CHARTERED SEMICONDUCTOR MANUFACTURING LTD, F-1, 2000-04-06

CHARTERED SEMICONDUCTOR MANUFACTURING LTD
F-1, 2000-04-06
SEMICONDUCTORS & RELATED DEVICES

Previous: TELEDYNE TECHNOLOGIES INC, DEF 14A, 2000-04-06

Next: HEALTHSTREAM INC, S-1/A, 2000-04-06

<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 6, 2000

REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

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

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. [ ]
------------------------

CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PROPOSED MAXIMUM
OFFERING PRICE PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE PER ORDINARY AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(2) SHARE(3) OFFERING PRICE(3) REGISTRATION FEE
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Ordinary Shares, par value S$0.26 per share,
including ordinary shares represented by
American Depositary Shares(1).............. 244,950,000 $7.575 $1,855,496,250 $489,851
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) The Registrant previously registered 100,000,000 American Depositary Shares
evidenced by American Depositary Receipts issuable upon deposit of Ordinary
Shares pursuant to a Registration Statement on Form F-6 (Registration No.
333-88623). 24,495,000 American Depositary Shares issuable upon deposit of
the Ordinary Shares registered hereby are being registered pursuant to a
separate Registration Statement on Form F-6. Each American Depositary Share
represents ten Ordinary Shares.

(2) Includes (i) 31,950,000 Ordinary Shares (including ordinary shares
represented by American Depositary Shares) that the underwriters have the
option to purchase to cover overallotments, if any, and (ii) all Ordinary
Shares (including ordinary shares represented by American Depositary Shares)
initially offered or sold outside the United States that are thereafter sold
or resold in the United States. Offers and sales of Ordinary Shares
(including ordinary shares represented by American Depositary Shares)
outside the United States are being made pursuant to Regulation S under the
Securities Act of 1933, as amended, and are not covered by this registration
statement.

(3) Estimated solely for the purpose of computing the amount of the registration
fee, in accordance with Rule 457(c) promulgated under the Securities Act.

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 APRIL 6, 2000

PROSPECTUS
213,000,000 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 135,000,000 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 213,000,000 ordinary shares that are being offered,
127,800,000 are being offered in the United States and Canada and 85,200,000 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 5, 2000 was $79.75 per ADS, and the last
reported sale price of our ordinary shares on the Singapore Exchange Securities
Trading Limited on April 5, 2000 was S$13.90 per ordinary share.
------------------

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

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

<TABLE>
<CAPTION>
PER ORDINARY
SHARE PER ADS TOTAL
-------------- -------------- --------------
<S> <C> <C> <C>
Public Offering Price............................ S$ US$ US$
Underwriting Discount............................ S$ US$ US$
Proceeds to Chartered (before expenses).......... S$ US$ US$
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
31,950,000 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................................................ 7
Use of Proceeds............................................. 21
Price Range of our ADSs and Ordinary Shares................. 22
Dividend Policy............................................. 22
Capitalization.............................................. 23
Exchange Rates.............................................. 24
Dilution.................................................... 25
Selected Financial Data..................................... 26
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 28
Business.................................................... 41
Management.................................................. 54
Principal and Selling Shareholders.......................... 62
Relationship with Singapore Technologies.................... 63
Description of Ordinary Shares.............................. 66
Description of American Depositary Shares................... 70
Taxation.................................................... 77
Shares Eligible for Future Sale............................. 81
Underwriting................................................ 83
Legal Matters............................................... 85
Experts..................................................... 85
Where You Can Find More Information......................... 86
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

1
<PAGE> 6

are located in Singapore, a politically and economically stable nation with laws
that protect our customers' proprietary technology.

We were incorporated in Singapore in 1987. As of March 31, 2000, we were
70.1% owned by Singapore Technologies Pte Ltd and its affiliates (57.7%
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.

RECENT DEVELOPMENTS

Our unaudited preliminary results for the first quarter ended March 31,
2000, subject to final review and confirmation, as compared to the first quarter
ended March 31, 1999 are as follows:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
(UNAUDITED)
------------------------
MARCH 31, MARCH 31,
1999 2000
---------- ----------
(IN MILLIONS, EXCEPT PER
SHARE DATA)
<S> <C> <C>
Net revenue................................................. $130.8 $238.4
Gross profit................................................ 12.7 84.1
Operating income (loss)..................................... (27.9) 29.2
Net income (loss)........................................... (34.9) 37.8
Diluted net income (loss) per ADS........................... $(0.35) $ 0.29
Diluted net income (loss) per ordinary share................ $(0.04) $ 0.03
</TABLE>

2
<PAGE> 7

THE GLOBAL OFFERING

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

SHARES OFFERED BY THE SELLING
SHAREHOLDERS....................... 135,000,000 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 127,800,000 ordinary shares,
directly or in the form of ADSs.

INTERNATIONAL OFFERING............. An offering outside the United States and
Canada of 85,200,000 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 31,950,000
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.

3
<PAGE> 8

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".

4
<PAGE> 9

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 $79.75 per ADS (the equivalent of S$13.677 per ordinary
share based on an exchange rate of S$1.715 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.

5
<PAGE> 10

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999
-------------------------
ACTUAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 544,996 $1,149,896
Working capital............................................. 294,562 899,462
Total assets................................................ 2,132,908 2,737,808
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 1,746,650
</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.

6
<PAGE> 11

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.

7
<PAGE> 12

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

8
<PAGE> 13

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.

9
<PAGE> 14

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.

10
<PAGE> 15

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
11
<PAGE> 16

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

12
<PAGE> 17

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.

13
<PAGE> 18

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 57.7% of our
outstanding ordinary shares following completion of the global offering, or
55.8% if the underwriters exercise their overallotment option

14
<PAGE> 19

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

15
<PAGE> 20

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.
16
<PAGE> 21

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 $8.7 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.

