inter-bank rates for
deposits quoted by specified banks to the lender (6.44% and 4.06% as of December
31, 1998 and 1999), respectively. The loans are repayable in June 2002 and
February 2002 respectively. See note 23(f).

The floating rate US dollar loan is unsecured and bears interest of 0.56%
above the arithmetic mean of Singapore inter-bank rates for deposits quoted by
specified banks to the lender (6.75% as of December 31, 1999). The loans are
repayable in semi-annual installments and mature between 2000 and 2002.

F-17
<PAGE> 111
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES

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

Annual maturities of long-term loans as of December 31, 1999 are as
follows:

<TABLE>
<S> <C>
Payable in year ending December 31,
2000................................................. $119,991
2001................................................. 119,991
2002................................................. 179,747
2003................................................. 68,772
2004................................................. 27,579
Thereafter........................................... 27,579
--------
$543,659
========
</TABLE>

12. ADDITIONAL CREDIT FACILITIES AND BANK OVERDRAFTS

As of December 31, 1999, the Company has unutilized banking facilities of
approximately $177,838 for short-term advances and bankers' guarantees and an
unutilized facility with ST of approximately $100,000.

The weighted average rate of interest payable on the bank overdrafts was
6.0% as of December 31, 1998.

13. ACCRUED OPERATING EXPENSES

Accrued operating expenses at December 31, 1998 and 1999 consist of the
following:

<TABLE>
<CAPTION>
1998 1999
------- --------
<S> <C> <C>
Accrual for employee bonuses and related expenses....... $14,732 $ 40,992
Accrual for vacation liability.......................... 2,237 4,460
Accrual for technology costs (see Note 23(g))........... 7,853 12,126
Unbilled raw materials.................................. 52,113 53,367
Accrual for interest costs.............................. 5,971 5,817
Others.................................................. 2,012 10,385
------- --------
$84,918 $127,147
======= ========
</TABLE>

Movements in accrual for technology costs are as follows:

<TABLE>
<CAPTION>
1997 1998 1999
------ ------ -------
<S> <C> <C> <C>
Beginning....................................... $4,261 $5,847 $ 7,853
Charge for the year............................. 1,586 2,006 4,273
------ ------ -------
Ending.......................................... $5,847 $7,853 $12,126
====== ====== =======
</TABLE>

F-18
<PAGE> 112
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES

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

14. OTHER CURRENT LIABILITIES

Other current liabilities at December 31, 1998 and 1999 consist of the
following:

<TABLE>
<CAPTION>
1998 1999
------- -------
<S> <C> <C>
Obligations payable under technology license agreements.... $ 1,280 $11,280
Customer deposits (see note 15)............................ 22,795 2
Others..................................................... 2,055 5,941
------- -------
$26,130 $17,223
======= =======
</TABLE>

15. CUSTOMER DEPOSITS

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.

16. OTHER LIABILITIES

Other liabilities at December 31, 1998 and 1999 consist of the following:

<TABLE>
<CAPTION>
1998 1999
------- -------
<S> <C> <C>
Obligations payable under technology license
agreements............................................. $ 7,200 $12,000
Deferred grants (see below).............................. 2,873 3,501
Deferred gain on forward contracts....................... 20,012 11,974
------- -------
$30,085 $27,475
======= =======
</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.

17. 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 1, 2000, 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, three 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 2006, 2007, and the earlier of ten years
from the initial fab production date and December 1, 2000, 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-19
<PAGE> 113
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997, 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 December 31, 1999, the Company has pioneer loss carryforwards of
$94,786.

The income tax expense for the years ended December 31, 1997, 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>
1997 1998 1999
-------- -------- -------
<S> <C> <C> <C>
Income taxes computed at Singapore statutory tax
rate of 26%....................................... $(31,009) $(49,177) $(9,872)
Permanent non-deductible expenses................... -- -- 9,220
Pioneer status relief............................... -- -- (4,769)
Pioneer losses not recognized as deferred benefit... 30,534 45,893 --
Non-deductible investee losses...................... -- 3,561 8,531
Settlement of prior years' tax claims............... -- -- (880)
All other items, net................................ 830 588 (99)
-------- -------- -------
Income tax expense (benefit)........................ $ 355 $ 865 $ 2,131
======== ======== =======
</TABLE>

As of December 31, 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.

18. SHARE CAPITAL

The Company's authorized share capital at December 31, 1999 was comprised
of 3,076,923,079 ordinary shares of Singapore dollars S$0.26 par value each.

Share capital at December 31, 1998 and 1999 consists of the following:

<TABLE>
<CAPTION>
1998 1999
-------- --------
<S> <C> <C>
Issued share capital................................... $160,272 $203,368
Capital reduction (see below).......................... 61,161 61,161
-------- --------
$221,433 $264,529
======== ========
</TABLE>

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.

On September 13, 1999, the Company restructured its share capital with 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.
This was approved by the High Court of Singapore on September 30, 1999.
Subsequently, the Company on October 14, 1999 merged the A ordinary shares and B
ordinary

F-20
<PAGE> 114
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES

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

shares into one class of ordinary shares and effected a share split which
resulted 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.

All share and per share amounts have been presented herein to reflect the
impact of this capital restructuring.

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.

19. ADDITIONAL PAID-IN CAPITAL

Additional paid-in capital as of December 31, 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 share
premium account had a balance of $1,207,656 as of December 31, 1999.

20. RETAINED EARNINGS

Singapore law allows dividends to be paid only out of profits of the
Company. 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.

21. 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>
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
USA................................................ $198,288 $265,398 $477,213
Taiwan............................................. 140,799 134,171 98,842
Singapore.......................................... 25,385 6,409 490
France............................................. 1,368 2,255 25,844
Japan.............................................. 562 4,976 20,338
Sweden............................................. -- 236 51,015
Others............................................. 13,359 9,177 20,516
-------- -------- --------
$379,761 $422,622 $694,258
======== ======== ========
</TABLE>

F-21
<PAGE> 115
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997, 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>
1997 1998 1999
----- ----- -----
<S> <C> <C> <C>
Customer A.................................................. 1.0% 9.6% 11.1%
Customer B.................................................. 14.0 7.6 6.7
Customer C.................................................. 10.4 1.0 5.5
Customer D.................................................. 14.6 9.3 0.9
Others...................................................... 60.0 72.5 75.8
----- ----- -----
100.0% 100.0% 100.0%
===== ===== =====
</TABLE>

The top five customers of the Company accounted for 48%, 43% and 38% of the
Company's net revenue in the years ended December 31, 1997, 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.

22. 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").

In addition to the transactions with related parties disclosed in Note 12,
the Company had the following significant transactions with related parties:

<TABLE>
<CAPTION>
1997 1998 1999
------- ------- -------
<S> <C> <C> <C>
ST
Management fees..................................... $ 5,719 $ 4,897 $ 3,820
Reimbursement of expenses incurred on behalf of the
Company.......................................... 5,594 5,697 6,496
Rental for leasehold land from ST................... 2,128 2,020 2,615
Interest expense.................................... 12,729 6,552 --
Affiliates of ST
Services purchased from STATS....................... 13,261 22,700 33,905
Other services purchased............................ 3,034 1,362 7,593
Net revenue......................................... 20,917 6,247 59,031
Property, plant and equipment purchased............. 1,051 924 588
Building construction costs......................... 2,575 1,101 126
Interest expense.................................... -- 2,310 95
======= ======= =======
</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.

F-22
<PAGE> 116
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES

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

Fabs 2, 3 and 6 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 at different times between 2024
and 2027 with an option, subject to certain conditions, to extend for another 30
years.

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 24. Management fees and expenses incurred on behalf of, or
allocated to, the Company by ST are charged to the Company. Under a service
agreement dated November 1, 1999, annual management fees are payable for the
provision of specified services on mutually agreed terms which the Company
believes approximates the cost of providing those services. Fees are also
payable as a proportion of revenues for affiliation and network benefits. In
addition, fees are payable as a percentage of guarantees and similar financial
support provided. Prior to November 1, 1999, these services were subject to a
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 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. Tritech commenced winding-up proceedings on October
15, 1999.

F-23
<PAGE> 117
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES

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

At December 31, 1998 and 1999, there were the following amounts due from or
to ST and its affiliates.

<TABLE>
<CAPTION>
1998 1999
------- ------
<S> <C> <C>
Amounts due from ST
Other receivables....................................... $ -- $ 282
Amounts due from ST affiliates
Accounts receivable
Trade, net of allowance for doubtful accounts........ 1,481 933
Others............................................... 1,110 407
------- ------
$ 2,591 $1,622
======= ======
Amounts due to ST
Other current liabilities............................... $ 4,654 $ 292
Amounts due to ST affiliates
Accounts payable, trade................................. 4,916 9,483
Other current liabilities............................... 1,037 --
------- ------
$10,607 $9,775
======= ======
</TABLE>

(b) CSP AND SMP

The Company provides management and corporate support services including
accounting, financial, sales and marketing services, to CSP and SMP and
allocates a portion of its costs to CSP and SMP. The Company commenced recording
such recharges in 1998, which amounted to $17,623 and $19,684 in the year ended
December 31, 1998 and 1999, respectively. The Company is also committed to
purchase a specified percentage of SMP's output or compensate SMP for any costs
it incurs in connection with unused capacity arising from such specified
percentage not purchased.

Rental expense with ST for the years ended December 31, 1997, 1998 and 1999
was $2,128, $2,020 and $2,615 respectively.

Minimum future rental payments on non-cancellable operating leases of
factory land leased from ST as of December 31, 1999 are as follows:

<TABLE>
<S> <C>
Payable in year ending December 31,
2000..................................................... $ 1,919
2001..................................................... 1,919
2002..................................................... 1,919
2003..................................................... 1,919
2004..................................................... 1,919
Thereafter............................................... 36,789
-------
$46,384
=======
</TABLE>

23. COMMITMENTS AND CONTINGENCIES

(a) LEASES

Rental expense, excluding amounts payable to ST disclosed in Note 22(a),
for the years ended December 31, 1997, 1998 and 1999 was $2,058, $1,949 and
$2,163, respectively.

F-24
<PAGE> 118
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES

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

Minimum future rental payments on non-cancellable operating leases of
apartments, excluding amounts payable to ST disclosed in Note 22(b), as of
December 31, 1999 are as follows:

<TABLE>
<S> <C>
Payable in year ending December 31,
2000...................................................... $3,401
2001...................................................... 2,100
2002...................................................... 276
2003...................................................... 243
2004...................................................... 243
Thereafter................................................ 3,090
------
$9,353
======
</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.

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 subscription and participation agreements were terminated
with effect from November 5, 1999.

The Company continues to be committed to provide the Equity Investor
Customers and technology partner with rights to wafer capacity first granted
under those agreements.

(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 December 31, 1999, deposits held by the Company
amounted to $39,806. 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, 1998
and 1999:

<TABLE>
<CAPTION>
1998 1999
-------- --------
<S> <C> <C>
Contracts for capital expenditure...................... $362,761 $876,263
</TABLE>

(f) FORWARD FOREIGN EXCHANGE CONTRACTS

The Company had the following notional amounts of forward foreign exchange
contracts as of December 31, 1998 and 1999:

<TABLE>
<CAPTION>
1998 1999
-------- --------
<S> <C> <C>
Forward foreign exchange contracts..................... $522,087 $512,760
</TABLE>

F-25
<PAGE> 119
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES

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

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.

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. The amounts so accrued were $7,853 and
$12,126 as of December 31, 1998 and 1999, respectively. No assurance can be
given that such provisions are adequate.

24. 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

The Company adopted the Chartered Semiconductor Manufacturing Employees'
Share Ownership Plan (the "1995 Ownership Plan") in 1995 and terminated it on
September 30, 1999 by converting the total amount paid up on the partly paid
shares into an equivalent number of fully paid shares, and the unpaid
subscription amounts into 1999 Option Plan options. The plan was administered by
a committee nominated by the directors and provided 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

F-26
<PAGE> 120
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES

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

price for each share which could 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 and fifth years following the date the option is granted, however,
such cumulative second installment due could 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, 1997, 1998 and 1999 were $1,853,
$(2,609) and $8,081 respectively.

