As filed with the Securities and Exchange Commission on June 23, 2005
===============================================================================
                                   UNITED STATES
                         SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549

                                     FORM 20-F
[_]  REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES
     EXCHANGE ACT OF 1934
                                         OR
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
     For the fiscal year ended December 31, 2004
                                         OR
[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                        Commission file number: 001-16125
                                     [LOGO]
             (Exact Name of Registrant as Specified in Its Charter)

                    Advanced Semiconductor Engineering, Inc.
                 (Translation of Registrant's Name into English)

                                REPUBLIC OF CHINA
                 (Jurisdiction of Incorporation or Organization)

                               26 Chin Third Road
                          Nantze Export Processing Zone
                            Nantze, Kaohsiung, Taiwan
                                Republic of China
                    (Address of Principal Executive Offices)

 Securities registered or to be registered pursuant to Section 12(b) of the Act:
                                      None

 Securities registered or to be registered pursuant to Section 12(g) of the Act:

  Title of Each Class                 Name of Each Exchange on which Registered
------------------------              -----------------------------------------
Common Shares, par value                    The New York Stock Exchange*
   NT$10.00 each

     *Traded in the form of American Depositary Receipts evidencing American
             Depositary Shares, each representing five Common Shares
                                (Title of Class)

 Securities for which there is a reporting obligation pursuant to Section 15(d)
                                   of the Act:

                                      None
                                (Title of Class)

   Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report:
                4,100,000,000 Common Shares, par value NT$10 each

     Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required t-o file such reports) and (2) has been subject to such
filing requirements for the past 90 days.

          Yes [X]  No [_]

   Indicate by check mark which financial statement item the Registrant has
elected to follow.

          Item 17 [_]  Item 18 [X]

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


<PAGE>


                                TABLE OF CONTENTS
                                -----------------

                                                                           Page

USE OF CERTAIN TERMS.........................................................1
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS............................1
PART I.......................................................................3
    Item 1.  Identity of Directors, Senior Management and Advisers...........3
    Item 2.  Offer Statistics and Expected Timetable.........................3
    Item 3.  Key Information.................................................3
           SELECTED FINANCIAL DATA...........................................3
           CAPITALIZATION AND INDEBTEDNESS...................................7
           REASON FOR THE OFFER AND USE OF PROCEEDS..........................7
           RISK FACTORS......................................................7
    Item 4.  Information on the Company.....................................21
           HISTORY AND DEVELOPMENT OF THE COMPANY...........................21
           BUSINESS OVERVIEW................................................23
           ORGANIZATIONAL STRUCTURE.........................................43
           PROPERTY, PLANTS AND EQUIPMENT...................................46
    Item 5.  Operating and Financial Review and Prospects...................47
           OPERATING RESULTS AND TREND INFORMATION..........................47
           LIQUIDITY AND CAPITAL RESOURCES..................................62
           RESEARCH AND DEVELOPMENT.........................................65
           OFF-BALANCE SHEET ARRANGEMENTS...................................66
           TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS....................67
    Item 6.  Directors, Senior Management and Employees.....................67
           DIRECTORS AND SENIOR MANAGEMENT AND BOARD PRACTICES..............67
           COMPENSATION.....................................................70
           EMPLOYEES........................................................71
           SHARE OWNERSHIP..................................................72
    Item 7.  Major Shareholders and Related Party Transactions..............73
           MAJOR SHAREHOLDERS...............................................73
           RELATED PARTY TRANSACTIONS.......................................74
    Item 8.  Financial Information..........................................75
           CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION..........75
           LEGAL PROCEEDINGS................................................75
           DIVIDENDS AND DIVIDEND POLICY....................................75
           SIGNIFICANT CHANGES..............................................77
    Item 9.  The Offer and Listing..........................................77
           OFFER AND LISTING DETAILS........................................77
           PLAN OF DISTRIBUTION.............................................79
           MARKETS..........................................................79
           SELLING SHAREHOLDERS.............................................79
           DILUTION.........................................................79
           EXPENSES OF THE ISSUE............................................79
    Item 10.  Additional Information........................................80
           SHARE CAPITAL....................................................80
           ARTICLES OF INCORPORATION........................................80
           MATERIAL CONTRACTS...............................................85
           EXCHANGE CONTROLS................................................86
           TAXATION.........................................................86
           DIVIDENDS AND PAYING AGENTS......................................90
           STATEMENT BY EXPERTS.............................................90
           DOCUMENTS ON DISPLAY.............................................90
           SUBSIDIARY INFORMATION...........................................90
    Item 11.  Quantitative and Qualitative Disclosures about Market Risk....90
    Item 12.  Description of Securities Other Than Equity Securities........93


<PAGE>


PART II.....................................................................93
    Item 13.  Defaults, Dividend Arrearages and Delinquencies...............93
    Item 14.  Material Modifications to the Rights of Security Holders
    and Use of Proceeds.....................................................93
    Item 15.  Controls and Procedures.......................................93
    Item 16.  [Reserved]....................................................94
    Item 16A.  Audit Committee Financial Expert.............................94
    Item 16B.  Code of Ethics...............................................94
    Item 16C.  Principal Accountant Fees and Services.......................94
    Item 16D.  Exemptions from the Listing Standards for Audit Committees...95
    Item 16E.  Purchases of Equity Securities by the Issuer and Affiliated
    Purchasers..............................................................95
PART III....................................................................95
    Item 17.  Financial Statements..........................................95
    Item 18.  Financial Statements..........................................95
    Item 19.  Exhibits......................................................95


<PAGE>


                              USE OF CERTAIN TERMS

     All references herein to (i) the "Company", "ASE Group", "ASE Inc.", "we",
"us", or "our" are to Advanced Semiconductor Engineering, Inc. and, unless the
context requires otherwise, its subsidiaries, (ii) "ASE Test" are to ASE Test
Limited and its subsidiaries, (iii) "ASE Test Taiwan" are to ASE Test, Inc., a
company incorporated under the laws of the ROC, (iv) "ASE Test Malaysia" are to
ASE Electronics (M) Sdn. Bhd., a company incorporated under the laws of
Malaysia, (v) "ISE Labs" are to ISE Labs, Inc., a corporation incorporated under
the laws of the State of California, (vi) "ASE Philippines" are to ASE Holdings
Electronics (Philippines) Inc., a company previously incorporated under the laws
of the Philippines, (vii) "Universal Scientific" are to Universal Scientific
Industrial Co., Ltd., a company incorporated under the laws of the ROC, (viii)
"ASE Material" are to ASE Material Inc., a company previously incorporated under
the laws of the ROC that merged into ASE Inc. on August 1, 2004, (ix) "ASE
Korea" are to ASE (Korea) Inc., a company incorporated under the laws of the
Republic of Korea, (x) "ASE Chung Li" are to ASE (Chung Li) Inc., a company
previously incorporated under the laws of the ROC that merged into ASE Inc. on
August 1, 2004, (xi) "ASE Shanghai" are to ASE (Shanghai) Ltd., a company
incorporated under the laws of the PRC, (xii) "Hung Ching" are to Hung Ching
Development & Construction Co. Ltd., a company incorporated under the laws of
the ROC, (xiii) the "Securities Act" are to the U.S. Securities Act of 1933, as
amended, and (xiv) the "Exchange Act" are to the U.S. Securities Exchange Act of
1934, as amended.

     All references to the "Republic of China", the "ROC" and "Taiwan" are to
the Republic of China, including Taiwan and certain other possessions. All
references to "Korea" or "South Korea" are to the Republic of Korea. All
references to the "PRC" are to the People's Republic of China and exclude
Taiwan, Macau and Hong Kong.

     We publish our financial statements in New Taiwan dollars, the lawful
currency of the ROC. In this annual report, references to "United States
dollars", "U.S. dollars" and "US$" are to the currency of the United States;
references to "New Taiwan dollars", "NT dollars" and "NT$" are to the currency
of the ROC; references to "RMB" are to the currency of the PRC; references to
"JP(Y)" are to the currency of Japan; references to "EUR" are to the currency of
the European Union; and references to "KRW" are to the currency of the Republic
of Korea. Unless otherwise noted, all translations from NT dollars to U.S.
dollars were made at the noon buying rate in The City of New York for cable
transfers in NT dollars per U.S. dollar as certified for customs purposes by the
Federal Reserve Bank of New York as of December 31, 2004, which was
NT$31.74=US$1.00. All amounts translated into U.S. dollars in this annual report
are provided solely for your convenience and no representation is made that the
NT dollar or U.S. dollar amounts referred to herein could have been or could be
converted into U.S. dollars or NT dollars, as the case may be, at any particular
rate or at all. On May 31, 2005, the noon buying rate was NT$31.13=US$1.00.


                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     This annual report on Form 20-F contains "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, including
statements regarding our future results of operations and business prospects.
Although these forward-looking statements, which may include statements
regarding our future results of operations, financial condition or business
prospects, are based on our own information and information from other sources
we believe to be reliable, you should not place undue reliance on these
forward-looking statements, which apply only as of the date of this annual
report. Some of these forward-looking statements are derived from projections
made and published by Gartner Dataquest and Semiconductor Industry Association.
We were not involved in the preparation of these projections. The words
"anticipate", "believe", "estimate", "expect", "intend", "plan" and similar
expressions, as they relate to us, are intended to identify these
forward-looking statements in this annual report. Our actual results of
operations, financial condition or business prospects may differ materially from
those expressed or implied in these forward-looking statements for a variety of
reasons, including risks associated with cyclicality and market conditions in
the semiconductor industry; demand for the outsourced semiconductor packaging
and testing services we offer and for such outsourced services generally; the
highly competitive semiconductor industry; our ability to introduce new
packaging, interconnect materials and testing technologies in order to remain
competitive; our ability to successfully integrate pending and future mergers
and acquisitions; international business activities; our business strategy; our
future expansion plans and capital expenditures; the strained relationship
between the ROC and the

                                       1


<PAGE>


People's Republic of China, or the PRC; general economic and political
conditions; possible disruptions in commercial activities caused by natural or
human-induced disasters, including terrorist activity and armed conflict;
fluctuations in foreign currency exchange rates; and other factors. For a
discussion of these risks and other factors, see "Item 3. Key Information--Risk
Factors".

                                       2


<PAGE>


                                     PART I

Item 1.  Identity of Directors, Senior Management and Advisers

   Not applicable.

Item 2.  Offer Statistics and Expected Timetable

   Not applicable.

Item 3.  Key Information

SELECTED FINANCIAL DATA

     The selected consolidated income statement data and cash flow data for the
years ended December 31, 2002, 2003 and 2004, and the selected consolidated
balance sheet data as of December 31, 2003 and 2004, set forth below are derived
from our audited consolidated financial statements included in this annual
report and should be read in conjunction with, and are qualified in their
entirety by reference to, these consolidated financial statements. Our
consolidated financial statements as of and for the years ended December 31,
2003 and 2004 have been audited by Deloitte & Touche, a member firm of Deloitte
Touche Tohmatsu. Our consolidated financial statements as of and for the year
ended December 31, 2002 have been audited by TN Soong & Co, independent public
accountants, which was at the time of such financial statements an associate
member firm of Deloitte Touche Tohmatsu. TN Soong & Co and Deloitte & Touche
(Taiwan) combined on June 1, 2003 to establish Deloitte & Touche, a member firm
of Deloitte Touche Tohmatsu. The selected consolidated income statement data and
cash flow data for the years ended December 31, 2000 and 2001 and the selected
consolidated balance sheet data as of December 31, 2000, 2001 and 2002 set forth
below are derived from our audited consolidated financial statements not
included in this annual report. Our consolidated financial statements as of and
for the years ended December 31, 2000 and 2001 have been audited by TN Soong &
Co, independent public accountants, which was at the time of such financial
statements an associate member firm of Deloitte Touche Tohmatsu. Prior to April
22, 2002, TN Soong & Co was a member firm of Andersen Worldwide SC. Our
consolidated financial statements have been prepared and presented in accordance
with generally accepted accounting principles in the ROC, or ROC GAAP, which
differ in material respects from generally accepted accounting principles in the
United States, or U.S. GAAP. See notes 29 and 30 to our consolidated financial
statements for a description of the principal differences between ROC GAAP and
U.S. GAAP for the periods covered by these consolidated financial statements.

<TABLE>
                                          As of and for the Year Ended December 31,
                               -----------------------------------------------------------------
                                   2000      2001       2002       2003           2004
                               ---------- --------- ---------- ---------- ----------------------
                                    NT$       NT$        NT$        NT$        NT$        US$

                                    (in millions, except earnings per share and per ADS data)
<S>                            <C>        <C>        <C>        <C>         <C>       <C>
ROC GAAP:
Income Statement Data:
Net revenues..................  50,893.4   38,367.8   45,586.8   57,311.8   81,712.6   2,574.5
Cost of revenues.............. (35,567.3) (32,957.0) (38,492.2) (46,466.5) (65,447.1) (2,062.0)
                               ---------  ---------  ---------  ---------  ---------  --------
Gross profit..................  15,326.1    5,410.8    7,094.6   10,845.3   16,265.5     512.5
Total operating expenses......  (5,449.0)  (5,872.9)  (6,554.2)  (7,574.8)  (8,714.3)   (274.6)
                               ---------  ---------  ---------  ---------  ---------  --------
Operating expenses:
  Selling.....................  (1,020.5)    (877.9)    (909.4)  (1,204.9)  (1,041.2)    (32.8)
  General and
   administrative.............  (2,606.2)  (2,797.6)  (2,780.2)  (3,196.6)  (4,211.0)   (132.8)
  Goodwill amortization.......    (559.8)    (692.9)    (815.6)    (819.3)    (877.6)    (27.6)
  Research and development....  (1,262.5)  (1,504.5)  (2,049.0)  (2,354.0)   2,584.5)    (81.4)
                               ---------  ---------  ---------  ---------  ---------  --------
Income (loss) from
  operations..................   9,877.1     (462.1)     540.4    3,270.5    7,551.2     237.9
Net non-operating income
  (expense):
  Investment income
   (loss) on long-term
   investments--net...........     195.7     (868.8)    (162.4)     (20.1)    (174.4)     (5.5)
  Goodwill amortization.......   (363.0)     (378.0)    (247.9)    (220.6)    (220.6)     (7.0)
  Gain (loss) on sale of
   investments--net...........      91.7       50.7      101.3      618.9       57.1       1.8
  Foreign exchange gain
   (loss)--net................     302.7      247.5     (397.9)    (386.8)    (146.2)     (4.6)
  Realized loss on
   long-term investments......      --           --         --     (354.8)       - -        --
  Interest income
   (expense)--net.............  (1,538.0)  (1,739.3)  (1,578.6)  (1,304.7)    (898.7)    (28.3)
</TABLE>

                                       3


<PAGE>


<TABLE>

                                          As of and for the Year Ended December 31,
                               -----------------------------------------------------------------
                                    2000       2001       2002       2003            2004
                               ---------- --------- ---------- ---------- ----------------------
                                    NT$       NT$        NT$        NT$        NT$        US$

                                    (in millions, except earnings per share and per ADS data)
<S>                             <C>         <C>       <C>         <C>       <C>          <C>
  Impairment of
   long-lived assets(1).              --         --   (1,225.6)        --         --        --
  Impairment of
   goodwill(2)..........              --         --         --         --   (1,950.1)    (61.4)
  Other investment loss(3)            --         --         --         --     (512.0)    (16.1)
  Others--net............         (162.6)     164.5      261.0     (114.6)    (174.5)     (5.5)
                               ---------  --------- ---------- ----------   --------  --------
Income (loss) before
  income tax............         8,403.6   (2,985.5)  (2,709.7)   1,487.8    3,531.8     111.3
Income tax benefit
  (expense).............        (1,065.8)     199.2    1,140.3    1,278.1    1,396.3      44.0
                               ---------  --------- ---------- ----------   --------  --------
Income (loss) before
  extraordinary loss and
  cumulative effect of
  change in accounting
  principle.............         7,337.8   (2,786.3)  (1,569.4)   2,765.9    4,928.1     155.3
Extraordinary loss......              --     (144.6)     (34.6)     (75.7)        --        --
Cumulative effect of
  change in accounting
  principle(4)..........              --         --         --         --      (26.8)     (0.9)
Minority interest in net
  loss (income) of
  subsidiaries..........        (1,500.6)     788.7    1,733.0       52.6     (691.6)    (21.8)
                               ---------  --------- ---------- ----------   --------  --------
Net income (loss).......         5,837.2   (2,142.2)     129.0    2,742.8    4,209.7     132.6
                               =========  ========= ========== ==========   ========  ========
Earnings per common
  share(5):
  Basic.................            1.58      (0.56)      0.04       0.74       1.09      0.03
  Diluted...............            1.54      (0.56)      0.04       0.73       1.06      0.03
Dividends per common
  share(6)..............            3.15       1.70         --       1.00       0.57      0.02
Earnings per equivalent
  ADS(5):
  Basic.................            7.89      (2.82)      0.18       3.69       5.46      0.17
  Diluted...............            7.71      (2.82)      0.18       3.65       5.31      0.17
Number of common
  shares(7):
  Basic.................         3,698.7    3,801.5    3,609.8    3,721.2    3,856.0   3,856.0
  Diluted...............         3,698.7    3,801.5    3,609.8    3,755.6    4,110.1   4,110.1
Number of equivalent ADSs:
  Basic.................           739.7      760.3      722.0      744.2      771.2     771.2
  Diluted...............           739.7      760.3      722.0      751.1      822.0     822.0
BALANCE SHEET DATA:
Current assets:
  Cash and cash
   equivalents..........        14,166.5   11,770.7    9,829.5    8,562.4    5,975.1     188.3
  Short-term investments         1,682.7    4,601.2    2,590.4    3,017.8    3,194.2     100.6
  Notes and accounts
   receivable...........         9,260.6    7,126.1    8,998.5   12,909.7   13,676.2     430.9
  Inventories...........         3,246.3    2,768.4    3,131.7    4,691.8    9,437.3     297.3
  Others................         2,431.6    3,383.2    2,481.7    2,276.2    3,612.1     113.8
                               ---------  --------- ---------- ----------   --------  --------
  Total.................        30,787.7   29,649.6   27,031.8   31,457.9   35,894.9   1,130.9
Long-term investments...        10,712.2    9,530.4    6,566.7    6,342.8    4,907.4     154.6
Properties..............        60,566.2   60,555.1   63,088.9   67,339.9   82,386.9   2,595.7
Other assets............         1,275.6    1,342.3    2,675.8    4,587.4    7,425.3     234.0
Goodwill................         4,999.5    5,248.9    5,541.8    4,596.2    3,336.4     105.1
                               ---------  --------- ---------- ----------   --------  --------
Total assets............       108,341.2  106,326.3  104,905.0  114,324.2  133,950.9   4,220.3
                               =========  ========= ========== ==========   ========  ========
Short-term borrowings(8)        13,768.0   13,983.1   13,453.8   14,090.2    6,852.8     215.9
Long-term liabilities(9)        25,976.9   30,674.3   30,553.7   30,840.1   46,529.6   1,466.0
Other liabilities and
  minority interest.....        24,927.1   19,722.6   21,466.8   24,271.3   29,256.7     921.8
                               ---------  --------- ---------- ----------   --------  --------
Total liabilities and
  minority interest.....        64,672.0   64,380.0   65,474.3   69,201.6   82,639.1   2,603.7
                               =========  ========= ========== ==========   ========  ========
Capital stock...........        27,520.0   32,548.0   32,548.0   35,802.8   41,000.0   1,291.7
Shareholders' equity....        43,669.2   41,946.3   39,430.7   45,122.6   51,311.8   1,616.6
CASH FLOW DATA:
Net cash outflow from
  acquisition of fixed
  assets................       (30,063.6) (13,816.5) (12,657.9) (17,534.1) (28,523.5)   (898.7)
Depreciation and
  amortization..........         8,593.8   11,127.3   12,286.3   12,766.6   14,786.3     465.9
Net cash inflow from
  operations............        17,459.9   11,578.4   11,313.8   13,306.2   19,487.0     614.0
Net cash inflow from sale
  of ASE Inc.
  common shares.........              --         --         --    2,850.5         --        --
Net cash outflow from
  investing activities..       (33,392.0) (17,302.0) (13,719.7) (18,572.6) (30,825.3)   (971.2)
Net cash inflow from
  financing activities..        17,607.3    2,854.5      530.5    4,210.9    9,166.3     288.8
</TABLE>

                                       4


<PAGE>


<TABLE>
                                          As of and for the Year Ended December 31,
                               -----------------------------------------------------------------
                                    2000       2001       2002       2003            2004
                               ---------- --------- ---------- ---------- ----------------------
                                    NT$       NT$        NT$        NT$        NT$        US$

                                    (in millions, except earnings per share and per ADS data)
<S>                             <C>       <C>         <C>       <C>         <C>       <C>

Segment Data:
Net revenues:
  Packaging.............        38,028.8   28,898.2   35,515.4   45,026.9   64,736.8   2,039.6
  Testing...............        12,768.4    9,459.2   10,060.6   12,142.4   16,473.9     519.1
  Others................            96.2       10.4       10.8      142.5      501.9      15.8
Gross profit:
  Packaging.............        10,016.9    4,625.8    6,255.4    7,984.3   11,814.9     372.3
  Testing...............         5,294.4      782.8      841.2    2,855.3    4,332.7     136.5
  Others................            14.8        2.2       (2.0)       5.7      117.9       3.7
</TABLE>


<TABLE>
                                          As of and for the Year Ended December 31,
                               -----------------------------------------------------------------
                                    2000       2001       2002       2003            2004
                               ---------- --------- ---------- ---------- ----------------------
                                    NT$       NT$        NT$        NT$        NT$        US$

                                    (in millions, except earnings per share and per ADS data)
<S>                             <C>       <C>         <C>       <C>         <C>       <C>
U.S. GAAP:
Income Statement Data:
Net revenues............        50,893.4   38,367.8   45,586.8   57,311.8   81,712.6   2,574.4
Cost of revenues........        37,081.2   34,538.3   39,308.2   47,747.5   65,836.0   2,074.2
                               ---------  ---------  ---------  ---------  ---------   -------
Gross profit............        13,812.2    3,829.5    6,278.6    9,564.3   15,876.6     500.2
Total operating expenses         5,820.8    6,209.9    9,294.2    7,116.9    7,302.1     230.1
                               ---------  ---------  ---------  ---------  ---------   -------
Income (loss) from
  operations............         7,991.4   (2,380.4)  (3,015.6)   2,447.4    8,574.5     270.1
Net non-operating income
  (expense).............        (1,502.5)  (2,704.6)  (2,793.8)  (1,314.0)  (5,152.7)   (162.3)
Income tax benefit
  (expense).............        (1,059.2)     254.4    1,162.6    1,289.1    1,505.4      47.4
Cumulative effect of
  change in accounting
  principle(4)..........              --         --         --         --      (26.8)     (0.8)
Minority interest in net
  loss (income) of
  subsidiaries..........        (1,499.7)     784.0    1,572.5      (70.5)    (603.3)    (19.0)
                               ---------  ---------  ---------  ---------  ---------   -------
Net income (loss).......         3,930.0   (4,046.6)  (3,074.3)   2,352.0    4,297.1     135.4
                               =========  =========  =========  =========  =========   =======
Earnings per common
  share(5):
  Basic.................            1.15      (1.13)     (0.85)      0.63       1.11      0.03
  Diluted...............            1.11      (1.13)     (0.85)      0.63       1.09      0.03
Earnings per equivalent
  ADS(5):
  Basic.................            5.73      (5.64)     (4.26)      3.16       5.57      0.18
  Diluted...............            5.54      (5.64)     (4.26)      3.13       5.43      0.17
Number of common
  shares(10):
  Basic.................         3,431.5    3,587.1    3,609.8    3,721.2    3,856.0   3,856.0
  Diluted...............         3,431.5    3,587.1    3,609.8    3,755.6    4,110.1    4110.1
Number of equivalent ADSs:
  Basic.................           686.3      717.4      722.0      744.2      771.2     771.2
  Diluted...............           686.3      717.4      722.0      751.1      822.0     822.0
Balance Sheet Data:
Current Assets
  Cash and cash
   equivalents..........        14,166.5   11,770.7    9,829.5    8,562.4    5,975.1     188.3
  Short-term investments         1,717.6    4,642.1    2,592.4    3,022.9    3,198.4     100.8
  Notes and accounts
   receivable...........         9,260.6    7,126.1    8,998.5   12,909.8   13,676.2     430.9
  Inventories...........         3,246.3    2,768.4    3,131.7    4,691.8    9,437.3     297.3
  Others................         2,431.6    3,383.2    2,481.7    2,276.2    3,612.1     113.8
                               ---------  ---------  ---------  ---------  ---------   -------
  Total.................        30,822.6   29,690.5   27,033.8   31,463.1   35,899.1   1,131.1
Long-term investments...         8,044.2    6,608.3    5,609.3    5,571.4    3,377.6     106.4
Properties..............        60,422.6   60,363.1   62,797.4   66,947.6   81,896.2   2,580.2
Other assets............         1,275.6    1,371.0    2,715.3    4,637.8    7,584.9     239.0
Consolidated debits.....         4,951.9    4,331.6    3,227.0    3,100.8    3,330.9     104.9
                               ---------  ---------  ---------  ---------  ---------   -------
Total assets............       105,516.9  102,364.5  101,382.8  111,720.7  132,088.7   4,161.6
                               ---------  ---------  ---------  ---------  ---------   -------
Short-term borrowings(8)        13,768.0   13,983.1   13,453.8   14,090.2    6,852.8     215.9
Long-term liabilities(9)        25,976.9   30,674.3   30,553.7   30,840.1   46,529.6   1,466.0
Other liabilities and
  minority interest.....        25,042.9   19,746.8   21,658.5   24,707.4   30,059.7     947.0
                               ---------  ---------  ---------  ---------  ---------   -------
Total liabilities and
  minority interest.....        64,787.8   64,404.2   65,666.0   69,637.7   83,442.1   2,628.9
                               =========  =========  =========  =========  =========   =======
Capital stock...........        27,520.0   32,548.0   32,548.0   35,802.0   41,000.0   1,291.7
Shareholders' equity....        40,729.1   37,960.3   35,716.8   42,083.0   48,646.6   1,532.7
</TABLE>
                                       5


<PAGE>


----------

(1)  In 2002, we took a NT$1,225.6 million impairment charge against some of our
     testing equipment to reflect the decline in economic value of such
     equipment. Whereas this impairment charge was previously recognized under
     general and administrative operating expenses, in 2004, as a result of our
     adoption of ROC SFAS No. 35, "Impairment of Assets", we reclassified this
     2002 impairment charge as an individual line item under non-operating
     income (expenses). For more information on the reclassification, see "Item
     5. Operating and Financial Review and Prospects--Operating Results and
     Trend Information--Critical Accounting Policies and Estimates" and note 9
     to our consolidated financial statements.

(2)  For the year ended December 31, 2004, we adopted ROC SFAS No. 35,
     "Impairment of Assets". In addition to yearly amortization, under ROC SFAS
     No. 35, goodwill is evaluated at least annually to determine if it is
     impaired. As a result of our annual impairment review, we recognized an
     impairment charge of NT$1,950.1 million (US$61.4 million) for goodwill
     relating to our shares of ASE Test and ISE Labs. For more information on
     impairment of goodwill, see "Item 5. Operating and Financial Review and
     Prospects--Operating Results and Trend Information-- Critical Accounting
     Policies and Estimates" and notes 3 and 10 to our consolidated financial
     statements.

(3)  As a result of our annual impairment review, we recognized an impairment
     charge of NT$512.0 million (US$16.1 million) for goodwill relating to our
     unconsolidated affiliate Universal Scientific. See "Item 5. Operating and
     Financial Review and Prospects--Operating Results and Trend
     Information--Critical Accounting Polices and Estimates" and notes 3 and 8
     to our consolidated financial statements.

(4)  As a result of our introduction of enterprise resource planning, or ERP, in
     order to increase our ability to effectively monitor our entire
     organization's resource allocation, we switched from using the
     weighted-average method to using the moving-average method to price our raw
     materials and supplies. For more information on this accounting change, see
     "Item 5. Operating and Financial Review and Prospects--Operating Results
     and Trend Information--Critical Accounting Policies and
     Estimates--Inventories" and note 3 to our consolidated financial
     statements.

(5)  The denominators for diluted earnings per common share and diluted earnings
     per equivalent ADS are calculated to account for the potential conversion
     of our convertible bonds into our common shares and ADS. See "Item 5.
     Operating and Financial Review and Prospects--Liquidity and Capital
     Resources" and note 22 to our consolidated financial statements.

(6)  Dividends per common share issued as a stock dividend.

(7)  Represents the weighted average number of shares after retroactive
     adjustments to give effect to stock dividends and employee stock bonuses.
     Beginning in 2002, common shares held by consolidated subsidiaries are
     classified for accounting purposes as "treasury stock", and are deducted
     from the number of common shares outstanding.

(8)  Includes current portions of long-term debt, obligations under capital
     leases and long-term payable for investments.

(9)  Excludes current portions of long-term debt, obligations under capital
     leases and long-term payable for investments.

(10) Represents the weighted average number of common shares after retroactive
     adjustments to give effect to stock dividends.


Exchange Rates

     Fluctuations in the exchange rate between NT dollars and U.S. dollars will
affect the U.S. dollar equivalent of the NT dollar price of the common shares on
the Taiwan Stock Exchange and, as a result, will likely affect the market price
of the American depositary shares, or ADSs. Fluctuations will also affect the
U.S. dollar conversion by the depositary under our ADS deposit agreement
referred to below of cash dividends paid in NT dollars on, and the NT dollar
proceeds received by the depositary from any sale of, common shares represented
by ADSs, in each case, according to the terms of the deposit agreement dated
September 29, 2000 among us, Citibank N.A., as depositary, and the holders and
beneficial owners from time to time of the ADSs, and supplemented by a letter
agreement between us and the depositary dated September 25, 2003, which we
collectively refer to as the deposit agreement.

     The following table sets forth, for the periods indicated, information
concerning the number of NT dollars for which one U.S. dollar could be exchanged
based on the noon buying rate for cable transfers in NT dollars as certified for
customs purposes by the Federal Reserve Bank of New York.

                                       6


<PAGE>


                                 NT Dollars per U.S. Dollar Noon Buying Rate
                                 -------------------------------------------
                                    Average    High    Low   Period-End
                                 ---------- -------- ------- ----------
2000.............................   31.37     33.25   30.35    33.17
2001.............................   33.91     35.13   32.23    35.00
2002.............................   34.53     34.79   34.70    34.70
2003.............................   34.40     34.98   33.72    33.99
2004.............................   33.37     33.98   33.10    33.24
  November.......................   32.78     33.48   32.17    32.20
  December.......................   32.17     32.49   31.74    31.74
2005
  January........................   31.85     32.22   31.65    31.71
  February.......................   31.50     31.79   31.06    31.06
  March..........................   31.11     31.73   30.65    31.46
  April..........................   31.48     31.70   31.23    31.23
  May............................   31.27     31.47   30.98    31.13

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

Source: Federal Reserve Statistical Release, Board of Governors of the Federal
        Reserve System.

     On May 31, 2005, the noon buying rate was NT$31.13 to US$1.00.

CAPITALIZATION AND INDEBTEDNESS

     Not applicable.

REASON FOR THE OFFER AND USE OF PROCEEDS

     Not applicable.

RISK FACTORS

Risks Relating to Our Business

     Since we are dependent on the highly cyclical semiconductor industry and
     conditions in the markets for the end-use applications of our products, our
     revenues and net income may fluctuate significantly.

     Our semiconductor packaging and testing business is affected by market
conditions in the highly cyclical semiconductor industry. All of our customers
operate in this industry, and variations in order levels from our customers and
service fee rates may result in volatility in our revenues and net income. From
time to time, the semiconductor industry has experienced significant, and
sometimes prolonged, downturns. As our business is, and will continue to be,
dependent on the requirements of semiconductor companies for independent
packaging and testing services, any future downturn in the semiconductor
industry would reduce demand for our services. For example, in the fourth
quarter of 2000, a worldwide downturn resulted in a significant deterioration in
the average selling prices of, as well as demand for, our services in 2001, and
significantly and adversely affected our operating results in 2001. Although the
modest recovery in the semiconductor industry, evident in 2002 and 2003,
strengthened in 2004, we expect market conditions to continue to exert downward
pressure on the average selling prices for our packaging and testing services.
If we cannot reduce our costs to sufficiently offset any decline in average
selling prices, our profitability will suffer and we may incur losses.

     Market conditions in the semiconductor industry depend to a large degree on
conditions in the markets for the end-use applications of semiconductor
products, such as communications, personal computer and consumer electronics
products. Any deterioration of conditions in the markets for the end-use
applications of the semiconductors we package and test would reduce demand for
our services, and would likely have a material adverse effect on our financial
condition and results of operations. In 2004, approximately 42.5%, 29.8% and
24.5% of our net revenues were attributed to the packaging and testing of
semiconductors used in communications, personal computer, and consumer
electronics applications, respectively. In 2003, approximately 34.9%, 35.7% and
28.3% of our net revenues were attributable to the packaging and testing of
semiconductors used in communications, personal computer, and consumer
electronics applications, respectively. In 2002, approximately 34.4%, 35.4% and
28.8% of our net revenues were attributable to the packaging and testing of
semiconductors used in

                                       7


<PAGE>


communications, personal computer, and consumer electronics applications,
respectively. Each of the markets for end-use applications is subject to intense
competition and significant shifts in demand, which could put pricing pressure
on the packaging and testing services provided by us and adversely affect our
revenues and net income.

     A reversal or slowdown in the outsourcing trend for semiconductor packaging
     and testing services could adversely affect our growth prospects and
     profitability.

     In recent years, semiconductor manufacturers that have their own in-house
packaging and testing capabilities, known as integrated device manufacturers,
have increasingly outsourced stages of the semiconductor production process,
including packaging and testing, to independent companies in order to reduce
costs and shorten production cycles. In addition, the availability of advanced
independent semiconductor manufacturing services has also enabled the growth of
so-called "fabless" semiconductor companies that focus exclusively on design and
marketing, and that outsource their manufacturing, packaging and testing
requirements to independent companies. We cannot assure you that these
integrated device manufacturers and fabless semiconductor companies will
continue to outsource their packaging and testing requirements to third parties
like us. A reversal of, or a slowdown in, this outsourcing trend could result in
reduced demand for our services and adversely affect our growth prospects and
profitability.

     If we are unable to compete favorably in the highly competitive
     semiconductor packaging and testing markets, our revenues and net income
     may decrease.

     The semiconductor packaging and testing markets are very competitive. We
face competition from a number of sources, including other independent
semiconductor packaging and testing companies, especially those that offer
turnkey packaging and testing services. We believe that the principal
competitive factors in the markets for our products and services are:

     o    the ability to provide total solutions to our customers;

     o    technological expertise;

     o    range of package types and testing platforms available;

     o    the ability to design and produce advanced and cost-competitive
          interconnect materials;

     o    the ability to work closely with our customers at the product
          development stage;

     o    responsiveness and flexibility;

     o    capacity;

     o    production cycle time;

     o    production yield; and

     o    price.

     We face increasing competition from other packaging and testing companies,
as most of our customers obtain packaging or testing services from more than one
source. In addition, some of our competitors may have access to more advanced
technologies and greater financial and other resources than we do. Many of our
competitors have shown a willingness to quickly and sharply reduce prices, as
they did in 2001, in order to maintain capacity utilization in their facilities
during periods of reduced demand. Although prices have stabilized, any renewed
erosion in the prices for our packaging and testing services could cause our
revenues and net income to decrease and have a material adverse effect on our
financial condition and results of operations.

     Our profitability depends on our ability to respond to rapid technological
     changes in the semiconductor industry.

     The semiconductor industry is characterized by rapid increases in the
diversity and complexity of semiconductors. As a result, we expect that we will
need to constantly offer more sophisticated packaging and testing technologies
and processes in order to respond to competitive industry conditions and
customer

                                       8


<PAGE>


requirements. If we fail to develop, or obtain access to, advances in
packaging or testing technologies or processes, we may become less competitive
and less profitable. In addition, advances in technology typically lead to
declining average selling prices for semiconductors packaged or tested with
older technologies or processes. As a result, if we cannot reduce the costs
associated with our services, the profitability of a given service and our
overall profitability, may decrease over time.

     Our operating results are subject to significant fluctuations, which could
     adversely affect the market value of your investment.

     Our operating results have varied significantly from period to period and
may continue to vary in the future. Downward fluctuations in our operating
results may result in decreases in the market price of the common shares and the
ADSs. Among the more important factors affecting our quarterly and annual
operating results are the following:

     o    changes in general economic and business conditions, particularly
          given the cyclical nature of the semiconductor industry and the
          markets served by our customers;

     o    our ability to quickly adjust to unanticipated declines or shortfalls
          in demand and market prices for our packaging and testing services,
          due to our high percentage of fixed costs;

     o    timing of capital expenditures in anticipation of future orders;

     o    changes in prices of our packaging and testing services;

     o    volume of orders relative to our packaging and testing capacity;

     o    our ability to design and produce advanced and cost-competitive
          interconnect materials;

     o    our ability to obtain adequate packaging and testing equipment on a
          timely basis;

     o    changes in costs and availability of raw materials, equipment and
          labor; and

     o    earthquakes, drought, epidemics and other natural disasters, as well
          as industrial and other incidents such as fires and power outages.

     Due to the factors listed above, our future operating results or growth
rates may be below the expectations of research analysts and investors. If so,
the market price of the common shares and the ADSs, and thus the market value of
your investment, may fall.

     If we are not successful in developing and enhancing our in-house
     interconnect materials capabilities, our margins and profitability may be
     adversely affected.

     We expect that interconnect materials will become an increasingly important
value-added component of the semiconductor packaging business as technology
migrates from the traditional wirebonding process towards the flip-chip wafer
bumping process and interconnect materials such as advanced substrates represent
a higher percentage of the cost of the packaging process. As a result, we expect
that we will need to offer more advanced interconnect materials designs and
production processes in order to respond to competitive industry conditions and
customer requirements. In particular, our competitive position will depend to a
significant extent on our ability to design and produce interconnect materials
that are comparable to or better than those produced by independent suppliers
and others. Many of these independent suppliers have dedicated greater resources
than we have for the research and development and design and production of
interconnect materials. In addition, we may not be able to acquire the
technology and personnel that would enable us to further develop our in-house
expertise and enhance our design and production capabilities. We intend to
enhance our interconnect materials capabilities through our merger with ASE
Material and our joint venture with Compeq Manufacturing Co. Ltd., or Compeq.
For more information on the merger, see "Item 7. Major Shareholders and Related
Party Transactions--Related Party Transactions". For more information on the
joint venture, see "Item 4. Information on the Company--History and Development
of the Company--Joint Venture with Compeq Manufacturing Co. Ltd." If we are
unable to maintain and enhance our in-

                                       9


<PAGE>


house interconnect materials expertise to offer advanced interconnect materials
that meet the requirements of our customers, we may become less competitive and
our margins and profitability may suffer as a result.

     If any of our acquisition of NEC's packaging and testing business or our
     joint venture with Compeq or our merger with ASE Chung Li and ASE Material
     does not result in successful integration with our operations or is
     otherwise not successful, we may not be able to realize the anticipated
     benefits of such transactions and our business prospects and profitability
     may be adversely affected.

     On February 3, 2004, we and J&R Holding Limited, our wholly-owned
subsidiary, entered into a share sale and purchase agreement with NEC
Electronics Corporation, or NEC, and NEC Yamagata in connection with the
acquisition of the semiconductor packaging and testing business of NEC Yamagata,
a wholly-owned subsidiary of NEC. Pursuant to the terms and conditions of the
agreement, the packaging and testing business of NEC Yamagata was transferred to
a newly established company named ASE Japan Co., Ltd., or ASE Japan, and all of
the issued and outstanding shares of ASE Japan were purchased by J&R Holding
Limited. The acquisition was completed on May 31, 2004. The acquisition of the
packaging and testing business of NEC Yamagata involves certain risks,
including: integration and management of the acquired business; retention of
select management personnel; unforeseen difficulties and liabilities of the
acquired business; and diversion of our management's attention from other
business concerns. These risks may adversely affect our short-term results of
operations as we integrate and operate the acquired business.

     On October 28, 2003, we entered into a joint venture agreement with Compeq
to establish ASE-Compeq Technologies, Inc. This joint venture is intended to
provide us with access to Compeq's production capabilities and expertise in
advanced substrates and has been approved by the ROC Fair Trade Commission.
Pursuant to the joint venture agreement, either party can terminate the joint
venture at any time with 90 days' prior written notice. The success of our joint
venture depends on a number of factors, including the ability of Compeq to meet
the design and production requirements of the customers of the joint venture,
the ability of the management of the two companies to work effectively together
and the effectiveness of the sales and marketing strategy of ASE-Compeq
Technologies, Inc. If the joint venture with Compeq is not successful, and we
are not able to enter into a similar joint venture, or otherwise obtain access
to similar capacity, expertise and capabilities, our interconnect materials
design and production capability may be adversely affected and we may not be
able to meet our customers' demand for advanced interconnect materials, which
could have an adverse effect on our profitability.

     On August 1, 2004, ASE Chung Li and ASE Material merged with and into us
pursuant to a merger agreement dated October 28, 2003. We are the surviving
corporation. Upon the completion of the merger, all of the assets and
liabilities of ASE Chung Li and ASE Material are owned and have been assumed by
us, and the operations of ASE Chung Li and ASE Material have been integrated
with the operations of us. The merger is intended to enhance our ability to
provide to our customers turnkey packaging and testing services and turnkey
services that incorporate interconnect materials, increase our economies of
scale, improve our operating efficiency and simplify our corporate structure.
The continued success of the merger will depend on a number of factors,
including our ability to integrate the operations of ASE Chung Li and ASE
Material with our own and our retention of select management personnel. If we
are not successful in integrating the operations of the merged companies, we may
not be able to realize the anticipated benefits of the merger and our business
prospects and profitability may be adversely affected.

     Due to our high percentage of fixed costs, we will be unable to maintain
     our gross margin at past levels if we are unable to achieve relatively high
     capacity utilization rates.

     Our operations, in particular our testing operations, are characterized by
relatively high fixed costs. We expect to continue to incur substantial
depreciation and other expenses as a result of our previous acquisitions of
packaging and testing machinery and equipment and facilities. Our profitability
depends not only on the pricing levels for our services, but also on utilization
rates for our packaging and testing machinery and equipment, commonly referred
to as "capacity utilization rates". In particular, increases or decreases in our
capacity utilization rates can significantly affect gross margins since the unit
cost of packaging and testing services generally decreases as fixed costs are
allocated over a larger number of units. In periods of low demand, we experience
relatively low capacity utilization rates in our operations, which leads to
reduced margins. During 2001, we experienced lower than anticipated utilization
rates in our operations due to a significant decline in worldwide demand for our
packaging and testing services, which resulted in reduced margins during that
period. Although our capacity utilization rates have

                                       10


<PAGE>

improved recently, we cannot assure you that we will be able to maintain or
surpass our past gross margin levels if we cannot consistently achieve or
maintain relatively high capacity utilization rates.

     If we are unable to manage our expansion effectively, our growth prospects
     may be limited and our future profitability may be affected.

     We have significantly expanded our packaging and testing operations in
recent years, and expect to continue to expand our operations in the future,
including the expansion of our interconnect materials operations. In particular,
we intend to provide total solutions for the packaging and testing of
semiconductors in order to attract new customers and broaden our product range
to include products packaged and tested for a variety of end-use applications.
In the past, we have expanded through both internal growth and the acquisition
of new operations. Rapid expansion puts strain on our managerial, technical,
financial, operational and other resources. As a result of our expansion, we
have implemented and will continue to need to implement additional operational
and financial controls and hire and train additional personnel. Any failure to
manage our growth effectively could lead to inefficiencies and redundancies and
result in reduced growth prospects and profitability.

     Because of the highly cyclical nature of our industry, our capital
     requirements are difficult to plan. If we cannot obtain additional capital
     when we need it, our growth prospects and future profitability may be
     adversely affected.

     Our capital requirements are difficult to plan in our highly cyclical and
rapidly changing industry. We will need capital to fund the expansion of our
facilities as well as research and development activities in order to remain
competitive. We believe that our existing cash and cash equivalents, short-term
investments, expected cash flow from operations and existing credit lines under
our short-term loan facilities will be sufficient to meet our capital
expenditures, working capital, cash obligations under our existing debt and
lease arrangements, and other requirements for at least the next twelve months.
However, future capacity expansions or market or other developments may cause us
to require additional funds. Our ability to obtain external financing in the
future is subject to a variety of uncertainties, including:

     o    our future financial condition, results of operations and cash flows;

     o    general market conditions for financing activities by semiconductor
          companies; and

     o    economic, political and other conditions in Taiwan and elsewhere.

     If we are unable to obtain funding in a timely manner or on acceptable
terms, our growth prospects and future profitability may decline.

     Restrictive covenants and broad default provisions in our existing debt
     agreements may materially restrict our operations as well as adversely
     affect our liquidity, financial condition and results of operations.

     We are a party to numerous loan and other agreements relating to the
incurrence of debt, many of which include restrictive covenants and broad
default provisions. In general, covenants in the agreements governing our
existing debt, and debt we may incur in the future, may materially restrict our
operations, including our ability to incur debt, pay dividends, make certain
investments and payments and encumber or dispose of assets. In the event of a
prolonged downturn in the demand for our services as a result of a downturn in
the worldwide semiconductor industry or otherwise, we cannot assure you that we
will be able to remain in compliance with our financial covenants which, as a
result, may lead to a default. Furthermore, a default under one agreement by us
or one of our subsidiaries may also trigger cross-defaults under other
agreements. In the event of default, we may not be able to cure the default or
obtain a waiver on a timely basis, and our operations would be significantly
disrupted or harmed and our liquidity would be adversely affected. An event of
default under any agreement governing our existing or future debt, if not cured
or waived, would have a material adverse effect on our liquidity, financial
condition and results of operations.

     We have on occasion failed to comply with certain financial covenants in
some of our loan agreements. Such non-compliance may also have, through broadly
worded cross-default provisions, resulted in default under some of the
agreements governing our other existing debt. For example, in 2004, we increased
our borrowings in order to

                                       11


<PAGE>


fund increases in our capital expenditure, which resulted in our failure to
comply with certain debt ratios. We are in the process of obtaining waivers from
the relevant lenders relating to such non-compliance and, while we believe that
we will be able to obtain such waivers, we can provide no guarantee that we will
be able to do so. Such non-compliance has not had any significant effect on our
ability to repay or refinance amounts due in respect of our existing debt. For
these and other reasons, including our financial condition and our relationship
with our lenders, no lender has to date sought and we do not believe that any of
our lenders would seek to declare a default or enforce remedies in respect of
our existing debt, as a result of cross-default provisions or otherwise,
although we cannot provide any assurance in this regard.

     We depend on select personnel and could be affected by the loss of their
     services.

     We depend on the continued service of our executive officers and skilled
technical and other personnel. Our business could suffer if we lose the services
of any of these personnel and cannot adequately replace them. Although some of
these management personnel have entered into employment agreements with us, they
may nevertheless leave before the expiration of these agreements. We are not
insured against the loss of any of our personnel. In addition, we may be
required to increase substantially the number of these employees in connection
with our expansion plans, and there is intense competition for their services in
the semiconductor industry. We may not be able to either retain our present
personnel or attract additional qualified personnel as and when needed. In
addition, we may need to increase employee compensation levels in order to
attract and retain our existing officers and employees and the additional
personnel that we expect to require. Furthermore, a portion of the workforce at
our facilities in Taiwan are foreign workers employed by us under work permits
which are subject to government regulations on renewal and other terms.
Consequently, our business could also suffer if the Taiwan regulations relating
to the import of foreign workers were to become significantly more restrictive
or if we are otherwise unable to attract or retain these workers at a reasonable
cost.

     If we fail to maintain an effective system of internal controls, we may not
     be able to accurately report our financial results or prevent fraud.

     The United States Securities and Exchange Commission, or the SEC, as
required by Section 404 of the Sarbanes-Oxley Act of 2002, adopted rules
requiring every public company to include a management report on such company's
internal controls over financial reporting in its annual report, which contains
management's assessment of the effectiveness of the company's internal controls
over financial reporting. In addition, an independent registered public
accounting firm must attest to and report on management's assessment of the
effectiveness of the company's internal controls over financial reporting. These
requirements will first apply to our annual report on Form 20-F for the fiscal
year ending December 31, 2006. Our management may conclude that our internal
controls over our financial reporting are not effective. Moreover, even if our
management concludes that our internal controls over financial reporting are
effective, our independent registered public accounting firm may still decline
to attest to our management's assessment or may issue a report that is qualified
if it is not satisfied with our controls or the level at which our controls are
documented, designed, operated or reviewed, or if it interprets the relevant
requirements differently from us. Furthermore, during the course of the
evaluation, documentation and attestation, we may identify deficiencies that we
may not be able to remedy in time to meet the deadline imposed by the
Sarbanes-Oxley Act for compliance with the requirements of Section 404. If we
fail to achieve and maintain the adequacy of our internal controls, we may not
be able to conclude that we have effective internal controls, on an ongoing
basis, over financial reporting in accordance with the Sarbanes-Oxley Act.
Moreover, effective internal controls, particularly those related to revenue
recognition, are necessary for us to produce reliable financial reports and are
important to help prevent fraud. As a result, our failure to achieve and
maintain effective internal controls over financial reporting could result in
the loss of investor confidence in the reliability of our financial statements,
which in turn could harm our business and negatively impact the trading price of
our ADSs. Furthermore, we anticipate that we will incur considerable costs and
use significant management time and other resources in an effort to comply with
Section 404 and other requirements of the Sarbanes-Oxley Act.

     If we are unable to obtain additional packaging and testing equipment or
     facilities in a timely manner and at a reasonable cost, our competitiveness
     and future profitability may be adversely affected.

     The semiconductor packaging and testing business is capital intensive and
requires significant investment in expensive equipment manufactured by a limited
number of suppliers. The market for semiconductor packaging and

                                       12


<PAGE>


testing equipment is characterized, from time to time, by intense demand,
limited supply and long delivery cycles. Our operations and expansion plans
depend on our ability to obtain a significant amount of such equipment from a
limited number of suppliers, including, in the case of wire bonders, Kulicke &
Soffa Industries Inc., and in the case of testers, Agilent Technologies, Inc.,
Credence Systems Corporation, LTX Corporation and Teradyne, Inc. We have no
binding supply agreements with any of our suppliers and acquire our packaging
and testing equipment on a purchase order basis, which exposes us to changing
market conditions and other substantial risks. For example, shortages of capital
equipment could result in an increase in the price of equipment and longer
delivery times. Semiconductor packaging and testing also requires us to operate
sizeable facilities. If we are unable to obtain equipment or facilities in a
timely manner, we may be unable to fulfill our customers' orders, which could
adversely affect our growth prospects as well as financial condition and results
of operations. See "Item 4. Information on the Company--Business
Overview--Equipment".

     Fluctuations in exchange rates could result in foreign exchange losses.

     Currently, the majority of our revenues from packaging and testing services
are denominated in U.S. dollars and NT dollars. Our costs of revenues and
operating expenses associated with packaging and testing services, on the other
hand, are incurred in several currencies, primarily NT dollars and U.S. dollars,
as well as, to a lesser extent, Malaysian ringgit, Korean won and Japanese yen.
In addition, a substantial portion of our capital expenditures, primarily for
the purchase of packaging and testing equipment, has been, and is expected to
continue to be, denominated in U.S. dollars, with much of the remainder in
Japanese yen. Fluctuations in exchange rates, primarily among the U.S. dollar,
the NT dollar and the Japanese yen, will affect our costs and operating margins.
In addition, these fluctuations could result in exchange losses and increased
costs in NT dollar and other local currency terms. Despite hedging and
mitigating techniques implemented by us, fluctuations in exchange rates have
affected, and may continue to affect, our financial condition and results of
operations. We incurred a foreign exchange loss of NT$146.2 million (US$4.6
million), NT$386.8 million and NT$397.9 million in 2004, 2003 and 2002,
respectively. See "Item 11. Quantitative and Qualitative Disclosures about
Market Risk--Market Risk--Foreign Currency Exchange Rate Risk".

     The loss of a large customer or disruption of our strategic alliance or
     other commercial arrangements with semiconductor foundries and providers of
     other complementary semiconductor manufacturing services may result in a
     decline in our revenues and profitability.

     Although we have over 200 customers, we have derived and expect to continue
to derive a large portion of our revenues from a small group of customers during
any particular period due in part to the concentration of market share in the
semiconductor industry. Our five largest customers together accounted for
approximately 34.7%, 34.8% and 39.6% of our net revenues in 2004, 2003 and 2002,
respectively. Other than Motorola, Inc., no other customer accounted for more
than 10% of our net revenues in 2003 or 2002. In 2004, no customer accounted for
more than 10% of our net revenues. The demand for our services from each
customer is directly dependent upon that customer's level of business activity,
which could vary significantly from year to year. The loss of a large customer
may adversely affect our revenues and profitability. Our key customers typically
operate in the cyclical semiconductor business and, in the past, have varied,
and may vary in the future, order levels significantly from period to period.
Some of these companies are relatively small, have limited operating histories
and financial resources, and are highly exposed to the cyclicality of the
industry. We cannot assure you that these customers or any other customers will
continue to place orders with us in the future at the same levels as in past
periods. The loss of one or more of our significant customers, or reduced orders
by any one of them, and our inability to replace these customers or make up for
such orders could reduce our profitability. In addition, we have in the past
reduced, and may in the future be requested to reduce, our prices to limit the
level of order cancellations. Any price reduction would likely reduce our
margins and profitability.

     Our strategic alliance with TSMC, the world's largest dedicated
semiconductor foundry, as well as our other commercial arrangements with
providers of other complementary semiconductor manufacturing services, enable us
to offer total semiconductor manufacturing solutions to our customers. This
strategic alliance and any of our other commercial arrangements may be
terminated at any time. A termination of this strategic alliance and other
commercial arrangements, and our failure to enter into substantially similar
alliances and commercial arrangements, may adversely affect our competitiveness
and our revenues and profitability.

                                       13


<PAGE>


     We depend on our agent for a portion of our sales in North America and
     Europe. Any serious disruption in our relationship with our agent, or
     substantial loss in its effectiveness, could significantly reduce our
     revenues and profitability.

     We depend on a non-exclusive agent, Gardex International Limited, or
Gardex, for a portion of our sales service in North America and Europe. Gardex
helps us identify customers and, within parameters set by us, helps us negotiate
price, delivery and other terms with our customers. Purchase orders are placed
directly with us by our customers.

     Currently, Gardex performs services only for us and our subsidiaries but
Gardex is not owned or controlled by us. Gardex is free to perform sales and
support services for others, including our competitors. While the purchase of
ASE (U.S.) Inc. by our subsidiary J&R Holding Limited has significantly
decreased our dependence upon non-exclusive agents for sales and customer
service in North America and Europe, we may not be able to develop sufficient
capabilities internally on a timely basis or to find an adequate replacement for
Gardex should our relationship with Gardex change unexpectedly. Any serious
disruption in our relationship with Gardex or substantial loss in Gardex's
effectiveness in performing its sales functions could significantly reduce our
revenues and profitability. See "Item 4. Information on the Company--Business
Overview--Sales and Marketing--Sales and Customer Service Agents".

     Our revenues and profitability may decline if we are unable to obtain
     adequate supplies of raw materials in a timely manner and at a reasonable
     price.

     Our packaging operations require that we obtain adequate supplies of raw
materials on a timely basis. Shortages in the supply of raw materials
experienced by the semiconductor industry have in the past resulted in
occasional price increases and delivery delays. For example, in 1999 and the
first half of 2000, the industry experienced a shortage in the supply of
advanced substrates used in ball grid array, or BGA, packaging. Raw materials
such as advanced substrates are prone to supply shortages since such materials
are produced by a limited number of suppliers such as IBIDEN Co., Ltd., Japan
Circuit Industrial Co., Ltd. and Phoenix Precision Technology Corporation. Our
merger with ASE Material and our joint venture with Compeq to establish
ASE-Compeq Technologies, Inc. are expected to help improve our ability to obtain
advanced substrates on a timely basis and at a reasonable cost. However, we do
not expect that our internal substrates operations, even after the ASE Material
merger and the formation of ASE-Compeq Technologies, Inc., to be able to meet
all of our raw materials requirements. Consequently, we will remain dependent on
market supply and demand for our raw materials. Recently, we have experienced a
tightening in the market supply of raw materials, and the fire in May 2005 at
our facilities in Chung Li, Taiwan has damaged a substantial portion of our
production capacity of interconnect materials for use in our packaging
operations. See "Item 8. Financial Information--Significant Changes" for a
description of the fire. We cannot guarantee that we will not experience
shortages in the near future or that we will be able to obtain adequate supplies
of raw materials in a timely manner and at a reasonable price. Our revenues and
net income could decline if we were unable to obtain adequate supplies of high
quality raw materials in a timely manner or if there were significant increases
in the costs of raw materials that we could not pass on to our customers. See
"Item 5. Operating and Financial Review and Prospects--Operating Results and
Trend Information--Raw Material Costs".

     Any environmental claims or failure to comply with any present or future
     environmental regulations, as well as any fire or other industrial
     accident, may require us to spend additional funds and may materially and
     adversely affect our financial condition and results of operations.

     We are subject to a variety of laws and regulations relating to the use,
storage, discharge and disposal of chemical by-products of, and water used in,
our packaging and interconnect materials production processes. Although we have
not suffered material environmental claims in the past, the failure to comply
with any present or future regulations could result in the assessment of damages
or imposition of fines against us, suspension of production or a cessation of
our operations. New regulations could require us to acquire costly equipment or
to incur other significant expenses that we may not be able to pass on to our
customers. For example, as a result of new restrictions in the European Union
governing the use of hazardous substances, we expect that our customers will
increasingly request that the materials used in our packaging processes be
compliant with new European Union regulations, which will likely increase our
raw material costs as a result. See "Item 4. Information on the

                                       14


<PAGE>


Company--Business Overview--Raw Materials and Suppliers--Packaging".
Additionally, any failure on our part to control the use, or adequately restrict
the discharge, of hazardous substances could subject us to future liabilities
that may have a material adverse effect on our financial condition and results
of operations.

     Our controlling shareholders may take actions that are not in, or may
     conflict with, our public shareholders' best interest.

     Members of the Chang family own, directly or indirectly, a controlling
interest in our outstanding common shares. See "Item 7. Major Shareholders and
Related Party Transactions--Major Shareholders". Accordingly, these shareholders
will continue to have the ability to exercise a controlling influence over our
business, including matters relating to:

     o    our management and policies;

     o    the timing and distribution of dividends; and

     o    the election of our directors and supervisors.

     Members of the Chang family may take actions that you may not agree with or
that are not in our or our public shareholders' best interests.

     We are an ROC company and, because the rights of shareholders under ROC law
     differ from those under U.S. law and the laws of certain other countries,
     you may have difficulty protecting your shareholder rights.

     Our corporate affairs are governed by our Articles of Incorporation and by
the laws governing corporations incorporated in the ROC. The rights of
shareholders and the responsibilities of management and the members of the board
of directors under ROC law are different from those applicable to a corporation
incorporated in the United States and certain other countries. As a result,
public shareholders of ROC companies may have more difficulty in protecting
their interest in connection with actions taken by management or members of the
board of directors than they would as public shareholders of a corporation in
the United States or certain other countries.

     Any required impairment charges may have a material adverse effect on our
     financial condition and results of operations.

     Under currently effective accounting principles, we are required to
evaluate our equipment, goodwill and other indefinite-lived assets for possible
impairment whenever there is an indication of impairment. If certain criteria
are met, we are required to record an impairment charge. As a result of an
impairment test performed for 2002, we took an impairment loss of NT$1,225.6
million for equipment held by ASE Test for the year ended December 31, 2002. No
impairment charges with regards to our equipment were recorded for the years
ended December 31, 2003 and 2004. We can give no assurance that additional
impairment charges will not be required in periods subsequent to December 31,
2004.

     As a result of standards under U.S. GAAP that became effective on January
1, 2002, we are no longer permitted to amortize remaining goodwill. Starting
from January 2002, all goodwill must be tested at least annually for impairment
under U.S. GAAP. As a result of an impairment test performed for 2002 under U.S.
GAAP, we wrote off the remaining goodwill of NT$2,213.0 million associated with
our purchase of shares of ASE Test for the year ended December 31, 2002. No
impairment charges relating to our goodwill were required to be recognized for
the year ended December 31, 2003. We recognized an impairment charge in 2004
under U.S. GAAP of NT$1,337.7 million (US$42.1 million) for goodwill relating to
our purchase of shares of ISE Labs. As of December 31, 2004, 2003 and 2002,
goodwill under U.S. GAAP amounted to NT$3,330.9 million (US$104.9 million),
NT$3,100.7 million and NT$3,227.0 million, respectively. Any goodwill impairment
charge required under U.S. GAAP may have a material adverse effect on our
financial condition and results of operations on a U.S. GAAP reconciled basis.

     For the year ended December 31, 2004, we adopted ROC SFAS No. 35,
"Impairment of Assets". In addition to yearly amortization, under ROC SFAS No.
35, goodwill is also evaluated at least annually to determine if it is impaired.
As a result of our annual impairment review, under ROC GAAP, we recognized an
impairment charge of NT$1,950.1 million (US$61.4 million) in 2004 for goodwill
relating to our purchase of shares of ASE Test and ISE

                                       15


<PAGE>


Labs. Under ROC GAAP, total goodwill amortization amounted to NT$877.6 million
(US$27.6 million), NT$819.3 million and NT$815.6 million in 2004, 2003 and 2002,
respectively. Any goodwill impairment charge required under ROC GAAP may have a
material adverse effect on our financial condition and results of operations.

     We are unable to estimate the extent and timing of goodwill impairment
charges for future periods. The determination of an impairment charge at any
given time is based significantly on our expected results of operations over a
number of years subsequent to that time. As a result, an impairment charge is
more likely to occur during a period in which our operating results and outlook
are otherwise already depressed.

     Terrorist attacks, such as the attacks that occurred on September 11, 2001,
     military action in Iraq and general instability in the Middle East may
     adversely affect the markets in which we operate, our operations and our
     profitability.

     The attacks of September 11, 2001 and subsequent events, including military
action in Iraq, have caused volatility in the world financial markets and have
led, and may continue to lead to, further armed hostilities, prolonged military
action in Iraq, or further acts of terrorism in the United States or abroad,
which could cause further instability in financial markets. These developments
could have an adverse impact on, among other things, our ability to expand the
market for our services, obtain financing as needed and enter into strategic
relationships, and, depending on their magnitude, could have a material adverse
effect on our business, financial condition, results of operations or cash
flows.

Risks Relating to Taiwan, ROC

     Strained relations between the ROC and the PRC could negatively affect our
     business and the market value of your investment.

     Our principal executive offices and our principal packaging and testing
facilities are located in Taiwan and approximately 69.8%, 77.0% and 77.4% of our
net revenues in 2004, 2003 and 2002, respectively, were derived from our
operations in Taiwan. The ROC has a unique international political status. The
government of the PRC asserts sovereignty over all of China, including Taiwan,
and does not recognize the legitimacy of the ROC government. Although
significant economic and cultural relations have been established in recent
years between the ROC and the PRC, relations have often been strained and the
government of the PRC has indicated that it may use military force to gain
control over Taiwan in some circumstances, such as the declaration of
independence by the ROC. Relations between the ROC and the PRC have been
particularly strained in recent years. On March 14, 2005, the PRC adopted an
anti-secession law which states that the PRC may use non-peaceful means and
other necessary measures if Taiwan formally declares its independence or if the
PRC determines that there is no possibility for a peaceful reunification.
Political uncertainty could adversely affect the prices of our common shares and
ADSs. Relations between the ROC and the PRC and other factors affecting the
political or economic conditions in Taiwan could have a material adverse effect
on our financial condition and results of operations, as well as the market
price and the liquidity of our common shares and ADSs.

     Currently, we manufacture interconnect materials as well as provide module
assembly services from time to time in the PRC through our wholly-owned
subsidiary, ASE Shanghai. See "Item 4. Information on the
Company--Organizational Structure--Our Consolidated Subsidiaries--ASE Shanghai".
The ROC government currently restricts certain types of investments by ROC
companies, including ourselves, in the PRC, and such restrictions include
limitations on investments in facilities for the packaging and testing of
semiconductors. We do not know when or if such laws and policies governing
investment in the PRC will be further amended, and we cannot assure you that
such ROC investment laws and policies will permit us to make further investments
in the PRC in the future that we consider beneficial to us. Our growth prospects
and profitability may be adversely affected if we are restricted from making
certain additional investments in the PRC and are not able to fully capitalize
on the growth of the semiconductor industry in the PRC.

                                       16


<PAGE>


     As a substantial portion of our business and operations is located in
     Taiwan, we are vulnerable to earthquakes, typhoons, drought and other
     natural disasters, as well as power outages and other industrial incidents,
     which could severely disrupt the normal operation of our business and
     adversely affect our results of operations.

     Taiwan is susceptible to earthquakes and has experienced severe earthquakes
which caused significant property damage and loss of life, particularly in the
central and eastern regions of Taiwan. Earthquakes have damaged production
facilities and adversely affected the operations of many companies involved in
the semiconductor and other industries. We have never experienced structural
damage to our facilities and damage to our machinery and equipment as a result
of these earthquakes. In the past, however, we have experienced interruptions to
our production schedule primarily as a result of power outages caused by
earthquakes.

     Taiwan is also susceptible to typhoons, which may cause damage and business
interruptions to companies with facilities located in Taiwan. In 2001, Taiwan
experienced severe damage from typhoons, including a typhoon on September 16
that caused over 100 deaths, severe flooding and extensive damage to property
and businesses. In the third quarter of 2004, a typhoon caused a partial
interruption for approximately two weeks in our water supply at ASE Chung Li's
substrate operations.

     We are dependent upon water for our packaging and substrates operations and
a drought could interrupt such operations. In May 2002, Taiwan experienced a
severe drought. Although we were not affected by the May 2002 drought directly,
a drought may interrupt the manufacturing process of the foundries located in
Taiwan, in turn disrupting some of our customers' production, which could result
in a decline in the demand for our services. In addition, the supply of
electrical power in Taiwan, which is primarily provided by Taiwan Power Company,
the state-owned electric utility, is susceptible to disruption that could be
prolonged and frequent, caused by overload as a result of high demand or other
reasons.

     Our production facilities as well as many of our suppliers and customers
and providers of complementary semiconductor manufacturing services, including
foundries, are located in Taiwan. If our customers are affected by an
earthquake, a typhoon, a drought or other natural disasters, or power outage or
other industrial incidents, it could result in a decline in the demand for our
packaging and testing services. If our suppliers and providers of complementary
semiconductor manufacturing services are affected, our production schedule could
be interrupted or delayed. As a result, a major earthquake, typhoon, drought, or
other natural disasters in Taiwan, or power outage or other industrial incidents
could severely disrupt the normal operation of business and have a material
adverse effect on our financial condition and results of operations.

     Any recurrence of SARS or outbreak of avian flu or other contagious disease
     may have an adverse effect on the economies of certain Asian countries and
     may adversely affect our results of operations.

     In the first half of 2003, the PRC, Hong Kong, Taiwan, Singapore, Vietnam
and certain other countries encountered an outbreak of severe acute respiratory
syndrome, or SARS, which is a highly contagious form of atypical pneumonia. The
SARS outbreak had an adverse effect on our results of operations for the first
half of 2003, primarily due to the lower than expected demand for our packaging
and testing services that resulted from the adverse effect of such SARS outbreak
on the level of economic activity in the affected regions. Additionally, the
World Health Organization, or WHO, reported in January 2005 that "during 2004,
large parts of Asia experienced unprecedented outbreaks of highly pathogenic
avian influenza, caused by the H5N1 virus," which moved the world closer than
any time since 1968 to an influenza pandemic "with high morbidity, excess
mortality, and social and economic disruption." There is no guarantee that an
outbreak of SARS, avian flu or other contagious disease will not occur again in
the future and that any future outbreak of SARS, avian flu or other contagious
disease or the measures taken by the governments of the ROC, Hong Kong, the PRC
or other countries against such potential outbreaks, will not seriously
interrupt our production operations or those of our suppliers and customers,
which may have a material adverse effect on our results of operations. The
perception that an outbreak of SARS, avian flu or other contagious disease may
occur again may have an adverse effect on the economic conditions of certain
countries in Asia.

                                       17


<PAGE>


Risks Relating to Ownership of the ADSs

     The market for the common shares and the ADSs may not be liquid.

     Active, liquid trading markets generally result in lower price volatility
and more efficient execution of buy and sell orders for investors, compared to
less active and less liquid markets. Liquidity of a securities market is often a
function of the volume of the underlying shares that are publicly held by
unrelated parties.

     There has been no trading market for the common shares outside the ROC and
the only trading market for the common shares will be the Taiwan Stock Exchange.
The outstanding ADSs are listed on the New York Stock Exchange. There is no
assurance that the market for the common shares or the ADSs will be active or
liquid.

     Although ADS holders are entitled to withdraw the common shares underlying
the ADSs from the depositary at any time, ROC law requires that the common
shares be held in an account in the ROC or sold for the benefit of the holder on
the Taiwan Stock Exchange. In connection with any withdrawal of common shares
from our ADS facility, the ADSs evidencing these common shares will be
cancelled. Unless additional ADSs are issued, the effect of withdrawals will be
to reduce the number of outstanding ADSs. If a significant number of withdrawals
are effected, the liquidity of our ADSs will be substantially reduced. We cannot
assure you that the ADS depositary will be able to arrange for a sale of
deposited shares in a timely manner or at a specified price, particularly during
periods of illiquidity or volatility.

     If a non-ROC holder of ADSs withdraws common shares, such holder of ADSs
     will be required to appoint a tax guarantor, local agent and custodian bank
     in the ROC and register with the Taiwan Stock Exchange in order to buy and
     sell securities on the Taiwan Stock Exchange.

     When a non-ROC holder of ADSs elects to withdraw common shares represented
by ADSs, such holder of the ADSs will be required to appoint an agent for filing
tax returns and making tax payments, or a tax guarantor, in the ROC. The tax
guarantor will be required to meet the qualifications set by the ROC Ministry of
Finance and will act as the guarantor of the withdrawing holder's tax payment
obligations. Evidence of the appointment of a tax guarantor, the approval of
such appointment by the ROC tax authorities and tax clearance certificates or
evidentiary documents issued by such tax guarantor may be required as conditions
to such holder repatriating the profits derived from the sale of common shares.
We cannot assure you that a withdrawing holder will be able to appoint and
obtain approval for a tax guarantor in a timely manner.