17
<PAGE> 22

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 5, 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;

18
<PAGE> 23

- 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 was to expire on April 26, 2000, unless terminated earlier by
Salomon Smith Barney Inc. In connection with the global offering, Salomon Smith
Barney Inc. has decided to terminate, effective upon the closing of the global
offering, the current lock-up agreement for all parties. Of the 979,231,742
ordinary shares subject to the initial lock-up, 797,833,046 ordinary shares will
be subject to a new 90-day lock-up as described below, 135,000,000 ordinary
shares are being sold by the selling shareholders in the global offering and
46,398,696 ordinary shares will be available for sale effective upon the closing
of the global lock-up.

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,
784,287,684 ordinary shares constituting approximately 57.7% 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
858,260,547 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.

The selling shareholders and ST, who will collectively hold 797,833,046
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 90 days from the date of this document, subject to certain
exceptions. Please see "Underwriting" and "Shares Eligible for Future Sale" for
additional information regarding resale restrictions.

19
<PAGE> 24

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.

20
<PAGE> 25

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 $604.9 million, or $695.7 million if the
underwriters exercise their overallotment option in full, assuming a public
offering price of $79.75 per ADS (the equivalent of S$13.677 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.

21
<PAGE> 26

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 5, 2000............................ $ 87.63 $ 79.75
</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 5, 2000........................... S$15.70 S$13.90
</TABLE>

The last reported sale price of the ADSs as quoted on Nasdaq on April 5,
2000 was $79.75 per ADS. The last reported sale price of the ordinary shares as
quoted on the Singapore Exchange on April 5, 2000 was S$13.90 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.

22
<PAGE> 27

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 $79.75 per ADS (the equivalent of S$13.677 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 $1,149,896
========== ==========
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............................... 264,529 276,354
Additional paid-in capital................................ 1,207,656 1,800,731
Accumulated other comprehensive income (loss)............. (52,696) (52,696)
Retained deficit.......................................... (277,739) (277,739)
---------- ----------
Total shareholders' equity............................. 1,141,750 1,746,650
---------- ----------
Total capitalization................................... $1,685,409 $2,290,309
========== ==========
</TABLE>

23
<PAGE> 28

EXCHANGE RATES

Fluctuations in the exchange rate between the Singapore dollar and the U.S.
dollar will affect the U.S. dollar equivalent of the Singapore dollar price of
the ordinary shares on the Singapore 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 March 31)................ 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.

24
<PAGE> 29

DILUTION

The net tangible book value of our company as of December 31, 1999 was
$1,113 million or S$1.493 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$13.677 per ordinary share and $79.750 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$2.171 per ordinary share and $12.661 per ADS. This represents an immediate
increase in net tangible book value of S$0.678 per ordinary share and $3.957 per
ADS to our existing shareholders and an immediate dilution in net tangible book
value of S$11.506 per ordinary share and $67.089 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$13.677 $79.750
Net tangible book value per ordinary share and per ADS as of
December 31, 1999......................................... S$1.493 $8.704
Increase in net tangible book value per ordinary share and
per ADS attributable to new public investors.............. 0.678 3.957
------- ------
Net tangible book value per ordinary share and per ADS after
the global offering....................................... 2.171 12.661
-------- -------
Dilution in net tangible book value per ordinary share and
per ADS to new public investors........................... S$11.506 $67.089
======== =======
</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 70.9% $1.15
New public investors........................ 78.0 5.7 604.9 29.1 7.76
------- ----- -------- ----- -----
Total..................................... 1,357.0 100.0% $2,077.1 100.0% $1.53
======= ===== ======== ===== =====
</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.

25
<PAGE> 30

SELECTED FINANCIAL DATA

You should read the following selected financial data in conjunction with
our consolidated financial statements and the related notes and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this 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>

26
<PAGE> 31

<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.

27
<PAGE> 32

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 (57.7%
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.

28
<PAGE> 33

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.

29
<PAGE> 34

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

30
<PAGE> 35

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
31
<PAGE> 36

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 11.9% 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.

32
<PAGE> 37

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.
33
<PAGE> 38

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>

34
<PAGE> 39

<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.

35
<PAGE> 40

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.

36
<PAGE> 41

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 $79.75 per ADS (the equivalent
of S$13.677 per ordinary share), our net proceeds from the global offering are
estimated to be approximately $604.9 million, or $695.7 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;

37
<PAGE> 42

- 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

38
<PAGE> 43

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.

39
<PAGE> 44

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>

40
<PAGE> 45

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 (57.7% 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.

41
<PAGE> 46

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.

42
<PAGE> 47

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.
43
<PAGE> 48

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.

44
<PAGE> 49

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.

45
<PAGE> 50

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

46
<PAGE> 51

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
47
<PAGE> 52

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.

48
<PAGE> 53

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,

49
<PAGE> 54

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.

50
<PAGE> 55

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.

51
<PAGE> 56

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

52
<PAGE> 57

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.

53
<PAGE> 58

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

54
<PAGE> 59

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.

55
<PAGE> 60

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.
56
<PAGE> 61

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

57
<PAGE> 62

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

58
<PAGE> 63

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 57.7% 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

59
<PAGE> 64

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 expect to grant to our officers, directors and employees
options under our 1999 Share Option Plan to purchase approximately 19,000,000
ordinary shares. The exercise price of such options will be 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

60
<PAGE> 65

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.

61
<PAGE> 66

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% 113,346,696 285,171,532 21.0
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% 10,000,000 11,418,177 *
Analog Devices, Inc...................... 8,627,185 * 6,500,000 2,127,185 *
Actel Corporation........................ 5,153,304 * 5,153,304 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.

62
<PAGE> 67

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 21.0% 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 57.7% 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
63
<PAGE> 68

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.

64
<PAGE> 69

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.

65
<PAGE> 70

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 this document 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
66
<PAGE> 71

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
67
<PAGE> 72

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,
68
<PAGE> 73

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.

69
<PAGE> 74

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;
70
<PAGE> 75

- 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.
71
<PAGE> 76

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.

72
<PAGE> 77

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.

73
<PAGE> 78

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.

74
<PAGE> 79

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.

75
<PAGE> 80

- 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.

76
<PAGE> 81

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.
77
<PAGE> 82

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,

78
<PAGE> 83

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.
79
<PAGE> 84

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.