Information for December 31, 1997, 1998 and 1999 is as follows:

<TABLE>
<CAPTION>
1997 1998 1999
------- ------- ------
<S> <C> <C> <C>
Shares outstanding at beginning of year (in
thousands)........................................... 13,451 12,859 11,436
Shares granted during the year (in thousands).......... 1,103 -- --
Shares fully paid and partly paid shares converted to
fully paid shares during the year (in thousands)..... (1,695) (1,423) (2,894)
Shares cancelled during the year (in thousands)........ -- -- (2,626)
Shares converted to 1999 Option Plan (in thousands).... -- -- (5,916)
Shares outstanding at year end (in thousands).......... 12,859 11,436 --
Subscription price for shares issued in 1995 at........ $ 0.77 $ 0.77 --
Subscription price for shares issued in 1996 from...... $ 0.92 $ 0.92 --
to................................................... $ 0.98 $ 0.98 --
Subscription price for shares issued in 1997 at........ $ 0.83 $ 0.83 --
Weighted average grant date fair value of options...... $ 1.31 -- --
Subscription receivable at year end.................... $10,565 $ 9,247 --
</TABLE>

The fair value of option grants was 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 57.0% in 1997. The weighted average risk free interest
rate used was 6.84%.

(b) 1997 OWNERSHIP PLAN

The Company adopted the Chartered Semiconductor Manufacturing Employees'
Share Ownership Plan 1997 (the "1997 Ownership Plan") in 1997 and terminated it
on September 30, 1999 by converting

F-27
<PAGE> 121
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES

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

the total amount paid up on the partly paid shares into an equivalent number of
fully paid shares, and the unpaid subscription amounts into 1999 Option Plan
options. The terms of the 1997 Ownership Plan were 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.

Total compensation expense (income) recognized for stock-based compensation
under the plan for the years ended December 31, 1997, 1998 and 1999 were $171,
$(171) and $2,922 respectively.

Information for December 31, 1997, 1998 and 1999 is as follows:

<TABLE>
<CAPTION>
1997 1998 1999
------- ------- -------
<S> <C> <C> <C>
Shares outstanding at beginning of year (in
thousands).......................................... -- -- 4,021
Shares granted during the year (in thousands)......... 2,792 5,341 2,526
Partly paid shares converted to fully paid shares
during the year (in thousands)...................... -- -- (327)
Shares cancelled during the year (in thousands)....... -- -- (937)
Shares converted to 1999 Option Plan (in thousands)... -- -- (5,283)
Shares granted pending issuance at year end (in
thousands).......................................... (2,792) (1,320) --
Shares outstanding at year end (in thousands)......... -- 4,021 --
Subscription price for shares issued in 1997 at....... $ 0.74 $ 0.74 --
Subscription price for shares issued in 1998 from..... -- $ 0.59 --
to.................................................. -- $ 0.84 --
Subscription price for shares issued in 1999 at....... -- -- $ 0.55
Weighted average grant date fair value of shares...... $ 1.50 $ 1.13 $ 1.05
Subscription receivable at year end................... -- $ 3,094 --
</TABLE>

The fair value of option grants was 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%, 70.0% and 71.0% in 1997, 1998 and 1999,
respectively. The weighted average risk free interest rate used was 5.96%, 5.29%
and 5.52% in 1997, 1998 and 1999, respectively.

Effective March 30, 1999, the Company adopted the Chartered Semiconductor
Manufacturing Ltd Share Ownership Plan 1999 (the "1999 Option 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 SMP, and outside directors
and consultants, who are not eligible for the grant of incentive stock options;
(ii) employees, outside directors and consultants of affiliates resident in the
United States, who are not be eligible for the grant of options; and (iii)
employees of SMP resident in the United States, who are not eligible for the
grant of options.

F-28
<PAGE> 122
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES

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

The exercise price of an incentive stock option is 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.

Information on options granted is as follows:

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
EXERCISE
OPTIONS PRICE
------- --------
<S> <C> <C>
Outstanding at beginning of year (in thousands)............. -- --
Granted (in thousands)...................................... 25,208 $1.52
Conversion from 1995 and 1997 Ownership Plans (in
thousands)................................................ 11,199 $0.78
Exercised (in thousands).................................... (2,630) $0.79
-------
Outstanding at end of year (in thousands)................... 33,777 $1.33
=======
Exercisable at end of year (in thousands)................... 11,295 $1.11
Weighted average fair value of options granted during the
year...................................................... $ 1.26
=======
</TABLE>

The following table summarizes information about fixed stock options
outstanding at December 31, 1999:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
----------------------------------------- OPTIONS EXERCISABLE
WEIGHTED --------------------------
NUMBER AVERAGE WEIGHTED WEIGHTED
OUTSTANDING REMAINING AVERAGE NUMBER AVERAGE
AT CONTRACTUAL EXERCISE EXERCISABLE EXERCISE
RANGE OF EXERCISE PRICES 12/31/1999 LIFE PRICE 12/31/1999 PRICE
- ------------------------ -------------- ----------- -------- -------------- --------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
$0.54 to $0.98.......... 17,054 8.1 years $0.68 8,075 $0.75
$2.00................... 16,723 9.2 years $2.00 3,220 $2.00
------ ------
33,777 11,295
====== ======
</TABLE>

The options vest over five years and expire on dates ranging from October
2004 to October 2009. The 1999 Option Plan is accounted for in accordance with
fixed-plan accounting under APB 25. Total compensation expense recognized for
1999 totalled $9,091.

The fair value of the 1999 option grant is estimated using the
Black-Scholes option pricing model with the following weighted average
assumptions used: dividend yield 0%, risk free interest rate of 6.1%, expected
volatility of 60.6% and expected lives of 10 years.

Options over 451,920 shares of the Company were granted in 1999 to
employees of SMP. SMP will bear the stock based compensation charge in respect
of these options.

F-29
<PAGE> 123
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES

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

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>
1997 1998 1999
--------- --------- --------
<S> <C> <C> <C>
Net loss
As reported............................................ $(119,621) $(190,006) $(32,619)
Pro forma.............................................. $(119,790) $(195,464) $(26,186)
Basic net loss per share
As reported............................................ $ (0.24) $ (0.24) $ (0.03)
Pro forma.............................................. $ (0.24) $ (0.25) $ (0.03)
Diluted net loss per share
As reported............................................ $ (0.24) $ (0.24) $ (0.03)
Pro forma.............................................. $ (0.24) $ (0.25) $ (0.03)
</TABLE>

25. FAIR VALUES OF FINANCIAL INSTRUMENTS

<TABLE>
<CAPTION>
1998 1999
--------------------- ---------------------
CARRYING ESTIMATED CARRYING ESTIMATED
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
$ $ $ $
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
ASSETS:
Cash and cash equivalents........................... $ 99,619 $ 99,619 $544,996 $544,996
Accounts receivable................................. 83,988 83,988 141,226 141,226
Amounts due from ST and affiliates.................. 9,254 9,254 7,946 7,946
LIABILITIES:
Accounts payable.................................... 31,359 31,359 152,401 152,401
Bank overdrafts..................................... 3,082 3,082 -- --
Amounts due to ST and affiliates.................... 10,607 10,607 9,775 9,775
Long-term debt...................................... 468,591 458,031 543,659 538,270
Technology obligations payable...................... 7,200 6,879 12,000 11,287
DERIVATIVES:
Forward foreign exchange............................ 4,199 42,620 6,553 39,148
</TABLE>

Cash and cash equivalents, bank overdrafts, amounts owing from and to 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 approximately
$42,620 and $39,148, respectively, at December 31, 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.

F-30
<PAGE> 124
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES

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

26. RECENT CHANGES IN US 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-31
<PAGE> 125

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 0.4%. The economy's
recovery has been stronger and earlier than expected, as real GDP grew 5.4% in
1999. The Monetary Authority of Singapore has projected GDP growth of 4.5% to
6.5% in 2000.

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 in 1998; 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> 126

In 1975, it took S$2.50 to buy one US$1 and S$5.00 to buy L1 sterling. As
of December 31, 1999, it took S$1.67 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 1999.

<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
GDP at 1990 market prices (S$m)...... 95,209 102,982 110,734 120,713 121,130 N/A
% change from prior year............. 11.4% 8.2% 7.5% 9.0% 0.4% 5.4%
GDP at current prices (S$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% 0.4%
Unemployment (%)..................... 2.0% 2.0% 2.0% 1.8% 3.2% 4.6%
Total demand (%)..................... 15.3% 12.6% 8.8% 7.9% -5.3% 6.6%
Domestic demand (%).................. 4.0% 9.0% 12.1% 10.2% -7.3% 6.5%
External demand (%).................. 20.5% 14.0% 7.6% 7.0% -4.4% 6.7%
</TABLE>

- ---------------
Source: Department of Statistics; Monetary Authority of Singapore.

A-2
<PAGE> 127

ANNEX B

THE SECURITIES MARKET OF SINGAPORE

SINGAPORE EXCHANGE SECURITIES TRADING LIMITED

The Stock Exchange of Singapore Limited, or SES, was incorporated on May
24, 1973. The Government of Singapore demutualized the SES and merged it with
the Singapore International Monetary Exchange effective December 1, 1999,
following which the SES was renamed the Singapore Exchange Securities Trading
Limited, or SGX-ST. The SGX-ST is the only securities exchange in Singapore and
is the leading organized market for debt and equity securities of Singapore
companies. The SGX-ST operates two trading facilities: the Main Board and the
Stock Exchange of Singapore Dealing and Automated Quotation System, or SESDAQ.
Trading on the SGX-ST is effected on a computerized quotation system known as
the Central Limit Order Book, or CLOB, Trading System. The securities of certain
non-Singapore companies listed on foreign stock exchanges are traded through the
SGX-ST on an over-the-counter market known as "CLOB International." 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. Starting March
15, 2000, the SGX-ST settlement period has been shortened to T+3, consistent
with other major international stock markets.

As of June 30, 1999, the SGX-ST 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 SGX-ST '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 SGX-ST.

<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 (SGX-ST Main Board)... 229 248 266 294 307
</TABLE>

- ---------------
(1) SGX-ST 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 SGX-ST-listed company is required under the SGX-ST 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 SGX-ST-listed
company (for example, acquisition of shares resulting in a company becoming a
subsidiary of the SGX-ST-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 SGX-ST-listed company and its subsidiaries); and any
recommendation or declaration of a dividend, the rate amount per share and date
of payment. In

B-1
<PAGE> 128

particular, the SES-listed company is obligated to release to the SGX-ST 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 SGX-ST Listing Manual and, in respect of the
half year financial statements, must include a review of the performance of the
SGX-ST-listed company, setting out any material factors affecting the earnings
or turnover of the SGX-ST-listed company and the group and a commentary on
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 the current year's prospects, including
factors likely to influence the future prospects of the SGX-ST-listed company.

An SGX-ST-listed company is further required to issue an annual report to
its members and the SGX-ST 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
SGX-ST- 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 SGX-ST-listed company and material contracts
involving directors' interests; and (iii) its annual audited accounts.

An SGX-ST-listed company is required to disclose to the SGX-ST 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 SGX-ST must obtain the
approval of the MAS for all changes in the rules governing the SGX-ST 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 SGX-ST Main Board
is the SGX-ST All Share Index. The SGX-ST 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.

B-2
<PAGE> 129

The following table sets forth the high close, low close and year-end
levels of the STII and the SGX-ST All Share Index for each of the periods
indicated.

<TABLE>
<CAPTION>
STII SGX-ST 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
1999............................ 2,479.58 1,286.56 2,479.58 668.79 351.45 668.79
</TABLE>

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

Source: SES Fact Book.

B-3
<PAGE> 130

[Description of inside back cover artwork: The inside back cover will contain a
photograph of a fabrication operator carrying a pod of wafers down an aisle in a
fabrication facility. It will also contain our logo.]
<PAGE> 131

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

175,000,000 ORDINARY SHARES

DIRECTLY OR IN THE FORM OF AMERICAN DEPOSITARY SHARES

CHARTERED SEMICONDUCTOR
MANUFACTURING LTD

CHARTERED LOGO

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

PROSPECTUS

, 2000

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

SALOMON SMITH BARNEY

CREDIT SUISSE FIRST BOSTON

CHASE H&Q

SG COWEN

WIT SOUNDVIEW

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 132

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 fee.

<TABLE>
<CAPTION>
AMOUNT TO
BE PAID
-----------
<S> <C>
SEC registration fee........................................ $ 489,851
NASD filing fee............................................. 30,500
Legal fees and expenses..................................... 210,000
Accounting fees and expenses................................ 100,000
Printing and engraving...................................... 200,000
Blue sky fees and expenses (including legal fees)........... 25,000
Transfer agent fees......................................... 25,000
Miscellaneous............................................... 719,649
-----------
Total..................................................... $ 1,800,000
===========
</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 of our company and our officers
and directors.