     In addition, under current ROC law, such withdrawing holder is required to
appoint a local agent in the ROC to, among other things, open a bank account,
open an account with the Taiwan Securities Central Depository Co., Ltd., open a
securities trading account with a local securities brokerage firm, pay taxes,
remit funds and exercise such holder's rights as a shareholder. Furthermore,
such withdrawing holder must appoint a local bank to act as custodian for
confirmation and settlement of trades, safekeeping of securities and cash
proceeds and reporting and declaration of information. Without satisfying these
requirements, non-ROC holders of ADSs that withdraw and hold the common shares
represented thereby would not be able to hold or otherwise transfer the common
shares on the Taiwan Stock Exchange or otherwise.

     In addition, non-ROC holders of common shares will be required to register
with the Taiwan Stock Exchange in order to buy and sell securities on the Taiwan
Stock Exchange prior to withdrawing common shares.

     The market value of your investment may fluctuate due to the volatility of
     the ROC securities market.

     The ROC securities market is smaller and more volatile than the securities
markets in the United States and in many European countries. The Taiwan Stock
Exchange has experienced substantial fluctuations in the prices and volumes of
sales of listed securities and there are currently limits on the range of daily
price movements on the Taiwan Stock Exchange. The Taiwan Stock Exchange Index
peaked at 12,495.3 in February 1990, and subsequently fell to a low of 2,560.5
in October 1990. On April 29, 2005, the Taiwan Stock Exchange Index closed at
5,818.1. The Taiwan Stock Exchange has experienced problems such as market
manipulation, insider trading and payment defaults. The recurrence of these or
similar problems could have a material adverse effect on the market price and

                                       18


<PAGE>


liquidity of the securities of ROC companies, including the common shares and
the ADSs, in both the domestic and the international markets.

     Holders of common shares and ADSs may incur dilution as a result of the
     practice among ROC technology companies of issuing stock bonuses and stock
     options to employees.

     Similar to other ROC technology companies, we issue bonuses from time to
time in the form of common shares valued at par under our employee stock bonus
plan. In 2004, we granted an aggregate of 15,427,203 common shares as stock
bonuses with an aggregate value of NT$154.3 million (US$4.9 million). In
addition, under the revised ROC Company Law we may, upon approval from our board
of directors and the ROC Securities and Futures Bureau (formerly known as the
Securities and Futures Commission), establish employee stock option plans. We
currently maintain two employee stock option plans pursuant to which our
full-time employees and the full-time employees of our domestic and foreign
subsidiaries are eligible to receive stock option grants. As of December 31,
2004, 284,885,000 options have been granted. See "Item 6. Directors, Senior
Management and Employees--Compensation--ASE Inc. Employee Bonus and Stock Option
Plans". The issuance of our common shares pursuant to stock bonuses or stock
options may have a dilutive effect on the holders of outstanding common shares
and ADSs.

     Restrictions on the ability to deposit our common shares into our ADS
     facility may adversely affect the liquidity and price of our ADSs.

     The ability to deposit common shares into our ADS facility is restricted by
ROC law. A significant number of withdrawals of common shares underlying our
ADSs would reduce the liquidity of the ADSs by reducing the number of ADSs
outstanding. As a result, the prevailing market price of our ADSs may differ
from the prevailing market price of our common shares on the Taiwan Stock
Exchange. Under current ROC law, no person or entity, including you and us, may
deposit our common shares in our ADS facility without specific approval of the
ROC Securities and Futures Bureau, unless:

   (1)    we pay stock dividends on our common shares;

   (2)    we make a free distribution of common shares;

   (3)    holders of ADSs exercise preemptive rights in the event of capital
          increases for cash; or

   (4)    to the extent permitted under the deposit agreement and the relevant
          custody agreement, investors purchase our common shares, directly or
          through the depositary, on the Taiwan Stock Exchange, and deliver our
          common shares to the custodian for deposit into our ADS facility, or
          our existing shareholders deliver our common shares to the custodian
          for deposit into our ADS facility.

     With respect to item (4) above, the depositary may issue ADSs against the
deposit of those common shares only if the total number of ADSs outstanding
following the deposit will not exceed the number of ADSs previously approved by
the ROC Securities and Futures Bureau, plus any ADSs issued pursuant to the
events described in subparagraphs (1), (2) and (3) above.

     In addition, in the case of a deposit of our common shares requested under
item (4) above, the depositary will refuse to accept deposit of our common
shares if such deposit is not permitted under any legal, regulatory or other
restrictions notified by us to the depositary from time to time, which
restrictions may include blackout periods during which deposits may not be made,
minimum and maximum amounts and frequency of deposits.

     The depositary will not offer holders of ADSs preemptive rights unless the
distribution of both the rights and the underlying common shares to our ADS
holders are either registered under the Securities Act, or exempt from
registration under the Securities Act.

                                       19


<PAGE>


     Holders of ADSs will not have the same voting rights as our shareholders,
     which may affect the value of their ADSs.

     The voting rights of a holder of ADSs as to the common shares represented
by its ADSs are governed by the deposit agreement. Holders of ADSs will not be
able to exercise voting rights on an individual basis. If holders representing
at least 51% of the ADSs outstanding at the relevant record date instruct the
depositary to vote in the same manner regarding a resolution, including the
election of directors and supervisors, the depositary will cause all common
shares represented by the ADSs to be voted in that manner. If the depositary
does not receive timely instructions representing at least 51% of the ADSs
outstanding at the relevant record date to vote in the same manner for any
resolution, including the election of directors and supervisors, holders of ADSs
will be deemed to have instructed the depositary or its nominee to authorize all
the common shares represented by the ADSs to be voted at the discretion of our
chairman or his designee, which may not be in the interest of holders of ADSs.

     The right of holders of ADSs to participate in our rights offerings is
     limited, which could cause dilution to your holdings.

     We may from time to time distribute rights to our shareholders, including
rights to acquire our securities. Under the deposit agreement, the depositary
will not offer holders of ADSs those rights unless both the distribution of the
rights and the underlying securities to all our ADS holders are either
registered under the Securities Act or exempt from registration under the
Securities Act. Although we may be eligible to take advantage of certain
exemptions under the Securities Act available to certain foreign issuers for
rights offerings, we can give no assurances that we will be able to establish an
exemption from registration under the Securities Act, and we are under no
obligation to file a registration statement for any of these rights.
Accordingly, holders of ADSs may be unable to participate in our rights
offerings and may experience dilution of their holdings.

     If the depositary is unable to sell rights that are not exercised or not
distributed or if the sale is not lawful or reasonably practicable, it will
allow the rights to lapse, in which case holders of ADSs will receive no value
for these rights.

     Changes in exchange controls which restrict your ability to convert
     proceeds received from your ownership of ADSs may have an adverse effect on
     the value of your investment.

     Under current ROC law, the depositary, without obtaining approvals from the
Central Bank of China or any other governmental authority or agency of the ROC,
may convert NT dollars into other currencies, including U.S. dollars, for:

o    the proceeds of the sale of common shares  represented  by ADSs or received
     as stock dividends from the common shares and deposited into the depositary
     receipt facility; and

o    any cash dividends or distributions received from the common shares.

     In addition, the depositary may also convert into NT dollars incoming
payments for purchases of common shares for deposit in the ADS facility against
the creation of additional ADSs. The depositary may be required to obtain
foreign exchange approval from the Central Bank of China on a payment-by-payment
basis for conversion from NT dollars into foreign currencies of the proceeds
from the sale of subscription rights for new common shares. Although it is
expected that the Central Bank of China will grant this approval as a routine
matter, we cannot assure you that in the future any approval will be obtained in
a timely manner, or at all.

     Under current ROC law, a holder of the ADSs, without obtaining further
approval from the Central Bank of China, may convert from NT dollars into other
currencies, including U.S. dollars, the following:

     o    the proceeds of the sale of any underlying common shares withdrawn
          from the depositary receipt facility or received as a stock dividend
          that has been deposited into the depositary receipt facility; and

     o    any cash dividends or distribution received from the common shares.

                                       20


<PAGE>


     However, such holder may be required to obtain foreign exchange approval
from the Central Bank of China on a payment-by-payment basis for conversion from
NT dollars into foreign currencies of the proceeds from the sale of subscription
rights for new common shares. Although the Central Bank of China is generally
expected to grant this approval as a routine matter, we cannot assure you that
you will actually obtain this approval in a timely manner, or at all.

     Under the ROC Foreign Exchange Control Law, the Executive Yuan of the ROC
government may, without prior notice but subject to subsequent legislative
approval, impose foreign exchange controls in the event of, among other things,
a material change in international economic conditions. We cannot assure you
that foreign exchange controls or other restrictions will not be introduced in
the future.

     The value of your investment may be reduced by possible future sales of
     common shares or ADSs by us or our shareholders.

     While we are not aware of any plans by any major shareholders to dispose of
significant numbers of common shares, we cannot assure you that one or more
existing shareholders or owners of securities convertible or exchangeable into
or exercisable for our common shares or ADSs will not dispose of significant
numbers of common shares or ADSs. In addition, several of our subsidiaries and
affiliates hold common shares, depositary shares representing common shares and
options to purchase common shares or ADSs. We or they may decide to sell those
securities in the future. See "Item 7. Major Shareholders and Related Party
Transactions--Major Shareholders" for a description of our significant
shareholders and affiliates that hold our common shares.

     On August 1, 2004, ASE Chung Li and ASE Material merged with and into ASE
Inc. pursuant to a merger agreement dated October 28, 2003, with ASE Inc. as the
surviving corporation. The merger was consummated by means of a share exchange
pursuant to which the respective shareholders of ASE Chung Li and ASE Material,
other than ourselves but including our subsidiaries ASE Test and ASE Test
Taiwan, received our common shares in exchange for the common shares of each of
ASE Chung Li and ASE Material. 282,315,437 common shares were issued in
connection with the merger, representing approximately 7.9% of our outstanding
shares as of October 28, 2003 before giving effect to such issuance. Of these
shares, the 149,175,000 common shares issued to ASE Test, our consolidated
subsidiary, are subject to certain transfer restrictions and are available for
resale in accordance with the rules and regulations of the Taiwan Stock
Exchange. See "Item 10. Additional Information--Articles of
Incorporation--Transfer Restrictions--Common Shares Issued to Substantial
Shareholders in Connection with a Merger". The 5,000,000 common shares issued to
ASE Test Taiwan are not subject to transfer restrictions under the rules and
regulations of the Taiwan Stock Exchange. In order to comply with Singapore law,
trusts have been set up to hold and dispose of our shares issued to ASE Test and
ASE Test Taiwan in connection with our merger with ASE Chung Li and ASE
Material. See "Item 7. Major Shareholders and Related Party
Transactions--Related Party Transactions".

     We cannot predict the effect, if any, that future sales of common shares or
ADSs, or the availability of common shares or ADSs for future sale, will have on
the market price of the common shares or the ADSs prevailing from time to time.
Sales of substantial numbers of common shares or ADSs in the public market, or
the perception that such sales may occur, could depress the prevailing market
prices of the common shares or the ADSs.

Item 4.  Information on the Company

HISTORY AND DEVELOPMENT OF THE COMPANY

     We were incorporated on March 23, 1984 as a company limited by shares under
the ROC Company Law, with facilities in the Nantze Export Processing Zone
located in Kaohsiung, Taiwan. We were listed on the Taiwan Stock Exchange in
1989. In 1990, we acquired ASE Test Taiwan, which provides our customers with
testing services. In 1991, we established ASE Test Malaysia, which provides our
customers with testing and packaging services. In 1997, we established ASE
Material, which designs and produces interconnect materials. In 1997, we
constructed a new facility in Kaohsiung, Taiwan for packaging services and
established a research and development laboratory. Our principal executive
offices are located at 26 Chin Third Road, Nantze Export Processing Zone,
Nantze, Kaohsiung, Taiwan, ROC and our telephone number at the above address is
(8867) 361-7131. Our agent for service


                                       21
<PAGE>


in the United States is CT Corporation, 111 Eighth Avenue, New York, New York
10011, and our agent's telephone number is (212) 894-8940.

     ASE Chung Li and ASE Korea

     In July 1999, we purchased Motorola's Semiconductor Products Sector
operations in Chung Li, Taiwan and Paju, South Korea for the packaging and
testing of semiconductors with principally communications, consumer and
automotive applications. We acquired substantially all of the assets of ASE
Chung Li for a base price of US$150.0 million in cash, consisting of an initial
payment at closing and additional payments in installments contingent upon
certain targets of revenue from packaging and testing services provided to
Motorola being met. All such installments were paid by July 2004. We acquired
100% of the outstanding shares of ASE Korea for a base price of US$140.0 million
in cash, consisting of an initial payment, with the remainder payable over five
years. In addition to the combined base price of US$290.0 million, we also paid
an aggregate of approximately US$60.1 million in cash to purchase capital assets
at both facilities which were acquired after January 1, 1999 and specified
inventories and cash positions. Under the acquisition agreements, we acquired a
70.0% interest in each of the two businesses, and ASE Test acquired the
remaining 30.0% interest. This division of the investment reflected in part our
estimate of the relative packaging and testing values at the facilities.

     ISE Labs

     In May 1999, we acquired 70.0% of the outstanding shares of ISE Labs, a
semiconductor testing company with its principal facilities located in Fremont,
California at a purchase price of US$100.1 million. We subsequently increased
our holding to 100% through purchases made in April, July and November 2000 and
in January 2002. The total price for our acquisition of 100% of the outstanding
shares of ISE Labs amounted to US$221.2 million.

     Universal Scientific

     From February through July of 1999, we purchased 22.6% of the outstanding
shares of Universal Scientific for approximately NT$3,532.5 million, principally
through open market purchases on the Taiwan Stock Exchange. We subsequently
increased our holding to 23.3% following open market purchases of additional
shares in July and August of 2000. As of May 31, 2005, we held 23.3% of
Universal Scientific's outstanding equity shares. Six out of the nine directors
on the Universal Scientific board of directors, including the chairman, are our
representatives.

     Acquisition of NEC's Packaging and Testing Operations in Yamagata, Japan

     On February 3, 2004, we and J&R Holding Limited, our wholly-owned
subsidiary, entered into a share sale and purchase agreement with NEC
Electronics Corporation, or NEC, and NEC Yamagata, Ltd. in connection with the
acquisition of the semiconductor packaging and testing business of NEC Yamagata,
a wholly-owned subsidiary of NEC. The acquisition was completed on May 31, 2004
and the purchase price, after accounting for certain purchase price adjustments,
was approximately US$25.6 million. The acquisition was consummated by means of a
company split under the Japanese Commercial Code through which the packaging and
testing business of NEC Yamagata was transferred to a company formed by NEC
Yamagata named ASE Japan Co., Ltd. Pursuant to the terms and conditions of the
share sale and purchase agreement, all of the issued and outstanding shares of
ASE Japan were purchased by J&R Holding Limited, and ASE Japan now owns and
operates the semiconductor packaging and testing business acquired from NEC
Yamagata. In connection with the acquisition, we and ASE Japan also entered into
a packaging and testing services agreement with NEC to provide packaging and
testing services to NEC for an initial period of four years after the completion
of the acquisition.

     Merger with ASE Chung Li and ASE Material

     On October 28, 2003, we entered into a merger agreement with ASE Chung Li
and ASE Material, pursuant to which ASE Chung Li and ASE Material merged with us
on August 1, 2004. We are the surviving corporation. Upon the completion of the
merger, all of the assets and liabilities of ASE Chung Li and ASE Material are
owned and have been assumed by us, and the operations of ASE Chung Li and ASE
Material have been integrated with our operations.

                                       22


<PAGE>


     The merger was consummated by means of a share exchange pursuant to which
the respective shareholders of ASE Chung Li and ASE Material, other than
ourselves but including our subsidiaries J&R Holding Limited, ASE Test and ASE
Test Taiwan, received our common shares in exchange for the common shares of
each of ASE Chung Li and ASE Material. 282,315,437 common shares were issued in
connection with the merger, representing 7.9% of our outstanding shares as of
October 28, 2003 before giving effect to such issuance.

     As of October 28, 2003, 57.6% of the outstanding common shares of ASE Chung
Li was held by us, 14.8% was held by J&R Holding Limited, our wholly-owned
subsidiary, and 27.6% was held by ASE Test, our consolidated subsidiary.
Pursuant to the merger agreement, all of the common shares of ASE Chung Li held
by shareholders of ASE Chung Li, other than ourselves but including our
subsidiaries J&R Holding Limited, ASE Test and ASE Test Taiwan, were exchanged
for our common shares at an exchange ratio of 0.85 ASE Inc. common share per ASE
Chung Li common share. In connection with the merger, we issued 79,914,225
common shares to J&R Holding Limited, 149,175,000 common shares to ASE Test and
four common shares to certain individuals who were the original shareholders of
ASE Chung Li. See "Item 7. Major Shareholders and Related Party
Transactions--Related Party Transactions". The merger with ASE Chung Li had a
transaction value of approximately NT$7,101.8 million (US$223.7 million), based
on NT$31.00 per ASE Inc. common share, which was the average of the closing
prices of our common shares on the Taiwan Stock Exchange for two days prior to
and following October 28, 2003.

     As of October 28, 2003, 57.4% of the outstanding common shares of ASE
Material was held by us and 4.0% was held by ASE Test Taiwan, with the remaining
38.6% held by the management and employees of ASE Material and ASE Inc., our
affiliates, and others. Pursuant to the merger agreement, all of the common
shares of ASE Material held by these shareholders other than ourselves were
exchanged for our common shares at an exchange ratio of 0.50 ASE Inc. common
share per ASE Material common share. In connection with the merger, we issued
53,226,208 common shares to these shareholders of ASE Material. The merger with
ASE Material had a transaction value of approximately NT$1,650.0 million
(US$52.0 million), based on NT$31.00 per ASE Inc. common share, which was the
average of the closing prices of our common shares on the Taiwan Stock Exchange
for two days prior and following October 28, 2003. See "Item 7. Major
Shareholders and Related Party Transactions--Related Party Transactions".

     Joint Venture with Compeq Manufacturing Co. Ltd.

     On October 28, 2003, we entered into a joint venture agreement with Compeq
to establish ASE-Compeq Technologies, Inc. to focus on the design and production
of interconnect materials for packaging semiconductors. Pursuant to the joint
venture agreement, we own 60% of the equity interest in ASE-Compeq Technologies,
Inc. and Compeq owns the remaining 40%. As of May 31, 2005, we had invested
NT$12 million (US$0.4 million) in ASE-Compeq Technologies, Inc. Our Chairman,
Jason C.S. Chang, serves as the Chairman of ASE-Compeq Technologies, Inc. The
joint venture has been approved by the ROC Fair Trade Commission and was
incorporated in January 2004. The initial focus of ASE-Compeq Technologies, Inc.
is on meeting our substrates requirements by providing us access to Compeq's
production capacity and expertise, know-how and engineering capabilities in the
design and production of advanced substrates and gradually expand its customer
base to include integrated device manufacturers and other backend
subcontractors. ASE-Compeq Technologies, Inc. will initially utilize Compeq's
existing facilities in Ta Yuan, Taiwan.

     Acquisition of ASE (U.S.) Inc.

     In order to decrease our dependence upon sales agents for sales and
customer service in North America and Europe, in July 2004, we, through our
subsidiary J&R Holding Limited, purchased all of the outstanding shares of ASE
(U.S.) Inc. from Y.C. Hsu, ASE (U.S.) Inc.'s sole shareholder, for a purchase
price of US$4.6 million. ASE (U.S.) Inc. is now our wholly-owned subsidiary
through which we provide sales and customer service in North American and
Europe. See "--Business Overview--Sales and Marketing--Sales and Customer
Service Agents".

BUSINESS OVERVIEW

     Together with our subsidiary ASE Test, we are the world's largest
independent provider of semiconductor packaging and testing services based on
2004 revenues. Our services include semiconductor packaging, design and
production of interconnect materials, front-end engineering testing, wafer
probing and final testing services. We

                                       23


<PAGE>


believe that, as a result of the following, we are better positioned than our
competitors to meet the requirements of semiconductor companies worldwide for
outsourced packaging and testing services across a wide range of end-use
applications:

     o    our ability to provide a broad range of advanced semiconductor
          packaging and testing services on a large-scale turnkey basis;

     o    our expertise in developing and providing advanced packaging,
          interconnect materials and testing technologies and solutions;

     o    our scale of operations and financial position, which enable us to
          make significant investments in capacity expansion and research and
          development as well as to make selective acquisitions;

     o    our geographic presence in key centers of outsourced semiconductor and
          electronics manufacturing; and

     o    our long-term relationships with providers of complementary
          semiconductor manufacturing services, including our strategic alliance
          with TSMC, the world's largest dedicated semiconductor foundry.

     We believe that the trend for semiconductor companies to outsource their
packaging and testing requirements is accelerating as semiconductor companies
increasingly rely on independent providers of foundry and advanced packaging and
testing services. In response to the increased pace of new product development
and shortened product life and production cycles, semiconductor companies are
increasingly seeking independent packaging and testing companies that can
provide turnkey services in order to reduce time-to-market. We believe that our
expertise and scale in advanced technology and our ability to integrate our
broad range of solutions into turnkey services allow us to benefit from the
accelerated outsourcing trend and better serve our existing and potential
customers.

     We believe that we have benefited, and will continue to benefit, from our
geographic location in Taiwan. Taiwan is currently the largest center for
outsourced semiconductor manufacturing in the world and, in addition, has a high
concentration of electronics manufacturing service providers, which are the end
users of our customers' products. Our close proximity to foundries and other
providers of complementary semiconductor manufacturing services is attractive to
our customers who wish to take advantage of the efficiencies of a total
semiconductor manufacturing solution by outsourcing several stages of their
manufacturing requirements. Our close proximity to end users of our customers'
products is attractive to our customers who wish to take advantage of the
logistical efficiencies of direct shipment services that we offer. We believe
that, as a result, we are well positioned to meet the advanced semiconductor
engineering and manufacturing requirements of our customers.

     Our global base of over 200 customers includes leading semiconductor
companies across a wide range of end-use applications:

     o  Agilent Technologies, Inc.    o  NEC Electronics Corporation
     o  Altera Corporation            o  NVIDIA Corporation
     o  ATI Technologies, Inc.        o  ON Semiconductor Corp.
     o  Conexant Systems, Inc.        o  Philips Semiconductors Inc.
     o  Freescale Semiconductor,      o  Qualcomm Incorporated
          Inc. (formerly the          o  RF Micro Devices, Inc.
          semiconductor operations    o  Silicon Integrated Systems Corp.
          of Motorola, Inc.)          o  STMicroelectronics N.V.
     o  IBM Corporation               o  Sunplus Technology Co., Ltd.
     o  LSI Logic Corporation         o  VIA Technologies, Inc.


Industry Background

     General

     Semiconductors are the basic building blocks used to create an increasing
variety of electronic products and systems. Continuous improvements in
semiconductor manufacturing processes and design technologies have enabled
manufacturers to produce smaller, more complex and more reliable semiconductors
at a lower cost per

                                       24


<PAGE>


function. These improvements have resulted in significant performance and price
benefits to manufacturers of electronic systems. As a result, semiconductor
demand has grown substantially in our primary end-user markets for
communications, personal computers and consumer electronics, and has experienced
increased growth in other markets such as automotive products, industrial
automation and control systems.

     The semiconductor industry is characterized by strong long-term growth,
with periodic and sometimes severe cyclical downturns. The Semiconductor
Industry Association estimates that worldwide sales of semiconductors increased
from approximately US$51 billion in 1990 to US$213 billion in 2004. The
semiconductor industry experienced strong growth between 1992 and 1995 and
between 1998 and 2000, with declines between 1996 and the first half of 1997 as
well as in 1998. Starting from the fourth quarter of 2000, the semiconductor
industry experienced a severe downturn due to a slowdown in the global economy,
overcapacity in the semiconductor industry and worldwide inventory adjustment.
The semiconductor industry started to show signs of a modest recovery in 2002,
primarily as a result of inventory replenishment and the introduction of new
products. This modest recovery, evident in 2002 and 2003, strengthened in 2004
and is expected to maintain its strength throughout most of 2005, according to
the Semiconductor Industry Association. We believe that the pattern of long-term
growth and cyclical fluctuations will continue in the semiconductor industry.

     Outsourcing Trends in Semiconductor Manufacturing

     Historically, semiconductor companies designed, manufactured, packaged and
tested semiconductors primarily in their own facilities. Over the past several
years, there has been a trend in the industry to outsource stages in the
manufacturing process. Virtually every significant stage of the manufacturing
process can be outsourced. Wafer foundry services and semiconductor packaging
services are currently the largest segments of the independent semiconductor
manufacturing services market. Most of the world's major integrated device
manufacturers use some independent manufacturing services to maintain a
strategic mix of internal and external manufacturing capacity.

     The availability of technologically advanced independent manufacturing
services has also enabled the growth of "fabless" semiconductor companies that
focus on semiconductor design and marketing and outsource their fabrication,
packaging and testing requirements to independent semiconductor manufacturing
companies. The growth in the number and scale of fabless semiconductor companies
that rely solely on independent companies to meet their manufacturing
requirements will continue to be a driver of growth in the market for
independent foundry, packaging and testing services. Similarly, the availability
of technologically advanced independent manufacturing services has encouraged
integrated device manufacturers, which had traditionally relied on in-house
semiconductor manufacturing capacity, to increasingly outsource their
manufacturing requirements to independent semiconductor manufacturing companies.

     We believe the outsourcing of semiconductor manufacturing services will
increase in the future from current levels for many reasons, including the
following:

     Technological Expertise and Significant Capital Expenditure. Semiconductor
manufacturing processes have become highly complex, requiring substantial
investment in specialized equipment and facilities and sophisticated engineering
and manufacturing expertise. Technical expertise becomes increasingly important
as the industry transitions from one generation of technology to another, as
evidenced by the current migration of fabrication technology from 8-inch to
12-inch wafers. In addition, product life cycles have been shortening,
magnifying the need to continuously upgrade or replace manufacturing equipment
to accommodate new products. As a result, new investments in in-house packaging,
testing and fabrication facilities are becoming less desirable to integrated
device manufacturers because of the high investment costs as well as the
inability to achieve sufficient economies of scale and utilization rates
necessary to be competitive with the independent service providers. Independent
packaging, testing and foundry companies, on the other hand, are able to realize
the benefits of specialization and achieve economies of scale by providing
services to a large base of customers across a wide range of products. This
enables them to reduce costs and shorten production cycles through high capacity
utilization and process expertise. In the process, they are also able to focus
on discrete stages of semiconductor manufacturing and deliver services of
superior quality.

   Since the recent industry downturn beginning in the fourth quarter of 2000,
semiconductor companies have significantly reduced their investment in in-house
packaging and testing technologies and capacity. As a result, some

                                       25


<PAGE>


semiconductor companies may have limited in-house expertise and capacity to
accommodate large orders following a recovery in demand, particularly in the
area of advanced technology. We expect semiconductor companies to increasingly
outsource their packaging and testing requirements to take advantage of the
advanced technology and scale of operations of independent packaging and testing
companies.

     Focus on Core Competencies. As the semiconductor industry becomes more
competitive, semiconductor companies are expected to further outsource their
semiconductor manufacturing requirements in order to focus their resources on
core competencies, such as semiconductor design and marketing.

     Time-to-Market Pressure. The increasingly short product life cycle has
accelerated time-to-market pressure for semiconductor companies, leading them to
rely increasingly on outsourced suppliers as a key source for effective
manufacturing solutions.

     Gartner Dataquest forecasts that the total outsourced semiconductor
packaging market will grow from US$8.2 billion in 2003 to US$21.3 billion in
2009. Gartner Dataquest also forecasts that the total outsourced semiconductor
testing market will grow from US$2.3 billion in 2003 to US$6.5 billion in 2009.

     The Semiconductor Industry in Taiwan

     The semiconductor industry in Taiwan has been a leader in, and a major
beneficiary of, the trend in outsourcing. The growth of the semiconductor
industry in Taiwan has been the result of several factors. First, semiconductor
manufacturing companies in Taiwan typically focus on one or two stages of the
semiconductor manufacturing process. As a result, these companies tend to be
more efficient and are better able to achieve economies of scale and maintain
higher capacity utilization rates. Second, semiconductor manufacturing companies
in Taiwan that provide the major stages of the manufacturing process are located
close to each other and typically enjoy close working relationships. This close
network is attractive to customers who wish to outsource several stages of the
semiconductor manufacturing process. For instance, a customer could reduce
production cycle time and unit cost and streamline logistics by outsourcing its
foundry, packaging, testing and drop shipment services to semiconductor
manufacturing companies in Taiwan. Third, Taiwan also has an educated labor pool
and a large number of engineers suitable for sophisticated manufacturing
industries such as semiconductors.

     As a result of the growth of the global semiconductor market, the
semiconductor industry in Taiwan has in recent years made significant capital
expenditures to expand capacity and technological capabilities. The ROC
government has also provided tax incentives, long-term loans at favorable rates
and research and development support, both directly and indirectly through
support of research institutes and universities. As a result of investments made
in recent years, Taiwan has achieved substantial market share in the outsourced
semiconductor manufacturing industry. Furthermore, the growth of Taiwan's
electronics manufacturing industry, particularly in personal computer design and
manufacturing, has created substantial local demand for semiconductors.

     The Semiconductor Industry in Other Asian Regions

     Many of the factors that contributed to the growth of the semiconductor
industry in Taiwan have also contributed to the recent development of the
semiconductor industry in Southeast Asia. Access to expanding semiconductor
foundry services in Singapore, convenient proximity to major downstream
electronics manufacturing operations in Malaysia, Singapore and Thailand,
government-sponsored infrastructure support, tax incentives and pools of skilled
engineers and labor at relatively low cost have all encouraged the development
of back-end semiconductor service operations in Southeast Asia. The downstream
electronics manufacturers in Southeast Asia have typically focused on products
used in the communications, industrial and consumer electronics and personal
computer peripheral sectors. The proximity to both semiconductor foundries and
end users has influenced local and international semiconductor companies
increasingly to obtain packaging, testing and drop shipment services from
companies in Southeast Asia.

     In addition, the world's leading electronics manufacturing service
providers, many of them from Taiwan, are increasingly establishing manufacturing
facilities in the PRC in order to take advantage of lower labor costs,
government incentives for investment and the potential size of the domestic
market for end users of electronics products. Many of the factors that
contributed to the growth of the semiconductor industry in Taiwan are beginning

                                       26


<PAGE>


to emerge in the PRC and may play an increasingly important role in the growth
of its semiconductor industry over the long term.

     Overview of Semiconductor Manufacturing Process

     The manufacturing of semiconductors is a complex process that requires
increasingly sophisticated engineering and manufacturing expertise. The
manufacturing process may be divided into the following stages from circuit
design to shipment:

                               [GRAPHICS OMITTED]


     We are involved in all stages of the semiconductor manufacturing process
except circuit design and wafer fabrication.

                Process                                Description
---------------------------------------- ---------------------------------------
Circuit Design.......................... The design of a semiconductor is
                                         developed by laying out circuit
                                         components and interconnections. A
                                         complex circuit may be designed with as
                                         many as 20 layers of patterns or more.

Front-End Engineering Test.............. Throughout and following the design
                                         process, prototype semiconductors
                                         undergo front-end engineering testing,
                                         which involves software development,
                                         electrical design validation,
                                         reliability and failure analysis.

Wafer Fabrication....................... Process begins with the generation of
                                         a photomask through the definition of
                                         the circuit design pattern on a
                                         photographic negative, known as a
                                         mask, by an electron beam or laser
                                         beam writer. These circuit patterns
                                         are transferred to the wafers using
                                         various advanced processes.

Wafer Probe............................. Each individual die is electrically
                                         tested, or probed, for defects. Dies
                                         that fail this test are marked to be

                                       27


<PAGE>


                Process                                Description
---------------------------------------- ---------------------------------------
                                         discarded.

Packaging............................... Packaging, also called assembly, is
                                         the processing of bare semiconductors
                                         into finished semiconductors and
                                         serves to protect the die and
                                         facilitate electrical connections and
                                         heat dissipation. The patterned
                                         silicon wafers received from our
                                         customers are diced by means of
                                         diamond saws into separate dies, also
                                         called chips. Each die is attached to
                                         a leadframe or a laminate (plastic or
                                         tape) substrate by epoxy resin. A
                                         leadframe is a miniature sheet of
                                         metal, generally made of copper and
                                         silver alloys, on which the pattern of
                                         input/output leads has been cut. On a
                                         laminate substrate, typically used in
                                         BGA packages, the leads take the shape
                                         of small bumps or balls. Leads on the
                                         leadframe or the substrate are
                                         connected by extremely fine gold wires
                                         or bumps to the input/output terminals
                                         on the chips, through the use of
                                         automated machines known as "bonders".
                                         Each chip is then encapsulated,
                                         generally in a plastic casing molded
                                         from a molding compound, with only the
                                         leads protruding from the finished
                                         casing, either from the edges of the
                                         package as in the case of the
                                         leadframe-based packages, or in the
                                         form of small bumps on a surface of
                                         the package as in the case of BGA or
                                         other substrate-based packages.

Final Test.............................. Final testing is conducted to ensure
                                         that the packaged semiconductor meets
                                         performance specifications. Final
                                         testing involves using sophisticated
                                         testing equipment known as testers and
                                         customized software to electrically
                                         test a number of attributes of
                                         packaged semiconductors, including
                                         functionality, speed, predicted
                                         endurance and power consumption. The
                                         final testing of semiconductors is
                                         categorized by the functions of the
                                         semiconductors tested into
                                         logic/mixed-signal final testing and
                                         memory final testing. Memory final
                                         testing typically requires simpler
                                         test software but longer testing time
                                         per device tested.

Strategy

     Our objective is to provide advanced semiconductor packaging and testing
services and interconnect materials design and production capabilities which set
industry standards and to lead and facilitate the industry trend towards
outsourcing semiconductor manufacturing requirements. The principal elements of
our strategy are to:

     Maintain Our Focus on Providing a Complete Range of Semiconductor Packaging
     and Testing Services

     We believe that an important factor in our ability to attract leading
semiconductor companies as our customers has been our ability to provide turnkey
services on a large scale. Turnkey services consist of the integrated packaging,
testing and direct shipment of semiconductors to end users designated by our
customers. As part of our integrated packaging solution, we also design and
produce advanced and cost-competitive interconnect materials, substantially all
of which are for internal use in our packaging operations. As a result of our
technical expertise and large production capacity in both packaging and testing,
we are able to provide turnkey services on a large scale. As product lives and
production cycles shorten and packaging and testing technologies advance more
rapidly, our

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<PAGE>


customers increasingly value our ability to work with them as an integral and
strategic partner in the development of their products. The front-end
engineering testing expertise of ISE Labs has greatly enhanced our ability to
participate in the earlier stages of circuit design and the semiconductor
manufacturing process. Our establishment of ASE Material in 1997 for the design
and production of interconnect materials, such as substrates and leadframes, has
provided us with expertise in interconnect materials technology, which has
become increasingly critical for our customers both in terms of cost and
production cycle time. With the merger of ASE Material into us in 2004, we
believe we are better positioned to provide effective and efficient service to
our customers.

     Continue to Focus on Advanced Technological, Processing and Interconnect
     Materials Capabilities

     We intend to continue our focus on developing advanced process and product
technologies in order to meet the advanced semiconductor engineering
requirements of our customers. Our expertise in packaging technology has enabled
us to develop advanced solutions such as fine-pitch wire bonding, stacked die
packaging and bump chip carrier packaging. We are continuously investing in
research and development in response to and in anticipation of migrations in
technology and intend to continue to acquire access to new technologies through
strategic alliances and licensing arrangements.

     We intend to continue to focus on developing and enhancing our existing
interconnect materials capabilities, both through our interconnect materials
operations (formerly operated by ASE Material prior to its merger with us), and
through our joint venture with Compeq. We expect that interconnect materials
will become an increasingly important value-added component of the semiconductor
packaging business as packaging technology migrates from the traditional wire
bonding process towards the flip-chip wafer bumping process and interconnect
materials such as advanced substrates represent a higher percentage of the cost
of the packaging process. By focusing on the design and production of
interconnect materials, we plan to capture most of the value added components of
the packaging business and lead the migration in packaging technology. In 2004,
our interconnect materials operations supplied approximately one-half of our
consolidated substrate requirements by value. We intend to capture more of the
value-added components of the packaging business by increasing the percentage of
our substrate requirements obtained from our own operations and through our
joint venture with Compeq. We believe that our merger with ASE Material will
further strengthen our ability to provide turnkey services that incorporate
interconnect materials to our customers and finance the growth of the
interconnect materials business. In addition, we expect that our joint venture
with Compeq will further strengthen our capabilities in the interconnect
materials business by providing us access to Compeq's production capacity and
expertise, know-how and engineering capability in the design and production of
advanced substrates.

     We intend to continue to strengthen our capabilities in testing complex,
high-performance semiconductors. In particular, we plan to focus on testing
logic/mixed-signal semiconductors that are characterized by very high clock
speeds, high pin count and high levels of integration.

     The increasing miniaturization of semiconductors and the growing complexity
of interconnect technology have also resulted in the blurring of the traditional
distinctions among assembly at different levels of integration: chip, module,
board and system. We currently provide module assembly services primarily at our
facilities in Malaysia, Korea and the PRC. Our controlling interest in Universal
Scientific has provided us with access to process and product technologies at
the levels of module, board and system assembly and test, which helps us to
better anticipate industry trends and take advantage of potential growth
opportunities.

     Strategically Expand Production Capacity

     We intend to strategically expand our production capacity, both through
internal growth and through selective acquisitions and joint ventures, with a
focus on providing more advanced packaging and testing services, which we
believe present greater opportunities to achieve higher growth in our revenues
and higher margins. We believe that the demand for advanced semiconductor
packaging and testing services will grow at a faster pace than demand for
traditional packaging and testing services. The gradual upturn in the demand for
advanced packaging and testing services is partially due to the trend of
integrated device manufacturers outsourcing their manufacturing requirements for
advanced packaging and testing services rather than undertaking the high capital
investment costs of maintaining in-house advanced packaging and testing
capabilities. Packaging and testing services for more advanced semiconductors
also generally have higher margins for two reasons. First, as the packaging and
testing of

                                       29


<PAGE>


advanced semiconductors become more complex, requiring greater expertise in
process and technology, such services typically command higher average selling
prices. Second, we have been able to achieve higher utilization rates for the
equipment we use for more advanced packaging and testing, compared to other
equipment that we maintain. We believe that our technical expertise, as well as
our scale of operations and financial position, which had enabled us to continue
to make investments in more advanced packaging and testing equipment even in
times of market downturn, have enabled us to attract a greater proportion of the
demand for more advanced packaging and testing services.

     We evaluate acquisition opportunities on the basis of access to new markets
and technology, the enhancement of our production capacity, economies of scale
and management resources, and closer proximity to existing and potential
customers. In 1999, we acquired ISE Labs, an independent testing company with
operations in California, Texas, Hong Kong and Singapore. Through combining the
front-end engineering testing capabilities of ISE Labs with our existing final
testing capabilities, we are able to provide our customers with complete
semiconductor testing solutions. In 1999, we acquired the semiconductor
packaging and testing operations of Motorola, Inc. located in Chung Li, Taiwan
and Paju, South Korea, which enabled us to expand our capacity and gain access
to specialized packaging and testing technologies with a focus on wireless
communications and automotive end-products. In February 2004, we acquired NEC's
semiconductor packaging and testing operations located in Yamagata, Japan, which
enabled us to expand our capacity and gain access to the Japanese market and
advanced packaging and testing facilities and know-how.

     Continue to Leverage Our Presence in Key Centers of Semiconductor and
     Electronics Manufacturing

     We intend to continue leveraging our presence in key centers of
semiconductor and electronics manufacturing to further grow our business. We
have significant packaging and testing operations in Taiwan, currently the
largest center for outsourced semiconductor manufacturing in the world. This
presence enables our engineers to work closely with our customers as well as
foundries and other providers of complementary semiconductor manufacturing
services early in the semiconductor design process, enhances our responsiveness
to the requirements of our customers and shortens production cycles. In
addition, as a turnkey service provider, we are able to offer in Taiwan
packaging and testing services, including interconnect materials solutions, all
within relatively close geographic proximity to our customers, complementary
service providers and the end users of our customers' products. In addition to
our current operations, we intend to expand our packaging, testing and
interconnect materials operations in Chung Li, Taiwan to better serve our
customers located in northern Taiwan and customers who request that we maintain
the capability of packaging and testing their products at more than one location
in Taiwan.

     In addition to our locations in Taiwan, we have operations in the following
     locations:

     o    Korea -- an increasingly important center for the manufacturing of
          memory and communications devices with a concentration of integrated
          device manufacturers specializing in these products;

     o    Malaysia and Singapore -- an emerging center for outsourced
          semiconductor manufacturing in Southeast Asia with a concentration of
          integrated device manufacturers;

     o    Silicon Valley in California -- the preeminent center for
          semiconductor design with a concentration of fabless customers; and

     o    Japan -- an emerging market for semiconductor packaging and testing
          services as Japanese integrated device manufacturers increasingly
          outsource their semiconductor manufacturing requirements.

     Strengthen and Develop Strategic Relationships with Providers of
     Complementary Semiconductor Manufacturing Services

     We intend to strengthen existing and develop new strategic relationships
with providers of other complementary semiconductor manufacturing services, such
as foundries, as well as equipment vendors, raw material suppliers and
technology research institutes, in order to offer our customers total
semiconductor manufacturing solutions covering all stages of the manufacturing
of their products from design to shipment.

                                       30


<PAGE>


     Since 1997, we have maintained a strategic alliance with TSMC, the world's
largest dedicated semiconductor foundry, which designates us as the
non-exclusive preferred provider of packaging and testing services for
semiconductors manufactured by TSMC. Through our strategic alliance with and
close geographic proximity to TSMC, we are able to offer our customers a total
semiconductor manufacturing solution that includes access to foundry services in
addition to our packaging, testing and direct shipment services.

Principal Products and Services

     We offer a broad range of advanced semiconductor packaging and testing
services. Our package types employ either leadframes or substrates as
interconnect materials. The semiconductors we package are used in a wide range
of end-use applications, including communications, personal computers, consumer
electronics, industrial, automotive and other applications. Our testing services
include front-end engineering testing, which is performed during and following
the initial circuit design stage of the semiconductor manufacturing process,
wafer probe, final testing and other related semiconductor testing services. We
focus on packaging and testing logic semiconductors. We offer our customers
turnkey services which consist of packaging, testing and direct shipment of
semiconductors to end users designated by our customers. In 2004, 2003 and 2002,
our packaging revenues, including revenues from module assembly, accounted for
79.2%, 78.6% and 77.9% of our net revenues, respectively, and our testing
revenues accounted for 20.2%, 21.2% and 22.1% of our net revenues, respectively.

     Packaging Services

     We offer a broad range of package types to meet the requirements of our
customers, with a focus on advanced packaging solutions. Within our portfolio of
package types, we focus on the packaging of semiconductors for which there is
expected to be strong demand. These include advanced leadframe-based package
types such as quad flat package, thin quad flat package, bump chip carrier and
quad flat no-lead package, and package types based on substrates, such as
flip-chip BGA and other BGA types as well as other advanced packages such as
wafer-bumping products. We are among the leaders in such advanced packaging
processes and technologies and are well positioned to lead the technology
migration in the semiconductor packaging industry.

     The semiconductor packaging industry has evolved to meet the advanced
packaging requirements of high-performance semiconductors. The development of
high-performance electronics products has spurred the innovation of
semiconductor packages that have higher interconnect density and better
electrical performance. As a part of this technology migration, semiconductor
packages have evolved from leadframe-based packages to substrate-based packages.
The key differences of these package types are:

     o    the size of the package;

     o    the density of electrical connections the package can support; and

     o    the thermal and electrical characteristics of the package.

     Leadframe-Based Packages. Leadframe-based packages are packaged by
connecting the die, using wire bonders, to the leadframe with gold wire. As
packaging technology improves, the number of leads per package increases.
Packages have evolved from the lower pin-count plastic dual in-line packages to
higher pin-count quad flat packages. In addition, improvements in
leadframe-based packages have reduced the footprint of the package on the
circuit board and improved the electrical performance of the package. The
following table sets forth our principal leadframe-based packages.

                         Number
                         of
     Package Types       Leads        Description         End-Use Applications
----------------------   -----  ----------------------  -----------------------
Quad Flat Package
(QFP)/ Thin Quad Flat    44-256 Designed for advanced    Multimedia
Package (TQFP)........          processors and           applications, cellular
                                controllers,             phones, personal
                                application-specific     computers, automotive
                                integrated circuits and  and industrial
                                digital signal           products, hard disk
                                processors.              drives, communication
                                                         boards such as
                                                         ethernet, integrated
                                                         services

                                       31


<PAGE>


                         Number
                         of
     Package Types       Leads        Description         End-Use Applications
----------------------   -----  ----------------------  -----------------------
                                                         digital network, and
                                                         notebook computers.

Quad Flat No-Lead
Package (QFN)/Microchip
Carrier (MCC).........   12-84  QFN, also known as MCC,  Cellular phones,
                                uses half-encapsulation  wireless local access
                                technology to expose     network, or wireless
                                the rear side of the     LAN, personal digital
                                die pad and the tiny     assistant devices and
                                fingers, which are used  digital cameras.
                                to connect the chip and
                                bonding wire with
                                printed circuit boards.

Bump Chip Carrier (BCC)  16-156 BCC packages use         Cellular phones,
                                plating metal pads to    wireless LAN, personal
                                connect with printed     digital assistant
                                circuit boards,          devices and digital
                                creating enhanced        cameras.
                                thermal and electrical
                                performance.
Small Outline Plastic
Package (SOP)/Thin
Small Outline Plastic     8-56  Designed for memory      Consumer audio/video
Package (TSOP)........          devices including        and entertainment
                                static random access     products, cordless
                                memory, or SRAM,         telephones, pagers,
                                dynamic random access    fax machines,
                                memory, or DRAM, fast    printers, copiers,
                                static RAM, also called  personal computer
                                FSRAM, and flash memory  peripherals,
                                devices.                 automotive parts,
                                                         telecommunications
                                                         products, recordable
                                                         optical disks and hard
                                                         disk drives.
Small Outline Plastic
J-Bend Package (SOJ)..   20-44  Designed for memory and  DRAM memory devices,
                                low pin-count            microcontrollers,
                                applications.            digital analog
                                                         conversions and
                                                         audio/video
                                                         applications.
Plastic Leaded Chip
Carrier (PLCC)........   28-84  Designed for             Personal computers,
                                applications that do     scanners, electronic
                                not require low-profile  games and monitors.
                                packages with high
                                density of
                                interconnects.
Plastic Dual In-line
Package (PDIP)........    8-64  Designed for consumer    Telephones,
                                electronic products.     televisions,
                                                         audio/video
                                                         applications and
                                                         computer peripherals.

     Substrate-Based Packages. Substrate-based packages generally employ the BGA
design, which utilizes a substrate rather than a leadframe. Whereas traditional
leadframe technology places the electrical connection around the perimeter of
the package, the BGA package type places the electrical connection at the bottom
of the package surface in the form of small bumps or balls. These small bumps or
balls are typically distributed evenly across the bottom surface of the package,
allowing greater distance between individual leads and higher pin-counts.

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<PAGE>


     The BGA package type was developed in response to the requirements of
advanced semiconductors. The benefits of the BGA package type include:

     o    smaller package size;

     o    higher pin-count;

     o    greater reliability;

     o    superior electrical signal transmission; and

     o    better heat dissipation.

     The industry demand for BGA packages has grown significantly in recent
years. BGA packages are generally used in applications where size, density and
performance are important considerations, such as cellular handsets and high
pin-count graphic chipsets. Our expertise in BGA packages also includes
capabilities in stacked-die BGA, which assembles multiple dies into a single
package. As an extension to stacked-die BGA, we also assemble
system-in-a-package products, which involve the integration of more than one
chip into the same package. We believe that we are among the leaders in these
packaging technologies.

     We believe that there will continue to be growing demand for packaging
solutions with increased input/output density, smaller size and better heat
dissipation characteristics. In anticipation of this demand, we have focused on
developing our capabilities in some advanced packaging solutions, such as
flip-chip BGA. Flip-chip BGA technology replaces wire bonding with wafer bumping
for interconnections within the package. Wafer bumping involves the placing of
tiny solder balls, instead of wires, on top of dies for connection to
substrates. As compared with more traditional packages which allow input/output
connection only on the boundaries of the dies, flip-chip packages significantly
enhance the input/output flow by allowing input/output connection over the
entire surface of the dies.

     The following table sets forth our principal substrate-based packages.

                    Number
 Package Types     of Leads         Description           End-Use Applications
----------------   --------    ----------------------    ----------------------
Plastic BGA........ 5-1296      Designed for             Wireless products,
                                semiconductors which     cellular phones,
                                require the enhanced     global positioning
                                performance provided by  systems, notebook
                                plastic BGA, including   computers, disk drives
                                personal computer        and video cameras.
                                chipsets, graphic
                                controllers and
                                microprocessors,
                                application-specific
                                integrated circuits,
                                digital signal
                                processors and memory
                                devices.

Film BGA........... 100-280     Substrate-based package  Cellular phones,
                                that has higher          pagers, wireless
                                performance and lower    communications,
                                profile than plastic     digital signal
                                BGA.                     processors and
                                                         micro-controller
                                                         applications and high
                                                         performance disk
                                                         drives.

Cavity Down BGA.... 256-1140    Designed for memory      Cellular and other
                                devices such as flash    telecommunications
                                memory devices, SRAM,    products, wireless and
                                DRAM and FSRAM,          consumer systems,
                                microprocessors/controllepersonal digital
                                and high-value,          assistants, or PDAs,
                                application-specific     disk drives, notebook
                                integrated circuits      computers and memory
                                requiring a low          boards.
                                profile, light and
                                small package.

                                       33


<PAGE>


                    Number
 Package Types     of Leads         Description           End-Use Applications
----------------   --------    ----------------------    ----------------------
Stacked-Die BGA.... 44-591      Combination of multiple  Cellular phones, local
                                dies in a single         area networks, graphic
                                package enables package  and processors,
                                to have multiple         digital cameras and
                                functions within a       pagers.
                                small surface area.

Flip-Chip BGA...... 16-2401     Using advanced           High-performance
                                interconnect             networking, graphics
                                technology, the          and processor
                                flip-chip BGA package    applications.
                                allows higher density
                                of input/output
                                connection over the
                                entire surface of the
                                dies.  Designed for
                                high-performance
                                semiconductors that
                                require high density of
                                interconnects in a
                                small package.

Land Grid Array     10-72       Leadless package which   High frequency
(LGA).............. ..          is essentially a BGA     integrated circuits
                                package without the      such as wireless
                                solder balls.  Based on  communications
                                laminate substrate,      products, computers
                                land grid array          servers and personal
                                packages allow flexible  computer peripherals.
                                routing and are capable
                                of multichip module
                                functions.

     Module Assembly. We also offer module assembly services, which combine one
or more packaged semiconductors with other components in an integrated module to
enable increased functionality, typically using automated surface mount
technology, or SMT, machines and other machinery and equipment for system-level
assembly. End-use applications for modules include PDAs, wireless LAN
applications, Bluetooth applications, camera modules, automotive applications
and toys. Historically, the majority of our module assembly services was
provided at our facilities in Malaysia to a customer for the assembly of camera
modules used in handsets. We expect revenues from such services to decrease
substantially in 2005 as such customer moves its camera module assembly
in-house. We also provide module assembly services at our facilities in Korea
for radio frequency and power amplifier modules used in wireless communications
and automotive applications.

     Interconnect Materials. Interconnect materials connect the input/output on
the semiconductor dies to the printed circuit board. Interconnect materials
include leadframe, which is a miniature sheet of metal, generally made of copper
and silver alloys, on which the pattern of input /output leads has been cut, and
substrate, which is a multi-layer miniature printed circuit board. Interconnect
materials are an important element of the electrical characteristics and overall
performance of semiconductors. We produce both leadframes and substrates for use
in our packaging operations. In 2004, our interconnect materials operations
supplied approximately one-half of our consolidated substrate requirements by
value.

     We expect substrates will become an increasingly important value-added
component of the semiconductor packaging business. The demand for higher
performance semiconductors in smaller packages will continue to spur the
development of advanced substrates that can support the advancement in circuit
design and fabrication. As a result, we believe that the market for substrates
will grow and the cost of substrates as a percentage of the total packaging
process will increase, especially for advanced packages such as flip-chip BGA
packages. In the past, substrates we designed for our customers were produced by
independent substrate manufacturers. In anticipation of the migration in
packaging technology, we established ASE Material in 1997 to develop our
capabilities in the design and production of interconnect materials for use in
our packaging operations. On August 1, 2004, we merged ASE Material with and
into us. We are the surviving corporation. In addition, on October 28, 2003, we
established ASE-Compeq Technologies Inc., a joint venture with Compeq, to focus
on the design and production of interconnect materials for packaging
semiconductors. Through our merger with ASE Material and our joint venture with
Compeq, we believe we can capture growth opportunities in the interconnect
materials business as well as reduce the production cycle time for our customers
by integrating substrate design and Compeq's existing production

                                       34


<PAGE>


capacity into our packaging services. See "Item 3. Key Information--Risk
Factors--Risk Relating to Our Business--If we are not successful in developing
and enhancing our in-house interconnect materials capabilities, our margins and
profitability may be adversely affected."

     The following table sets forth, for the periods indicated, the percentage
of our packaging revenues accounted for by each principal type of packaging
products or services.

                                              Year Ended December 31,
                                      ----------------------------------------
                                        2002           2003            2004
                                      ------------ -------------- ------------
                                         (percentage of packaging revenues)

  Advanced substrate and
    leadframe-based packages(1).        80.8%          78.5%           71.4%
  Traditional leadframe-based
    packages(2).................        11.0            7.4             7.8
  Module assembly...............         2.7            8.7            17.4
  Other.........................         5.5            5.4             3.4
                                      ------------ -------------- ------------
    Total.......................       100.0%         100.0%          100.0%
                                      ============ ============== ============
------------------
(1)  Includes leadframe-based packages such as QFP/TQFP, QFN/MCC and BCC and
     substrate-based packages such as various BGA package types (including
     flip-chip and others) and LGA.

(2)  Includes leadframe-based packages such as SOP/TSOP, SOJ, PLCC and PDIP.

     Testing Services

     We provide a complete range of semiconductor testing services, including
front-end engineering testing, wafer probing, final testing of
logic/mixed-signal and memory semiconductors and other test-related services.

     The testing of semiconductors requires technical expertise and knowledge of
the specific applications and functions of the semiconductors tested as well as
the testing equipment utilized. We believe that our testing services employ
technology and expertise which are among the most advanced in the semiconductor
industry. In addition to maintaining different types of testing equipment, which
enables us to test a variety of semiconductor functions, we work closely with
our customers to design effective testing and conversion programs on multiple
equipment platforms for particular semiconductors.

     In recent years, complex, high-performance logic/mixed-signal
semiconductors have accounted for an increasing portion of our testing revenues.
As the testing of complex, high-performance semiconductors requires a large
number of functions to be tested using more advanced testing equipment, these
products generate higher revenues per unit of testing time, as measured in
central processing unit seconds.

     Front-End Engineering Testing. We provide front-end engineering testing
services, including customized software development, electrical design
validation, and reliability and failure analysis.

     o    Customized Software Development. Test engineers develop customized
          software to test the semiconductor using advanced testing equipment.
          Customized software, developed on specific testing platforms, is
          required to test the conformity of each particular semiconductor type
          to its unique functionality and specification.

     o    Electrical Design Validation. A prototype of the designed
          semiconductor is subjected to electrical tests using advanced test
          equipment and customized software. These tests assess whether the
          prototype semiconductor complies with a variety of different operating
          specifications, including functionality, frequency, voltage, current,
          timing and temperature range.

     o    Reliability Analysis. Reliability analysis is designed to assess the
          long-term reliability of the semiconductor and its suitability of use
          for intended applications. Reliability testing can include "burn-in"
          services, which electrically stress a device, usually at high
          temperature and voltage, for a period of time long enough to cause the
          failure of marginal devices.

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<PAGE>


     o    Failure Analysis. In the event that the prototype semiconductor does
          not function to specifications during either the electrical design
          validation or reliability testing processes, it is typically subjected
          to failure analysis to determine the cause of the failure to perform
          as anticipated. As part of this analysis, the prototype semiconductor
          may be subjected to a variety of analyses, including electron beam
          probing and electrical testing.

     Wafer Probing. Wafer probing is the step immediately before the packaging
of semiconductors and involves visual inspection and electrical testing of the
processed wafer for defects to ensure that it meets our customers'
specifications. Wafer probing services require expertise and testing equipment
similar to that used in final testing, and most of our testers can also be used
for wafer probing.

     Logic/Mixed-Signal Final Testing. We conduct final tests of a wide variety
of logic/mixed signal semiconductors, with the number of leads ranging from the
single digits to over one thousand and operating frequencies of over 2.5 Gbps
for digital semiconductors and 6 GHz for radio frequency semiconductors, which
are at the high end of the range for the industry. The products we test include
semiconductors used for networking and wireless communications, graphics and
disk controllers for home entertainment and personal computer applications, as
well as a variety of application-specific integrated circuits for various
specialized applications.

     Memory Final Testing. We provide final testing services for a variety of
memory products, such as SRAM, DRAM, single-bit erasable programmable read-only
memory semiconductors and flash memory semiconductors.

     Other Test-Related Services. We provide a broad range of additional
     test-related services, including:

     o    Burn-in Testing. Burn-in testing is the process of electrically
          stressing a device, usually at high temperature and voltage, for a
          period of time to simulate the continuous use of the device to
          determine whether this use would cause the failure of marginal
          devices.

     o    Dry Pack. Process which involves heating semiconductors in order to
          remove moisture before packaging and shipping to customers.

     o    Tape and Reel. Process which involves transferring semiconductors from
          a tray or tube into a tape-like carrier for shipment to customers.

     Drop Shipment Services. We offer drop shipment services for shipment of
semiconductors directly to end users designated by our customers. Drop shipment
services are provided mostly in conjunction with logic/mixed-signal testing. We
provide drop shipment services to a significant percentage of our testing
customers. A substantial portion of our customers at each of our facilities have
qualified these facilities for drop shipment services. Since drop shipment
eliminates the additional step of inspection by the customer before shipment to
the end user, quality of service is a key consideration. We believe that our
ability to successfully execute our full range of services, including drop
shipment services, is an important factor in maintaining existing customers as
well as attracting new customers.

     The following table sets forth, for the periods indicated, the percentage
of our testing revenues accounted for by each type of testing service.

                                              Year Ended December 31,
                                   --------------------------------------------
                                        2002           2003           2004
                                   --------------- ------------ ---------------
                                          (percentage of testing revenues)
Testing Services:
  Front-end engineering test....         7.4%           4.3%            3.6%
  Wafer probe...................         8.9           14.9            21.5
  Final test....................        83.7           80.8            74.9
                                   --------------- ------------ ---------------
    Total.......................       100.0%         100.0%          100.0%
                                   =============== ============ ===============

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<PAGE>


Seasonality

     See "Item 5. Operating and Financial Review and Prospects--Operating
Results and Trend Information--Quarterly Net Revenues, Gross Profit and Gross
Margin".

Sales and Marketing

     Sales and Marketing Offices

     We maintain sales and marketing offices in Taiwan, the United States,
Austria, Belgium, Germany, Korea, Malaysia and Japan. Our sales and marketing
offices in Taiwan, which are located in Hsinchu and Kaohsiung, are staffed with
both our and ASE Test Taiwan's employees. We conduct marketing research through
our customer service personnel and those of our sales agent and through our
relationships with our customers and suppliers to keep abreast of market trends
and developments. We also provide advice in the area of production process
technology to our major customers planning the introduction of new products. In
placing orders with us, our customers specify which of our facilities these
orders will go to. Our customers conduct separate qualification and correlation
processes for each of our facilities that they use. See "Item 4. Information on
the Company--Business Overview--Sales and Marketing--Qualification and
Correlation by Customers".

     Sales and Customer Service Agents

     Under commission agreements, each of ASE Inc., ASE Test Taiwan, ASE Korea
and ASE Test Malaysia has appointed Gardex as the non-exclusive sales agent for
its services and products worldwide. Gardex helps us identify customers and,
within parameters set by us, negotiate price, delivery and other terms with our
customers. Gardex currently focuses on markets outside of Asia. Purchase orders
are placed directly with us by our customers. We currently pay Gardex a
commission of between 0.4% and 0.5% of our sales outside of Asia, payable
quarterly, depending on the amount of these sales. In 2004, 2003 and 2002, we
paid US$8.3 million, US$6.7 million and US$5.6 million, respectively, in
commissions to Gardex.

     Gardex is wholly-owned by Y.C. Hsu, who has had a long personal
relationship with Jason C.S. Chang, our Chairman and Chief Executive Officer,
that predates the founding of our company. We have maintained a business
relationship with Gardex and its predecessors since 1985. Gardex currently
performs services only for us and our subsidiaries. See "Item 3. Key
Information--Risk Factors--We depend on our agent for a portion of our sales in
North America and Europe. Any serious disruption in our relationship with our
agent, or substantial loss in its effectiveness, could significantly reduce our
revenues and profitability."

     Before we acquired ASE (U.S.) Inc. in July 2004, ASE (U.S.) Inc. was our
non-exclusive agent that provided customer service and after-sales support to
our customers in Europe and North America. See "Item 4. Information on the
Company--History and Development of the Company--Acquisition of ASE (U.S.) Inc."
In 2004, 2003 and 2002, we paid US$26.4 million, US$21.8 million and US$15.6
million, respectively, in fees and service charges to ASE (U.S.) Inc.

     Customers

     Our global base of over 200 customers includes leading semiconductor
companies across a wide range of end-use applications:

     o  Agilent Technologies, Inc.    o  NVIDIA Corporation
     o  Altera Corporation            o  ON Semiconductor Corp.
     o  ATI Technologies, Inc.        o  Philips Semiconductors Inc.
     o  Conexant Systems, Inc.        o  Qualcomm Incorporated
     o  Freescale Semiconductor,      o  RF Micro Devices, Inc.
          Inc. (formerly the          o  Silicon Integrated Systems Corp.
          semiconductor operations    o  STMicroelectronics N.V.
          of Motorola, Inc.)          o  Sunplus Technology Co., Ltd.
     o  IBM Corporation

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<PAGE>


     o  LSI Logic Corporation         o  VIA Technologies, Inc.
     o  NEC Electronics Corporation


     Our five largest customers together accounted for approximately 34.7%,
34.8% and 39.6% of our net revenues in 2004, 2003 and 2002, respectively. Other
than Motorola, Inc. in 2003 and 2002, no other customer accounted for more than
10% of our net revenues in 2003 or 2002. No customer accounted for more than 10%
of our net revenues in 2004.

     We package and test for our customers a wide range of products with end-use
applications in the communications, personal computers, consumer electronics,
industrial and automotive sectors. The following table sets forth a breakdown of
the percentage of our net revenues, for the periods indicated, by the principal
end-use applications of the products which we packaged and tested.

                                                Year Ended December 31,
                                        ---------------------------------------
                                           2002          2003          2004
                                        ------------- -------------- ----------

  Communications....................        34.4%         34.9%         42.5%
  Personal computers................        35.4          35.7          29.8
  Consumer
    electronics/industrial/automotive       28.8          28.3          24.5
  Other.............................         1.4           1.1           3.2
                                        ------------- -------------- ----------
    Total...........................       100.0%        100.0%        100.0%
                                        ============= ============== ==========

     Many of our customers are leaders in their respective end-use markets. For
example, we provide Freescale Semiconductor, Inc. (formerly the semiconductor
operations of Motorola, Inc.), an industry leader in automotive and wireless
communications semiconductor products, with most of its outsourced packaging and
testing requirements. The following table sets forth some of our largest
customers, in alphabetical order, categorized by the principal end-use
applications of the products which we package and test for them.

                                                                Consumer
                                                        Electronics/Industrial/
   Communications           Personal Computers               Automotive
--------------------------  ------------------------  -------------------------
Agilent Technologies, Inc.  ATI Technologies, Inc.     Altera Corporation
Conexant Systems, Inc.      IBM Corporation            Freescale Semiconductor,
Freescale Semiconductor,    Marvell Technology Group   Inc. (formerly the
  Inc. (formerly the          Ltd.                       semiconductor
  semiconductor operations  NVIDIA Corporation           operations of Motorola,
  of Motorola, Inc.)        Silicon Integrated           Inc.)
NEC Electronics Corporation   Systems Corp.            LSI Logic Corporation
Philips Semiconductors Inc. VIA Technologies, Inc.     Micronas Semiconductor
Qualcomm Incorporated       Winbond Electronics          Holding AG
RF Micro Devices, Inc.        Corporation              NEC Electronics
STMicroelectronics N.V.                                  Corporation
                                                       ON Semiconductor Corp.
                                                       STMicroelectronics N.V.
                                                       Sunplus Technology Co.,
                                                         Ltd.


     We categorize our packaging and testing revenues geographically based on
the country in which the customer is headquartered. The following table sets
forth, for the periods indicated, the percentage breakdown by geographic regions
of our packaging and testing revenues.

                                                Year Ended December 31,
                                        ---------------------------------------
                                           2002          2003          2004
                                        ----------- ----------- ---------------

  North America.............                59.1%         60.2%         58.2%
  Taiwan....................                24.9          27.0          21.6
  Europe....................                 6.1           8.3           8.2
  Other.....................                 9.9           4.5          12.0
                                        ----------- ----------- ---------------
    Total...................               100.0%        100.0%        100.0%
                                        =========== =========== ===============

                                       38


<PAGE>


     The majority of our testing revenues is accounted for by the testing of
semiconductors that were also packaged at our packaging facilities. The balance
represented testing revenues from customers who delivered packaged
semiconductors directly to our facilities for testing services alone. A
substantial minority of our packaging revenues is accounted for by the packaging
of semiconductors which were subsequently tested at our facilities. We expect
that more customers of our packaging facilities will begin to contract for our
packaging and testing services on a turnkey basis.

     Qualification and Correlation by Customers

     Customers generally require that our facilities undergo a stringent
qualification process during which the customer evaluates our operations and
production processes, including engineering, delivery control and testing
capabilities. The qualification process typically takes up to eight weeks, but
can take longer depending on the requirements of the customer. In the case of
our testing operations, after we have been qualified by a customer and before
the customer delivers semiconductors to us for testing in volume, a process
known as correlation is undertaken. During the correlation process, the customer
provides us with sample semiconductors to be tested and either provides us with
the test program or requests that we develop a conversion program. In some
cases, the customer also provides us with a data log of results of any testing
of the semiconductors which the customer may have conducted previously. The
correlation process typically takes up to two weeks, but can take longer
depending on the requirements of the customer. We believe our ability to provide
turnkey services reduces the amount of time spent by our customers in the
qualification and correlation process. As a result, customers utilizing our
turnkey services are able to achieve shorter production cycles.

     Pricing

     We price our packaging services primarily on a cost-plus basis with
reference to prevailing market prices. We price our testing services primarily
on the basis of the amount of time, measured in central processing unit seconds,
taken by the automated testing equipment to execute the test programs specific
to the products being tested, as well as the cost of the equipment, with
reference to prevailing market prices. Prices for our packaging and testing
services are confirmed at the time firm orders are received from customers,
which is typically four to eight weeks before delivery.

Raw Materials and Suppliers

     Packaging

     The principal raw materials used in our packaging processes are
interconnect materials such as leadframes and substrates, gold wire and molding
compound. Interconnect materials, such as leadframes, substrates, gold wire and
molding compound represented approximately 15.6%, 43.6%, 18.4% and 7.6%,
respectively, of our total cost of packaging materials in 2004.

     The silicon die, which is the functional unit of the semiconductor to be
packaged, is supplied in the form of silicon wafers. Each silicon wafer contains
a number of identical dies. We receive the wafers from the customers or the
foundries on a consignment basis. Consequently, we generally do not incur
inventory costs relating to the silicon wafers used in our packaging process.

     We do not maintain large inventories of leadframes, substrates, gold wire
or molding compound, but generally maintain sufficient stock of each principal
raw material for approximately one month's production based on blanket orders
and rolling forecasts of near-term requirements received from customers. In
addition, several of our principal suppliers dedicate portions of their
inventories, typically in amounts equal to the average monthly amounts supplied
to us, as reserves to meet our production requirements. However, shortages in
the supply of materials experienced by the semiconductor industry have in the
past resulted in occasional price adjustments and delivery delays. For example,
in the first half of 2000, the industry experienced a shortage in the supply of
advanced substrates used in BGA packages, which, at the time, were only
available from a limited number of suppliers located primarily in Japan.
Recently, we have experienced a tightening in the market supply of raw
materials, and the fire in May 2005 at our facilities in Chung Li, Taiwan has
damaged a substantial portion of our production capacity of interconnect
materials for use in our packaging operations. See "Item 8. Financial
Information--Significant Changes" for a

                                       39


<PAGE>


description of the fire. We cannot guarantee that we will not experience
shortages in the near future or that we will be able to obtain adequate supplies
of raw materials in a timely manner and at a reasonable price. In the event of a
shortage, we generally inform our customers and work together to accommodate
changes in delivery schedules. See "Item 4. Information on the Company--Business
Overview--Strategy--Continue to Focus on Advanced Technological, Processing and
Interconnect Materials Capabilities".

     We produce both leadframe and substrates for use in our packaging
operations. In 2004, our interconnect materials operations supplied
approximately one-half of our consolidated substrate requirements by value. See
"Item 4. Information on the Company--Business Overview--Principal Products and
Services--Interconnect Materials".

     As a result of the "Directive 2002/95/EC on the restriction of the use of
certain hazardous substances in electrical and electronic equipment", or RoHS,
becoming effective on July 1, 2006, we have begun adjusting our purchases of raw
materials and our production processes in order to use raw materials that comply
with this legislation for part of our production. The aim of this new
legislation is to restrict the use in the European Union, or EU, of certain
substances the EU has deemed harmful to consumers, which includes certain grades
of molding compounds, solder and other raw materials that are used in our
products. Manufacturers of electrical and electronic equipment will need to
comply with this legislation in order to sell their products in an EU member
state. As a result of this legislation, we expect that our customers will
increasingly request that RoHS-compliant materials be used in our packaging
processes, which will likely increase our raw material and other costs as a
result.

     Testing

     Apart from packaged semiconductors, no other raw materials are needed for
the functional and burn-in testing of semiconductors. For the majority of our
testing equipment, we often base our purchases on prior discussions with our
customers about their forecast requirements. The balance consists of testing
equipment on consignment from customers and which are dedicated exclusively to
the testing of these customers' specific products.