80
<PAGE> 85

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 858,260,547 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.

The selling shareholders and ST, who will collectively hold 797,833,046
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 90-day period following the date
of this 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

81
<PAGE> 86

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 expect to
grant to our officers, directors and employees options under our 1999 Share
Option Plan to purchase approximately 19,000,000 ordinary shares. The exercise
price of such options will be 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."

82
<PAGE> 87

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 127,800,000 ordinary shares, directly or
in the form of ADSs, in the United States and Canada; and

- an offering of an aggregate of 85,200,000 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

83
<PAGE> 88

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 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. If all
the ordinary shares (including the ordinary shares represented by ADSs) are not
sold at the public offering price, the representatives may change the public
offering price and other selling terms.

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 31,950,000 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 and the selling shareholders 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 disposed of as bona fide gifts approved by Salomon
Smith Barney Inc. and shares subject to priority allocation in the global
offering. Salomon Smith Barney Inc. in its sole discretion may release any of
the ordinary shares subject to the lock-up at any time without notice. Salomon
Smith Barney Inc. has advised us that it does not presently have any intention
to release prematurely any of the shares that are subject to the lockup
agreement.

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.

84
<PAGE> 89

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.

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

85
<PAGE> 90

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, which is a part of the registration statement, contains all
material information included in the registration statement, part of the
registration statement has been omitted from this 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.

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.

86
<PAGE> 91

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> 92

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> 93

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> 94

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> 95

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> 96

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> 97

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> 98
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> 99
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> 100
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> 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)

(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> 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)

(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> 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)

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> 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)

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> 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)

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> 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)

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> 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)

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> 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)

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> 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)

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> 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)

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> 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)

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> 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)

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> 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)

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> 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)

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> 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)

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> 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)

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> 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)

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> 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)

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> 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)

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> 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)

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> 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)

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> 122

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> 123

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> 124

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> 125

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> 126

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> 127

[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> 128

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

213,000,000 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> 129

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> 130

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> 131

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
</TABLE>

II-3
<PAGE> 132
<TABLE>
<C> <S>
**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
*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
</TABLE>

II-4
<PAGE> 133
<TABLE>
<C> <S>
*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
*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>

II-5
<PAGE> 134

- ---------------
+ To be filed by amendment.

++ 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.

* 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.

(b) Financial Statement Schedules.

None.

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> 135

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 6th day of April, 2000.

CHARTERED SEMICONDUCTOR
MANUFACTURING LTD

By: /s/ CHIA SONG HWEE
------------------------------------
Name: Chia Song Hwee
Title:
Senior Vice President and
Chief
Financial Officer

POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints Barry
Waite, Chia Song Hwee, Sum Soon Lim and Lim Ming Seong as attorneys-in-fact with
the power of substitution, for him or her in any and all capacities, to sign any
amendment to this Registration Statement (including post-effective amendments
and registration statements filed pursuant to Rule 462 and otherwise), and to
file the same, with exhibits thereto and other documents in connection
therewith, with the SEC, granting to said attorneys-in-fact, and each of the
individually, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in connection therewith, as fully to
all intents and purposes as her or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-facts or each of them
individually, or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.

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>
/s/ HO CHING Chairman of the Board April 6, 2000
- -----------------------------------------------------
Ho Ching

/s/ LIM MING SEONG Deputy Chairman of the Board April 6, 2000
- -----------------------------------------------------
Lim Ming Seong

/s/ BARRY WAITE President and Chief Executive April 6, 2000
- ----------------------------------------------------- Officer (principal executive
Barry Waite officer)

/s/ CHIA SONG HWEE Senior Vice President and Chief April 6, 2000
- ----------------------------------------------------- Financial Officer (principal
Chia Song Hwee financial and accounting officer)

/s/ SUM SOON LIM Director April 6, 2000
- -----------------------------------------------------
Sum Soon Lim

/s/ JAMES H. VAN TASSEL Director April 6, 2000
- -----------------------------------------------------
James H. Van Tassel
</TABLE>

II-7
<PAGE> 136

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <C> <S>
/s/ AUBREY C. TOBEY Director April 6, 2000
- -----------------------------------------------------
Aubrey C. Tobey

/s/ ROBERT EDMUND LA BLANC Director April 6, 2000
- -----------------------------------------------------
Robert Edmund La Blanc

/s/ ANDRE BORREL Director April 6, 2000
- -----------------------------------------------------
Andre Borrel

/s/ CHARLES E. THOMPSON Director April 6, 2000
- -----------------------------------------------------
Charles E. Thompson

/s/ KOH BENG SENG Director April 6, 2000
- -----------------------------------------------------
Koh Beng Seng

/s/ TSUGIO MAKIMOTO Director April 6, 2000
- -----------------------------------------------------
Tsugio Makimoto

/s/ LARRY JAMES Authorized Representative in the April 6, 2000
- ----------------------------------------------------- United States
Larry James
</TABLE>

II-8

<PAGE> 1
EXHIBIT 5

[On the letterhead of Allen & Gledhill]

Chartered Semiconductor Manufacturing Ltd,
60, Woodlands Industrial Park D,
Street 2,
Singapore 738406. 6th April, 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, (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]

April 6, 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 (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
April 06, 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 10.47

Dated this 21st day of March, 2000

Between

CHARTERED SEMICONDUCTOR MANUFACTURING LTD

And

ST ASSEMBLY TEST SERVICES LTD

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

TURNKEY SUBCONTRACT
AGREEMENT
FOR
SORT, ASSEMBLY AND/OR FINAL TEST SERVICES

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

CHARTERED-STATS CONFIDENTIAL
<PAGE> 2
CONTENTS

<TABLE>
<CAPTION>
Clause Page
- ------ ----
<S> <C>
1. DEFINITIONS .......................................................... 1