We also have directors and officers insurance providing indemnification for
certain of our directors, officers, affiliates and employees for certain
liabilities.

II-1
<PAGE> 133

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 (except for the September 30
and October 14 share issuances and the October 15, 1999 option grants).

<TABLE>
<CAPTION>
NUMBER OF
PURCHASER DATE OF ISSUANCE ORDINARY SHARES CONSIDERATION (S$)
--------- ------------------ --------------- ------------------
<S> <C> <C> <C>
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(3)
Employees............................... August 2, 1999 520,000 910,000(3)
Former 1995 and 1997 Benefit Plan
Participants.......................... September 30, 1999 413,325 916,976(3)
Shareholders............................ October 14, 1999 702(5) 100(3)
</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(4) 5,654,005(3)
Former 1995 and 1997 Benefit Plan
Participants........................... October 15, 1999 11,199,457(4) 13,173,566(3)
</TABLE>

- ---------------
(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 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.

(4) Represents issued but unexercised share options.

(5) Represents shares issued as a result of fractional shares being rounded up
in our capital restructuring effected on October 14, 1999. Of the 702 shares
issued, 319 shares were issued by way of a capitalization from the share
premium account.

II-2
<PAGE> 134

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits.

<TABLE>
<C> <S>
1.1 Form of U.S. Underwriting Agreement
1.2 Form of International Underwriting Agreement
*3 Memorandum and New Articles of Association of the Registrant
*4.1 Specimen certificate for ordinary shares
**4.2 Deposit Agreement dated November 4, 1999 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)
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 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 Deed of Accession and Ratification dated November 9, 1999 by
and among the Registrant, EDB Investments Pte Ltd,
Hewlett-Packard Europe B.V. and Agilent Technologies Europe
B.V. relating to the Joint Venture Agreement dated March 13,
1997, as amended
*10.5 Option Agreement dated July 4, 1997 by and among the
Registrant, Hewlett-Packard Europe B.V. and EDB Investments
Pte Ltd
**10.6 Deed of Accession and Ratification dated November 9, 1999 by
and among the Registrant, EDB Investments Pte Ltd,
Hewlett-Packard Europe B.V. and Agilent Technologies Europe
B.V. relating to the Option Agreement dated July 4, 1997
*10.7 Assured Supply and Demand Agreement dated July 4, 1997 by
and among the Registrant, Chartered Silicon Partners Pte Ltd
and Hewlett-Packard Company
*10.8 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
**10.9 Novation and Amendment Agreement dated November 9, 1999 by
and among Chartered Silicon Partners Pte Ltd, the
Registrant, Hewlett-Packard Company and Agilent
Technologies, Inc. relating to the Assured Supply and Demand
Agreement 64-225 dated July 4, 1997, as amended
*10.10 Joint Venture Agreement dated December 19, 1997 by and
between the Registrant and Lucent Technologies
Microelectronics Pte Ltd
*10.11 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
*10.12 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
*10.13 License and Technology Transfer Agreement dated July 4, 1997
by and among the Registrant, Chartered Silicon Partners Pte
Ltd and Hewlett-Packard Company
**10.14 Novation and Amendment Agreement dated November 9, 1999 by
and among Chartered Silicon Partners Pte Ltd, the
Registrant, Hewlett-Packard Company and Agilent
Technologies, Inc. relating to the License and Technology
Transfer Agreement 64-224 dated July 4, 1997
</TABLE>

II-3
<PAGE> 135

<TABLE>
<C> <S>
*10.15 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
*10.16 Technology Transfer Agreement dated February 17, 1998 by and
between the Registrant and Lucent Technologies Inc.
*10.17 Technology Transfer and License Agreement dated May 20, 1999
by and among the Registrant, Chartered Silicon Partners Pte
Ltd and Motorola, Inc.
***10.18 First Ancillary Agreement to the Technology Transfer and
License Agreement dated January 24, 2000 by and among the
Registrant, Chartered Silicon Partners Pte Ltd and Motorola,
Inc.
*10.19 Patent License Agreement dated January 1, 1998 by and
between the Registrant and Lucent Technologies Inc.
*10.20 Patent License Agreement dated January 1, 1995 by and
between the Registrant and International Business Machines
Corporation
*10.21 Patent Cross License Agreement dated August 12, 1999 by and
between the Registrant and Toshiba Corporation
*10.22 Joint Development Agreement for Process Technologies dated
February 18, 1999 by and between the Registrant and Lucent
Technologies Inc.
**10.23 ST Group Management and Support Services Agreement dated
November 1, 1999 by and between the Registrant and Singapore
Technologies Pte Ltd
*10.24 Loan Agreement dated August 1, 1995 by and between the
Registrant and the Economic Development Board of Singapore
*10.25 Loan Agreement dated April 14, 1997 by and between the
Registrant and the Economic Development Board of Singapore,
as supplemented on May 29, 1997
*10.26 Loan Agreement dated July 21, 1997 by and between the
Registrant and the Economic Development Board of Singapore
*10.27 Loan Agreement dated February 11, 1997 by and between the
Registrant and Post Office Savings Bank of Singapore
*10.28 Loan Agreement dated June 10, 1997 by and between the
Registrant and Post Office Savings Bank of Singapore
*10.29 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
**10.30 Second Supplemental Agreement dated November 9, 1999 by and
among Chartered Silicon Partners Pte Ltd, the banks on the
signature pages thereto, as Lenders, and ABN Amro Bank N.V.
(Singapore Branch), as agent
*10.31 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
**10.32 Second Supplemental Shareholders Undertaking dated November
9, 1999 by and among Chartered Silicon Partners Pte Ltd, as
Borrower, the Registrant, EDB Investments Pte Ltd, Agilent
Technologies Europe B.V., as Shareholders, Hewlett-Packard
Europe B.V., as Retiring Shareholder, and ABN Amro Bank N.F.
(Singapore Branch), as Agent
*10.33 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
*10.34 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
</TABLE>

II-4
<PAGE> 136

<TABLE>
<C> <S>
*10.35 Lease of Lot 2164 Mukim 3-2 Science Park Drive dated January
18, 1995 by and between Technology Parks Private Limited and
the Registrant
*10.36 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
*10.37 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
*10.38 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
*10.39 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
*10.40 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
*10.41 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
*10.42 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
*10.43 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
*10.44 Sub-Lease dated February 17, 1998 by and between the
Registrant and Silicon Manufacturing Partners Pte Ltd
*10.45 Building Agreement relating to Private Lot A12787(d)
Woodlands Industrial Park D, Mukim No. 13 Sembawang dated
September 24, 1999 by and between Jurong Town Corporation
and Singapore Technologies Pte Ltd
*10.46 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
+10.47 Turnkey Subcontract Agreement for Sort, Assembly and/or
Final Test Services dated March 21, 2000 by and between the
Registrant and ST Assembly Test Services 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 as part of signature page)
</TABLE>

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

+ Previously filed.

* Filed as an exhibit to the Company's Registration Statement on Form F-1
(Registration No. 333-88397), which exhibit is incorporated herein by
reference.

** Filed as an exhibit to the Company's Current Report on Form 6-K (File No.
000-27811), which exhibit is incorporated herein by reference.

*** Filed as an exhibit to the Company's Annual Report on Form 20-F, as filed
with the Securities and Exchange commission on March 20, 2000, which exhibit
is incorporated herein by reference.

(b) Financial Statement Schedules.

None.

II-5
<PAGE> 137

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 the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.

II-6
<PAGE> 138

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 1st day of May, 2000.

CHARTERED SEMICONDUCTOR
MANUFACTURING LTD

By: /s/ CHIA SONG HWEE
------------------------------------
Name: Chia Song Hwee
Title: Senior Vice President and
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
--------- ----- ----
<C> <C> <S>
* Chairman of the Board May 1, 2000
- -----------------------------------------------------
Ho Ching

* Deputy Chairman of the Board May 1, 2000
- -----------------------------------------------------
Lim Ming Seong

* President and Chief Executive May 1, 2000
- ----------------------------------------------------- Officer (principal executive
Barry Waite officer)

/s/ CHIA SONG HWEE Senior Vice President and Chief May 1, 2000
- ----------------------------------------------------- Financial Officer (principal
Chia Song Hwee financial and accounting officer)

* Director May 1, 2000
- -----------------------------------------------------
Sum Soon Lim

* Director May 1, 2000
- -----------------------------------------------------
James H. Van Tassel

* Director May 1, 2000
- -----------------------------------------------------
Aubrey C. Tobey

* Director May 1, 2000
- -----------------------------------------------------
Robert Edmund La Blanc

* Director May 1, 2000
- -----------------------------------------------------
Andre Borrel

* Director May 1, 2000
- -----------------------------------------------------
Charles E. Thompson
</TABLE>

II-7
<PAGE> 139

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <C> <S>
* Director May 1, 2000
- -----------------------------------------------------
Koh Beng Seng

* Director May 1, 2000
- -----------------------------------------------------
Tsugio Makimoto

* Authorized Representative in the May 1, 2000
- ----------------------------------------------------- United States
Larry James
</TABLE>

*By: /s/ CHIA SONG HWEE

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

Chia Song Hwee

Attorney-in-Fact

II-8

<PAGE> 1
EXHIBIT 1.1

Chartered Semiconductor Manufacturing Ltd

105,000,000 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

U.S. Underwriting Agreement

New York, New York
May __, 2000

Salomon Smith Barney Inc.
Credit Suisse First Boston Corporation
Chase Securities Inc.
SG Cowen Securities Corporation
Wit SoundView Corporation
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,
46,800,000 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") and each of the Selling Shareholders named in Schedule II hereto
proposes to sell to the several U.S. Underwriters the number of Ordinary Shares
directly or in the form of ADSs set forth opposite its name on Schedule II
aggregating 58,200,000 Ordinary Shares (said Ordinary Shares to be issued and
sold by the Company and the Selling Shareholders being hereinafter called the
"U.S. Underwritten Shares"). The Company and Singapore Technologies
Semiconductors Pte Ltd ("STS") also propose to grant to the U.S. Underwriters an
option to purchase up to 7,020,000 and 8,730,000, respectively, 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").

- --------

* Plus an option to purchase from Chartered Semiconductor Manufacturing
Ltd and Singapore Technologies Semiconductors Pte Ltd up to 7,020,000
and 8,730,000, respectively, additional Ordinary Shares directly or in
the form of American Depositary Shares to cover overallotments.

<PAGE> 2

It is understood that the Company and the Selling Shareholders
are concurrently entering into the International Underwriting Agreement, dated
May ___, 2000 (together with this U.S. Underwriting Agreement, the
"Underwriting Agreements"), providing for the sale by the Company and the
Selling Shareholders of an aggregate of 70,000,000 Ordinary Shares directly or
in the form of ADSs (said Ordinary Shares to be sold by the Company and the
Selling Shareholders 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 and STS up to 4,680,000 and 5,820,000, respectively, 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").

In connection with the Global Offering (as defined below), the
Company has made a listing application to the Singapore Exchange Securities
Trading Limited (the "SGX-ST") and has lodged a Statement of Material Facts (the
"Statement") with the Singapore Registrar of Companies and Businesses ("RCB") to
invoke the exemption from the prospectus registration requirements under Section
106F of the Companies Act, Chapter 50 of Singapore.

You have also advised the Company and the Selling Shareholders
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 November
4, 1999 (the "Deposit Agreement"), 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 Ordinary 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.

Prior to the Closing Date (as defined below), the Ordinary Shares
to be issued and sold by the Company will be delivered into escrow to be held by
Citibank Nominees Singapore Pte Ltd, as escrow agent (the "Escrow Agent"),
pursuant to an escrow agreement (the "Issuer Escrow Agreement") to be entered
into between the Company, the Escrow Agent and the Underwriters. Prior to the
Closing Date, the Ordinary Shares to be sold by each Selling Shareholder will be
delivered into escrow to be held by the Escrow Agent pursuant to an escrow
agreement (each, a "Selling Shareholder Escrow Agreement") to be entered into
between a Selling Shareholder, the custodian for such Selling Shareholder, the
Escrow Agent and the Underwriters.

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" 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 and
Shares, as well as, in each case, to any ADSs representing such securities.