Equipment

     Packaging

     The most important equipment used in the semiconductor packaging process is
the wire bonder. Wire bonders connect the input/output terminals on the silicon
die using extremely fine gold wire to leads on leadframes or substrates.
Typically, a wire bonder may be used, with minor modifications, for the
packaging of different products. We purchase our wire bonders principally from
Kulicke & Soffa Industries Inc. As of April 30, 2005, we operated an aggregate
of 6,676 wire bonders, of which 5,485 were fine-pitch wire bonders. As of the
same date, 33 of the wire bonders operated by us were consigned by customers.
For the packaging of certain types of substrate-based packages, such as
flip-chip BGA, die bonders are used in place of wire bonders. The number of
bonders at a given facility is commonly used as a measure of the packaging
capacity of the facility. In addition to bonders, we maintain a variety of other
types of packaging equipment, such as wafer grind, wafer mount, wafer saw,
automated molding machines, laser markers, solder plate, pad printers,
dejunkers, trimmers, formers, substrate saws and scanners.

     Testing

     Testing equipment is the most capital intensive component of the testing
process. We generally seek to purchase testers from different suppliers with
similar functionality and the ability to test a variety of different
semiconductors. We purchase testers from major international manufacturers,
including Agilent Technologies, Inc., Credence Systems Corporation, LTX
Corporation and Teradyne, Inc. Upon acquisition of new testers, we install,
configure, calibrate, perform burn-in diagnostic tests on and establish
parameters for the testers based on the anticipated requirements of existing and
potential customers and considerations relating to market trends. As of April
30, 2005, we operated an aggregate of 1,467 testers, of which 227 were consigned
by customers and 107 were leased under operating leases. In addition to testers,
we maintain a variety of other types of testing equipment, such as automated
handlers and probers (special handlers for wafer probing), scanners, reformers
and computer workstations for use in software development. Each tester may be
attached to a handler or prober. Handlers attach to testers and transport

                                       40


<PAGE>

individual packaged semiconductor to the tester interface. Probers similarly
attach to the tester and align each individual die on a wafer with the interface
to the tester.

     Test programs, which are the software that drive the testing of specific
semiconductors, are written for a specific testing platform. We often perform
test program conversions that enable us to test semiconductors on multiple test
platforms. This portability between testers enables us to allocate
semiconductors tested across our available test capabilities and thereby improve
capacity utilization rates. In cases where a customer requires the testing of a
semiconductor product that is not yet fully developed, the customer may provide
personal computer workstations to us to test specific functions. In cases where
a customer has specified testing equipment that was not widely applicable to
other products which we test, we have required the customer to furnish the
equipment on a consignment basis.

Intellectual Property

     As of May 31, 2005, we held 597 Taiwan patents and 184 U.S. patents related
to various semiconductor packaging technologies. In addition, we registered
"ASE" as a trademark and as a servicemark in Taiwan.

     We have also entered into various non-exclusive technology license
agreements with other companies involved in the semiconductor manufacturing
process, including Motorola, Inc., Tessera Inc., Fujitsu Limited, Flip Chip
International, L.L.C. and LSI Logic Corporation. We paid royalties under our
license agreements in the amount of NT$164.0 million (US$5.2 million), NT$218.8
million and NT$176.7 million in 2004, 2003 and 2002, respectively. The
technology we license from these companies includes solder bumping,
redistribution, ultra CSP assembly and other technologies used in the production
of package types, such as BCC, flip-chip BGA and film BGA. The license agreement
with Tessera Inc. will not expire until the expiration of the Tessera Inc.
patents licensed by the agreement. The license agreements with Motorola, Inc.
and LSI Logic Corporation will expire on December 31, 2010 and January 1, 2010,
respectively. Our license agreements with Flip Chip International, L.L.C. will
expire on March 1, 2009 and December 25, 2010. Historically, we negotiate
annually the renewal of our license agreement with Fujitsu Limited, and we are
currently in the process of negotiating the renewal of our license agreement
with them.

     Our success depends in part on our ability to obtain, maintain and protect
our patents, licenses and other intellectual property rights, including rights
under our license agreement with Motorola, Inc.

Quality Control

     We believe that our advanced process technology and reputation for high
quality and reliable services have been important factors in attracting and
retaining leading international semiconductor companies as customers for our
packaging and testing services. We have maintained an average packaging yield
rate of 99.8% or greater in each of the last three years. We maintain a quality
control staff at each of our facilities. Our quality control staff typically
includes engineers, technicians and other employees who monitor packaging and
testing processes in order to ensure high quality. Our quality assurance systems
impose strict process controls, statistical in-line monitors, supplier control,
data review and management, quality controls and corrective action systems. Our
quality control employees operate quality control stations along production
lines, monitor clean room environments and follow up on quality through outgoing
product inspection and interaction with customer service staff. We have
established quality control systems which are designed to ensure high quality
service to customers, high product and testing reliability and high production
yields at our facilities. We also have established an environmental management
system in order to ensure that we can comply with the environmental standards of
our customers and the countries within which they operate. See "Item 4.
Information on the Company--Business Overview--Raw Materials and
Suppliers--Packaging". In addition, our packaging and testing facilities have
been qualified by all of our major customers after satisfying stringent quality
standards prescribed by these customers.

     Our packaging and testing operations are undertaken in clean rooms where
air purity, temperature and humidity are controlled. To ensure stability and
integrity of our operations, we maintain clean rooms at our facilities that meet
U.S. Federal 209E class 1,000, 10,000 and 100,000 standards.

                                       41


<PAGE>


     Our packaging and testing facilities in Taiwan, Malaysia, Japan and Korea
have been certified as meeting TS 16949 standards. Such standards were
originally created by the International Automotive Task Force in conjunction
with the International Standards Organization, or ISO. These standards provide
for continuous improvement with an emphasis on the prevention of defects and
reduction of variation and waste in the supply chain. The TS 16949 certification
is required by some semiconductor manufacturers as a threshold indicator of
company's quality control standards.

     ISE Labs' testing facilities in Fremont, California have been approved by
the U.S. military's Defense Supply Center, Columbus, Sourcing and Qualifications
Unit as a laboratory possessing the requisite level of performance, quality and
reliability required of suppliers for the U.S. Department of Defense.

     ISE Lab's testing facilities in Fremont, California have been certified as
meeting the ISO 9001 quality standards set by the ISO. In addition, our
packaging and testing facilities Taiwan, Korea, Japan and Malaysia and our
interconnect materials facilities have also been certified as meeting the ISO
14001 quality standards. ISO certifications are required by many countries in
connection with sales of industrial products.

     Our testing facilities in Kaohsiung, Taiwan have also been certified to be
in compliance with OHSAS 18001:1999, a set of standards designed upon
collaboration with occupational health and safety experts and now offered by
many certification organizations as an indication of compliance with certain
standards for occupational health and safety.

     Our packaging, testing and interconnect materials facilities in Kaohsiung,
Taiwan have been certified as a "Sony Green Partner", which indicates our
compliance with the "Sony Green Package" standard requirements.

     In addition, we have received various vendor awards from our customers for
the quality of our products and services.

Competition

     We compete in the highly competitive independent semiconductor packaging
and testing markets. We face competition from a number of sources, including
other independent semiconductor packaging and testing companies. More
importantly, we compete for the business of integrated device manufacturers with
in-house packaging and testing capabilities and fabless semiconductor design
companies with their own in-house testing capabilities. Some of these integrated
device manufacturers have commenced, or may commence, in-house packaging and
testing operations in Asia. Substantially all of the independent packaging and
testing companies that compete with us have established operations in Taiwan.

     Integrated device manufacturers that use our services continuously evaluate
our performance against their own in-house packaging and testing capabilities.
These integrated device manufacturers may have access to more advanced
technologies and greater financial and other resources than we do. We believe,
however, that we can offer greater efficiency at lower cost while maintaining
equivalent or higher quality for several reasons. First, as we benefit from
specialization and economies of scale by providing services to a large base of
customers across a wide range of products, we are better able to reduce costs
and shorten production cycles through high capacity utilization and process
expertise. Second, as a result of our customer base and product offerings, our
equipment generally has a longer useful life. Third, as a result of the
continuing reduction of investments in in-house packaging and testing capacity
and technology at integrated device manufacturers, we are better positioned to
meet their advanced packaging and testing requirements on a large scale.

Environmental Matters

     Our packaging and interconnect materials operations generate environmental
wastes, including gaseous chemical, liquid and solid industrial wastes. We have
installed various types of anti-pollution equipment for the treatment of liquid
and gaseous chemical waste generated at all of our semiconductor packaging
facilities. We believe that we have adopted adequate anti-pollution measures for
the effective maintenance of environmental protection standards that are
consistent with the industry practice in the countries in which our facilities
are located.

                                       42


<PAGE>


In addition, we believe we are in compliance in all material respects with
present environmental laws and regulations applicable to our operations and
facilities.

Insurance

     We have insurance policies covering property damage and damage to our
production facilities, buildings and machinery. In addition, we have insurance
policies covering our liabilities in connection with certain accidents.
Significant damage to any of our production facilities would have a material
adverse effect on our results of operations.

     We are not insured against the loss of key personnel.

ORGANIZATIONAL STRUCTURE

     The following chart illustrates our corporate structure and our effective
equity interest in each of our principal operating subsidiaries and affiliates
as of May 31, 2005. The following chart does not include wholly-owned
intermediate holding companies.




<TABLE>
<S>             <C>             <C>         <C>            <C>           <C>          <C>             <C>            <C>
                           ===================================================
                           ||                                               ||
                           ||  ADVANCED SEMICONDUCTOR ENGINEERING, INC.(1)  ||
                           ||                                               ||
                           ===================================================
                                                   |
                                                   |
                                                   |
    -------------------------------------------------------------------------------------------------------------------------
    |                                |                            |             |            |               |              |
    |                                |                            |             |            |               |              |
  70.0%                            51.0%                       100.0%        100.0%        60.0%           23.3%          26.4%
    |                                |                            |             |            |               |              |
    |                                |                            |             |            |               |              |
    |                                |                            |             |            |               |              |
    |                         --------------                      |             |            |               |              |
    |                         |            |                      |             |            |               |              |
    |                         | ASE Test   |                      |             |            |               |              |
    |                         | Limited(2) |                      |             |            |               |              |
    |                         |            |                      |             |            |               |              |
    |                         --------------                      |             |            |               |              |
    |                                |                            |             |            |               |              |
    |      ---------------------------------------                |             |            |               |              |
    |      |            |            |           |                |             |            |               |              |
    |      |            |            |           |                |             |            |               |              |
    |    30.0%       100.0%       100.0%      99.99%              |             |            |               |              |
    |      |            |            |           |                |             |            |               |              |
 -------------- --------------- ----------- -----------    ------------- ------------ --------------- -------------- ---------------
 |            | |    ASE      | |         | |         |    |           | |          | |             | | Universal  | | Hung Ching  |
 |    ASE     | | Electronics | |ISE Labs,| |ASE Test,|    |ASE Japan  | |    ASE   | | ASE-Compeq  | | Scientific | |Development &|
 |(Korea) Inc.| |(M) Sdn. Bhd.| | Inc.    | |  Inc.   |    |Co. Ltd.(3)| |(Shanghai)| |Technologies,| | Industrial | |Construction |
 |            | |             | |         | |         |    |           | | Inc.(4)  | |   Inc.(5)   | |Co., Ltd.(6)| |Co., Ltd.(7) |
 |            | |             | |         | |         |    |           | |          | |             | |            | |             |
 -------------- --------------- ----------- -----------    ------------- ------------ --------------- -------------- ---------------
</TABLE>














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

(1)  The common shares of ASE Inc. are listed on the Taiwan Stock Exchange under
     the symbol "2311". ADSs representing the shares of ASE Inc. are listed on
     the New York Stock Exchange under the symbol "ASX". [GRAPHICS OMITTED]

(2)  The ordinary shares of ASE Test are quoted for trading on the Nasdaq
     National Market under the symbol "ASTSF". ASE Test's Taiwan depositary
     shares, which represent its ordinary shares, are listed for trading on the
     Taiwan Stock Exchange under the symbol "9101".

(3)  Our acquisition of ASE Japan was completed in May 2004. For more
     information on the acquisition, see "--History and Development of the
     Company--Acquisition of NEC's Packaging and Testing Operations in Yamagata,
     Japan".

(4)  ASE Shanghai began operations in June 2004. See "--Our Consolidated
     Subsidiaries--ASE Shanghai".

(5)  In October 2003, we established ASE-Compeq Technologies, Inc., a joint
     venture with Compeq in which we own 60% of the equity interest, to focus on
     the design and production of interconnect materials for packaging
     semiconductors. For more information on the joint venture, see "--History
     and Development of the Company--Joint Venture with Compeq Manufacturing Co.
     Ltd."

(6)  The common shares of Universal Scientific Industrial Co., Ltd. are listed
     on the Taiwan Stock Exchange under the symbol "2350".

(7)  The common shares of Hung Ching are listed on the Taiwan Stock Exchange
     under the symbol "2527".

                                       43


<PAGE>


Our Consolidated Subsidiaries

   ASE Test

     ASE Test is the largest independent testing company in the world, providing
a complete range of semiconductor testing services to leading international
semiconductor companies. ASE Test also provides semiconductor packaging
services. ASE Test has testing operations in Taiwan, the United States and
Singapore, and also maintains testing and packaging operations in Malaysia.

     ASE Test was incorporated in 1995 and its ordinary shares have been quoted
for trading on the Nasdaq National Market since June 1996 under the symbol
"ASTSF". ASE Test's Taiwan depositary shares representing its ordinary shares
have been listed for trading on the Taiwan Stock Exchange under the symbol
"9101" since January 1998. As of May 31, 2005, we held 51.0% of the outstanding
shares of ASE Test.

     ASE Test is a holding company incorporated in Singapore whose significant
assets are its ownership interests in the following operating companies as of
May 31, 2005:

     o    ASE Test Taiwan. ASE Test Taiwan is ASE Test's 99.99%-owned
          subsidiary. It is incorporated in Taiwan and is engaged in the testing
          of integrated circuits;

     o    ASE Test Malaysia. ASE Test Malaysia is ASE Test's wholly-owned
          subsidiary. It is incorporated in Malaysia and is engaged in the
          packaging and testing of integrated circuits;

     o    ISE Labs. ISE Labs is ASE Test's wholly-owned subsidiary. It is
          incorporated in the United States and is engaged in the testing of
          integrated circuits. See "--History and Development of the
          Company--ISE Labs"; and

     o    ASE Korea. ASE Test owns 30% of ASE Korea. We own the remaining 70%.
          It is incorporated in Korea and is engaged in the packaging and
          testing of semiconductors. See "--History and Development of the
          Company--ASE Chung Li and ASE Korea".

     In 2004, ASE Test recorded net revenues of US$621.1 million, operating
income of US$27.8 million and net income of US$25.1 million. In 2003, ASE Test
recorded net revenues of US$391.9 million, operating income of US$1.2 million
and a net loss of US$3.5 million. In 2002, ASE Test recorded net revenues of
US$302.0 million, an operating loss of US$40.6 million and a net loss of US$81.3
million.

   ASE Korea

     In July 1999, we and our subsidiary, ASE Test, jointly acquired Motorola's
Semiconductor business in Paju, South Korea for the testing and packaging of
semiconductors, thereby forming ASE Korea. We own 70% of ASE Korea and ASE Test
owns the remaining 30%. See "--History and Development of the Company--ASE Chung
Li and ASE Korea".

   ASE Japan

     ASE Japan was incorporated in Japan in May 2004 and is engaged in the
packaging and testing of semiconductors. See "--History and Development of the
Company--Acquisition of NEC's Packaging and Testing Operations in Yamagata,
Japan".

   ASE Shanghai

     ASE Shanghai was established in 2001 as a wholly-owned subsidiary of ASE
Inc. and began operations in June 2004. Located in the Pudong New Area of
Shanghai, ASE Shanghai currently has a lot size of approximately 195,000 square
feet and production floor space of approximately 431,000 square feet. ASE
Shanghai primarily manufactures and supplies interconnect materials for our
packaging operations and also provides module assembly services to third parties
on a contract basis. As of May 31, 2005, ASE Shanghai had 1,811 employees.


                                       44
<PAGE>


   ASE-Compeq Technologies, Inc.

     In October 2003, we established ASE-Compeq Technologies, Inc., a joint
venture with Compeq in which we own 60% of the equity interest, to focus on the
design and production of interconnect materials for packaging semiconductors.
See "--History and Development of the Company--Joint Venture with Compeq
Manufacturing Co. Ltd."

Our Unconsolidated Affiliates

     As of May 31, 2005, we held approximately 23.3% of the outstanding shares
of Universal Scientific and 26.4% of the outstanding shares of Hung Ching.

   Universal Scientific

     Universal Scientific, which is an ROC company, manufactures electronics
products in varying degrees of system integration principally on a contract
basis for original equipment manufacturers, including:

     o    electronic components such as thick film mixed-signal devices, thick
          film resistors, high frequency devices and automotive and power
          electronic devices;

     o    board and sub-system assemblies such as customized surface mount
          technology board assemblies, mother boards for personal computers,
          wireless local area network cards and fax control boards; and

     o    system assemblies such as portable computers, desktop personal
          computers, network computers and servers.

     We are the largest shareholder in Universal Scientific and six out of the
nine directors on its board of directors, including the chairman, are
representatives of ASE Inc.

     Universal Scientific's principal manufacturing facilities are located in
Nantou, Taiwan. In 2004, Universal Scientific recorded net revenues of
NT$53,231.5 million (US$1,677.1 million), operating income of NT$1,327.0 million
(US$41.8 million) and a net income of NT$1,044.3 million (US$32.9 million). In
2003, Universal Scientific recorded net revenues of NT$40,928.1 million, an
operating income of NT$967.7 million and net income of NT$776.3 million. In
2002, Universal Scientific recorded net revenues of NT$31,775.9 million,
operating income of NT$803.4 million and net income of NT$276.0 million. The
shares of Universal Scientific are listed on the Taiwan Stock Exchange under the
symbol "2350". As of May 31, 2005, Universal Scientific had a market
capitalization of NT$8,499.0 million (US$267.8 million).

   Hung Ching

     Hung Ching is an ROC company engaged in the development and management of
commercial, residential and industrial real estate properties in Taiwan. Hung
Ching's completed development projects include the ASE Design Center commercial
project and the Earl Village residential project, both located in Hsichih,
Taiwan. Hung Ching was founded in 1986 by Chang Yao Hung-ying. Chang Yao
Hung-ying is the mother of both Jason C.S. Chang, our Chairman and Chief
Executive Officer, and Richard H.P. Chang, our Vice Chairman and President, and
was a director of ASE Inc. from 1984 to June 2003. Jason C.S. Chang, Richard
H.P. Chang, Chang Yao Hung-ying and other members of the Chang family are
controlling shareholders of Hung Ching.

     In 2004, Hung Ching recorded net revenues of NT$845.1 million (US$26.6
million), an operating loss of NT$374.4 million (US$11.8 million) and a net loss
of NT$1,150.0 million (US$36.2 million). In 2003, Hung Ching recorded net
revenues of NT$1,014.9 million, an operating loss of NT$491.5 million and a net
loss of NT$483.8 million. In 2002, Hung Ching recorded net revenues of NT$546.7
million, an operating loss of NT$253.8 million and a net loss of NT$521.5
million. The shares of Hung Ching are listed on the Taiwan Stock Exchange under
the symbol "2527". As of May 31, 2005, Hung Ching had a market capitalization of
NT$1,631.4 million (US$51.4 million).


                                       45
<PAGE>


PROPERTY, PLANTS AND EQUIPMENT

     We operate a number of packaging and testing facilities in Asia and the
United States. Our facilities provide varying types or levels of services with
respect to different end-product focus, customers, technologies and geographic
locations. With our diverse facilities we are able to tailor our packaging and
testing solutions closely to our customers' needs. The following table sets
forth the location, commencement of operation, primary use, approximate floor
space and ownership of our facilities as of April 30, 2005.

<TABLE>
<S>                    <C>               <C>               <C>                               <C>                <C>
                                                                                                Approximate
                                         Commencement of                                      Floor Space (in
      Facility             Location         Operation                 Primary Use                 sq. ft.)      Owned or Leased
-------------------    --------------    ---------------   -------------------------------   ----------------   -----------------

ASE Inc.               Kaohsiung,        March 1984        Our primary packaging facility,       3,040,000      Land: leased
                          Taiwan                           which offers complete                                Buildings: owned
                                                           semiconductor manufacturing
                                                           solutions in conjunction with
                                                           ASE Test Taiwan and foundries
                                                           located in Taiwan. Focuses
                                                           primarily on advanced packaging
                                                           services, including flip-chip,
                                                           wafer bumping and fine-pitch
                                                           wire bonding. Also have
                                                           facilities for the design and
                                                           production of interconnect
                                                           materials.

                       Chung Li,         Acquired in       An integrated packaging and             900,000      Land and
                          Taiwan         August 1999       testing facility that                                buildings:
                                                           specializes in semiconductors                        owned
                                                           for communications and consumer
                                                           applications. Also
                                                           facilities for the
                                                           design and production
                                                           of substrates.

ASE Test Taiwan        Kaohsiung,        December 1987     Our primary testing facilities,       1,013,000      Land: leased
                          Taiwan                           which offer complete                                 Buildings: owned
                                                           semiconductor
                                                           manufacturing
                                                           solutions in
                                                           conjunction with ASE
                                                           Inc.'s facility in
                                                           Kaohsiung and
                                                           foundries located in
                                                           Taiwan. Focuses
                                                           primarily on advanced
                                                           logic/mixed-signal
                                                           testing for
                                                           integrated device
                                                           manufacturers,
                                                           fabless design
                                                           companies and system
                                                           companies.

                       Chung Li,         October 2001      Our primary wafer probing                70,000      Land and
                       Taiwan                              testing facilities.                                  building: leased

ASE Test Malaysia      Penang,           February 1991     An integrated packaging and             827,000      Land: leased
                       Malaysia                            testing facility that focuses                        Buildings:
                                                           primarily on the requirements of                     owned and leased
                                                           integrated device manufacturers
                                                           and system companies, including
                                                           those for module assembly.

ASE Korea              Paju, Korea       March 1967        An integrated packaging and             508,000      Land and
                                                           testing facility that                                buildings:
                                                           specializes in semiconductors                        owned, subject
                                                           for radio frequency, sensor and                      to mortgage
                                                           automotive applications.

ISE Labs               Fremont,          November 1983     Front-end engineering and final         363,000      Land and
                          California                       testing facilities located in                        buildings:
                       Austin, Texas                       northern California in close                         leased
                       Singapore                           proximity to some of the world's
                                                           largest fabless
                                                           design companies.
                                                           Testing facilities
                                                           located in close
                                                           proximity to
                                                           integrated device
                                                           manufacturers and
                                                           fabless companies in
                                                           Texas and
</TABLE>


                                       46
<PAGE>


<TABLE>
<S>                    <C>               <C>               <C>                               <C>                <C>
                                                                                                Approximate
                                         Commencement of                                      Floor Space (in
      Facility             Location         Operation                 Primary Use                 sq. ft.)      Owned or Leased
-------------------    --------------    ---------------   -------------------------------   ----------------   -----------------

                                                           Southeast Asia.

ASE Shanghai           Shanghai, PRC     June 2004         Design and production of                787,000      Land: leased
                                                           semiconductor packaging                              Buildings: owned
                                                           materials and provision of
                                                           module assembly services on a
                                                           contract basis.

ASE Japan              Takahata, Japan   Acquired in       An integrated packaging and             274,000      Land and
                                         June 2004         testing facility that                                buildings:
                                                           specializes in semiconductors                        leased
                                                           for cellular phone, household
                                                           appliance and automotive
                                                           applications.
</TABLE>

     Our leased property in Kaohsiung consists primarily of approximately twenty
leases of land in the Kaohsiung Nantze Export Processing Zone between ASE Inc.
and ASE Test Taiwan, as the lessees, and the Export Processing Zones
Administration, or the EPZA, under the Ministry of Economic Affairs. The leases
have ten year terms that expire between the end of June 2005 and May 2014. No
sublease or lending of the land is allowed. The EPZA has the right to adjust the
rental price in the event the government revalues the land. The leases are
typically renewable with three months notice prior to the termination date.

     For information on the aggregate capacity of our facilities in terms of the
number of bonders and testers we operate, see "--Business Overview--Equipment".

   Closure of ASE Philippines

     In order to consolidate our operations and improve operating efficiency
across our various locations, we closed our facilities and discontinued our
operations in the Philippines in October 2003, which had been conducted through
ASE Philippines. We estimate that the charges associated with the closure of our
operations in the Philippines will amount to approximately NT$350 million (US$11
million), of which NT$148.5 million (US$4.7 million) and NT$101.5 million was
recognized in 2004 and 2003, respectively.

Expansion

     We have completed the construction of two new buildings in Chung Li, Taiwan
with Hung Ching. The new buildings have floor space of approximately 1,022,000
square feet and are intended to house a part of our testing and packaging
operations and a part of our interconnect materials operations. Construction
commenced in September 2003 and was completed in May 2005. The total cost of the
construction project to Hung Ching before its sale to us is estimated to be
approximately NT$1,200.0 million (US$37.8 million). We are currently in
discussions with Hung Ching to finalize the purchase price of the two new
buildings. We plan to finance this construction project with internally
generated cash or through bank loans. We have not yet paid Hung Ching for any
portion of the construction costs for either of these two new buildings in Chung
Li, Taiwan.

     We have not finalized the portion of our productive capacity, either
existing capacity or new capacity budgeted to be added in 2005, which will be
allocated to these new buildings upon their completion.

Item 5. Operating and Financial Review and Prospects

OPERATING RESULTS AND TREND INFORMATION

     The following discussion of our business, financial condition and results
of operations should be read in conjunction with our consolidated financial
statements, which are included elsewhere in this annual report. This discussion
contains forward-looking statements that reflect our current views with respect
to future events and financial performance. Our actual results may differ
materially from those anticipated in these forward-looking statements as a
result of any number of factors, such as those set forth under "Item 3. Key
Information--Risk Factors" and elsewhere in this annual report. See
"Forward-Looking Statements".


                                       47
<PAGE>


Overview

     We offer a broad range of semiconductor packaging and testing services. In
addition to offering each service separately, we also offer turnkey services,
which consist of the integrated packaging, testing and direct shipment of
semiconductors to end users designated by our customers. Our net revenues
increased to NT$81,712.6 million (US$2,574.5 million) in 2004 from NT$57,311.8
million in 2003 and NT$45,586.8 million in 2002. The increase in our net
revenues in 2003 and 2004 reflected a modest recovery in the semiconductor
industry and increased outsourcing of the packaging of advanced package types
such as BGA. In 2004 and 2003, we experienced a gradual improvement in our net
revenues compared to 2002 across each of the end-use applications of the
semiconductors that we packaged and tested. In addition to our overall increase
in production volume, our improvement was also concentrated in the packaging of
more advanced package types, the testing of more complex, high-performance
semiconductors and the assembly of modules.

Pricing and Revenue Mix

     We price our services on a cost-plus basis, taking into account the actual
costs involved in providing these services, with reference to prevailing market
prices. The majority of our prices and revenues are denominated in U.S. dollars.
However, as more than half of our costs, including most of our labor and
overhead costs, are denominated in NT dollars, we consider the NT dollar to be
our functional currency. Furthermore, the majority of our financing costs are
denominated in NT dollars.

     In the case of semiconductor packaging, the cost of the silicon die, by
most accounts the most costly component of the packaged semiconductor, is
typically not reflected in our costs (or revenues) since it is typically
supplied by our customers on a consignment basis. In the case of module
assembly, we typically procure the substantial majority of the components and
raw materials to be assembled, including packaged semiconductors, which are
reflected both in our costs and our revenues. Compared to semiconductor
packaging, module assembly typically generates higher revenues and incurs higher
costs for a given amount of gross profit, and affects our margins accordingly.

     The semiconductor industry is characterized by a general trend towards
declining prices for products and services of a given technology over time. In
addition, during periods of intense competition and adverse conditions in the
semiconductor industry, the pace of this decline may be more rapid than that
experienced in other years. The average selling prices of our packaging and
testing services have experienced sharp declines during such periods as a result
of intense price competition from other independent packaging and testing
companies that attempt to maintain high capacity utilization levels in the face
of reduced demand. During the industry downturn commencing in the fourth quarter
of 2000, we experienced a significant deterioration in average selling prices
which resulted in our company incurring a net loss in 2001 and a significant
decrease in net income in 2002, as compared with the years prior to 2001. As a
result of the modest recovery in the semiconductor industry and a gradual upturn
in the outsourcing trend in 2002, 2003 and 2004, our average selling prices for
packaging and testing services stabilized in 2002, 2003 and 2004 as compared to
2001.

     In 2004, 2003 and 2002, packaging revenues, including revenues from module
assembly, accounted for 79.2%, 78.6% and 77.9% while testing revenues accounted
for 20.2%, 21.2% and 22.1%, respectively, of our net revenues. Testing revenues
as a percentage of our net revenues decreased in 2004 and 2003 primarily as a
result of the increase in revenues from module assembly, but also in part
because the average selling prices of our testing services are more severely
affected by a downturn in the semiconductor industry than the average selling
prices of our packaging services. In periods of an industry downturn, the
decline in the average selling prices of our testing services is often
exacerbated by the decrease in demand from our integrated device manufacturer
customers, who typically maintain larger in-house testing capacity than in-house
packaging capacity. These price declines are also exacerbated by the intense
price competition from other independent testing service providers, who
typically offer large price discounts during periods of depressed demand, such
as in 2001, in order to maintain higher capacity utilization rates to defray the
high fixed costs associated with testing operations.

     We believe that, over the long term, the market for outsourced
semiconductor testing services has more potential for growth than the market for
outsourced semiconductor packaging services for two reasons. First, the portion
of the semiconductor testing market that is currently accounted for by
independent testing service providers is smaller than that for packaging.
Second, the large capital expenditures needed for increasingly sophisticated


                                       48
<PAGE>


testing equipment, as compared to less expensive packaging equipment, are also a
driver for further outsourcing of testing services by integrated device
manufacturers.

     Declines in average selling prices have been partially offset over the last
three years by a change in our revenue mix. In particular, revenues derived from
packaging more advanced package types, such as flip-chip BGA, higher density
packages with finer lead-to-lead spacing, or pitch, and testing of more complex,
high-performance semiconductors have increased as a percentage of total
revenues. In addition, module assembly, which typically commands higher unit
prices, has accounted for an increased portion of our net revenues. We intend to
continue to focus on packaging more advanced package types, such as BGA and
flip-chip BGA, developing and offering new technologies in packaging and testing
services and expanding our capacity to achieve economies of scale, as well as
improving production efficiencies for older technology, in order to mitigate the
effects of declining average selling prices on our profitability.

High Fixed Costs

     Our operations, in particular our testing operations, are characterized by
relatively high fixed costs. We expect to continue to incur substantial
depreciation and other expenses as a result of our previous acquisitions of
packaging and testing equipment and facilities. Our profitability depends in
part not only on absolute pricing levels for our services, but also on
utilization rates for our packaging and testing equipment, commonly referred to
as "capacity utilization rates". In particular, increases or decreases in our
capacity utilization rates could have a significant effect on gross margins
since the unit cost of packaging and testing services generally decreases as
fixed costs are allocated over a larger number of units. The capacity
utilization rates of the machinery and equipment installed at our production
facilities typically depend on factors such as the volume and variety of
different products packaged or tested using such machinery and equipment, the
efficiency of our operations in terms of the loading and adjustment of machinery
and equipment for the packaging or testing of different products, the complexity
of the different products to be packaged or tested, the amount of time set aside
for the maintenance and repair of the machinery and equipment, the experience
and schedule of work shifts of operators, and others.

     The current generation of advanced testers typically cost between US$1.0
million and US$3.0 million each, while wire bonders used in packaging typically
cost between US$50,000 - US$150,000 each. In 2004, 2003 and 2002, our
depreciation as a percentage of net revenues was 16.2%, 20.1% and 24.9%,
respectively. The decrease in depreciation as a percentage of net revenues in
2004 compared to 2003 was primarily a result of higher equipment utilization and
an increase in revenues from advanced processes that translated into higher
average selling prices in 2004, as well as increased reliance upon equipment
that was leased instead of purchased. See "Item 4. Information on the
Company--Business Overview--Equipment". We begin depreciating our equipment when
it is placed into service. There may sometimes be a time lag between when our
equipment is placed into service and when it achieves high levels of
utilization. In periods of depressed industry conditions, we may experience
lower than expected demand from customers and a sharp decline in the average
selling price of our testing services, resulting in an increase in depreciation
relative to net revenues. In particular, the capacity utilization rates for our
testing equipment are more severely affected during an industry downturn as a
result of the decrease in outsourcing demand from integrated device
manufacturers, which typically maintain larger in-house testing capacity than
in-house packaging capacity.

     In 2003, we entered into operating leases with leasing companies to lease
advanced testers, generally for a term of three years. We believe that these
operating leases will allow us to better manage our capacity utilization rates
and cash flow. Since testers operated under operating leases could be replaced
with more advanced testers upon the expiration of the lease, we expect that
these operating leases would improve our capacity utilization rate by reducing
the number of testers with lower utilization. In 2004, we, along with ASE Test
Taiwan, have also entered into a lease receivables purchase facility agreement
in order to assist with our leasing of testing equipment. See "--Liquidity and
Capital Resources" and note 25 to our consolidated financial statements. For
more information about our testers, including the number of testers under lease,
see "Item 4. Information on the Company--Business Overview--Equipment--Testing".


                                       49
<PAGE>


Raw Material Costs

     Substantially all of our raw material costs are accounted for by packaging
and the production of interconnect materials, as testing requires minimal raw
materials. In 2004, 2003 and 2002, raw material cost as a percentage of our net
revenues was 27.2%, 28.8% and 30.2%, respectively. We expect interconnect
materials to become an increasingly important component of the cost of our
packaging revenues and we plan to continue to develop and enhance our in-house
interconnect materials capabilities in order to maintain and enhance our
profitability, ensure an adequate supply of interconnect materials at
competitive prices and reduce production time. On August 1, 2004, we merged with
ASE Material. On October 28, 2003, we established ASE-Compeq Technologies, Inc.,
a joint venture with Compeq, to focus on the design and production of
interconnect materials for packaging semiconductors. We believe that our merger
with ASE Material and our joint venture with Compeq will enhance our
interconnect materials capabilities. For more information on the merger, see
"Item 7. Major Shareholders and Related Party Transactions--Related Party
Transactions". For more information on the joint venture, see "Item 4.
Information on the Company--History and Development of the Company--Joint
Venture with Compeq Manufacturing Co. Ltd." As a result of new restrictions in
the European Union governing the use of hazardous substances, we expect that our
customers will increasingly request that the materials used in our packaging
processes be compliant with new European Union regulations, which will likely
increase our raw material costs as a result. See "Item 4. Information on the
Company--Business Overview--Raw Materials and Suppliers--Packaging".

Goodwill Amortization under ROC GAAP

     Our operating income and non-operating income in recent years have been
affected by goodwill amortization charges in connection with the restructuring
of our investment holdings and other share repurchases. Under ROC GAAP,
additional purchases of shares of consolidated subsidiaries (majority owned) or
of companies accounted for using the equity method (less than majority but at
least 20% owned) will generate goodwill in an amount equal to the difference
between the purchase price and the investors' proportionate equity in the fair
value of net assets of the investees. The goodwill generated is amortized over
ten years. Goodwill amortization from the purchases of shares of consolidated
subsidiaries are recognized under general and administrative expense. Goodwill
amortization from the purchases of shares of companies accounted for using the
equity method are recognized as a debit under investment income. Transactions
which created significant goodwill were (1) our merger with ASE Chung Li and ASE
Material (2) the purchase of additional ordinary shares of ASE Test in 2001 from
two of our directors at the prevailing market price, (3) the purchase of a total
of 26,250,000 shares of ISE Labs in 1999, 2000 and 2002, (4) the open market
purchase of shares of Universal Scientific between 1999 and 2000 and (5) the
purchase of additional ordinary shares of ASE Test in the open market in 2002
and 2004. See "Item 7. Major Shareholders and Related Party
Transactions--Related Party Transactions" and notes 1 and 10 to the consolidated
financial statements.

Merger of ASE Chung Li and ASE Material

     On August 1, 2004, ASE Chung Li and ASE Material merged with and into us
pursuant to a merger agreement dated October 28, 2003. We are the surviving
corporation. The merger was consummated by means of a share exchange pursuant to
which the respective shareholders, other than ourselves, of ASE Chung Li and ASE
Material received our common shares in exchange for the common shares of each of
ASE Chung Li and ASE Material. The share exchange pursuant to the merger
agreement between ourselves and entities under our control was treated as a
transaction between entities under common control, and all assets and
liabilities exchanged were transferred at their carrying amounts. With respect
to the share exchange between ourselves and the outstanding minority interests,
the purchase method of accounting was applied as the exchange represents the
acquisition of non-controlling equity interests in a subsidiary. Because the
"fair value" of our common shares (based on NT$31.00 per ASE Inc. common share,
which was the average of the closing prices of our common shares on the Taiwan
Stock Exchange for two days prior to and following October 28, 2003) exchanged
for the non-controlling equity interests exceeded the "fair value" of the
acquired net assets (based on the appraised value on the effective date of the
merger), the merger generated goodwill of NT$1,608.7 million (US$50.7 million).
For more information on the merger, see "Item 7. Major Shareholders and Related
Party Transactions--Related Party Transactions".


                                       50
<PAGE>


Critical Accounting Policies and Estimates

     Preparation of our consolidated financial statements requires us to make
estimates and judgments in applying our critical accounting policies which have
a significant impact on the results we report in our consolidated financial
statements. We continually evaluate these estimates, including those related to
revenue recognition, allowances for doubtful accounts, inventories, allowances
for deferred income tax assets, useful lives of properties, realizability of
long-term assets, goodwill and the valuation of marketable securities and
long-term investments. We base our estimates on historical experience and other
assumptions which we believe to be reasonable under the circumstances. Actual
results may differ from these estimates under different assumptions and
conditions. We have identified below the accounting policies that are the most
critical to our consolidated financial statements.

     Revenue Recognition. Revenues from semiconductor packaging services that we
provide are recognized upon shipment. Revenues from testing services that we
provide are recognized upon completion of the services. We do not take ownership
of:

     o    bare semiconductor wafers received from customers that we package into
          finished semiconductors; and

     o    packaged semiconductors received from customers that we test.

The title and risk of loss remains with the customer for those bare
semiconductors and/or packaged semiconductors. Accordingly, the cost of
customer-supplied semiconductor materials is not included in our consolidated
financial statements. Other criteria that we use to determine when to recognize
revenue are:

     o    existence of persuasive evidence of the services provided;

     o    the selling price is fixed or determinable; and

     o    collectibility is reasonably assured.

These policies are consistent with provisions in the Staff Accounting Bulletin
No. 101 issued by the United States Securities and Exchange Commission, or SEC.
We do not provide warranties to our customers except in cases of defects in the
packaging services provided and deficiencies in testing services provided. An
appropriate sales allowance is recognized in the period during which the sale is
recognized, and is estimated based on historical experience.

     Allowance for Doubtful Accounts. We periodically record a provision for
doubtful accounts based on our evaluation of the collectibility of our accounts
receivable. The total amount of this provision is determined by us as follows.
We first identify the receivables of customers that are considered to be a
higher credit risk based on their current overdue accounts with us, difficulties
collecting from these customers in the past or their overall financial
condition. For each of these customers, we estimate the extent to which the
customer will be able to meet its financial obligations to us, and we record an
allowance that reduces our accounts receivable for that customer to the amount
that we reasonably believe will be collected. For all other customers, we
maintain an allowance for doubtful accounts equal to a percentage of their
aggregate accounts receivable. Based on our experience, we currently maintain an
allowance for the accounts receivables of these other customers which average
between 3% and 4%, on a consolidated basis, of our net revenues. Additional
allowances may be required in the future if the financial condition of our
customers or general economic conditions deteriorate, and this additional
allowance would reduce our net income.

     Inventories. In January 2004, we implemented enterprise resource planning,
or ERP, in order to increase our ability to effectively monitor our resource
allocation throughout our company. As a result, we switched from using the
weighted-average method to using the moving-average method to price our raw
materials and supplies. As a result of the change, our net income for 2004
decreased NT$26.8 million (US$0.8 million) and our earnings per share decreased
NT$0.01. See also note 3 to the consolidated financial statements. Otherwise,
inventories are recorded at cost when acquired and stated at the lower of
weighted average cost or market value. Unbilled processing charges incurred are
included in finished goods and work in progress and are stated at actual cost.
Market value for finished goods and work in process is estimated to be the net
realizable value. Market value for raw materials, supplies and spare parts is
the replacement cost. Materials received from customers for processing, mainly


                                       51
<PAGE>


of semiconductor wafers, are excluded from inventories, as title and risk of
loss remains with the customers. An allowance for loss on decline in market
value and obsolescence is provided based on the difference between the cost of
inventory and the estimated market value based upon assumptions about future
demand and market conditions. An additional inventory provision may be required
if actual market conditions are less favorable than those projected.

     Allowances for Deferred Income Tax Assets. Tax benefits arising from
deductible temporary differences, unused tax credits and net operating loss
carryforwards are recognized as deferred tax assets. We record a valuation
allowance to reduce our deferred income tax assets to an amount that we believe
will more likely than not be realized. We have considered future taxable income
and ongoing prudent and feasible tax planning strategies in assessing the need
and amount for the valuation allowance. In the event we were to determine that
we would be able to realize our deferred income tax assets in the future in
excess of our net recorded amount, an adjustment to our deferred income tax
assets would increase income in the period such determination was made.
Alternatively, should we determine that we would not be able to realize all or
part of our net deferred income tax assets in the future, an adjustment to our
deferred income tax assets would decrease income in the period such
determination was made.

     Useful Lives of Properties. Our properties primarily consist of machinery
and equipment, buildings and improvements and land improvements. As our
operations are capital intensive, we have significant investments in expensive
packaging and testing equipment. Properties represented 61.5%, 58.9% and 60.1%
of our total assets as of December 31, 2004, 2003 and 2002, respectively. We
depreciate our properties based on our estimate of their economic useful lives
to us, which is in turn based on our judgment, historical experience and the
potential obsolescence of our existing equipment brought about by the
introduction of more sophisticated packaging and testing technologies and
processes. If we subsequently determine that the actual useful life of
properties is shorter than what we had estimated, we will depreciate the
remaining undepreciated value of that asset over its remaining economic useful
life. This would result in increased depreciation and decreased net income
during those periods. Similarly, if the actual lives of properties are longer
than what we had estimated, we would have less depreciation and higher net
income in subsequent periods. As a result, if our estimations of the useful
lives of our properties are not accurate or are required to be changed in the
future, our net income in future periods would be affected.

     Realizability of Long-Term Assets. We are required to evaluate our
equipment, goodwill and other long-lived assets for impairment whenever there is
an indication of impairment. If certain criteria are met, we are required to
record an impairment charge. In accordance with U.S. Statement of Financial
Accounting Standards, or U.S. SFAS, No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets", long-lived assets held and used by us are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. For purposes of
evaluating the recoverability of long-lived assets, the recoverability test is
performed by comparing undiscounted net cash flows of the assets against the net
book value of the assets. If the recoverability test indicates that an
impairment has occurred, the impairment loss is the amount of the asset's net
book value in excess of the related fair value. For example, we took a
NT$1,225.6 million impairment charge in 2002 against some of our testing
equipment to reflect the decline in economic value of this equipment.

     For the year ended December 31, 2004, we adopted ROC Statement of Financial
Accounting Standards, or ROC SFAS, No. 35, "Impairment of Assets" to account for
the impairment of our long-lived assets under ROC GAAP. In accordance with ROC
SFAS No. 35, long-lived assets held and used by us are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Prior to 2004, there were no requirements
related to the evaluation of recoverability of long-lived assets' impairment
under ROC GAAP, and we applied U.S. SFAS No. 144 when accounting for impairment
of long-lived assets for both ROC GAAP and U.S. GAAP.

     We have reclassified the impairment charge of NT$1,225.6 million, formerly
recognized under general and administrative operating expenses, as an individual
line item under non-operating income (expense) as a result of our adoption of
ROC SFAS No. 35. In 2003 and 2004, we did not take any impairment charges
against long-lived assets.

     Goodwill. Effective January 1, 2002, we adopted U.S. SFAS No. 142,
"Goodwill and Other Intangible Assets", which requires that goodwill no longer
be amortized, and instead be tested for impairment annually or more frequently
if events or changes in circumstances indicate that the asset might be impaired.
Under U.S. GAAP, we


                                       52
<PAGE>


realized an impairment charge as of December 31, 2002 related to the goodwill
from the acquisition of ASE Test. See "--U.S. GAAP Reconciliation". Under U.S.
GAAP, we continue to carry significant goodwill resulting from the acquisition
of ASE Korea and the purchase of shares of ISE Labs, and will have to assess
such goodwill for impairment on at least an annual basis in the future. The
merger of ASE Chung Li and ASE Material generated goodwill of NT$1,608.7 million
(US$50.7 million). See "--Merger of ASE Chung Li and ASE Material". In 2004, as
a result of our annual impairment review under U.S. GAAP, we recognized an
impairment charge of NT$1,337.7 million (US$42.1 million) for goodwill relating
to our purchase of shares of ISE Labs. If events and circumstances warrant in
the future, the value of the goodwill could be further impaired under U.S. GAAP.

     For the year ended December 31, 2004, we adopted ROC SFAS No. 35,
"Impairment of Assets". In addition to yearly amortization, under ROC SFAS No.
35, goodwill is also evaluated at least annually to determine if it is impaired.
As a result of our annual impairment review, under ROC GAAP, we recognized an
impairment charge of NT$1,950.1 million (US$61.4 million) for goodwill relating
to our shares of ASE Test and ISE Labs. See note 10 to the consolidated
financial statements.

     Valuation of Long-term Investments. We hold significant long-term
investments in public and non-public entities. We periodically evaluate these
long-term investments based on market prices, if available, the financial
condition of the investee company, economic conditions in the industry, and our
intent and ability to hold the investment for a long period of time. These
assessments usually require a significant amount of judgment as a significant
decline in the market price may not be the best indicator of impairment. Under
U.S. GAAP, we evaluate long-term investments using the above mentioned criteria
and, to the extent any decline in the value of a long-term investment is
determined to be other than temporary, an impairment charge is recorded in the
current period. The methods to measure the amount of impairment under ROC GAAP
and U.S. GAAP may be based on different estimates of fair value depending on the
circumstances. Under U.S. GAAP, market price is to be used, if available, to
determine the fair value. Under ROC GAAP, however, if the market price is deemed
to be a result of an inactive market, other measures of fair value may be used.
Several of the long-term investments held by us are accounted for under the
equity method. Any significant decline in the operations of an equity method
investee could affect the value of the long-term investment and an impairment
charge may occur.

     After determining that other-than-temporary impairment occurred in our
long-term investments as of December 31, 2004, an impairment charge of NT$512.0
million (US$16.1 million) was recorded under ROC GAAP based on the difference
between the book value and the calculated recoverable amount of Universal
Scientific with adjustments made to significant assets of Universal Scientific
using appraised values and other appropriate information. In 2004, we incurred
an impairment charge of NT$1,707.0 million (US$53.8 million) under U.S. GAAP
relating to our shares of Universal Scientific. See "--U.S. GAAP Reconciliation"
and note 29 to the consolidated financial statements.

ROC Labor Pension Act

     In accordance with ROC Labor Pension Act, effective July 1, 2005, all ROC
companies, including us, will be required to contribute at least 6% of their
employees' monthly salary to the pension fund accounts of those employees who
decide to participate in the "portable" pension plans available under the new
law. Under the prior applicable pension law, the required contribution amount
was no less than 2%. It is not yet clear how many of our employees will decide
to participate in the "portable" pension plans available under the new law, but
we anticipate that our pension costs will increase as a result of the ROC Labor
Pension Act.


                                       53
<PAGE>


Results of Operations

     The following table sets forth, for the periods indicated, financial data
from our consolidated statements of income, expressed as a percentage of net
revenues.

<TABLE>
                                                                             Year Ended December 31,
                                                                -------------------------------------------------
                                                                    2002               2003                2004
                                                                -------------------------------------------------
                                                                          (percentage of net revenues)
<S>                                                             <C>                    <C>                <C>
ROC GAAP:
Net revenues..............................................         100.0%              100.0%             100.0%
   Packaging..............................................          77.9                78.6               79.2
   Testing................................................          22.1                21.2               20.2
   Others.................................................           0.0                 0.2                0.6
Cost of revenues..........................................         (84.4)              (81.1)             (80.1)
Gross profit..............................................          15.6                18.9               19.9
Operating expenses........................................         (14.4)              (13.2)             (10.7)
Income (loss) from operations.............................           1.2                 5.7                9.2
Non-operating income (expenses)...........................          (7.1)               (3.2)              (4.9)
Income (loss) before income tax and minority interest.....          (5.9)                2.5                4.3
Income tax benefit (expense)..............................           2.5                 2.3                1.7
Income (loss) before extraordinary loss and cumulative
   effect of change in accounting principle...............          (3.4)                4.8                6.0
Extraordinary loss........................................          (0.1)               (0.1)               --
Cumulative effect of change in accounting principle.......           --                   --                  *
Minority interest in net (income) loss of subsidiaries....           3.8                 0.1               (0.8)
                                                                -------------------------------------------------
Net income (loss).........................................           0.3%                4.8%               5.2%
                                                                =================================================
</TABLE>

-----------------
*    Indicates percentage is less than 0.1%.


     The following table sets forth, for the periods indicated, the gross
margins for our packaging and testing services and our total gross margin. Gross
margin is calculated by dividing gross profits by net sales.

<TABLE>
                                                                             Year Ended December 31,
                                                                  -----------------------------------------------
                                                                     2002               2003                2004
                                                                  -----------------------------------------------
                                                                           (percentage of net revenues)
<S>                                                                <C>                 <C>                <C>
ROC GAAP:
Gross margin
   Packaging.............................................            17.6%              17.7%              18.3%
   Testing...............................................             8.4               23.5               26.3
Overall..................................................            15.6%              18.9%              19.9%
</TABLE>


     The following table sets forth, for the periods indicated, a breakdown of
our total cost of revenues and operating expenses, expressed as a percentage of
net revenues.

<TABLE>
                                                                             Year Ended December 31,
                                                                  -----------------------------------------------
                                                                   2002               2003                2004
                                                                  -----------------------------------------------
                                                                            (percentage of net revenues)
<S>                                                                <C>                 <C>                <C>
ROC GAAP:
Cost of revenues
   Raw materials.........................................            30.2%              28.8%              27.2%
   Labor.................................................            14.8               15.1               15.3
   Depreciation..........................................            24.9               20.1               16.2
   Others................................................            14.5               17.1               21.4
                                                                  -----------------------------------------------
</TABLE>


                                       54
<PAGE>


<TABLE>
                                                                             Year Ended December 31,
                                                                  -----------------------------------------------
                                                                   2002               2003                2004
                                                                  -----------------------------------------------
                                                                            (percentage of net revenues)
<S>                                                                <C>                 <C>                <C>
         Total cost of revenues..........................            84.4%              81.1%              80.1
                                                                  ===============================================
Operating expenses
   Selling...............................................             2.0%               2.1%               1.3%
   General and administrative(1).........................             6.1                5.6                5.1
   Goodwill amortization(2)..............................             1.8                1.4                1.1
   Research and development..............................             4.5                4.1                3.2
                                                                  -----------------------------------------------
         Total operating expenses........................            14.4%              13.2%              10.7%
                                                                  ===============================================
</TABLE>

------------------
(1) Excludes goodwill amortization for purposes of this table only.
(2) Included in general and administrative expense in the consolidated financial
    statements.

     Year Ended December 31, 2004 Compared to Year Ended December 31, 2003

     Net Revenues. Net revenues increased 42.6% to NT$81,712.6 million
(US$2,574.5 million) in 2004 from NT$57,311.8 million in 2003. Packaging
revenues increased 43.8% to NT$64,736.8 million (US$2,039.6 million) in 2004
from NT$45,026.9 million in 2003. Testing revenues increased 35.7% to
NT$16,473.9 million (US$519.1 million) in 2004 from NT$12,142.4 million in 2003.
The increase in packaging revenues was primarily due to an increase in packaging
volume. The increase in testing revenues was primarily due to an increase in
testing volume, which was partially offset by a decrease in the average selling
prices for testing services. The increase in packaging and testing volume
resulted primarily from the recovery in the semiconductor industry and the
increase in outsourcing of the packaging and testing of semiconductor devices.
The decrease in the average selling prices for testing services reflected the
general trend in the semiconductor industry of declining prices for testing
services.

     Gross Profit. Gross profit increased 50.0% to NT$16,265.5 million (US$512.5
million) in 2004 from NT$10,845.3 million in 2003. Our gross margin increased to
19.9% in 2004 compared to 18.9% in 2003. This increase was primarily a result of
a decrease in depreciation and raw material costs, partially offset by increases
in rental expense and cost of wafers, testing and materials, all as a percentage
of net revenues. Our gross margin for packaging increased to 18.3% in 2004 from
17.7% in 2003. This increase was primarily due to a decrease in raw material
costs and depreciation, partially offset by an increase in factory supplies and
components for use in modules, all as a percentage of packaging revenues. Our
gross margin for testing increased to 26.3% in 2004 from 23.5% in 2003. This
increase was primarily due to a decrease in depreciation, partially offset by an
increase in rental expenses for testing equipment, all as a percentage of net
revenues. Depreciation in 2004 was NT$13,247.1 million (US$417.4 million),
compared to NT$11,517.0 million in 2003. As a percentage of net revenues,
however, depreciation decreased to 16.2% in 2004 from 20.1% in 2003, reflecting
higher capacity utilization rates.

     Operating Income. We had an operating income of NT$7,551.2 million
(US$237.9 million) in 2004, compared to NT$3,270.5 million in 2003. Operating
expenses increased 15.0% to NT$8,714.3 million (US$274.6 million) in 2004,
compared to NT$7,574.8 million in 2003. The increase in operating expenses was
primarily due to higher general and administrative expenses and, to a lesser
extent, higher research and development expenses, partially offset by a decrease
in selling expenses. General and administrative expense, excluding goodwill
amortization, increased 31.7% to NT$4,211.0 million (US$132.8 million) in 2004
from NT$3,196.6 million in 2003. This increase was primarily the result of an
increase in our salaries and bonuses expense. General and administrative
expense, excluding goodwill amortization, represented 5.1% of our net revenues
in 2004, compared to 5.6% in 2003. Goodwill amortization was NT$877.6 million
(US$27.6 million) in 2004 compared to NT$819.3 million in 2003. Goodwill
amortization represented 1.1% of our net revenues in 2004, compared to 1.4% in
2003. Research and development expense increased 9.8% to NT$2,584.5 million
(US$81.4 million) in 2004 from NT$2,354.0 million in 2003. This increase was
primarily a result of increases in our salaries and bonuses expense and the cost
of maintaining our research and development equipment. Research and development
expense accounted for 3.2% of our net revenues in 2004, compared to 4.1% in
2003. Selling expense decreased 13.6% to NT$1,041.2 million (US$32.8 million) in
2004 from NT$1,204.9 million in 2003. This decrease was primarily due to
decreased commission and fee payments to our sales and customer service agents
following our acquisition of ASE (U.S.) Inc.,


                                       55
<PAGE>


which was previously our agent providing customer service and after-sales
support to our customers in Europe and North America. See "Item 4. Information
on the Company--Business Overview--Sales and Marketing--Sales and Customer
Service Agents". Selling expense represented 1.3% of our net revenues in 2004,
compared to 2.1% in 2003. Operating margin increased to 9.2% in 2004 from 5.7%
in 2003, primarily as a result of a decrease in our operating expenses as a
percentage of net revenues. Such decrease resulted primarily from the
significant increase in our net revenues while most components of our operating
expenses did not increase as significantly, reflecting efficiencies realized
from increased scale of operations and the acquisition of ASE (U.S.) Inc.

     Net Non-Operating Income (Expense). We incurred a net non-operating expense
of NT$4,019.4 million (US$126.6 million) in 2004, compared to a net
non-operating expense of NT$1,782.7 million in 2003. This overall increase was
primarily a result of an impairment of goodwill under ROC GAAP, other investment
loss and a decrease in our gain on sales of investments, partially offset by a
decrease in our interest expense and a decrease in our realized loss on
long-term investments. Pursuant to our yearly review of goodwill under ROC GAAP,
we determined that NT$1,950.1 million (US$61.4 million) of our goodwill relating
to our purchase of shares of ISE Labs and ASE Test was impaired in 2004,
compared to zero in 2003. Our other investment loss also increased to NT$512.0
million (US$16.1 million) in 2004 from zero in 2003 after we determined that
some of the goodwill relating to our affiliate, Universal Scientific, was
impaired. Our gain on sale of investment decreased 90.8% to NT$57.1 million
(US$1.8 million) in 2004, compared to NT$618.9 million in 2003. Net interest
expense decreased 31.1% to NT$898.7 million (US$28.3 million) in 2004 from
NT$1,304.7 million in 2003, primarily due to lower interest rates on our bank
loans. Our realized loss on long-term investments decreased to zero in 2004 from
NT$354.8 million in 2003. We recorded net other non-operating expense of
NT$174.5 million (US$5.5 million) in 2004, compared to net other non-operating
expense of NT$114.6 million in 2003.

     Net Income. We had a net income of NT$4,209.7 million (US$132.6 million) in
2004, compared to a net income of NT$2,742.8 million in 2003. Our net income per
ADS was NT$5.31 (US$0.17) in 2004, compared to a net income per ADS of NT$3.65
in 2003 (retroactively adjusted to account for stock dividends issued in 2004).
We had an income tax benefit of NT$1,396.3 million (US$44.0 million) in 2004,
compared to an income tax benefit of NT$1,278.1 million in 2003, primarily as a
result of tax credits resulting from an increase in capital expenditures
relating to our facilities in Kaohsiung, Taiwan.

     Year Ended December 31, 2003 Compared to Year Ended December 31, 2002

     Net Revenues. Net revenues increased 25.7% to NT$57,311.8 million in 2003
from NT$45,586.8 million in 2002. Packaging revenues increased 26.8% to
NT$45,026.9 million in 2003 from NT$35,515.4 million in 2002. Testing revenues
increased 20.7% to NT$12,142.4 million in 2003 from NT$10,060.6 million in 2002.
The increase in packaging revenues was primarily due to an increase in packaging
volume. The increase in testing revenues was primarily due to an increase in
testing volume, which was partially offset by a decrease in the average selling
prices for testing services. The increase in packaging and testing volume
resulted primarily from the recovery in the semiconductor industry and the
increase in outsourcing of the packaging and testing of semiconductor devices.
This increase was tempered in part by adverse global political and economic
conditions as well as the impact of the outbreak of SARS in the first half of
2003. The decrease in the average selling prices for testing services reflected
the general trend in the semiconductor industry of declining prices for testing
services.

     Gross Profit. Gross profit increased 52.9% to NT$10,845.3 million in 2003
from NT$7,094.6 million in 2002. Our gross margin increased to 18.9% in 2003
compared to 15.6% in the comparable period in 2002. This increase was primarily
a result of a decrease in depreciation and raw material costs, partially offset
by an increase in factory supplies, all as a percentage of net revenues. Our
gross margin for packaging increased slightly to 17.7% in 2003 from 17.6% in
2002. This increase was primarily due to a decrease in raw material costs and
depreciation, which was partially offset by an increase in factory supplies and
components for use in modules, all as a percentage of packaging revenues. Our
gross margin for testing increased to 23.5% in 2003 from 8.4% in 2002. This
increase was primarily due to higher utilization rates for our testers, which
resulted in a decrease in depreciation as a percentage of testing revenues.
Depreciation in 2003 was NT$11,517.0 million, compared to NT$11,366.9 million in
2002. As a percentage of net revenues, however, depreciation decreased to 20.1%
in 2003 from 24.9% in 2002, reflecting higher capacity utilization rates.


                                       56
<PAGE>


     Operating Income (Loss). We had an operating income of NT$3,270.5 million
in 2003, compared to NT$540.4 million in 2002. Operating margin was 5.7% in
2003, compared to 1.2% in 2002. Operating expenses increased 15.6% to NT$7,574.8
million in 2003, compared to NT$6,554.2 million in 2002. The increase in
operating expenses was primarily due to higher selling, general and
administrative, and research and development expenses. Selling expense increased
32.5% to NT$1,204.9 million in 2003 from NT$909.4 million in 2002. This increase
was primarily due to increased commission and fee payments to our sales and
customer service agents, reflecting increased sales. Selling expense represented
2.1% of our net revenues in 2003, compared to 2.0% in 2002. General and
administrative expense, excluding goodwill amortization, increased 15.0% to
NT$3,196.6 million in 2003 from NT$2,780.2 million in 2002. General and
administrative expense, excluding goodwill amortization, represented 5.6% of our
net revenues in 2003, compared to 6.1% in 2002. Goodwill amortization was
NT$819.3 million in 2003 compared to NT$815.6 million in 2002. Goodwill
amortization represented 1.4% of our net revenues in 2003, compared to 1.8% in
2002. Research and development expense increased 14.9% to NT$2,354.0 million in
2003 from NT$2,049.0 million in the comparable period in 2002. This increase was
primarily a result of an increase in the number of our research and development
employees. Research and development expense accounted for 4.1% of our net
revenues in 2003, compared to 4.5% of our net revenues in 2002.

     Net Non-Operating Income (Expense). We incurred a net non-operating expense
of NT$1,782.7 million in 2003, compared to a net non-operating expense of
NT$3,250.1 million in 2002. This overall decrease was primarily a result of an
asset impairment charge of NT$1,225.6 million which was recorded as an
impairment of long-lived assets in 2002, but for which there was no similar
charge in 2003, and to a lesser degree, a decrease in net interest expense and
an increase in gain on disposal of investments, which was partially offset by an
increase in realized loss on long-term investments. Net interest expense
decreased 17.4% to NT$1,304.7 million in 2003 from NT$1,578.6 million in 2002,
primarily due to lower interest rates on our bank loans and NT$511.5 million in
interest income recognized in connection with the redemption of the US$160
million 1% guaranteed convertible notes due 2004 issued by ASE Test through its
finance subsidiary. We recorded a realized loss on long-term investments of
NT$354.8 million in 2003 due to the recognition of a loss on the sale of our
common shares by our wholly-owned subsidiary ASE Capital Inc. in connection with
our ADS offering in June 2003.

     Net Income (Loss). We had a net income of NT$2,742.8 million in 2003,
compared to a net income of NT$129.0 million in 2002. Our net income per ADS was
NT$3.65 in 2003, compared to a net income per ADS of NT$0.18 per ADS in 2002. We
had an income tax benefit of NT$1,278.1 million in 2003, compared to an income
tax benefit of NT$1,140.3 million in 2002, primarily as a result of tax credits
resulting from an increase in capital expenditures relating to our facilities in
Kaohsiung, Taiwan.

Quarterly Net Revenues, Gross Profit and Gross Margin

     The following table sets forth our unaudited consolidated net revenues,
gross profit and gross margin for the quarterly periods indicated. You should
read the following table in conjunction with the consolidated financial
statements and related notes included in this annual report. Our net revenues,
gross profit and gross margin for any quarter are not necessarily indicative of
the results for any future period. Our quarterly net revenues, gross profit and
gross margin may fluctuate significantly.

<TABLE>
                                                                   Quarter Ended
                                ------------------------------------------------------------------------------------
                                Jun. 30,    Sept.      Dec. 31,  Mar. 31,   Jun. 30,   Sept.      Dec. 31,  Mar. 31,
                                  2003    30, 2003      2003       2004       2004    30, 2004     2004       2005
                                ------------------------------------------------------------------------------------
                                   NT$       NT$         NT$        NT$        NT$       NT$        NT$        NT$
                                                                   (in millions)
<S>                              <C>      <C>          <C>       <C>        <C>       <C>         <C>       <C>
Consolidated Net Revenues
   Packaging...............      9,986.6  11,420.1     14,598.6  13,745.0   16,131.7  17,249.6    17,610.5  14,680.5
   Testing.................      2,752.3   3,065.7      3,789.7   3,418.5    4,101.6   4,596.5     4,357.3   3,692.8
   Others..................         33.9      38.8         41.7      57.4       57.0     176.3       211.2     196.0
                                ------------------------------------------------------------------------------------
     Total................      12,772.8  14,524.6     18,430.0  17,220.9   20,290.3  22,022.4    22,179.0  18,569.3
                                ====================================================================================
Consolidated Gross Profit
   Packaging                     1,437.5   2,018.0      3,368.9   2,885.4    3,263.4   3,101.9     2,564.2   1,506.5
   Testing.................        531.6     758.8      1,209.6     853.6    1,188.8   1,295.0       995.3     377.5
   Others..................          1.1       6.0          2.7      29.7       16.8      38.6        32.8      (0.7)
                                ------------------------------------------------------------------------------------
     Total.................      1,970.2   2,782.8      4,581.2   3,768.7    4,469.0   4,435.5     3,592.3   1,883.3
                                ====================================================================================
</TABLE>


                                       57
<PAGE>


<TABLE>
                                                                   Quarter Ended
                                --------------------------------------------------------------------------------------
                                  Jun. 30,  Sept. 30,    Dec. 31,  Mar. 31,  Jun. 30,  Sept. 30,    Dec. 31,  Mar. 31,
                                    2003      2003         2003      2004      2004       2004        2004      2005
                                --------------------------------------------------------------------------------------
                                     NT$       NT$          NT$       NT$       NT$        NT$         NT$       NT$
                                                                   (in millions)
<S>                              <C>      <C>          <C>       <C>        <C>       <C>         <C>       <C>
Consolidated Gross Margin
   Packaging...............         14.4%     17.7%        23.1%     21.0%      20.2%     18.0%       14.6%     10.3%
   Testing.................         19.3%     24.8%        31.9%     25.0%      29.0%     28.2%       22.8%     10.2%
   Overall.................         15.4%     19.2%        24.9%     21.9%      22.0%     20.1%       16.2%     10.1%
</TABLE>


     Our results of operations have been adversely affected by the global
semiconductor industry downturn which commenced in the fourth quarter of 2000
and continued through the fourth quarter of 2001. Beginning the second quarter
of 2002, we experienced an improvement in our net revenues as a result of a
modest recovery in the semiconductor industry. However, in the first quarter of
2003, our net revenues were adversely affected by global political and economic
conditions. To a lesser extent, our results of operations have also been
affected by seasonality. Our first quarter net revenues have historically
decreased over the preceding fourth quarter, primarily due to the combined
effects of holidays in the United States, Taiwan and elsewhere in Asia.
Moreover, the increase or decrease in net revenues of a particular quarter as
compared with the immediately preceding quarter varies significantly. See "Item
3. Key Information--Risk Factors--Risks Relating to Our Business--Our operating
results are subject to significant fluctuations, which could adversely affect
the market value of your investment."

     Our testing operations historically have higher gross margins than our
packaging operations. However, during periods of lower-than-normal capacity
utilization, such as the full year of 2002 and the first quarter of 2005, our
testing operations have experienced lower gross margins than our packaging
operations.

Exchange Rate Fluctuations

     For a quantitative and qualitative disclosure of our exposure to foreign
currency exchange rate risk, see "Item 11. Quantitative and Qualitative
Disclosures about Market Risk--Market Risk--Foreign Currency Exchange Rate
Risk".

Taxation

     The regular corporate income tax rate in the ROC applicable to us is 25%.
Under the ROC Statute of Upgrading Industries, which gives certain preferential
tax treatment to companies that qualify as operating in an "important technology
industry", we have two five-year tax exemptions on income derived from the
packaging of BGA products, as well as other products, which expire at the end of
2005 and 2007. We also received two five-year tax exemptions, one that expired
at the end of 2004 and one that will expire at the end of 2007, on income
derived from a portion of our Chung Li manufacturing, processing and testing
operations. ASE Test Taiwan has one five-year tax exemption that will expire in
December 2005 on income derived from a portion of its testing operations. We are
currently in the process of applying for additional five-year exemptions under
the ROC Statute for Upgrading Industries. In addition, ASE Test Malaysia
qualified as a "pioneer" company in Malaysia and enjoyed a tax exemption which
expired on June 30, 1999. ASE Test Malaysia subsequently obtained the status of
"high-tech pioneer" and was granted a five-year tax exemption which expired on
June 30, 2004. These tax exemptions resulted in tax savings for us of
approximately NT$642.3 million (US$20.2 million), NT$481.2 million and NT$52.1
million in 2004, 2003 and 2002, respectively. In order to qualify for a more
beneficial reinvestment allowance, ASE Test Malaysia applied for and was granted
cancellation of its pioneer status, which was deemed to have been cancelled on
September 21, 2002. ASE Test Malaysia's current reinvestment allowance applies
to certain of our qualifying equipment and allows us to reduce our tax payments
on income from our operations that use such equipment until we use up such
allowance.

     We also have tax credits under the ROC Statute for Upgrading Industries.
Under the previous tax credit rules, we obtained a tax credit of 20% for the
purchase of equipment manufactured in Taiwan and 10% for the purchase of
equipment manufactured outside Taiwan. In July and December 2004, the ROC
Executive Yuan amended the tax credit rules and adopted tax credits ranging from
5% to 13% to be applied to the purchase of equipment regardless of where it was
manufactured.


                                       58
<PAGE>


     Under the ROC Statute for Upgrading Industries, we may apply for additional
tax holidays covering the portion of our income allocable to eligible machinery
and equipment upon receipt of a cash infusion from our shareholders, including
through rights offerings, if the proceeds of which are used to purchase eligible
machinery and equipment. We may also apply for this tax holiday after the
capitalization of retained earnings through the issuance of stock dividends. See
note 21 to our consolidated financial statements.

     In addition, since we have facilities located in special export zones such
as the Nantze Export Processing Zone in Taiwan and the Bayan Lepas Free
Industrial Zone in Malaysia, we enjoy exemptions from various import duties and
commodity taxes on imported machinery, equipment, raw materials and components.
Goods produced by companies located in these zones and exported or sold to
others within the zones are exempt from otherwise applicable commodity or
business taxes.

     Our effective income tax rate was 0% in 2004 and 2003 primarily as a result
of tax credits generated from qualifying equipment purchases made at our
facilities in Kaohsiung, Taiwan and 0% in 2002 because we incurred a net loss
before income tax, minority interests and extraordinary loss.

     We generated additional tax credits in 2004, 2003 and 2002 and believe that
the future estimated taxable income will be sufficient to realize the current
and long-term portion of our net deferred tax assets recorded as of December 31,
2004, 2003 and 2002.

     Under the ROC Income Tax Law, all retained earnings generated in a year
which are not distributed to shareholders as dividends in the following year
will be assessed a 10% retained earnings tax. As a result, if we do not
distribute all of our annual retained earnings as either cash or stock dividends
in the following year, these earnings will be subject to the 10% retained
earnings tax.

Inflation

     We do not believe that inflation in Taiwan or elsewhere has had a material
impact on our results of operations.

U.S. GAAP Reconciliation

     Our financial statements are prepared in accordance with ROC GAAP, which
differ in certain material respects from U.S. GAAP. The following table sets
forth a comparison of our net income and shareholders' equity in accordance with
ROC GAAP and U.S. GAAP as of and for the periods indicated.