2. END CUSTOMER ......................................................... 2

3. SORT, ASSEMBLY AND FINAL TEST SERVICES ............................... 3

4. PLANNING ............................................................. 4

5. PURCHASE ORDERS ...................................................... 4

6. PRICING AND PAYMENT TERMS ............................................ 5

7. QUALITY CONTROL AND INSPECTION ....................................... 5

8. PERFORMANCE .......................................................... 5

9. SPECIFICATION CONTROL ................................................ 6

10. PRODUCTION HALTS ..................................................... 6

11. PROCEDURE FOR CUSTOMER RETURN ........................................ 6

12. DELIVERY ............................................................. 7

13. TERM AND TERMINATION ................................................. 8

14. FORCE MAJEURE ........................................................ 8

15. INDEMNITY ............................................................ 9

16. LIMITATION OF LIABILITY .............................................. 10

17. CONFIDENTIALITY ...................................................... 10

18. APPLICABILITY OF AGREEMENT TO AFFILIATE .............................. 11

19. NOTICES .............................................................. 11

20. WAIVER AND REMEDIES .................................................. 12

21. SEVERANCE ............................................................ 12

22. ENTIRE AGREEMENT ..................................................... 12

23. NO ASSIGNMENT OR SUB-CONTRACTING ..................................... 13

24. GOVERNING LAW ........................................................ 13

APPENDIX A - SPECIFICATIONS RELATING TO THE SORT, ASSEMBLY AND/OR
FINAL TEST OF WAFERS AND/OR UNITS ......................................... 14
</TABLE>

CHARTERED-STATS CONFIDENTIAL

<PAGE> 3
THIS TURNKEY SUBCONTRACT AGREEMENT is made this 21st day of March, 2000 (the
'Effective Date') by and between:-

(1) CHARTERED SEMICONDUCTOR MANUFACTURING LTD, a company incorporated in
Singapore, with its principal place of business at 60 Woodlands
Industrial Park D, Street 2, Singapore 738406 (hereinafter referred to
as 'Chartered'); and

(2) ST ASSEMBLY TEST SERVICES LTD, a company incorporated in Singapore, with
its principal place of business at 5 Yishun Street 23, Singapore 768442
(hereinafter referred to as 'STATS').

WHEREAS

(A) Chartered is desirous of manufacturing Wafers and/or Units (as
hereinafter defined) for End Customers (as hereinafter defined) on a
sorted, assembled and/or final tested basis. This will involve the
manufacture of Wafers by Chartered and the subsequent subcontracting of
the sort, assembly and/or final test services related to Wafers and/or
Units to a third-party;

(B) STATS is in the business of performing sort, assembly and final test
services related to Wafers and/or Units; and

(C) Chartered and STATS desire to enter into an agreement for the purpose of
having STATS perform the sort, assembly and/or final test services for
Wafers and/or Units.

NOW IT IS HEREBY AGREED as follows :-

1. DEFINITIONS

1.1 In this Agreement, unless otherwise defined or the context otherwise
requires, the following words and expressions shall bear the following
meanings:-

'Affiliate' means Chartered's joint venture fabs, Silicon Manufacturing
Partners Pte Ltd and Chartered Silicon Partners Pte Ltd, and such other
corporation that may be agreed to by the Parties from time to time.

'End Customer' means Chartered's customer who has appointed Chartered as
manufacturer of Wafers and/or Units on a sorted, assembled and/or final
tested basis.

'Parties' mean collectively Chartered and STATS, and 'Party' shall mean
any one of them.

'Products' mean End Customer's integrated circuit products identified by
Chartered and/or End Customer's product part numbers.

1
<PAGE> 4

'Technical Matters' mean all matters related to (a) transfer, evaluation
and release of test programs for sort and/or final test, (b) probecard
and/or loadboard configuration; (c) determination of good die per Wafer
('gdpw'), net die per Wafer ('ndpw'), sort test time and final test
time; (d) tester platform and package information; (e) test and/or
process flow requirements; (f) bonding diagram, marking instructions,
assembly process requirements and qualification requirements and bill of
materials, (g) quality and reliability requirements; and (h) such other
matters that the Parties may mutually designate in writing from time to
time as 'Technical Matters'.

'Units' mean finished die in packaged form.

'Wafer' means 150mm and/or 200mm silicon wafers manufactured by
Chartered and containing finished die for the Products.

'Works' mean the sort, assembly and/or final test services to be
performed by STATS with respect to the Wafers and/or Units, and/or such
other services and activities which STATS shall provide to Chartered,
including without limitation, shipping services to End Customer.

1.2 References to recitals, clauses and appendices are references to
recitals, clauses and appendices of this Agreement.

1.3 The headings in this Agreement are inserted for convenience only and
shall be ignored in the interpretation of this Agreement.

1.4 Unless the context otherwise requires, words denoting the singular
number shall include the plural and vice versa, words importing the
masculine gender shall include the feminine gender and words importing a
person shall include a company or corporation and vice versa.

2. END CUSTOMER

2.1 Where expedient, Chartered may authorise STATS to communicate directly
with End Customer on any Technical Matters. In this regard, STATS shall
provide regular updates to Chartered regarding the exchange of
information including copying (when requested by Chartered) of all
correspondence between STATS and End Customer to Chartered. For the
purposes of this Agreement, where the communication between Chartered
and STATS is related to Technical Matters, references to 'Chartered'
shall, where the context so requires, also include End Customer. All
communications between Chartered, STATS and End Customer shall comply
with Chartered's Turnkey Business Procedure BX-005 paragraph 7.3.1.

2.2 STATS shall have no authority nor shall STATS hold out to End Customer
as having the authority or right to assume, create or undertake any
obligation of any kind whatsoever, expressed or implied, on behalf of or
in the name of Chartered, without the prior written consent of
Chartered.

2
<PAGE> 5

2.3 Chartered may consign equipment for the Works, or where mutually agreed
in writing procure the direct consignment of End Customer's equipment,
to STATS for use exclusively in performing the Works for End Customer.
With respect to STATS owned equipment, STATS shall keep Chartered
informed and updated on any equipment upgrades.

3. SORT, ASSEMBLY AND FINAL TEST SERVICES

3.1 STATS shall undertake the sort, assembly and/or final test services in
accordance with the terms of this Agreement.

3.2 Chartered shall provide at its own expense requisite quantities of
probecards and loadboard per project. STATS shall be responsible for the
maintenance of and damage to the probecards and loadboards.