<PAGE> 3
It is further understood and agreed that the U.S. Underwriters
and the International Underwriters have entered into an Agreement Among U.S.
Underwriters and International Underwriters, dated the date hereof (the
"Agreement Among U.S. Underwriters and International Underwriters"), pursuant to
which, among other things, the International 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 and the U.S. Underwriters may purchase from the
International Underwriters a portion of the International Securities to be sold
pursuant to the International 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"; and the offering of the
International Shares, directly or in the form of ADSs, is referred to herein as
the "International Offering". The U.S. Offering and International Offering are
referred to collectively as the "Global Offering".

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. In addition, to the extent that there is not more than
one Selling Shareholder named in Schedule II, the term Selling Shareholders
shall mean the singular. 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. (I) The Company and, except as
to paragraphs (i), (n) (other than clause (i) thereof), (q), (r), (s), (t)
(other than clause (i) thereof), (v), (w), (x), (y), (z), (aa), (bb), (cc),
(dd), (ff), (gg) and (hh) below, STS jointly and severally represent and warrant
to, and agree with, each U.S. Underwriter as set forth below in this Section 1.

(a) The Company has filed with the Commission a registration
statement (file number 333-34194) 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 have 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

<PAGE> 4
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 offering documents are to be
used in connection with the Global 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
offering memorandum 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 Offering Memorandum
are identical except for the outside front cover page and the outside
back cover page.

(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 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 and STS
make 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, ninth,
thirteenth and fifteenth paragraphs under the heading "Underwriting" in
the Preliminary Prospectuses or Prospectuses.

(c) The Company has filed with the Commission registration
statements (file numbers 333-88623 and 333-34692) on Form F-6
(collectively, the "ADR Registration

<PAGE> 5
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 Agilent Technologies Europe BV 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 Ordinary Shares being sold under the
Underwriting Agreements have been duly and validly authorized, and, when
issued and delivered to the Depositary or its nominee in accordance with
the Deposit Agreement, to the U.S. Underwriters in accordance with this
U.S. Underwriting Agreement and to 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 that are in certificated form 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
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 being sold by the Company are freely
transferable by the Company to or for the account of the several
Underwriters, their designees and the initial purchasers thereof. 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.

<PAGE> 6
(g) The capital stock of the Company conforms in all material
respects to the description thereof contained in the Prospectuses. The
Articles of Association described in the Prospectuses under the heading
"Description of Ordinary Shares" are in full force and effect.

(h) Each of this U.S. Underwriting Agreement, the International
Underwriting Agreement, the Deposit Agreement and the Issuer Escrow
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 issuance by the Depositary of the ADRs evidencing the
ADSs against deposit in accordance with the provisions of the Deposit
Agreement of the underlying Ordinary Shares being sold by the Company
under the Underwriting Agreements, such ADSs will be duly and validly
issued and persons in whose names such ADSs are duly registered will be
entitled to the rights specified in the ADSs and in the Deposit
Agreement. Assuming that an Underwriter acquires its interest in such
ADSs without notice of an adverse claim (within the meaning of Section
8-105 of the UCC), such Underwriter that has purchased such ADSs
delivered to The Depository Trust Company by making payment therefor as
provided herein, and that has had such ADSs credited to the securities
account or accounts of such Underwriter maintained with The Depository
Trust Company or such other securities intermediary will have acquired a
security entitlement (within the meaning of Section 8-102(a)(17) of the
New York Uniform Commercial Code (the "UCC")) to such ADSs purchased by
such Underwriter, and no action based on any such adverse claim (within
the meaning of Section 8-102(a)(1) of the UCC) may be asserted against
such Underwriter with respect to such ADSs.

(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 Ordinary Shares or the ADSs being sold by the Company
under the Underwriting Agreements in the manner contemplated by the
Underwriting Agreements, (C) the deposit with the Depositary of the
underlying Ordinary Shares being sold by the Company under the
Underwriting Agreements against issuance of ADRs evidencing the ADSs,
(D) the sale and delivery of the Ordinary Shares and the ADSs by the
Company to

<PAGE> 7
the Underwriters in accordance with the Underwriting Agreements, 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 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 consummation by the Company of the transactions
contemplated in this U.S. Underwriting Agreement, the International
Underwriting Agreement, the Deposit Agreement and the Issuer Escrow
Agreement, except (A) such as have been obtained under the Act, the
Exchange Act, the Companies Act, Chapter 50 of Singapore, (B) 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 and (C) such as may be required pursuant
to the National Association of Securities Dealers, Inc. rules, The
Nasdaq Stock Market, Inc. rules, the letter from the SGX-ST dated
September 15, 1999 granting approval in principle for the listing and
quotation of the entire issued share capital of the Company on the Main
Board of the SGX-ST, or the letter from the SGX-ST dated March 29, 2000
regarding the listing of the new Shares, which such approvals have been
obtained.

(n) None of the issue and sale of the Securities, the
consummation of any other of the transactions contemplated in this U.S.
Underwriting Agreement, the International Underwriting Agreement, the
Deposit Agreement or the Issuer Escrow Agreement, or 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 U.S. Underwriting Agreement or the
consummation of any of the transactions contemplated herein or (B) the
condition (financial or otherwise),

<PAGE> 8
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.

(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.

<PAGE> 9
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 ("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) Except as described in the Prospectuses, for the periods
described in the Prospectuses, the Company has no material capital
commitments.

<PAGE> 10
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).

(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, Agilent
Technologies Europe BV 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 infringement by third parties of any such
Intellectual Property; (c) there is no pending or threatened action,
suit, proceeding or claim by others challenging the

<PAGE> 11
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 has addressed the Year 2000
Problem with respect to the material operations of the Company and that
the Year 2000 Problem 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 U.S. Underwriting Agreement.

<PAGE> 12
(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 and the Subsidiaries are (i) in compliance with
any and all Singapore 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).

(hh) 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 "multi-employer plan" within the meaning of Section 4001(a)(3) of
ERISA) and each such plan (other than any "multi-employer 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 properties of the Company and the Subsidiaries, taken as a
whole.

<PAGE> 13
(ii) The Subsidiaries are the only significant subsidiaries of
the Company as defined by Rule 1.02 of Regulation S-X.

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.

(II) Each Selling Shareholder (other than STS with respect to
paragraphs (d) and (f) to the extent they relate to the Custody
Agreement), severally and not jointly, represents and warrants to, and
agrees with, each U.S. Underwriter and the Company as follows:

(a) Such Selling Shareholder is the lawful owner of the Ordinary
Shares to be sold by such Selling Shareholder pursuant to this
Underwriting Agreement free and clear of all liens, encumbrances,
equities and claims whatsoever.

(b) In the case of an Underwriter entitled to receive Ordinary
Shares, the Selling Shareholder has executed (in blank or otherwise)
share transfer forms relating to such Ordinary Shares and, assuming that
such Underwriter purchases such Ordinary Shares without notice of any
adverse claim (within the meaning of Section 8-105 of the UCC), upon
sale and delivery of, and payment for, such Ordinary Shares, as provided
herein [and in the Selling Shareholder Escrow Agreement], each
Underwriter will own such Ordinary Shares free and clear of all liens,
encumbrances, equities and claims whatsoever.

(c) In the case of an Underwriter entitled to receive ADRs
evidencing ADSs, upon issuance by the Depositary of ADRs evidencing the
ADSs against deposit in accordance with the provisions of the Deposit
Agreement of the underlying Ordinary Shares being sold by such Selling
Shareholder under the Underwriting Agreements, such ADSs will be duly
and validly issued and persons in whose names such ADSs are duly
registered will be entitled to the rights specified in the ADSs and in
the Deposit Agreement. Assuming that an Underwriter acquires its
interest in such ADSs without notice of an adverse claim (within the
meaning of Section 8-105 of the UCC), such Underwriter that has
purchased such ADSs delivered to The Depository Trust Company by making
payment therefor as provided herein, and that has had such ADSs credited
to the securities account or accounts of such Underwriter maintained
with The Depository Trust Company or such other securities intermediary
will have acquired a security entitlement (within the meaning of Section
8-102(a)(17) of the UCC) to such ADSs purchased by such Underwriter, and
no action based on any such adverse claim (within the meaning of Section
8-102(a)(1) of the UCC) may be asserted against such Underwriter with
respect to such ADSs.

<PAGE> 14
by such Selling Shareholder, in the form heretofore furnished to you
(the "Custody Agreement") with Salomon Smith Barney Inc. as the
Custodian (the "Custodian"); the Ordinary Shares so held in custody for
each Selling Shareholder are subject to the interests under this
Underwriting Agreement of the Underwriters; the arrangements for custody
and delivery of such Ordinary Shares made by such Selling Shareholder
under this Underwriting Agreement and under the Custody Agreement and
the Selling Shareholder Escrow Agreement are not subject to termination
by any acts of such Selling Shareholder, or by operation of law, whether
by the death or incapacity of such Selling Shareholder or the occurrence
of any other event; and if any such death, incapacity or any other such
event shall occur before the delivery of the Securities under this
Underwriting Agreement, Ordinary Shares will be delivered by the
Custodian and Escrow Agent in accordance with the terms and conditions
of this Underwriting Agreement, the Custody Agreement and the Selling
Shareholder Escrow Agreement as if such death, incapacity or other event
had not occurred, regardless of whether or not the Custodian and Escrow
Agent shall have received notice of such death, incapacity or other
event.

(e) Each of this U.S. Underwriting Agreement and the
International Underwriting Agreement has been duly authorized, executed
and delivered by such Selling Shareholder. No consent, approval
(including exchange control approval), authorization, filing with or
order of any court or governmental agency or body is required under
Singapore or U.S. federal law or the laws of any state or political
subdivision thereof for the consummation by such Selling Shareholder of
the transactions contemplated in this Underwriting Agreement, except
such as may have been obtained under the Act, the Exchange Act, the
Companies Act, Chapter 50 of Singapore, such as may be required under
the blue sky laws of any jurisdiction and the securities laws of any
jurisdiction outside the United States in connection with the purchase
and distribution of the Securities by the Underwriters in the manner
contemplated in the Underwriting Agreements and the Prospectuses and
such as may be required pursuant to the National Association of
Securities Dealers, Inc. rules or The Nasdaq Stock Market, Inc. rules,
which such approvals have been obtained.

(f) None of the execution and delivery of this Underwriting
Agreement, the Custody Agreement and the Selling Shareholder Escrow
Agreement, the deposit of the Underwritten Securities being sold by such
Selling Shareholder with the Depositary in accordance with the terms of
the Deposit Agreement, the Custody Agreement and the Selling Shareholder
Escrow Agreement, the sale of the Securities being sold by the Selling
Shareholder, the consummation of any other of the transactions
contemplated in this Underwriting Agreement by such Selling Shareholder
or the fulfillment of the terms hereof by such Selling Shareholder will
conflict with, result in a breach or violation of, or constitute a
default under (i) the charter or by-laws of such Selling Shareholder,
(ii) the terms of any indenture or other agreement or instrument to
which such Selling Shareholder or any of its subsidiaries is a party or
bound, or (iii) any statute, law, rule, regulation, judgment, order or
decree applicable to such Selling Shareholder or any of its subsidiaries
of any court, regulatory body, administrative agency, governmental body
or arbitrator having jurisdiction over such Selling Shareholder or any
of its subsidiaries except, with respect to clause (ii) or (iii) above,
such as would not individually or in the

<PAGE> 15
aggregate, have a material adverse effect on the performance of this
Underwriting Agreement or the consummation of any of the transactions
contemplated herein.

(g) 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 the case of STS)
or the government in which the Selling Shareholder is domiciled or any
political subdivision or taxing authority thereof (in the case of other
Selling Shareholders) in connection with (A) the issuance of the ADSs
being sold by such Selling Shareholder under the Underwriting Agreements
in the manner contemplated by this Underwriting Agreement, (B) the
deposit with the Depositary of the Underwritten Securities being sold by
such Selling Shareholder under the Underwriting Agreements against
issuance of ADRs evidencing the ADSs, (C) the sale and delivery of the
Ordinary Shares and the ADSs being sold by the Selling Shareholder in
accordance with the Underwriting Agreements, or (D) the resale and
delivery by the Underwriters of the Ordinary Shares or the ADSs being
sold by such Selling Shareholder to the Underwriters in the manner
contemplated in the Prospectuses.

(h) Such Selling Shareholder 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.

(i) The sale of the Securities by such Selling Shareholder
pursuant hereto is not prompted by any information concerning the
Company or any of its subsidiaries which is not set forth in the
Prospectuses or any supplement thereto.