                                    As of and For the Year Ended December 31,
                                ------------------------------------------------
                                   2002         2003                2004
                                ------------------------------------------------
                                    NT$          NT$           NT$         US$
                                                 (in millions)
Net income (loss):
   ROC GAAP.................       129.0       2,742.8       4,209.7       132.6
   U.S. GAAP................    (3,074.3)      2,352.0       4,297.1       135.4
Shareholders' equity:
   ROC GAAP.................    39,430.7      45,122.6      51,311.8     1,616.6
   U.S. GAAP................    35,716.8      42,083.0      48,646.6     1,532.7


     Note 29 to the consolidated financial statements provides a description of
the principal differences between ROC GAAP and U.S. GAAP as they relate to us
and a reconciliation to U.S. GAAP of select items, including net income and
shareholders' equity. Differences between ROC GAAP and U.S. GAAP, which
primarily affect our net income as reported under ROC GAAP, relate to impairment
of goodwill and long-term investments and compensation expense pertaining to
bonuses to employees, directors and supervisors.

     Effective January 1, 2002, we adopted U.S. SFAS No. 142, "Goodwill and
Other Intangible Assets", which requires that goodwill no longer be amortized,
and instead, be tested for impairment annually or more frequently if events or
changes in circumstances indicate that the asset might be impaired. In
conjunction with the implementation of U.S. SFAS No. 142, we completed a
goodwill impairment review as of January 1, 2002 in accordance with the
provisions of the standard and found no impairment. SFAS No. 142 also requires
companies to


                                       59
<PAGE>


discontinue amortizing goodwill and other indefinite lived assets beginning
January 1, 2002. This resulted in a decrease in amortization of approximately
NT$877.6 million (US$27.6 million), NT$819.3 million and NT$815.6 million in
2004, 2003 and 2002, respectively, which continues to be recorded for ROC GAAP
purposes. Under U.S. GAAP, we completed our annual goodwill impairment tests as
of December 31, 2002 and determined that NT$2,213.0 million of the goodwill
attributable to shares of ASE Test was impaired and accordingly wrote off the
full amount of the goodwill. No impairment charges were recorded for goodwill,
attributable to other reporting units, for the year ended December 31, 2003. For
the year ended December 31, 2004, we took an impairment charge under U.S. GAAP
of NT$1,337.7 million (US$42.1 million) relating to our purchase of shares of
ISE Labs.

     For the year ended December 31, 2004, we adopted ROC SFAS No. 35,
"Impairment of Assets". In addition to yearly amortization, under ROC SFAS No.
35, goodwill is evaluated at least annually to determine if it is impaired. As a
result of our annual impairment review, under ROC GAAP we recognized an
impairment charge of NT$1,950.1 million (US$61.4 million) for goodwill relating
to our purchase of shares of ASE Test and ISE Labs. See note 10 to the
consolidated financial statements.

     ROC GAAP and U.S. GAAP require an assessment of impairment of long-term
investments whenever events or circumstances indicate a decline in value may be
other-than-temporary. The criteria for determination are similar under ROC GAAP
and U.S. GAAP. However, the methods to measure the amount of impairment may be
based on different estimates of fair values depending on the circumstances. When
impairment is determined to have occurred, U.S. GAAP requires the market price
to be used, if available, to determine the fair value of the long-term
investment and measure the amount of impairment at the reporting date. Under ROC
GAAP, if the market price is deemed to be a result of an inactive market,
another measure of fair value may be used. As such, when determining whether an
other-than-temporary impairment occurred in our long-term investment in Hung
Ching as of December 31, 2002, the fair value, under ROC GAAP, was based on the
difference between the carrying value and the net-asset value of Hung Ching with
adjustments made to significant assets of Hung Ching using appraised values and
other appropriate information. Using this method under ROC GAAP, we determined
that no impairment occurred in our long-term investment in Hung Ching in 2002.
Under U.S. GAAP, we determined an other-than-temporary impairment occurred in
our long-term investment in Hung Ching as of December 31, 2002 in the amount of
NT$883.6 million. We did not record any impairment charge for long-term
investments in 2003. For the year ended December 31, 2004, under U.S. GAAP we
took an impairment charge of NT$1,707.0 million (US$53.8 million) relating to
our investment in Universal Scientific.

     We typically pay all or a portion of employee bonuses in the form of common
shares. The number of common shares distributed as part of employee bonuses is
obtained by dividing the total nominal NT dollar amount of the bonus to be paid
in the form of common shares by the par value of the common shares, or NT$10 per
share, rather than their market value, which has generally been substantially
higher than par value. We paid employee bonuses in 2004 in the form of common
shares with respect to the results of the preceding fiscal year. We did not pay
any employee bonuses in the form of common shares in 2003 or 2002 because we had
minimal net income in 2002 and incurred a net loss in 2001. Under ROC GAAP, the
distribution of employee bonus shares is treated as an allocation from retained
earnings, and we are not required to, and do not, charge the value of the
employee bonus shares to employee compensation expense. Under U.S. GAAP,
however, we are required to charge the market value of the employee bonus shares
to employee compensation expense in the period to which they relate, and
correspondingly reduce our net income and income per common share. See "Item 6.
Directors, Senior Management and Employees--Compensation--ASE Inc. Employee
Bonus and Stock Option Plans".

     The amount and the form of the payment of this compensation is subject to
approval at our annual general shareholders' meeting. Under U.S. GAAP, the
compensation expense is initially accrued at the nominal NT dollar amount of the
aggregate bonus in the period to which it relates. For U.S. GAAP purposes, the
difference between the amount initially accrued and the market value of the
common shares issued as payment of all or any part of the bonus is recorded as
employee compensation expense in the period in which shareholders' approval is
obtained, which normally occurs during the second quarter of each year.

Recent U.S. GAAP Accounting Pronouncements

     In March 2004, the Emerging Issues Task Force, or EITF, reached a consensus
on EITF 03-1, "The Meaning of Other-Than-Temporary Impairment and Its
Application to Certain Investments". The consensus was that certain


                                       60
<PAGE>


quantitative and qualitative disclosure should be required for debt and
marketable equity securities classified as available-for-sale or
held-to-maturity under SFAS Nos. 115 and 124 that are impaired at the balance
sheet date but for which an other-than-temporary impairment has not been
recognized. This EITF consensus is effective for fiscal years ending after
December 15, 2003. Adoption of the EITF consensus did not result in an impact on
our financial position, results of operations or cash flows.

     In November 2004, the FASB issued SFAS No. 151, "Inventory Costs - An
Amendment of ARB No. 43, Chapter 4". SFAS No. 151 clarifies the accounting that
requires abnormal amounts of idle facility expenses, freight, handling costs and
spoilage costs to be recognized as current-period charges. It also requires that
allocation of fixed production overhead to the costs of conversion be based on
the normal capacity of the production facilities. SFAS No. 151 will be effective
for inventory costs incurred on or after July 1, 2005. We are currently
evaluating the impact of this standard on our consolidated financial statements.

     In December 2004, the FASB issued SFAS No. 123R, "Share-Based Payment".
This statement is a revision of SFAS No. 123 and supercedes APB Opinion No. 25.
This statement establishes standards for the accounting of transactions in which
an entity exchanges its equity instruments for goods or services, primarily
focusing on the accounting for transactions in which an entity obtains employee
services in share-based payment transactions. Entities will be required to
measure the cost of employee services received in exchange for an award of
equity instruments based on the grant-date fair value of the award (with limited
exceptions). That cost will be recognized over the period during which an
employee is required to provide service, the requisite service period (usually
the vesting period), in exchange for the award. The grant-date fair value of
employee share options and similar instruments will be estimated using
option-pricing models. If an equity award is modified after the grant date,
incremental compensation cost will be recognized in an amount equal to the
excess of the fair value of the modified award over the fair value of the
original award immediately before the modification. This statement is effective
as of the beginning of the first interim or annual reporting period that begins
after January 1, 2006.

     Upon adoption, we have two application methods to choose from: the
modified-prospective transition approach or the modified-retrospective
transition approach. Under the modified-prospective transition method, we would
be required to recognize compensation cost for:

     o    share-based awards to employees based on their grant-date fair value
          from the beginning of the fiscal period in which the recognition
          provisions are first applied; and

     o    awards that were granted prior to, but not vested as of the date of
          adoption.

Prior periods remain unchanged and pro forma disclosures previously required by
SFAS No. 123 continue to be required. Under the modified-retrospective
transition method, we would restate prior periods by recognizing compensation
cost in the amounts previously reported in the pro forma footnote disclosure
under SFAS No. 123. Under this method, we are permitted to apply this
presentation to all periods presented or to the start of the fiscal year in
which SFAS No. 123R is adopted. We would follow the same guidelines as in the
modified-prospective transition method for awards granted subsequent to adoption
and those that were granted and not yet vested. We have not yet determined which
methodology we will adopt but we believe that the impact the adoption of SFAS
No. 123R will have on our financial position or results of operations will
approximate the magnitude of our stock-based employee compensation cost
disclosed in note 30 to our consolidated financial statements pursuant to the
disclosure requirements of SFAS No. 148.

     In December 2004, the FASB issued SFAS No. 153, "Exchanges of Non-Monetary
Assets - An Amendment of APB Opinion No. 29", or SFAS No. 153. The amendments
made by SFAS No. 153 are based on the principle that exchanges of non-monetary
assets should be measured based on the fair value of the assets exchanged.
Further, the amendments eliminate the exception for non-monetary exchanges of
similar productive assets and replace it with a general exception for exchanges
of non-monetary assets that do not have commercial substance. The provisions in
SFAS No. 153 are effective for non-monetary asset exchanges occurring in fiscal
periods beginning after June 15, 2005 (July 1, 2005 for us). Early application
of the SFAS No. 153 is permitted. The provisions of this Statement shall be
applied prospectively. We do not expect the adoption of SFAS No. 153 to have a
material effect on our financial statements or our results of operations.


                                       61
<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

     We have historically been able to satisfy our working capital needs from
our cash flow from operations. We have historically funded our capacity
expansion from internally generated cash and, to the extent necessary, the
issuance of equity securities and long-term borrowings. If adequate funds are
not available on satisfactory terms, we may be forced to curtail our expansion
plans. Moreover, our ability to meet our working capital needs from cash flow
from operations will be affected by the demand for our packaging and testing
services, which in turn may be affected by several factors. Many of these
factors are outside of our control, such as economic downturns and declines in
the prices of our services caused by a downturn in the semiconductor industry.
See "Item 3. Key Information--Risk Factors--Risks Relating to Our Business--Our
operating results are subject to significant fluctuations, which could adversely
affect the market value of your investment." The average selling prices of our
packaging and testing services are likely to be subject to further downward
pressure in the future. To the extent we do not generate sufficient cash flow
from our operations to meet our cash requirements, we will have to rely on
external financing. We have not historically relied, and we do not plan to rely
in the foreseeable future, on off-balance sheet financing arrangements to
finance our working capital or capacity expansion.

     Net cash provided by operating activities amounted to NT$19,487.0 million
(US$614.0 million) in 2004, partially as a result of adjusting for non-cash
depreciation and amortization, including amortization of goodwill, and to a
lesser extent, as a result of adjusting for the impairment of goodwill and
long-term investment of NT$18,126.0 million (US$571.1 million). Net cash
provided by operating activities amounted to NT$13,306.2 million in 2003,
partially as a result of adjusting for non-cash depreciation and amortization,
including amortization of goodwill, of NT$13,585.9 million. Net cash provided by
operating activities amounted to NT$11,313.8 million in 2002, partially as a
result of adjusting for non-cash depreciation and amortization, including
amortization of goodwill, of NT$13,101.9 million. The increase in net cash
generated by operating activities in 2004 compared to 2003 was primarily due to
a significant increase in net income to NT$4,209.7 million (US$132.6 million) in
2004 from NT$2,742.8 million in 2003 and non-cash depreciation, amortization and
impairment of goodwill and long-term investment to NT$18,126.0 million (US$571.1
million) in 2004 from NT$13,585.9 million in 2003. The increase in net cash
generated by operating activities in 2003 compared to 2002 was primarily due to
a significant increase in net income from NT$129.0 million in 2002 to NT$2,742.8
million in 2003, and adjustments for loss on long-term investments of NT$354.8
million in 2003 due to the recognition of a loss for the sale of our common
shares by our wholly-owned subsidiary ASE Capital Inc. in connection with our
ADS offering in June 2003. Depreciation and amortization increased in 2002 and
2003 compared to the prior year primarily due to an increase in capital
expenditure in 2002 and the first half of 2003.

     Net cash used in investing activities amounted to NT$30,825.3 million
(US$971.2 million) in 2004, primarily as a result of the acquisition of
properties, such as machinery and equipment for our packaging, testing and
interconnect materials operations, of NT$28,523.5 million (US$898.7 million).
Net cash used in investing activities amounted to NT$18,572.6 million in 2003,
primarily as a result of the acquisition of properties of NT$17,534.1 million.
Net cash used in investing activities amounted to NT$13,719.7 million in 2002,
primarily due to the acquisition of properties of NT$12,657.9 million and the
purchases of ASE Test shares and ISE Labs shares of NT$2,072.1 million.

     Net cash provided by financing activities in 2004 was NT$9,166.3 million
(US$288.8 million). This amount reflected primarily an increase in long-term
debt of NT$5,997.2 million (US$188.9 million), our issuance of domestic secured
bonds of NT$2,733.1 million (US$86.1 million) and an increase in short-term
borrowings of NT$2,696.0 million (US$84.9 million), which was partially offset
by investments payable of NT$2,310.0 million (US$72.8 million). Net cash
provided by financing activities in 2003 was NT$4,210.9 million. This amount
reflected proceeds from the sale of our common shares of NT$2,850.5 million and
proceeds of NT$6,684.9 million from the issuance of our zero coupon convertible
bonds due 2008, which was partially offset by the early redemption of foreign
convertible bonds issued by ASE Test through a finance subsidiary totaling
NT$4,908.4 million. Net cash provided by financing activities in 2002 amounted
to NT$530.5 million. This amount reflected proceeds from short-term and
long-term debt of NT$3,536.8 million, which was partially offset by the
reduction in commercial papers and bank acceptances payable of NT$1,739.3
million, and payment of NT$1,674.1 million for the repurchase of the remaining
outstanding portion of our US$200 million zero coupon convertible bonds due
2002.


                                       62
<PAGE>


     As of December 31, 2004, our primary source of liquidity was NT$5,975.1
million (US$188.3 million) of cash and cash equivalents and NT$3,194.2 million
(US$100.6 million) of short-term investments. Our short-term investments
primarily consisted of investments in fixed income mutual funds. As of December
31, 2004, we had total unused short-term credit lines of NT$12,877.0 million
(US$405.7 million), and total unused long-term credit lines of NT$1,793.0
million (US$56.5 million). As of December 31, 2004, we had working capital of
NT$10,691.0 million (US$336.8 million).

     As of December 31, 2004, we had total borrowings of NT$53,382.4 million
(US$1,681.9 million), NT$4,642.3 million (US$146.3 million) of which were
short-term borrowings and NT$48,740.1 million (US$1,535.6 million) of which were
long-term borrowings. The interest rate for borrowings under our short-term
borrowings ranged from 0.6% to 7.0% per year as of December 31, 2004. All of our
short-term loans are revolving facilities with a term of one year, each of which
may be extended on an annual basis with lender consent. Our long-term borrowings
consist primarily of bank loans and bonds payable. As of December 31, 2004, we
had outstanding long-term borrowings, less current portion, of NT$46,529.6
million (US$1,466.0 million). As of December 31, 2004, the current portion of
our long-term borrowings was NT$2,210.5 million (US$69.6 million). Our long-term
borrowings carried variable interest rates which ranged between 1.2% and 11.0%
per year as of December 31, 2004.

     We have pledged a portion of our assets, with a carrying value of
NT$11,423.1 million (US$359.9 million) as of December 31, 2004, to secure our
obligations under our short-term and long-term facilities.

     We have also entered into a lease receivables purchase facility agreement
in connection with our leasing of testing equipment. In August 2004, we, along
with ASE Test Taiwan, entered into an agreement with a syndicate of banks
arranged by Citibank, N.A., Taipei Branch whereby such syndicate agrees to
purchase up to US$90.0 million of qualifying lease receivables from eligible
leasing companies for twelve months from the date of the agreement. As evidence
of the obligations entered into under the transaction, we and ASE Test Taiwan
are required to issue promissory notes to such leasing companies that are
indorsed to Citibank, N.A., Taipei Branch. The leasing companies also execute a
mortgage agreement granting Citibank N.A., Taipei Branch a mortgage on the
leased equipment.

     In connection with ASE Chung Li's merger into us in August 2004, we assumed
the remaining NT$914.2 million (US$28.8 million) of a NT$4.0 billion syndicated
bank loan which ASE Chung Li originally entered into in November 2000. The loan
is due in May 2006, and we were in compliance with the loan's covenants as of
December 31, 2004.

     In January 2004, we issued eleven series of secured non-convertible bonds
in the aggregate principal amount of NT$2.75 billion (US$86.6 million). These
bonds bear semi-annual interest at floating LIBOR-based rates. We are required
to repay half of the aggregate principal amount of the bonds in January 2008
with the remaining due in January 2009. Our payment obligations under the bonds
are secured by guarantees provided by syndicate banks pursuant to a guarantee
agreement entered into in December 2003, for which Chinatrust Commercial Bank,
Ltd. and The Hongkong and Shanghai Banking Corporation Limited, Taipei Branch
acted as arrangers.

     In September 2003, we issued US$200 million in aggregate principal amount
of zero coupon convertible bonds due 2008. The convertible bonds are convertible
into our common shares and ADSs. As of May 31, 2005, these convertible bonds are
convertible into our common shares at a conversion price of NT$35.53 per common
share. As of May 31, 2005, none of the convertible bonds had been converted.

     In September 2003, we entered into a NT$7.0 billion five-year syndicated
credit facility, for which Citibank, N.A., Taipei Branch acted as the lead
manager. We used NT$3.0 billion of the amount available to refinance our NT$6.0
billion syndicated loan facility, for which Citibank, N.A., Taipei Branch acted
as the lead manager, entered into on December 11, 2001. The remaining NT$4.0
billion was used to fund our capital expenditure requirements.

     In August 2003, ASE Test redeemed US$159.9 million aggregate principal
amount of the US$160 million 1% guaranteed convertible notes due 2004 issued
through its finance subsidiary. The early redemption of the US$160 million 1%
guaranteed convertible notes due 2004 was financed in part through a five-year
syndicated credit facility entered into in June 2003 by ASE Test Finance
Limited, a wholly-owned finance subsidiary of ASE Test. The total


                                       63
<PAGE>


commitments under the facility totaled US$150 million. In addition to ASE Inc.,
guarantees were also provided by ASE Test and ASE Test Taiwan for ASE Test
Finance Limited's payment obligations under the facility.

     In August 2003, ASE Test Finance Limited obtained a loan of US$60.0 million
from J&R Holding Limited in connection with the redemption of its convertible
notes issued in 1999. The loan was originally due in February 2005 but was
repaid in full in July 2004. In connection with the repayment of the loan to J&R
Holding Limited in June 2004, ASE Test entered into a two-year revolving loan
facility agreement for US$30.0 million which was guaranteed by ASE Test Taiwan
and, as of December 31, 2004, bears interest at 3.299%. Also in connection with
the repayment of the loan to J&R Holding Limited, ASE Test Finance Limited
entered into a credit facility for US$30.0 million which was guaranteed by ASE
Test and, as of December 31, 2004, bears interest at 3.52%. Both of these loans
are due in June 2006.

     In June 2003, our wholly-owned subsidiaries, ASE Investment Inc. and ASE
Capital Inc., sold an aggregate of 32,757,600 of our ADSs. The net proceeds from
the offering were approximately NT$2,850.5 million. We used the net proceeds to
repay our borrowings of an aggregate principal amount of NT$6.0 billion,
borrowings of ASE Investment Inc. in an aggregate principal amount of NT$1.2
billion and borrowings of ASE Capital Inc. in an aggregate principal amount of
NT$150 million. In addition, pursuant to a merger agreement dated July 17, 2002,
ASE Investment Inc. and ASE Capital Inc. merged with and into us on July 1,
2003, and we assumed all of the assets and liabilities of both ASE Investment
Inc. and ASE Capital Inc.

     In December 2002, we entered into a NT$7.0 billion three-year syndicated
credit facility, for which Citibank, N.A., Taipei Branch acted as the lead
arranger. We used NT$5.2 billion of the amount available under the facility to
refinance a NT$5.2 billion syndicated credit facility, for which Citibank, N.A.,
Taipei Branch acted as the lead arranger, entered into on June 22, 2001. The
remaining NT$1.8 billion was used to repay a portion of our existing revolving
credit lines.

     Our long-term loans and facilities contain various financial and other
covenants that could trigger a requirement for early payment. Among other
things, these covenants require the maintenance of certain financial ratios,
such as liquidity ratio, indebtedness ratio, interest coverage ratio and other
technical requirements. In general, covenants in the agreements governing our
existing debt, and debt we may incur in the future, may materially restrict our
operations, including our ability to incur debt, pay dividends, make certain
investments and payments and encumber or dispose of assets. A default under one
debt instrument may also trigger cross-defaults under our other debt
instruments. An event of default under any debt instrument, if not cured or
waived, could have a material adverse effect on our liquidity, as well as our
financial condition and operations.

     We have on occasion failed to comply with certain financial covenants in
some of our loan agreements. Such non-compliance may also have, through broadly
worded cross-default provisions, resulted in default under some of the
agreements governing our other existing debt. For example, in 2004, in
connection with increases in our capital expenditures, we borrowed more money
which resulted in our failure to comply with certain debt ratios. We are in the
process of obtaining waivers from the relevant lenders relating to such
non-compliance. We cannot assure you that we will be able to obtain such waivers
or that we will be able to otherwise remain in compliance with our financial
covenants under our loan agreements. In the event of default, we may not be able
to cure the default or obtain a waiver, and our operations could be
significantly disrupted and harmed. See "Item 3. Key Information--Risk
Factors--Risks Relating to Our Business--Restrictive covenants and broad default
provisions in the agreements governing our existing debt may materially restrict
our operations as well as adversely affect our liquidity, financial condition
and results of operations."

     Our contingent obligations consist of guarantees provided by us to our
subsidiaries and affiliates. As of December 31, 2004, we endorsed and guaranteed
the promissory notes of our subsidiaries and affiliates in the amount of
NT$11,382.7 million (US$358.6 million). Other than such guarantees, we have no
other contingent obligations. See note 25 to our consolidated financial
statements.

     We have made, and expect to continue to make, substantial capital
expenditures in connection with the expansion of our production capacity. The
table below sets forth our principal capital expenditures incurred for the
periods indicated.


                                       64
<PAGE>


                                              Year Ended December 31,
                                ------------------------------------------------
                                  2002         2003                 2004
                                ------------------------------------------------
                                   NT$          NT$           NT$          US$
                                                  (in millions)
Machinery and equipment.......  13,786.8     14,833.9      26,063.0       821.1
Building and improvements.....   1,963.0      2,400.4       4,525.3       142.6


     We have budgeted capital expenditures of approximately NT$11,109 million
(US$350 million) for 2005, primarily to purchase machinery and equipment in
connection with the expansion of our packaging, testing, and interconnect
materials operations. We may adjust the amount of our capital expenditures
upward or downward based on market conditions, the progress of our expansion
plans and cash flow from operations. Due to the rapid changes in technology in
the semiconductor industry, we frequently need to invest in new machinery and
equipment, which may require us to raise additional capital. We cannot assure
you that we will be able to raise additional capital should it become necessary
on terms acceptable to us or at all. See "Item 3. Key Information--Risk
Factors--Risks Relating to Our Business--Because of the highly cyclical nature
of our industry, our capital requirements are difficult to plan. If we cannot
obtain additional capital when we need it, our growth prospects and future
profitability may be adversely affected."

     We believe that our existing cash and cash equivalents, short-term
investments, expected cash flow from operations and existing credit lines under
our short-term loan facilities will be sufficient to meet our capital
expenditures, working capital, cash obligations under our existing debt and
lease arrangements, and other requirements for at least the next twelve months.
We currently hold cash and cash equivalents primarily in U.S. dollars, New
Taiwan dollars and Malaysian Ringgit. See note 4 to our consolidated financial
statements. As of December 31, 2004, we had contractual obligations of
NT$33,339.8 million (US$1,050.4 million) due in the next three years. We intend
to meet our payment obligations through the expected cash flow from operations,
long-term borrowings and the issuance of additional equity or equity-linked
securities. We will continue to evaluate our capital structure and may decide
from time to time to increase or decrease our financial leverage through equity
offerings or borrowings. The issuance of additional equity or equity-linked
securities may result in additional dilution to our shareholders.

     From time to time, we evaluate possible investments, acquisitions or
divestments and may, if a suitable opportunity arises, make an investment,
acquisition or divestment. Other than disclosed elsewhere in this annual report,
we currently have no commitments to make any material investment, acquisition or
divestment.

     Our treasury team, under the supervision of our chief financial officer, is
responsible for setting our funding and treasury policies and objectives. Our
exposure to financial market risks relate primarily to changes in interest rates
and foreign currency exchange rates. To mitigate these risks, we utilize
derivative financial instruments, the application of which is primarily to
manage these exposures, and not for speculative purposes.

     We have, from time to time, entered into interest rate swap transactions to
hedge our interest rate exposure. As of December 31, 2004, we had US$157.0
million and NT$2,750.0 million (US$86.6 million) outstanding interest rate swap
transactions. See "Item 11. Quantitative and Qualitative Disclosures about
Market Risk--Market Risk--Interest Rate Risk". We have entered into foreign
currency option contracts and forward exchange contracts to hedge our existing
assets and liabilities denominated in foreign currencies and identifiable
foreign currency purchase commitments. As of December 31, 2004, we had US$912.4
million outstanding in foreign currency option contracts and no forward exchange
contracts outstanding. In October 2003, we entered into cross-currency swap
contracts to hedge against reductions in value caused by changes in foreign
currency exchange rates in connection with the proceeds received from our
offering of US$200.0 million zero coupon convertible bonds due 2008. See "Item
11. Quantitative and Qualitative Disclosures about Market Risk" and note 26 to
the consolidated financial statements.

RESEARCH AND DEVELOPMENT

     For 2004, 2003 and 2002, our research and development expenditures totaled
approximately NT$2,584.5 million (US$81.4 million), NT$2,354.0 million and
NT$2,049.0 million, respectively. These expenditures represented approximately
3.2%, 4.1% and 4.5% of net revenues in 2004, 2003 and 2002, respectively. We
have


                                       65
<PAGE>


historically expensed all research and development costs as incurred and none is
currently capitalized. As of May 31, 2005, we employed 2,105 employees in
research and development.

   Packaging

     We centralize our research and development efforts in packaging technology
in our Kaohsiung, Taiwan facilities. After initial phases of development, we
conduct pilot runs in one of our facilities before the new technologies or
processes are implemented commercially at other sites. Facilities with special
product expertise, such as ASE Korea, also conduct research and development of
these specialized products and technologies at their sites. One of the areas of
emphasis for our research and development efforts is improving the efficiency
and technology of our packaging processes. We expect these efforts to continue.
We are now also putting significant research and development efforts into the
development and adoption of new technology. We work closely with the
manufacturers of our packaging equipment, including Kulicke & Soffa Industries
Inc., in designing and modifying the equipment used in our production process.
We also work closely with our customers to develop new product and process
technology.

     A significant portion of our research and development efforts is also
focused on the development of advanced substrate production technology for BGA
packaging. Substrate is the principal raw material for BGA packages. Development
and production of advanced substrates involve complex technology and, as a
result, high quality substrates are currently available only from a limited
number of suppliers, located primarily in Japan. We believe that our successful
development of substrate production capability will, among other things, enable
us to capture an increasingly important value-added component of the packaging
process, help ensure a stable and cost-effective supply of substrates for our
BGA packaging operations and shorten production time. See "Item 7. Major
Shareholders and Related Party Transactions--Related Party Transactions".

   Testing

     Our research and development efforts in the area of testing have focused
primarily on improving the efficiency and technology of our testing processes.
The efforts include developing software for parallel testing of logic
semiconductors, rapid automatic generation and cross-platform conversion of test
programs to test logic/mixed-signal semiconductors, automatic code generation
for converting and writing testing programs, testing new products using existing
machines and providing customers remote access to monitor test results. We are
also continuing the development of interface designs to provide for
high-frequency testing by minimizing electrical noise. We work closely with our
customers in designing and modifying testing software and with equipment vendors
to increase the efficiency and reliability of testing equipment. Our research
and development operations also include a mechanical engineering group, which
currently designs handler kits for semiconductor testing and wafer probing, as
well as software to optimize capacity utilization.

OFF-BALANCE SHEET ARRANGEMENTS

     We have no off-balance sheet arrangements that have or are reasonably
likely to have a material current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources.


                                       66
<PAGE>


TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

     The following table sets forth the maturity of our contractual obligations
as of December 31, 2004.

<TABLE>
                                                               Payments Due by Period
                                           -----------------------------------------------------------------
                                                                        1 to 3                    After 5
                                             Total     Under 1 Year     Years     3 to 5 Years     Years
                                           -----------------------------------------------------------------
                                              NT$          NT$           NT$          NT$           NT$
                                                                   (in millions)
<S>                                         <C>           <C>          <C>          <C>              <C>
Contractual Obligations:
     Long-term debt(1).................     48,343.8      2,011.7      25,305.6     20,728.9         297.6
     Capital lease obligations(2)......        396.3        198.8         195.6          1.9           --
     Operating leases(3)...............      4,409.8      1,810.7       2,127.6        413.8          57.7
     Purchase obligations(4)...........      1,689.8      1,689.8           --           --            --
                                           -----------------------------------------------------------------
         Total(5)(6)(7)................     54,839.7      5,711.0      27,628.8     21,144.6         355.3
                                           =================================================================
</TABLE>

------------------
(1)  Excludes interest payments.

(2)  Represents our commitments under property leases less imputed interest.
     These obligations are recorded on our consolidated balance sheets. See note
     16 to our consolidated financial statements.

(3)  Represents our commitments under leases for land, machinery and equipment
     such as testers, and office buildings and equipment. See note 25 to our
     consolidated financial statements.

(4)  Represents unpaid commitments for construction. These commitments are not
     recorded on our consolidated balance sheets as of December 31, 2004. See
     note 25 to our consolidated financial statements. Total commitments for
     construction of buildings were approximately NT$3,264.0 million (US$102.8
     million), of which NT$1,574.2 million (US$49.6 million) had been paid as of
     December 31, 2004.

(5)  Excludes payments that vary based upon our net sales or sales volume, such
     as commissions, service fees and royalty payments for technology license
     agreements. Commission and service fee expenses in 2004 were approximately
     NT$769.6 million (US$24.2 million). Royalty expenses in 2004 were
     approximately NT$164.0 million (US$5.2 million). See note 25 to our
     consolidated financial statements.

(6)  Excludes non-binding commitments to purchase machinery and equipment of
     approximately NT$7,600.0 million (US$239.4 million) as of December 31,
     2004.

(7)  Excludes our minimum pension funding requirements since such amounts have
     not been determined. We made pension contributions of approximately
     NT$133.4 million (US$4.2 million) in 2004 and we estimate that we will
     contribute approximately NT$215.2 million (US$6.8 million) in 2005. See
     "--Operating Results and Trend Information--Critical Accounting Policies"
     and note 17 to our consolidated financial statements.

Item 6. Directors, Senior Management and Employees

DIRECTORS AND SENIOR MANAGEMENT AND BOARD PRACTICES

Directors

     Our board of directors is elected by our shareholders in a general meeting
at which a quorum, consisting of a majority of all issued and outstanding common
shares, is present. The chairman is elected by the board from among the
directors. Our six-member board of directors is responsible for the management
of our business.

     The term of office for our directors is three years from the date of
election. The current board of directors began serving on June 19, 2003. The
terms of the current directors will expire on June 18, 2006. Directors may serve
any number of consecutive terms and may be removed from office at any time for a
valid reason by a resolution adopted at a general meeting of shareholders.
Normally, all board members are elected at the same time, except where the posts
of one-third or more of the directors are vacant, at which time a special
meeting of shareholders shall be convened to elect directors to fill the
vacancies. We and our subsidiaries do not have service contracts with our
directors that provide for benefits upon termination of employment.

     Under Rule 10A-3 of the Exchange Act and the rules of the New York Stock
Exchange, we are required to have an audit committee that meets certain
requirements by July 31, 2005. We are currently in the process of reviewing
examples of audit committee charters and considering candidates for appointment
as audit committee members with a view to fully comply with these new
requirements in the specified time period, including the appointment of an audit
committee financial expert, as defined under Item 16A of Form 20-F.


                                       67
<PAGE>


     The following table sets forth information regarding all of our directors
as of May 31, 2005.

<TABLE>
                                                              Director                    Other Significant
Name                                     Position               Since     Age               Positions Held
--------------------------------------------------------------------------------------------------------------------
<S>                            <C>                           <C>         <C>    <C>
Jason C.S. Chang(1)........    Director, Chairman and           1984       61    Chairman of ASE Test; Chairman of
                                  Chief Executive Officer                           ASE Test Taiwan
Richard H.P. Chang(1)......    Director, Vice Chairman and      1984       58    Vice Chairman of ASE Test; Chairman
                                  President                                         of Universal Scientific
Joseph Tung(2).............    Director and Chief Financial     1997       46    Supervisor of Universal Scientific;
                                  Officer                                           Director of ASE Test
Chin Ko-Chien(2)...........    Director and Executive Vice      1997       59    Director of ASE Test
                                  President
Jeffrey Chen(2)............    Director and Vice President      2003       41    Director of ASE Test
Tien Wu(2).................    Director                         2003       47    Chief Executive Officer of ISE Labs
</TABLE>

------------------
(1)  Jason C.S. Chang and Richard H.P. Chang are brothers.

(2)  Representative of ASE Enterprises, a company organized under the laws of
     Hong Kong, which held 17.77% of our outstanding common shares as of April
     30, 2005. All of the outstanding shares of ASE Enterprises are held by a
     company organized under the laws of the British Virgin Islands in trust for
     the benefit of the family of our Chairman and Chief Executive Officer,
     Jason C.S. Chang, who is the sole shareholder and director of that company.

Supervisors

     We currently have five supervisors, each serving a three-year term. The
current supervisors began serving on June 15, 2004, and their terms will expire
on June 14, 2007. The supervisors' duties and powers include investigation of
our business condition, inspection of our corporate records, verification and
review of financial statements presented by our board of directors at
shareholders' meetings, convening of shareholders' meetings, representing us in
negotiations with our directors and notification, when appropriate, to the board
of directors to cease acting in contravention of any applicable law or
regulation or in contravention of our Articles of Incorporation. Each supervisor
is elected by our shareholders and cannot concurrently serve as a director,
managerial officer or other staff member. The ROC Company Law requires at least
one supervisor be appointed at all times, or two supervisors for a company with
publicly issued equity shares, and that a supervisor's term of office be no more
than three years.

     The following table sets forth information regarding all of our supervisors
as of May 31, 2005.

<TABLE>
                                                             Supervisor                   Other Significant
Name                                     Position              Since      Age               Positions Held
-------------------------------------------------------------------------------------------------------------------
<S>                            <C>                           <C>          <C>    <C>
Feng Mei-Jean(1)...........    Supervisor                       1984       50    Supervisor of J&R Industrial Inc.
Yen-Yi Tseng(2)............    Supervisor                       2000       63    Chairman of Hung Ching
John Ho(2).................    Supervisor                       1998       50    Director of Universal Scientific
Raymond Lo(2)..............    Supervisor                       2000       51    President of ASE Test
Samuel Liu(2)..............    Supervisor                       2005       57    Chief Technical Officer (Test) of
                                                                                    ASE Inc.
</TABLE>

------------------
(1)  Feng Mei-Jean is the wife of Richard H.P. Chang.
(2)  Representative of ASE Enterprises.

     In accordance with ROC law, each of our directors and supervisors is
elected either in his or her capacity as an individual or as an individual
representative of a corporation or government. Persons designated to represent
corporate or government shareholders as directors are typically nominated by
such shareholders at the annual general meeting and may be replaced as
representatives by such shareholders at will. Of the current directors and
supervisors, eight represent ASE Enterprises. The remaining directors and
supervisors serve in their capacity as individuals.


                                       68
<PAGE>


Executive Officers

     The following table sets forth information regarding all of our executive
officers as of May 31, 2005.

<TABLE>
                                                                                                     Years
                                                                                                    with the
Name                                                             Position                           Company     Age
---------------------------------------------------------------------------------------------------------------------
<S>                                       <C>                                                       <C>         <C>
Jason C.S. Chang.....................     Chairman and Chief Executive Officer                         21        61
Richard H.P. Chang...................     Vice Chairman and President                                  21        58
Chin Ko-Chien........................     Executive Vice President and General Manager,                21        59
                                             Kaohsiung packaging facility
Raymond Lo...........................     President, ASE Test; President, ASE Test Taiwan              19        51
Joseph Tung..........................     Chief Financial Officer                                      10        46
Fu-Sing Chang........................     President, ASE Test Malaysia                                 6         54
Sang Jin Maeng.......................     President, ASE Korea                                         6         53
Tien Wu..............................     Chief Executive Officer, ISE Labs                            5         47
</TABLE>


Biographies of Directors, Supervisors and Executive Officers

     Jason C.S. Chang has served as Chairman of ASE Inc. since its founding in
March 1984 and as its Chief Executive Officer since May 2003. Mr. Chang is also
the Chairman of ASE Test. He holds a degree in electrical engineering from
National Taiwan University and a master's degree from the Illinois Institute of
Technology. He is the brother of Richard H.P. Chang, our Vice Chairman and
President.

     Richard H.P. Chang has served as Vice Chairman of ASE Inc. since November
1999 after having served as President of ASE Inc. since its founding in March
1984, and served as Chief Executive Officer of ASE Inc. from July 2000 to April
2003. In February 2003, he was again appointed President of ASE Inc. upon the
retirement of Mr. Leonard Y. Liu. Mr. Chang is also the Vice Chairman of ASE
Test. He holds a degree in industrial engineering from Chung Yuan Christian
University of Taiwan. He is the brother of Jason C.S. Chang, our Chairman and
Chief Executive Officer.

     Joseph Tung has served as a director of ASE Inc. since April 1997 and Chief
Financial Officer since December 1994. He is also a director of ASE Test. Before
joining ASE Inc., Mr. Tung was a Vice President at Citibank, N.A. He received a
degree in economics from the National Chengchi University of Taiwan and a
master's degree in business administration from the University of Southern
California.

     Chin Ko-Chien has served as a director of ASE Inc. since March 1984 and
Executive Vice President and General Manager of our packaging facility in
Kaohsiung, Taiwan since March 1990. Mr. Chin is also a director of ASE Test.
Before joining ASE Inc., he held managerial positions at Fu Hua Construction Co.
Ltd. and De Ji Trading Company. He holds a degree in bearings technology from
Taiwan Ocean University.

     Jeffrey Chen has served as a director of ASE Inc. since June 2003 and a
director of ASE Test since 1998. He is also a Vice President of ASE Inc. and a
Special Assistant to the Chairman of ASE Inc. He was the Chief Financial Officer
of ASE Test from July 1998 to August 2002. Prior to joining the ASE group, he
worked in the corporate banking department of Citibank, N.A. in Taipei and as
the Vice President of corporate finance at Bankers Trust in Taipei. He holds a
degree in finance and economics from Simon Fraser University in Canada and a
master's degree in business administration from the University of British
Columbia in Canada.

     Tien Wu has served as a director of ASE Inc. since June 2003 and the Chief
Executive Officer of ISE Labs since March 2003. He also serves as the Vice
President of Worldwide Marketing and Strategy of the ASE group. Prior to joining
ASE Inc. in March 2000, Mr. Wu held various managerial positions with IBM. He
holds a B.S.C.E. degree from the National Taiwan University and a M.S. degree in
mechanical engineering and a Ph.D. in applied mechanics from the University of
Pennsylvania.

     Feng Mei-Jean has served as a supervisor of ASE Inc. since March 1984. She
holds a degree in economics from National Taiwan University. She is the wife of
Richard H.P. Chang, our Vice Chairman and President.


                                       69
<PAGE>


     Yen-Yi Tseng has served as a supervisor of ASE Inc. since July 2000 and
Chairman of Hung Ching since July 2002. Mr. Tseng served as President of Ret-Ser
Engineering Agency from 1991 to 1998. He holds a degree in civil engineering
from National Taiwan University and a master's degree in system engineering from
Asian Institute of Technology in Thailand. He was also a participant in the
Program for Management Development at Harvard Business School.

     John Ho has served as a supervisor of ASE Inc. since April 1998. He is also
a director of Universal Scientific. He served as Chief Financial Officer of ASE
Inc. from 1988 until 1995. He holds a degree in business administration from
National Taiwan University and a master's degree in business administration from
the University of Iowa.

     Raymond Lo has served as a supervisor of ASE Inc. since July 2000 and
President of ASE Test since April 2004, after serving as President of ASE Test
Taiwan since 1999 and Vice President of Operations of ASE Inc. since July 1993.
Before joining ASE Inc., Mr. Lo was the Director of Quality Assurance at Zeny
Electronics Co. He holds a degree in electronic physics from the National Chiao
Tung University of Taiwan.

     Samuel Liu has served as a supervisor of ASE Inc. since May 2005. He is
currently the Chief Technical Officer for testing operations. Prior to joining
ASE Inc. in 2004, Mr. Liu worked at Intel and other chip companies in various
technical and management positions for over 25 years. He holds a B.S.E.E. degree
from National Taiwan University and a Ph.D. from Stanford University.

     Fu-Sing Chang has served as President of ASE Test Malaysia since August
2004. Before joining ASE Test Malaysia, Mr. Chang was a special assistant to the
General Manager of our packaging facility in Kaohsiung, Taiwan. He holds a
degree in mechanical engineering from Chung Kung University in Taiwan.

     Sang Jin Maeng has served as President of ASE Korea since January 2004,
after serving as Senior Vice President of ASE Korea since July 1999. Mr. Maeng
was Vice President of Motorola Korea, Limited before joining ASE Korea when we
acquired Motorola Korea, Limited. He holds a degree in communication and
electronic engineering from the Civil Aviation College of Korea.

     The business address of our directors, supervisors and executive officers
is our registered office.

COMPENSATION

     In 2004, we paid to our directors, supervisors and executive officers
approximately NT$117.0 million (US$3.7 million) in cash remuneration. In June
2004, we granted an aggregate of 11,150,000 options to our directors,
supervisors and executive officers under our employee stock option plan at an
initial exercise price of NT$26.60 per share, which as of May 31, 2005 has been
adjusted to an exercise price of NT$25.10 per share due to subsequent stock
dividends. In 2004, we did not set aside any pension, retirement and similar
benefits for our executive officers pursuant to existing plans provided by or
contributed to by our company or its subsidiaries. We did not pay any
remuneration in kind to our directors, supervisors or executive officers in
2004. We have not provided any loans to or guarantees for the benefit of any of
our directors, supervisors or executive officers. For information regarding our
pension and other retirement plans and those of our subsidiaries, see
"--Employees", "Item 5. Operating and Financial Review and Prospects--Operating
Results and Trend Information--ROC Labor Pension Act" and note 17 to our
consolidated financial statements.

   ASE Inc. Employee Bonus and Stock Option Plans

     We award bonuses to employees of ASE Inc. and its subsidiaries who are
located in Taiwan based on overall income and individual performance targets.
These employees are eligible to receive bonuses in the form of our common shares
valued at par. Actual amounts of bonuses to individual employees are determined
based upon the employee meeting specified individual performance objectives. We
did not grant any stock bonuses to employees of ASE Inc. or its subsidiaries in
2002 or 2003. In 2004, we granted an aggregate of 15,427,203 common shares as
stock bonuses with an aggregate value of NT$154.3 million (US$4.9 million). At
our annual shareholders' meeting held on June 15, 2004, our shareholders, in
addition to approving such stock bonus, also approved NT$18.4 million (US$0.6
million) as cash bonuses to employees. See "Item 5. Operating and Financial
Review and Prospects--


                                       70
<PAGE>


Operating Results and Trend Information--U.S. GAAP Reconciliation" for a
discussion of how stock bonuses are calculated under ROC GAAP.

     We currently maintain two option plans, adopted in 2002 and 2004. Pursuant
to these plans, our full-time employees as well as the full-time employees of
our domestic and foreign subsidiaries are eligible to receive stock option
grants. Under the 2002 plan, for a period of one year from August 28, 2002, we
could grant up to 160,000,000 options. Under the 2004 plan, for a period of one
year from May 27, 2004, we can grant up to 140,000,000 options. Each option
entitles the holder to purchase one ASE Inc. common share at a price equal to
the closing market price on the date of the option issuance. Each option is
exercisable upon vesting for five years. Typically, 40% of the options
originally granted vest upon the second anniversary of the grant date, and an
additional 10% of the options originally granted vest every six months
thereafter. Each option expires at the end of the 10th year following its grant
date. The options are generally not transferable. As of December 31, 2004, a
total of 159,968,000 options had been granted under the 2002 plan, 145,989,000
of which had an initial exercise price of NT$17.80 per share and 13,979,000 of
which had an initial exercise price of NT$23.20 per share. As of December 31,
2004, a total of 124,917,000 options with an initial exercise price of NT$25.10
per share had been granted under the 2004 plan.

   ASE Test Share Option Plans

     As of December 31, 2004, ASE Test maintained six option plans, which
included plans adopted in each year from 1996 to 2000, and a sixth option plan,
which became effective on June 25, 2004. The option plans that ASE Test adopted
in 1996, 1997 and 1998 expired on April 19, 2005. Under ASE Test's share option
plans, ASE Test's directors, employees, advisors, consultants and affiliates,
some of whom serve as our directors, supervisors and employees, may, at the
discretion of a committee of its directors administering the plan, be granted
options to purchase its shares at an exercise price of no less than their market
value on the date of grant. The committee has complete discretion to determine
which eligible individuals are to receive option grants, the number of shares
subject to each grant, the vesting schedule for each option grant and the
maximum term for which each granted option is to remain outstanding, up to a
maximum term of ten years in the case of the 1999, 2000 and 2004 option plans.
ASE Test's board of directors may amend or modify the plans at any time. As of
December 31, 2004, an aggregate of 31,300,000 of ASE Test's shares had been
reserved for issuance and 10,877,448 options to purchase its shares remained
outstanding under its various option plans. An aggregate of 10,381,000 options
(of which 5,175,000 was outstanding as of December 31, 2004) had been granted to
the directors and executive officers of ASE Test. Options granted under the
various plans are exercisable at exercise prices ranging from US$5.50 to
US$25.00 per share.

EMPLOYEES

     The following table sets forth, for the periods indicated, certain
information concerning our employees for the dates indicated.

                                                     As of December 31,
                                             -----------------------------------
                                               2002          2003         2004
                                             -----------------------------------
Total..................................      20,401        24,443        34,649
Function
   Direct labor........................      13,059        15,808        23,184
   Indirect labor (manufacturing)......       4,264         5,389         7,238
   Indirect labor (administration).....       1,517         1,704         2,017
   Research and development............       1,561         1,542         2,210
Location
   Taiwan..............................      15,061        18,202        22,893
   Malaysia............................       3,140         4,207         5,787
   PRC(1)..............................         --             --         2,561
   Korea...............................       1,305         1,617         1,912
   Japan(2)............................         --             --           988
   Singapore...........................          65           116           304
   United States.......................         361           273           195


                                       71
<PAGE>


                                                     As of December 31,
                                             -----------------------------------
                                               2002          2003         2004
                                             -----------------------------------
   Philippines(3)......................         461            20           --
   Hong Kong(4)........................           8             8             9

------------------
(1)  We commenced our operations in the PRC in June 2004. See "Item 4.
     Information on the Company--Organizational Structure--Our Consolidated
     Subsidiaries--ASE Shanghai".

(2)  We commenced our operations in Japan in May 2004. See "Item 10. Additional
     Information--Material Contracts--Share Sale and Purchase Agreement dated as
     of February 3, 2004 among NEC Electronics Corporation, NEC Yamagata Ltd.,
     J&R Holding Limited and ASE Inc."

(3)  In October 2003, we closed our facilities and discontinued our operations
     in the Philippines.

(4)  We are currently in the process of discontinuing our operations in Hong
     Kong.


     Eligible employees may participate in our employee share bonus plan and
stock option plans and the ASE Test's share option plans. See
"--Compensation--ASE Inc. Employee Bonus and Stock Option Plans" and
"--Compensation--ASE Test Share Option Plans". See also "Item 5. Operating and
Financial Review and Prospects--Operating Results and Trend Information--ROC
Labor Pension Act".

     With the exception of ASE Korea's employees, our employees are not covered
by any collective bargaining arrangements. We believe that our relationship with
our employees is good.

SHARE OWNERSHIP

     The following table sets forth certain information with respect to our
common shares and options exercisable for our common shares held by our
directors, supervisors and executive officers as of April 30, 2005.

<TABLE>
                                               Percentage of
                                               Total ASE Inc.                       Exercise
                            Number of ASE      Common Shares                        Price of
Director, Supervisor or      Inc. Common         Issued and        Number of        Options         Expiration Date
   Executive Officer         Shares Held        Outstanding       Options Held       (NT$)            of Options
----------------------------------------------------------------------------------------------------------------------
<S>                         <C>                <C>                <C>              <C>           <C>
Jason C.S. Chang.....       36,084,709(1)          0.88%          9,800,000(2)     17.8-25.1     12/23/2012-6/29/2014
Richard H.P. Chang...       51,632,748             1.26%          6,200,000(2)     17.8-25.1     12/23/2012-6/29/2014
Joseph Tung..........        1,259,635             0.03%                 *         17.8-25.1     12/23/2012-6/29/2014
Chin Ko-Chien........        1,031,771             0.03%                 *         17.8-25.1     12/23/2012-6/29/2014
Jeffrey Chen.........           34,627               +                   *         17.8-25.1     12/23/2012-6/29/2014
Tien Wu..............          203,907               +                   *         17.8-25.1     12/23/2012-6/29/2014
Feng Mei-Jean........       67,027,344             1.63%                --             --                 --
Yen-Yi Tseng.........           52,427               +                   *         17.8-25.1     12/23/2012-6/29/2014
John Ho..............          893,864             0.02%                 *         17.8-25.1     12/23/2012-6/29/2014
Raymond Lo...........          746,882             0.02%                 *         17.8-25.1     12/23/2012-6/29/2014
Samuel Liu...........               --              --                   *           25.1              6/29/2014
Fu-Sing Chang........          150,000               +                   *         17.8-25.1     12/23/2012-6/29/2014
Sang Jin Maeng.......               --              --                   *         17.8-25.1     12/23/2012-6/29/2014
</TABLE>

------------------
(1)  In addition to holding 0.88% of our common shares directly, Jason C.S.
     Chang is the sole shareholder and director of a company that holds all the
     outstanding shares of ASE Enterprises, which holds 17.77% of our common
     shares. See "Item 7. Major Shareholders and Related Party
     Transactions--Major Shareholders".

(2)  Each option covers one of our common shares.

*    The sum of the number of common shares held and the number of common shares
     issuable upon exercise of all options held is less than 1% of our total
     outstanding common shares.

+    Represents less than 0.01% of our total outstanding common shares.


                                       72
<PAGE>


Item 7.  Major Shareholders and Related Party Transactions

MAJOR SHAREHOLDERS

     The following table sets forth information known to us with respect to the
beneficial ownership of our common shares, as of April 30, 2005, by each
shareholder known by us to beneficially own more than 5% of our outstanding
common shares and all directors, supervisors and executive officers as a group.

<TABLE>
                                                                      Common Shares Beneficially Owned
                                                                      --------------------------------
Name of Shareholder or Group                                            Number           Percentage
------------------------------------------------------------------------------------------------------
<S>                                                                     <C>                   <C>
ASE Enterprises(1)..............................................        730,912,329           17.8%
Capital Group International, Inc.(2)............................        251,874,420            6.1%
Capital International, Inc.(2)..................................        243,206,070            5.9%
Directors, supervisors and executive officers as a group(3).....        889,049,325           21.6%
</TABLE>

------------------
(1)  ASE Enterprises is a company organized under the laws of Hong Kong. All of
     the outstanding shares of ASE Enterprises are held by a company organized
     under the laws of the British Virgin Islands in trust for the benefit of
     the family of our Chairman and Chief Executive Officer, Jason C.S. Chang,
     who is the sole shareholder and director of that company.

(2)  Beneficial ownership information as of December 31, 2004 as reported by
     Capital Group International, Inc.'s and Capital International, Inc.'s
     Schedule 13G filed jointly with the SEC on February 11, 2005. Capital Group
     International, Inc. and Capital International, Inc. are companies organized
     under the laws of the state of California. Capital Group International,
     Inc. is the parent holding company of investment management companies,
     including Capital International, Inc., an investment advisor providing
     investment advisory and management services to its clients. We do not have
     any information with respect to the ownership of our common shares by
     Capital Group International, Inc. or Capital International, Inc. other than
     what is disclosed in their Schedule 13G filed on February 11, 2005.

(3)  Includes shareholding of ASE Enterprises.

     The following table sets forth information relating to our common shares
held by our consolidated subsidiaries and unconsolidated affiliates as of April
30, 2005.

                                             Common Shares Beneficially Owned
                                             --------------------------------
Name of Shareholder                             Number           Percentage
-----------------------------------------------------------------------------
ASE Test Taiwan(1)........................          759,196            0.02%
Hung Ching(2).............................       44,576,204            1.08%
J&R Holding Limited(3)....................       84,501,301            2.05%

------------------
(1)  ASE Test Taiwan is a 99.99%-owned subsidiary of ASE Test, our 51%-owned
     subsidiary.

(2)  As of April 30, 2005, we held 26.4% of the outstanding shares of Hung
     Ching. Chang Yao Hung-ying, who was our director from 1984 to June 2003,
     our Chairman and Chief Executive Officer, Jason C.S. Chang, our Vice
     Chairman and President, Richard H.P. Chang, and other members of the Chang
     family are controlling shareholders of Hung Ching. See "Item 4. Information
     on the Company--Organizational Structure--Our Unconsolidated Affiliates".

(3)  J&R Holding Limited is our wholly-owned subsidiary. J&R Holding Limited's
     ownership of our common shares is the result of the merger of ASE Chung Li
     with and into us and subsequent dividends upon shares received in
     connection with such merger. See "--Related Party Transactions.

     In connection with the merger of ASE Chung Li with and into ASE Inc., we
and ASE Test have established a trust to hold and dispose of 149,175,000 and
5,000,000 of our common shares that were issued to ASE Test and ASE Test Taiwan,
respectively, upon completion of the merger. As a result, the trustee appointed
under the trust agreement has become one of our shareholders until such common
shares are sold as permitted under the rules and regulations of the Taiwan Stock
Exchange and the terms and conditions of the trust agreement. As of May 31,
2005, as a result of stock dividends, the total amount of our common shares held
by the trust was 163,024,645. See "Item 7. Major Shareholders and Related Party
Transactions--Related Party Transactions".

     In June 2003, we completed an offering of ADSs in which our wholly-owned
subsidiaries ASE Investment Inc. and ASE Capital Inc. together sold 163,788,000
of our common shares. ASE Investment Inc. and ASE Capital Inc. also sold an
additional 1,144 of our common shares on the Taiwan Stock Exchange following the
ADS offering.

     None of our major shareholders has voting rights different from those of
our other shareholders. Other than:


                                       73
<PAGE>


     o    Capital Group International, Inc. and Capital International, Inc.
          becoming the beneficial owners of more than 5% of our outstanding
          common shares in 2003 and 2004, respectively;

     o    the sale of our common shares in June 2003 by ASE Investment Inc. and
          ASE Capital Inc. as described above; and

     o    the receipt by J&R Holding Limited, our wholly-owned subsidiary, of
          79,914,225 of our outstanding shares in connection with the merger of
          ASE Chung Li with and into ASE Inc. See "--Related Party
          Transactions";

there were no changes in our major shareholders or significant changes in the
percentage ownership of any of our major shareholders in 2004, 2003 or 2002.

     As of April 30, 2005, a total of 4,113,744,200 common shares were
outstanding. With certain limited exceptions, holders of common shares that are
not ROC persons are required to hold their common shares through a brokerage
account in the ROC. As of April 30, 2005, 138,135,270 common shares were
registered in the name of a nominee of Citibank, N.A., the depositary under our
ADS deposit agreement. Citibank, N.A., has advised us that, as of April 30,
2005, 27,625,611 ADSs, representing 138,128,055 common shares, were held of
record by Cede & Co., and 1,443 ADSs, representing 7,215 common shares, were
held by 7 other U.S. persons. We have no further information as to common shares
held, or beneficially owned, by U.S. persons.

RELATED PARTY TRANSACTIONS

     In recent years, we have awarded our common shares to the employees of our
subsidiaries as part of their compensation, based in part on our consolidated
net income and the subsidiaries' contribution to the consolidated income. At our
annual shareholders' meeting held on June 15, 2004, our shareholders approved
the grant of 15,427,203 common shares as stock bonuses to employees. We expect
this practice to continue in the future.

     Prior to its merger into us, ASE Material sold interconnect materials in
the aggregate amount of NT$3,766.2 million (US$118.7 million), NT$4,116.3
million and NT$2,885.6 million to us in 2004, 2003 and 2002, respectively. In
2004, ASE Group purchased approximately 51% of its substrate requirements by
value for its packaging facilities from ASE Material (including the amount
provided by the former operations of ASE Material after ASE Material's merger
into us). Before the completion of our merger with ASE Material on August 1,
2004, we purchased materials from ASE Material at prevailing market prices.

     On August 1, 2004, ASE Chung Li and ASE Material merged with and into us
pursuant to a merger agreement dated October 28, 2003. We are the surviving
corporation. The merger was consummated by means of a share exchange pursuant to
which the respective shareholders (other than ourselves) of ASE Chung Li and ASE
Material received our common shares in exchange for the common shares of each of
ASE Chung Li and ASE Material. We issued 282,315,437 common shares, or
approximately 7.9% of our outstanding shares as of October 28, 2003, in
connection with the merger. In connection with our merger with ASE Chung Li, we
issued 149,175,000 of our common shares to ASE Test, our consolidated
subsidiary, 79,914,225 of our common shares to J&R Holding Limited, our
wholly-owned subsidiary, and four common shares to certain individuals who were
the original shareholders of ASE Chung Li. The merger with ASE Chung Li had a
transaction value of approximately NT$7,101.8 million, based on NT$31.00 per ASE
Inc. common share, which was the average of the closing prices of our common
shares on the Taiwan Stock Exchange for two days prior to and following October
28, 2003. In connection with our merger with ASE Material, we issued 5,000,000
of our common shares to ASE Test Taiwan, a consolidated subsidiary of ASE Test,
1,086,800 of our common shares to Hung Ching, our affiliate, and 47,139,409 of
our common shares to employees and other shareholders (other than ourselves) of
ASE Material and a strategic investor. The merger with ASE Material had a
transaction value of approximately NT$1,650.0 million (US$52.0 million), based
on NT$31.00 per ASE Inc. common share, which was the average of the closing
prices of our common shares on the Taiwan Stock Exchange for two days prior to
and following October 28, 2003. In connection with our merger with ASE Material,
Richard H.P. Chang, our Vice Chairman and President, in his individual capacity
as a shareholder and director of ASE Material, also received our common shares
in exchange for common shares of ASE Material held by him.


                                       74
<PAGE>


     All of the assets and liabilities of ASE Chung Li and ASE Material are
owned and have been assumed by ourselves and the operations of ASE Chung Li and
ASE Material have been integrated with our operations. The merger agreement was
approved by our board of directors and shareholders as well as the board of
directors and shareholders of each of ASE Chung Li and ASE Material.

     In order to comply with Singapore law, trusts organized under ROC law have
been established to hold and dispose of our 149,175,000 common shares issued to
ASE Test and our 5,000,000 common shares issued to ASE Test Taiwan in connection
with the merger. Under Section 76(1)(b)(ii) of the Companies Act, Chapter 50, of
Singapore, ASE Test, a Singapore company, may not purport to acquire, directly
or indirectly, shares or units of shares in our company, ASE Test's parent
company. Pursuant to the applicable trust agreements, the trustee under each
trust is (1) the registered owner of the common shares, (2) able to exercise all
of the rights as a shareholder of the common shares, (3) able to sell the common
shares pursuant to the terms and conditions of the trust agreement and (4) able
to transfer and deliver to ASE Test or ASE Test Taiwan the proceeds from the
sale of our common shares and any cash dividends distributed, as the case may
be. Neither ASE Test nor ASE Test Taiwan have any rights with respect to the
common shares held in trust pursuant to the applicable trust agreements other
than the right to receive the proceeds from the sale of such common shares and
cash dividends.

     We have historically guaranteed the promissory notes of many of our
subsidiaries and affiliates. As of December 31, 2004, we had endorsed and
guaranteed an aggregate amount of NT$11,382.7 million (US$358.6 million) of the
outstanding promissory notes of our subsidiaries.

     We have constructed a new building in Kaohsiung, Taiwan with Hung Ching,
our affiliate engaged in the development and management of commercial,
residential and industrial real estate in Taiwan. The new building was completed
in July 2004 and has approximately 1,172,000 square feet of floor space. We and
ASE Test Taiwan purchased Hung Ching's interest in the development in January
2005. We own the first eight floors of the building with floor space of
approximately 940,000 square feet and ASE Test Taiwan owns the remaining two
floors with floor space of approximately 232,000 square feet. We use our floor
space to house part of our operations in Kaohsiung. The total cost to us of the
construction project was approximately NT$1,329.2 million (US$41.9 million).

     We are currently in discussions with Hung Ching to finalize the purchase
price of the two new buildings in Chung Li, Taiwan that we have built with Hung
Ching. See "Item 4. Information on the Company--Property, Plants and
Equipment--Expansion".

Item 8. Financial Information

CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

     Consolidated financial statements are set forth under "Item 18. Financial
Statements".

LEGAL PROCEEDINGS

     We are not involved in material legal proceedings the outcome of which we
believe would have a material adverse effect on us.

DIVIDENDS AND DIVIDEND POLICY

     To date, we have not paid cash dividends on our common shares, and, while
we anticipate paying a percentage of our dividends in cash in the near future,
we expect that we will continue to pay a substantial portion of our dividends in
the form of stock. We have paid annual stock dividends on our common shares
since 1989, except in 2002 when we did not pay any dividend due to the losses we
incurred in the 2001 fiscal year.


                                       75
<PAGE>


     The following table sets forth the stock dividends paid during each of the
years indicated and related information.

<TABLE>
                                                                                                      Percentage of
                                                   Total Common Shares    Outstanding Common    Outstanding Common Shares
                           Stock Dividends Per       Issued as Stock            Shares            Represented by Stock
                             Common Shares(1)           Dividends          on Record Date(2)            Dividends
                        ---------------------------------------------------------------------------------------------------
                                   NT$
<S>                        <C>                     <C>                     <C>                  <C>
1995..................              3.60                 93,600,000           260,000,000                 36.0%
1996..................              8.00                319,840,000           399,800,000(3)              80.0%
1997..................              3.80                277,020,000           729,000,000                 38.0%
1998..................              7.20                732,240,000         1,017,000,000                 72.0%
1999..................              1.07                190,460,000         1,780,000,000                 10.7%
2000..................              3.15                623,811,852         1,980,355,086                 31.5%
2001..................              1.70                467,840,000         2,752,000,000                 17.0%
2002..................              --                           --         3,254,800,000                   --
2003..................              1.00                325,480,000         3,254,800,000                 10.0%
2004..................              0.57                221,977,360         3,862,595,437                  5.7%
</TABLE>

------------------
(1)  Holders of common shares receive as a stock dividend the number of common
     shares equal to the NT dollar value per common share of the dividend
     declared multiplied by the number of common shares owned and divided by the
     par value of NT$10 per share. Fractional shares are not issued but are paid
     in cash.

(2)  Aggregate number of common shares outstanding on the record date applicable
     to the dividend payment. Includes common shares issued in the previous year
     under our employee bonus plan.

(3)  Includes 43,000,000 common shares issued in connection with an offering of
     global depositary shares in July 1995.

     We have historically paid stock dividends on our common shares with respect
to the results of the preceding year following approval by our shareholders at
the annual general meeting of shareholders. At our annual shareholders' meeting
held on June 15, 2004, our shareholders approved a stock dividend of 221,977,360
common shares, or NT$0.57 (US$0.02) per common share. The form, frequency and
amount of future cash or stock dividends on our common shares will depend upon
our net income, cash flow, financial condition and other factors. See "Item 10.
Additional information--Articles of Incorporation--Dividends and Distributions".

     In general, we are not permitted to distribute dividends or make other
distributions to shareholders for any year where we did not record net income or
retained earnings (excluding reserves). The ROC Company Law also requires that
10% of annual net income (less prior years' losses, if any) be set aside as a
legal reserve until the accumulated legal reserve equals our paid-in capital. In
addition, our Articles of Incorporation require that before a dividend is paid
out of our annual net income:

o    up to 2% of our annual net income (less prior years' losses and legal and
     special reserves, if any) should be paid to our directors and supervisors
     as compensation; and

o    between 5% and 7% of the annual net income (less prior years' losses and
     legal and special reserves, if any) should be paid to our employees as
     bonuses; the 5% portion is to be distributed to all employees in accordance
     with our employee bonus distribution rules, while any portion exceeding 5%
     is to be distributed in accordance with rules established by our board of
     directors to individual employees who have been recognized as having made
     special contributions to our company.

     In order to meet the needs of our present and future capital expenditures,
our dividend distribution will be primarily in the form of common shares. Cash
dividends may also be distributed in certain circumstances. However, in
accordance with our Articles of Incorporation, the percentage of cash dividends
shall not exceed 20% in any dividend distribution.

     Holders of ADSs will be entitled to receive dividends, subject to the terms
of the deposit agreement, to the same extent as the holders of the common
shares. Cash dividends will be paid to the depositary in NT dollars and, except
as otherwise provided in the deposit agreement, will be converted by the
depositary into U.S. dollars and paid to holders of ADSs according to the terms
of the deposit agreement. Stock dividends will be distributed to the


                                       76
<PAGE>


depositary and, except as otherwise provided in the deposit agreement, will be
distributed by the depositary, in the form of additional ADSs, to holders of
ADSs according to the terms of the deposit agreement.

     Holders of outstanding common shares on a dividend record date will be
entitled to the full dividend declared without regard to any prior or subsequent
transfer of common shares. Accordingly, holders of outstanding ADSs on the
relevant dividend record date will, subject to the terms of the deposit
agreement, be similarly entitled to the full amount of any dividend declared.

     For information relating to ROC withholding taxes payable on dividends, see
"Item 10. Additional Information--Taxation--ROC Taxation--Dividends".

SIGNIFICANT CHANGES

     On May 1, 2005, a fire broke out at the principal building of our
facilities in Chung Li, Taiwan. Before the fire, the building housed our
operations for the production of interconnect materials, as well as the
substantial majority of our packaging and testing operations, at Chung Li. Based
upon our initial assessment, the estimated net book value as of March 31, 2005
of our fixed assets, including the building, machinery and equipment, and the
estimated value of our inventory damaged by the fire totaled approximately
NT$12.2 billion (US$0.4 billion).

     While we currently plan to return to pre-accident output levels in the
foreseeable future, we cannot guarantee that we will be able to do so. Our
failure to do so, as well as any inability to collect on insurance, prevent our
customers from switching to our competitors, or otherwise proceed with our plans
to restore our operations may have a material adverse effect on our financial
condition and results of operations.

Item 9. The Offer and Listing

OFFER AND LISTING DETAILS

     Our common shares were first issued in March 1984 and have been listed on
the Taiwan Stock Exchange since July 1989. The Taiwan Stock Exchange is an
auction market where the securities traded are priced according to supply and
demand through announced bid and ask prices. As of April 30, 2005, there were an
aggregate of 4,113,744,200 of our common shares outstanding. The following table
sets forth, for the periods indicated, the high and low closing prices and the
average daily volume of trading activity on the Taiwan Stock Exchange for the
common shares and the high and low of the daily closing values of the Taiwan
Stock Exchange Index. The closing price for our common shares on the Taiwan
Stock Exchange on May 31, 2005 was NT$22.85 per share.


                                       77
<PAGE>


<TABLE>
                                                                                       Average
                                                                                        Daily
                                          Closing Price per      Adjusted Closing      Trading       Taiwan Stock
                                                Share           Price per Share(1)     Volume       Exchange Index
                                         ---------------------------------------------------------------------------
                                                                                        (in
                                                                                      thousands
                                                                                         of
                                           High        Low       High        Low       shares)     High        Low
                                         ---------------------------------------------------------------------------
<S>                                      <C>          <C>        <C>        <C>         <C>      <C>         <C>
  1999.............................      117.00       51.00      66.18      27.22       47,782    8,608.9    5,474.8
  2000.............................      123.00       22.60      72.68      17.56       24,507   10,202.2    4,614.6
  2001.............................       38.80       14.00      31.09      12.73       25,079    6,104.2    3,446.3
  2002.............................       38.50       15.90      35.00      14.45       24,798    6,462.3    3,850.0
    First Quarter..................       35.80       26.00      32.55      23.64       35,735    6,242.6    5,488.3
    Second Quarter.................       38.50       20.80      35.00      18.91       19,479    6,462.3    5,071.8
    Third Quarter..................       24.50       17.10      22.27      15.55       17,232    5,416.5    4,185.9
    Fourth Quarter.................       24.30       15.90      22.09      14.45       28,264    4,823.7    3,850.0
  2003.............................       35.50       16.90      35.50      15.36       24,852    6,142.3    4,139.5
    First Quarter..................       22.50       16.90      20.45      15.36       16,422    5,078.8    4,260.4
    Second Quarter.................       22.50       17.80      20.45      16.18       27,240    5,048.9    4,139.5
    Third Quarter..................       27.80       21.50      27.80      19.55       33,764    5,757.9    5,017.8
    Fourth Quarter.................       35.50       26.30      35.50      26.30       20,889    6,142.3    5,581.7
  2004.............................       36.20       21.10      36.20      21.10       24,113    6,209.2    5,856.5
    First Quarter..................       39.30       33.20      39.30      33.20       26,838    7,034.1    5,890.7
    Second Quarter.................       36.20       21.10      36.20      21.10       26,281    6,182.4    6,055.8
    Third Quarter..................       28.20       21.90      28.20      21.90       20,745    5,675.8    5,602.2
    Fourth Quarter.................       26.00       22.20      26.00      22.20       27,733    5,944.3    5,877.5
      November.....................       26.00       22.50      26.00      22.50       18,612    5,923.2    5,844.3
      December.....................       24.50       22.90      24.50      22.70       21,410    5,983.7    5,930.4
  2005
    First Quarter..................       24.85       20.00      24.85      20.00       27,239    6,074.8    6,018.1
      January......................       23.80       20.00      23.80      20.00       27,360    5,956.6    5,894.3
      February.....................       24.80       21.40      24.80      21.40       47,029    6,131.6    6,077.3
      March........................       24.85       22.00      24.85      22.00       15,942    6,136.2    6,082.1
    Second Quarter (through May 31)       23.65       19.35      23.55      19.35       20,560    5,932.1    5,877.8
      April........................       23.55       20.55      23.55      20.55       16,655    5,906.8    5,847.8
      May..........................       22.85       19.35      22.85      19.35       24,279    5,957.5    5,907.9
</TABLE>

------------------
(1)  As adjusted retroactively by the Taiwan Stock Exchange to give effect to
     stock dividends paid in the periods indicated. See "Item 8. Financial
     Information--Dividends and Dividend Policy".