3.3 Chartered shall ensure that End Customer supplies to STATS all test
programs to be used in the Works (the 'Test Programs'), including the
necessary correlation units for correlation, including probecard wafers
and golden wafers. STATS may initiate and modify in any manner such Test
Programs without the prior written consent of Chartered, provided STATS
shall not implement such modified Test Program without Chartered's prior
written consent. STATS shall, at the written request of Chartered,
develop Test Programs or undertake Test Program conversion on such terms
and conditions to be mutually agreed.

3.4 Chartered shall approve and bear the cost of all other non-recurring
engineering charges to be incurred in the Works. With respect to
engineering time charge, Chartered shall pay the agreed rate for work
performed after office hours, on weekends and on public holidays by
STATS personnel on the Works in accordance with the price agreement
between Chartered and STATS (and as amended from time to time by the
Parties).

3.5 STATS shall be responsible for the maintenance of or damage to goods
consigned by End Customer to STATS (the 'Consigned Goods'), save that
STATS shall not be responsible for damage to the Consigned Goods due to
fair wear and tear and acts of God or arising out of the negligence,
default, acts or omissions to act of Chartered's employees, agents or
contractors. For the purposes of this Agreement, Consigned Goods shall
mean testers, correlation wafers, golden wafer, golden units, probecard
wafers and software.

3.6 Chartered shall obtain and maintain liability insurance and insurance
against loss or damage (including, without limitation, loss by fire,
theft and such other risks of loss as are customarily insured against)
to the Wafers and/or Units (including tested and untested Wafers and/or
Units, and packaged and unpackaged Wafers and/or Units) and all
loadboards, probecards, and Consigned Goods purchased or procured by
Chartered for the performance of the Works. Such insurance shall
(subject to Clause 16.1) be in such amounts, in such form and with such
insurers as Chartered deems appropriate.

3
<PAGE> 6
4. PLANNING

4.1 Chartered shall provide to STATS not later than the 20th day of each
calendar month, its rolling 6-monthly forecast of its monthly volume
requirements for the performance of the Works for each Product.
Chartered shall not be liable for any direct or indirect materials
incurred by STATS in reliance of the said forecasts if Chartered's
confirmed orders are less than Chartered's forecast orders for the
Works, provided that Chartered shall only be liable for materials unique
to End Customer's requirements based on Chartered's forecast for the
Works up to a maximum of 1 month plus lead time for the procurement of
the unique material. STATS shall declare all unique materials and lead
time to Chartered, and the said lead time shall be mutually agreed to by
the Parties.

4.2 STATS shall use best efforts to meet Chartered's forecast volumes. STATS
shall keep Chartered informed of its capacity situation and provide
Chartered with sufficient pre-warning of any capacity issues that STATS
may experience. Chartered agrees that it shall work with STATS in the
spirit of cooperation to develop the turnkey business for the mutual
benefit of both Parties.

5. PURCHASE ORDERS

5.1 Chartered may furnish STATS with blanket purchase orders or individual
purchase orders for the Works.

5.2 All purchase orders issued by Chartered shall reference this Agreement.
The terms and conditions of this Agreement shall exclusively govern the
Works and shall override any conflicting, amending and/or additional
terms contained in STATS' quotation and/or acceptance documents. No
variation or addition to the terms and conditions contained in this
Agreement shall be binding unless agreed in writing between the
authorised representatives of the Parties.

5.3 Chartered's purchase order shall contain such information and
requirements to be mutually agreed between the Parties.

5.4 In order for Chartered to place purchase orders with STATS, STATS shall
respond to Chartered in accordance with the following time frames:

(a) Works Quote within 24 hours of Chartered's RFQ for
Works, provided all relevant information is
given to STATS in accordance with BX-005;

(b) NRE Quote within 48 hours of Chartered's RFQ for NRE;

(c) Delivery Commit within 24 hours of Chartered's schedule
request for orders within the forecasted
volume, and within 48 hours of Chartered's
schedule request for orders in excess of
forecasted volumes.

4
<PAGE> 7

6. PRICING AND PAYMENT TERMS

6.1 The fees for the Works charged to Chartered shall be in accordance with
the terms of any price schedule agreed to by the Parties from time to
time for the Wafers and/or Units (the 'Agreed Price Schedule'). However
in special circumstances related to an extra-ordinary End Customer
requirement Chartered and STATS shall review the Agreed Price Schedule
for that End Customer.

6.2 Unless otherwise set out in Chartered's applicable purchase order,
payment for the Works shall be made by Chartered in United States
dollars within 30 days from the date of the acceptance of the Works by
Chartered. Chartered shall make payment by telegraphic transfer to an
account nominated by STATS, or such other method requested by STATS.

6.3 All invoices issued by STATS for the Works shall identify the Wafers
and/or Units and the relevant Chartered purchase order number, Product
part number, description of items and quantity of items shipped and the
type of services performed by STATS.

6.4 Chartered and STATS shall not disclose the terms of this Agreement, the
Agreed Price Schedule, STATS quotation to Chartered or Chartered
purchase order to STATS, to End Customer.

7. QUALITY CONTROL AND INSPECTION

In order to control and ensure quality assurance, Chartered will have
the right at all reasonable times and on reasonable notice, either by
itself or through its auditors, to inspect the assembly lines,
warehouse, facilities, equipment, materials, data, billings and systems
connected with the Works, subject always to the confidentiality
undertakings in Clause 17. STATS undertakes to make available all
documentation and grant Chartered all necessary access rights for
Chartered or its auditors to conduct audit as permitted under this
Clause 7.

8. PERFORMANCE

8.1 STATS shall implement a continuous improvement program where STATS will
work to reduce cycle time, reaching mutually agreed performance
benchmarks.

8.2 STATS shall implement a continuous improvement program where STATS will
work with Chartered on an ongoing basis to reduce costs against an
agreed cost down target. Targets will be set based on cost analysis
received and final pricing agreed between the Parties.