(j) In respect of any statements in or omissions from the
Registration Statement and the ADR Registration Statement or the
Prospectuses or any supplements thereto made in reliance upon and in
conformity with information furnished in writing to the Company by such
Selling Shareholder specifically for use in connection with the
preparation thereof, such Selling Shareholder hereby makes the same
representations and warranties to each Underwriter and the Company as
the Company makes to such Underwriter under paragraph (I)(b) of this
Section. The Company and each Underwriter acknowledge that the
information set forth under the heading "Principal and Selling
Shareholders" constitutes the only information so furnished.

Any certificate signed by any officer of any Selling Shareholder
and delivered to the Representatives or counsel for the Underwriters in
connection with the offering of the Securities shall be deemed a representation
and warranty by such Selling Shareholder, as to matters covered thereby, to each
U.S. Underwriter.

<PAGE> 16
2. Purchase and Sale.

(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 and each Selling Shareholder agrees, severally
and not jointly, to sell to each U.S. Underwriter, and each U.S.
Underwriter agrees, severally and not jointly, to purchase from the
Company and the Selling Shareholders, at a purchase price of US$________
per ADS and S$________ per Ordinary Share, 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 and STS hereby grant an option to the several
U.S. Underwriters to purchase, severally and not jointly, up to
7,020,000 and 8,730,000, respectively, 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 proportionally from the Company and STS 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 and STS 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 third
Business Day prior to the Closing Date) shall be made at 9:00 AM, New York City
time, on May __, 2000 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, the
Selling Shareholders 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 and the Selling Shareholders to or upon the
order of the Company and the Selling Shareholders by wire transfer payable in
same day funds to the accounts specified by the Company and the Selling
Shareholders. 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

<PAGE> 17
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 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 that the settlement date for any U.S. Option Securities occurring
after the Closing Date shall occur simultaneously with the settlement date for
any International Option Securities occurring after the Closing Date under the
International Underwriting Agreement.

If the option provided for in Section 2(b) hereof is exercised
after the third Business Day prior to the Closing Date, the Company and STS will
deliver (at their expense) to the U.S. Representatives, c/o Salomon Smith Barney
Inc. at 388 Greenwich Street, New York, New York 10013, on the date specified by
the U.S. Representatives (which shall be within three 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 and STS respectively, by wire transfer of U.S.
dollars and payable in same day funds to the accounts specified by the Company
and STS, respectively. If settlement for the U.S. Option Securities occurs after
the Closing Date, the Company and STS 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:

(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

<PAGE> 18
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 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 (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.

<PAGE> 19
(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
Inc., 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 90 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) Each of the Company and the Selling Shareholders (in
proportion to the number of Securities being offered by each of them,
including any Option Securities which the Underwriters shall have
elected to purchase), agrees, severally and not jointly, 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 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

<PAGE> 20
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 SGX-ST
and The Nasdaq National Market, Inc., respectively (such SGX-ST listing
fees to be paid only by the Company, however); (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 each of the Company and the Selling Shareholders 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 and the U.S.
Underwriters pursuant to the Agreement Among U.S. Underwriters and
International Underwriters, (B) stabilization transactions contemplated
under the Agreement Among U.S. Underwriters and International
Underwriters, conducted through Salomon Smith Barney (or through the
U.S. Representatives and International 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.

(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, paragraph (I)(i) of Section
5 of the International Underwriting Agreement and Section 2(f) of the
Agreement Among U.S. Underwriters and International Underwriters; 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 and the International 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 and the U.S. Representatives that the distribution of the
International

<PAGE> 21
Securities by the International Underwriters has not yet been completed.
If such notice by the U.S. Representatives or the International
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.

(III) Each Selling Shareholder agrees with the several
Underwriters and the Company that:

(a) Except pursuant to the Underwriting Agreements, such Selling
Shareholder will not, without the prior written consent of Salomon Smith
Barney Inc., 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 Selling Shareholder) directly or indirectly, or file
(or participate 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 with respect to, 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 90 days after
the date of this U.S. Underwriting Agreement, other than Ordinary Shares
or ADSs disposed of as bona fide gifts approved by Salomon Smith Barney
Inc.

(b) Such Selling Shareholder will not take 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.

(c) Such Selling Shareholder will advise you promptly, and if
requested by you, will confirm such advice in writing, so long as
delivery of a prospectus relating to the Securities by an underwriter or
dealer may be required under the Act, of (i) any material change in the
Company's condition (financial or otherwise), prospects, earnings,
business or properties which comes to the attention of such Selling
Shareholder, (ii) any change in information in the Registration
Statement, the ADR Registration Statement or the Prospectuses relating
to such Selling Shareholder or (iii) any new material information
relating to the Company or relating to any matter stated in the
Prospectuses which comes to the attention of such Selling Shareholder.

(d) Such Selling Shareholder will comply with the agreement
contained in Section 5(I)(h).

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
and each of the Selling Shareholders contained in this U.S. Underwriting
Agreement as of the Execution Time, the Closing Date and any settlement

<PAGE> 22
date pursuant to Section 3 hereof, to the accuracy of the statements of the
Company and each of the Selling Shareholders made in any certificates pursuant
to the provisions hereof, to the performance by the Company and each of the
Selling Shareholders of their respective 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
Statement shall have been issued and no proceedings for that purpose
shall have been instituted or threatened.

(b) The Company and STS shall have requested and caused Allen &
Gledhill, Singapore counsel for the Company and STS, 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 the federal laws of the United
States and the laws of the State of New York, 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 and STS shall have furnished to the
Representatives the opinion of Latham & Watkins, United States counsel
for the Company and STS, 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, STS and public officials. References to the
Prospectuses in this paragraph (c) include any supplements thereto at
the Closing Date.

(d) Each of the Selling Shareholders (other than STS) shall have
requested and caused its counsel, which counsel shall be reasonably
satisfactory to counsel for the Underwriters, to have furnished to the
Representatives their opinion dated the Closing Date and addressed to
the Representatives to the effect set forth in Appendix C.

<PAGE> 23
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other than
the jurisdiction of incorporation of such Selling Shareholder, the State
of New York or the Federal laws of the United States, to the extent they
deem proper and specified in such opinion, upon the opinion of other
counsel of good standing whom they believe to be reliable and who are
satisfactory to counsel for the U.S. Underwriters and the International
Underwriters, and (B) as to matters of fact, to the extent they deem
proper, on certificates of responsible officers of the Selling
Shareholders and public officials.

(e) 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 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.

<PAGE> 24
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 and each Selling Shareholder shall have furnished to such
counsel such documents as they request for the purpose of enabling them
to pass upon such matters.

(g) 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).

(h) Each Selling Shareholder shall have furnished to the
Representatives a certificate, signed by the Chairman of the Board or
the President and the principal financial or accounting officer of such
Selling Shareholder, dated the Closing Date, to the effect that (1) in
the case of STS, the signers of such certificate have carefully examined
the Registration Statement, the ADR Registration Statement, the
Prospectuses, any supplement to either of the Prospectuses and this U.S.
Underwriting Agreement and the International Underwriting Agreement and
(2) in the case of each Selling Shareholder, the representations and
warranties of such Selling Shareholder in this U.S. Underwriting
Agreement and the International Underwriting Agreement are true and
correct in all material respects on and as of the Closing Date to the
same effect as if made on the Closing Date.

(i) 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, confirming that they are independent

<PAGE> 25
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
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
condensed consolidated financial statements made available by
the Company and Chartered Semiconductor Manufacturing Inc.;
their limited review, in accordance with United States generally
accepted auditing standards under Statement on Auditing
Standards No. 71 of the three-month period ended March 31, 2000,
and as at March 31, 2000; 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 inquiries of
certain officials of the Company who have responsibility for
financial and accounting matters of the Company and Chartered
Semiconductor Manufacturing Inc. as to transactions and events
subsequent to March 31, 2000, such Company officials advising
that no consolidated financial statements are available as of
any date or for any period subsequent to March 31, 2000, nothing
came to their attention which caused them to believe that:

(1) the unaudited condensed consolidated 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;
or

(2) with respect to the period subsequent to March 31, 2000,
there were any material changes, at a specified date not
more than five Business Days prior to the date of the
letter, in the share capital of the Company (except as
disclosed in the Registration Statement), any material
increase in long-term debt (excluding current installments)
or in total current liabilities, or any material decrease in
shareholders' equity of the consolidated companies as
compared with the amounts shown on the March 31, 2000
unaudited condensed consolidated balance sheet, or for the
period from April 1, 2000 to May ___, 2000 there was any
decrease, as compared with the corresponding period in the
preceding year, in consolidated net revenue of the Company,
except in all instances for changes, increases 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; and

(iii) they have performed certain other specified procedures
as a result of which they determined that certain information of
an accounting, financial or

<PAGE> 26
statistical nature derived from the general accounting records
of the Company and Chartered Semiconductor Manufacturing Inc.
set forth in the Registration Statement and the Prospectuses,
including the information set forth under the captions
"Summary," "Risk Factors," "Use of Proceeds," "Dividend Policy,"
"Capitalization," "Dilution," "Selected Financial Data,"
"Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Business," "Management," "Principal and
Selling Shareholders," "Relationship with Singapore
Technologies", "Description of Ordinary Shares," and "Shares
Eligible for Future Sale" agrees with or is recomputed from the
accounting records of the Company and the Subsidiaries,
excluding any questions of legal interpretation.

References to the Prospectuses in this paragraph (i) include any
supplement thereto at the date of the letter.

(j) 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 (i)
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).

(k) At the Execution Time, the Company shall have furnished to
the Representatives a letter substantially in the form of Exhibit A
hereto from each shareholder of the Company listed in Schedule III
hereto.

(l) The Deposit Agreement shall be in full force and effect, and
shall not have been amended except as approved by the Representatives.

(m) 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.

(n) The closing of the purchase of the International
Underwritten Securities to be issued and sold by the Company and the
Selling Shareholders pursuant to the

<PAGE> 27
International Underwriting Agreement 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.

(o) The Ordinary Shares shall have been listed and admitted and
authorized for trading on the SGX-ST, 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.

(p) Prior to the Closing Date, the Company and the Selling
Shareholders 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 and each Selling Shareholder 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 39th Floor, Bank of China Tower, One Garden Road, Central, Hong
Kong, on the Closing Date.

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 and the Selling
Shareholders (in proportion to the number of securities offered by each of
them), severally but not jointly, 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. and a selling commission of ____ per cent. in respect of the U.S.
Underwritten Shares or the U.S. Option Shares, as the case may be. The amounts
payable by the Selling Shareholders to the U.S. Underwriters pursuant to this
Section 7 shall be deducted from the amounts payable by the U.S. Underwriters to
the Selling Shareholders pursuant to Section 2.

8. Reimbursement of Underwriters' Expenses.1 The Company and each
Selling Shareholder have agreed, severally but not jointly (in proportion to the
number of securities being offered by each of them, including any Option
Securities which the Underwriters shall have elected to purchase), to reimburse
the Underwriters through Salomon Smith Barney on demand for out-of-pocket
expenses (including reasonable fees and disbursements of counsel)

- -------------
1 To be revised regarding expense reimbursement mechanics.

<PAGE> 28
that shall have been incurred by them in connection with the proposed purchase
and sale of the Securities, up to an aggregate maximum of $________. The amounts
payable by the Selling Shareholders to the U.S. Underwriters pursuant to this
Section 8 shall be deducted from the amounts payable by the U.S. Underwriters to
the Selling Shareholders pursuant to Section 2. The U.S. Underwriters may also
deduct from the amounts payable by the U.S. Underwriters to the Selling
Shareholders pursuant to Section 2 an amount to be held by the U.S. Underwriters
as a reserve for expenses that have not been calculated at the time of closing;
provided, however, that (1) the amount of this reserve may not exceed $________
in total for all Selling Shareholders in the Global Offering, (2) all deductions
shall be made in proportion to the number of securities being offered by each of
the Selling Shareholders, including any Option Securities which the U.S.
Underwriters shall have elected to purchase, and (3) the U.S. Underwriters shall
pay to the Selling Shareholders within ____ days after the Closing Date the
balance of this reserve, if any, that has not been applied against such
expenses. 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 or any Selling
Shareholders 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 and each Selling Shareholder
will, severally but not jointly (in proportion to the number of securities being
offered by each of them, including any Option Securities which the Underwriters
shall have elected to purchase), reimburse the Underwriters 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 $________. If the Company makes any payments to the
Underwriters under this Section 8 because of any Selling Shareholder's refusal,
inability or failure to satisfy any condition to the obligations of the
Underwriters set forth in Section 6, the Selling Shareholders shall each
reimburse the Company on demand for all amounts so paid, pro rata in proportion
to the percentage of Securities to be sold by them.