     The performance of the Taiwan Stock Exchange has in recent years been
characterized by extreme price volatility. There are currently limits on the
range of daily price movements on the Taiwan Stock Exchange. In the case of
equity securities traded on the Taiwan Stock Exchange, such as our common
shares, fluctuations in the price of a particular security may not exceed a 7%
change either above or below the previous day's closing price of such security.

     Our ADSs have been listed on the New York Stock Exchange under the symbol
"ASX" since September 26, 2000. The outstanding ADSs are identified by the CUSIP
number 00756M404. As of April 30, 2005, a total of 27,627,054 ADSs were
outstanding. The following table sets forth, for the periods indicated, the high
and low closing prices and the average daily volume of trading activity on the
New York Stock Exchange for our ADSs and the highest and lowest of the daily
closing values of the New York Stock Exchange Index. The closing price for our
ADSs on the New York Stock Exchange on May 31, 2005 was US$3.54 per ADS.


                                       78
<PAGE>


<TABLE>
                                                                                     Average
                                                                                      Daily
                                                               Adjusted Closing      Trading       New York Stock
                                      Closing Price per ADS    Price per ADS(1)       Volume       Exchange Index
                                      -------------------------------------------------------------------------------
                                                                                  (In thousands
                                          High       Low         High        Low     of ADSs)      High        Low
                                      -------------------------------------------------------------------------------
                                          US$        US$         US$         US$
<S>                                       <C>        <C>         <C>         <C>        <C>      <C>         <C>
2000............................          6.75       3.06        5.24        2.38       31       7,164.55    6,094.91
2001............................          6.05       1.75        4.70        1.59      106       7,048.13    5,331.38
2002............................          5.54       2.21        5.04        2.01      111       6,445.01    4,452.49
  First Quarter.................          5.35       3.75        4.86        3.41      135       6,445.01    5,894.75
  Second Quarter................          5.54       3.05        5.04        2.77      130       6,327.11    5,543.28
  Third Quarter.................          3.70       2.39        3.36        2.17      110       5,598.68    4,549.66
  Fourth Quarter................          3.50       2.21        3.18        2.01       72       5,247.64    4,452.49
2003............................          5.27       2.45        5.27        2.23      195       6,440.30    4,486.70
  First Quarter................           3.23       2.45        2.94        2.23       41       5,255.39    4,486.70
  Second Quarter...............           3.22       2.50        2.93        2.27      229       5,722.85    4,793.56
  Third Quarter..................         4.11       3.17        4.11        2.88      257       5,855.97    5,451.02
  Fourth Quarter.................         5.27       3.88        5.27        3.88      244       6,440.30    5,768.32
2004.............................         5.95       3.18        5.16        3.03      219       7,253.06    6,217.06
   First Quarter.................         5.95       5.12        5.62        4.34      328       6,780.03    6,375.67
   Second Quarter................         5.46       3.22        5.16        3.04      269       6,715.09    6,231.19
   Third Quarter.................         3.87       3.18        3.75        3.03      202       6,633.22    6,217.06
   Fourth Quarter................         3.97       3.28        3.97        3.28       89       7,253.06    6,516.10
     November....................         3.97       3.36        3.97        3.36       94       7,046.69    6,699.86
     December....................         3.76       3.51        3.76        3.51      108       7,253.06    7,014.72
2005
   First Quarter.................         4.07       3.20        4.07        3.20      165       7,441.18    6,996.56
     January.....................         3.74       3.20        3.74        3.20      134       7,250.06    7,010.47
     February....................         4.03       3.40        4.03        3.40      177       7,361.89    7,146.21
     March.......................         4.07       3.54        4.07        3.54      184       7,441.18    7,070.53
   Second Quarter (through May
     31).........................         3.80       3.09        3.80        3.09      398       7,227.08    6,935.31
     April.......................         3.80       3.29        3.80        3.29      508       7,227.08    6,935.31
     May.........................         3.62       3.09        3.62        3.09      287       7,184.90    6,937.69
</TABLE>

------------------
(1)  As adjusted retroactively to give effect to stock dividends paid in the
     periods indicated.

PLAN OF DISTRIBUTION

     Not applicable.

MARKETS

     The principal trading market for our common shares is the Taiwan Stock
Exchange and the principal trading market for ADSs representing our common
shares is the New York Stock Exchange.

SELLING SHAREHOLDERS

     Not applicable.

DILUTION

     Not applicable.

EXPENSES OF THE ISSUE

     Not applicable.


                                       79
<PAGE>


Item 10. Additional Information

SHARE CAPITAL

     Not applicable.

ARTICLES OF INCORPORATION

General

     We are a company limited by shares organized under the laws of the ROC. Our
organizational document is our Articles of Incorporation. We have no by-laws.

     Our Articles of Incorporation provide, in Article 2, that we are to engage
in the following types of business:

     o    the manufacture, assembly, processing, testing and export of various
          types of integrated circuitry;

     o    the research, development, design and manufacture, assembly,
          processing, testing and export of various computers, electronics,
          communications, information products and their peripheral products;

     o    general import and export trading (excluding businesses that require
          trading permits);

     o    the manufacture of electronic parts and components;

     o    the manufacture of mechanical and electronic devices and materials
          (including integrated circuit leadframes, BGA substrates and flip-chip
          substrates);

     o    wholesale and retail sales of electronic materials;

     o    technical support and consulting service for integrated circuit
          leadframes, BGA substrates and flip-chip substrates;

     o    leasing; and

     o    except any business requiring a special permit, any business not
          prohibited or restricted by law or regulation.

     We were incorporated on March 23, 1984 as a company limited by shares under
the ROC Company Law. Our authorized capital was NT$51,500,000,000, divided into
5,150,000,000 common shares, 4,113,744,200 of which were issued in registered
form and outstanding as of April 30, 2005. We do not have any equity in the form
of preference shares or otherwise outstanding as of the date of this annual
report.

     With the approval of our board of directors and the ROC Securities and
Futures Bureau, we may grant stock options to our employees, provided that the
shares to be issued under any option plan shall not exceed 10% of our
outstanding common shares and the total number of shares to be issued under all
option plans shall not exceed 15% of our outstanding common shares. The exercise
price of an option shall not be less than the closing price of our common shares
on the Taiwan Stock Exchange on the grant date of the option. As of December 31,
2004, we had granted 284,885,000 options pursuant to employee stock option plans
established on August 28, 2002 and May 27, 2004, to our full-time employees as
well as to full-time employees of our domestic and foreign subsidiaries. See
"Item 6. Directors, Senior Management and Employees--Compensation--ASE Inc.
Employee Bonus Plan and Stock Option Plans". We have 300,000,000 common shares
reserved for issuance under our employee stock option plans.

Directors

     Our Articles of Incorporation provide that we are to have from five to
seven directors with tenures of three years who are elected at a shareholders'
meeting. There is no minimum amount of shares necessary to stand for election to
a directorship. Many of our directors are representatives appointed by corporate
shareholders which


                                       80
<PAGE>


appoint individual representatives. Re-elections are allowed. The directors have
certain powers and duties, including devising operations strategy, proposing to
distribute dividends or make up losses, proposing to increase or decrease
capital, reviewing material internal rules and contracts, hiring and discharging
the general manager, establishing and dissolving branch offices, reviewing
budgets and audited financial statements and other duties and powers granted by
or in accordance with the ROC Company Law, our Articles of Incorporation or
shareholders resolutions.

     The board of directors is constituted by the directors, who elect a
chairman and a vice-chairman from among the directors to preside over the
meeting of the board. Meetings of the board may be held in the ROC or any place
abroad. A director may appoint another director to attend a meeting and vote by
proxy, but a director may accept only one proxy.

     Our Articles of Incorporation contain no provisions relating to a
director's power to vote on a proposal in which that director is interested, the
directors' power to vote compensation to themselves, borrowing powers,
retirement or age-limit requirements.

Dividends and Distributions

     In general, we are not permitted to distribute dividends or make other
distributions to shareholders in any year in which we did not record net income
or retained earnings (excluding reserves). The ROC Company Law also requires
that 10% of annual net income (less prior years' losses, if any) be set aside as
a legal reserve until the accumulated legal reserve equals our paid-in capital.
In addition, our Articles of Incorporation require that before a dividend is
paid out of our annual net income:

     o    up to 2% of our annual net income (less prior years' losses and legal
          and special reserves, if any) should be paid to our directors and
          supervisors as compensation; and

     o    between 5% and 7% of the annual net income (less prior years' losses
          and legal and special reserves, if any) should be paid to our
          employees as bonuses. The 5% portion is to be distributed to all
          employees in accordance with our employee bonus distribution rules,
          while any portion exceeding 5% is to be distributed in accordance with
          rules established by our board of directors to individual employees
          who have been recognized as having made special contributions to our
          company. Such employees include those of our affiliated companies who
          meet the criteria set by our board of directors.

     At the annual general shareholders' meeting, our board of directors submits
to the shareholders for their approval any proposal for the distribution of
dividends or the making of any other distribution to shareholders from our net
income for the preceding fiscal year. All common shares outstanding and fully
paid as of the relevant record date are entitled to share equally in any
dividend or other distribution so approved. Dividends may be distributed in
cash, in the form of common shares or a combination of the two, as determined by
the shareholders at the meeting. Cash dividends should not exceed 20% of the
distribution for any given year.

     We are also permitted to make distributions to our shareholders of
additional common shares by capitalizing reserves. However, the capitalized
portion payable out of our legal reserve is limited to 50% of the total
accumulated legal reserve and the capitalization can only be effected when the
accumulated legal reserve exceeds 50% of our paid-in capital.

     For information on the dividends we paid in recent years, see "Item 8.
Financial Information--Dividends and Dividend Policy". For information as to ROC
taxes on dividends and distributions, see "--Taxation--ROC Taxation--Dividends".

Changes in Share Capital

     Under ROC Company Law, any change in the authorized share capital of a
company limited by shares requires an amendment to its Articles of
Incorporation. In the case of a public company such as ourselves, the approval
of the ROC Securities and Futures Bureau and the ROC Ministry of Economic
Affairs is also required. Authorized but unissued common shares may be issued,
subject to applicable ROC law, upon terms as our board of directors may
determine.


                                       81
<PAGE>


Preemptive Rights

     Under the ROC Company Law, when an ROC company issues new shares for cash,
existing shareholders who are listed on the shareholders' register as of the
record date have preemptive rights to subscribe for the new issue in proportion
to their existing shareholdings, while a company's employees, whether or not
they are shareholders of the company, have rights to subscribe for 10% to 15% of
the new issue. Any new shares that remain unsubscribed at the expiration of the
subscription period may be offered by us to the public or privately placed.

     In addition, in accordance with the ROC Securities and Exchange Law, a
public company that intends to offer new shares for cash must offer to the
public at least 10% of the shares to be sold. This percentage can be increased
by a resolution passed at a shareholders' meeting, which would diminish the
number of new shares subject to the preemptive rights of existing shareholders.

     These preemptive rights provisions do not apply to offerings of new shares
through a private placement approved at a shareholders' meeting.

Meetings of Shareholders

     We are required to hold an ordinary meeting of our shareholders within six
months following the end of each fiscal year. These meetings are generally held
in Kaohsiung, Taiwan. Extraordinary shareholders' meetings may be convened by
resolution of the board of directors or by the board of directors upon the
written request of any shareholder or shareholders who have held 3% or more of
the outstanding common shares for more than one year. Shareholders' meetings may
also be convened by a supervisor. Notice in writing of general meetings of
shareholders, stating the place, time and purpose, must be dispatched to each
shareholder at least 30 days, in the case of ordinary meetings, and 15 days, in
the case of extraordinary meetings, before the date set for each meeting. A
majority of the holders of all issued and outstanding common shares present at a
shareholders' meeting constitutes a quorum for meetings of shareholders.

Voting Rights

     Under the ROC Company Law, shareholders have one vote for each common share
held. Under the ROC Company Law, our directors and supervisors are elected at a
shareholders' meeting through cumulative voting, unless the articles of
incorporation of a company provide otherwise.

     In general, a resolution can be adopted by the holders of at least a
majority of the common shares represented at a shareholders' meeting at which
the holders of a majority of all issued and outstanding common shares are
present. Under ROC Company Law, the approval by at least a majority of the
common shares represented at a shareholders' meeting in which a quorum of at
least two-thirds of all issued and outstanding common shares are represented is
required for major corporate actions, including:

     o    amendment to the Articles of Incorporation, including increase of
          authorized share capital and any changes of the rights of different
          classes of shares;

     o    transfer of the company's entire business or assets or substantial
          part of its business or assets;

     o    execution, amendment or termination of any contract through which the
          company leases its entire business to others, or the company appoints
          others to operate its business or the company operates its business
          with others on a continuous basis;

     o    acquisition of the entire business or assets of any other company,
          which would have a significant impact on the company's operations;

     o    distribution of any stock dividend;

     o    dissolution, merger or spin-off of the company; and

     o    removal of the directors or supervisors.


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     A shareholder may be represented at an ordinary or extraordinary meeting by
proxy if a valid proxy form is delivered to us five days before the commencement
of the ordinary or extraordinary shareholders' meeting.

     Holders of ADSs do not have the right to exercise voting rights with
respect to the underlying common shares, except as described in the deposit
agreement.

Voting of Deposited Securities

     Except as described below, holders of ADSs generally have no right under
the deposit agreement to instruct the depositary to exercise the voting rights
for the common shares represented by the ADSs. Instead, by accepting ADSs or any
beneficial interest in ADSs, holders of ADSs are deemed to have authorized and
directed the depositary to appoint our chairman or his designee to represent
them at our shareholders' meetings and to vote the common shares deposited with
the custodian according to the terms of the deposit agreement.

     The depositary will mail to holders of ADSs 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 we fail to timely provide the depositary with an English language
translation of our notice of meeting or other materials related to any meeting
of owners of common shares, the depositary will endeavor to cause all the
deposited securities represented by ADSs to be present at the applicable
meeting, insofar as practicable and permitted under applicable law, but will not
cause those securities to be voted.

     If the depositary timely receives voting instructions from owners of at
least 51.0% of the outstanding ADSs to vote in the same direction regarding one
or more resolutions to be proposed at the meeting, including election of
directors and supervisors, the depositary will notify our chairman or his
designee to attend the meeting and vote all the securities represented by the
holders' ADSs in accordance with the direction received from owners of at least
51.0% of the outstanding ADSs.

     If we have timely provided the depositary with the materials described in
the deposit agreement and the depositary has not timely received instructions
from holders of at least 51.0% of the outstanding ADSs to vote in the same
direction regarding any resolution to be considered at the meeting, then,
holders of ADSs will be deemed to have authorized and directed the depositary
bank to give a discretionary proxy to our chairman or his designee to attend and
vote at the meeting the common shares represented by the ADSs in any manner, our
chairman or his designee may wish, which may not be in the interests of holders.

     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 ADS holders that they will receive voting materials in
time to enable them to return voting instructions to the depositary in a timely
manner.

Register of Shareholders and Record Dates

     Our share registrar, President Securities Corp., maintains our register of
shareholders at its offices in Taipei, Taiwan, enters transfers of common shares
in our register upon presentation of, among other documents, certificates
representing the common shares transferred and acts as paying agent for any
dividends or distributions with respect to our common shares. Under the ROC
Company Law and our Articles of Incorporation, we may, by giving advance public
notice, set a record date and close the register of shareholders for a specified
period in order for us to determine the shareholders or pledgees that are
entitled to rights pertaining to the common shares. The specified period
required is as follows:

     o    ordinary shareholders' meeting--60 days;

     o    extraordinary shareholders' meeting--30 days; and

     o    relevant record date--five days.


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Annual Financial Statements

     At least ten days before the annual ordinary shareholders' meeting, our
annual financial statements must be available at our principal executive office
in Kaohsiung, Taiwan for inspection by the shareholders.

Transfer of Common Shares

     The transfer of common shares in registered form is effected by endorsement
and delivery of the related share certificates but, in order to assert
shareholders' rights against us, the transferee must have his name and address
registered on our register of shareholders. Shareholders are required to file
their respective specimen seals, also known as chops, with us. Chops are
official stamps widely used in Taiwan by individuals and other entities to
authenticate the execution of official and commercial documents.

Acquisition of Common Shares by ASE Inc.

     Under the ROC Securities and Exchange Law, we may purchase our own common
shares for treasury stock in limited circumstances, including:

     o    to transfer shares to our employees;

     o    to deliver shares upon the conversion or exercise of bonds with
          warrants, preferred shares with warrants, convertible notes,
          convertible preferred shares or warrants issued by us; and

     o    to maintain our credit and our shareholders' equity, provided that the
          shares so purchased shall be canceled.

     We may purchase our common shares on the Taiwan Stock Exchange or by means
of a public tender offer. These transactions require the approval of a majority
of our board of directors at a meeting in which at least two-thirds of the
directors are in attendance. The total amount of common shares purchased for
treasury stock may not exceed 10% of the total outstanding shares. In addition,
the total cost of the purchased shares shall not exceed the aggregate amount of
our retained earnings, any premium from share issuances and the realized portion
of our capital reserve.

     Pursuant to the amended ROC Company Law, effective from November 14, 2001,
our subsidiaries are not permitted to acquire our common shares. This
restriction does not affect any acquisition of our common shares made by our
subsidiaries prior to November 14, 2001.

Liquidation Rights

     In the event of our liquidation, the assets remaining after payment of all
debts, liquidation expenses and taxes will be distributed pro rata to the
shareholders in accordance with the relevant provisions of the ROC Company Law
and our Articles of Incorporation.

Transfer Restrictions

   Substantial Shareholders

     The ROC Securities and Exchange Law currently requires:

     o    each director, supervisor, executive officer or substantial
          shareholder (that is, a shareholder who, together with his or her
          spouse, minor children or nominees, holds more than 10% of the shares
          of a public company) to report any change in that person's
          shareholding to the issuer of the shares and the ROC Securities and
          Futures Bureau; and

     o    each director, supervisor, executive officer or substantial
          shareholder, after acquiring the status of director, supervisor,
          executive officer or substantial shareholder for a period of six
          months, to report his or her intent to transfer any shares on the
          Taiwan Stock Exchange to the ROC Securities and Futures Bureau at
          least three days before the intended transfer, unless the number of
          shares to be transferred is less than 10,000 shares.


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     In addition, the number of shares that can be sold or transferred on the
Taiwan Stock Exchange by any person subject to the restrictions described above
on any given day may not exceed:

     o    0.2% of the outstanding shares of the company in the case of a company
          with no more than 30 million outstanding shares; or

     o    0.2% of 30 million shares plus 0.1% of the outstanding shares
          exceeding 30 million shares in the case of a company with more than 30
          million outstanding shares; or

     o    in any case, 5% of the average trading volume (number of shares) on
          the Taiwan Stock Exchange for the ten consecutive trading days
          preceding the reporting day on which the director, supervisor, manager
          or substantial shareholder reports the intended share transfer to the
          ROC Securities and Futures Bureau.

     These restrictions do not apply to sales or transfers of our ADSs.

   Common Shares Issued to Substantial Shareholders in Connection with a Merger

     The rules and regulations of the Taiwan Stock Exchange impose certain
transfer restrictions on common shares of a Taiwan Stock Exchange listed company
issued to a substantial shareholder (as defined under the ROC Securities and
Exchange Law and described under "--Substantial Shareholders") of an unlisted
company to be merged with and into the acquiror. A substantial shareholder of an
unlisted company to be merged with and into a Taiwan Stock Exchange listed
company is restricted from selling or transferring common shares received in
connection with such merger for a period of six months after such shares are
listed on the Taiwan Stock Exchange. After the initial six-month lock-up period,
such holder is permitted to sell or transfer 50% of its holdings of the common
shares received in the merger. After two years from the date of the listing of
the common shares, the holder is permitted to sell or transfer an additional 10%
of its holdings of the common shares and an additional 10% of the common shares
every six months thereafter.

MATERIAL CONTRACTS

     Joint Venture Agreement dated October 28, 2003 by and between ASE Inc. and
Compeq

     This contract was entered into with Compeq to establish the joint venture
ASE-Compeq Technologies, Inc., which will focus on the design and production of
interconnect materials for packaging semiconductors. We own a 60% equity
interest in ASE-Compeq Technologies, Inc. and Compeq owns the remaining 40%
equity interest. See "Item 4. Information on the Company--History and
Development of the Company--Joint Venture with Compeq Manufacturing Co. Ltd."

     Merger Agreement dated October 28, 2003 by and among ASE Inc., ASE Chung Li
and ASE Material

     Under this contract, ASE Chung Li and ASE Material merged with and into us.
We are the surviving corporation. As a result of the merger, all of the assets
and liabilities of ASE Chung Li and ASE Material are now owned and have been
assumed by us. The merger was consummated by means of a share exchange pursuant
to which each common share of ASE Chung Li not directly owned by us was
exchanged for 0.85 ASE Inc. common share and each common share of ASE Material
not directly owed by us was exchanged for 0.5 ASE Inc. common share. The merger
was completed on August 1, 2004. See "Item 7. Major Shareholders and Related
Party Transactions--Related Party Transactions".

     Share Sale and Purchase Agreement dated as of February 3, 2004 among NEC
Electronics Corporation, NEC Yamagata Ltd., J&R Holding Limited and ASE Inc.

     On February 3, 2004, we and J&R Holding Limited, our wholly-owned
subsidiary, entered into a share sale and purchase agreement with NEC and NEC
Yamagata, Ltd. in connection with the acquisition of the semiconductor packaging
and testing business of NEC Yamagata, a wholly-owned subsidiary of NEC. The
acquisition was completed on May 31, 2004 and the purchase price, after
accounting for certain purchase price adjustments, was approximately US$25.6
million. The acquisition was consummated by means of a company split under the
Japanese Commercial Code through which the packaging and testing business of NEC
Yamagata was transferred to a


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company formed by NEC Yamagata named ASE Japan Co., Ltd. Pursuant to the terms
and conditions of the share sale and purchase agreement, all of the issued and
outstanding shares of ASE Japan were purchased by J&R Holding Limited, and ASE
Japan now owns and operates the semiconductor packaging and testing business
acquired from NEC Yamagata.

     See "Item 4. Information on the Company--Business Overview--Sales and
Marketing--Sales and Customer Service Agents" for a summary of contracts we have
entered into with agents for sales and customer service.

EXCHANGE CONTROLS

ROC Exchange Controls

     The Foreign Exchange Control Statute and regulations provide that all
foreign exchange transactions must be executed by banks designated to handle the
business, by the ROC Financial Supervisory Commission and by the Central Bank of
China. Current regulations favor trade-related foreign exchange transactions.
Consequently, foreign currency earned from exports of merchandise and services
may now be retained and used freely by exporters, and all foreign currency
needed for the importation of merchandise and services may be purchased freely
from the designated foreign exchange banks.

     Trade aside, ROC companies and resident individuals may, without foreign
exchange approval, remit into and outside the ROC foreign currency of up to
US$50 million (or its equivalent) and US$5 million (or its equivalent)
respectively in each calendar year. The above limits apply to remittances
involving a conversion of NT dollars to a foreign currency and vice versa. A
requirement is also imposed on all enterprises to register medium- and long-term
foreign debt with the Central Bank of China.

     In addition, foreign persons may, subject to specified requirements, but
without foreign exchange approval of the Central Bank of China, remit outside
and into the ROC foreign currencies of up to US$100,000 (or its equivalent) for
each remittance. The above limit applies to remittances involving a conversion
of NT dollars to a foreign currency and vice versa. The above limit does not,
however, apply to the conversion of NT dollars into other currencies, including
U.S. dollars, from the proceeds of sale of any underlying shares withdrawn from
a depositary receipt facility.

TAXATION

ROC Taxation

     The following discussion describes the material ROC tax consequences of the
ownership and disposition of the common shares or ADSs to a non-resident
individual or non-resident entity that holds the common shares or ADSs (referred
to here as a "non-ROC holder"). As used in the preceding sentence, a
"non-resident individual" is a foreign national who owns the common shares or
ADSs and is not physically present in the ROC for 183 days or more during any
calendar year and a "non-resident entity" is a corporation or a non-corporate
body that owns the common shares or ADSs, is organized under the laws of a
jurisdiction other than the ROC and has no fixed place of business or other
permanent establishment in the ROC.

   Dividends

     Dividends (whether in cash, common shares or ADSs) declared by us out of
retained earnings and distributed to a non-ROC holder in respect of common
shares or ADSs are subject to ROC withholding tax, currently at the rate of 20%
on the amount of the distribution (in the case of cash dividends) or on the par
value of the distributed common shares (in the case of stock dividends). A 10%
retained earnings tax is imposed on a ROC company for its after-tax earnings
generated after January 1, 1998 which are not distributed in the following year.
The retained earnings tax so paid will further reduce the retained earnings
available for future distribution. When we declare a dividend out of those
retained earnings, up to a maximum amount of 10% of the net dividend received
will be credited against the 20% withholding tax imposed on the non-ROC holders
of our common shares or ADSs.


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<PAGE>


     It is currently unclear whether dividends paid by us out of our capital
reserves are subject to ROC withholding tax because there are two possible
interpretations of the relevant tax laws and regulations that lead to different
conclusions on whether such dividends will be taxable, and there is currently no
authoritative guidance on this issue.

   Capital Gains

     Under current ROC law, capital gain realized upon the sale or other
disposition of securities is exempt from ROC income tax. This exemption
currently applies to capital gains derived from the sale of common shares.

     Sales of ADSs by non-ROC holders are not regarded as sales of ROC
securities and thus any gains derived from transfers of ADSs are not currently
subject to ROC income tax.

   Sale

     Securities transaction tax will be imposed on the seller at the rate of
0.3% of the transaction price upon a sale of common shares. Transfers of ADSs
are not subject to ROC securities transaction tax.

   Subscription Rights

     Distributions of statutory subscription rights for the common shares in
compliance with the ROC Company Law are currently not subject to ROC tax.
Proceeds derived from sales of statutory subscription rights evidenced by
securities are currently exempted from income tax but are subject to securities
transaction tax, currently at the rate of 0.3% of the gross amount received.
Proceeds derived from sales of statutory subscription rights which are not
evidenced by securities are subject to capital gains tax at the rate of (i) 25%
of the gross amount realized for non-resident entities and (ii) 35% of the gross
amount realized for non-resident individuals. Subject to compliance with ROC
law, we, in our sole discretion, may determine whether statutory subscription
rights are securitized.

   Inheritance and Gift Tax

     ROC inheritance tax is payable on any property within the ROC of a deceased
non-resident individual, and ROC gift tax is payable on any property within the
ROC donated by a non-resident individual. Inheritance tax is currently imposed
at rates ranging from 2% of the first NT$600,000 to 50% of amounts in excess of
NT$100 million. Gift tax is imposed at rates ranging from 4% of the first
NT$600,000 donated to 50% of amounts donated in excess of NT$45 million. Under
ROC Inheritance and Gift Tax Law, shares and bonds issued by ROC companies are
deemed located in the ROC without regard to the location of the owner. It is
unclear whether a holder of ADSs will be considered to own common shares for
this purpose.

   Tax Treaty

     At present, the ROC has income tax treaties with Indonesia, Singapore, New
Zealand, Australia, the United Kingdom, South Africa, Gambia, Swaziland,
Malaysia, Macedonia, the Netherlands, Senegal, Sweden and Vietnam. These tax
treaties may limit the rate of ROC withholding tax on dividends paid with
respect to common shares in ROC companies. It is unclear whether a non-ROC
holder of ADSs will be considered to own common shares for the purposes of such
treaties. Accordingly, a holder of ADSs who is otherwise entitled to the benefit
of a treaty should consult its own tax advisers concerning eligibility for
benefit under the treaty with respect to the ADSs as the case may be. The United
States does not have an income tax treaty with the ROC.

United States Federal Income Taxation

     The following discussion describes the material U.S. federal income tax
consequences of the ownership and disposition of common shares or ADSs to those
U.S. holders described below who hold such common shares or ADSs as capital
assets for U.S. federal income tax purposes. For these purposes, you are a U.S.
holder if you are a beneficial owner of common shares or ADSs that is, for U.S.
federal income tax purposes:

     o    a citizen or resident of the United States;


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<PAGE>


     o    a corporation, or other entity taxable as a corporation, created or
          organized under the laws of the United States or of any political
          subdivision of the United States; or

     o    an estate or trust the income of which is subject to U.S. federal
          income tax purposes regardless of its source.

     This discussion assumes that we are not a passive foreign investment
company, as discussed below.

     This discussion does not address all of the tax consequences that may be
relevant in light of your particular circumstances. In particular, it does not
address all of the tax consequences that may be relevant to holders subject to
special rules, including:

     o    persons subject to the alternative minimum tax;

     o    insurance companies;

     o    tax-exempt entities;

     o    dealers or traders in securities;

     o    financial institutions;

     o    partnerships or other entities classified as partnerships for U.S.
          federal income tax purposes;

     o    persons carrying on a trade or business in the ROC;

     o    persons who hold or will hold common shares or ADSs as part of an
          integrated investment, including a straddle, hedging or conversion
          transaction, comprising common shares or ADSs and one or more other
          positions for tax purposes;

     o    persons whose functional currency is not the U.S. dollar; or

     o    persons who own 10% or more of our voting stock.

     This discussion is based on the Internal Revenue Code of 1986, as amended,
Treasury regulations, administrative announcements and judicial decisions
currently in effect. These laws and regulations may change, possibly with
retroactive effect. This discussion is also based in part on representations by
the depositary and assumes that each obligation under the deposit agreement and
any related agreement will be performed in accordance with its terms.

     In general, for U.S. federal income tax purposes, a U.S. holder of ADSs
should be treated as the holder of the common shares represented by the ADSs.

     The U.S. Treasury has expressed concerns that parties to whom ADSs are
pre-released may be taking actions that are inconsistent with the claiming of
foreign tax credits by the holders of ADSs. Such actions would also be
inconsistent with the claiming of the reduced rate of tax applicable to
dividends received by certain noncorporate U.S. holders. Accordingly, the
analysis of the creditability of ROC taxes, both described below, and the
availability of the reduced tax rate for dividends received by certain
noncorporate U.S. holders, could be affected by actions that may be taken by
parties to whom the ADSs are pre-released.

     Please consult your tax advisor with regard to the application of the U.S.
federal income tax laws to common shares or ADSs as well as any tax consequences
arising under the laws of any state, local or non-U.S. taxing jurisdictions.

   Dividends

     Distributions paid on common shares or ADSs (other than certain pro rata
distributions of common shares to all shareholders, including holders of ADSs),
including the amount of any ROC taxes withheld thereon, reduced by any


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credit against the withholding tax on account of the 10% retained earnings tax
imposed on us, will constitute foreign source dividend income to the extent paid
out of our current or accumulated earnings and profits as determined in
accordance with U.S. federal income tax principles. The amount you will be
required to include in income for any dividend paid in NT dollars will be equal
to the U.S. dollar value of the NT dollars paid, calculated by reference to the
exchange rate in effect on the date the payment is received by the depositary
(in the case of ADSs) or by you (in the case of common shares), regardless of
whether the payment is converted into U.S. dollars on the date or receipt. If
you realize gain or loss on a sale or other disposition of NT dollars, it will
generally be U.S. source ordinary income or loss. The amount of any distribution
of property other than cash will be the fair market value of such property on
the date of distribution. You will not be entitled to a dividends-received
deduction for dividends you receive.

     Subject to applicable limitations and the discussion above regarding
concerns expressed by the U.S. Treasury, dividends paid to certain noncorporate
U.S. holders in taxable years beginning before January 1, 2009 will be taxable
at a maximum tax rate of 15%. Noncorporate U.S. holders should consult their own
tax advisers to determine whether they are subject to any special rules that
limit their ability to be taxed at this favorable rate.

     Subject to applicable limitations and restrictions and the discussion above
regarding concerns expressed by the U.S. Treasury, the ROC taxes withheld from
dividend distributions, reduced by any credit against the withholding tax on
account of the 10% retained earnings tax, will be eligible for credit against
your U.S. federal income tax liability. The limitation on foreign taxes eligible
for credit is calculated separately with respect to specific classes of income.

     Certain pro rata distributions of common shares by a company to all of its
shareholders, including holders of ADSs, will not be subject to U.S. federal
income tax. Accordingly, these distributions will not give rise to U.S. federal
income against which the ROC tax imposed on these distributions may be credited.
Any ROC tax of this nature will only be creditable against a U.S. holder's U.S.
federal income tax liability with respect to income in the general category
income, subject to applicable limitations and restrictions.

   Capital Gains

     You will generally recognize U.S. source capital gain or loss for U.S.
federal income tax purposes on the sale or exchange of common shares or ADSs,
which will be long-term capital gain or loss if the common shares or ADSs were
held for more than one year. The amount of gain or loss will be equal to the
difference between your tax basis in the common shares or ADSs disposed of and
the amount realized on disposition. You should consult your own tax advisor
about the treatment of capital gains, which may be taxed at lower rates than
ordinary income for non-corporate taxpayers, and capital losses, the
deductibility of which may be limited.

     Deposits and withdrawals of common shares by a U.S. holder in exchange for
ADSs will not result in realization of gain or loss for U.S. federal income tax
purposes.

   Passive Foreign Investment Company Rules

     We believe that we were not a passive foreign investment company for the
2004 taxable year. In general, a foreign corporation is a passive foreign
investment company for any taxable year in which (1) 75% or more of its gross
income consists of passive income (such as dividends, interest, rents and
royalties) or (2) 50% or more of the average quarterly value of its assets
consists of assets that produce, or are held for the production of, passive
income. The determination of whether we are a passive foreign investment company
will be based on the composition of our income and assets, as well as those of
our subsidiaries and certain affiliates, from time to time. Since the
composition of our income and assets will vary over time, there can be no
assurance that we will not be considered a passive foreign investment company
for any taxable year. If we are a passive foreign investment company at any time
that you own common shares or ADSs:

     o    you may be subject to additional taxes and interest charges on any
          gain realized on the disposition of the common shares or ADSs and on
          certain "excess distributions" on the common shares or ADSs. The
          additional taxes are assessed at the highest tax rate applicable for
          corporate or individual taxpayers for the relevant tax periods;


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     o    you will be subject to additional U.S. tax filing requirements for
          each year that you hold ADSs; and

     o    the 15% dividend rate discussed above with respect to dividends paid
          to certain noncorporate U.S. holders would not apply to dividends paid
          in any taxable year that we are a PFIC or the taxable year succeeding
          any taxable year that we are a PFIC.

     Please consult your tax advisors about the possibility that ASE Inc. may be
a passive foreign investment company and the rules that would apply to you if it
were.

DIVIDENDS AND PAYING AGENTS

     Not applicable.

STATEMENT BY EXPERTS

     Not applicable.

DOCUMENTS ON DISPLAY

     We file annual reports on Form 20-F and periodic reports on Form 6-K with
the SEC. You can read and copy these reports and other information at the SEC's
Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You can
also request copies of the documents, upon payment of a duplicating fee, by
writing to the Public Reference Section of the SEC. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the Public Reference
Room. The reports and other information we file electronically with the SEC are
also available to the public from the SEC's website at http://www.sec.gov.

SUBSIDIARY INFORMATION

     Not applicable.

Item 11. Quantitative and Qualitative Disclosures about Market Risk

Market Risk

     Our exposure to financial market risks relates primarily to changes in
interest rates and foreign currency exchange rates. To mitigate these risks we
utilize derivative financial instruments, the application of which is primarily
to manage these exposures and not for speculative purposes.

     Interest Rate Risk. Our exposure to interest rate risks relates primarily
to our long-term floating rate debt, which is normally incurred to support our
corporate activities and capital expenditures. In May 2004, we entered into an
interest rate swap contract with a bank to manage our exposure to interest rate
fluctuations associated with our long-term debt. The contract will expire in
January 2009. The terms of the contract provide for a semi-annual exchange of
interest payments whereby we pay NT$ 90-day BA rate minus 0.70% on an underlying
nominal amount of $2.75 billion.

     In May 2004, we entered into an interest rate swaption contract with a bank
whereby we pay a floating interest rate, 6-month US$-LIBOR-BBA and receive a
fixed annual rate of 3.65% on a notional amount of US$20.0 million. Payment
dates are November 23, 2005 and May 23, 2006 (the contract expiration date). As
of December 31, 2004, the contract's fair value was negative US$0.03 million.

     In April 2004, we entered into an interest rate swaption contract with a
bank, which will expire on October 20, 2007. The terms of the contract provide
that if the 6-month US$-LIBOR-BBA rate ever reaches 5% before the expiration of
the contract, the interest to be paid to the bank during the contract period
will be based on a fixed rate of 2.7% multiplied by the number of days for which
the 6-month US$-LIBOR-BBA rate exceeded 5% divided by the number of days in the
contract period. The notional amount of the contract is US$157.0 million.
Payment dates are every April 20 and October 20 starting from October 20, 2004
through the expiration date. As of December 31, 2004, the contract's fair value
was negative US$1.6 million.


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     On December 2003, we entered into an interest rate swap contract whereby
we pay NT dollars at a 90-day BA rate minus 0.70% in exchange for three possible
payoff scenarios: (1) if the US$ 6-month LIBOR is below 0.95%, we receive the
US$ 6-month LIBOR per annum; (2) if the US$ 6-month LIBOR is equal to or above
0.95% and equal to or below 2.00%, we receive 3.60% per annum; and (3) if the
US$ 6-month LIBOR is above 2.00%, we receive either 4.00% minus US$ 6-month
LIBOR or 0%, whichever is greater. The contract has a notional amount of
NT$2,750.0 million and expires in January 2009. As of December 31, 2004, the
contract's fair value was negative US$0.06 million.

     In October 2003, we entered into two cross-currency swap contracts to
hedge against reductions in value caused by changes in foreign currency exchange
rates, as well as to manage our exposure to interest rates. See "--Foreign
Currency Exchange Rate Risk".

     The table below sets forth information relating to our significant
obligations that are sensitive to interest rate fluctuations as of December 31,
2004.

<TABLE>
                                                               Expected Maturity Date
                                 ------------------------------------------------------------------------------------
                                                                                                            Fair
                                   2005       2006      2007       2008     2009    Thereafter    Total     Value
                                 ------------------------------------------------------------------------------------
                                                         (in millions, except percentages)
<S>                               <C>        <C>      <C>        <C>       <C>        <C>       <C>         <C>
   Short-term debt:
      Variable rate (NT$)....     1,016.8        -         -          -         -        -        1,016.8   1,016.8
        Average interest rate         1.58%      -         -          -         -        -            1.58%
      Variable rate (US$)....        76.4        -         -          -         -        -           76.4      76.4
        Average interest rate         4.37%      -         -          -         -        -            4.37%
      Variable rate (JP(Y))..        25.6        -                    -         -        -           25.6      25.6
        Average interest rate         0.78%      -         -          -         -        -            0.78%
      Variable rate (EUR)....         1.3        -         -          -         -        -            1.3       1.3
        Average interest rate         2.81%      -         -          -         -        -            2.81%
      Variable rate (KRW)....     2,729.9        -         -          -         -        -        2,729.9   2,729.9
        Average interest rate         6.96%      -         -          -         -        -            6.96%
      Variable rate (RMB)....       268.8        -         -          -         -        -          268.8     268.8
        Average interest rate         5.03%      -         -          -         -        -            5.03%
   Long-term debt:
      Variable rate (NT$)....       714.6   10,955.2   5,230.5    6,909.1   4,000.3     47.5     27,857.2  27,857.2
        Average interest rate         3.83%      2.78%     3.04%      3.60%     4.36%    2.91%        3.29%
      Fixed rate (NT$).......        42.4       44.1      25.8        1.4       0.5      -          114.2     114.2
        Average interest rate         4.98%      5.01%     5.20%      8.49%     6.35%    -            5.09%
      Variable rate (US$)....        40.1      169.5     106.2       81.6      13.9      4.2        415.5     415.5
        Average interest rate         4.51%      4.60%     4.82%      4.77%     4.42%    5.21%        4.68%
      Fixed rate (US$).......         5.4        3.1       1.9      209.7       -        -          220.1     220.1
        Average interest rate         8.56%      8.76%     8.65%      3.75%     -        -            3.98%
      Variable rate (JP(Y))..         -        800.0       -          -         -        -          800.0     800.0
        Average interest rate         -          0.92%     -          -         -        -            0.92%
      Variable rate (RMB)....         -          -        10.2       10.2      10.2     30.4         61.0      61.0
        Average interest rate         -          -         5.02%      5.02%     5.02%    5.02%        5.02%
</TABLE>


     Foreign Currency Exchange Rate Risk. Our foreign currency exposure gives
rise to market risk associated with exchange rate movements against the NT
dollar, our functional currency. Currently, the majority of our revenues from
packaging and testing services are denominated in U.S. dollars, with a portion
denominated in NT dollars. Our costs of revenues and operating expenses
associated with packaging and testing services are incurred in several
currencies, primarily in NT dollars and U.S. dollars, as well as, to a lesser
extent, Malaysian ringgit, Korean won and Japanese yen. In addition, a
substantial portion of our capital expenditures, primarily for the purchase of
packaging and testing equipment, has been, and is expected to continue to be,
denominated primarily in U.S. dollars with the remainder in Japanese yen.
Fluctuations in exchange rates, primarily among the U.S. dollar, the NT dollar


                                       91
<PAGE>


and the Japanese yen, will affect our costs and operating margins and could
result in exchange losses and increased costs in NT dollar and other local
currency terms. Despite hedging and mitigating techniques implemented by us,
fluctuations in exchange rates have affected, and may continue to affect, our
financial condition and results of operations. We recorded a net foreign
exchange loss of NT$146.2 million (US$4.6 million), NT$386.8 million and
NT$397.9 million in 2004, 2003 and 2002, respectively. In 2004, 2003 and 2002,
the average exchange rate of the NT dollar to the U.S. dollar was 33.37, 34.40
and 34.53, respectively, calculated using noon buying rates in The City of New
York for cable transfers in NT dollars as certified for customs purposes by the
Federal Reserve Bank of New York.

     Foreign currency denominated liabilities as of December 31, 2004 include
U.S. dollar debt and Japanese yen debt. As of December 31, 2004, approximately
62% of our cash and accounts receivable were denominated in U.S. dollars, with a
substantial portion of the remainder denominated in NT dollars. As of December
31, 2004, approximately 72% of our accounts payable and payable for fixed assets
were denominated in currencies other than the NT dollar. To protect against
reductions in value and the volatility of future cash flows caused by changes in
foreign currency exchange rates, we utilize currency forward contracts from time
to time to reduce the impact of foreign currency fluctuations on our results of
operations. Our policy is to account for these contracts on a mark-to-market
rate basis, and the premiums are amortized on a straight-line basis over the
life of the contract.

     In October 2003, we entered into two cross-currency swap contracts to hedge
against reductions in value caused by changes in foreign currency exchange rates
and to manage our exposure to interest rates in connection with the proceeds
received from our offering of US$200.0 million zero coupon convertible bonds due
2008.

     The terms of one of such contracts provide that we pay NT dollars at a
fixed rate of 1.7% and receive U.S. dollars at a fixed rate of 2.7%. The
contract rate is US$/NT$33.95. The contract has a notional amount of US$157.0
million/NT$5,330.2 million and, as of December 31, 2004, had a fair value of
negative US$6.0 million. The contract expires in October 2007.

     The terms of the other of such contracts provide that we pay U.S. dollars
at a floating rate that is the percentage by which LIBOR is greater than 2% and
receive NT dollars at a floating rate that is the percentage by which LIBOR is
less than 2%. The contract rate is US$/NT$33.95. The contract has a notional
amount of US$43.0 million/NT$1,459.8 million and, as of December 31, 2004, had a
fair value of negative US$2.9 million. The contract expires in September 2008.

     The table below sets forth our outstanding foreign currency option
contracts in aggregate terms by type of contract as of December 31, 2004.

                        Foreign Currency Option Contracts

Buy US$ Put/JP(Y) Call
      Notional Amount                                 US$66.6 million
      Weighted Average Strike Price                   US$/JP(Y)104.96
      Fair Value                                      US$0.1 million

Buy US$ Put/KRW Call
      Notional Amount                                 US$54.0 million
      Weighted Average Strike Price                   US$/KRW1,062.72
      Fair Value                                      US$1.3 million

Buy US$ Put/NT$ Call
      Notional Amount                                 US$223.0 million
      Weighted Average Strike Price                   US$/NT$32.18
      Fair Value                                      US$4.1 million

Buy US$ Call/NT$ Call
      Notional Amount                                 US$43.0 million
      Weighted Average Strike Price                   US$/NT$33.95


                                       92
<PAGE>


                        Foreign Currency Option Contracts

      Fair Value                                      US$0.1 million

Sell US$ Call/JP(Y) Put
      Notional Amount                                 US$152.8 million
      Weighted Average Strike Price                   US$/JP(Y)103.98
      Fair Value                                      (US$0.1 million)

Sell US$ Call/KRW Put
      Notional Amount                                 US$104.0 million
      Weighted Average Strike Price                   US$/KRW1,057.42
      Fair Value                                      (US$0.9 million)

Sell US$ Call/NT$ Put
      Notional Amount                                 US$112.0 million
      Weighted Average Strike Price                   US$/NT$32.41
      Fair Value                                      (US$0.5 million)

Sell US$ Put/NT$ Call
      Notional Amount                                 US$157.0 million
      Weighted Average Strike Price                   US$/NT$31.37
      Fair Value                                      (US$3.0 million)

Item 12. Description of Securities Other Than Equity Securities

     Not applicable.


                                     PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies

     Not applicable.

Item 14. Material Modifications to the Rights of Security Holders and Use of
Proceeds

     Not applicable.

Item 15. Controls and Procedures

     As of December 31, 2004, we, under the supervision and with the
participation of our management, including our Chief Executive Officer and Chief
Financial Officer, performed an evaluation of the effectiveness of our
disclosure controls and procedures. Based on this evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that our disclosure
controls and procedures are effective for gathering, analyzing and disclosing
the information we are required to disclose in the reports we file under the
Exchange Act, within the time periods specified in the SEC's rules and forms.
Our management necessarily applied its judgment in assessing the costs and
benefits of such controls and procedures, which by their nature can provide only
reasonable assurance regarding management's control objectives.

     There has been no change in our internal control over financial reporting
that occurred during the period covered by this annual report that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.


                                       93
<PAGE>


Item 16. [Reserved]

Item 16A. Audit Committee Financial Expert

     Under Rule 10A-3 of the Exchange Act and the rules of the New York Stock
Exchange, we are required to have an audit committee that meets certain
requirements by July 31, 2005. We have identified a potential candidate for our
audit committee. Subject to such candidate's election to the board of directors
as a new director by our shareholders during our annual shareholders' meeting in
June 2005, we anticipate considering such candidate's installation as the audit
committee member at a board of directors meeting following such annual
shareholders' meeting. We also plan to consider his eligibility to serve as our
audit committee financial expert. We have drafted an audit committee charter
which is subject to approval by our board of directors upon our establishment of
an audit committee.

Item 16B. Code of Ethics

     We have drafted a code of ethics for our principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions and we plan to address the adoption of such
code of ethics with the board of directors before the end of 2005. Historically,
ethical oversight and actual or apparent conflicts of interest have been handled
informally by senior management and the board of directors.

Item 16C. Principal Accountant Fees and Services

Policy on Pre-Approval of Audit and Non-Audit Services of Independent Auditors

     Until the establishment of our audit committee, the full board of directors
is responsible for the oversight of our independent auditor's work. Our board of
directors pre-approves all audit and non-audit services provided by our
independent auditors, including audit services, audit-related services, tax
services and other services, on a case-by-case basis. Accordingly, we have not
established any pre-approval policies and procedures. All audit and non-audit
services performed by Deloitte & Touche, our independent auditors, after May 6,
2003, the effective date of revised Rule 2-01(c)(7) of Regulation S-X entitled
"Audit Committee Administration of the Engagement", were pre-approved by the
board of directors.

Independent Auditor Fees

     TN Soong & Co, independent public accountants, an associate member firm of
Deloitte Touche Tohmatsu, combined on June 1, 2003 with Deloitte & Touche
(Taiwan) to establish Deloitte & Touche, a member firm of Deloitte Touche
Tohmatsu, or Deloitte & Touche, at which time Deloitte & Touche became our
principal independent auditor. Prior to June 1, 2003, TN Soong & Co had served
as our principal independent auditor for the periods indicated in the table
below.

     The following table sets forth the aggregate fees by categories specified
below in connection with certain professional services rendered by Deloitte &
Touche or TN Soong & Co, as applicable. We did not pay any other fees to our
auditors during the periods indicated below.

                                            For the Year Ended December 31,
                                       -----------------------------------------
                                        2003                      2004
                                       -----------------------------------------
                                         NT$              NT$             US$
                                                   (in thousands)
Audit fees(1)....................      26,582.3         28,332.3          892.6
Audit-related fees(2)............      14,898.3         39,156.4        1,233.7
Tax fees(3)......................         813.5          4,034.6          127.1
Other fees(4)....................       5,454.1            410.0           12.9
                                       -----------------------------------------
     Total.......................      47,748.2         71,933.3        2,266.3
                                       =========================================

------------------
(1)  Consists of fees for professional services in connection with the audit of
     our annual financial statements, reviews of interim financial statements
     and statutory and regulatory filings or engagements.


                                       94
<PAGE>


(2)  Principally comprises fees associated with the issuance of agreed-upon
     procedure letters.

(3)  Consists of fees for tax advice.

(4)  Consists of risk management consulting fees.


Item 16D. Exemptions from the Listing Standards for Audit Committees.

     Not applicable.

Item 16E. Purchases of Equity Securities by the Issuer and Affiliated
Purchasers.

     None of our equity securities were purchased by ourselves or our affiliated
purchasers in 2004.


                                    PART III

Item 17. Financial Statements

     The Company has elected to provide financial statements for fiscal year
2004 and the related information pursuant to Item 18.

Item 18. Financial Statements

     Reference is made to pages F-1 to F-73 of this annual report.

     The consolidated financial statements of the Company and the report thereon
by its independent auditors listed below are attached hereto as follows:

     (a)  Report of Independent Registered Public Accounting Firm of the Company
          dated February 1, 2005 (page F-1).

     (b)  Consolidated Balance Sheets of the Company and subsidiaries as of
          December 31, 2003 and 2004 (page F-3).

     (c)  Consolidated Statements of Income of the Company and subsidiaries for
          the years ended December 31, 2002, 2003 and 2004 (page F-4 to F-6).

     (d)  Consolidated Statements of Changes in Shareholders' Equity of the
          Company and subsidiaries for the years ended December 31, 2002, 2003
          and 2004 (page F-7 to F-8).

     (e)  Consolidated Statements of Cash Flows of the Company and subsidiaries
          for the years ended December 31, 2002, 2003 and 2004 (pages F-9 to
          F-11).

     (f)  Notes to Consolidated Financial Statements of the Company and
          subsidiaries (pages F-12 to F-73).

Item 19. Exhibits

1.        Articles of Incorporation of the Registrant (in Chinese with English
          translation) (incorporating all amendments as of May 31, 2005).

2.        Amended and Restated Deposit Agreement dated as of September 29, 2000
          among ASE Inc., Citibank N.A., as depositary, and Holders and
          Beneficial Holders of American Depositary Shares evidenced by American
          Depositary Receipts issued thereunder, including the form of American
          Depositary Receipt (incorporated by reference to Exhibit 4.1 to our
          registration statement on Form F-3 (File No. 333-87428) filed on March
          31, 2003).

4.   (a)  Asset Purchase Agreement dated as of July 3, 1999 among ASE (Chung Li)
          Inc., ASE Inc., Motorola Electronics Taiwan, Ltd. and Motorola, Inc.
          (incorporated by reference to Exhibit 10.2 to ASE Test's


                                       95
<PAGE>


          registration statement on Form F-3 (File No. 333-10892) filed on
          September 27, 1999 (the "ASE Test 1999 Form-3")).

     (b)  Agreement dated as of June 5, 2002 among ASE (Chung Li) Inc., ASE
          Inc., Motorola Electronics Taiwan, Ltd. and Motorola, Inc. amending
          certain earn-out arrangements provided for in Section 2.09(b)(ii)(D)
          of the Asset Purchase Agreement dated as of July 3, 1999 among the
          same parties (incorporated by reference to Exhibit 4(b) to our annual
          report on Form 20-F (File No. 001-16125) for the year ended December
          31, 2002 filed on June 30, 2003).

     (c)  Stock Purchase Agreement dated as of July 3, 1999 among ASE Investment
          (Labuan) Inc., ASE Inc., Motorola Asia Ltd. and Motorola, Inc.
          relating to the purchase and sale of 100% of the common stock of
          Motorola Korea Ltd. (incorporated by reference to Exhibit 10.3 to the
          ASE Test 1999 Form F-3).

     (d)+ BGA Immunity Agreement dated as of January 25, 1994 between ASE Inc.
          and Motorola, Inc. (incorporated by reference to Exhibit 10.6 to the
          Form F-1).

     (e)++ Amendment dated March 18, 2003 renewing the BGA Immunity Agreement
          dated as of January 25, 1994 between ASE Inc. and Motorola, Inc.
          (incorporated by reference to Exhibit 4(g) to our annual report on
          Form 20-F (File No. 001-16125) for the year ended December 31, 2003
          filed on June 30, 2004).

     (f)  Consent dated June 10, 2004 to the Assignment of the BGA Immunity
          Agreement between ASE Inc. and Motorola, Inc. dated January 25, 1994
          (incorporated by reference to Exhibit 4(h) to our annual report on
          Form 20-F (File No. 001-16125) for the year ended December 31, 2003
          filed on June 30, 2004).

     (g)  Commission Agreement dated as of August 1, 2004 between ASE
          Electronics (M) Sdn. Bhd. and Gardex International Limited.

     (h)  Commission Agreement dated as of August 1, 2004 between ASE Test, Inc.
          and Gardex International Limited.

     (i)  Commission Agreement dated as of August 1, 2004 between ASE (Korea)
          Inc. and Gardex International Limited.

     (j)  Commission Agreement dated as of August 1, 2004 between Advanced
          Semiconductor Engineering, Inc. and Gardex International Limited.

     (k)  Joint Venture Agreement dated as of October 28, 2003 by and between
          ASE Inc. and Compeq Manufacturing Co., Ltd. (in Chinese with English
          translation) (incorporated by reference to Exhibit 10.51 to our
          registration statement on Form F-3 (File No. 333-111172) filed on
          December 15, 2003 (the "December 2003 Form F-3"))

8.        List of Subsidiaries.

12.  (a)  Certification of Jason C.S. Chang, Chief Executive Officer of Advanced
          Semiconductor Engineering, Inc. required by Rule 13a-14(a) of the
          Exchange Act.

     (b)  Certification of Joseph Tung, Chief Financial Officer of Advanced
          Semiconductor Engineering, Inc. required by Rule 13a-14(a) of the
          Exchange Act.

13.       Certification of the Chief Executive Officer and the Chief Financial
          Officer of Advanced Semiconductor Engineering, Inc. required by Rule
          13a-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title
          18 of the United States Code.

--------------------
+    Does not contain portions for which confidential treatment has been
     granted.


                                       96
<PAGE>


++   Does not contain portions for which confidential treatment has been
     requested.

     The Company agrees to furnish to the Securities and Exchange Commission
upon request a copy of any instrument which defines the rights of holders of
long-term debt of the Company and its consolidated subsidiaries.






                                       97
<PAGE>


                                   SIGNATURES

     The registrant hereby certifies that it meets all of the requirements for
filing on Form 20-F and that it has duly caused and authorized the undersigned
to sign this annual report.

                                            ADVANCED SEMICONDUCTOR
                                                ENGINEERING, INC.



                                            By:  /s/ Joseph Tung
                                                -------------------------------
                                                Joseph Tung
                                                Chief Financial Officer

Date: June 23, 2005


<PAGE>


                          INDEX TO FINANCIAL STATEMENTS


                                                                            Page
                                                                            ----
Consolidated Financial Statements of Advanced Semiconductor Engineering,
   Inc. and Subsidiaries
     Independent Registered Public Acounting Firm's Report...............   F-1
     Consolidated Balance Sheets.........................................   F-3
     Consolidated Statements of Income...................................   F-4
     Consolidated Statements of Changes in Shareholders' Equity..........   F-7
     Consolidated Statements of Cash Flows...............................   F-9
     Notes to Consolidated Financial Statement...........................   F-12

<PAGE>


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


February 1, 2005

The Board of Directors and Shareholders
Advanced Semiconductor Engineering, Inc.

We have audited the accompanying consolidated balance sheets of Advanced
Semiconductor Engineering, Inc., a corporation incorporated under the laws of
the Republic of China, and its consolidated subsidiaries (the "Company") as of
December 31, 2003 and 2004, and the related consolidated statements of income,
changes in shareholders' equity and cash flows for each of the years in the
three year period ended December 31, 2004, which are required to be prepared in
accordance with accounting principles generally accepted in the Republic of
China and expressed in New Taiwan dollars. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with the Rules Governing the Audit of
Financial Statements by Certified Public Accountants, auditing standards
generally accepted in the Republic of China and the Standards of the Public
Company Accounting Oversight Board (United States). These rules and standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. (The Company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting.) Our audit includes consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
December 31, 2003 and 2004, and the results of their operations and their cash
flows for each of the years in the three-year period ended December 31, 2004, in
conformity with accounting principles generally accepted in the Republic of
China.

As disclosed in Note 3 to the consolidated financial statements, the Company
adopted Republic of China Statement of Financial Accounting Standards No. 35
"Impairment of Assets" on December 31, 2004.


                                       F-1
<PAGE>


Accounting principles generally accepted in the Republic of China vary in
certain significant respects from accounting principles generally accepted in
the United States of America. Information relating to the nature and effect of
such differences is presented in Note 29 to the consolidated financial
statements.

Our audits also comprehended the translation of New Taiwan dollar amounts into
U.S. dollar amounts and, in our opinion, such translation has been made in
conformity with the basis stated in Note 2. Such U.S. dollar amounts are
presented solely for the convenience of the readers.






Deloitte & Touche
Taipei, Taiwan
Republic of China





                                       F-2
<PAGE>


<TABLE>
ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND ITS SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(Amounts In Thousands, Except Par Value)
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                  December 31
                                                                                  --------------------------------------------------
                                                                                       2003                         2004
                                                                                  --------------        ----------------------------
<S>                                                                                <C>                  <C>            <C>
ASSETS                                                                                 NT$                   NT$              US$

CURRENT ASSETS
   Cash and cash equivalents (Notes 2 and 4)                                           8,562,425          5,975,103         188,252
   Short-term investments (Notes 2, 5 and 24)                                          3,017,779          3,194,183         100,636
   Notes receivable                                                                      111,596             89,612           2,823
   Accounts receivable-net (Notes 2, 6 and 23)                                        12,798,135         13,586,635         428,060
   Other receivables (Note 6)                                                            206,475            967,616          30,486
   Inventories (Notes 2, 3 and 7)                                                      4,691,771          9,437,257         297,330
   Deferred income tax assets (Notes 2 and 21)                                         1,224,501          1,375,450          43,335
   Pledged time deposit (Note 24)                                                        167,426            125,599           3,957
   Prepayments and other                                                                 677,794          1,143,417          36,024
                                                                                  --------------        -----------    ------------

         Total current assets                                                         31,457,902         35,894,872       1,130,903
                                                                                  --------------        -----------    ------------

LONG-TERM INVESTMENTS (Notes 2, 3 and 8)

   Long-term stock investments-equity method                                           4,521,113          3,534,289         111,351
   Long-term stock investments- cost method                                            1,756,542          1,323,074          41,685
   Prepaid for long-term investments                                                      12,000                  -               -
   Other long-term investments                                                            50,000             50,000           1,575
   Other financial assets - non-current                                                    3,140                  -               -
                                                                                  --------------        -----------    ------------
         Total long-term investments                                                   6,342,795          4,907,363         154,611
                                                                                  --------------        -----------    ------------

PROPERTIES (Notes 2, 9, 16, 23, 24 and 25)
   Cost
      Land                                                                             3,794,571          2,388,264          75,244
      Buildings and improvements                                                      18,391,271         21,023,396         662,363
      Machinery and equipment                                                         81,840,769         95,462,106       3,007,628
      Transportation equipment                                                           107,400            122,160           3,849
      Furniture and fixtures                                                           1,781,292          2,479,940          78,133
      Leased assets and leasehold improvements                                         1,026,848          1,095,910          34,528
      Long-term land leasehold rights                                                     60,808             60,808           1,915
                                                                                  --------------        -----------    ------------
      Total cost                                                                     107,002,959        122,632,584       3,863,660
   Accumulated depreciation                                                          (48,281,935)       (59,126,412)     (1,862,836)
                                                                                  --------------        -----------    ------------
                                                                                      58,721,024         63,506,172       2,000,824
   Construction in progress                                                            2,425,310          4,318,509         136,059
   Machinery in transit and prepayments                                                6,193,613         14,562,234         458,798
                                                                                  --------------        -----------    ------------
         Net properties                                                               67,339,947         82,386,915       2,595,681
                                                                                  --------------        -----------    ------------
GOODWILL (Notes 2, 3 and 10)                                                           4,596,234          3,336,376         105,116
                                                                                  --------------        -----------    ------------

OTHER ASSETS
   Guarantee deposits (Note 24)                                                          359,908            383,131          12,071
   Deferred charges (Notes 2 and 25)                                                   1,519,268          2,257,876          71,136
   Deferred income tax assets (Notes 2 and 21)                                         2,230,229          3,838,132         120,925
   Other                                                                                 477,960            946,211          29,811
                                                                                  --------------        -----------    ------------

         Total other assets                                                            4,587,365          7,425,350         233,943
                                                                                  --------------        -----------    ------------


TOTAL                                                                                114,324,243        133,950,876       4,220,254
                                                                                  ==============        ===========    ============


                                                                                                   December 31
                                                                                  -------------------------------------------------
                                                                                       2003                    2004
                                                                                  --------------        ---------------------------
   LIABILITIES AND SHAREHOLDERS' EQUITY                                                NT$                   NT$            US$

   CURRENT LIABILITIES
      Short-term borrowings (Note 11)                                                  5,048,230          3,733,433         117,625
      Commercial papers and bank acceptances payable (Notes 11 and 12)                 1,075,965            908,816          28,633
      Notes payable                                                                        4,612             20,538             647
      Accounts payable (Note 23)                                                       6,484,377          7,879,412         248,249
      Payable for properties                                                           4,392,340          6,500,851         204,816
      Income tax payable (Note 21)                                                       217,846            287,709           9,065
      Current portion of long-term bank loans (Notes 14 and 24)                        5,491,389          2,011,673          63,380
      Current portion of obligations under capital leases (Notes 2 and 16)               164,612            198,831           6,264
      Current portion of long-term payable for investments (Note 15)                   2,309,960                  -               -

      Accrued expenses (Note 17)                                                       1,839,276          3,163,155          99,658
      Other                                                                              324,244            499,454          15,736
                                                                                  --------------        -----------    -------------

            Total current liabilities                                                 27,352,851         25,203,872         794,073
                                                                                  --------------        -----------    -------------

   LONG-TERM LIABILITIES
      Long-term bonds payable (Notes 2 and 13)                                         6,861,232          9,440,582         297,435
      Long-term bank loans (Notes 14 and 24)                                          23,873,312         36,891,546       1,162,304
      Obligations under capital leases (Notes 2 and 16)                                  105,517            197,513           6,223
                                                                                  --------------        -----------    ------------

            Total long-term liabilities                                               30,840,061         46,529,641       1,465,962
                                                                                  --------------        -----------    ------------

   OTHER LIABILITIES
      Accrued pension cost (Notes 2 and 17)                                              896,480          2,120,686          66,814
      Deferred income tax liabilities (Notes 2 and 21)                                    34,674             32,424           1,022
      Other (Notes 8 and 26)                                                                   -            347,668          10,953
                                                                                  --------------        -----------    ------------

            Total other liabilities                                                      931,154          2,500,778          78,789
                                                                                  --------------        -----------    ------------

            Total liabilities                                                         59,124,066         74,234,291       2,338,824
                                                                                  --------------        -----------    ------------


   COMMITMENTS AND CONTINGENCIES (Note 25)


   MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES                                     10,077,575          8,404,826         264,802
                                                                                  --------------        -----------    ------------

   SHAREHOLDERS' EQUITY (Notes 2 and 18)

      Capital stock - NT$10 par value
         Authorized - 5,150,000 thousand shares in 2003 and 2004

         Issued - 3,580,280 thousand shares in 2003 and 4,100,000 thousand
           shares in 2004                                                             35,802,800         41,000,000       1,291,745
                                                                                  --------------        -----------    ------------
      Capital received in advance                                                              -             42,759           1,347
                                                                                  --------------        -----------    ------------
      Capital surplus
         Capital in excess of par value                                                   14,777          3,168,119          99,815
         Treasury stock transaction                                                      220,735            220,735           6,954
         Long-term investment                                                          3,811,262          3,583,802         112,911
                                                                                  --------------        -----------    ------------
         Total capital surplus                                                         4,046,774          6,972,656         219,680
                                                                                  --------------        -----------    ------------
      Retained earnings                                                                3,808,436          5,576,332         175,687
                                                                                  --------------        -----------    ------------
      Other equity adjustments
         Unrealized loss on long-term investments in shares of stock                     (68,833)           (70,614)         (2,225)

         Cumulative translation adjustments                                            1,559,599            640,379          20,176
         Unrecognized pension cost                                                       (16,137)            (4,710)           (148)
         Other                                                                                 -            (36,607)         (1,153)
                                                                                  --------------        -----------    ------------
         Total other equity adjustments                                                1,474,629            528,448          16,650
                                                                                  --------------        -----------    ------------
      Treasury stock - 366 thousand shares in 2003 and 167,949 thousand  shares
        in 2004                                                                          (10,037)        (2,808,436)       (88,481)
                                                                                  --------------        -----------    ------------

            Total shareholders' equity                                                45,122,602         51,311,759       1,616,628
                                                                                  --------------        -----------    ------------
   TOTAL                                                                             114,324,243        133,950,876       4,220,254
                                                                                  ==============        ===========    ============

The accompanying notes are an integral part of the financial statements.
</TABLE>

                                       F-3
<PAGE>


<TABLE>
ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
(Amounts In Thousands, Except Share Data)
-----------------------------------------------------------------------------------------------------------------------

                                                                                Year Ended December 31
                                                             ----------------------------------------------------------
                                                                 2002           2003                    2004
                                                             ------------   ------------     --------------------------
                                                                 NT$            NT$             NT$           US$
<S>                                                          <C>              <C>             <C>            <C>
NET REVENUES (Notes 2 and 28)
   Packaging                                                   35,515,397     45,026,868      64,736,754     2,039,595
   Testing                                                     10,060,635     12,142,396      16,473,924       519,027
   Other                                                           10,806        142,506         501,966        15,815
                                                             ------------   ------------     -----------   -----------
         Total revenues                                        45,586,838     57,311,770      81,712,644     2,574,437
                                                             ------------   ------------     -----------   -----------

COST OF REVENUES (Note 20)
   Packaging                                                   29,260,015     37,042,539      52,921,805     1,667,354
   Testing                                                      9,219,424      9,287,142      12,141,233       382,522
   Other                                                           12,831        136,772         384,101        12,101
                                                             ------------   ------------     -----------   -----------
         Total cost of revenues                                38,492,270     46,466,453      65,447,139     2,061,977
                                                             ------------   ------------     -----------   -----------
GROSS PROFIT                                                    7,094,568     10,845,317      16,265,505       512,460
                                                             ------------   ------------     -----------   -----------

OPERATING EXPENSES (Notes 2, 10, 20 and 25)
   Selling                                                        909,440      1,204,912       1,041,232        32,805
   General and administrative                                   3,595,829      4,015,850       5,088,647       160,323
   Research and development                                     2,048,973      2,354,034       2,584,470        81,426
                                                             ------------   ------------     -----------   -----------
         Total operating expenses                               6,554,242      7,574,796       8,714,349       274,554
                                                             ------------   ------------     -----------   -----------
INCOME FROM OPERATIONS                                            540,326      3,270,521       7,551,156       237,906
                                                             ------------   ------------     -----------   -----------

NON-OPERATING INCOME
   Interest (Note 26)                                             392,593        114,627          79,678         2,510
   Gain on sale of investment                                     101,314        618,857          57,140         1,800
   Other                                                          481,526        336,546         339,042        10,682
                                                             ------------   ------------     -----------   -----------
         Total non-operating income                               975,433      1,070,030         475,860        14,992
                                                             ------------   ------------     -----------   -----------

NON-OPERATING EXPENSES
   Interest (Notes 2 and 9)                                     1,971,227      1,419,352         978,405        30,825
   Investment loss under equity method (Notes 2 and 8)            410,348        240,656         394,995        12,445
   Foreign exchange loss, net (Notes 2 and 26)                    397,874        386,844         146,207         4,606
   Realized loss on long-term investments (Note 18)                     -        354,787               -             -
   Impairment of long-lived assets (Note 9)                     1,225,555              -               -             -
   Other investment loss (Notes 2, 3 and 8)                             -              -         512,000        16,131
   Impairment of goodwill (Notes 2, 3 and 10)                           -              -       1,950,097        61,440
   Other                                                          220,460        451,182         513,496        16,178
                                                             ------------   ------------     -----------   -----------

         Total non-operating expenses                           4,225,464      2,852,821       4,495,200       141,625
                                                             ------------   ------------     -----------   -----------

INCOME (LOSS) BEFORE INCOME TAX                                (2,709,705)     1,487,730       3,531,816       111,273

INCOME TAX BENEFIT (Notes 2 and 21)                             1,140,324      1,278,148       1,396,326        43,993
                                                             ------------   ------------     -----------   -----------

INCOME (LOSS) BEFORE EXTRAORDINARY LOSS AND
  CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
  PRINCIPLE                                                    (1,569,381)     2,765,878       4,928,142       155,266

EXTRAORDINARY LOSS (NET OF TAX BENEFIT
  NT$11,538 thousand in 2002)(Note 13)                            (34,613)       (75,668)              -             -