5
<PAGE> 8
9. SPECIFICATION CONTROL

9.1 Notwithstanding that Chartered will be referencing STATS standard
manufacturing and quality flows and procedures, STATS shall at the same
time be required to comply with Chartered standard operating
specifications relating to back-end services and subcontractors. The
list of applicable STATS specifications and Chartered specifications are
set out in Appendix A hereto. In addition, STATS shall comply with such
other specifications (including End Customer specifications and
procedures) that Chartered may issue from time to time.

10. PRODUCTION HALTS

10.1 Chartered may at any time request STATS to halt the Works still
in-process as a result of reliability and quality issues, and STATS
shall effect stoppage immediately. The Works shall remain on hold
pending written directions from Chartered.

10.2 If Chartered decides to cancel any part of the halted Works, Chartered
shall pay to STATS the cost of the work-in-progress only, as at the date
of Chartered's written notice to halt the Works. The cost of the
work-in-progress arising from the halt shall be borne by STATS if the
Works halt was due to quality and reliability defects caused by STATS,
without prejudice to Chartered's right to claim against STATS for any
defects in Wafers and/or Units under Clause 11.

10.3 STATS shall, if commercially feasible, re-start the Works as soon as
possible after receipt of Chartered's written request. The cost of
re-start shall be borne by STATS if the Works halt was due to quality
and reliability defects caused by STATS, without prejudice to
Chartered's right to claim against STATS for any defects in Wafers
and/or Units under Clause 11.

11. PROCEDURE FOR CUSTOMER RETURN

11.1 STATS warrants that the Works performed and the Wafers and/or Units
supplied hereunder shall conform to Chartered's specifications and will
be free from any defects in workmanship, materials and manufacture for a
period of 90 days from the date of acceptance of the Wafers and/or Units
by Chartered. STATS shall work with End Customer and/or Chartered to
resolve any defects that occur after the 90-day warranty period.

11.2 STATS shall be under no liability for probe yield in the Wafers or final
test yield in the Units, unless the loss in yield is due to the Works
performed by STATS.

11.3 With respect to Wafers' and/or Units returned with respect to this
Clause 11, STATS shall at STATS' sole option, and at STATS' sole expense
and with top

6
<PAGE> 9

priority, replace, repair, retest or rework the subject Wafers and/or
Units. Such replaced, repaired, retested or reworked Wafers and/or Units
shall be delivered Exworks (STATS' factory in Singapore) (Incoterms
2000) or such other delivery terms as may be specified by End Customer.

11.4 SUBJECT TO CLAUSE 16, THE FOREGOING STATES STATS' ENTIRE LIABILITY,
WHETHER IN CONTRACT, TORT OR OTHERWISE, FOR ALL CLAIMS BASED ON FAILURE
OR DEFECTS IN WAFERS AND/OR UNITS. THE EXPRESS TERMS OF THIS AGREEMENT
ARE IN LIEU OF ALL WARRANTIES, CONDITIONS, TERMS, UNDERTAKINGS AND
OBLIGATIONS IMPLIED BY STATUTE, COMMON LAW, CUSTOM, TRADE USAGE, COURSE
OF DEALING OR OTHERWISE, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED TO
THE FULLEST EXTENT PERMITTED BY LAW AND STATS SPECIFICALLY DISCLAIMS ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

12. DELIVERY

12.1 Wafers shall be delivered by Chartered to STATS for the performance of
the Works Exworks (STATS' factory in Singapore) (Incoterms 2000). Title
to the Wafers and/or Units (including finished goods and
work-in-progress) and equipment purchased or procured by Chartered for
the performance of the Works, shall be vested in Chartered throughout
the performance of the Works.

12.2 STATS shall strictly adhere to the cycle times that have been mutually
agreed between the Parties, and good Wafers and/or Units and (if
requested by Chartered or End Customer) reject Wafers and/or Units shall
be delivered, Exworks (STATS' factory in Singapore) (Incoterms 2000).
STATS shall immediately give Chartered written notice of any prospective
failure to deliver within the Scheduled Delivery Date.

12.3 STATS shall deliver all quantities of Wafers and/or Units to Chartered
and/or End Customer in STATS standard containers and packaging which
comply with Chartered's specifications as notified by Chartered to STATS
from time to time, with proper labels identifying the specific Product
lot number and shall be accompanied by an invoice specifying the
purchase order number, quantity and agreed processing documentation.
STATS shall forward a copy of the bill of lading or the airway bill as
soon as practicable to Chartered for the delivered Wafers and/or Units,
and a monthly report furnishing the details of the month's shipment made
to the End Customer, for GST billing purposes.

12.4 STATS shall not scrap any Wafers and/or Units without first seeking the
prior written permission of Chartered.

7
<PAGE> 10
13. TERM AND TERMINATION

13.1 This Agreement shall commence on the Effective Date and shall continue
for a period of 3 years therefrom and shall thereafter be automatically
renewed annually, unless earlier terminated in the following events :-

(a) by agreement of the Parties;

(b) forthwith by either Party if the other commits any material breach
of any term of this Agreement and which in the case of a breach
capable of being remedied shall not have been remedied within 60
days of a written request to remedy the same;

(i) the inability of the other Party to pay its debts in the
normal course of business; or

(ii) the other Party ceasing or threatening to cease wholly or
substantially to carry on its business, otherwise than for
the purpose of a reconstruction or amalgamation without
insolvency; or

(iii) any encumbrancer taking possession of or a receiver,
trustee or judicial manager being appointed over the whole
or any substantial part of the undertaking, property or
assets of the other Party; or

(iv) the making of an order by a court of competent
jurisdiction or the passing of a resolution for the
winding-up of the other Party or any company controlling
the other Party, otherwise than for the purpose of a
reconstruction or amalgamation without insolvency.

13.2 Termination of this Agreement pursuant to Clause 13.1 shall take effect
immediately upon the issue of a written notice to that effect by the
Party terminating the Agreement to the other. The termination of this
Agreement however caused shall be without prejudice to any obligations
or rights of either Party which have accrued prior to such termination
and shall not affect any provision of this Agreement which is expressly
or by implication provided to come into effect on or to continue in
effect after such termination.