9. Indemnification and Contribution.

(a) The Company (to the extent permitted by applicable law) and
STS jointly and severally agree 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 or in any
amendment thereof, or in any 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

<PAGE> 29
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 and STS 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 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 or STS 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 describing any such loss,
claim, damage or liability purchased the Securities, or any person
controlling such U.S. Underwriter, to the extent that any such loss,
claim, damage or liability of each U.S. Underwriter (or any person
controlling 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) 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 and STS, 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 and STS acknowledge that (A)
the names of the Underwriters contained in any Preliminary Prospectus or
either of 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 Preliminary Prospectus or either of the
Prospectuses, (B) the statements set forth in the last paragraph on the
front cover page of any Preliminary Prospectus or either of the
Prospectuses regarding delivery of the Securities (and the ADSs
representing such Securities) and (C) the statements set forth in the
seventh, ninth, thirteenth and fifteenth paragraphs under the heading
"Underwriting" in any Preliminary Prospectus or either of the
Prospectuses constitute the only information furnished in writing by or
on behalf of the several U.S. Underwriters for inclusion in any
Preliminary Prospectus or either of the Prospectuses.

(c) 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

<PAGE> 30
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) or (b) 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) or
(b) 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. 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 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.

<PAGE> 31
investigating or defending same) (collectively "Losses") to which the
Company, STS 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, by STS 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 (to the
extent permitted by applicable law), STS 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, of STS 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 and by STS shall be
deemed to be equal to the total net proceeds from the offering (before
deducting expenses) received by each of them, 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, by STS or
by 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, STS 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 (d), 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 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 (d).

(e) The liability of each Selling Shareholder under its
representations and warranties contained in Section 1 hereof (and of STS
under the indemnity and contribution agreements contained in this
Section 9) shall be limited to an amount equal to the offering price of
the U.S. Securities sold by such Selling Shareholder to the U.S.
Underwriters net of underwriting and selling commissions paid by such
Selling Shareholder under this Agreement. The Company and the Selling
Shareholders may agree, as among themselves and without limiting the
rights of the U.S. Underwriters under this U.S. Underwriting Agreement,
as to the respective amounts of such liability for which they each shall
be responsible.

<PAGE> 32
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, the Selling Shareholders 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, the Selling Shareholders 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 SGX-ST, trading
in securities generally on the New York Stock Exchange, The Nasdaq National
Market, Inc. or the SGX-ST 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).

12. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers, of each Selling Shareholder 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, any Selling Shareholders or the Company or any of the
officers, directors or controlling persons referred to in Section 9 hereof, and
will survive delivery of and

<PAGE> 33
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 the Legal Department (fax no.: (65)
3622-909) and confirmed to it at 60 Woodlands Industrial Park D, Street 2,
Singapore 738406, Attention: Legal Department; or if sent to any Selling
Shareholder, will be mailed, delivered or telefaxed and confirmed to it at the
address set forth in Schedule II hereto.

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, directors, employees, agents 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. Each of the Company and STS 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. Each of the Company and STS has appointed Chartered
Semiconductor Manufacturing, Inc., at 1450 McCandless Drive, Milpitas,
California 94035 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 Court 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. Each of the Company and STS consents to process being served in any
action or proceeding by mailing a copy thereof by registered or certified mail
to the Authorized Agent. Each of the Company and STS 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 and STS. 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.

<PAGE> 34
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 each of the Company and the Selling
Shareholders 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 or the Selling Shareholder
making such payment 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 or the
Selling Shareholders. Any obligation of the Company or the Selling Shareholders
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 or the
Selling Shareholders 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,
each of the Company and each of the Selling Shareholders 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.

<PAGE> 35
"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.

"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 Offering Memorandum" shall mean such form of
offering memorandum relating to the International Securities.

"International Preliminary Offering Memorandum" shall mean any
preliminary offering memorandum with respect to the offering of 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 relating to
the sale of the International Securities by the Company and the Selling
Shareholders 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.

<PAGE> 36
"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 Offering Memorandum.

"Prospectuses" and "each Prospectus" shall mean the U.S.
Prospectus and the International Offering Memorandum.

"RCB" shall mean the Singapore Registrar of Companies and
Businesses.

"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.

"Selling Shareholders" shall mean the persons named on Schedule
II to the U.S. Underwriting Agreement and the International Underwriting
Agreement.

"Shares" shall mean the U.S. Shares and the International
Shares.

"Statement" shall mean the Statement of Material Facts filed
with the RCB.

"STS" shall mean Singapore Technologies Semiconductors Pte Ltd.

"Subsidiary" shall mean each of Chartered Semiconductor
Manufacturing Inc. and Chartered Silicon Partners Pte Ltd.

<PAGE> 37
"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
and the International 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 and the Selling
Shareholders 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

<PAGE> 38
acceptance shall represent a binding agreement among the Company and the several
U.S. Underwriters.

Very truly yours,

Chartered Semiconductor Manufacturing
Ltd

By:
-------------------------------
Name:
Title:

Singapore Technologies Semiconductors Pte 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.

<PAGE> 39
ANNEX A

List of Subsidiaries

Chartered Semiconductor Manufacturing, Inc.

Chartered Silicon Partners Pte Ltd

<PAGE> 40
SCHEDULE I

<TABLE>
<CAPTION>
Number of
U.S. Underwriter U.S. Underwritten Shares
- ---------------- ------------------------
<S> <C>
Salomon Smith Barney Inc. ..........................
Credit Suisse First Boston Corporation..............
Chase Securities Inc. ..............................
SG Cowen Securities Corporation.....................
Wit SoundView Corporation...........................

Total............................................... 105,000,000
-----------
</TABLE>

<PAGE> 41
SCHEDULE II

<TABLE>
<CAPTION>
Number of
Selling Shareholder U.S. Underwritten Shares
- ------------------- ------------------------
<S> <C>
Singapore Technologies Semiconductors Pte Ltd........... 58,200,000
51 Cuppage Road #09-01
Singapore 229469
</TABLE>

<PAGE> 42
SCHEDULE III

List of Signatories to Letter Attached as Exhibit A

1. Singapore Technologies Pte Ltd

<PAGE> 43
EXHIBIT A

Chartered Semiconductor Manufacturing Ltd
Public Offering of Ordinary Shares

May , 2000

Salomon Smith Barney Inc.
Salomon Brothers International Limited
Credit Suisse First Boston Corporation
Credit Suisse First Boston (Singapore) Limited
Chase Securities Inc.
Overseas Union Bank Limited
SG Cowen Securities Corporation
SG Securities (Singapore) Pte. Ltd.
Vickers Ballas & Company Pte Ltd
Wit SoundView Corporation
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"), the
Selling Shareholders named therein (the "Selling Shareholders"), 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 90 days following the
date of the Underwriting Agreements, other than 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.

<PAGE> 44
Yours very truly,

[Signature]

[Name and address]

<PAGE> 45
APPENDIX A

[LEGAL OPINION OF ALLEN & GLEDHILL]

A-1

<PAGE> 46
APPENDIX B

[LEGAL OPINION OF LATHAM & WATKINS]

B-1

<PAGE> 47
APPENDIX C

[LEGAL OPINION OF COUNSEL TO SELLING SHAREHOLDERS]

(i) The Underwriting Agreements, the Power-of-Attorney, the
Custody Agreement and the Selling Shareholder Escrow Agreement have been
duly executed and delivered by the Selling Shareholder and the Selling
Shareholder has full legal right and authority to sell, transfer and
deliver, in the manner provided in the Underwriting Agreements, the
Custody Agreement and the Selling Shareholder Escrow Agreement, the
Securities being sold by such Selling Shareholder under the Underwriting
Agreements.

(ii) Assuming that an Underwriter acquires its interest in the
ADSs it has purchased from such Selling Shareholder without notice of an
adverse claim (within the meaning of Section 8-105 of the New York
Uniform Commercial Code (the "UCC")), such Underwriter that has
purchased such ADSs delivered to The Depository Trust Company or other
securities intermediary, as the case may be, by making payment therefor
pursuant to the Underwriting Agreements, and that has had such ADSs
credited to the securities account or accounts of such Underwriter
maintained with The Depository Trust Company or such other securities
intermediary, as the case may be, will have acquired a security
entitlement (within the meaning of Section 8-102(a)(17) of the UCC) to
such ADSs purchased by such Underwriter, and no action based on any such
adverse claim (within the meaning of Section 8-102(a)(1) of the UCC) may
be asserted against such Underwriter with respect to such ADSs.

(iii) No consent, approval, authorization or order of any court
or governmental agency or body is required for the consummation by any
Selling Shareholder of the transactions contemplated in the Underwriting
Agreements, except such as may have been obtained under the Act and such
as may be required under the blue sky laws of any jurisdiction and the
securities laws of any jurisdiction outside the United States in
connection with the purchase and distribution of the Securities by the
Underwriters and such other approvals (specified in such opinion) as
have been obtained.

(iv) Neither the sale of the Securities or ADSs representing
deposited shares being sold by any Selling Shareholder nor the
consummation of any other of the transactions contemplated in the
Underwriting Agreements or the Deposit Agreement by any Selling
Shareholder or the fulfillment of the terms hereof by any Selling
Shareholder will conflict with, result in a breach or violation of, or
constitute a default under any law or the charter or By-laws of the
Selling Shareholder or the terms of any indenture or other agreement or
instrument known to such counsel and to which any Selling Shareholder or
any of its subsidiaries is a party or bound, or any judgment, order or
decree known to such counsel to be applicable to any Selling Shareholder
or any of its subsidiaries of any court, regulatory body, administrative
agency, governmental body or

C-1

<PAGE> 48
arbitrator having jurisdiction over any Selling Shareholder or any of
its subsidiaries.

(v) Assuming that (a) Securities to be purchased by any
Underwriter or to be delivered to the Depositary have been credited to
the [Escrow Account] on the books of the Escrow Agent and (b) a
certificate substantially in the form of Annex ___ to the Escrow
Agreement has been delivered by a Selling Shareholder, such Underwriter
and the Depositary, as the case may be, will own such Securities free of
adverse claims. [This opinion (v) is to be provided by Singapore
counsel]

C-2

<PAGE> 1
EXHIBIT 1.2

Chartered Semiconductor Manufacturing Ltd
70,000,000 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

International Underwriting Agreement

London, England
May ___, 2000

Salomon Brothers International Limited
Credit Suisse First Boston (Singapore) Limited
Chase Securities Inc.
Overseas Union Bank Limited
SG Securities (Singapore) Pte. Ltd.
Vickers Ballas & Company Pte Ltd
Wit SoundView Corporation
As International Representatives of the several International Underwriters

c/o Salomon Brothers International Limited
Victoria Plaza
111 Buckingham Palace Road
London SW1W 0SB
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, 31,200,000 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") and each of the Selling
Shareholders named in Schedule II hereto proposes to sell to the several
International Underwriters the number of Ordinary Shares directly or in the form
of ADSs set forth opposite its name on Schedule II aggregating 38,800,000
Ordinary Shares (said Ordinary Shares to be issued and sold by the Company and
the Selling Shareholders being hereinafter called the "International
Underwritten Shares"). The Company and Singapore Technologies Semiconductors Pte
Ltd ("STS") also propose to grant to

- --------
* Plus an option to purchase from Chartered Semiconductor Manufacturing
Ltd and Singapore Technologies Semiconductors Pte Ltd up to 4,680,000
and 5,820,000, respectively, additional Ordinary Shares directly or in
the form of American Depositary Shares to cover overallotments.

<PAGE> 2

the International Underwriters an option to purchase up to 4,680,000 and
5,820,000, respectively, 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 and the Selling Shareholders
are concurrently entering into the U.S. Underwriting Agreement, dated May
____, 2000 (together with this International Underwriting Agreement, the
"Underwriting Agreements"), providing for the sale by the Company and the
Selling Shareholders of an aggregate of 105,000,000 Ordinary Shares directly or
in the form of ADSs (said Ordinary Shares to be sold by the Company and the
Selling Shareholders 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 and
STS up to 7,020,000 and 8,730,000, respectively, 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").