                                                                                                            (Continued)
</TABLE>


                                       F-4
<PAGE>


<TABLE>
                                                                                Year Ended December 31
                                                             ----------------------------------------------------------
                                                                 2002          2003                 2004
                                                             ------------   ------------     --------------------------
                                                                 NT$           NT$                NT$          US$
<S>                                                             <C>              <C>            <C>             <C>
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
  PRINCIPLE (Note 3)                                                    -             -          (26,844)         (846)

MINORITY INTEREST IN NET LOSS (INCOME) OF
   SUBSIDIARIES                                                 1,733,029        52,586         (691,608)      (21,790)
                                                             ------------   ------------     ------------   ----------

NET INCOME                                                        129,035     2,742,796        4,209,690       132,630
                                                             ============   ============     ============   ==========

EARNINGS PER SHARE (Note 22)
   Basic EPS
     Based on weighted average number of outstanding shares
     after giving retroactive adjustment to 2003 and 2004
     stock dividends
        Before income tax
           Income (loss) before extraordinary loss and
             cumulative effect of change in accounting
             principle                                              (0.22)          0.48            0.85          0.03
           Extraordinary loss                                       (0.01)         (0.02)              -             -
           Cumulative effect of change in accounting principle          -              -           (0.01)            -
                                                             ------------   ------------     -----------   -----------
           Net income (loss)                                        (0.23)          0.46            0.84          0.03
                                                             ============   ============     ============  ===========
         After income tax
           Income before extraordinary loss and cumulative
            effect of change in accounting principle                 0.05           0.76            1.10          0.03
           Extraordinary loss                                       (0.01)         (0.02)              -             -
           Cumulative effect of change in accounting principle          -              -           (0.01)            -
                                                             ------------   ------------     -----------   -----------
           Net income                                                0.04           0.74            1.09          0.03
                                                             ============   ============     ============  ===========
   Diluted EPS
     Based on weighted average number of outstanding shares
     after giving retroactive adjustment to 2003 and 2004
     stock dividends
        Before income tax
           Income (loss) before extraordinary loss and
            cumulative effect of change in accounting principle     (0.22)          0.47            0.85          0.03
           Extraordinary loss                                       (0.01)         (0.02)              -             -
           Cumulative effect of change in accounting principle          -              -           (0.01)            -
                                                             ------------   ------------     -----------   -----------
           Net income (loss)                                        (0.23)          0.45            0.84          0.03
                                                             ============   ============     ============  ===========
         After income tax
           Income before extraordinary loss and cumulative
            effect of change in accounting principle                 0.05           0.75            1.07          0.03
           Extraordinary loss                                       (0.01)         (0.02)              -             -
           Cumulative effect of change in accounting principle          -              -           (0.01)            -
                                                             ------------   ------------     -----------   -----------
           Net income                                                0.04           0.73            1.06          0.03
                                                             ============   ============     ============  ===========

EARNINGS PER EQUIVALENT ADS (Note 22)
   Basic EPS
     Based on weighted average number of outstanding shares
     after giving retroactive effect for the 2003 and 2004
     stock dividends
        Before income tax
           Income (loss) before extraordinary loss and
            cumulative effect of change in accounting principle     (1.10)          2.39            4.26          0.13
           Extraordinary loss                                       (0.06)         (0.10)              -             -
           Cumulative effect of change in accounting principle          -              -           (0.03)        (0.00)
                                                             ------------   ------------     -----------   -----------
           Net income (loss)                                        (1.16)          2.29            4.23          0.13
                                                             ============   ============     ============  ===========
         After income tax
           Income before extraordinary loss and cumulative
            effect of change in accounting principle                 0.23           3.79            5.49          0.17
           Extraordinary loss                                       (0.05)         (0.10)              -             -
           Cumulative effect of change in accounting principle          -              -           (0.03)        (0.00)
                                                             ------------   ------------     -----------   -----------
           Net income                                                0.18           3.69            5.46          0.17
                                                             ============   ============     ============  ===========

                                                                                                           (Continued)
</TABLE>


                                       F-5
<PAGE>


<TABLE>
                                                                                Year Ended December 31
                                                             ----------------------------------------------------------
                                                                 2002          2003                 2004
                                                             ------------   ------------     --------------------------
                                                                 NT$           NT$                NT$          US$
<S>                                                             <C>              <C>            <C>             <C>

   Diluted EPS
     Based on weighted average number of outstanding shares
     after giving retroactive effect for the 2003 and 2004
     stock dividends
        Before income tax
           Income (loss) before extraordinary loss and
            cumulative effect of change in accounting
            principle                                               (1.10)          2.37            4.23          0.13
           Extraordinary loss                                       (0.06)         (0.10)              -             -
           Cumulative effect of change in accounting principle          -              -           (0.03)        (0.00)
                                                             ------------   ------------     -----------   -----------
            Net income (loss)                                       (1.16)          2.27            4.20          0.13
                                                             ============   ============     ============  ===========
         After income tax
           Income before extraordinary loss and cumulative
            effect of change in accounting principle                 0.23           3.75            5.34          0.17
            Extraordinary loss                                      (0.05)         (0.10)              -             -
           Cumulative effect of change in accounting principle          -              -           (0.03)        (0.00)
                                                             ------------   ------------     -----------   -----------
           Net income                                                 0.18          3.65            5.31          0.17
                                                             ============   ============     ============  ===========

The accompanying notes are an integral part of the financial statements.                                    (Concluded)
</TABLE>





                                       F-6
<PAGE>


<TABLE>
ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Amounts In Thousands)
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                           Retained Earnings
                                                                                                   ---------------------------------
                                                              Capital Surplus
                                             ---------------------------------------------------              Unappropri-
                                                                   Gain on                                        ated
                                   Capital               Treasury  Disposal     Long-                           Earnings
                                   Received  Capital in   Stock       of        term                            (Acummu-
                          Capital    in       Excess of   Trans-   Proper-     Invest-               Legal        lated
                           Stock   Advance    Par Value   action     ties       ment      Total     Reserve      Losses)      Total

<S>                     <C>         <C>          <C>       <C>       <C>      <C>        <C>        <C>          <C>          <C>
New Taiwan Dollars
BALANCE,
  JANUARY 1, 2002       32,548,000        -   3,171,933        -    23,109   3,656,472  6,851,514  2,912,716  (1,897,062) 1,015,654

   Transfer of ASE Inc.
     shares held by
     subsidiaries as
     treasury stock              -        -           -        -         -           -          -          -           -          -
   Reversal of prior
     years' gain on
     disposal of
     properties                  -        -           -        -   (23,109)          -    (23,109)     2,310      20,799     23,109
   Legal reserve
     offsets against
     deficit                     -        -           -        -         -           -          - (1,876,264)  1,876,264          -
   Reversal of
     unrealized loss
     on long-term
     investments in
     share of stock              -        -           -        -         -           -          -          -           -          -
   Adjustment of equity
     in subsidiary due
     to change in
     percentage of
     ownership                   -        -           -        -         -     104,474    104,474          -      (1,586)    (1,586)
   Adjustment of equity
     in subsidiary due
     to reversal of
     oprior years' gain
     on disposal of
     properties                  -        -           -        -         -      (7,352)    (7,352)         -       7,352      7,352
   Consolidated net
     income in 2002              -        -           -        -         -           -          -          -     129,035    129,035
   Cumulative
     translation
     adjustments                 -        -           -        -         -           -          -          -           -          -
                        ----------  -------  ---------- --------  --------  ---------- ---------- ----------  ---------- ----------

BALANCE,
  DECEMBER 31, 2002     32,548,000        -   3,171,933        -         -   3,753,594  6,925,527  1,038,762     134,802  1,173,564

   Appropriations of
     2002 earnings
      Legal reserve              -        -           -        -         -           -          -     12,903     (12,903)         -
      Compensation to
        directors
        and supervisors          -        -           -        -         -           -          -          -      (2,280)    (2,280)
      Bonus to
        employees - cash         -        -           -        -         -           -          -          -      (8,000)    (8,000)
      Stock dividends -
        0.3%                97,644        -           -        -         -           -          -          -     (97,644)   (97,644)

   Capital surplus
     transfer to
     common stock -
     9.7%                3,157,156        -  (3,157,156)       -         -           - (3,157,156)         -           -          -
   Sales of ASE Inc.
     shares held
     by subsidiaries             -        -           -  220,735         -           -    220,735          -           -          -
   Adjustment of equity
     in subsidiary due
     to change in
     percentage of
     ownership                   -        -           -        -         -      57,668     57,668          -           -          -
   Adjustment of equity
     in subsidiary due
     to unrecognized
     pension cost                -        -           -        -         -           -          -          -           -          -
   Consolidated net
     income in 2003              -        -           -        -         -           -          -          -   2,742,796  2,742,796
   Cumulative
     translation
     adjustments                 -        -           -        -         -           -          -          -           -          -
                        ----------  -------  ---------- --------  --------  ---------- ---------- ----------  ---------- ----------
BALANCE,
  DECEMBER 31, 2003     35,802,800        -      14,777  220,735         -   3,811,262  4,046,774  1,051,665   2,756,771  3,808,436

   Appropriations of
    2003 earnings
      Legal reserve              -        -           -        -         -           -          -    274,279    (274,279)         -
      Compensation to
        directors
        and supervisors          -        -           -        -         -           -          -          -     (49,320)   (49,320)
      Bonus to
       employees - cash          -        -           -        -         -           -          -          -     (18,428)   (18,428)
      Bonus to
       employees - stock   154,272        -           -        -         -           -          -          -    (154,272)  (154,272)
      Stock dividends -
       5.7%              2,219,774        -           -        -         -           -          -          -  (2,219,774)(2,219,774)
   Capital received in
     advance from stock
     option exercised
     by employees                -   42,759           -        -         -           -          -          -           -          -

   Transfer of ASE Inc.
     shares held by
     subsidiaries as
     treasury stock              -        -           -                  -           -          -          -           -          -
   Evaluation on
     derivatives
     financial
     instruments - loss          -        -           -        -         -           -          -          -           -          -
   Adjustment of equity
     in subsidiary due
     to change in
     percentage of
     ownership                   -        -           -        -         -      15,332     15,332          -           -          -
   Unrealized loss on
     long-term
     investment                  -        -           -        -         -           -          -          -           -          -
   Issuance of common
     stock through
     merge               2,823,154         -   3,153,342        -         -           -  3,153,342          -           -
   Elimination of
     long-term
     investment balance
     on consolidation            -        -           -        -         -    (242,792)  (242,792)         -           -          -
   Consolidated net
     income in 2004              -        -           -        -         -           -          -          -   4,209,690  4,209,690
   Adjustment of equity
     in subsidiary due
     to unrecognized
     pension cost                -        -           -        -         -           -          -          -           -          -
   Cumulative
     translation
     adjustments                 -        -           -        -         -           -          -          -           -          -
                        ----------  -------  ---------- --------  --------  ---------  ---------  ----------  ---------- ----------
BALANCE,
   DECEMBER 31, 2004    41,000,000   42,759   3,168,119  220,735         -   3,583,802  6,972,656  1,325,944   4,250,388  5,576,332
                        ==========  =======  ========== ========  ========  ========== ========== ==========  ========== ==========
</TABLE>

<TABLE>
                                          Unrealized
                                           Loss on
                                          Long-term
                                         Investments    Cumulative   Unrecognized                                 Total
                                          in Shares    Translation      Pension                   Treasury    Shareholders'
                                          of Stock     Adjustments       Cost         Other         Stock           Equity
<S>                                       <C>           <C>          <C>            <C>          <C>           <C>
New Taiwan Dollars
BALANCE, JANUARY 1, 2002                    (442,246)    1,973,399            -            -              -      41,946,321

    Transfer of ASE Inc. shares held
      by subsidiaries as treasury stock            -             -            -            -     (2,639,826)     (2,639,826)
    Reversal of prior years' gain on
      disposal of properties                       -             -            -            -              -               -
    Legal reserve offsets against
      deficit                                      -             -            -            -              -               -
    Reversal of unrealized loss on
      long-term investments in share
      of stock                                18,626             -            -            -              -          18,626
    Adjustment of equity in subsidiary
      due to change in percentage of
      ownership                                    -             -            -            -              -         102,888
    Adjustment of equity in subsidiary
      due to reversal of prior years'
      gain on disposal of properties               -             -            -            -              -               -
    Consolidated net income in 2002                -             -            -            -              -         129,035
    Cumulative translation adjustments             -      (126,378)           -            -              -        (126,378)
                                          ----------  ------------    ---------    ---------   ------------   -------------

BALANCE, DECEMBER 31, 2002                  (423,620)    1,847,021            -            -     (2,639,826)     39,430,666

    Appropriations of 2002 earnings
       Legal reserve                               -             -            -            -              -               -
       Compensation to directors and
         supervisors                               -             -            -            -              -          (2,280)
       Bonus to employees - cash                   -             -            -            -              -          (8,000)
       Stock dividends - 0.3%                      -             -            -            -              -               -
    Capital surplus transfer to
      common stock - 9.7%                          -             -            -            -              -               -
    Sales of ASE Inc. shares held by
      subsidiaries                           354,787             -            -            -      2,629,789       3,205,311
    Adjustment of equity in subsidiary
      due to change in percentage of
      ownership                                    -             -            -            -              -          57,668
    Adjustment of equity in subsidiary
      due to unrecognized pension cost             -             -      (16,137)           -              -         (16,137)
    Consolidated net income in 2003                -             -            -            -              -       2,742,796
    Cumulative translation adjustments             -      (287,422)           -            -              -        (287,422)
                                          ----------  ------------    ---------    ---------   ------------   -------------

BALANCE, DECEMBER 31, 2003                   (68,833)    1,559,599      (16,137)           -        (10,037)     45,122,602

    Appropriations of 2003 earnings
       Legal reserve                               -             -            -            -              -               -
       Compensation to directors and
         supervisors                               -             -            -            -              -         (49,320)
       Bonus to employees - cash                   -             -            -            -              -         (18,428)
       Bonus to employees - stock                  -             -            -            -              -               -
       Stock dividends - 5.7%                      -             -            -            -              -               -
    Capital received in advance from
      stock option exercised by employees          -             -            -            -              -          42,759
    Transfer of ASE Inc. shares held
      by subsidiaries as treasury stock            -            -            -     (2,798,399)     (2,798,399)
    Evaluation on derivatives financial
      instruments - loss                           -             -            -      (36,607)             -         (36,607)
    Adjustment of equity in subsidiary
      due to change in percentage of
      ownership                                    -             -            -            -              -          15,332
    Unrealized loss on long-term investme     (1,781)            -            -            -              -          (1,781)
    Issuance of common stock through merg          -             -            -            -              -       5,976,496
    Elimination of long-term investment
      balance on consolidation                     -             -            -            -              -        (242,792)
    Consolidated net income in 2004                -             -            -            -              -       4,209,690
    Adjustment of equity in subsidiary
      due to unrecognized pension cost             -             -       11,427            -              -          11,427
    Cumulative translation adjustments             -      (919,220)           -            -              -        (919,220)
                                          ----------  ------------    ---------    ---------   ------------   -------------

BALANCE, DECEMBER 31, 2004                   (70,614)      640,379       (4,710)     (36,607)    (2,808,436)     51,311,759
                                          ==========  ============    =========    =========   ============   =============
                                                                                                                 (Continued)

                                                              F-7
</TABLE>
<PAGE>


<TABLE>
ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Amounts In Thousands)
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                           Retained Earnings
                                                                                                   ---------------------------------
                                                              Capital Surplus
                                             ---------------------------------------------------              Unappropri-
                                                                   Gain on                                        ated
                                   Capital               Treasury  Disposal     Long-                           Earnings
                                   Received  Capital in   Stock       of        term                            (Acummu-
                          Capital    in       Excess of   Trans-   Proper-     Invest-               Legal        lated
                           Stock   Advance    Par Value   action     ties       ment      Total     Reserve      Losses)      Total

<S>                     <C>         <C>          <C>       <C>       <C>      <C>        <C>        <C>          <C>          <C>
New Taiwan Dollars
U.S. Dollars

BALANCE,
  JANUARY 1, 2004      1,128,003          -         466     6,954         -    120,077  127,497      33,134       86,854    119,988

    Appropriations of
      2003 earnings
       Legal reserve           -          -           -         -         -          -        -       8,641       (8,641)         -
       Compensation to
        directors and
        supervisors            -          -           -         -         -          -        -           -       (1,554)    (1,554)
       Bonus to
        employees
        - cash                 -          -           -         -         -          -        -           -         (581)      (581)
       Bonus to
        employees
        - stock            4,860          -           -         -         -          -        -           -       (4,860)    (4,860)
       Stock
        dividends -
        5.7%              69,936          -           -         -         -          -        -           -      (69,936)   (69,936)
    Capital received in
      advance from
      stock option
      exercised
      by employees             -      1,347           -         -         -          -        -           -            -          -
    Transfer of ASE Inc.
      shares held by
      subsidiaries
      as treasury stock        -           -         -         -          -          -        -           -             -         -

    Evaluation on
      derivative
      financial
      instruments
      - loss                   -          -           -         -         -          -        -           -            -          -
    Adjustment of
      equity in
      subsidiary due to
      change in
      percentage of
      ownership                -          -           -         -         -        483      483           -            -          -
    Unrealized loss on
      long-term
      investment               -          -        -           -            -        -        -           -            -          -
    Issuance of
      common stock
      through merger      88,946          -      99,349         -          -         -   99,349           -            -           -
    Elimination of
      long-term
      investment
      balance on
      consolidation            -          -           -         -         -     (7,649)  (7,649)          -            -          -
    Consolidated net
      income
      in 2004                  -          -           -         -         -          -        -           -      132,630     132,630
    Adjustment of
      equity in
      subsidiary due to
      unrecognized loss
      on pension cost          -          -           -         -         -          -        -           -            -         -
    Cumulative
      translation
      adjustments              -          -           -         -         -          -        -           -            -         -
                       ---------   --------    --------  --------  --------    -------  -------    --------    ---------   ---------
BALANCE,
  DECEMBER 31, 2004    1,291,745      1,347      99,815     6,954         -    112,911  219,680      41,775      133,912     175,687
                       =========   =========   ========  ========  ========    =======  =======    ========     ========   =========
</TABLE>

<TABLE>
                                   Unrealized
                                     Loss
                                   Long-term
                                   Investments    Cumulative    Unrecognized                            Total
                                    in Shares    Translation       Pension               Treasury   Shareholders'
                                    of Stock     Adjustments        Cost       Other       Stock        Equity

<S>                                    <C>           <C>             <C>      <C>          <C>          <C>
New Taiwan Dollars

U.S. Dollars

BALANCE, JANUARY 1, 2004               (2,169)       49,137          (508)          -         (316)     1,421,632

   Appropriations of 2003
     earnings
      Legal reserve                         -             -             -           -            -              -
      Compensation to directors
        and supervisors                     -             -             -           -            -         (1,554)
      Bonus to employees - cash             -             -             -           -            -           (581)
      Bonus to employees - stock            -             -             -           -            -              -
      Stock dividends - 5.7%                -             -             -           -            -              -
   Capital received in advance
     from stock option exercised
     by employees                           -             -             -           -            -          1,347
   Transfer of ASE Inc. shares
     held by subsidiaries as
     treasury stock                                       -             -           -      (88,165)       (88,165)

   Evaluation on derivative
     financial instruments -
     loss                                   -             -             -      (1,153)           -         (1,153)
   Adjustment of equity in
     subsidiary due to change in
     percentage of ownership                -             -             -           -            -            483
   Unrealized loss on long-term
     investment                           (56)            -             -           -            -            (56)
   Issuance of common stock
     through merger                         -             -             -           -            -        188,295
   Elimination of long-term
     investment balance on
     consolidation                          -             -             -           -            -         (7,649)
   Consolidated net income in                                               -
     2004                                   -             -             -           -            -        132,630
   Adjustment of equity in
     subsidiary due to
     unrecognized loss on
     pension cost                           -             -           360          -            -            360
   Cumulative translation
    adjustments                             -       (28,961)            -          -            -        (28,961)
                                     --------    ----------     ---------   --------   ----------    -----------
BALANCE, DECEMBER 31, 2004             (2,225)       20,176          (148)    (1,153)     (88,481)     1,616,628
                                     ========    ==========     =========   ========   ==========    ===========

The accompanying notes are an integral part of the financial statement                               (Concluded)

</TABLE>


                                       F-8
<PAGE>


<TABLE>
ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts In Thousands)
--------------------------------------------------------------------------------------------------------------------------

                                                                                 Year Ended December 31
                                                                   -------------------------------------------------------
                                                                       2002           2003                 2004
                                                                   ------------   ------------    ------------------------
                                                                       NT$            NT$            NT$          US$
<S>                                                                     <C>          <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income                                                           129,035      2,742,796      4,209,690      132,630
   Adjustments to reconcile net income to net cash provided by
     operating activities:
      Minority interest in net income (loss) of subsidiaries         (1,733,029)       (52,586)       691,608       21,790
      Depreciation                                                   11,841,331     12,210,910     13,898,098      437,873
      Amortization                                                      444,995        555,658        888,174       27,983
      Investment loss under equity method                               410,348        240,656        394,995       12,445
      Impairment of goodwill                                                  -              -      1,950,097       61,440
      Other investment loss                                                   -              -        512,000       16,131
      Accrued interest on foreign convertible bonds                     576,437        358,286        255,172        8,039
      Exchange gain on:
         Long-term foreign bonds payable                                (69,321)      (110,655)      (425,822)     (13,416)
         Long-term foreign investment payable                           (34,926)       (62,747)             -            -
      Provision for doubtful accounts and sales allowance                85,823        207,018        151,358        4,769
      Gain on sale of investments                                      (101,314)      (618,857)       (57,140)      (1,800)
      Allowance for inventory valuation                                       -        240,844         75,842        2,389
      Loss on early redemption of foreign convertible bonds              46,151         75,668              -            -
      Loss from sale of treasury stock                                        -        354,787              -            -
      Reversal of accrued interest from long-term investment
        payable                                                        (145,238)             -              -            -
      Impairment loss of long-lived assets                            1,225,555              -              -            -
      Loss on disposal of properties                                     15,668         62,792         83,826        2,641
      Loss on assets to be disposed of                                   78,120        176,841         96,138        3,029
      Amortization of goodwill                                          815,573        819,253        877,582       27,649
      Loss (gain) on derivative financial instruments                         -         (3,140)       308,138        9,708
      Deferred income taxes                                          (1,130,358)    (1,190,500)    (1,660,695)     (52,322)
      Accrued pension cost                                              122,233        479,809        372,580       11,739
      Effect of exchange rate changes                                    65,858        211,640        506,025       15,943
      Other                                                                   -              -         71,594        2,255
      Changes in operating assets and liabilities
         Notes receivable                                                (7,482)         1,071         21,984          692
         Accounts receivable                                         (1,950,738)    (4,119,274)      (696,501)     (21,943)
         Other receivable                                                     -        (76,165)      (492,059)     (15,503)
         Inventories                                                   (363,216)    (1,800,963)    (4,691,419)    (147,808)
         Prepayments and other current assets                          (231,154)       160,329       (469,247)     (14,784)
         Notes and accounts payable                                   1,078,392      2,441,818      1,485,391       46,799
         Income tax payable                                             (72,165)        45,393         62,727        1,976
         Accrued expenses and other current liabilities                 217,222        (44,449)     1,066,867       33,613
                                                                   ------------   ------------   ------------  -----------
         Net cash provided by operating activities                   11,313,800     13,306,233     19,487,003      613,957
                                                                   ------------   ------------   ------------  -----------

CASH FLOWS FROM INVESTING ACTIVITIES
   Acquisition of properties                                        (12,657,920)   (17,534,057)   (28,523,467)    (898,660)
   Decrease (increase) in short-term investments                      2,112,050       (371,561)      (126,277)      (3,978)
   Decrease (increase) in pledged time deposits                        (287,794)       261,317         41,827        1,318
   Payments for long-term stock investments                             (49,716)      (138,019)       (61,713)      (1,944)
   Increase in other assets                                            (831,279)    (1,125,361)    (2,006,620)     (63,222)
   Proceeds from sales of:
      Properties                                                         77,142        250,535        628,508       19,802
      Others                                                                  -        105,536        505,546       15,928
   Purchase of ASE Japan Co., Ltd. shares                                     -              -       (830,678)     (26,171)
   Purchase of ASE (U.S.) Inc. shares                                         -              -       (112,824)      (3,555)
   Purchase of ASE Material Inc. shares                                 (10,000)       (20,976)             -            -
   Purchase of ASE Test Limited shares                                 (317,004)             -       (339,644)     (10,701)
   Purchase of ISE Labs, Inc. shares                                 (1,755,133)             -              -            -
                                                                   ------------   ------------   ------------  -----------

         Net cash used in investing activities                      (13,719,654)   (18,572,586)   (30,825,342)    (971,183)
                                                                   ------------   ------------   ------------  -----------

                                                                                                                (Continued)
</TABLE>
                                       F-9
<PAGE>


<TABLE>
                                                                                     Year Ended December 31
                                                                   -------------------------------------------------------
                                                                       2002           2003                 2004
                                                                   ------------   ------------    ------------------------
                                                                       NT$            NT$            NT$          US$
<S>                                                                   <C>             <C>           <C>            <C>
CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from (repayments of):
      The issuance of foreign convertible bonds                               -      6,684,882              -            -
      The issuance of domestic secured bonds                                  -              -      2,733,112       86,109
      Long-term debts                                                 1,161,489       (102,881)     5,997,199      188,948
      Investment payable                                               (249,250)      (954,411)    (2,309,960)     (72,778)
      Commercial papers and bank acceptances payable                 (1,739,263)      (629,086)      (167,149)      (5,266)
   Proceeds from sales of ASE Inc. shares                                     -      2,850,524              -            -
   Proceeds from short-term borrowings                                2,375,322      1,161,183      2,695,984       84,940
   Early redemption of foreign convertible bonds                     (1,674,053)    (4,908,389)             -            -
   Increase in minority interest                                        656,246        119,368        242,059        7,626
   Compensation to directors and supervisors and bonus to
     employees                                                                -        (10,280)       (67,748)      (2,134)
   Capital received in advance                                                -              -         42,759        1,347
                                                                   ------------   ------------   ------------  -----------

         Net cash provided by financing activities                      530,491      4,210,910      9,166,256      288,792
                                                                   ------------   ------------   ------------  -----------

EFFECT OF EXCHANGE RATE CHANGES                                         (65,858)      (211,640)      (415,239)     (13,082)
                                                                   ------------   ------------   ------------  -----------

NET DECREASE IN CASH AND CASH EQUIVALENTS                            (1,941,221)    (1,267,083)    (2,587,322)     (81,516)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                         11,770,729      9,829,508      8,562,425      269,768
                                                                   ------------   ------------   ------------  -----------

CASH AND CASH EQUIVALENTS, END OF YEAR                                9,829,508      8,562,425      5,975,103      188,252
                                                                   ============   ============   ============  ===========

SUPPLEMENTAL INFORMATION
   Interest paid (excluding capitalized interest)                     1,248,726      1,120,215        951,281       29,971
   Income tax paid                                                       88,884         57,633        113,882        3,588
   Cash paid for acquisition of properties
      Acquisition of properties                                      15,749,807     17,234,324     30,588,311      963,715
      Decrease (increase) in payable                                 (2,566,359)       102,488     (1,961,788)     (61,808)
      Decrease (increase) in obligation under capital leases           (525,528)       197,245       (103,056)      (3,247)
                                                                   ------------   ------------   ------------  -----------
                                                                     12,657,920     17,534,057     28,523,467      898,660
                                                                   ============   ============   ============  ===========
   Cash received from issuance of foreign convertible bonds
      Proceeds                                                                -      6,818,000              -            -
      Issuance expense                                                        -       (119,315)             -            -
      Increase in payable                                                     -        (13,803)             -            -
                                                                   ------------   ------------   ------------  -----------
      Net cash inflow                                                         -      6,684,882              -            -
                                                                   ============   ============   ============  ===========
   Cash received from issuance of domestic secured bonds
      Proceeds                                                                -              -      2,750,000       86,641
      Issuance expense                                                        -              -        (16,888)        (532)
                                                                   ------------   ------------   ------------  -----------
      Net cash inflow                                                         -              -      2,733,112       86,109
                                                                   ============   ============   ============  ===========
   Cash paid for redemption of foreign convertible bonds
      Redemption price for foreign convertible bonds                  3,242,110      4,908,389              -            -
      Cash paid from sinking fund                                    (1,568,057)             -              -            -
                                                                   ------------   ------------   ------------  -----------
                                                                      1,674,053      4,908,389              -            -
                                                                   ============   ============   ============  ===========

   Total assets acquired from acquisition of ASE Japan Co., Ltd.              -              -      2,162,468       68,130
   Less:  Liabilities assumed                                                 -              -     (1,310,428)     (41,286)
                                                                   ------------   ------------   ------------  -----------
   Cash paid                                                                  -              -        852,040       26,844
   Less: Cash received at the date of acquisition                             -              -        (21,362)        (673)
                                                                   ------------   ------------   ------------  -----------
   Net cash outflow                                                           -              -        830,678       26,171
                                                                   ============   ============   ============  ===========

   Total assets acquired from acquisition of ASE (U.S.) Inc.                  -              -        171,999        5,419
   Less:  Liabilities assumed                                                 -              -        (16,240)        (512)
                                                                   ------------   ------------   ------------  -----------
   Cash paid                                                                  -              -        155,759        4,907
   Less:  Cash received at the date of acquisition                            -              -        (42,935)      (1,352)
                                                                   ------------   ------------   ------------- ------------
   Net cash outflow                                                           -              -        112,824        3,555
                                                                   ============   ============   ============  ===========
                                                                                                                (Continued)
</TABLE>


                                      F-10
<PAGE>


<TABLE>
                                                                                     Year Ended December 31
                                                                   -------------------------------------------------------
                                                                       2002           2003                 2004
                                                                   ------------   ------------    ------------------------
                                                                       NT$            NT$            NT$          US$
<S>                                                                   <C>             <C>           <C>            <C>
NON-CASH FLOWS FROM INVESTING AND FINANCING
  ACTIVITIES
   Reclassification of the ASE Inc. shares held by consolidated
     subsidiaries from long-term investment to treasury
     stock                                                            2,639,826              -      2,798,399       88,165
   Reversal of treasury stock due to sale of ASE Inc.'s shares
     held by consolidated subsidiaries                                        -      1,405,632              -            -




The accompanying notes are an integral part of the financial statements.                                      (Concluded)
</TABLE>


                                      F-11
<PAGE>


ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND ITS
SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002, 2003 AND 2004
(Amounts in Thousands, Except Share Data and Unless Otherwise Stated)
--------------------------------------------------------------------------------

1.   HISTORY AND ORGANIZATION

     Overview

     Advanced Semiconductor Engineering, Inc. (the "Company"), a corporation
     incorporated under the laws of Republic of China (the "ROC"), is an
     independent provider of semiconductor packaging and testing services and is
     engaged in design and production of leadframes and substrates in the
     packaging of semiconductors. The Company's common shares are traded on the
     Taiwan Stock Exchange under the symbol "2311". Since September 2000, the
     Company's common shares in the form of American depositary shares ("ADS")
     have been traded on the New York Stock Exchange under the symbol "ASX". The
     Company and its consolidated subsidiaries and affiliates are together
     referred to as the "ASE Group".

     On July 1, 2003, ASE Investment Inc. and ASE Capital Inc. were merged with
     and into the Company. On October 28, 2003, the Board of Directors of the
     Company passed a resolution whereby ASE (Chung Li) Inc. ("ASE Chung Li")
     and ASE Material Inc. ("ASE Material") would be merged into the Company.
     The Company issued 282,315 thousand shares, in connection with the merger
     at exchange ratios of 0.85 of the Company's share for one ASE Chung Li
     share and 0.5 of the Company's share for one ASE Material share. Upon
     completion of the merger, all of the assets and liabilities of ASE Chung Li
     and ASE Material were assumed by the Company. The merger was effective on
     August 1, 2004.

     As of December 31, 2003 and 2004, the Company and its subsidiaries had
     24,443 and 34,649 employees, respectively.

     Set forth is a brief overview of the Company's organizational structure and
     its respective equity stake in its consolidated subsidiaries.

     The Company has six wholly-owned subsidiaries:

     a.   ASE Holding Limited (incorporated in Bermuda in April 1990), which
          holds shares in ASE Group companies;

     b.   ASE Marketing Services Ltd. (incorporated in Hong Kong in February
          1991), which engages in trading;

     c.   J&R Holding Limited (incorporated in Bermuda in May 1996), which
          holds shares in ASE Group companies;

     d.   ASE Marketing & Service Japan Co., Ltd. (incorporated in Japan in
          December 2003), which engages in marketing and provides sales
          services relating to packaging and testing.

     e.   Omniquest Industrial Ltd. (ASE Chung Li's wholly-owned subsidiary,
          incorporated in the British Virgin Islands in June 2001, which holds
          shares in ASE (Shanghai) Inc. On August 1, 2004, when ASE Chung Li
          was merged with and into the Company, the Company assumed the
          investment in Omniquest), which holds shares in ASE Group companies;
          and

     f.   Innosource Limited (incorporated in the British Virgin Islands in
          August 2004, which holds shares in ASE (Kun Shan) Inc.), which holds
          shares in ASE Group companies.


                                      F-12
<PAGE>


     As of December 31, 2004, the Company also held:

     a.   99.5% equity stake in ASE Technologies, Inc. (incorporated in the ROC
          in June 1991), which is engaged in the research and development,
          manufacture and sales of computers and related accessories;

     b.   90.0% equity stake in ASE Network Inc. (incorporated in the ROC in
          January 2000), which has a 1.13% equity stake in Taiwan Fixed Network
          Co., Ltd.; and

     c.   60.0% equity stake in ASE-Compeq Technologies, Inc. (incorporated in
          the ROC in February 2004), which is engaged in the manufacture and
          sale of electronic components.

     ASE Holding Limited has the following wholly-owned or majority-owned
     subsidiaries:

     a.   ASEP Realty Corporation (incorporated in the Philippines in December
          1995), which holds real estate of ASE Holding Electronics
          (Philippines);

     b.   ASE Holding Electronics (Philippines) Incorporated (incorporated in
          the Philippines in December 1995), which manufactures electronic
          products, components and semiconductors. However, the board of ASE
          Holding Electronics (Philippines) Incorporated decided to close the
          facilities and discontinued operation in December 2003; and

     c.   70.0% equity stake in ASE Investment (Labuan) Inc. (incorporated in
          Malaysia in June 1999), which holds shares of ASE Korea Inc. In
          addition, ASE Test Limited has a 30.0% equity stake in ASE Investment
          (Labuan) Inc.

     A portion of the share capital of the Company's subsidiaries incorporated
     in Philippines is held by certain Filipino individuals, on behalf of the
     Company, in order to comply with certain legal requirements.

     J&R Holding Limited has five subsidiaries:

     a.   100.0% equity stake of J&R Industrial Inc. (incorporated in the ROC
          in April 1999), which is mainly engaged in the leasing of substrate,
          packaging and testing equipment, to consolidated subsidiaries of the
          Company;

     b.   100.0% equity stake of Grand Innovation Co., Ltd. (incorporated in
          the British Virgin Islands in March 2001), which holds convertible
          preferred stock of Integrated Programmable Communication, Inc. that
          represents a 6.1% equity interest;

     c.   100% equity stake of ASE Japan Co., Ltd. (incorporated in the Japan
          in May 2004), which is engaged in the packaging and testing of
          semiconductors;

     d.   100% equity stake of ASE (U.S.) Inc. (incorporated in the USA in July
          2002), which is engaged in marketing and provides sales services
          relating to packaging and testing; and

     e.   39.8% equity stake of ASE Test Limited ("ASE Test") (incorporated in
          Singapore in May 1996), which holds shares in ASE Group companies.

     In addition, as of December 31, 2004, ASE Holding Limited held an 11.1%
     equity stake in ASE Test. The shares of ASE Test have been listed on the
     NASDAQ National Market in the United States since June 1996.

     ASE Test has one 99.99%-owned and three wholly-owned subsidiaries:

     a.   ASE Test, Inc. (incorporated in the ROC in December 1987 and
          99.99%-owned by ASE Test), which is
          engaged in the testing of semiconductors;


                                      F-13
<PAGE>


     b.   ASE Holding (Singapore) Pte Ltd (incorporated in Singapore in
          December 1994), which holds shares in ASE Group companies;

     c.   ASE Test Holdings, Limited ("ASE Test Holdings") (incorporated in
          Cayman Islands in April 1999), which mainly holds shares in ASE Group
          companies; and

     d.   ASE Test Finance Limited ("ASE Test Finance") (incorporation in
          Mauritius in June 1999), which is engaged in financing activities.

     ASE Test, Inc. has a wholly-owned subsidiary, ASE Test (USA) Inc.
     (incorporated in the United States in October 1995), which was dissolved
     in 2003.

     ASE Holding (Singapore) Pte Ltd has a wholly-owned subsidiary, ASE
     Electronics (M) Sdn., Bhd. ("ASE Test Malaysia") (incorporated in Malaysia
     in February 1991), which is engaged in the packaging and testing of
     semiconductors.

     ASE Test Holdings has a wholly-owned subsidiary, ISE Labs, Inc. ("ISE
     Labs"). Incorporated in California, U.S.A. in November 1983, ISE Labs and
     its wholly-owned subsidiaries, ISE Labs Hong Kong Limited, ASE Singapore
     Pte Ltd, ISE Technology, Inc. and Digital Testing Services Inc. are engaged
     in the front-end engineering testing and final testing of semiconductors.

     ASE Investment (Labuan) Inc. has a wholly-owned subsidiary, ASE Korea Inc.
     ("ASE Korea") (incorporated in the Republic of Korea in 1999), which is
     engaged in the packaging and testing of semiconductors.

2.   SIGNIFICANT ACCOUNTING POLICIES

     The accompanying consolidated financial statements have been prepared in
     conformity with generally accepted accounting principles in the ROC ("ROC
     GAAP"). Significant accounting policies are summarized as follows:

     Basis of Presentation

     The Company prepares its consolidated financial statements in accordance
     with ROC GAAP and prepares a reconciliation to generally accepted
     accounting principles in the United States ("U.S. GAAP") (see Note 29). The
     accompanying consolidated balance sheets are presented as of December 31,
     2003 and 2004, and the accompanying consolidated statements of income,
     changes in shareholders' equity and cash flows are presented for each of
     the three years ended December 31, 2002, 2003 and 2004.

     Unless otherwise stated and except for share and per share information,
     amounts presented are in thousands of New Taiwan dollars (NT$).

     Basis of Consolidation

     The consolidated financial statements include the accounts of the Company
     and all of the aforementioned subsidiaries.

     All intercompany accounts and transactions have been eliminated and
     minority shareholders' interests in the equity and earnings of the
     subsidiaries are presented separately in the consolidated financial
     statements. The differences between the costs of investments and the
     proportionate equity in each subsidiary when the stocks were acquired are
     recorded as goodwill and are amortized over ten years.


                                      F-14
<PAGE>


     Use of Estimates

     The preparation of consolidated financial statements in conformity with ROC
     GAAP requires management to make estimates and judgments that affect the
     recorded amounts of assets, liabilities, revenues and expenses of the
     Company. The Company continually evaluates these estimates, including those
     related to allowances for doubtful accounts and sales allowances,
     inventories, useful lives of properties, long-term investment, goodwill,
     income tax valuation allowances, pension plans and the fair value of
     financial instruments. The Company bases its estimates on historical
     experience and other assumptions, which it believes to be reasonable under
     the circumstances. Actual results may differ from these estimates under
     different assumptions and conditions.

     Current and Non-current Assets and Liabilities

     Current assets include cash or cash equivalents and other assets that are
     reasonably expected to be realized in cash, or to be consumed within one
     year from the balance sheet date. All other assets are classified as
     non-current assets.

     Current liabilities are liabilities which are reasonably expected to be
     liquidated within one year. All other liabilities are classified as
     non-current.

     Cash Equivalents

     The Company considers all highly liquid investments within an original
     maturity from date of purchase of three months or less to be cash
     equivalents.

     Short-term Investments

     Short-term investments are carried at cost less allowance for a decline in
     market value, if any.

     Sales of Accounts Receivable

     The following three conditions must be met before sales of accounts
     receivable are recorded:

     a.   the accounts receivable have been legally isolated from the Company
          and its creditors;

     b.   the transferees have obtained the right to pledge or exchange
          accounts receivable, either the transferred accounts receivable or
          beneficial interest in the transferred assets; and

     c.   the transferor does not maintain effective control over the
          transferred accounts receivable through an agreement to repurchase or
          redeem them prior to maturity.

     If the three conditions are met, the difference between the proceeds and
     the face value of the accounts receivable is recognized as a loss on the
     sales of accounts receivable.

     Allowance for Doubtful Accounts

     Allowance for doubtful accounts is provided based on an analysis of the
     aging of accounts and an evaluation of the collectibility of receivables.

     The total amount of the provision is determined based on the identification
     of customers that the Company determines to have a higher credit risk based
     on overdue accounts, past collection difficulties or their overall
     financial condition. An estimation is made based on the extent to which the
     customer will be able to meet its financial obligations to the Company and
     a provision is recorded to reduce the accounts receivable balance to the
     amount the Company reasonably believes will be collected. For all other
     customers, an allowance is equal to a percentage of the aggregate accounts
     receivable based on history of collection. An allowance for these other
     customers ranges between 3% and 4%, on a consolidated basis, of the
     Company's


                                      F-15
<PAGE>


     accounts receivable.

     Inventories

     Inventories are stated at the lower of the weighted average cost or market
     value. Unbilled processing charges incurred are included in finished goods
     and work in process and are stated at actual cost. Market value represents
     net realizable value for finished goods and work in process, and
     replacement costs for raw materials, supplies and spare parts.

     Materials received from customers for processing, mainly semiconductor
     wafers, are excluded from inventories as title and risk of loss remains
     with the customers.

     At the start of 2004, the Company elected to change its method of
     accounting for the costs of raw materials and supplies from the
     weighted-average method to the moving-average method, as the Company
     believes this provides a more precise measurement of the costs (Note 3).

     Long-term Investments in Shares of Stock

     Long-term investments of which the Company owns at least 20% of the
     outstanding voting shares and where the Company exercises significant
     influence over the investee company's operations are accounted for by the
     equity method. Under the equity method, the investments are initially
     carried at cost and subsequently adjusted for the Company's proportionate
     share in the net earnings or losses of the investee companies. Such
     proportionate share in the earnings or losses are recognized as investment
     income or losses while any cash dividends declared are reflected as a
     reduction in the carrying value of the investments. If an investor's share
     of the investee's losses exceeds the carrying amount of the investment, it
     is appropriate for the investor to continue to recognize investment loss by
     the investor's proportionate share and record a corresponding liability if
     the Company has an obligation to provide further financial support or if
     the investee's losses are considered temporary and a return to profitable
     operations appears to be assured. The goodwill representing the excess of
     the investment cost over the Company's proportionate equity in the fair
     value of the net assets of the investees at the time of investments or at
     the time the equity method of accounting is first applied to a particular
     investment, is amortized on the straight-line method over ten years.

     Changes in the Company's ownership percentage of investees under the equity
     method are accounted for as adjustments to long-term investments and a
     corresponding adjustment to the capital surplus account.

     Unrealized profits or losses arising from transactions with equity
     investees or between equity investees are offset against investment income
     or loss from long-term investments, based on percentage of ownership.

     When an impairment loss is determined to have occurred, the long-term
     investment recoverable amount is less than the carrying amount, and such
     loss in value is recorded as a nonoperating loss.

     Other investments over which the Company does not have significant
     influence are accounted for by the cost method.

     Properties

     Properties, except for leased equipment, are stated at cost. Equipment held
     under capital leases are recorded as an asset and an obligation at an
     amount equal to the lower of: (i) the present value at the beginning of the
     lease term of the minimum lease payments during the lease term (including
     the payment called for under any bargain purchase option); or (ii) fair
     value of the leased equipment at the inception of the lease. Machinery in
     transit, construction in progress and prepayments under construction are
     stated at cost. These include the cost of machinery, construction costs,
     down payments and other direct costs plus interest charges attributable to
     the borrowings used to finance the acquisitions of these assets. Major
     renewals and improvements are capitalized, while maintenance and repairs
     are expensed as incurred.

     Depreciation is computed using the straight-line method over estimated
     service lives which range as


                                      F-16
<PAGE>


     follows: long-term land leasehold rights, 53 to 60 years (lease period);
     buildings and improvements, 3 to 55 years; machinery and equipment, 3 to 8
     years; furniture and fixtures, 2 to 15 years; transportation equipment, 3
     to 8 years; and leased assets and leasehold improvements, 3 to 5 years. In
     the event that an asset which has been depreciated to its residual value
     is deemed to have a further useful life, the residual value is depreciated
     over its reestimated service life.

     The Company reviews properties for impairment and determines whether an
     event or change in facts and circumstances indicated that their carrying
     amount may not be recoverable. Recoverable amount is measured as the higher
     of net selling price and value in use. Upon recording of the impairment
     loss, the adjusted carrying amount of the assets becomes its new cost
     basis, which is depreciated or amortized over the remaining useful life of
     the assets. Impairment losses on properties are recorded as a non-operating
     expense.

     When properties are retired or disposed of, their costs and accumulated
     depreciation are removed from the accounts and any gain or loss is credited
     or charged to income.

     Deferred Charges

     Deferred charges are amortized as follows: tools, 2 years; license fees, 2
     years; telecommunications, electrical, computer network systems, 5 years;
     bond issuance costs, 4 years; and others, 2 to 5 years.

     Goodwill

     Goodwill, as shown in the balance sheet, represents an amount arising from
     acquisitions or investments in the consolidated subsidiaries and is
     amortized over 10 years.

     If the carrying amount of goodwill is determined to exceed its recoverable
     amount, an impairment loss is recognized at an amount equal to that excess.
     Reversal of a previously recognized goodwill impairment loss is prohibited.

     Pension Cost

     Pension cost is recorded based on actuarial calculations (Note 17).
     Provisions for pension costs are accrued based on actuarially determined
     amounts which include service costs, interest, amortization of unrecognized
     net obligation and expected return on pension assets.

     An additional accrued pension cost must be recognized if the accumulated
     benefit obligation exceeds the fair value of plan assets. The debit is
     either to an asset-deferred pension cost or to a contra account of
     shareholders' equity entitled unrecognized pension cost. If the debit is
     less than unamortized balances of transition obligation, it is reported as
     an intangible asset. If the debit is greater than unamortized balances of
     transition obligation, the excess debit is reported as a contra account to
     shareholders' equity.

     Convertible Bonds

     Conversion of convertible bonds into common shares is accounted for by the
     book value method. Under this method, unamortized bond issuance costs and
     accrued interest which is no longer payable, together with the carrying
     amount of converted bonds are written off, and the common shares issued are
     recorded at their par value, and any excess is recorded as capital surplus.


                                      F-17
<PAGE>


     Stock Option Compensation

     All stock-based compensation for awards granted or modified after January
     1, 2004 should be accounted for in conformity with the related
     Interpretations of the Accounting Research and Development Foundation
     (ARDF) in the ROC. The compensation cost is measured based on the intrinsic
     value method and accordingly, compensation cost for stock options is
     measured as the excess, if any, of the quoted market price of the Company's
     stock at the date of the grant over the amount an employee must pay to
     acquire the stock. The intrinsic value of the shares is recognized as
     expense over the requisite service or vesting period.

     Treasury Stock

     The Company's shares held by its subsidiaries are accounted for as treasury
     stock and, accordingly, the cost of such shares are reclassified from
     long-term investments to treasury stock on consolidation.

     Shipping and Handling Costs

     Shipping and handling costs for goods sold are recorded as selling expense.

     Revenue Recognition

     Revenues from semiconductor packaging services that the Company provides
     are recognized upon shipment. Revenues from semiconductor testing services
     that the Company provides are recognized upon completion of the services.
     The Company does not take ownership of: (i) bare semiconductor wafers
     received from customers that the Company packages into finished
     semiconductors and (ii) packaged semiconductors received from customers
     that the Company tests as to whether they meet certain performance
     specifications. The title and risk of loss remains with the customer for
     those bare semiconductors and/or packaged semiconductors. Accordingly, the
     cost of customer-supplied semiconductor materials is not included in the
     accompanying consolidated financial statements. Other criteria that the
     Company uses to determine when to recognize revenue are: (i) existence of
     persuasive evidence of the services provided, (ii) the selling price is
     fixed or determinable and (iii) collectibility is reasonably assured. The
     Company does not provide warranties to its customers except in the case
     where a defect in the packaging services provided or deficiencies in
     testing services provided has occured. An appropriate sales allowance,
     based on historical experience, is recognized in the period of the sale.

     Income Tax

     Tax effects of deductible temporary differences, unused tax credits and
     operating loss carryforwards are recognized as deferred income tax assets,
     and taxable temporary differences are recognized as deferred income tax
     liabilities. A valuation allowance is provided for deferred income tax
     assets based on their estimated realizability.

     Tax credits of the Company from investments in machinery and equipment,
     research and development and employees' training costs are recognized in
     the year in which they are acquired and expended.

     Adjustments of prior years' income tax are added to or deducted from the
     current year's tax provision.

     Income taxes on undistributed earnings (10%) as determined by tax authority
     generated in 1998 and onwards for consolidated entities in the ROC are
     recorded as expense in the following year when the shareholders have
     resolved that the earnings shall be retained.

     Foreign Currency Transactions and Translation of Foreign-currency
     Financial Statements

     The Company and its subsidiaries maintain their accounts in the currency of
     their respective countries of incorporation (local currencies) and
     functional currencies.


                                      F-18
<PAGE>


     Foreign currency transactions, other than foreign currency forward exchange
     contracts, are recorded in the local currencies at the rates of exchange in
     effect when the transactions occur.

     Gains or losses resulting from the application of different foreign
     exchange rates when foreign-currency assets and liabilities are settled,
     are credited or charged to income in the year of settlement. Year-end
     balances of foreign currency assets and liabilities are restated based on
     prevailing exchange rates and the resulting differences are credited or
     charged to income.

     The financial statements of the foreign subsidiaries are translated into
     N.T. dollars at the following rates: assets and liabilities, current rate;
     and income and expenses, average exchange rate during the year. The net
     resulting translation adjustment is reported as a separate component of
     shareholders' equity.

     Derivative Financial Instruments

     a.   Forward exchange contracts

          Forward exchange contracts, which the company enters into as an
          economic hedge of foreign-currency denominated assets or liabilities,
          are initially recorded in New Taiwan dollars at the spot rates on the
          date of each forward contract. The differences between spot rates and
          forward rates are amortized over the period of each forward contract
          and recognized as gains or losses. On the balance sheet date,
          balances of forward exchange contracts are restated at the prevailing
          exchange rates and the resulting adjustments are credited or charged
          to income. Any resulting gain or loss upon settlement is credited or
          charged to income in the year of settlement.

          For outstanding forward contracts as of the balance sheet date, the
          related receivables and payables are netted out, and the resulting
          balance is presented as a current asset or liability.

     b.   Option contracts

          The premiums received, if any, from sale of option contracts entered
          into for hedging purposes are recorded as income. The premiums paid,
          if any, for purchase of option contracts entered into for hedging
          purposes are recorded as expenses. Gains or losses upon settlement
          are credited or charged to income. At period-end, outstanding written
          option contracts and cross-currency swap contracts are marked to
          market, and the resulting gains or losses are recorded to income and
          the offset is recognized as an asset or liability, as appropriate,
          with the exception of options entered into as a cash flow hedge,
          which the Company has deemed to be effective. Any gain or loss
          calculated on cash flow hedges as of the balance sheet date are
          initially recorded as a separate component of shareholders' equity
          and subsequently reclassified into earnings in the same period or
          periods during which the hedged forecasted transaction affects
          earnings.

     c.   Interest rate swap contracts

          Interest rate swap contracts entered into to limit the impact of
          interest rate fluctuations on certain long-term debt are not recorded
          as assets or liabilities on the contract date. The difference between
          fixed and variable rates to be paid or received on swaps is accrued
          as an interest rate change based on the contracts and is included in
          current interest income or expense.

     d.   Cross-currency swap contracts

          The Company enters into cross-currency swap contracts in order to
          manage their exposure to exchange rate fluctuations on
          foreign-currency denominated assets and liabilities. The principal
          amount is recorded at spot rates on the contract date. The difference
          in interest between the contract starting date rate and the rate on
          each settlement date or the balance sheet date is recorded as an
          adjustment to the interest income or expense associated with the
          hedged items. The differences in the New Taiwan dollar amounts
          translated using the spot rates on the contract starting date and the
          amounts translated using the contracted forward rate are amortized
          over the terms of the contracts using the straight-line


                                      F-19
<PAGE>


          method.

          At the end of each year, the receivables or payables arising from
          outstanding cross-currency swap contracts are restated at prevailing
          spot rates and the difference is charged to income. In addition, the
          receivables and payables under the contracts are presented on a net
          basis as either an asset or a liability.

     Recent Accounting Pronouncements

     In December 2003, the ROC ARDF issued SFAS No. 34 "Accounting for Financial
     Instruments", which will be required to be applied by the Company from
     January 1, 2006. SFAS No. 34 will require the Company to classify all
     financial instruments, excluding limited financial instruments specified by
     SFAS No. 34, as either trading, available-for-sale or held-to-maturity.
     Debt securities that the Company has the positive intent and ability to
     hold to maturity are classified as held-to-maturity securities and reported
     at amortized cost. Debt and equity securities that are bought and traded
     for short-term profit are classified as trading securities and reported at
     fair value, with unrealized gains and losses charged to earnings in the
     current period. Debt and equity securities not classified as either
     held-to-maturity or trading are classified as available-for-sale securities
     and reported at fair value, with unrealized gains and losses excluded from
     earnings and reported as a separate component of shareholders' equity.
     Additionally, SFAS No. 34 will require the Company to recognize all
     derivatives on the balance sheet at fair value. Derivatives that are not
     hedges must be adjusted to fair value through income. If the derivative is
     designated as a hedge, depending on the nature of the hedge, changes in the
     fair value of the derivatives will either be offset against the change in
     fair value of the hedged assets, liabilities or firm commitments through
     earnings, or recognized in a separate component of shareholders' equity
     until the hedged item is recognized in earnings. The change in a
     derivative's fair value attributable to the ineffective portion of a hedge,
     if any, will be immediately recognized in earnings.

     In December 2004, ARDF revised SFAS No. 7 "Consolidated Financial
     Statements", which will be adopted by the Company on January 1, 2005.
     Revised SFAS No. 7 will require the Company to consolidate all investees
     under the control of the Company. Control is not only presumed to exist
     when a company holds more than half of the voting interests or rights in an
     investee but may be deemed to exist if certain criteria established by
     revised SFAS No.7 are met.

     U.S. Dollar Amounts

     The Company prepares its consolidated financial statements in New Taiwan
     dollars. A translation of the 2004 financial statements into U.S. dollars
     is included solely for the convenience of the reader, and has been based on
     the U.S. Federal Reserve Bank of New York noon buying rate of NT$31.74 to
     US$1.00 in effect at December 31, 2004. The convenience translations should
     not be construed as representations that the New Taiwan dollar amounts have
     been, could have been, or could in the future be, converted into U.S.
     dollars at this or any other rate of exchange.

3.   CHANGE IN ACCOUNTING PRINCIPLE

     The Company introduced enterprise resource planning (ERP) as part of its
     strategy to enhance operations to enhance its competitiveness as well as
     strengthen internal management and integrate resources. Thus, at the start
     of 2004, the Company decided to change its method for pricing raw materials
     and supplies from the weighted-average method to the moving-average method.
     The cumulative effect of this accounting change resulted in a decrease of
     the 2004 net income by NT$26,844 thousand and in earnings per share by
     $0.01. The pro forma effects of this change in accounting principle on the
     2002 and 2003 net income were immaterial.

     On December 31, 2004, the Company adopted ROC SFAS No. 35. The adoption of
     ROC SFAS No. 35 resulted in the decrease in the balance of long-term
     investment and goodwill by NT$512,000 thousand (US$16,131 thousand) and
     NT$1,950,097 thousand (US$61,440 thousand), respectively.


                                      F-20
<PAGE>


4.   CASH AND CASH EQUIVALENTS

<TABLE>
                                                                    December 31
                                                 --------------------------------------------------
                                                      2003                       2004
                                                 ---------------   --------------------------------
                                                      NT$               NT$              US$

<S>                                                        <C>               <C>                <C>
     Cash on hand                                          3,255             7,234              228
     Checking accounts and current deposit             5,467,730         5,295,088          166,827
     Time deposits                                     2,813,006           471,461           14,854
     Cash equivalents                                     92,727           201,001            6,333
     Cash in transit                                     185,707               319               10
                                                 ---------------   ---------------   --------------
                                                       8,562,425         5,975,103          188,252
                                                 ===============   ===============   ==============
</TABLE>

     As of December 31, 2004, foreign deposits consisted of the following:

<TABLE>
                                                                                         NT$

<S>                                                                                    <C>
     USA (U.S. dollars $12,249 thousand)                                                    390,940
     Hong Kong (U.S. dollars $53,431 thousand)                                            1,705,366
     Malaysia (Malaysia Ringgits $59,763 thousand)                                          501,963
     Singapore (Singapore dollars $1,348 thousand and U.S. dollars $5,204 thousand)         192,457
     Japan (Japanese yen $457,261 thousand)                                                 140,973
     China-Shanghai (U.S. dollars $2,963 thousand and China Yuan Renminbi
       $13,014 thousand)                                                                    144,772
     Korea (U.S. dollars $96 thousand and Korea Won $12,263 thousand)                         3,465
                                                                                     --------------
                                                                                          3,079,936
                                                                                     ==============
</TABLE>

5.   SHORT-TERM INVESTMENTS

<TABLE>
                                                                    December 31
                                                 --------------------------------------------------
                                                      2003                       2004
                                                 ---------------   --------------------------------
                                                      NT$               NT$              US$

<S>                                                    <C>               <C>                <C>
     Mutual funds                                      3,012,264         3,196,210          100,700
     Stocks                                                6,025             5,660              178
     Convertible bonds                                       391                 -                -
                                                 ---------------   ---------------   --------------
                                                       3,018,680         3,201,870          100,878
     Allowance for loss                                     (901)           (7,687)            (242)
                                                 ---------------   ---------------   --------------
                                                       3,017,779         3,194,183          100,636
                                                 ===============   ===============   ==============
</TABLE>

6.   ACCOUNTS RECEIVABLE

<TABLE>
                                                                    December 31
                                                 --------------------------------------------------
                                                      2003                       2004
                                                 ---------------   --------------------------------
                                                      NT$               NT$              US$

<S>                                                   <C>               <C>                <C>
     Accounts receivable                              13,180,553        14,086,199          443,799
     Allowance for doubtful accounts                    (337,311)         (430,822)         (13,573)
     Allowance for sales allowances                      (45,107)          (68,742)          (2,166)
                                                 ---------------   ---------------   --------------
                                                      12,798,135        13,586,635          428,060
                                                 ===============   ===============   ==============
</TABLE>


                                      F-21
<PAGE>


     The change in allowance for doubtful accounts and sales allowances are as
     follows:

                                                   Doubtful            Sales
                                                   Accounts        Allowances
                                              ---------------   ---------------
                                                     NT$               NT$

     Balance, beginning of 2002                       286,476            53,626
     Additions                                         67,567            18,256
     Deductions                                       (53,330)          (28,833)
                                              ---------------   ---------------
     Balance, end of 2002                             300,713            43,049
     Additions                                         95,853           111,165
     Deductions                                       (59,255)         (109,107)
                                              ---------------   ---------------
     Balance, end of 2003                             337,311            45,107
     Additions                                         98,597            52,761
     Deductions                                        (5,086)          (29,126)
                                              ---------------   ---------------
     Balance, end of 2004                             430,822            68,742
                                              ===============   ===============

                                                   US$               US$

     Balance, beginning of 2004                        10,627             1,421
     Additions                                          3,106             1,663
     Deductions                                          (160)             (918)
                                              ---------------   ---------------
     Balance, end of 2004                              13,573             2,166
                                              ===============   ===============

     In 2004, the Company sold to a bank account receivables amounting to
     NT$2,082,278 thousand (US$65,604 thousand). Under the terms of the
     contract, the Company may sell up to an aggregate amount of outstanding
     receivables of US$80,000 thousand and must pay certain financing costs and
     remains responsible for handling any commercial disputes that may arise in
     relation to the sold receivables.

7.   INVENTORIES

<TABLE>
                                                                    December 31
                                                 --------------------------------------------------
                                                      2003                       2004
                                                 ---------------   --------------------------------
                                                      NT$               NT$              US$

<S>                                                   <C>               <C>                <C>
     Raw materials                                     3,365,079         6,478,395          204,108
     General supplies and spare parts                    573,240           841,635           26,517
     Work in process                                     637,692         1,357,634           42,773
     Finished goods                                      399,699           602,417           18,980
     Supplies in transit                                  29,620           362,579           11,423
                                                 ---------------   ---------------   --------------
                                                       5,005,330         9,642,660          303,801
     Allowance for obsolescence                         (313,559)         (205,403)          (6,471)
                                                 ---------------   ---------------   --------------
                                                       4,691,771         9,437,257          297,330
                                                 ===============   ===============   ==============
</TABLE>


                                      F-22
<PAGE>


     The movement of allowance for obsolescence is as follows:

                                                                    NT$

     Balance, beginning of 2002                                        220,548
     Additions                                                          34,379
     Deductions                                                        (42,170)
                                                               ---------------
     Balance, end of 2002                                              212,757
     Additions                                                         240,844
     Deductions                                                       (140,042)
                                                               ---------------
     Balance, end of 2003                                              313,559
     Additions                                                          75,842
     Deductions                                                       (183,998)
                                                               ---------------
     Balance, end of 2004                                              205,403
                                                               ===============

                                                                    US$

     Balance, beginning of 2004                                          9,879
     Additions                                                           2,389
     Deductions                                                         (5,797)
                                                               ---------------
     Balance, end of 2004                                                6,471
                                                               ===============

8.   LONG-TERM INVESTMENTS AND DEFERRED CREDIT

<TABLE>
                                                                                        December 31
                                                                 --------------------------------------------------------
                                                                        2003                       2004
                                                                 --------------------   ---------------------------------
                                                                                % of                                % of
                                                                               Direct                              Direct
                                                                               Owner-                              Owner-
                                                                     NT$        ship         NT$          US$       ship
     Equity method

<S>                                                    <C>          <C>           <C>      <C>              <C>       <C>
     Common stock
       Universal Scientific Industrial Co., Ltd. (Note 10)          3,342,455     23.6     2,741,808        86,383    23.3
       Hung Ching Development & Construction Co.                    1,012,399     26.4       708,992        22,337    26.4
       Hung Ching Kwan Co.                                            406,131     27.3       345,280        10,878    27.3
       Inprocomm, Inc.                                                  7,678     32.1             -             -    32.1
       Universal Access Technology Inc.                                     -     25.0             -             -     -
     Preferred stock
       Intergrated Programmable Communication, Inc.                    52,599     30.0        38,358         1,209    26.5
                                                                 ------------           ------------   -----------
                                                                    4,821,262              3,834,438       120,807
     Unrealized gain on sale of land                                 (300,149)              (300,149)       (9,456)
                                                                 ------------           ------------   -----------
                                                                    4,521,113              3,534,289       111,351
                                                                 ------------           ------------   -----------
     Cost method

     Taiwan Fixed Network Co., Ltd.                                 1,500,000      1.6     1,050,000        33,081     1.1
     H&HH Venture Investment Corporation                                    -      -          50,000         1,576    13.2
     InveStar Burgeon Venture Capital, Inc.                            83,228     13.0        36,886         1,162    13.0
     Global Strategic Investment, Inc.                                 67,940      2.5        63,834         2,011     2.5
     Digital Communications International Inc.                         50,167     15.0        47,135         1,485    15.0
     UC Fund II                                                        33,970      -          31,917         1,006     -
     Crimson@Velocity Fund, L.P.                                       21,237      -          43,302         1,364     -
                                                                 ------------           ------------   -----------
                                                                    1,756,542              1,323,074        41,685
                                                                 ------------           ------------   -----------
                                                                                                                         (Continued)
</TABLE>


                                      F-23
<PAGE>


<TABLE>
                                                                                        December 31
                                                                 --------------------------------------------------------
                                                                        2003                       2004
                                                                 --------------------   ---------------------------------
                                                                                % of                                % of
                                                                               Direct                              Direct
                                                                               Owner-                              Owner-
                                                                     NT$        ship         NT$          US$       ship

<S>                                                    <C>          <C>           <C>      <C>              <C>       <C>
     Prepaid for long-term investments - ASE-Compeq
        Technologies, Inc.                                             12,000                      -             -
                                                                 ------------           ------------   -----------
     Other long-term investment - Asset Backed Security                50,000                 50,000         1,575
                                                                 ------------           ------------   -----------
     Other financial assets                                             3,140                      -             -
                                                                 ------------           ------------   -----------

                                                                    6,342,795              4,907,363       154,611
                                                                 ============           ============   ===========

     Deferred credits of long-term investments - included in
      other Liabilities
       Inprocomm, Inc.                                                      -                 30,147           950    32.1
                                                                 ============           ============   ===========
</TABLE>

     From February 1999 to April 2000, the Company acquired shares of Universal
     Scientific Industrial Co., Ltd. ("USI") from the open market on the Taiwan
     Stock Exchange. As of December 31, 2004, the Company had an accumulated
     total investment cost of NT$3,838,368 thousand (US$120,931 thousand). USI
     is engaged in the manufacturing, processing and sale of computer
     peripherals, integrated circuits, electrical parts, personal computers and
     related accessories. USI declared stock and cash dividends in 2004 for
     NT$0.20 and NT$0.50 per share, respectively. As of December 31, 2004, the
     market value of the shares held in USI totaled NT$1,999,250 thousand
     (US$62,988 thousand). The difference between the investment balance and the
     Company's share in the net equity of USI is attributable to goodwill.

     During the year ended December 31, 2004, the Company recorded an impairment
     loss of NT$512,000 thousand (US$16,131 thousand) on its investment in USI,
     based on the difference between the calculated recoverable amount and the
     book value of the investment.

     From March 1995 to February 1999, the Company acquired shares of Hung Ching
     Development & Construction Co. ("HCDC") from the stock market. As of
     December 31, 2004, the Company had an accumulated total investment cost of
     NT$2,845,913 thousand (US$89,663 thousand). HCDC is engaged in the
     development and management of commercial, residential and industrial real
     estate properties in Taiwan. As of December 31, 2004, the market value of
     the shares held in HCDC totaled NT$698,537 thousand (US$22,008 thousand).

     The Company acquired its 27.3% equity interest in Hung Ching Kwan Co.
     ("HCKC") in 1992 by transferring to HCKC a parcel of land as an investment
     in HCKC at an agreed value of NT$390,470 thousand. The resulting gain of
     NT$300,149 thousand (US$9,456 thousand), which represents the excess of
     such value over the cost of the land plus land value increment tax, has
     been deferred until the disposal of this investment. As of December 31,
     2004, the Company had a 44.1% effective interest in HCKC, which consisted
     of 27.3% interest directly owned by the Company, and 16.8% interest
     indirectly owned through HCDC (based on HCDC's 63.5% interest in HCKC).

     The Company invested in Inprocomm, Inc. ("Inprocomm") in May 2003 with
     capital of NT$52,000 thousand and directly acquired its 32.1% equity
     interest. In addition, USI and Global Strategic Investment, Inc. have 17.3%
     and 8.6% equity interests in Inprocomm, respectively. Inprocomm is engaged
     in the design of semiconductors for wireless communication applications. As
     of December 31, 2004, the accumulated loss of Inprocomm was NT$255,917
     thousand (US$8,063 thousand).

     The Company invested in Universal Access Technology Inc. ("UAT") in
     December 2000 and directly acquired its 25.0% equity interest. In addition,
     HCDC and USI have 10.0% and 25.0% equity interest in UAT, respectively.
     Accordingly, as of December 31, 2003, the Company had a 33.3% effective
     interest in UAT. UAT received approval to dissolve as of July 8, 2003 and
     was liquidated as of December 31, 2003.


                                      F-24
<PAGE>


     In December 2000, the Company invested in convertible preferred stock
     issued by Intergrated Programmable Communication, Inc. ("IPC"). As of
     December 31, 2004, the Company and its subsidiary, Grand Innovation Co.,
     Ltd., have made total investments of US$5.2 million and own a 26.5% stake
     in IPC. In addition, USI holds a 16% equity interest in IPC. IPC is
     engaged in the design of semiconductors for wireless communication
     applications.

     The Company recorded net investment losses of NT$410,348 thousand in 2002,
     NT$240,656 thousand in 2003 and NT$394,995 thousand (US$12,445 thousand) in
     2004, respectively, from its investments in the aforementioned
     equity-method investees.

     In 2003 and 2004, the cumulative translation adjustments for investment in
     foreign companies decreased by NT$287,422 thousand and NT$919,220 thousand
     (US$28,961 thousand), respectively.

9.   PROPERTIES

     Accumulated depreciation consists of:

<TABLE>
                                                                    December 31
                                                 --------------------------------------------------
                                                      2003                       2004
                                                 ---------------   --------------------------------
                                                      NT$               NT$              US$

<S>                                                   <C>               <C>                <C>
     Buildings and improvements                        3,734,503         5,228,222          164,720
     Machinery and equipment                          42,959,968        51,913,680        1,635,592
     Transportation equipment                             66,463            71,911            2,266
     Furniture and fixtures                            1,044,699         1,503,129           47,358
     Leased assets and leasehold improvements            466,688           399,432           12,584
     Long-term land leasehold rights                       9,614            10,038              316
                                                 ---------------   ---------------   --------------

                                                      48,281,935        59,126,412        1,862,836
                                                 ===============   ===============   ==============
</TABLE>

     Certain machinery and equipment related to the testing business of ASE Test
     and ISE Labs were impaired during 2002. As a result, an impairment loss of
     NT$1,225,555 thousand was recognized and included in non-operating expenses
     in 2002.

     Interest capitalized and included as cost of properties amounted to
     NT$145,985 thousand, NT$149,051 thousand and NT$298,062 thousand (US$9,391
     thousand) for the years ended December 31, 2002, 2003 and 2004,
     respectively.

     Machinery in transit pertains to the purchase of packaging, testing and
     substrate equipment that has been received but is not ready for use.
     Prepayments are payments made to purchase machinery with non-cancellable
     purchase orders.