14. FORCE MAJEURE

14.1 Each Party's obligations under this Agreement shall be suspended upon
the occurrence of a force majeure event such as act of God, flood,
earthquake, fire, explosion, act of government, war, civil commotion,
insurrection, embargo,

8
<PAGE> 11

riots, lockouts, labour disputes affecting such Party, for such period
as such force majeure event may subsist. Upon the occurrence of a force
majeure event, the affected Party shall notify the other Party in
writing of the same and shall by subsequent written notice after the
cessation of such force majeure event inform the other Party of the date
on which that Party's obligation under this Agreement shall be
reinstated.

14.2 Notwithstanding anything in this Clause 14, upon the occurrence of a
force majeure event affecting either Party, and such force majeure event
continues for a period exceeding 6 consecutive months without a prospect
of a cure of such event, the other Party shall have the option, in its
sole discretion, to terminate this Agreement. Such termination shall
take effect immediately upon the written notice to that effect from the
other Party to the Party affected by the force majeure event.

15. INDEMNITY

15.1 Chartered shall indemnify, hold harmless and defend STATS from and
against any claim, suit, demand, or action alleging that the
manufacture, sale, or other disposition of the Wafers and/or the Units
or a process, design or Test Program licensed from or otherwise provided
by Chartered or End Customer infringes a patent, copyright, trade
secret, or any other proprietary right of any third-party, including,
without limitation, any infringement based on specifications furnished
by Chartered or End Customer or resulting from the use of any Test
Program, equipment or process specified by Chartered or End Customer,
and Chartered shall indemnify and hold harmless STATS against any and
all direct losses, liabilities, damages, awards of settlement (including
court costs) and expenses (including all reasonable attorney's fees,
whether or not legal proceedings are commenced) arising from any such
claim, suit, demand, or action.

15.2 STATS shall notify Chartered of any claim of infringement or of
commencement of any suit, action, or proceedings against STATS (the
'STATS Proceedings') alleging infringement of any intellectual property
rights of any third-party by Chartered's Wafers and/or Units or a
process or design licensed from or otherwise provided by Chartered or
End Customer or the use of a Test program provided by Customer, promptly
after receiving notice thereof and shall provide reasonable assistance
to Chartered (at Chartered's expense) in connection with the defence
thereof. Chartered shall have the right in its sole discretion and at
its expense to assume full control of the defence and settlement of any
such STATS Proceedings and in any and all negotiations with respect
thereto.

15.3 STATS shall indemnify, hold harmless and defend Chartered from and
against any claim, suit, demand, or action alleging that the Works or
any part of the Works infringes a patent, copyright, trade secret, or
any other proprietary right of any third-party, and STATS shall
indemnify and hold harmless Chartered against any and all direct losses,
liabilities, damages, awards of settlement (including court costs) and
expenses (including all reasonable attorney's fees, whether or not legal
proceedings are commenced) arising from any such claim, suit, demand, or
action.

9
<PAGE> 12

15.4 Chartered shall notify STATS of any claim of infringement or of
commencement of any suit, action or proceedings (the 'Chartered
Proceedings') alleging infringement of any intellectual property rights
of any third-party by the Works or any part of the Works, promptly after
receiving notice thereof and shall provide reasonable assistance to
STATS (at STATS' expense) in connection with the defence thereof. STATS
shall have the right in its sole discretion and at its expense to assume
full control of the defence and settlement of any such Proceedings and
in any and all negotiations with respect thereto.

15.5 SUBJECT TO CLAUSE 16, EITHER PARTY'S AGGREGATE CUMULATIVE LIABILITY TO
THE OTHER PARTY ARISING OUT OF THE INDEMNIFICATION UNDER THIS CLAUSE 15
SHALL NOT EXCEED THE TOTAL AMOUNT RECEIVED BY STATS FROM CHARTERED IN
RESPECT OF THE PERFORMANCE OF THE WORKS BY STATS. THE FOREGOING STATES
EACH PARTY'S ENTIRE LIABILITY AND OBLIGATION (EXPRESS, IMPLIED,
STATUTORY OR OTHERWISE) WITH RESPECT TO INTELLECTUAL PROPERTY
INFRINGEMENT OR CLAIMS THEREFOR REGARDING ANY PART OF THE WORKS
PERFORMED PURSUANT TO THIS AGREEMENT.

16. LIMITATION OF LIABILITY

16.1 STATS' liability to Chartered for Wafers or die destroyed or damaged by
STATS shall not exceed 100% of the average selling price ('ASP') charged
by STATS to Chartered for the Works rendered or to be rendered on the
damaged or destroyed Wafers or die.

16.2 Save as provided in Clauses 16.1, the total liability of either Party on
all claims of any kind, whether in contract, tort (including
negligence), strict liability or otherwise (including as a result of
intellectual property infringement) arising out of the performance or
breach of this Agreement or use of the Wafers and/or Units or the
performance of the Works shall not exceed the total amount received by
STATS from Chartered in respect of the performance of the Works by
STATS.

16.3 In no event shall either Party be liable to the other with respect to
any subject matter of this Agreement under any contract, tort (including
negligence), strict liability or other legal or equitable theory, for
any incidental, consequential, special, exemplary or indirect damages of
any sort even if such Party has been informed of the possibility of such
damages.

17. CONFIDENTIALITY

17.1 All Confidential Information shall be kept confidential by the recipient
unless or until the recipient Party can reasonably demonstrate that any
such Confidential Information is, or part of it is, in the public domain
through no fault of its own, whereupon to the extent that it is in the
public domain or is required to be disclosed by law this obligation
shall cease. For the purposes of this Agreement,

10
<PAGE> 13

'Confidential Information' shall mean all communications between the
Parties and/or between either Party and End Customer, and all
information and other materials supplied to or received by either of
them from the other or End Customer (a) prior to or on the date of this
Agreement whether or not marked confidential; (b) after the date of this
Agreement which is marked confidential with an appropriate legend,
marking, stamp or other obvious written identification by the disclosing
Party and/or End Customer, and (c) all information concerning the
business transactions and the financial arrangements of the Parties
and/or End Customer with any person with whom any of them is in a
confidential relationship with regard to the matter in question coming
to the knowledge of the recipient.