2
<PAGE> 3

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 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
and the International Underwriters have entered into an Agreement Among U.S.
Underwriters and International Underwriters, dated the date hereof (the
"Agreement Among U.S. Underwriters and International Underwriters"), pursuant to
which, among other things, the International 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 may purchase from the
International Underwriters a portion of the International Securities to be sold
pursuant to this International Underwriting Agreement.

The offering of the International Shares, directly or in the form
of ADSs, is referred to herein as the "International Offering"; and the offering
of the U.S. Shares, directly or in the form of ADSs, is referred to herein as
the "U.S. Offering". The U.S. Offering and International Offering are referred
to collectively as the "Global Offering".

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 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. In addition, to the extent that there is not more than one
Selling Shareholder named in Schedule II, the term Selling Shareholders, shall
mean the singular. 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. (I) The Company and, except as
to paragraphs (i), (n) (other than clause (i) thereof), (q), (r), (s), (t)
(other than clause (i) thereof), (v), (w), (x), (y), (z), (aa), (bb), (cc),
(dd), (ff), (gg) and (hh) below, STS jointly and severally represent and warrant
to, and agree with, each International Underwriter as set forth below in this
Section 1.

3
<PAGE> 4

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.

4
<PAGE> 5

regarding delivery of the Securities (and the ADSs representing such
Securities) and (C) the statements set forth in the seventh, ninth,
thirteenth and fifteenth paragraphs under the heading "Underwriting" in
the Preliminary Prospectuses or Prospectuses.

(c) The Company has filed with the Commission registration
statements (file numbers 333-88623 and 333-34692) on Form F-6
(collectively, 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.

(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 Agilent Technologies Europe BV 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 Ordinary Shares being sold under the
Underwriting Agreements have been duly and validly authorized, and, when
issued and delivered to the Depositary or its nominee in accordance with
the Deposit Agreement, to the International Underwriters in accordance
with this International Underwriting Agreement and to the U.S.
Underwriters in accordance with the U.S. Underwriting Agreement, will be
validly issued, fully paid and non-assessable. The certificates for the
Shares and the ADRs that are in certificated form 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
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

5
<PAGE> 6

ownership interests in the Company are outstanding. The Securities being
sold by the Company are freely transferable by the Company to or for the
account of the several Underwriters, their designees and the initial
purchasers thereof. 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
Articles of Association described in the Prospectuses under the heading
"Description of Ordinary Shares" are in full force and effect.

(h) Each of this International Underwriting Agreement, the U.S.
Underwriting Agreement the Deposit Agreement and the Issuer Escrow
Agreement has been duly authorized, executed and delivered by the
Company.

6
<PAGE> 7

connection with (A) the execution and delivery of the Underwriting
Agreements, (B) the issuance of the Ordinary Shares or the ADSs being
sold by the Company under the Underwriting Agreements in the manner
contemplated by the Underwriting Agreements, (C) the deposit with the
Depositary of the underlying Ordinary Shares being sold by the Company
under the Underwriting Agreements against issuance of ADRs evidencing
the ADSs, (D) the sale and delivery of the Ordinary Shares and the ADSs
by the Company to the Underwriters in accordance with the Underwriting
Agreements, 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 Underwriters in the manner contemplated
in the Prospectuses.

7
<PAGE> 8

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.

(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).

8
<PAGE> 9

(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 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.

(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.

(x) Except as described in the Prospectuses, for the periods
described in the Prospectuses, the Company has no material capital
commitments.

9
<PAGE> 10

(y) No labor dispute with the employees of the Company or any of
the Subsidiaries exists or to the Company's best knowledge, is
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).

10
<PAGE> 11

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 infringement 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.

(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).

11
<PAGE> 12

(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.

12
<PAGE> 13

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.

(ii) The Subsidiaries are the only significant subsidiaries of
the Company as defined by Rule 1.02 of Regulation S-X.

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.

13
<PAGE> 14

the meaning of Section 8-102(a)(1) of the UCC) may be asserted against
such Underwriter with respect to such ADSs.

(d) Such Selling Shareholder's Ordinary Shares have been placed
in custody, for delivery pursuant to the terms of this Underwriting
Agreement, under a Custody Agreement and Power of Attorney duly
authorized (if applicable), executed and delivered by such Selling
Shareholder, in the form heretofore furnished to you (the "Custody
Agreement") with Salomon Smith Barney Inc. as the Custodian (the
"Custodian"); the Ordinary Shares so held in custody for each Selling
Shareholder are subject to the interests under this Underwriting
Agreement of the Underwriters; the arrangements for custody and delivery
of such Ordinary Shares made by such Selling Shareholder under this
Underwriting Agreement and under the Custody Agreement and the Selling
Shareholder Escrow Agreement are not subject to termination by any acts
of such Selling Shareholder, or by operation of law, whether by the
death or incapacity of such Selling Shareholder or the occurrence of any
other event; and if any such death, incapacity or any other such event
shall occur before the delivery of the Securities under this
Underwriting Agreement, Ordinary Shares will be delivered by the
Custodian and Escrow Agent in accordance with the terms and conditions
of this Underwriting Agreement, the Custody Agreement and the Selling
Shareholder Escrow Agreement as if such death, incapacity or other event
had not occurred, regardless of whether or not the Custodian and Escrow
Agent shall have received notice of such death, incapacity or other
event.

(e) Each of this International Underwriting Agreement and the
U.S. Underwriting Agreement has been duly authorized, executed and
delivered by such Selling Shareholder. No consent, approval (including
exchange control approval), authorization, filing with or order of any
court or governmental agency or body is required under Singapore or U.S.
federal law or the laws of any state or political subdivision thereof
for the consummation by such Selling Shareholder of the transactions
contemplated in this Underwriting Agreement, except such as may have
been obtained under the Act, the Exchange Act, the Companies Act,
Chapter 50 of Singapore, such as may be required under the blue sky laws
of any jurisdiction and the securities laws of any jurisdiction outside
the United States in connection with the purchase and distribution of
the Securities by the Underwriters in the manner contemplated in the
Underwriting Agreements and the Prospectuses and such as may be required
pursuant to the National Association of Securities Dealers, Inc. rules
or The Nasdaq Stock Market, Inc. rules, which such approvals have been
obtained.

14
<PAGE> 15

Shareholder or any of its subsidiaries is a party or bound, or (iii) any
statute, law, rule, regulation, judgment, order or decree applicable to
such Selling Shareholder or any of its subsidiaries of any court,
regulatory body, administrative agency, governmental body or arbitrator
having jurisdiction over such Selling Shareholder or any of its
subsidiaries except, with respect to clause (ii) or (iii) above, such as
would not individually or in the aggregate, have a material adverse
effect on the performance of this Underwriting Agreement or the
consummation of any of the transactions contemplated herein.

(g) 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 the case of STS) or the
government in which the Selling Shareholder is domiciled or any
political subdivision or taxing authority thereof (in the case of other
Selling Shareholders) in connection with (A) the issuance of the ADSs
being sold by such Selling Shareholder under Underwriting Agreements in
the manner contemplated by this Underwriting Agreement, (B) the deposit
with the Depositary of the Underwritten Securities being sold by such
Selling Shareholder under the Underwriting Agreements against issuance
of ADRs evidencing the ADSs, (C) the sale and delivery of the Ordinary
Shares and the ADSs being sold by the Selling Shareholder in accordance
with the Underwriting Agreements, or (D) the resale and delivery by the
Underwriters of the Ordinary Shares or the ADSs being sold by such
Selling Shareholder to the Underwriters in the manner contemplated in
the Prospectuses.

Any certificate signed by any officer of any Selling Shareholder
and delivered to the Representatives or counsel for the Underwriters in
connection with the offering of the

15
<PAGE> 16

Securities shall be deemed a representation and warranty by such Selling
Shareholder, as to matters covered thereby, to each International
Underwriter.

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 and each Selling Shareholder agrees,
severally and not jointly, to sell to each International Underwriter,
and each International Underwriter agrees, severally and not jointly, to
purchase from the Company and the Selling Shareholders, at a purchase
price of US$________ per ADS and S$________ per Ordinary Share, 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 and STS hereby grant an option to
the several International Underwriters to purchase, severally and not
jointly, up to 4,680,000 and 5,820,000, respectively, 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
proportionally from the Company and STS 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 and STS setting forth the number of
shares of the International Option Securities as to which the several
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 third Business Day) shall be made at 9:00 AM, New York City time,
on May __, 2000 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,
the Selling Shareholders 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

16
<PAGE> 17

prices of the International Securities being sold by the Company and the Selling
Shareholders to or upon the order of the Company and the Selling Shareholders by
wire transfer payable in same day funds to the accounts specified by the Company
and the Selling Shareholders. 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
that the settlement date for any International Option Securities occurring after
the Closing Date, shall occur simultaneously with the settlement date for any
U.S. Option Securities occurring after the Closing Date under the U.S.
Underwriting Agreement.

If the option provided for in Section 2(b) hereof is exercised
after the third Business Day prior to the Closing Date, the Company and STS will
deliver (at their expense) to the U.S. Representatives, c/o Salomon Smith Barney
Inc. at 388 Greenwich Street, New York, New York 10013, on the date specified by
the International Representatives (which shall be within three 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 and STS
respectively, by wire transfer of U.S. dollars and payable in same day funds to
the accounts specified by the Company and STS, respectively. If settlement for
the International Option Securities occurs after the Closing Date, the Company
and STS 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:

17
<PAGE> 18

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 International
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 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 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 International
Representatives an earnings statement or statements of the Company and
the Subsidiaries which will satisfy the provisions of Section 11(a) of
the Act and Rule 158 under the Act.

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<PAGE> 19

(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 Offering Memorandum and
International Offering Memorandum 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.

(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.

19
<PAGE> 20

(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 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 SGX-ST and The Nasdaq National Market, Inc.,
respectively (such SGX-ST listing fees to be paid only by the Company,
however); (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 each of the Company and the
Selling Shareholders of its obligations under the Underwriting
Agreements.

(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 Offering Memorandum 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
and the U.S. Underwriters pursuant to the Agreement Among U.S.
Underwriters and International Underwriters, (B) stabilization
transactions contemplated under the Agreement Among U.S. Underwriters
and International Underwriters, conducted through Salomon Smith Barney
(or through the U.S. Representatives and International Representatives)
as part of the distribution of the Securities, and (C) sales to or
through (or distributions of International Offering Memoranda or
International Preliminary Offering Memoranda 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.

(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:

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<PAGE> 21

(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, paragraph (I)(i) of Section
5 of the U.S. Underwriting Agreement and Section 2(f) of the Agreement
Among U.S. Underwriters and International Underwriters; 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 and the U.S. Representatives that the distribution of the
International Securities by the International Underwriters has not yet
been completed, or (ii) the U.S. Representatives shall have given notice
to the Company and the International Representatives that the
distribution of the U.S. Securities by the U.S. Underwriters has not yet
been completed. If such notice by the International Representatives or
the U.S. 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.

(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,

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<PAGE> 22

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;

(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 complied and will comply with all applicable laws and
regulations and has made or obtained or will make or obtain all
necessary filings, consents or approvals in each jurisdiction in which
it purchases, offers, sells or delivers International Securities
(including, without limitation, any applicable requirements relating to
the delivery of the Preliminary Prospectuses or Prospectuses), in each
case at its own expense; and

(i) 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 (any of
the foregoing a "Singapore Institutional Investor"); it being understood
that this clause (i) shall not apply to Overseas Union Bank Limited and
Vickers Ballas & Company Pte Ltd (except that Overseas Union Bank
Limited and Vickers Ballas & Company Pte Ltd shall not distribute the
International Offering Memorandum, in a preliminary or final form, to
any person in Singapore other than a Singapore Institutional Investor).

(IV) Each Selling Shareholder agrees with the several
Underwriters and the Company that:

22
<PAGE> 23

transaction, for a period of 90 days after the date of this
International Underwriting Agreement, other than Ordinary Shares or ADSs
disposed of as bona fide gifts approved by Salomon Smith Barney Inc.

(b) Such Selling Shareholder will not take 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.

(d) Such Selling Shareholder will comply with the agreement
contained in Section 5(I)(h).

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 and each of the Selling Shareholders
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 each of the Selling Shareholders
made in any certificates pursuant to the provisions hereof, to the performance
by the Company and each of the Selling Shareholders of their respective
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 International Representatives and the U.S. 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.