     Machinery in transit and prepayments consist of the following:

<TABLE>
                                                                    December 31
                                                 --------------------------------------------------
                                                      2003                       2004
                                                 ---------------   --------------------------------
                                                      NT$               NT$              US$

<S>                                                   <C>               <C>                <C>
     Bonders                                             457,944         1,148,272           36,177
     Testers                                           2,726,211         2,015,784           63,509
     Bumping                                             833,639         2,206,403           69,515
     Flip Chip                                           503,225         1,028,663           32,409
     Substrate                                            19,640         3,213,956          101,259
     Others                                            1,652,954         4,949,156          155,929
                                                 ---------------   ---------------   --------------
                                                       6,193,613        14,562,234          458,798
                                                 ===============   ===============   ==============
</TABLE>


                                      F-25
<PAGE>


10.  GOODWILL

     These represent goodwill arising from the purchases of:

<TABLE>
                                                                    December 31
                                                 --------------------------------------------------
                                                      2003                       2004
                                                 ---------------   --------------------------------
                                                      NT$               NT$              US$

<S>                                                   <C>               <C>                <C>
     ASE Chung Li shares                                       -         1,068,681           33,670
     ASE Material shares                                       -           473,022           14,903
     ASE Test shares                                   2,212,135           725,015           22,842
     ISE Labs shares                                   2,113,500           817,443           25,754
     ASE Korea shares                                    270,599           209,249            6,593
     ASE Japan shares                                          -            25,732              811
     ASE (U.S.) shares                                         -            17,234              543
                                                 ---------------   ---------------   --------------
                                                       4,596,234         3,336,376          105,116
                                                 ===============   ===============   ==============
</TABLE>

     Amortization of goodwill is reflected in general and administrative
     expenses in the consolidated statement of income and was NT$815,573
     thousand, NT$819,253 thousand and NT$877,582 thousand (US$27,649 thousand)
     for the years ended December 31, 2002, 2003 and 2004, respectively. The
     Company adopted ROC SFAS No. 35 "Impairment of Assets" on December 31,
     2004, and recognized an impairment loss on goodwill of NT$1,950,097
     thousand (US$61,440 thousand), which was determined based on the amount by
     which the carrying amount of the cash-generating unit exceeded its
     recoverable amount. In testing a cash-generating unit for impairment, the
     Company identified the goodwill related to ASE Test and ISE Labs. The
     recoverable amount was determined by the Company based on the
     "value-in-use" of ASE Test and ISE Labs, which was determined based on
     estimated cash flows, discounted at rate of 9.58%.

11.  SHORT-TERM BORROWINGS

<TABLE>
                                                                            December 31
                                              ----------------------------------------------------------------------------
                                                            2003                                 2004
                                              ------------------------------  --------------------------------------------
                                               Interest                        Interest
                                                Rate (%)           NT$          Rate (%)           NT$             US$

<S>                                            <C>               <C>           <C>                <C>               <C>
     Letters of credit                         0.86-3.60          2,967,178    0.60-3.41            604,770         19,054
     Revolving                                 1.32-6.00          2,081,052    1.50-7.00          3,128,663         98,571
                                                             --------------                  --------------   ------------
                                                                  5,048,230                       3,733,433        117,625
                                                             ==============                  ==============   ============
</TABLE>

     As of December 31, 2004, unused credit lines for short-term borrowings,
     including commercial paper and bank acceptances, totaled approximately
     NT$12,877,000 thousand (US$405,703 thousand).

12.  COMMERCIAL PAPER AND BANK ACCEPTANCES PAYABLE

<TABLE>
                                                                    December 31
                                                 --------------------------------------------------
                                                      2003                       2004
                                                 ---------------   --------------------------------
                                                      NT$               NT$              US$

<S>                                                   <C>               <C>                <C>
     Commercial paper and bank acceptances
       payable - interest at 1.10%-2.35% in
       2003 and 1.24%-1.52% in 2004                    1,077,000           910,000           28,670
     Less:  Unamortized discount                           1,035             1,184               37
                                                 ---------------   ---------------   --------------
                                                       1,075,965           908,816           28,633
                                                 ===============   ===============   ==============
</TABLE>


                                      F-26
<PAGE>


     As of December 31, 2004, the guarantee/acceptance agencies were Fubon Bills
     Finance Co., China Bills Finance Corporation, E.Sun Bills Finance Corp.,
     China Trust Bills Finance Corporation, Taiwan Finance Corporation,
     International Bills Finance Corporation and Dah Chung Bills Finance Corp.
     The commercial paper and bank acceptances payable are due from January 2005
     to March 2005.

13.  LONG-TERM BONDS PAYABLE

<TABLE>
                                                                    December 31
                                                 --------------------------------------------------
                                                      2003                       2004
                                                 ---------------   --------------------------------
                                                      NT$               NT$              US$

<S>                                                   <C>               <C>                <C>

     Foreign convertible bonds                         6,794,000         6,383,400          201,115
     Accrued interest                                     67,232           307,182            9,678
                                                 ---------------  ----------------  ---------------
                                                       6,861,232         6,690,582          210,793
     Domestic secured bonds                                    -         2,750,000           86,642
                                                 ---------------   ---------------   --------------
                                                       6,861,232         9,440,582          297,435
                                                 ===============   ===============   ==============
</TABLE>

     Information on the long-term bonds payable is as follows:

     a.   Foreign convertible bonds

          In September 2003, the Company issued US$200,000 thousand of
          unsecured zero coupon convertible bonds due September 2008,
          consisting of 200,000 units with face values of US$1,000 each. The
          bonds have an implied interest rate of 3.75%.

          From the date 31 days after issuance through the date 10 days before
          the due date, the bondholders have the right to convert the bonds
          into the Company's common shares or ADS at the specified conversion
          price. The conversion rate is based on the current market price at
          the time of sale.

          The Company may redeem the bonds at the redemption price if:

          1)   On or at any time after September 2007, the closing price of the
               common shares for a period of 20 consecutive trading days is
               higher than 130% of the conversion price (NT$35.53 per share at
               December 31, 2004) in effect on each such trading day, and

          2)   at least 90% of the bonds have already been converted, redeemed,
               or purchased and cancelled.

          3)   If the applicable tax law is unfavorably changed, the Company
               may redeem at any time all, but not some, of the bonds.

          In November 1997, the Company issued US$200.0 million of zero coupon
          convertible bonds due November 2002. Except for US$1.0 million
          aggregate principal amount of convertible bonds that were converted
          into 355,086 common shares during 2001, the remaining US$199.0 million
          aggregate principal amount of the outstanding bonds were repurchased
          from the open market and cancelled in 2001 and 2002. During 2002, the
          Company repurchased US$68.0 million in aggregate principal amount of
          the outstanding bonds from the open market with payments of
          NT$3,242,110 thousand, which resulted in an extraordinary loss of
          NT$34,613 thousand (net of income tax benefit of NT$11,538 thousand).


                                      F-27
<PAGE>


     b.   Domestic secured bonds

          In January 2004, the Company issued NT$2.75 billion in domestic
          secured bonds, due in January 2009. The bonds consisted of 275 units
          with par value of NT$10 million and repayable in January 2008 and
          2009 in two equal payments. The interest, payable semiannually, was
          3.6% in 2004. The bank has guaranteed the bonds and has the right to
          redeem the bonds early in the event the Company violates certain
          provisions of the bond agreement.

     c.   Foreign convertible notes - issued by ASE Test Finance

          In June 1999, ASE Test, in connection with the acquisitions of ISE
          Labs and Motorola's Semiconductor Products Sector Business in Taiwan
          and Korea, issued US$160.0 million of 1% guaranteed convertible bonds
          due July 1, 2004 through its subsidiary, ASE Test Finance. The
          Company subscribed US$50.0 million of the convertible bonds and,
          accordingly, the net balance of US$110,111 thousand is recorded in
          the accompanying balance sheet as of December 31, 2002. On August 19,
          2003, ASE Test Finance redeemed and cancelled the total outstanding
          convertible notes with payments of NT$4,908,389 thousand, which
          resulted in an extraordinary loss of NT$75,668 thousand.

          Under ROC GAAP, the loss of NT$75,668 thousand was as a result of the
          early redemption and cancellation of the convertible notes and was
          recorded as an extraordinary loss. Under U.S. GAAP, the loss would
          not qualify as extraordinary and would have been included in other
          expenses.

14.  LONG-TERM DEBTS

     Long-term debts consist of the following:

<TABLE>
                                                                    December 31
                                                 --------------------------------------------------
                                                      2003                       2004
                                                 ---------------   --------------------------------
                                                      NT$               NT$              US$

<S>                                                   <C>               <C>                <C>
     Mortgage bank loans for purchase of
       building and machinery                          6,266,559         3,877,982          122,180
     Acceptances payable                                 874,798         3,882,903          122,334
     Revolving bank loans                             13,440,020        20,496,874          645,774
     Bank loans secured by assets                      2,025,672         3,645,659          114,860
     Letters of credit loans for purchase of
       materials and machinery                         1,662,152         2,212,251           69,699
     Loans for redemption of convertible bond          5,095,500         4,787,550          150,837
                                                 ---------------   ---------------   --------------
                                                      29,364,701        38,903,219        1,225,684
     Current portion                                  (5,491,389)       (2,011,673)         (63,380)
                                                 ---------------   ---------------  ---------------
                                                      23,873,312        36,891,546        1,162,304
                                                 ===============   ===============   ==============
</TABLE>

     a.   Mortgage bank loans for purchase of building and machinery

          Mortgage bank loans obtained by the Company and ASE Test, Inc. are
          repayable in quarterly or semi-annual installments, as well as in a
          lump sum payment at maturity. The effective interest rates on the
          loans ranged from 1.82% to 7.92% in 2003 and 2.57% to 7.92% in 2004,
          respectively.

          In November 2000 a subsidiary, ASE Chung Li, obtained a syndicated
          bank loan of NT$4.0 billion in order to finance the expansion of
          factory buildings. Upon completing its merger with ASE Chung Li, the
          Company assumed all of the rights and obligations of ASE Chung Li.
          The agreements require, among other things, the following:

          1)   Without the prior written consent from the majority of the
               syndicate banks, the Company may not:


                                      F-28
<PAGE>


               a)   guarantee, or assume direct or indirect liabilities of
                    other parties, in excess of 50% of the Company's net worth;

               b)   merge or combine with any other entity, unless the Company
                    is the surviving entity, and the merger or combination will
                    unfavorably affect the Company's financial condition;

               c)   sell, lease or transfer operating assets in excess of 20%
                    of the Company's total assets, unless the transfer of an
                    account receivable to a financial institution is for the
                    increase in working capital;

               d)   pledge its assets in excess of NT$100,000 thousand outside
                    the normal course of business;

               e)   provide financing to any other entity;

               f)   make other investments in excess of NT$200,000 thousand;

               g)   invest in any other entity which may be presumed by the
                    syndicated bank to unfavorably impact the Company's
                    financial condition;

               h)   stop or revise the plan on expanding factory buildings in
                    Chung Li if the stoppage or revision will be unfavorable to
                    the Company;

               i)   dispose of the assets pledged under this agreement; and

               j)   make changes in the Company's operating items and plans
                    that will be unfavorable to the Company.

          2)   The Company's tangible net worth, as defined in a loan
               agreement, should not be less than NT$38.0 billion.

          3)   The Company should maintain certain financial ratios.

          Mortgage bank loans for purchase of machinery amount of NT$1,074,184
          thousand (US$33,843 thousand) are due within one year and the Company
          has received permission from the relevant banks to refinance these
          loans or obtain a new long-term credit line to repay these loans.

     b.   Acceptance payables

<TABLE>
                                                                    December 31
                                                 --------------------------------------------------
                                                      2003                       2004
                                                 ---------------   --------------------------------
                                                      NT$               NT$              US$

<S>                                                   <C>               <C>                <C>
         Acceptance payables                             875,000         3,900,000          122,873
         Unamortized discounts                              (202)          (17,097)            (539)
                                                 ---------------   ---------------   --------------
                                                         874,798         3,882,903          122,334
                                                 ===============   ===============   ==============

         Interest rate                                1.03%-1.10%      1.238%-2.75%
</TABLE>

          The acceptance payable with a credit line of NT$820 million
          stipulates, among other things, the following:


                                      F-29
<PAGE>


          1)   Unless there is a written consent from the majority of the
               syndicate banks, the Company cannot pledge its assets, assume
               liabilities or dispose of assets in excess of 20% of its total
               assets, unless the transaction involves a transfer of assets
               between affiliates;

          2)   Unless there is a written consent from the majority of the
               syndicate banks, the Company cannot (a) merge with any other
               entity or (b) split up according to the Company law, and (c)
               make investments of more than NT$2.5 billion starting from the
               day after the agreement date. (an exception was the Company's
               joint venture agreement with Compeq to establish ASE-Compeq
               Technologies, Inc.; total investment under the joint venture
               agreement were not more than NT$5.0 billion); (d) acquire major
               assets of another entity (except if the investment is in a
               subsidiary that existed before the bank acceptance agreement;
               the Company is the survivor entity of any merger, or if the
               merger with subsidiaries will not harm the Company's operations,
               financial condition or ability to meet the terms of the bank
               acceptance agreement);

          3)   The Company's tangible net worth should not be less than NT$38.0
               billion; and

          4)   The Company should maintain certain financial ratios.

          Acceptances payable of NT$1,080,000 thousand (US$34,026 thousand) is
          due for repayment by September 2005. The Company has obtained a new
          long-term credit line to make the repayment.

     c.   Revolving bank loans

<TABLE>
                                                                                          December 31
                                                                       --------------------------------------------------
                                                                            2003                       2004
                                                                       ---------------   --------------------------------
                                                                            NT$               NT$              US$

<S>                                                                          <C>               <C>                <C>
         Syndicated bank loan - effective interest rate was
           2.15%-2.53% in 2003 and 2.14%-2.30% in 2004
            ASE                                                               8,050,000        12,398,077          390,614
         Revolving credit lines due February 2005 to June 2008
           -effective interest rate was 1.45%-5.50% in 2003
           and 1.60%-3.35% in 2004
            ASE                                                               3,513,760         3,669,005          115,596
            Others                                                            1,876,260         4,429,792          139,564
                                                                        ---------------   ---------------   --------------
                                                                             13,440,020        20,496,874          645,774
                                                                        ===============   ===============   ==============
</TABLE>

         The syndicated bank loan of NT$7.0 billion is repayable in three
         semi-annual installments from December 2004 to December 2005. The
         Company made an early payment in the amount of NT$3.35 billion in
         October 2003, repaid NT$1.252 billion in December 2004 and as a result
         there was an outstanding balance of NT$2.398 billion as of December 31,
         2004, which is repayable in accordance with the original payment
         schedule.

         The second syndicated bank loan of NT$7.0 billion outstanding as of
         December 31, 2004 (including NT$5.0 billion revolving bank loan and
         NT$2.0 billion acceptances payable) was repayable in seven semi-annual
         installments from September 2005 to September 2008. A third syndicated
         bank loan totaled NT$5.0 billion as of December 31, 2004 and is
         repayable in five semi-annual installments from December 2007 to
         December 2009.

         The loan agreement's covenants specify the following:

          1)   Without the prior written consent from the majority of the
               banks, the Company should not:

               a)   pledge its assets, assume liabilities or dispose of assets
                    in excess of 20% of total assets, unless the transaction
                    involves a transfer of assets between affiliates; and


                                      F-30
<PAGE>


               b)   merge with any other entity or make investments in excess
                    of NT$2.5 billion or acquire material assets from another
                    entity.

          2)   The Company's tangible net worth, as defined in a loan
               agreement, should not be less than NT$45.0 billion; and

          3)   The Company should maintain certain financial ratios.

          As of December 31, 2004, the revolving bank loan of NT$4,158,077
          thousand (US$131,004 thousand) was due before the end of 2005. The
          Company has received permission from the banks concerned to refinance
          these loans or obtain a new long-term credit line to repay these
          loans.

     d.   Bank loans secured by assets

          These include various bank loans obtained by ASE Korea which are
          secured by ASE Korea's land, buildings and improvements, and
          machinery and equipment, which totaled NT$4,273,830 thousand
          (US$134,651 thousand) as of December 31, 2004. The loans are
          repayable in annual installments which are due 2008 and bear interest
          from 3.15% to 3.87% in 2003 and 1.88% to 4.68% in 2004, respectively.

     e.   Letters of credit loans for purchase of materials and machinery

          These represent various bank loans obtained by the Company with
          original terms of one year or less, due from January 2005 through
          June 2005 with interest rates ranging from 0.83% to 1.61% in 2003 and
          2.13% to 5.02% in 2004. From October 2004 to January 2005, the
          Company obtained new credit lines to repay these letters of credit
          loans, which are due from January 2007 to July 2010.

     f.   Loans for redemption of convertible bonds

          The loan obtained in 2003 by ASE Test Finance, specifically for the
          purpose of redeeming the convertible bonds issued in 1999 (Note 13),
          is repayable in semi-annual installments starting June 2005 to June
          2008 and bears interest at 2.27% in 2003 and 3.63% in 2004. The
          Company and its subsidiaries ASE Test and ASE Test, Inc. provided
          guarantees for ASE Test Finance's payment obligations under the
          facility. Under the guarantees, ASE Test is required to maintain
          certain financial ratios and the tangible net worth of ASE Test shall
          not be less than US$400 million at any time.

          The abovementioned bank loan contracts have variable interest rates
          and are subject to adjustments by banks or changes in prime rate. In
          addition, several of the loan agreements have default provisions,
          whereby a default under one debt agreement may also trigger
          cross-defaults under other debt agreements.

          As of December 31, 2004, unused long-term bank facilities
          approximated NT$1,793,000 thousand (US$56,112 thousand).


                                      F-31
<PAGE>


     As of December 31, 2004, the maturities of long-term bonds payable and
     long-term bank loans were as follows:

                                                        Amount
                                            --------------------------------
                                                  NT$              US$

     Within the following year                    2,011,673           63,380
     During the second year                      16,629,629          523,933
     During the third year                        8,675,985          273,345
     During the fourth year                      16,245,278          511,824
     During the fifth year and thereafter         4,781,236          150,637
                                            ---------------   --------------
                                                 48,343,801        1,523,119
                                            ===============   ==============

     Long-term bonds payable and long-term bank loans by currencies are
     detailed as follows:

                                                   December 31
                                         -------------------------------
                                               2003             2004

     New Taiwan dollars                  NT$ 18,052,221   NT$ 27,775,646
     U.S. dollars                        US$    519,805   US$    629,329
     Japanese yen                        Yen  1,622,970   Yen    800,000
     China Yuan Renminbi                 RMB          -   RMB     61,000

15.  LONG-TERM PAYABLE FOR INVESTMENT

     In July 1999, the Company and ASE Test purchased equity interests of 70.0%
     and 30.0%, respectively, in the Motorola's Semiconductor Products Sector
     Businesses in Taiwan and Korea held through ASE Chung Li and ASE Korea,
     respectively. Both ASE Chung Li and ASE Korea are engaged in the packaging
     and testing of semiconductors. The total purchase price was approximately
     US$350.1 million. As of December 31, 2001, US$246.8 million had been paid
     to Motorola and the remaining amount of US$103.3 million and accrued
     interest were to be paid within the following three years. In addition, a
     portion of the purchase price, payable for investment US$23,333 thousand
     and accrued interest US$4,486 thousand, was not paid because payment was
     contingent upon achieving certain targets of revenue from the packaging and
     testing services provided to Motorola, which were not met. In June 2002,
     the Company and Motorola re-negotiated the agreement with respect to the
     payment terms and the contingent payments. As of December 2004, the
     contingent payments had been settled in full.

16.  OBLIGATIONS UNDER CAPITAL LEASES

     The Company and its subsidiaries, ASE Test, Inc., ASE Japan and ISE Labs
     lease equipment and buildings under certain non-cancellable capital lease
     agreements, which expire on various dates through December 2010. The net
     book value, as of December 31, 2003 and 2004, of the equipment acquired
     under such capital lease obligations amounted to NT$559,615 thousand and
     NT$706,147 thousand (US$22,248 thousand), respectively. The effective
     interest rates on obligations under capital leases ranged from 0.7% to 11%
     in 2003 and 5.64% to 11% in 2004, respectively.


                                      F-32
<PAGE>


     The future minimum lease payments under the above-mentioned capital leases
     as of December 31, 2004 were as follows:

                                                     NT$               US$

     Within the following year                         218,603            6,887
     Within the second year                            136,614            4,304
     Within the third year                              71,413            2,250
     Within the fourth year                              1,499               47
     Within the fifth year                                 560               18
                                               ---------------   --------------
     Total minimum lease payments                      428,689           13,506
     Imputed interest                                  (32,345)          (1,019)
                                               ---------------   --------------
     Present value of future lease obligations         396,344           12,487
     Capital lease obligation, current                (198,831)          (6,264)
                                               ---------------   --------------
     Capital lease obligation, long-term               197,513            6,223
                                               ===============   ==============

17.  PENSION PLANS

     The Company and its subsidiaries, ASE Test, Inc. maintain pension plans for
     certain employees. Retirement benefits are based on the length of service
     and average salaries or wages of the last six months before retirement. ISE
     Labs has a defined contribution savings plan ("401k plan") for eligible
     employees. This plan permits employees to make contributions up to the
     maximum limits allowable under Internal Revenue Code Section 401k. ASE Test
     Malaysia also has a defined contribution plan. In addition, ASE Korea has a
     pension plan where eligible employees and directors with more than one year
     of service are entitled to receive a lump-sum payment upon termination of
     their service with ASE Korea, based on their length of service and rate of
     pay at the time of termination. The Company, ASE Test, Inc. and ASE Japan
     make monthly contributions, at a specified percentage of salaries and
     wages, to pension funds which are in the name of, and are administered by,
     the employee pension plan committee of the respective entities and are
     deposited in financial institutions. The financial institutions may invest
     the assets of the plan in stocks, bonds and other securities. The changes
     in the retirement funds during the periods indicated are summarized as
     follows:

<TABLE>
                                                           Year Ended December 31
                                     --------------------------------------------------------------------
                                           2002              2003                      2004
                                     ---------------   ---------------   --------------------------------
                                          NT$               NT$               NT$               US$

<S>                                          <C>               <C>               <C>               <C>
     Balance, beginning of year              440,746           535,412           649,035           20,448
     Acquisition from ASE Japan                    -                 -           299,142            9,425
     Contributions                            83,996           113,077           133,398            4,203
     Payments                                   (145)           (8,803)          (20,770)            (654)
     Interest income                          10,815             9,349            20,781              655
                                     ---------------   ---------------   ---------------   --------------
     Balance, end of year                    535,412           649,035         1,081,586           34,077
                                     ===============   ===============   ===============   ==============
</TABLE>

     Of the Company's plan assets, approimately NT$29,360 thousand, NT$29,775
     thousand and NT$30,126 thousand (US$949 thousand) as of December 31, 2002,
     2003 and 2004, respectively, mainly represented amounts contributed by ASE
     Technology, Inc, which no longer has employees. In accordance with laws of
     Taiwan, such funds may not be used to settle obligations of the Company or
     its other subsidiaries.


                                      F-33
<PAGE>


     The plan assets deposited in the financial institutions as of December 31,
     2004, by category, are as follows:

     Type of Investment                                         Allocation (%)

     Cash                                                                 31
     Government Loans                                                     20
     Equities                                                             38
     Notes                                                                10
     Bonds                                                                 1
                                                                      ------
                                                                         100
                                                                       =====

     Pension costs for these entities consist of:

<TABLE>
                                                                           Year Ended December 31
                                                      --------------------------------------------------------------------
                                                           2002              2003                       2004
                                                      ---------------   ---------------   --------------------------------
                                                           NT$               NT$               NT$               US$

<S>                                                           <C>               <C>               <C>               <C>
     Service costs                                            191,707           365,402           455,912           14,364
     Interest                                                  36,102            43,312            88,090            2,775
     Projected return on pension assets                       (23,003)          (19,413)          (26,179)            (825)
     Amortization of prior period service cost,
       gain or loss on plan assets                              4,176            11,161            16,454              519
                                                      ---------------   ---------------   ---------------   --------------
                                                              208,982           400,462           534,277           16,833
                                                      ===============   ===============   ===============   ==============
</TABLE>

     Other pension information based on actuarial calculations of the plan
     during the periods indicated is as follows:

<TABLE>
                                                                                          December 31
                                                                       --------------------------------------------------
                                                                            2003                       2004
                                                                       ---------------   --------------------------------
                                                                            NT$               NT$              US$

<S>                                                                          <C>               <C>                <C>
     a.  Benefit obligations

         Vested benefit obligation                                             372,423           547,519           17,250
         Non-vested benefit obligation                                         971,450         1,275,640           40,190
                                                                       ---------------   ---------------   --------------
         Accumulated benefit obligation                                      1,343,873         1,823,159           57,440
         Additional benefits based on future salaries                          642,098         1,974,046           62,194
                                                                       ---------------   ---------------   --------------
         Projected benefit obligation                                        1,985,971         3,797,205          119,634
         Fair value of assets                                                 (619,260)       (1,060,860)         (33,423)
                                                                       ---------------   ---------------   --------------
         Funded status                                                       1,366,711         2,736,345           86,211
         Unrecognized net transition obligation                                (96,979)          (89,853)          (2,831)
         Unrecognized prior service cost                                       (15,247)          (14,521)            (458)
         Unrecognized net actuarial loss                                      (368,778)         (509,860)         (16,064)
         Additional pension cost                                                31,873             8,963              283
         Portion in other current liabilities                                  (21,100)          (10,388)            (327)
                                                                       ---------------   ---------------   --------------
         Accrued pension cost                                                  896,480         2,120,686           66,814
                                                                       ===============   ===============   ==============
</TABLE>


                                      F-34
<PAGE>


<TABLE>
                                                                                          December 31
                                                                       --------------------------------------------------
                                                                            2003                       2004
                                                                       ---------------   --------------------------------
                                                                            NT$               NT$              US$

<S>                                                                         <C>               <C>                <C>

     b.  Vested obligation                                                     380,630           559,061           17,614
                                                                       ===============   ===============   ==============

     c. Actuarial assumptions used

         Discount rate                                                    3.25%-4.30%       2.50%-4.50%
         Increase in future salary level                                  3.00%-5.00%       3.00%-5.00%
         Expected rate of return on plan assets                              3.25%          2.50%-3.25%
</TABLE>

     d.  The consolidated entities expect to make contributions of NT$215,241
         thousand (US$6,781 thousand) to retirement funds in 2005.

     e.  Expected benefit payments:

         Year of Payments

         2005                                                   NT   $    91,139
         2006                                                             52,301
         2007                                                             83,461
         2008                                                             65,624
         2009                                                             88,774
         2010 to 2053                                                 14,555,112

     Plan assets and obligations reflected herein were measured as of December
     31, 2004.

     The Company has no other post-retirement or post-employment benefit plans.

18.  SHAREHOLDERS' EQUITY

     Common Stock

     As of December 31, 2004, the Company had "capital received in advance" of
     NT$42,759 thousand (US$1,347 thousand) as a result of employees exercising
     their options in accordance with the 2002 Stock Option Plan. The "capital
     received in advance" represents 2,402 thousand shares of commom stock, of
     which only 660 thousand shares were issued and outstanding as of December
     31, 2004. The remaining shares will be issued once they have been
     registered with the Taiwan regulator.

     American Depositary Shares

     In July 1995, the Company issued 8,600,000 GDSs, representing 43,000,000
     common shares. In September 2000, the Company issued 20,000,000 ADSs,
     representing 100,000,000 common shares. In connection with the ADS offering
     in 2000, the Company offered to exchange all outstanding GDSs for ADSs
     listed on the New York Stock Exchange.

     The GDS or ADS holders generally have the same rights and obligations as
     other shareholders, subject to provisions of relevant laws. The exercise of
     such rights and obligations shall comply with the related regulations and
     the deposit agreement, which stipulate, among other things, that the GDS or
     ADS holders can, through Citicorp Financial Services Limited as the nominee
     holder: (a) exercise their voting rights; (b) sell their GDSs or ADSs; and
     (c) receive dividends declared and subscribe to the issuance of new shares.


                                      F-35
<PAGE>


     As of December 31, 2004, a portion of the outstanding ADSs were revoked in
     exchange for approximately 360,549 thousand common shares of the Company,
     which represented 8.79% of the Company's total outstanding common shares
     (including treasury stock). As of December 31, 2004, the outstanding ADSs
     represented 1.80% of the Company's total outstanding common shares
     (including treasury stock).

     Capital Surplus

     Under the ROC Company Law, capital surplus from the paid-in capital in
     excess of par value and from treasury stock transactions can be used to
     offset a deficit. In addition, such capital surplus may be transferred to
     capital and is subject to a specified limit under relevant regulations.

     Capital surplus from long-term investments in shares of stock which are
     accounted for by the equity method may not be used for any purpose.

     Appropriation of Retained Earnings

     The Company's Articles of Incorporation provide that the annual net income
     shall be appropriated as follows:

     a.   offset against deficit, if any;

     b.   10.0% of the remainder as legal reserve, until the accumulated amount
          equals paid-in capital;

     c.   an amount equal to the income from long-term investments in shares of
          stock accounted for by the equity method, excluding cash dividends,
          as special reserve;

     d.   not more than 2.0% of the remainder, as compensation to directors and
          supervisors;

     e.   between 5.0% to 7.0% of the remainder, as bonus to employees, of
          which 5.0% will be distributed in accordance with the employee bonus
          plan and the excess to be distributed to specific employees as
          decided by the board of directors; and

     f.   the remainder, as dividends to shareholders.

     The aforementioned appropriations shall be approved by the shareholders in
     the following year and given effect in the financial statements of such
     year.

     Under the ROC Company Law, the aforementioned legal reserve may be used to
     offset a deficit. Also, when the reserve has reached 50.0% of capital
     stock, up to 50.0% thereof may be transferred to capital stock.

     The appropriations of the 2002 and 2003 earnings, as resolved at the
     Company's annual shareholder's meetings, were as follows:

<TABLE>
                                                                                   Amount
                                                             --------------------------------------------------
                                                                  2002                       2003
                                                             ---------------   --------------------------------
                                                                  NT$               NT$              US$

<S>                                                                   <C>              <C>                <C>
     Legal reserve                                                    12,903           274,279            8,641
     Compensations to directors and supervisors                        2,280            49,320            1,554
     Bonus to employees - cash                                         8,000            18,428              581
     Bonus to employees - stock                                            -           154,272            4,860
     Stock dividends - NT$0.03 in 2002 and NT$0.57 in 2003
       per share, respectively                                        97,644         2,219,774           69,936
                                                             ---------------   ---------------   --------------
                                                                     120,827         2,716,073           85,572
                                                             ===============   ===============   ==============
</TABLE>


                                      F-36
<PAGE>


     The stock dividends per share represent dividends paid in the fiscal year
     for shares outstanding on the record date applicable to the payment of
     these dividends. However, such dividend was reduced from NT$0.62 to NT$0.57
     upon the completion of the merger with ASE Chung Li and ASE Material.

     The information related to appropriations of the 2002 and 2003 earnings may
     be accessed through the website of the Taiwan Stock Exchange.

     Dividend Policy

     In order to meet the needs of the Company's present and future capital
     expenditures, the Company's dividend distribution shall be primarily in the
     form of stock dividends. Cash dividends may also be distributed in certain
     circumstances. However, the percentage of cash dividends generally shall
     not exceed 20.0% of any dividend declared.

     With respect to the percentage of cash dividends to be paid referred to in
     the preceding paragraph, the Company may decide the most suitable manner to
     distribute such dividends in accordance with its current operational status
     while taking into consideration the budget plan for the following year. The
     board of directors shall propose a profit distribution plan, which shall be
     submitted to the shareholders for approval before implementation.

     Effect of Bonuses to Employees, Directors and Supervisors

     Should the bonuses to employees, directors and supervisors be charged to
     expense in 2003, the basic and diluted earnings per share (after tax) for
     2003 would decrease from NT$0.74 and NT$0.73 to NT$0.68 and NT$0.67,
     respectively. The common shares issued for bonus to employees represented
     0.41% of the Company's total outstanding common shares as of December 31,
     2003.

     Imputation Tax System

     Under the Integrated Income Tax System which became effective on January 1,
     1998, non-corporate resident shareholders are allowed a tax credit for the
     income tax paid or payable by the Company on earnings generated in 1998 and
     onwards. Non-resident shareholders are allowed only a tax credit from the
     10% income tax on undistributed earnings, which can be used to deduct the
     withholding income tax on dividends paid. An Imputation Credit Account
     ("ICA") is maintained by the Company for such income tax and the tax credit
     allocated to each shareholder. The maximum credit available for allocation
     to each shareholder cannot exceed the balance shown in the ICA on the date
     of distribution of dividends.

     As of December 31, 2004, the creditable taxes aggregated NT$297,354
     thousand (US$9,368 thousand). The actual percentage for the distribution of
     2003 earnings and estimated percentage for the distribution of 2004
     earnings were 4.40% and 4.32%, respectively.

     Treasury Stock

<TABLE>
                                     Thousand
                                      Shares,                                  Thousand
                                     Beginning                                  Shares,
                Purpose               of year       Increase    Decrease      End of Year

<S>                                     <C>                <C>     <C>                <C>
     2003

     Shares held by subsidiaries        164,442            65      163,789            718
                                     ==========    ==========   ==========     ==========

     2004

     Shares held by subsidiaries            718       247,567            -        248,285
                                     ==========    ==========   ==========     ==========
</TABLE>


                                      F-37
<PAGE>


     Effective January 1, 2002, the Company reclassified its shares held by its
     subsidiaries with book value of NT$2,639,826 thousand, representing 164,442
     thousand shares, from long-term investment to treasury stock.

     The treasury stock increased by 65 thousand shares in 2003 and by 13,478
     thousand shares in 2004 because of the Company's capitalization of retained
     earnings. Of these shares, 163,789 thousand were sold at NT$2,850,524
     thousand. The amount of NT$220,735 thousand in excess of the book value of
     NT$2,629,789 thousand was recorded as capital surplus, while subsidiaries
     recorded the excess as investment income. This transaction resulted in the
     increase in realized loss on long-term investments of NT$354,787 thousand
     in 2003.

     As disclosed in Note 1, the Company issued common shares in connection with
     the merger. The Company reclassified the shares held by its subsidiaries
     with a book value of NT$2,798,399 thousand (US$88,166 thousand),
     representing 234,089 thousand shares, from long-term investments to
     treasury stock. The Company's subsidiary, ASE Test, is a Singapore
     incorporated company, and may not acquire, directly or indirectly, shares
     or units of shares in the Company under Singapore law. In order to comply
     with relevant regulations, a trust has been established to hold and dispose
     of the Company's shares obtained in connection with this merger. ASE Test
     does not have any rights with respect to the common shares held in trust,
     other than the right to receive the proceeds from the sale of such common
     shares and any cash dividends declared while the shares remain in trust.

     As of December 31, 2004, the book value of those shares was NT$2,645,575
     thousand (US$83,351 thousand), representing 248,285 thousand shares, which
     had a market value of NT$3,956,878 thousand (US$124,665 thousand).

     Although these shares are treated as treasury stock in the financial
     statements, the shareholders are entitled to exercise their rights on these
     shares, except for participation in additional capital increases through
     cash payment.

19.  EMPLOYEE STOCK OPTION PLANS

     In order to attract, retain and incentivize employees, the Company adopted
     two employee stock option plans, the 2002 Plan and the 2004 Plan, which
     were approved in August 2002 and May 2004, respectively. The maximum number
     of units authorized to be granted under 2002 Plan and 2004 Plan is 160,000
     thousand and 140,000 thousand, respectively, with each unit representing
     one common stock. Under the terms of the plans, stock option rights are
     granted at an exercise price equal to the closing price of the Company's
     common shares listed on the Taiwan Stock Exchange (TSE) on the date of
     grant. The option rights of both plans are valid for ten years and
     exercisable at certain percentages subsequent to the second anniversary of
     the grant date. Under the 2002 Plan, the number of units authorized,
     including those which were never granted and those which had been granted
     and subsequently cancelled, all expired as of August 2004. Under the 2004
     Plan, 124,917 thousand units were granted and 83 thousand units will never
     be granted. The remaining 15,000 thousand units have not yet been granted
     and are expected to be granted before May 27, 2005.

     ASE Test has six stock option plans, the 1996 Executive Management Option
     Plan (the "1996 Plan"), and the 1997, 1998, 1999, 2000 and 2004 Option
     Plans. Stock options granted under these plans are exercisable for ASE Test
     ordinary shares based on a vesting schedule over five to ten years until
     the options expire.

     Information on the outstanding stock options in 2003 and 2004 is as
     follows:


                                      F-38
<PAGE>


     ASE Option Plan
<TABLE>
                                                                  2003                                2004
                                                    ---------------------------------   --------------------------------
                                                        Number of                           Number of
                                                       Outstanding        Weighted-        Outstanding        Weighted-
                                                      Stock Option         Average        Stock Option         Average
                                                         Rights           Exercise           Rights           Exercise
                                                     (in Thousands)      Prices (NT$)    (in Thousands)      Prices (NT$)

<S>                                                        <C>              <C>                <C>              <C>
     Beginning outstanding balance                         145,989          $17.80             146,752          $18.30
     Options granted                                        13,979           23.20             124,917           25.10
     Options forfeited                                     (13,216)          17.90              (9,220)          19.20
     Options exercised                                           -            -                   (660)          17.80
                                                        ----------                          ----------
     Ending outstanding balance                            146,752           18.30             261,789           21.50
                                                        ==========                          ==========

     Ending options exercisable                                  -                              49,270
                                                        ==========                          ==========

     Fair value under the 2004 Plan (NT$)               $        -                          $    11.08
                                                        ==========                          ==========
</TABLE>

     The number of outstanding options and their exercise prices have been
     adjusted to reflect the dilution attributable to the distribution of stock
     dividends in accordance with the terms of the plans.

     Information on outstanding and exercisable option rights as of December
     31, 2004 is as follows:

                                     Number of
                                    Outstanding       Remaining
                      Exercise      Options (in      Contractual
                    Price (NT$)     Thousands)      Life (Years)

                        17.8            125,145         8.0
                        23.2             12,618         8.6
                        25.1            124,026         9.5
                                     ----------
                                        261,789
                                     ==========

     The Company used the Black-Scholes Option Pricing Model to evaluate the
     fair market value of the 2004 Plan options, using the following
     assumptions:

     Expected dividend yield                                     3.00%
     Expected volatility                                           59%
     Risk free interest rate                                     2.50%
     Expected life                                             5 years

     ASE Test Option Plan

     Information regarding the stock options granted or modified after January
     1, 2004 is presented below:


                                      F-39
<PAGE>


<TABLE>
                                                                    Weighted
                                                                    Average      Weighted
                                                     Number of      Exercise      Average
                                                       Shares        Price      Grant Date
                                                        (in       Per Share     Fair Values
                                                    thousands)       (US$)         (US$)

<S>                                                       <C>       <C>           <C>
         Option granted                                   260       $  6.18       $   6.18
                                                                                  ========
         Option exercised                                   -             -
         Option forfeited                                   -             -
         Option expired                                     -             -
                                                   ----------
         Ending balance - December 31, 2004               260          6.18
                                                   ==========
</TABLE>

     Above options outstanding at December 31, 2004 and the related weighted
     average exercise price and remaining contractual life information is as
     follows:

<TABLE>
                                                       Outstanding                  Exercisable            Weighted
                                                  ------------------------  --------------------------
                                                                  Weighted                    Weighted      Average
                                                     Shares        Average     Shares          Average     Remaining
                                                       (in          Price        (in           Price     Life (Years)
                                                   thousands)       (US$)     Thousands)       (US$)

<S>                                 <C>                  <C>      <C>         <C>              <C>            <C>
     Options with exercise price of $ 6.18               260      $    6.18           -        $     -        9.51
                                                   =========                  =========
</TABLE>

     ASE Test used the Black-Scholes Option Pricing Model to evaluate market
     price of the 2004 Plan and the assumptions are as follows:

     Expected dividend yield                                           -
     Expected volatility                                            78.28%
     Risk free interest rate                                      3.50%-3.88%
     Expected life                                                  5 years

     For purposes of the pro forma disclosure below, the estimated fair value of
     the options is assumed to be amortized to expense over the option rights'
     respective vesting periods. Had the Company and ASE Test used the fair
     value based method to evaluate the options granted, the method, assumptions
     and pro forma results of the Company in 2004 would have been as follows:

                                                              NT$         US$
     Net income for calculation of basic EPS
        As reported                                        4,209,690    132,629
        Pro forma                                          3,784,386    119,231

     Net Income for calculation of diluted EPS
        As reported                                        4,373,239    137,783
        Pro forma                                          3,947,935    124,384

     Earnings per share (EPS):
        Basic EPS as reported                                   1.09       0.03
        Pro forma basic EPS                                     0.98       0.03
        Diluted EPS as reported                                 1.06       0.03
        Pro forma diluted EPS                                   0.96       0.03


                                      F-40
<PAGE>


20.  PERSONNEL EXPENDITURE, DEPRECIATION AND AMORTIZATION

<TABLE>
                                       Year Ended December 31, 2003                 Year Ended December 31, 2004
                                  -------------------------------------  -------------------------------------------------
                                    Cost of     Operating                  Cost of     Operating
                                    Revenues     Expenses      Total       Revenues     Expenses             Total
                                  -----------  -----------  -----------  -----------  -----------  -----------------------
                                      NT$          NT$          NT$          NT$          NT$          NT$          US$
<S>                                 <C>          <C>          <C>        <C>            <C>         <C>            <C>
     Personnel
        Salary                      7,206,380    2,024,201    9,230,581  $10,401,732    2,611,914   13,013,646     410,008
        Pension cost                  343,734       94,601      438,335      506,552      147,318      653,870      20,601
        Meal allowance                228,783       36,951      265,734      356,976       65,177      422,153      13,300
        Welfare                        25,300        7,120       32,420       69,761       17,926       87,687       2,762
        Labor and health
          insurance                   476,816      153,492      630,308      787,325      222,287    1,009,612      31,809
        Others                        371,245      246,578      617,823      339,890      110,201      450,091      14,181
                                  -----------  -----------  -----------  -----------  -----------  -----------  ----------
                                    8,652,258    2,562,943   11,215,201   12,462,236    3,174,823   15,637,059     492,661
                                  ===========  ===========  ===========  ===========  ===========  ===========  ==========

     Depreciation                  11,516,968      693,942   12,210,910   13,247,095      651,003   13,898,098     437,873
     Amortization                     377,623      178,035      555,658      641,010      247,164      888,174      27,983
</TABLE>

21.  INCOME TAX

     a.   Income tax benefit is summarized as follows:

<TABLE>
                                                                             Year Ended December 31
                                                       --------------------------------------------------------------------
                                                           2002              2003                       2004
                                                       ---------------   ---------------   --------------------------------
                                                            NT$               NT$               NT$              US$
<S>                                                           <C>                <C>             <C>                 <C>
          Tax (benefit) based on pre-tax
            accounting income (loss) at
            statutory rate                                    (950,597)          604,102         1,470,928           46,343
          Add (less) tax effects of:
              Permanent differences
                Tax-exempt income
                   Tax holiday                                 (52,126)         (481,214)         (642,285)         (20,236)
                   Gain from sales of securities               (16,798)          (10,357)           (9,527)            (300)

              Temporary differences
                Investment loss                                793,812           131,560           132,031            4,160
                Other investment loss                                -                 -           123,345            3,886
                Unfunded pension cost                           24,239            86,255            73,436            2,314
                Bond interest payable                         (163,289)           16,776            63,793            2,010
                Other                                          629,545          (184,453)            4,113              129
                                                       ---------------   ---------------   ---------------   --------------
                                                               264,786           162,669         1,215,834           38,306
          Income taxes on undistributed
            earnings                                            54,598           170,281            86,968            2,740
          Credits for investments and research
            and development                                   (331,255)         (439,457)       (1,081,023)         (34,059)
          Net change in deferred income tax for
            the period                                      (1,130,358)       (1,190,500)       (1,660,695)         (52,322)
          Adjustment of prior year's income tax                  1,905            18,859            42,590            1,342
                                                       ---------------   ---------------   ---------------   --------------
                                                            (1,140,324)       (1,278,148)       (1,396,326)         (43,993)
                                                       ===============   ===============   ===============   ==============
</TABLE>

     b.   The above-mentioned taxes on pre-tax accounting income (loss) based
          on the applicable statutory rates for both domestic and foreign
          entities are shown below:


                                      F-41
<PAGE>


<TABLE>
                                                                             Year Ended December 31
                                                       --------------------------------------------------------------------
                                                           2002              2003                       2004
                                                       ---------------   ---------------   --------------------------------
                                                            NT$               NT$               NT$              US$
<S>                                                           <C>                <C>             <C>                 <C>
          Domestic entities in ROC
            (25% statutory rate)                              (173,787)          750,348         1,364,316           42,984
          Foreign entities
              ASE Korea (30.8% statutory rate)                       -            74,806           (37,683)          (1,187)
              ASE Japan (40% statutory rate)                         -                 -           101,429            3,196
              ISE Labs (federal tax rate 35% and
                state tax rate 6%)                            (725,744)         (209,911)          (16,852)            (531)
              ASE Test Malaysia (30% statutory
                rate)                                          (51,066)          (11,141)           59,718            1,881
                                                       ---------------   ---------------   ---------------   --------------
                                                              (950,597)          604,102         1,470,928           46,343
                                                       ===============   ===============   ===============   ==============
</TABLE>

     c.   Deferred income tax assets and liabilities are summarized as follows:

<TABLE>
                                                                                             December 31
                                                                         --------------------------------------------------
                                                                             2003                    2004
                                                                         ---------------   --------------------------------
                                                                              NT$                 NT$              US$
<S>                                                                               <C>               <C>                 <C>
          Current deferred income tax assets
              Unused tax credits                                               1,054,370         1,463,022           46,094
              Provision for inventory obsolescence                                50,475            19,572              617
              Provision for doubtful accounts and sales allowance                 33,754            38,436            1,211
              Unrealized foreign exchange loss (gain)                             65,118            (4,424)            (139)
              Other                                                               29,752            86,259            2,717
                                                                         ---------------   ---------------   --------------
                                                                               1,233,469         1,602,865           50,500
              Valuation allowance                                                 (8,968)         (227,415)          (7,165)
                                                                         ---------------   ---------------   --------------

              Net current deferred income tax assets                           1,224,501         1,375,450           43,335
                                                                         ===============   ===============   ==============

          Non-current deferred income tax assets
              Unused tax credits                                               3,101,039         4,376,234          137,878
              Accrued pension costs                                              153,924           538,129           16,954
              Loss carryforwards                                                 483,538           236,759            7,459
              Investment income                                                 (144,000)         (144,000)          (4,537)
              Others                                                             120,387           213,984            6,742
                                                                         ---------------   ---------------   --------------
                                                                               3,714,888         5,221,106          164,496
              Valuation allowance                                             (1,484,659)       (1,382,974)         (43,571)
                                                                         ---------------   ---------------   --------------

          Net non-current deferred income tax assets                           2,230,229         3,838,132          120,925
                                                                         ===============   ===============   ==============

              Non-current liabilities
              Goodwill amortization                                              (34,674)          (32,424)          (1,022)
                                                                         ===============   ===============   ==============
</TABLE>

          In assessing the realizability of deferred income tax assets, the
          Company considers its future taxable earnings and expected timing of
          the reversal of temporary differences. In addition, in the event
          future taxable earnings do not materialize as forecasted, the Company
          will consider executing certain tax planning strategies available to
          realize the deferred income tax assets. The valuation allowance is
          provided to reduce the gross deferred income tax assets to an amount
          which the Company believes will more likely than not be realized.
          Deferred income tax assets and liabilities are classified in the
          consolidated balance sheets based on the classification of the
          related assets or liabilities or the expected timing of the reversal
          of temporary differences.


                                      F-42
<PAGE>


          The U.S. Federal and California State net operating loss
          carryforwards of ISE Labs as of December 31, 2004 approximated
          US$16.3 million and US$30.8 million with expiration periods in 2024
          and 2014, respectively.

          A portion of the Company's and ASE Test, Inc.'s income from the
          manufacturing, processing and testing of semiconductors is exempt
          from income tax for the five years ending December 2005 and 2007,
          respectively. A portion of ASE Chung Li's income from the
          manufacturing, processing and testing of semiconductors is exempt
          from income tax for the five years ending 2007.

          ASE Test Malaysia had been granted pioneer status by Ministry of
          International Trade and Industry in Malaysia for five years from July
          1, 1999 to June 30, 2004. During the year 2003, the Company had
          applied to the relevant authorities to surrender its pioneer status
          in line with the 2003 budget proposal, which allows a pioneer company
          that intends to undertake reinvestment before the expiry of its
          pioneer status the option to surrender its pioneer certificate to
          qualify for reinvestment allowance. On September 11, 2004, the
          Malaysian Industrial Development Authority had approved the Company's
          surrender of pioneer status with effect from September 21, 2002, the
          date of announcement of the 2003 budget proposal.

          The per share effect of this tax holiday was NT$0.02 in 2002, NT$0.14
          in 2003 and NT$0.16 in 2004, respectively.

     d.   As of December 31, 2004, unused tax credits of subsidiaries which can
          be utilized to offset their future income tax are set forth below:

<TABLE>
                                                       ASE
                                     ASE            Test, Inc.      ASE Korea                  Total
                                --------------   --------------  --------------   ----------------------------
          Year of Expiry             NT$              NT$             NT$                NT$           US$

<S>                                  <C>              <C>              <C>             <C>             <C>
          2004                         203,765                -               -          203,765         6,420
          2005                         468,915           76,717               -          545,632        17,191
          2006                         882,384          305,193         170,245        1,357,822        42,780
          2007                       1,044,224          588,402         262,230        1,894,856        59,699
          2008 and thereafter        1,252,324          441,773         143,084        1,837,181        57,882
                                --------------   --------------  --------------   --------------  ------------
                                     3,851,612        1,412,085         575,559        5,839,256       183,972
                                ==============   ==============  ==============   ==============  ============
</TABLE>

          In the ROC, the tax credits may be utilized to reduce up to 50% of
          income tax payable each year. In the year of expiration, any
          remainder of unused tax credits can be used entirely.

          Income tax returns of the Company and ASE Test, Inc. in Taiwan have
          been examined by the ROC tax authorities through the 2002 tax year.
          (Income tax returns of ASE Material and ASE Chung Li have been
          examined through 2001 and 2000, respectively.)

22.  EARNINGS PER SHARE

     The Company's common shares corresponding to the employees' stock options
     and convertible bonds had a dilutive effect on the 2002, 2003 and 2004 EPS
     calculation. The employee stock options issued by the Company's
     subsidiary, ASE Test Limited, had no dilutive effect on the 2002, 2003 and
     2004 EPS calculation. The numerators and denominators used in the EPS
     calculations were as follows:


                                      F-43
<PAGE>


     a.   Numerator - net income

<TABLE>
                                                                              2002                         2003
                                                                   ---------------------------  -------------------------
                                                                     Before         After         Before         After
                                                                    Income Tax    Income Tax     Income Tax    Income Tax
                                                                       NT$           NT$            NT$           NT$
<S>                                                                    <C>            <C>          <C>           <C>
          Income before  extraordinary loss and cumulative effect
            of change in accounting principle                          (799,520)      163,648      1,776,463     2,818,464
          Extraordinary loss                                            (46,151)      (34,613)       (75,668)      (75,668)
          Cumulative effect of change in accounting principle                 -             -              -             -
                                                                   ------------  ------------   ------------  ------------
          Basic EPS
             Income of common shareholders                             (845,671)      129,035      1,700,795     2,742,796
             Interest, net of tax, paid on convertible bonds                  -             -              -             -
                                                                    -----------   -----------   ------------  ------------
          Diluted EPS
             Income of common shareholders                             (845,671)      129,035      1,700,795     2,742,796
                                                                   ============   ===========   ============  ============
</TABLE>

<TABLE>
                                                                                           2004
                                                                   -------------------------------------------------------
                                                                       Before Income Tax              After Income Tax
                                                                   ---------------------------  --------------------------
                                                                       NT$           US$            NT$           US$
<S>                                                                   <C>              <C>         <C>             <C>
          Income before  extraordinary loss and cumulative effect
            of change in accounting principle                         3,282,673        103,434     4,236,534       133,476
          Extraordinary loss                                                  -              -             -             -
          Cumulative effect of change in accounting principle           (26,844)          (846)      (26,844)         (846)
                                                                   ------------  -------------  ------------   -----------
          Basic EPS
             Income of common shareholders                            3,255,829        102,578     4,209,690       132,630
             Interest, net of tax, paid on convertible bonds            197,762          6,231       163,549         5,153
                                                                   ------------  -------------  ------------   -----------
          Diluted EPS
             Income of common shareholders                            3,453,591        108,809     4,373,239       137,783
                                                                   ============  =============  ============   ===========
</TABLE>

     b.   Denominator - shares (in thousands)

<TABLE>
                                                                            2002              2003              2004

<S>                                                                          <C>               <C>               <C>
          Weighted-average number of common stock                            3,254,800         3,580,280         3,580,280
          Retroactive adjustments for capitalization of retained
            earnings                                                           546,660           221,180           212,554
          Issuance of common stock in connection with the
            merger                                                                   -                 -           118,340
          Stock Bonuses paid to employees                                            -                 -            15,427
          Shares issued in connection with stock options
            exercised by employees                                                   -                 -                14
          Shares held by subsidiaries                                         (191,687)          (80,249)          (70,625)
                                                                       ---------------   ---------------   ---------------
          Number of shares used for purposes of the basic EPS
            calculation                                                      3,609,773         3,721,211         3,855,990
          Potential number shares issuable upon exercise of
            unvested options                                                         -            34,347            62,303
          Potential number of outstanding shares assumed upon
            conversion of convertible bonds                                          -                 -           191,810
                                                                       ---------------   ---------------   ---------------
          Number of shares used in the diluted EPS calculation               3,609,773         3,755,558         4,110,103
                                                                       ===============   ===============   ===============
</TABLE>

     For purposes of the ADS calculation, the denominator representes the
     above-mentioned weighted average outstanding shares divided by five (one
     ADS represents five common shares). The numerator was the same.


                                      F-44
<PAGE>


23.  RELATED PARTY TRANSACTIONS

     a.   Related parties

<TABLE>
                           Related Parties                     Relationship with the Company
          --------------------------------------------------   -----------------------------
<S>                                                            <C>
          Hung Ching Development & Construction Co. ("HCDC")   Affiliate
          USI Electronics (Shanghai) Co., Ltd. ("USI-SH")      Affiliate
</TABLE>

     b.   The significant transactions with related parties are summarized as
          follows:

                                                 Amount
                                       --------------------------  % of
                                           NT$           US$       Total
          For the year, 2004

          Purchase of materials
             USI-SH                          72,164         2,274       -
                                       ============   ===========  ======

          Purchase of properties
             HCDC                           398,766        12,563       2
             USI-SH                         126,310         3,980       -
                                       ------------   -----------  ------
                                            525,076        16,543       2
                                       ============   ===========  ======

          The price of material bought from related parties was commensurate
          with similar purchases from third parties. The collection terms range
          from 30 days to 60 days, which is consistent with the terms provided
          by third parties for similar transactions.

          The price for property purchased from or sales to USI-SH is based on
          book value. The payment term is one month, which is similar to those
          for similar transactions with third parties.

          The amount the Company paid in buying real estate from HCDC was based
          on an appraiser's assessment.

                                                 Amount
                                       --------------------------  % of
                                           NT$           US$       Total
          At end of year, 2004

          Receivable                        14,140           445       -
                                      ============   ===========  ======
          Payables                         117,852         3,713       1
                                      ============   ===========  ======


                                      F-45
<PAGE>


24.  ASSETS PLEDGED OR MORTGAGED

     The assets pledged or mortgaged as first priority collateral are
     summarized as follows:

<TABLE>
                                                             December 31
                                            --------------------------------------------------
                                                  2003                    2004
                                            ---------------   --------------------------------
                                                  NT$               NT$              US$

<S>                                                 <C>               <C>               <C>
     Land                                           374,621           351,992           11,090
     Buildings and improvements                   1,852,435         1,651,734           52,039
     Machinery and equipment                      9,544,523         9,419,416          296,768
     Pledged time deposits                          167,426           125,599            3,957
     Guarantee deposit - time deposits              102,720           137,340            4,327
     Short-term investment                           90,000                 -                -
                                            ---------------   ---------------   --------------
                                                 12,131,725        11,686,081          368,181
                                            ===============   ===============   ==============
</TABLE>


25.  COMMITMENTS AND CONTINGENCIES AS OF DECEMBER 31, 2004

     a.   The Company and ASE Test, Inc. lease the land on which their
          buildings are situated under various operating lease agreements with
          the government expiring on various dates ranging from December 2012
          to July 2014. The agreements grant these entities the option to renew
          the leases and reserve the right for the lessor to adjust the lease
          charges upon an increase in the assessed value of the land and to
          terminate the leases under certain conditions. The Company, ASE Test,
          Inc. and ASE Test Malaysia lease machinery and equipment under
          non-cancelable operating leases. ISE Labs also leases office
          buildings and equipment under non-cancellable operating lease
          agreements. The rental expenses for the years ended December 31,
          2002, 2003 and 2004 were US$9,936 thousand, US$10,427 thousand and
          US$40,841 thousand, respectively.

          The future minimum lease payments under the above-mentioned operating
          leases are as follows:

               Operating Leases                        NT$              US$

          2005                                        1,810,650           57,046
          2006                                        1,526,822           48,104
          2007                                          600,773           18,928
          2008                                          170,837            5,382
          2009 and thereafter                           300,688            9,474
                                                ---------------   --------------

          Total minimum lease payments                4,409,770          138,934
                                               ===============    ==============

     b.   The Company, ASE Test, Inc., ISE Labs, ASE Test Malaysia and ASE
          Korea engage outside sales agencies. Commissions and service fees
          were paid based on monthly incurred service-related costs and
          expenses plus a certain percentage (there are limited amounts
          prescribed for costs and expenses incurred) or based on a certain
          percentage of net export sales. Commissions and service fees paid in
          2002, 2003 and 2004 were approximately NT$734,322 thousand,
          NT$973,031 thousand and NT$769,637 thousand (US$24,248 thousand),
          respectively.

     c.   As of December 31, 2004, unused letters of credit were approximately
          NT$1,776,000 thousand (US$55,955 thousand).

     d.   As of December 31, 2004, commitments to purchase machinery and
          equipment were approximately NT$7,600,000 thousand (US$239,445
          thousand), including a commitment to buy machinery and equipment
          (M&E) for US$69,317 thousand. Under the related contract, the Company
          and the subsidiary must make fixed monthly payments at a certain
          percentage of the purchase amount. The


                                      F-46
<PAGE>


          amount paid may be used to offset a certain percentage of the cost of
          future purchases, if any, of additional machinery and equipment from
          these entities.

     e.   As of December 31, 2004, outstanding commitments related to the
          construction of buildings were approximately NT$3,264,000 thousand
          (US$102,836 thousand).

     f.   The Company entered into technology license agreements with foreign
          companies which will expire on various dates through 2010 under which
          the Company has licensed certain technologies used in the packaging
          of certain products. Pursuant to such agreements, the Company shall
          pay royalties, based on specified percentages of sales quantities,
          and license fees. Such royalties in 2003 and 2004 were approximately
          NT$218,764 thousand and NT$163,975 thousand (US$5,166 thousand),
          respectively. As of December 31, 2004, the Company had paid license
          fees of US$5,500 thousand related to such agreements, of which
          NT$59,586 (US$1,877 thousand) was included in deferred charges.

     g.   The Company entered into a co-construction agreement with HCDC, an
          affiliated company, in April 2003. The Company provided the land
          leased from the government to Hung Ching to build an office building.
          Under this agreement, after completion of the construction, the
          Company will own 21,810 square meters and HCDC will own 86,214 square
          meters. In December 2004, the Company and ASE Test Inc., entered into
          contracts with HCDC to purchase HCDC's 85,702 square meters for NT$
          1,329,217 thousand (US$41,878 thousand). As of December 31, 2004, the
          amount paid pursuant to this agreement was approximately NT$398,766
          thousand (US$12,564 thousand) and was recorded as construction in
          process.

     h.   On August 27, 2004, the Company and the subsidiary, ASE Test, Inc.,
          entered a syndicated lease receivables purchase facility agreement
          with three eligible lessors and banks. Under this agreement, the
          banks have agreed to purchase from the eligible lessors receivables,
          if any, from the Company and ASE Test, Inc. in an amount up to
          US$90,000 thousand and within 12 months after the contract date. The
          Company and ASE Test, Inc. will be required to issue promissory notes
          in favor of the banks as evidence of any obligations entered into
          under the agreement.

     i.   As of December 31, 2004, the Company had endorsed and guaranteed the
          promissory notes of its subsidiaries as follows:

                                                          NT$             US$

          ASE Test Finance                              4,787,550        150,836
          ASE Japan                                     2,593,280         81,704
          ASE Shanghai                                  1,755,435         55,307
          HCDC                                            960,000         30,246
          ASE Holding Electronics (Philippines),
            Incorporated                                   92,559          2,916
          Omniquest                                       319,170         10,056
          ASE Singapore Pte Ltd                           874,659         27,557
                                                    -------------   ------------
                                                       11,382,653        358,622
                                                    =============   ============

26.  DERIVATIVE FINANCIAL INSTRUMENTS

     The Company, ASE Test, Inc., ASE Material and ASE Korea entered into
     European foreign currency option contracts, forward exchange contracts,
     cross-currency swaps, interest rate swap contracts and interest rate
     swaptions in 2003 and 2004 in order to manage the Company's exposure to
     fluctuations associated with foreign currency denominated assets and
     liabilities, variable interest rates and foreign exchange rate
     fluctuations. The Company does not enter into derivative contracts for
     trading purposes.


                                      F-47
<PAGE>


     Information on such derivative transactions is as follows:

     a.   European foreign currency option contracts

          1)   Because the Company expects to receive U.S. dollars from export
               sales and to pay Japanese yen or New Taiwan dollars to settle
               payables or bank borrowings, the Company occasionally enters
               into European foreign currency option contracts to manage its
               exposure to exchange rate fluctuations.

               The outstanding contracts as of December 31, 2004 are shown in
               Schedule I.

          2)   Because the Company expects to pay Japanese yen to settle
               certain yen denominated payables, the Company occasionally
               enters into European foreign currency option contracts to manage
               its exposure to exchange rate fluctuations.

               The outstanding contracts as of December 31, 2004 are shown in
               Schedule II.

          3)   The Company occasionally enters into European foreign currency
               option contracts to manage its exposure to exchange rate
               fluctuations associated with its net investments in foreign
               operations.

               The outstanding contracts as of December 31, 2004 are shown in
               Schedule III.

               The gain on exchange rates arising from such contracts
               approximated NT$79,758 thousand and NT$48,181 thousand (US$1,518
               thousand) in 2003 and 2004 (including exchange loss of NT$7,162
               thousand and exchange income of NT$33,310 thousand (US$1,049
               thousand) arising from such contracts based on mark-to-market
               valuation on the balance sheet date), respectively.

     b.   Forward exchange contracts

          The Company entered into forward contracts to manage its exposure to
          foreign exchange rate fluctuations associated with its long-term debt
          and payables. As of December 31, 2004, there were no outstanding
          contracts. The gain or loss arising from such contracts during the
          years ended December 31, 2003 and 2004 was immaterial.

     c.   Cross-currency swap contract

          In October 2003, the Company entered into two cross-currency swap
          contracts with banks to manage its exposure to interest rate and
          exchange rate fluctuations associated with its long-term bond
          payables. These contracts will expire in October 2007 and September
          2008, respectively. The terms of these contracts provide for a
          semi-annual exchange of interest payment, whereby the Company pays an
          annual interest rate of 1.7% and receives an annual interest rate of
          2.7% on a nominal amount of US$200,000 thousand. The Company had net
          interest income of NT$11,056 thousand (US$348 thousand) and NT$57,410
          thousand (US$1,809 thousand) from these contracts in 2003 and 2004,
          respectively, which was recorded as an offset to interest expense on
          the bonds.

          The Company adjusted the related receivables and payables associated
          with the cross-currency swap contracts based on the spot rate as of
          December 31, 2004. The exchange loss arising from such contracts,
          based on the spot rate on December 31, 2004, was approximately
          NT$322,321 thousand (US$10,155 thousand) in 2004, and the cumulated
          unrealized exchange loss was NT$319,181 thousand (US$10,056
          thousand).

     d.   Interest rate swap contracts

          In December 2003, the Company entered into an interest rate swap
          contract with a bank to manage its exposure to interest rate
          fluctuations associated with its long-term debt. The contract will
          expire in January 2009. The terms of the contract provide for a
          semi-annual exchange of interest payments whereby the company pays a
          floating rate and receives an annual interest rate 3.6% on an
          underlying


                                      F-48
<PAGE>


          nominal amount of NT$2.75 billion.

          The Company recorded net interest income of NT$87,699 thousand
          (US$2,763 thousand) from the contract in 2004, which was recorded as
          an offset against interest expense on the bonds.

     e.   Interest rate swaption contract

          In May 2004, the Company entered into an interest rate swaption
          contract with a bank whereby the Company pays a floating interest
          rate, 6-month USD-LIBOR-BBA, and receives a fixed annual rate of
          3.65%. The notional amount of the contract is US$20,000 thousand.
          Payment dates are November 23, 2005 and May 23, 2006, the contract
          termination date.

          In April 2004, the Company entered into another interest rate
          swaption contract which will expire in October 2007. The terms of the
          contract provide that if the 6-month USD-LIBOR-BBA rate ever reaches
          5% before the expiration of the contract, the interest to be paid to
          the bank during the contract period is calculated as the number of
          days for which index rate 6-month USD-LIBOR-BBA is greater than 5%
          divided by the numbers of days that have passed during the contract
          period, multiplied by the fixed rate of 2.7%. The notional amount of
          the contract is US$157,000 thousand. Payment dates are every April 20
          and October 20 starting from October 20, 2004 through the expiration
          date.

     f.   Transaction risk

          1)   Credit risk

               The Company is exposed to credit risk in the event of
               non-performance of the counter parties to forward contracts on
               maturity. In order to manage this risk, the Company transacts
               only with financial institutions with good credit ratings. As a
               result, no material losses resulting from counter party defaults
               are anticipated.

          2)   Market risk

               The Company periodically purchases and sells products in
               currencies other than its functional currencies. This subjects
               the Company to the risks associated with fluctuations of foreign
               currency exchange rates. The Company reduces this risk by
               utilizing natural hedging (offsetting receivables and payables)
               as well as by creating offsetting positions through the use of
               derivative financial instruments, primarily foreign currency
               options contracts with maturities of less than six months. The
               market risk related to the foreign currency options contracts is
               typically offset by the changes in valuation of the underlying
               items being hedged. The amount of risk and the use of derivative
               financial instruments described above are not material to the
               Company's financial position or results of operations. As of
               December 31, 2004, the Company had certain outstanding debt
               which was in variable rate short-term instruments as well as
               fixed rate instruments. Accordingly, the Company will be
               impacted by any change in short-term interest rates. The Company
               does not hedge either its investment in its foreign operations
               or its floating interest rate exposures.

          3)   Liquidity risk and cash flow risk

               The Company entered into European option contracts and forward
               exchange contracts to manage its exposure to the effect of
               exchange rate fluctuations on net assets or net liabilities. As
               the Company has sufficient operating capital to meet cash
               requirements upon the maturity of these contracts, the Company
               believes there are no significant liquidity or cash flow risks.


                                      F-49
<PAGE>


27.  NON-DERIVATIVE AND DERIVATIVE FINANCIAL INSTRUMENTS

<TABLE>
                                                                              December 31
                                                  -----------------------------------------------------------------------
                                                            2003                                2004
                                                  -----------------------    --------------------------------------------
                                                   Carrying
                                                    Values    Fair Values        Carrying Values           Fair Values
                                                  ----------- -----------    ----------------------  --------------------
                                                      NT$          NT$          NT$          US$        NT$         US$
     Non-derivative financial instruments

<S>                                                 <C>          <C>          <C>          <C>        <C>         <C>
     Assets
       Cash and cash equivalents                    8,562,425    8,562,425    5,975,103    188,252    5,975,103   188,252
       Short-term investments                       3,017,779    3,023,055    3,194,183    100,636    3,198,369   100,768
       Notes receivable                               111,596      111,596       89,612      2,823       89,612     2,823
       Accounts receivable                         12,798,135   12,798,135   13,586,635    428,060   13,586,635   428,060
       Other receivable                               206,475      206,475      915,433     28,842      915,433    28,836
       Pledged time deposit                           167,426      167,426      127,629      4,021      127,629     4,021
       Long-term investments including deferred
         credit of long-term investment             6,339,655    4,736,368    4,877,216    153,661    4,079,448   128,527
       Guarantee deposit                              359,908      359,908      383,131     12,071      383,131    12,071
     Liabilities
       Short-term borrowings                        5,048,230    5,048,230    3,733,433    117,625    3,733,433   117,625
       C/P and B/A payable                          1,075,965    1,075,965      908,816     28,633      908,816    28,633
       Notes and Accounts payable                   6,488,989    6,488,989    7,899,950    248,896    7,899,950   248,896
       Accrued expense                              1,839,276    1,839,276    3,163,155     99,658    3,163,155    99,658
       Payables for properties                      4,392,340    4,392,340    6,500,851    204,816    6,500,851   204,816
       Long-term bonds payable                      6,861,232    7,511,616    9,440,582    297,435    9,778,704   308,088
       Long-term bank loan (included current
         portion)                                  29,364,701   29,364,701   38,903,219  1,225,684   38,903,219 1,225,684
       Capital lease obligation (included
         current portion)                             270,129      270,129      396,344     12,487      396,344    12,487
       Long-term payable for investments
         (included current portion)                 2,309,960    2,309,960            -          -            -         -

     Derivative financial instruments

     European options                                       -            -       (3,297)     (104)       (3,297)    (104)
     Forward exchange contracts                        (7,162)      (7,162)      42,335      1,334       42,335     1,334
     Cross currency swap contract                     (68,110)     (68,110)    (310,089)   (9,770)     (310,089)  (9,770)
</TABLE>

     The carrying values of cash and cash equivalents, notes receivable,
     accounts receivable, short-term borrowings, commercial paper and bank
     acceptance payables, notes and accounts payable approximate their fair
     values due to the short-term nature of these instruments. The fair values
     of short-term and long-term investments are determined based on market
     values or net equity values. The book value of pledged time deposits and
     guarantee deposits represents their fair value. The fair values of
     long-term bonds, capital lease obligations and payables for investments
     are determined based on the market value or the estimated present value of
     future cash flows using interest rates of similar debt instruments which
     the Company is able to obtain as the discount rate. The fair value of
     variable rate long-term bank loans approximate their carrying values. The
     derivative financial instruments are recorded at their fair market values.