17.2 The Parties shall take all reasonable steps to minimise the risk of
disclosure of Confidential Information, by ensuring that only they
themselves and such of their employees and directors whose duties will
require them to possess any of such information shall have access
thereto, and will be instructed to treat the same as confidential.

17.3 The obligation contained in this Clause 17 shall endure, even after the
termination of this Agreement, for a period of 5 years from the date
expiry or termination of this Agreement except and until such
Confidential Information enters the public domain as set out above.

18. APPLICABILITY OF AGREEMENT TO AFFILIATE

Affiliates of Chartered may enter into agreements for the Works with
STATS in their own name and for their own account under the terms and
conditions of this Agreement.

19. NOTICES

19.1 Addresses

All notices, demands or other communications required or permitted to be
given or made under or in connection with this Agreement shall be in
writing and shall be sufficiently given or made (a) if delivered by hand
or commercial courier or (b) sent by pre-paid registered post or (c)
sent by legible facsimile transmission (provided that the receipt of
such facsimile transmission is confirmed and a copy thereof is sent
immediately thereafter by pre-paid registered post or commercial
courier) addressed to the intended recipient at its address or facsimile
number set out below. A Party may from time to time notify the others of
its change of address or facsimile number in accordance with this Clause
19.

STATS

5 Yishun Street 23
Singapore 768442
Facsimile no: (65) 755-5082

11
<PAGE> 14

Attention: Legal Department

Chartered

60 Woodlands Industrial Park D
Street 2
Singapore 738406
Facsimile no: (65) 362-2909
Attention: Legal Department

19.2 Deemed Delivery

Any such notice, demand or communication shall be deemed to have been
duly served (a) if delivered by hand or commercial courier, or sent by
pre-paid registered post, at the time of delivery; or (b) if made by
successfully transmitted facsimile transmission, at the time of dispatch
(provided that the receipt of such facsimile transmission is confirmed
and that immediately after such dispatch, a copy thereof is sent by
pre-paid registered post or commercial courier).

20. WAIVER AND REMEDIES

20.1 No delay or neglect on the part of either Party in enforcing against the
other Party any term or condition of this Agreement or in exercising any
right or remedy under this Agreement shall either be or be deemed to be
a waiver or in any way prejudice any right or remedy of that Party under
this Agreement.

20.2 No remedy conferred by any of the provisions of this Agreement is
intended to be exclusive of any other remedy which is otherwise
available at law, in equity, by statute or otherwise and each and every
other remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law, in equity,
by statute or otherwise. The election of any one or more of such
remedies by either of the Parties shall not constitute a waiver by such
Party of the right to pursue any other available remedy.

21. SEVERANCE

If any provision or part of this Agreement is rendered void, illegal or
unenforceable in any respect under any enactment or rule of law, the
validity, legality and enforceability of the remaining provisions shall
not in any way be affected or impaired thereby.

22. ENTIRE AGREEMENT

22.1 This Agreement and the Appendices constitutes the entire agreement
between STATS and Chartered and shall supersede all previous agreements
and undertakings between Parties with respect to the subject matter
hereof.

12
<PAGE> 15

22.2 The following Appendices are hereby deemed a part of this Agreement and
incorporated herein by reference. The term 'Agreement' includes the
following Appendices:-

Appendix A Specifications relating to Sort, Assembly and Final
Test of Wafers and/or Units

23. NO ASSIGNMENT OR SUB-CONTRACTING

Unless otherwise agreed in writing by the Parties, this Agreement may
not be assigned or sub-contracted by either Party to any third-party
without the prior written consent of the other Party, save that STATS
may subcontract the plating process, probecard, loadboard and tape and
reel services to its nominated subcontractors subject to Chartered's
prior written consent for the change of subcontractors.

24. GOVERNING LAW

24.1 This Agreement shall be governed by and construed in accordance with the
substantive laws of Singapore. The Parties hereby irrevocably submit to
the non-exclusive jurisdiction of the courts of Singapore.

24.2 The Parties hereby specifically exclude the application of the United
Nations Convention on Contracts for the International Sale of Goods to
this Agreement.

IN WITNESS WHEREOF the Parties have hereunto entered into this Agreement as at
the date first above written.

/s/ Jacky McNulty
- ------------------------------------------
Name: Jacky McNulty
Title: Director, Supply Management
for and on behalf of
CHARTERED SEMICONDUCTOR MANUFACTURING LTD

/s/ Choong Chan Yong
- ------------------------------------------
Name: Choong Chan Yong
Title: Vice President, Sales and Marketing
for and on behalf of
ST ASSEMBLY TEST SERVICES LTD

13
<PAGE> 16
APPENDIX A

SPECIFICATIONS RELATING TO THE SORT, ASSEMBLY AND/OR FINAL TEST OF
WAFERS AND/OR UNITS

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
STATS SPECIFICATIONS
(AND AMENDMENTS THERETO)
- --------------------------------------------------------------------------------
<S> <C>
DOCUMENT NO. DOCUMENT TITLE

TG080003QP Project Initiation/NRE and Program Acceptance
Criteria

QT090010QP QA Incoming Wafer Inspection Procedure

TG160001QP Test Program/Audit Verification

TG020001QP Test Administration Procedure

QT090004QP QA Outgoing Wafer Inspection Procedure

AD140014QP Chartered Wafer Drop Ship Procedure
- --------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
CHARTERED SPECIFICATIONS
(AND AMENDMENTS THERETO)
- --------------------------------------------------------------------------------
DOCUMENT NO. DOCUMENT TITLE
<S> <C>
QX-079 Chartered Subcontractor's Quality Management
Procedure

QX-079-XX01 Work Instruction for Wafer Sort, Final Test and
Assembly House

QX-060 Suppliers and Subcontractors Major Change Control

QX-038 Procedure for Customer Returns

BX-005 Turnkey Business Procedure
- --------------------------------------------------------------------------------
</TABLE>

<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

April 6, 2000