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<PAGE> 24

(b) The Company and STS shall have requested and caused Allen &
Gledhill, Singapore counsel for the Company and STS, 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 and STS shall have furnished to the
Representatives the opinion of Latham & Watkins, United States counsel
for the Company and STS, to the effect set forth in the U.S.
Underwriting Agreement under Section 6(c).

(d) Each of the Selling Shareholders (other than STS) shall have
requested and caused its counsel, which counsel shall be reasonably
satisfactory to counsel for the Underwriters, 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 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(e).

(f) 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 and each Selling Shareholder 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

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<PAGE> 25

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).

(h) Each Selling Shareholder shall have furnished to the
Representatives a certificate, signed by the Chairman of the Board or
the President and the principal financial or accounting officer of such
Selling Shareholder, dated the Closing Date, to the effect that (1) in
the case of STS, the signers of such certificate have carefully examined
the Registration Statement, the ADR Registration Statement, the
Prospectuses, any supplement to either of the Prospectuses and this
International Underwriting Agreement and the U.S. Underwriting Agreement
and (2) in the case of each Selling Shareholder, the representations and
warranties of such Selling Shareholder in this International
Underwriting Agreement and the U.S. Underwriting Agreement are true and
correct in all material respects on and as of the Closing Date to the
same effect as if made on the Closing Date.

(j) 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 (i)
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).

(l) The Deposit Agreement shall be in full force and effect, and
shall not have been amended except as approved by the Representatives.

(m) The Depositary shall have furnished or caused to be furnished
to the Representatives certificates satisfactory to the Representatives
evidencing the deposit

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<PAGE> 26

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.

(n) The closing of the purchase of the U.S. Underwritten
Securities to be issued and sold by the Company and the Selling
Shareholders pursuant to the U.S. Underwriting Agreement 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.

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 and each Selling Shareholder 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 39th Floor, Bank of China Tower, One Garden Road, Central, Hong
Kong, on the Closing Date.

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 and the Selling Shareholders (in proportion to the
number of securities offered by each of them), severally but not jointly, 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. and a selling
commission of ____ per cent. in respect of the International Underwritten Shares
or the International Option Shares, as the case may be. The amounts payable by
the Selling Shareholders to the International Underwriters pursuant to this
Section 7 shall be deducted from the amounts payable by the International
Underwriters to the Selling

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<PAGE> 27

Shareholders pursuant to Section 2.

8. Reimbursement of Underwriters' Expenses. The Company and each
Selling Shareholder have agreed, severally but not jointly (in proportion to the
number of securities being offered by each of them, including any Option
Securities which the Underwriters shall have elected to purchase), to reimburse
the Underwriters 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, up to an aggregate maximum of $________. The amounts payable by
the Selling Shareholders to the International Underwriters pursuant to this
Section 8 shall be deducted from the amounts payable by the International
Underwriters to the Selling Shareholders pursuant to Section 2. The
International Underwriters may also deduct from the amounts payable by the
International Underwriters to the Selling Shareholders pursuant to Section 2 an
amount to be held by the International Underwriters as a reserve for expenses
that have not been calculated at the time of closing; provided, however, that
(1) the amount of this reserve may not exceed $________ in total for all Selling
Shareholders in the Global Offering, (2) all deductions shall be made in
proportion to the number of securities being offered by each of the Selling
Shareholders, including any Option Securities which the International
Underwriters shall have elected to purchase, and (3) the International
Underwriters shall pay to the Selling Shareholders within ____ days after the
Closing Date the balance of this reserve, if any, that has not been applied
against such expenses. 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 or any Selling
Shareholders 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 and each Selling Shareholder
will, severally but not jointly (in proportion to the number of securities being
offered by each of them, including any Option Securities which the Underwriters
shall have elected to purchase), reimburse the Underwriters 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 $________. If the Company makes any payments to the
Underwriters under this Section 8 because of any Selling Shareholder's refusal,
inability or failure to satisfy any condition to the obligations of the
Underwriters set forth in Section 6, the Selling Shareholders shall each
reimburse the Company on demand for all amounts so paid, pro rata in proportion
to the percentage of Securities to be sold by them.

9. Indemnification and Contribution.

(a) The Company (to the extent permitted by applicable law) and
STS jointly and severally agree 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

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<PAGE> 28

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 or in any amendment thereof, or in any 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 and STS 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 or STS 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 describing any such loss, claim, damage
or liability purchased the Securities, or any person controlling such
International Underwriter, to the extent that any such loss, claim,
damage or liability of each International Underwriter (or any person
controlling 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.

(b) 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 and STS, 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 and STS acknowledge that (A) the names of the Underwriters
contained in any Preliminary Prospectus or either of 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
Preliminary Prospectus or either of the Prospectuses, (B) the statements
set forth in the last paragraph on the front

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<PAGE> 29

cover page of any Preliminary Prospectus or either of the Prospectuses
regarding delivery of the Securities (and the ADSs representing such
Securities) and (C) the statements set forth in the seventh, ninth,
thirteenth and fifteenth paragraphs under the heading "Underwriting" in
any Preliminary Prospectus or either of the Prospectuses constitute the
only information furnished in writing by or on behalf of the several
International Underwriters for inclusion in any Preliminary Prospectus
or either of the Prospectuses.

(c) 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) or (b) 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) or (b) 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. 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

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<PAGE> 30

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.

(d) In the event that the indemnity provided in paragraph (a) or
(b) of this Section 9 is unavailable to or insufficient to hold harmless
an indemnified party for any reason, the Company (to the extent
permitted by applicable law), STS and the International 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 STS and one or more of the International
Underwriters may be subject in such proportion as is appropriate to
reflect the relative benefits received by the Company STS 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 (to the
extent permitted by applicable law), STS 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, of STS 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 and by STS shall be deemed to be equal to the total net proceeds
from the offering (before deducting expenses) received by each of them,
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 Offering
Memorandum. 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, by STS or by 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, STS 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 (d), 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 International 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 (d).

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<PAGE> 31

(e) The liability of each Selling Shareholder under its
representations and warranties contained in Section 1 hereof (and of STS
under the indemnity and contribution agreements contained in this
Section 9) shall be limited to an amount equal to the offering price of
the International Securities sold by such Selling Shareholder to the
International Underwriters net of underwriting and selling commissions
paid by such Selling Shareholder under this Agreement. The Company and
the Selling Shareholders may agree, as among themselves and without
limiting the rights of the International Underwriters under this
International Underwriting Agreement, as to the respective amounts of
such liability for which they each shall be responsible.

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 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, the Selling Shareholders 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, the Selling Shareholders
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 SGX-ST, trading in securities generally on the New York Stock
Exchange, The Nasdaq National Market, Inc. or the SGX-ST 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

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<PAGE> 32

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
Offering Memorandum (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, of each Selling Shareholder 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, any Selling Shareholders 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 to the Salomon Brothers International Limited General Counsel (fax
no.: (44) 171-721-2870) and confirmed to such General Counsel at Salomon
Brothers International Limited, Victoria Plaza, 111 Buckingham Palace Road,
London SW1W 0SB England, Attention: General Counsel; or, if sent to the Company,
will be mailed, delivered or telefaxed to the Legal Department (fax no.: (65)
3622-909) and confirmed to it at 60 Woodlands Industrial Park D, Street 2,
Singapore 738406, Attention: Legal Department; or if sent to any Selling
Shareholder, will be mailed, delivered or telefaxed and confirmed to it at the
address set forth in Schedule II hereto.

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, directors, employees, agents 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. Each of the Company and STS 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.
Each of the Company and STS has appointed Chartered Semiconductor Manufacturing,
Inc., at 1450 McCandless Drive, Milpitas, California 94035 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 Court
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. Each of the
Company and STS consents to process being served in any action or proceeding by
mailing a copy thereof by registered or certified mail to the Authorized Agent.
Each of the Company and STS hereby

32
<PAGE> 33

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 and STS.
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 each of the Company and the
Selling Shareholders 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, 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 or the Selling
Shareholder making such payment 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 or the Selling Shareholders. Any obligation of the Company or the
Selling Shareholders 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.

33
<PAGE> 34

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.

"Commission" shall mean the Securities and Exchange Commission.

"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 Offering Memorandum" shall mean such form of
offering memorandum relating to the International Securities.

"International Preliminary Offering Memorandum" shall mean any
preliminary offering memorandum with respect to the offering of 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 the International Underwriting Agreement.

34
<PAGE> 35

"International Underwriting Agreement" shall mean this agreement
relating to the sale of the International Securities by the Company and
the Selling Shareholders 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 Offering Memorandum.

"Prospectuses" and "each Prospectus" shall mean the U.S.
Prospectus and the International Offering Memorandum.

"RCB" shall mean the Singapore Registrar of Companies and
Businesses.

"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.

"Securities" shall mean the U.S. Securities and the International
Securities.

"Selling Shareholders" shall mean the persons named on Schedule
II to the U.S. Underwriting Agreement and the International Underwriting
Agreement.

35
<PAGE> 36

"Shares" shall mean the U.S. Shares and the International Shares.

"Statement" shall mean the Statement of Material Facts filed with
the RCB.

"STS" shall mean Singapore Technologies Semiconductors Pte Ltd.

"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 and
the International 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. 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.

36
<PAGE> 37

"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 and the Selling Shareholders 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:

Singapore Technologies Semiconductors
Pte Ltd

By:
-------------------------------------
Name:
Title:

Alliance Semiconductor Corporation

By:
-------------------------------------
Name:
Title: Attorney-in-fact

Analog Devices, Inc.

By:
-------------------------------------
Name:
Title: Attorney-in-fact

Actel Corporation

By:
-------------------------------------
Name:
Title: Attorney-in-fact

37
<PAGE> 38

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.

38
<PAGE> 39

ANNEX A

List of Subsidiaries

Chartered Semiconductor Manufacturing, Inc.

Chartered Silicon Partners Pte Ltd

<PAGE> 40

SCHEDULE I

<TABLE>
<CAPTION>
Number of
International Underwriter International Underwritten Shares
- ------------------------- ---------------------------------
<S> <C>
Salomon Brothers International Limited..............
Credit Suisse First Boston (Singapore) Limited......
Chase Securities Inc................................
Overseas Union Bank Limited.........................
SG Securities (Singapore) Pte. Ltd..................
Vickers Ballas & Company Pte Ltd....................
Wit SoundView Corporation...........................

Total............................................... 70,000,000
----------
</TABLE>

<PAGE> 41

SCHEDULE II

<TABLE>
<CAPTION>
Number of
Selling Shareholders International Underwritten Shares
- -------------------- ---------------------------------
<S> <C>
Singapore Technologies Semiconductors Pte Ltd....... 19,896,696
51 Cuppage Road #09-01
Singapore 229469

Analog Devices, Inc................................. 7,750,000
Three Technology Way
Norwood, MA 02062
USA

Alliance Semiconductor Corporation.................. 6,000,000
2575 Augustine Drive
Santa Clara, CA 95054
USA

Actel Corporation................................... 5,153,304
----------
955 East Arques Avenue
Sunnyvale, CA 94086
USA

Total............................................... 38,800,000
----------
</TABLE>

<PAGE> 42

SCHEDULE III

List of Signatories to Letter Attached as Exhibit A

1. Singapore Technologies Pte Ltd

<PAGE> 43

EXHIBIT A

Chartered Semiconductor Manufacturing Ltd
Public Offering of Ordinary Shares

May , 2000

c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
U.S.A.

Ladies and Gentlemen:

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.

C-1
<PAGE> 44

Yours very truly,

[Signature]

[Name and address]

C-2

<PAGE> 1
EXHIBIT 5

[On the letterhead of Allen & Gledhill]

Chartered Semiconductor Manufacturing Ltd,
60, Woodlands Industrial Park D,
Street 2,
Singapore 738406. 1 May, 2000

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 6th April, 2000, 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 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.

<PAGE> 2
2

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,

/s/ Allen & Gledhill

<PAGE> 1
EXHIBIT 8.1

[LATHAM & WATKINS LETTERHEAD]

May 1, 2000

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
89,700,000 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 April 6, 2000, as amended (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

<PAGE> 2
LATHAM & WATKINS
May 1, 2000
Page 2

by us, and (b) the statements made to us by the officers and representatives of
the Company, in connection with formulating our opinion.

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 captions "Taxation - United State Federal Taxation" and
"Legal Matters" 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,

/s/ Latham & Watkins

<PAGE> 1

EXHIBIT 23.3

[KPMG LETTERHEAD]

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

May 1, 2000