28.  SEGMENT AND GEOGRAPHICAL INFORMATION

     a.   Geographical sales information

          1)   Net revenue:

<TABLE>
                                                                  Year Ended December 31
                                     -------------------------------------------------------------------------------------
                                             2002                      2003                          2004
                                     -----------------------  -----------------------  -----------------------------------
                                                     % of                     % of                                  % of
                                                     Total                    Total                                 Total
                                         NT$       Revenues       NT$       Revenues       NT$           US$      Revenues

<S>                                    <C>              <C>     <C>              <C>     <C>            <C>            <C>
               America                 26,922,752       59      34,480,470       60      47,569,012     1,498,709      58
               Taiwan                  11,342,210       25      15,498,114       27      17,656,632       556,289      22
               Europe                   2,766,981        6       4,741,725        8       6,664,946       209,986       8
               Asia and other areas     4,554,895       10       2,591,461        5       9,822,054       309,453      12
                                     ------------     ----    ------------     ----    ------------   -----------    ----
                                       45,586,838      100      57,311,770      100      81,712,644     2,574,437     100
                                     ============     ====    ============     ====    ============   ===========    ====
</TABLE>


                                      F-50
<PAGE>


          2)   Long-lived assets:

<TABLE>
                                                                           December 31
                                             ----------------------------------------------------------------------------
                                                        2003                                   2004
                                             ----------------------------    --------------------------------------------
                                                               % of Total                                      % of Total
                                                               Long-lived                                      Long-lived
                                                   NT$           Assets            NT$               US$         Assets

<S>                                               <C>                <C>          <C>               <C>              <C>
               Taiwan                             52,020,556         77           61,258,813        1,930,019        74
               Asia                               14,442,830         22           20,286,615          639,150        25
               America                               876,561          1              841,487           26,512         1
                                             ---------------      -----      ---------------   --------------     -----
                                                  67,339,947        100           82,386,915        2,595,681       100
                                             ===============      =====      ===============   ==============     =====
</TABLE>

          b.   Major customers

               Customers that account for 10% or more of total revenues are
               shown below:

<TABLE>
                                                                    Year Ended December 31
                                          --------------------------------------------------------------------------------------
                                                   2002                     2003                          2004
                                          -----------------------  -----------------------  ------------------------------------
                                                          % of                     % of                                  % of
                                                          Total                    Total                                 Total
                                              NT$        Revenues      NT$        Revenues      NT$            US$      Revenues

<S>                                        <C>             <C>      <C>             <C>      <C>             <C>           <C>
               Customer A                  7,703,767       17       5,815,933       10       6,389,929       201,321       8
</TABLE>

          c.   Reported segment information

               The Company has three reportable segments: packaging, testing
               and investing. The Company packages bare semiconductors into
               finished semiconductors with enhanced electrical and thermal
               characteristics; provides testing services, including front-end
               engineering testing, wafer probing and final testing services;
               and engages in investing activities. The accounting policies of
               the segments are the same as those described in Note 2. Segment
               information for the years ended December 31, 2002, 2003 and 2004
               is as follows:

<TABLE>
                                                Packaging         Testing          Investing        All Other          Total

               2002

<S>                                           <C>              <C>              <C>               <C>              <C>
               Revenue from external
                 customer                   NT$  35,800,353  NT$   9,784,007  NT$           -   NT$       2,478  NT$  45,586,838
               Inter-segment revenues                14,291          276,628                -         3,297,278        3,588,197
               Interest revenue                     277,096           12,619           90,127            12,751          392,593
               Interest expense                   1,109,241          183,967          639,896            38,124        1,971,227
               Net interest expense                (832,145)        (171,348)        (549,769)          (25,373)      (1,578,634)
               Depreciation and
                 amortization                     5,743,420        5,679,224              738           862,944       12,286,326
               Impairment of long-lived
                 assets                                   -        1,225,555                -                 -        1,225,555
               Segment profit (loss)              1,304,013       (2,797,405)        (654,314)         (561,999)      (2,709,705)
               Segment asset                     53,667,786       31,338,672        8,099,495        11,799,063      104,905,016
               Expenditures for segment
                 assets                           9,054,519        4,393,023                -         2,302,265       15,749,807
               Goodwill                             585,406        4,956,402                -                 -        5,541,808

               2003

               Revenue from external
                 customer                   NT$  45,026,868  NT$  12,142,396  NT$           -   NT$     142,506  NT$  57,311,770
               Inter-segment revenues                90,576          103,249                -         5,082,561        5,276,386
               Interest revenue                      53,678            7,593           47,621             5,735          114,627
               Interest expense                     734,312          147,975          429,750           107,315        1,419,352
               Net interest revenue
                 (expense)                         (680,634)        (140,382)        (382,129)         (101,580)      (1,304,725)
               Depreciation and
                 amortization                     6,527,475        5,251,832            1,890           985,371       12,766,568
               Segment profit (loss)              2,692,936          124,234         (706,384)         (623,056)       1,487,730
               Segment asset                     61,923,742       33,343,057        6,578,117        12,479,327      114,324,243
               Expenditures for segment
                 assets                           9,084,929        6,027,521                -         2,121,874       17,234,324
               Goodwill                             481,123        4,115,111                -                 -        4,596,234

                                                                                                                        (Continued)
</TABLE>


                                      F-51
<PAGE>


<TABLE>
                                                Packaging         Testing          Investing        All Other          Total

               2004

<S>                                           <C>              <C>              <C>               <C>              <C>
               Revenue from  external
                 customer                   NT$  64,735,754  NT$  16,473,924  NT$           -   NT$     501,966  NT$  81,712,644
               Inter-segment revenues               122,131          128,398                -         5,254,736        5,505,265
               Interest revenue                      52,103            6,445           19,516             1,614           79,678
               Interest expense                     605,596          132,320          166,910            73,579          978,405
               Net interest revenue
                 (expense)                         (553,493)        (125,875)        (147,394)          (71,965)        (898,727)
               Depreciation and
                 amortization                     7,648,147        5,881,685                -         1,256,440       14,786,272
               Impairment on assets                 175,348        1,774,749                -           512,000        2,462,097
               Segment profit (loss)              5,603,930          691,150       (1,737,156)       (1,026,108)       3,531,816
               Segment asset                     75,714,335       35,200,341        4,239,422        18,796,778      133,950,876
               Expenditures for segment
                 assets                          16,756,713        7,769,043                -         6,062,555       30,588,311
               Goodwill                             868,682        1,977,438                -                 -        3,336,376

               2004

               Revenue from  external
                 customer                   US$   2,039,595  US$     519,027  US$           -   US$      15,815  US$   2,574,437
               Inter-segment revenues                 3,848            4,045                -           165,556          173,449
               Interest revenue                       1,641              203              615                51            2,510
               Interest expense                      19,080            4,169            5,259             2,317           30,825
               Net interest revenue
                 (expense)                          (17,439)          (3,966)          (4,644)           (2,268)         (28,315)
               Depreciation and
                 amortization                       240,962          185,308                -            39,586          465,856
               Impairment on assets                   5,525           55,915                -            16,131           77,571
               Segment profit (loss)                176,557           21,775          (54,731)          (32,329)         111,272
               Segment asset                      2,385,455        1,109,021          133,567           592,211        4,220,254
               Expenditures for segment
                 assets                             527,937          244,771                -           191,007          963,715
               Goodwill                              27,369           62,301                -                 -          105,116
</TABLE>

29.  SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES FOLLOWED
     BY THE CORPORATION AND GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN THE
     UNITED STATES

     The Company's consolidated financial statements have been prepared in
     accordance with ROC GAAP, which differ in the following respects from U.S.
     GAAP:

     a.   Pension benefits

          The Company adopted U.S. Statement of Financial Accounting Standards
          ("U.S. SFAS") No. 87, "Accounting for Pensions", on January 1, 1987.
          ROC SFAS No. 18, which is substantially similar in many aspects to
          U.S. SFAS No. 87, became effective in 1996 for listed companies in
          Taiwan. Therefore, pension expense, which includes an amount
          attributable to the unrecognized net obligation at the date of
          adoption, differs due to different adoption dates and is therefore
          adjusted.

     b.   Short-term investments

          Under ROC GAAP, marketable equity securities are carried at the lower
          of aggregate cost or market, and debt securities are carried at cost,
          with only unrealized losses recognized. Under U.S. SFAS No. 115,
          "Accounting for Certain Investments in Debt and Equity Securities",
          debt and equity securities that have readily determinable fair values
          are to be classified as either trading, available-for-sale or
          held-to-maturity securities. Debt securities for which the Company
          has the positive intent and ability to hold to maturity are
          classified as held-to-maturity securities and reported at amortized
          cost. Debt and equity securities that are bought and traded for
          short-term profit are classified as trading securities and reported
          at fair value, with unrealized gains and losses included in earnings.
          Debt and equity securities not classified as either held-to-maturity
          or trading are classified as available-for-sale securities and
          reported at fair value, with unrealized gains and losses excluded
          from earnings and reported as a separate component of shareholders'
          equity.

          All of the Company's short-term investments are classified as trading
          securities under U.S. GAAP, with gains and losses recognized
          currently in income. The unrealized gains included in earnings under
          U.S. GAAP for the years ended December 31, 2002, 2003 and 2004 were
          as follows:


                                      F-52
<PAGE>


                                               Year Ended December 31
                                   --------------------------------------------
                                        2002           2003           2004
                                   --------------  ------------  --------------
                                        NT$            NT$         NT$     US$

          Unrealized gain (loss)      (38,844)        3,151      (1,011)   (32)

          All of the Company's short-term investments in mutual funds, stocks,
          commercial papers and convertible bonds are held principally for the
          purpose of selling them in the near term.

     c.   Bonuses to employees, directors and supervisors

          According to ROC regulations and the Articles of Incorporation of the
          Company, a portion of distributable earnings should be set aside as
          bonuses to employees, directors and supervisors. Bonuses to directors
          and supervisors are always paid in cash. However, bonuses to
          employees may be granted in cash or stock or both. All of these
          appropriations, including stock bonuses which are valued at par value
          of NT$10, are charged against retained earnings under ROC GAAP after
          such appropriations are formally approved by the shareholders in the
          following year. Under U.S. GAAP, such bonuses are charged against
          income earned in the current year. Shares issued as part of these
          bonuses are recorded at fair market value. Since the amount and form
          of such bonuses are not usually determinable until the shareholders'
          board of directors meeting in the subsequent year, the total amount
          of the aforementioned bonuses is initially accrued based on the
          management's estimate regarding the amount to be paid based on the
          Company's Articles of Incorporation. Any difference between the
          initially accrued amount and the fair market value of any shares
          issued as bonuses is recognized in the year of approval by the
          shareholders.

          Aside from the aforementioned bonus plan, the Company granted a
          special stock bonus to employees of NT$2,506,617 thousand in 2000.
          Employees who received the special stock bonus are required to
          continue working for the Company for an additional three years.
          Accordingly, the amount of special stock bonuses is being allocated
          over three years as additional compensation expense in the
          consolidated statement of income under U.S. GAAP.

     d.  Treasury stock

         The common shares of the Company that are held by consolidated
         subsidiaries are, under U.S. GAAP, reflected as treasury stock in the
         consolidated balance sheet. The capital gain (loss) from sales of
         treasury stock is deducted from or added to the consolidated balance of
         capital surplus.

         Beginning January 1, 2002, the Company adopted ROC SFAS No. 30,
         "Accounting for Treasury Stock", which requires shares of parent stock
         held by subsidiaries to be recorded as treasury stock. Prior to 2002,
         common shares of the Company held by subsidiaries were presented as a
         long-term investment in the consolidated balance sheets with the gain
         or loss on the sale of the treasury stock reflected in the consolidated
         statements of income.

         Prospectively, any unrealized losses that have accumulated prior to the
         effective date of the new standard will be recorded to the income
         statement when the corresponding shares are sold under ROC GAAP.


                                      F-53
<PAGE>


     e.   Depreciation of buildings

          Under ROC GAAP, the estimated life of a building can be up to 55
          years based on ROC practices. For U.S. GAAP purposes, the useful
          lives of buildings are estimated to be 25 years.

     f.   Excess of book value on transfer of buildings between consolidated
          subsidiaries

          ASE Test, Inc., a consolidated subsidiary, purchased buildings and
          facilities from another consolidated subsidiary, ASE Technologies, in
          1997. The purchase price of the building from ASE Technologies was
          based on market value. Such additional payment for the excess of book
          value of NT$17,667 thousand was capitalized by ASE Test, Inc. as
          allowed under ROC GAAP. Under U.S. GAAP, transfers of assets between
          entities under common control are accounted for using their historic
          cost.

     g.   Gain on sales of subsidiary's stock

          The carrying value of stock investments in ASE Test by J&R Holding
          Limited under ROC GAAP is different from that under U.S. GAAP mainly
          due to the differences in accounting for bonuses to employees,
          directors and supervisors.

     h.   Effects of U.S. GAAP adjustments on equity-method investments

          The carrying values of equity-method investments and the investment
          income (loss) accounted for by the equity method in HCDC, HCKC, USI
          and Inprocomm are reflected in the consolidated financial statements
          under ROC GAAP. The financial statements of these equity investees
          prepared under ROC GAAP are different from the financial statements
          of such equity investees prepared under U.S. GAAP mainly due to the
          differences in accounting for bonuses to employees, directors and
          supervisors and the depreciation of buildings. Therefore, the
          investment income (loss) has been adjusted to reflect the differences
          between ROC GAAP and U.S. GAAP in the investees' financial
          statements.

     i.   Impairment of long-lived assets

          Under U.S. GAAP, in accordance with U.S. SFAS No. 144, "Accounting
          for the Impairment or Disposal of Long-Lived Assets", long-lived
          assets held and used by the Company are reviewed for impairment
          whenever events or changes in circumstances indicate that the
          carrying amount of an asset may not be recoverable. For purposes of
          evaluating the recoverability of long-lived assets, the
          recoverability test is performed by comparing undiscounted net cash
          flows of the assets against the net book value of the assets. If the
          recoverability test indicates that an impairment has occurred, the
          impairment loss is the amount of the asset's net book value in excess
          of the related fair value. Prior to 2004, there were no requirements
          related to the evaluation of recoverability of the carrying value of
          long-lived assets under ROC GAAP, and accordingly, the Company
          applied the same accounting for impairment of long-lived assets as
          U.S. SFAS No. 144 for both ROC GAAP and U.S. GAAP reporting. On
          December 31, 2004, the Company adopted ROC SFAS No.35 "Impairment of
          Assets", which requires that long-lived assets should be tested for
          impairment annually.

     j.   Stock dividends

          Under ROC GAAP, stock dividends are recorded at par value with a
          charge to retained earnings. Under U.S. GAAP, if the ratio of
          distribution is less than 25 percent of the same class of shares
          outstanding, the fair value of the shares issued should be charged to
          retained earnings. The difference for 2003 and 2004 stock dividends
          would be treated as an additional reduction to retained earnings and
          an increase to capital surplus amounting to NT$143 million and
          NT$3,285 million (US$104 million), respectively.


                                      F-54
<PAGE>


     k.   Stock option compensation

          Under ROC GAAP, all stock-based compensation for awards granted or
          modified after January 1, 2004 should be accounted for in conformity
          with the related Interpretations of ARDF in the ROC. The compensation
          cost is measured based on the intrinsic value method and accordingly,
          compensation cost for stock options is measured as the excess, if
          any, of the quoted market price of the Company's stock at the date of
          the grant over the amount an employee must pay to acquire the stock.
          The intrinsic value of the shares is recognized as expense over the
          requisite service or vesting period. For U.S. GAAP reporting, the
          Company has elected to follow Accounting Principles Board ("APB")
          Opinion No. 25, "Accounting for Stock Issued to Employees", which
          measures compensation expense based on the difference, if any,
          between the market price of the underlying common shares and the
          exercise price of the stock option on the date of the grant. The
          Company is required under U.S. SFAS No. 123, "Accounting for
          Stock-based Compensation", to disclose the pro forma information
          regarding option grants to its employees computed as if the fair
          value method had been applied.

     l.   Derivative financial instruments

          Under ROC GAAP, the Company accounts for certain derivative
          instruments as cash flow hedges of certain forecasted transactions
          and accordingly any gains or losses on such contracts have been
          recorded to an other component of shareholder's equity. Under U.S.
          GAAP, accounting for derivative instruments is covered under U.S.
          SFAS No. 133, as amended, which requires that all entities recognize
          derivative instruments as assets and liabilities in the statement of
          financial positions at fair value. If certain conditions are met,
          including certain rigorous documentation requirements, entities may
          elect to designate a derivative instrument as a hedge. Under U.S.
          GAAP, the Company does not apply hedge accounting, and derivatives
          have historically been, and continue to be, recorded on the
          consolidated balance sheet at fair value, with the changes in fair
          values recorded in current period earnings.

     m.   Goodwill

          Under ROC GAAP, the Company amortizes goodwill arising from
          acquisitions over 10 years. Total amortization expenses of goodwill
          under ROC GAAP in 2002, 2003 and 2004 are NT$815,573 thousand,
          NT$819,253 thousand and NT$877,582 thousand (US$27,649 thousand),
          respectively. Under U.S. GAAP, SFAS No. 142 requires the Company to
          review for possible impairment goodwill existing at the date of
          adoption and perform subsequent impairment tests on at least an
          annual basis. In addition, existing goodwill and intangible assets
          must be reassessed and classified consistently in accordance with the
          criteria set forth in U.S. SFAS No. 141 and U.S. SFAS No. 142. As a
          result, the Company will no longer amortize goodwill. Definite-lived
          intangible assets will continue to be amortized over their estimated
          useful lives. The Company completed its transitional impairment test
          on January 1, 2002 and found no impairment. The Company performed its
          annual impairment test during the fourth quarter and determined that
          the goodwill related to the acquisition of ASE Test and ISE Labs was
          impaired and recorded a charge of NT$2,213,045 thousand and
          NT$1,337,670 thousand (US$42,145 thousand) in 2002 and 2004,
          respectively.

          On December 31, 2004, the Company adopted ROC SFAS No.35 "Impairment
          of Assets" which requires that long-lived assets should be tested for
          impairment annually. In conjunction of ROC SAFS No.35, the Company
          recognized on impairment loss of NT$1,950,097 thousand (US$61,440
          thousand). Under ROC GAAP, the Company will continue to amortize
          goodwill.

     n.   Undistributed earnings tax

          Undistributed earnings generated after 1997 are subject to a 10% tax
          in compliance with the Income Tax Law of the ROC. Under ROC GAAP, the
          10% tax on undistributed earnings is recorded as an expense at the
          time shareholders resolve that the Company's earnings shall be
          retained. Under U.S. GAAP, the Company measured its income tax
          expense, including the tax effects of temporary differences, using
          the rate that includes the tax on undistributed earnings.


                                      F-55
<PAGE>


     o.   Impairment of long-term investments

          ROC GAAP and U.S. GAAP require an assessment of impairment of
          long-term investments whenever events or circumstances indicate a
          decline in value may be other than temporary. The criteria for
          determining whether on not an impairment charge is required are
          similar under ROC GAAP and U.S. GAAP; however, the methods to measure
          the amount of impairment may be based on different estimates of fair
          values depending on the circumstances. When impairment is determined
          to have occurred, U.S. GAAP generally requires the market price to be
          used, if available, to determine the fair value of the long-term
          investment and measure the amount of impairment at the reporting
          date. Under ROC GAAP, if the market price is deemed to be a result of
          an inactive market, another measure of fair value may be used. As
          such, the Company determined an other-than-temporary impairment
          occurred in one of its long-term investments in an equity-method
          investee at December 31, 2002. The amount recorded for U.S. GAAP was
          based on the market price of the stock of the investee at December
          31, 2002. The difference resulted in an additional impairment charge
          for 2002 under U.S. GAAP of NT$883,620 thousand. No impairment charge
          was incurred under U.S. GAAP in 2003 as a result of the increase of
          the market price of the stock of investee companies. On December 31,
          2004, the Company adopted ROC SFAS No. 35 and, in accordance with
          this standard, determined that an impairment charge of NT$512,000
          thousand (US$16,131 thousand) was required. Under U.S. GAAP, the
          Company recorded an impairment charge of NT$1,707,000 thousand
          (US$53,781 thousand) in 2004.

     The following schedule reconciles net income (loss) and shareholders'
     equity under ROC GAAP as reported in the consolidated financial statements
     to the approximate net income (loss) and shareholders' equity amounts as
     determined under U.S. GAAP, giving effect to adjustments for the
     differences listed above.

<TABLE>
                                                                                  Year Ended December 31
                                                                   --------------------------------------------------------
                                                                       2002           2003                2004
                                                                   ------------   ------------  ---------------------------
                                                                       NT$            NT$           NT$            US$
     Net income

<S>                                                                     <C>          <C>           <C>              <C>
     Net income based on ROC GAAP                                       129,035      2,742,796     4,209,690        132,630
                                                                   ------------   ------------  ------------   ------------
     Adjustments:
       a. Pension benefits                                                2,619          3,172         2,568             81
       b. Short-term investments                                        (38,844)         3,151        (1,011)           (32)
       c. Bonuses to employees, directors and supervisors:
            Accrued regular bonuses                                          -       (307,500)     (609,008)       (19,187)
            Special stock bonuses                                     (835,539)      (417,769)            -              -
       d. Loss from sale of treasury stock                                 -          354,787             -              -
       e. Depreciation of buildings                                    (99,981)      (101,242)      (98,828)        (3,114)
       f. Excess of book value of building transferred between
          consolidated subsidiaries                                         432            432           432             13
       h. Effects for U.S. GAAP adjustments on equity-method
          investees                                                     198,839        186,055       436,619         13,756
       k. Stock option compensation                                           -       (819,027)      238,602          7,517
       l. Derivative financial instruments                                    -              -      (374,444)       (11,797)
       m. Goodwill
            Amortization                                               815,573        819,253       877,582         27,649
            Impairment loss                                         (2,213,045)             -       612,427         19,295
       o. Net impact of impairment loss on equity-method
           investees                                                  (883,620)             -    (1,195,000)       (37,649)
        Effect of U.S. GAAP adjustment on income tax                     10,783         10,953       109,068          3,436
        Effect of U.S. GAAP adjustment on minority interest            (160,517)      (123,050)       88,376          2,785
                                                                   ------------   ------------  ------------   ------------
     Net decrease in net income                                      (3,203,300)      (390,785)       87,383          2,753
                                                                   ------------   ------------  ------------   ------------

     Net income (loss) based on U.S. GAAP                            (3,074,265)     2,352,011     4,297,073        135,383
                                                                   ============   ============  ============   ============

     Earnings (loss) per share
       Basic                                                              (0.85)          0.63          1.11           0.03
       Diluted                                                            (0.85)          0.63          1.09           0.03

                                                                                                                         (Continued)
</TABLE>


                                      F-56
<PAGE>


<TABLE>
                                                                                  Year Ended December 31
                                                                   ---------------------------------------------------------
                                                                       2002           2003                2004
                                                                   ------------   ------------  ----------------------------
                                                                       NT$            NT$           NT$            US$
     Net income

<S>                                                                     <C>          <C>           <C>              <C>

     Earnings (loss) per ADS (Note 30(i))
       Basic                                                              (4.26)          3.16           5.57           0.18
       Diluted                                                            (4.26)          3.13           5.43           0.17
     Number of weighted average shares outstanding (Note 30(i))
       Basic                                                      3,609,773,466  3,721,211,293  3,855,990,735  3,855,990,735
       Diluted                                                    3,609,773,466  3,755,558,548  4,110,103,367  4,110,103,367

     Number of ADS
       Basic                                                        721,954,693    744,242,259    771,198,147    771,198,147
       Diluted                                                      721,954,693    751,111,710    822,020,673    822,020,673

     Shareholders' equity

     Shareholders' equity based on ROC GAAP                          39,430,666     45,122,602     51,311,759      1,616,628
                                                                   ------------   ------------  -------------   ------------
     Adjustments:
       a. Pension benefits                                              (36,785)       (33,613)       (31,045)          (978)
       b. Restatement of short-term investments                           2,046          5,197          4,186            132
       c. Bonuses to employees, directors and supervisors                     -       (124,424)      (244,345)        (7,698)
       d. Treasury stock
            Reversal of unrealized loss                                 367,662         12,875         12,875            406
            Classification of treasury stock                           (378,138)       (23,351)       (23,351)          (736)
       e. Effect of U.S. GAAP adjustments on useful life               (276,207)      (377,449)      (476,277)       (15,006)
       f. Excess of book value of building transferred between
          related parties                                               (15,327)       (14,895)       (14,463)          (456)
       g. Restate carrying value of subsidiaries' long-term
            investment                                                   (8,619)        (8,619)        (8,619)          (272)
       h. Effects of the above adjustments on equity-method
            investments                                                 (73,819)       112,236        548,855         17,292
       k. Stock option compensation                                    (908,661)      (908,661)      (908,661)       (28,628)
       l. Derivative financial instruments                                    -              -       (337,837)       (10,644)
       m. Goodwill
            Amortization                                                815,573      1,634,826      2,512,408         79,156
            Impairment loss                                          (2,213,045)    (2,213,045)    (1,600,618)       (50,429)
       o. Impairment loss on equity-method investments                 (883,620)      (883,620)    (2,078,620)       (65,489)
       Effect of U.S. GAAP adjustments on income tax                     39,484         50,437        159,505          5,025
       Effect on U.S. GAAP adjustments on minority interest            (144,458)      (267,508)      (179,132)        (5,643)
                                                                   ------------   ------------  -------------   ------------
     Net decrease in shareholders` equity                            (3,713,914)    (3,039,614)    (2,665,139)       (83,968)
                                                                   ------------   ------------  -------------   ------------
     Shareholders' equity based on U.S. GAAP                         35,716,752     42,082,988     48,646,620      1,532,660
                                                                   ============   ============  =============   ============

     Changes in shareholders' equity based on U.S. GAAP:

     Balance, beginning of year                                      37,960,342     35,716,752    42,082,988      1,325,866
     Net income (loss) for the year                                  (3,074,265)     2,352,011     4,297,073        135,383
     Capital received in advance                                              -              -        42,759          1,347
     Adjustment for common shares issued as bonuses to employees,
       directors and supervisors                                        835,539        590,565       421,339         13,274
     Adjustment for stock option compensation                                 -        819,027      (238,602)        (7,517)
     Translation adjustment for subsidiaries                           (126,378)      (287,422)     (919,220)       (28,961)
     Adjustment from changes in ownership percentage of investees       102,888         57,668        15,332            483
     Unrealized loss on long-term investment in shares of stock          18,626              -        (1,781)           (56)
     Capital increase through the issuance of common stock
       through merger                                                         -              -     5,976,496        188,295
     Elimination of long-term investment balance on consolidation             -              -      (242,792)        (7,649)
     Sale (purchase) of treasury stock                                        -      2,850,524    (2,798,399)       (88,165)
     Unrecognized pension cost                                                -        (16,137)       11,427            360
                                                                   ------------   ------------  ------------   ------------
     Balance, end of year                                            35,716,752     42,082,988    48,646,620      1,532,660
                                                                   ============   ============  ============   ============
</TABLE>


                                      F-57
<PAGE>


     A reconciliation of the significant balance sheet accounts to the
     approximate amounts as determined under U.S. GAAP is as follows:

<TABLE>
                                                                           December 31
                                                            -----------------------------------------
                                                               2003                2004
                                                            ------------   --------------------------
                                                                NT$           NT$            US$
     Short-term investments

<S>                                                            <C>           <C>              <C>
     As reported                                               3,017,779     3,194,183        100,636
     U.S. GAAP adjustments
        Restatement of investments to fair value                   5,197         4,186            132
                                                            ------------  ------------   ------------

     As adjusted                                               3,022,976     3,198,369        100,768
                                                            ============  ============   ============

     Long-term investments

     As reported                                               6,342,795     4,907,363        154,611
     U.S. GAAP adjustments
        Equity investments                                       112,236       548,855         17,292
        Impairment loss                                         (883,620)   (2,078,620)       (65,489)
                                                            ------------  ------------   ----- ------

     As adjusted                                               5,571,411     3,377,598        106,414
                                                            ============  ============   ============

     Buildings and improvement

     As reported                                              18,391,271    21,023,396        662,363
     U.S. GAAP adjustments
        Effect of U.S. GAAP adjustments on useful life          (377,449)     (476,277)       (15,006)
        Excess of book value of building transferred
          between related parties                                (14,895)      (14,463)          (456)
                                                            ------------  ------------   ------------
     As adjusted                                              17,998,927    20,532,656        646,901
                                                            ============  ============   ============

     Other assets

     As reported                                               4,587,365     7,425,350        233,943
     U.S. GAAP adjustments
        Effect of U.S. GAAP adjustments on income tax             50,437       159,505          5,025
                                                            ------------  ------------   ------------
     As adjusted                                               4,637,802     7,584,855        238,968
                                                            ============  ============   ============

     Goodwill

     As reported                                               4,596,234     3,336,376        105,116
     U.S. GAAP adjustments
        Restated carrying value of subsidiaries'
          long-term investment                                  (917,280)     (917,280)       (28,900)
        Goodwill amortization                                  1,634,826     2,512,408         79,156
        Impairment loss of goodwill                           (2,213,045)   (1,600,618)       (50,429)
                                                            ------------  ------------   ------------
      As adjusted                                              3,100,735     3,330,886        104,943
                                                            ============  ============   ============

     Current liabilities

     As reported                                              27,352,851    25,203,872        794,073
     U.S. GAAP adjustments
        Bonuses to employees, directors and supervisors          124,424       244,345          7,698
                                                            ------------  ------------   ------------
     As adjusted                                              27,477,275    25,448,217        801,771
                                                            ============  ============   ============

     Other liabilities

     As reported                                                 931,154     2,500,778         78,789
     U.S. GAAP adjustments
        Pension benefits                                          33,613        31,045            978
        Derivative financial instrumens                                -       337,837         10,644
                                                            ------------  ------------   ------------
     As adjusted                                                 964,767     2,869,660         90,411
                                                            ============  ============   ============
</TABLE>


                                      F-58
<PAGE>


     As a result of the adjustments presented above, the approximate amounts of
     total assets based on U.S. GAAP were NT$111,720,650 thousand,
     NT$132,088,572 thousand (US$4,161,581 thousand) as of December 31, 2003
     and 2004, respectively. Total liabilities based on U.S. GAAP were
     NT$59,282,103 thousand and NT$74,847,518 thousand (US$2,358,145 thousand)
     as of December 31, 2003 and 2004, respectively.

30.  ADDITIONAL DISCLOSURES REQUIRED BY U.S. GAAP

     a.   Recent accounting pronouncements


          In March 2004, the Emerging Issues Task Force ("EITF") reached a
          consensus on EITF 03-1, "The Meaning of Other-Than-Temporary
          Impairment and Its Application to Certain Investments". The consensus
          was that certain quantitative and qualitative disclosures should be
          required for debt and marketable equity securities classified as
          available-for-sale or held-to-maturity under SFAS Nos. 115 and 124
          that are impaired at the balance sheet date but for which an
          other-than-temporary impairment has not been recognized. This EITF
          consensus is effective for fiscal years ending after December 15,
          2003. Adoption of the EITF consensus did not result in an impact on
          the Company's financial position, results of operations or cash
          flows.

          In November 2004, the FASB issued SFAS No. 151, "Inventory Costs - An
          Amendment of ARB No. 43, Chapter 4." SFAS No. 151 clarifies the
          accounting that requires abnormal amounts of idle facility expenses,
          freight, handling costs, and spoilage costs to be recognized as
          current-period charges. It also requires that allocation of fixed
          production overhead to the costs of conversion be based on the normal
          capacity of the production facilities. SFAS No. 151 will be effective
          for inventory costs incurred on or after July 1, 2005. The Company is
          currently evaluating the impact of this standard on its consolidated
          financial statements.

          In December 2004, the FASB issued SFAS No. 123R, "Share-Based
          Payment". This statement is a revision of SFAS No. 123 and supercedes
          APB Opinion No. 25. This statement establishes standards for the
          accounting of transactions in which an entity exchanges its equity
          instruments for goods or services, primarily focusing on the
          accounting for transactions in which an entity obtains employee
          services in share-based payment transactions. Entities will be
          required to measure the cost of employee services received in
          exchange for an award of equity instruments based on the grant-date
          fair value of the award (with limited exceptions). That cost will be
          recognized over the period during which an employee is required to
          provide service, the requisite service period (usually the vesting
          period), in exchange for the award. The grant-date fair value of
          employee share options and similar instruments will be estimated
          using option-pricing models. If an equity award is modified after the
          grant date, incremental compensation cost will be recognized in an
          amount equal to the excess of the fair value of the modified award
          over the fair value of the original award immediately before the
          modification. This statement is effective as of the beginning of the
          first fiscal year that begins after January 1, 2006.

          Upon adoption, the Company has two application methods to choose
          from: the modified-prospective transition approach or the
          modified-retrospective transition approach. Under the
          modified-prospective transition method the Company would be required
          to recognize compensation cost for share-based awards to employees
          based on their grant-date fair value from the beginning of the fiscal
          period in which the recognition provisions are first applied as well
          as compensation cost for awards that were granted prior to, but not
          vested as of the date of adoption. Prior periods remain unchanged and
          pro forma disclosures previously required by SFAS No. 123 continue to
          be required. Under the modified-retrospective transition method, the
          Company would restate prior periods by recognizing compensation cost
          in the amounts previously reported in the pro forma footnote
          disclosure under SFAS No. 123. Under this method, the Company is
          permitted to apply this presentation to all periods presented or to
          the start of the fiscal year in which SFAS No. 123R is adopted. The
          Company would follow the same guidelines as in the
          modified-prospective transition method for awards granted


                                      F-59
<PAGE>


          subsequent to adoption and those that were granted and not yet
          vested. The Company has not yet determined which methodology it will
          adopt but believes that the impact that the adoption of SFAS No. 123R
          will have on its financial position or results of operations will
          approximate the magnitude of the stock-based employee compensation
          cost disclosed in Note 30 (e) pursuant to the disclosure requirements
          of SFAS No. 148.

          In December 2004, the FASB issued SFAS No. 153, "Exchanges of
          Non-Monetary Assets - An Amendment of APB Opinion No. 29" ("SFAS No.
          153"). SFAS No. 153 amends APB Opinion No. 29, "Accounting for
          Non-Monetary Transactions" (Opinion 29). The amendments made by SFAS
          No. 153 are based on the principle that exchanges of non-monetary
          assets should be measured based on the fair value of the assets
          exchanged. Further, the amendments eliminate the exception for
          non-monetary exchanges of similar productive assets and replace it
          with a general exception for exchanges of non-monetary assets that do
          not have commercial substance. The provisions in SFAS NO. 153 are
          effective for non-monetary asset exchanges occurring in fiscal
          periods beginning after June 15, 2005 (July 1, 2005 for the Company).
          Early application of the SFAS No. 153 is permitted. The provisions of
          this Statement shall be applied prospectively. The Company does not
          expect the adoption of SFAS No. 153 to have a material effect on the
          Company's financial statements or its results of operations.

     b.   Pension

          Set forth below is pension information disclosed in accordance with
          U.S. SFAS 132 (R):

<TABLE>
                                                                             Year Ended December 31
                                                       --------------------------------------------------------------------
                                                            2002              2003                    2004
                                                       ---------------   ---------------   --------------------------------
                                                            NT$               NT$               NT$              US$
<S>                                                            <C>               <C>               <C>               <C>
          Components of net periodic benefit
            cost
             Service cost                                      261,810           355,624           455,913           14,364
             Interest cost                                      43,209            54,218            88,087            2,775
             Expected return on plan assets                    (23,003)          (19,413)          (25,961)            (818)
             Amortization of prior service cost                  1,557             7,989            13,670              431
                                                       ---------------   ---------------     -------------   --------------
          Net periodic benefit cost                            283,573           398,418           531,709           16,752
                                                       ===============   ===============   ===============   ==============

          Changes in benefit obligation
             Benefit obligation at beginning of
               year                                            848,888         1,443,917         1,985,971           62,570
             Benefit obligation from acquisition
               from ASE Japan                                        -                 -         1,133,061           35,698
             Service cost                                      261,810           355,624           455,913           14,364
             Interest cost                                      43,209            54,218            88,087            2,775
             Plan amendments                                         -            15,247                 -                -
             Actuarial loss                                    288,441           150,332           142,752            4,498
             Benefits paid                                      (8,374)          (21,414)          (52,649)          (1,659)
             Exchange loss (Gain)                                9,943           (11,953)           44,072            1,389
                                                       ---------------   ---------------   ---------------   --------------
          Benefit obligation at end of year                  1,443,917         1,985,971         3,797,207          119,635
                                                       ===============   ===============   ===============   ==============

          Change in plan assets
             Fair value of plan assets at
               beginning of year                               412,036           507,098           619,358           19,513
             Acquire form ASE - Japan                                -                 -           299,142            9,425
             Actual return on plan assets                       10,157             7,890            20,428              644
             Employer contribution                              85,050           113,173           138,320            4,358
             Benefits paid                                        (145)           (8,803)          (25,788)            (813)
                                                       ---------------   ---------------   ---------------   --------------
                                                               507,098           619,358         1,051,460           33,127
                                                       ---------------   ---------------   ---------------   --------------

                                                                                                                         (Continued)
</TABLE>


                                      F-60
<PAGE>


<TABLE>
                                                                             Year Ended December 31
                                                       --------------------------------------------------------------------
                                                            2002              2003                    2004
                                                       ---------------   ---------------   --------------------------------
                                                            NT$               NT$               NT$              US$
<S>                                                            <C>               <C>               <C>               <C>
          Funded status                                        936,819         1,366,613         2,745,747           86,508
          Unrecognized actuarial gain (loss)                  (270,641)         (461,562)         (597,363)         (18,821)
          Additional pension cost                                    -            28,627             8,867              279
                                                       ---------------   ---------------   ---------------   --------------
          Net amount recognized (recognized as
            accrued pension cost)                              666,178           933,678         2,157,251           67,966
                                                       ===============   ===============   ===============   ==============

          Actuarial assumptions:

                                                                                                               2002 to 2004

          Discount rate                                                                                       2.50% to 5.00%
          Rate of compensation increase                                                                       3.00% to 5.00%
          Expected return on plan assets                                                                      2.50% to 5.00%
</TABLE>

          The Company has no other post-retirement or post-employment benefit
          plans.

     c.   Short-term investments

          At December 31, 2003 and 2004, certain investments carried at cost
          under ROC GAAP were restated under U.S. SFAS 115:

<TABLE>
                                                                       December 31
                               --------------------------------------------------------------------------------------------
                                             2003                                             2004
                               ---------------------------------  ---------------------------------------------------------
                                                     Unrealized                                               Unrealized
                               Carrying    Fair        Holding                                                 Holding
                                 Value     Value       Gains        Carrying Value         Fair Value           Gains
                               ---------  ---------  -----------  -------------------  ------------------  ----------------
                                  NT$       NT$         NT$          NT$       US$        NT$       US$       NT$     US$

<S>                            <C>        <C>           <C>       <C>         <C>      <C>        <C>        <C>      <C>
         Short-term
           investments         3,017,779  3,022,976     5,197     3,194,183   100,636  3,198,369  100,768    4,186    132
</TABLE>

     d.   Income tax benefit

<TABLE>
                                                                           Year Ended December 31
                                                       --------------------------------------------------------------------
                                                            2002              2003                    2004
                                                       ---------------   ---------------   --------------------------------
                                                            NT$               NT$               NT$              US$

<S>                                                            <C>              <C>                <C>                <C>
          Tax benefit                                          (66,469)         (276,788)          134,811            4,247
          Net change in deferred income tax
            assets (liabilities) for the period             (1,261,021)       (1,201,453)       (1,769,763)         (55,758)
          Income tax on undistributed earnings                 174,478           170,281            86,968            2,740
          Adjustment of prior years' income
            taxes                                                1,905            18,859            42,590            1,342
                                                       ---------------   ---------------   ---------------   --------------
                                                            (1,151,107)       (1,289,101)       (1,505,394)         (47,429)
                                                       ===============   ===============   ===============   ==============
</TABLE>

          A reconciliation between the income tax calculated on pretax
          financial statement income based on the


                                      F-61
<PAGE>


          statutory tax rate and the income tax expense (benefit) which
          conforms to U.S. GAAP is as follows:

<TABLE>
                                                                           Year Ended December 31
                                                       --------------------------------------------------------------------
                                                            2002              2003                      2004
                                                       ---------------   ---------------   --------------------------------
                                                            NT$               NT$               NT$              US$

<S>                                                         <C>                  <C>             <C>                 <C>
          Tax (benefit) based on pre-tax
            accounting income (loss) at
            statutory rate                                  (1,064,135)          527,790         1,391,754           43,848
          Add (less) tax effects of:
             Permanent differences
                Tax-exempt income
                   Tax holiday                                 (52,126)         (481,214)         (642,285)         (20,236)
                   Gain from sale of securities                (16,798)          (10,357)           (9,527)            (300)
                Bonus to employee and directors                 52,221            96,519            92,602            2,918
                Other                                           65,259             7,691           (22,094)            (696)
          Tax credits
             Utilized                                         (331,255)         (439,457)       (1,081,023)         (34,059)
             Deferred                                          139,224        (1,179,213)       (1,364,379)         (42,986)

          Income taxes (10%) on undistributed
            earnings                                            54,598           170,281            86,968            2,740
          Adjustment of prior year's income tax                  1,905            18,859            42,590            1,342
                                                       ---------------   ---------------   ---------------   --------------
          Income tax expense (benefit)                      (1,151,107)       (1,289,101)       (1,505,394)         (47,429)
                                                       ===============   ===============   ===============   ==============
</TABLE>

          The abovementioned taxes on pretax accounting income (loss) at the
          statutory rates for domestic and foreign entities are shown below:

<TABLE>
                                                                           Year Ended December 31
                                                       --------------------------------------------------------------------
                                                            2002              2003                      2004
                                                       ---------------   ---------------   --------------------------------
                                                            NT$               NT$               NT$              US$

<S>                                                         <C>                  <C>             <C>                 <C>
          Domestic entities in ROC
            (25% statutory rate)                              (282,713)          674,036        1,287,255            40,556
          Foreign entities
             ASE Korea Inc. (30.8% statutory
               rate)                                                 -            74,806          (37,683)           (1,187)
             ASE Japan (40% statutory rate)                          -                 -          101,429             3,195
             ISE Labs, Inc. (33% statutory rate)              (725,744)         (209,911)         (16,852)             (531)
             ASE Test Malaysia (30% statutory
               rate)                                           (55,678)          (11,141)          57,605             1,815
                                                       ---------------   ---------------   --------------   ---------------
                                                            (1,064,135)          527,790        1,391,754            43,848
                                                       ===============   ===============   ==============   ===============
</TABLE>


                                      F-62
<PAGE>


          Deferred income tax assets and liabilities as of December 31, 2002,
          2003 and 2004 are summarized as follows:

<TABLE>
                                                                                            December 31
                                                                         --------------------------------------------------
                                                                              2003                       2004
                                                                         ---------------   --------------------------------
                                                                               NT$               NT$              US$
<S>                                                                            <C>               <C>                 <C>
          Current deferred income tax assets
             Unused tax credits                                                1,054,370         1,463,022           46,094
             Provision for inventory obsolescence                                 50,475            19,572              617
             Provision for doubtful accounts and sales allowance                  33,754            38,436            1,211
             Unrealized foreign exchange loss                                     65,118            (4,424)            (139)
             Other                                                                29,752            86,259            2,717
                                                                         ---------------   ---------------   --------------
                                                                               1,233,469         1,602,865           50,500
             Valuation allowance                                                  (8,968)         (227,415)          (7,165)
                                                                         ---------------   ---------------   --------------
                                                                                1,224,501         1,375,450           43,335
                                                                         ===============   ===============   ==============

          Non-current deferred income tax assets (liabilities)
             Unused tax credits                                                3,101,039         4,376,234          137,878
             Accrued pension costs                                               153,924           538,129           16,954
             Loss carryforward                                                   483,538           236,759            7,459
             Investment income                                                  (144,000)         (144,000)          (4,537)
             Others                                                              170,824           373,489           11,767
                                                                         ---------------   ---------------   --------------
                                                                               3,765,325         5,380,611          169,521
          Valuation allowance                                                 (1,484,659)       (1,382,974)         (43,572)
                                                                         ---------------   ---------------   --------------
                                                                                2,280,666         3,997,637          125,949
                                                                         ===============   ===============   ==============
          Non-current deferred income tax liabilities
             Goodwill amortization                                               (34,674)           32,424            1,021
                                                                         ===============   ===============   ==============
</TABLE>

     e.   Employee stock option plans

          ASE Option Plan

          Information regarding the Company's employee stock option plans is
          provided in note 19.

          ASE Test Option Plan

          ASE Test has six stock option plans, the 1996 Executive Management
          Option Plan (the "1996 Plan"), the 1997 Option Plan, the 1998 Option
          Plan, the 1999 Option Plan, the 2000 Option Plan and the 2004 Option
          Plan. Up to 10,000,000 shares, 3,200,000 shares, 1,600,000 shares,
          2,000,000 shares, 12,000,000 shares and 2,500,000 shares have been
          reserved for issuance under the 1996, 1997, 1998, 1999, 2000 and 2004
          Option Plans, respectively.

          The 1996, 1997, 1998, 1999, 2000 and 2004 Option Plans granted the
          following stock options to purchase the ASE Test shares which are
          exercisable based on a vesting schedule over a period of five years
          until the expiration of options, to directors, officers and key
          employees. If any granted shares are forfeited, the shares may be
          granted again, to the extent of any such forfeiture.

          Each aforementioned option exercise price was equal to the stock's
          market price on the date of grant. Options granted under the 1996,
          1997 and 1998 Option Plans expire 5 years after grant. Options
          granted under the 1999, 2000 and 2004 Option Plan expire 10 years
          after grant.


                                      F-63
<PAGE>


          Further Information regarding the option plans of ASE Test is
          presented below:

<TABLE>
                                                                   Weighted
                                                                    Average      Weighted
                                                                    Exercise      Average
                                                      Number of       Price      Grant Date
                                                        Shares     Per Share    Fair Values

<S>                                                       <C>            <C>      <C>
          Beginning balance - January 1, 2002          16,308,585  $    11.15
          Option granted                                  414,500        7.36     $  10.46
                                                                                  ========
          Option exercised                             (2,420,591)       8.62
          Option forfeited                               (882,051)       9.88
          Option expired                                  (89,080)      13.84
                                                   --------------
          Ending balance - December 31, 2002           13,331,363       11.55
          Option granted                                2,000,000       12.95     $  12.95
                                                                                  ========
          Option exercised                               (478,426)       8.99
          Option forfeited                               (568,860)      13.72
          Option expired                                 (982,659)      11.08
                                                   --------------
          Ending balance - December 31, 2003           13,301,418       11.80
          Option granted                                  260,000        6.18     $   6.18
                                                                                  ========
          Option exercised                               (512,815)       8.90
          Option forfeited                               (417,815)      11.82
          Option expired                               (1,753,340)      20.00
                                                   --------------
              Ending balance - December 31, 2004       10,877,448       10.48
                                                   ==============
</TABLE>

          Options outstanding on December 31, 2004 and the related weighted
          average exercise price and remaining contractual life information are
          as follows (in U.S. dollars):

<TABLE>
                                                          Outstanding               Exercisable
                                                  -------------------------   ------------------------     Weighted
                                                                  Weighted                    Weighted     Average
                                                                   Average                     Average    Remaining
                                                     Shares         Price        Shares        Price     Life (Years)

<S>                                               <C>             <C>              <C>        <C>               <C>
          Options with exercise price of:
          $  20-$25                                      724,800  $   22.70          685,700  $   22.57         4.56
          $  11.5-$12.95                               2,232,450      12.81          341,200      12.39         8.69
          $  5.5-$9                                    7,920,198       8.70        4,930,822       8.82         6.23
                                                  --------------              --------------
          Options outstanding at December 31,
            2004                                      10,877,448                   5,957,722
                                                  ==============              ==============
</TABLE>

          Under U.S. GAAP, SFAS 123, "Stock-Based Compensation" effective in
          1996, establishes accounting and disclosure requirements using a fair
          value-based method of accounting for stock-based employee
          compensation plans. Under SFAS 123, the Company and ASE Test have
          elected to use the intrinsic value-based method and provide pro forma
          disclosures of net income and earnings per share as if the fair value
          accounting provisions of this statement had been adopted.

          ASE Test has computed, for pro forma disclosure purposes, the fair
          value of each option grant, as defined by U.S. SFAS No. 123, using
          the Black-Scholes option pricing model with the following
          assumptions:


                                      F-64
<PAGE>


                                       2002             2003            2004

          Risk-free interest rate    2.58%-4.48%        3.38%         3.5%-3.88%
          Expected life                5 years         5 years         5 years
          Expected volatility          62.14%           65.07%          78.28%
          Expected dividend              0%               0%              0%

          For purposes of pro forma disclosure, the estimated fair value of the
          options is amortized to expense over the option rights vesting
          periods. Had the Company and ASE Test recorded compensation costs
          based on the estimated grant date fair value, as defined by SFAS No.
          123, the Company's net income (loss) under U.S. GAAP would have been
          reduced to the pro forma amounts below.

<TABLE>
                                                                       Ended December 31
                                                   --------------------------------------------------------------
                                                        2002            2003                    2004
                                                   --------------  --------------   -----------------------------
                                                        NT$             NT$              NT$             US$

<S>                                                    <C>              <C>              <C>              <C>
          Net income (loss) based on U.S. GAAP         (3,074,265)      2,352,011        4,297,073        135,383
          Stock - based compensation expense
            (net of tax)                                 (331,872)       (220,147)        (375,135)       (11,819)
                                                   --------------  --------------   --------------   ------------

          Pro forma net income (loss)                  (3,406,137)      2,131,864        3,921,938        123,564
                                                   ==============  ==============   ===============  ============

          Report EPS - Basic                                (0.85)           0.63             1.11           0.03
                                                        =========       =========        =========      =========
                     - Diluted                              (0.85)           0.63             1.09           0.03
                                                        =========       =========        =========      =========
          Pro forma EPS - Basic                             (0.94)           0.57             1.02           0.03
                                                        =========       =========        =========      =========
                        - Diluted                           (0.94)           0.57             0.99           0.03
                                                        =========       =========        =========      =========
          Reported EPS per ADS - Basic                      (4.26)           3.16             5.57           0.18
                                                        =========       =========        =========      =========
                               - Diluted                    (4.26)           3.13             5.43           0.17
                                                        =========       =========        =========      =========
          Pro forma EPS per ADS - Basic                     (4.72)           2.86             5.09           0.16
                                                        =========       =========        =========      =========
                                - Diluted                   (4.72)           2.84             4.97           0.16
                                                        =========       =========        =========      =========
</TABLE>

          The pro forma amounts reflect compensation expense related to the
          Company 2004 option plan and ASE Test 1996, 1997, 1998, 1999, 2000
          and 2004 option plans granted and vested only. In future years, the
          annual compensation expense may increase relative to the fair value
          of the options granted and vested in those future years.

     f.   In accordance with U.S. SFAS No. 130, the statement of comprehensive
          income (loss) for the each years ended December 31, 2002, 2003 and
          2004 are presented below:

<TABLE>
                                                                        Year Ended December 31
                                                   --------------------------------------------------------------
                                                        2002            2003                    2004
                                                   --------------  --------------   -----------------------------
                                                        NT$             NT$              NT$             US$

<S>                                                    <C>              <C>              <C>              <C>

          Net income (loss) based on U.S.
            GAAP                                       (3,074,265)       2,352,011      4,297,073         135,383
          Translation adjustments on
            subsidiaries, net of income tax
            benefit of NT$31,595 thousand,
            NT$71,856 thousand and NT$229,805
            thousand in 2002, 2003 and 2004,
            respectively                                  (94,783)        (215,566)      (689,415)        (21,720)

                                                                                                                         (Continued)
</TABLE>


                                      F-65
<PAGE>


<TABLE>
                                                                        Year Ended December 31
                                                   -----------------------------------------------------------------
                                                        2002            2003                    2004
                                                   --------------  --------------   --------------------------------
                                                        NT$             NT$              NT$             US$

<S>                                                    <C>              <C>              <C>              <C>
          Unrecognized pension cost                             -         (16,137)           11,427              360
                                                   --------------  --------------   ---------------   --------------
          Comprehensive income (loss)                  (3,169,048)      2,120,308         3,619,085          114,023
                                                   ==============  ==============   ===============   ==============
</TABLE>

     g.   U.S. GAAP cash flow information

          The following schedule presents the major captions of cash flows in
          accordance with SFAS 95:

<TABLE>
                                                                        Year Ended December 31
                                                   -----------------------------------------------------------------
                                                        2002            2003                    2004
                                                   --------------  --------------   --------------------------------
                                                        NT$             NT$              NT$             US$

<S>                                                    <C>              <C>              <C>              <C>
          Cash flows
             Net cash provided by operating
               Activities                              11,313,800      13,295,953        19,419,255          611,823
             Net cash used in investing activities    (13,719,654)    (18,572,586)      (30,825,342)        (971,183)
             Net cash provided by financing
               Activities                                 530,491       4,221,190         9,234,004          290,926
                                                   --------------  --------------   ---------------  ---------------
             Net decrease in cash                      (1,875,363)     (1,055,443)       (2,172,083)         (68,434)
             Cash, beginning of year                   11,770,729       9,829,508         8,562,425          269,768
             Effect of exchange rate changes in
               Cash                                       (65,858)       (211,640)         (415,239)         (13,082)
                                                   --------------  --------------   ---------------  ---------------
                                                        9,829,508       8,562,425         5,975,103          188,252
                                                   ==============  ==============   ===============  ===============
</TABLE>

          The significant reclassifications for U.S. GAAP cash flow statements
          pertain to the compensation to directors and supervisors and bonuses
          to employees is shown in the operating activity under U.S. GAAP (as
          opposed to financing activities under ROC GAAP).

     h.   Goodwill

          On January 1, 2002, the Company adopted U.S. SFAS No. 142, "Goodwill
          and Other Intangible Assets", which requires that goodwill no longer
          be amortized, and instead, be tested for impairment on a periodic
          basis. In conjunction with the implementation of U.S. SFAS No. 142,
          the Company completed a goodwill impairment review as of January 1,
          2002 using a fair-value based approach in accordance with the
          provision of the standard and found no impairment.

          Based on acquisitions completed as of June 30, 2001, application of
          the goodwill non-amortization provisions resulted in a decrease in
          amortization of approximately NT$815,573 thousand for 2002. The
          Company completed its annual goodwill impairment test at December 31,
          2002 and determined that it had impairment of NT$2,213,045 thousand
          relating to the remaining goodwill associated with its acquisition of
          ASE Test. The Company also completed its annual goodwill impairment
          test at December 31, 2004 and determined impairment of NT$1,337,670
          thousand (US$42,145 thousand) of the remaining goodwill associated
          with its acquisition of ISE Labs. As of December 31, 2004, the
          Company had goodwill of NT$3,330,886 thousand (US$104,943 thousand)
          primarily from the reporting units of the testing operations.


                                      F-66

<PAGE>


          Changes in the carrying amount of goodwill for the years ended
          December 31, 2003 and 2004, by reportable segment, are as follows:

<TABLE>
                                          Packaging        Testing           Other                      Total
                                       ---------------  ---------------  ---------------   --------------------------------
                                            NT$              NT$              NT$               NT$             US$

<S>                                       <C>            <C>                   <C>             <C>                <C>
          Balance as of January
            1, 2003                            172,041        3,055,015                -         3,227,056          101,672
          Translation adjustment                (6,734)        (119,587)               -          (126,321)          (3,980)
                                       ---------------  ---------------  ---------------   ---------------  ---------------
          Balance as of
            December 31, 2003                  165,307        2,935,428                -         3,100,735           97,692
          Goodwill acquired
            during the period                  683,774          459,893          512,818         1,656,485           52,189
          Goodwill impairment                        -       (1,337,670)               -        (1,337,670)         (42,145)
          Translation adjustment                (4,141)         (83,276)          (1,247)          (88,664)          (2,793)
                                       ---------------  ---------------    -------------     -------------    -------------
          Balance as of
            December 31, 2004                  844,940        1,974,375          511,571         3,330,886          104,943
                                       ===============  ===============  ===============   ===============  ===============
</TABLE>

     i.   Earnings per share

          The following table represents the computation of basic and diluted
          earnings (loss) per share for each of the years ended at December 31:

<TABLE>
                                                    2002                2003                      2004
                                              -----------------   -----------------   -----------------------------------
                                                    NT$                 NT$                 NT$                US$

<S>                                                 <C>                  <C>                 <C>                  <C>
          Basic EPS
            Net Income (loss)                       (3,074,265)          2,352,011           4,297,073            135,383
            Interest, net of tax,
              paid on convertible bonds                      -                   -             163,549              5,153
                                              -----------------   -----------------   -----------------  -----------------
          Diluted EPS
            Net Income (Loss)                        (3,074,265)          2,352,011           4,460,622            140,536
                                              =================   =================   =================  =================
            Weighted average shares
              outstanding
                Basic                             3,609,773,466       3,721,211,293       3,855,990,735      3,855,990,735
                Effect of
                  dilutive Securities                         -          34,347,255         254,112,632        254,112,632
                                              -----------------   -----------------   -----------------  -----------------
                Diluted                           3,609,773,466       3,755,558,548       4,110,103,367      4,110,103,367
                                              =================   =================   =================  =================
</TABLE>

          Diluted earnings per share for the year ended December 31, 2004 were
          calculated as follows:

          The denominator was the weighted average number of outstanding common
          shares which equaled 4,110,103,367 shares in 2004 adjusted for the
          effect of the ASE stock options and convertible bonds in 2004.

          The denominator used for purposes of calculating earnings (loss) per
          ADS was the above-mentioned weighted average outstanding shares
          divided by five (one ADS represents five common shares). The
          numerator was the same as mentioned in the above EPS calculation.


                                      F-67
<PAGE>


         ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND ITS SUBSIDIARIES

                                                                     SCHEDULE I

                                  Amount
             Contract          (in Million)       Strike Price    Maturity Date

ASE

Buy NTD Call / USD Put             US$157              32          2005.03.25
Sell NTD Call / USD Put               157             31.37        2005.08.25
Buy USD Call / NTD Put                 43             33.95        2008.09.25
Buy USD Put/NTD Call                    5            Note 1        2005.01.05
Sell USD Call/NTD Put                   5            Note 2        2005.01.05
Buy USD Put/JPY Call                    1            Note 3        2005.01.06
Sell USD Call/JPY Put                   2            Note 4        2005.01.06
Buy USD Put/NTD Call                    6            Note 5        2005.01.06
Sell USD Call/NTD Put                  12            Note 6        2005.01.06
Sell USD Call/JPY Put                   5            Note 7        2005.01.05
Sell USD Call/JPY Put                   5            Note 7        2005.02.03
Sell USD Call/JPY Put                   5            Note 7        2005.03.03
Sell USD Call/JPY Put                   5            Note 7        2005.04.05
Buy USD Put/JPY Call                    0.6          Note 8        2005.01.12
Sell USD Call/JPY Put                   1            Note 9        2005.01.12
Buy USD Put/JPY Call                    1            Note 10       2005.01.14
Sell USD Call/JPY Put                   1.75         Note 11       2005.01.14
Buy USD Put/NTD Call                    5            Note 1        2005.02.03
Sell USD Call/NTD Put                   5            Note 2        2005.02.03
Buy USD Put/NTD Call                    6            Note 5        2005.02.04
Sell USD Call/NTD Put                  12            Note 6        2005.02.04
Buy USD Put/JPY Call                    1            Note 3        2005.02.09
Sell USD Call/JPY Put                   2            Note 4        2005.02.09
Buy USD Put/NTD Call                    5            Note 1        2005.03.03
Sell USD Call/NTD Put                   5            Note 2        2005.03.03
Buy USD Put/JPY Call                    1            Note 3        2005.03.04
Sell USD Call/JPY Put                   2            Note 4        2005.03.04
Buy USD Put/NTD Call                    6            Note 5        2005.03.08
Sell USD Call/NTD Put                  12            Note 6        2005.03.08
Buy USD Put/NTD Call                    5            Note 1        2005.04.05
Sell USD Call/NTD Put                   5            Note 2        2005.04.05
Buy USD Put/JPY Call                    1            Note 3        2005.04.06
Sell USD Call/JPY Put                   2            Note 4        2005.04.06
Buy USD Put/NTD Call                    6            Note 5        2005.04.07
Sell USD Call/NTD Put                  12            Note 6        2005.04.07
Buy USD Put/JPY Call                    1            Note 3        2005.05.05
Sell USD Call/JPY Put                   2            Note 4        2005.05.05
Buy USD Put/NTD Call                    6            Note 5        2005.05.06
Sell USD Call/NTD Put                  12            Note 6        2005.05.06
Buy USD Put/NTD Call                    6            Note 5        2005.06.08
Sell USD Call/NTD Put                  12            Note 6        2005.06.08


                                      F-68
<PAGE>


Strike price is as follows:

Note 1:     If 32.10<USD/NTD<32.50, strike price is 32.50.
            If 32.00<USD/NTD<=32.10, strike price is 32.60.
            If 31.20<USD/NTD<=32.00, strike price is 32.70.
            If USD/NTD<=31.20, strike price is based on the spot rate plus
            100bp.

Note 2:     If USD/NTD spot rate ever reaches 33.10 at anytime before
            expiration, and the settlement rate is >=32.5, strike price is
            32.50.

Note 3:     If USD/JPY<=106.00, strike price is based on the spot rate plus
            100bp.
            If 106.00<USD/JPY<=108.00, strike price is 109.00.
            If 108.00<USD/JPY<=109.00, strike price is based on the spot rate
            plus 100bp.

Note 4:     If USD/JPY>109.00, strike price is 109.00.

Note 5:     If USD/NTD spot rate never reaches 33.00 at anytime before
            expiration, and the settlement rate <=31.20, strike price is based
            on the spot rate plus 380bp.

            If USD/NTD spot rate ever reaches 33.00 at anytime before
            expiration, and the settlement rate <=31.20, strike price is based
            on the spot rate plus 380bp.

            If USD/NTD spot rate never reaches 33.00 at anytime before
            expiration, and the settlement rate 31.20<USD/NTD<=32.20, strike
            price is 32.58.

            If USD/NTD spot rate ever reaches 33.00 at anytime before
            expiration, and the settlement rate 31.20<USD/NTD<=32.20, strike
            price is 32.58.

            If USD/NTD spot rate never reaches 33.00 at anytime before
            expiration, and the settlement rate 32.20<USD/NTD<=32.58, strike
            price is based on the spot rate plus 380bp.

            If USD/NTD spot rate never reaches 33.00 at anytime before
            expiration, and the settlement rate >32.58, there is no
            transaction.

Note 6:     If USD/NTD spot rate ever reaches 33.00 at anytime before
            expiration, and the settlement rate 32.20<USD/NTD<=32.58, strike
            price is 32.39.

            If USD/NTD spot rate ever reaches 33.00 at anytime before
            expiration, and the settlement rate >32.58, strike price is 32.20.

Note 7:     If USD/JPY>103.50, and spot rate ever reaches 106.20 at anytime
            before expiration, strike price is 103.50.

Note 8:     If USD/JPY<=106.50, strike price is based on the spot rate plus
            200bp.
            If 106.5<USD/JPY<=107.50, strike price is 112.00.
            If 107.5<USD/JPY<=108.50, strike price is 111.00.
            If 108.5<USD/JPY<=110.00, strike price is 110.00.


                                      F-69
<PAGE>


Note 9:     If USD/JPY>110.00, and spot rate ever reaches 114.00 at anytime
            before the expiry, strike price is 110.00.

Note 10:    If USD/JPY<=106.50, strike price is based on the spot rate plus
            100bp.
            If 106.5<USD/JPY<=107.50, strike price is 112.00.
            If 107.5<USD/JPY<=108.50, strike price is 111.00.
            If 108.5<USD/JPY<=110.00, strike price is 110.00.

Note 11:    If USD/JPY>110.00, and spot rate ever reaches 113.80 at anytime
            before the expiry, strike price is 110.00.

                           Amount
        Contract        (in Millions)    Strike Price    Maturity Date

ASE Test Inc.

Sell USD Call/NTD Put        $2              Note 1      January 12, 2005
Sell USD Call/NTD Put         2              Note 2      January 12, 2005
Buy USD Put/NTD Call          1              Note 3      January 12, 2005
Buy USD Put/NTD Call          1              Note 4      January 12, 2005
Sell USD Call/NTD Put         2              Note 1      February 14, 2005
Sell USD Call/NTD Put         2              Note 2      February 3, 2005
Buy USD Put/NTD Call          1              Note 3      February 14, 2005
Buy USD Put/NTD Call          1              Note 4      February 3, 2005
Sell USD Call/NTD Put         2              Note 1      March 10, 2005
Sell USD Call/NTD Put         2              Note 2      March 10, 2005
Buy USD Put/NTD Call          1              Note 3      March 10, 2005
Buy USD Put/NTD Call          1              Note 4      March 10, 2005
Sell USD Call/NTD Put         2              Note 1      April 12, 2005
Sell USD Call/NTD Put         2              Note 2      April 12, 2005
Buy USD Put/NTD Call          1              Note 3      April 12, 2005
Buy USD Put/NTD Call          1              Note 4      April 12, 2005
Sell USD Call/NTD Put         2              Note 1      May 12, 2005
Buy USD Put/NTD Call          1              Note 3      May 12, 2005
Sell USD Call/NTD Put         2              Note 1      June 10, 2005
Buy USD Put/NTD Call          1              Note 3      June 10, 2005

Note 1:     If USD/NTD>=32.8, strike price=32.8.

Note 2:     If USD/NTD>=32.6, strike price=32.6.

Note 3:     If 31<USD/NTD<32.525, strike price=32.525.
            If USD/NTD<=31, strike price is based on the spot rate (at maturity
            date) plus 500 bps.

Note 4:     If 31<USD/NTD<32.5, strike price=32.5.
            If USD/NTD<=31, strike price is based on the spot rate (at maturity
            date) plus 1500 bps.


                                      F-70
<PAGE>


                            Amount
        Contract        (in Millions)     Strike Price     Maturity Date

ASE Korea

Sell USD Call/KRWPut         $2              $1.063         94.01.14
Sell USD Call/KRWPut          2               1.063         94.02.15
Sell USD Call/KRWPut          2               1.063         94.03.15
Sell USD Call/KRWPut          2               1.063         94.04.14
Sell USD Call/KRWPut          2               1.063         94.05.13
Sell USD Call/KRWPut          2               1.063         94.06.15
Buy KRW Call/USD Put          7               1.068         94.06.15
Sell USD Call/KRWPut          2               1.068         94.01.14
Sell USD Call/KRWPut          2               1.068         94.02.15
Sell USD Call/KRWPut          2               1.068         94.03.15
Sell USD Call/KRWPut          2               1.068         94.04.14
Sell USD Call/KRWPut          2               1.068         94.05.13
Sell USD Call/KRWPut          2               1.068         94.06.15
Buy KRW Call/USD Put          7               1.073         94.06.15


                                      F-71
<PAGE>


         ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND ITS SUBSIDIARIES

                                                                    SCHEDULE II

                            Amount
        Contract        (in Millions)     Strike Price     Maturity Date

Buy USD Put/JPY Call         US$10           Note 1         2005.07.27
Sell USD Call/JPY Put           20           Note 2         2005.07.27
Buy USD Put/JPY Call            10           Note 1         2005.08.29
Sell USD Call/JPY Put           20           Note 2         2005.08.29
Buy USD Put/JPY Call            10           Note 1         2005.09.27
Sell USD Call/JPY Put           20           Note 2         2005.09.27
Buy USD Put/JPY Call            10           Note 1         2005.10.27
Sell USD Call/JPY Put           20           Note 2         2005.10.27
Buy USD Put/JPY Call            10           Note 1         2005.11.28
Sell USD Call/JPY Put           20           Note 2         2005.11.28
Buy USD Put/JPY Call            10           Note 1         2005.12.22
Sell USD Call/JPY Put           20           Note 2         2005.12.22

Strike prices are determined as follows:

Note 1:     If the USD/JPY spot rate never reaches 105.50 and 99.00, and if, on
            the maturity date of the option, USD/JPY rate at the cutoff time is
            less than 105.00, the strike price is 105.00.

            If the USD/JPY spot rate reaches 105.50 but never reaches 106.00
            and 99.00, and if, on the maturity date of the option, USD/JPY rate
            at the cutoff time is less than 105.00, the strike price is 105.00.

            If the USD/JPY spot rate reaches 106.00 but never reaches 107.00
            and 99.00, and if, on the maturity date of option, USD/JPY rate at
            cut-off time is less than 106.00, the strike price is 106.00.

            If the USD/JPY spot rate reaches 107.00 but never reaches 99.00,
            and if, on the maturity date of option, USD/JPY rate at cut-off
            time is less than 103.50, the strike price is 103.50.

Note 2:     If the USD/JPY spot rate reaches 107.00 but never reaches 99.00,
            and if, on the maturity date of the option, the USD/JPY rate at
            cut-off time is greater than or equal to 103.50, the strike price
            is 103.50.

            If the USD/JPY spot rate reaches 99.00, there is no right and
            obligation.


                                      F-72
<PAGE>


         ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND ITS SUBSIDIARIES

                                                                   SCHEDULE III

                            Amount
        Contract        (in Millions)     Strike Price     Maturity Date

BUY USD Put/KRW Call         US$10           Note 1         2005.02.01
SELL USD Call/KRW Put           20           Note 2         2005.02.01
BUY USD Put/KRW Call            10           Note 1         2005.02.28
SELL USD Call/KRW Put           20           Note 2         2005.02.28
BUY USD Put/KRW Call            10           Note 1         2005.03.31
SELL USD Call/KRW Put           20           Note 2         2005.03.31
BUY USD Put/KRW Call            10           Note 1         2005.04.29
SELL USD Call/KRW Put           20           Note 2         2005.04.29

The strike prices are calculated as follows:

Note 1:     If the USD/KRW spot rate never reaches 1080.00 at any time before
            expiration and the settlement rate <=1000.00, the strike price is
            based on the spot rate plus 10.

            If the USD/KRW spot rate ever reaches 1080.00 at any time before
            expiration and the settlement rate <=1000, the strike price is
            based on the spot rate plus 10.

            If the USD/KRW spot rate never reaches 1080.00 at any time before
            expiration and 1000.00<USD/KRW<=1050, the strike price is based on
            the spot rate of 1060.00.

            If the USD/KRW spot rate ever reaches 1080.00 at any time before
            expiration and 1000.00<USD/KRW<=1050.00, the strike price is based
            on the spot rate of 1060.00.

            If the USD/KRW spot rate never reaches 1080.00 at any time before
            expiration and 1050.00<USD/KRW<=1060.00, the strike price is based
            on the spot rate plus 10.

            If the USD/KRW spot rate never reaches 1080.00 at any time before
            expiration and the settlement rate >1060.00, there is no right or
            obligation.

Note 2:     If the USD/KRW spot rate ever reaches 1080.00 at any time before
            expiration and 1050.00<USD/KRW<=1060.00, the strike price is based
            on the spot rate of 1055.00.

            If the USD/KRW spot rate never reaches 1080.00, and
            USD/KRW>1060.00, the strike price is based on the spot rate
            1050.00.

            The exchange loss arising from such contract based on
            mark-to-market valuation was NT$1,774, and which was offset against
            the stockholders' equity.


                                      F-73