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


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 20-F

[ ]  REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (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, 2000

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934


             (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
                                (8867) 361-7131
                    (Address of Principal Executive Offices)

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

                 American Depositary Shares, each representing
                       5 Common Shares of NT$10 par value

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

          (As of the close of the period covered by the annual report)

Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act: None

     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: 2,752,000,000 Common Shares

     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 to 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
         ---          ---


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<PAGE>



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

                                        TABLE OF CONTENTS

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

                                                                           Page
                                                                           ----
Introduction
          Use of Certain Terms............................................    1
          Special Note Regarding Forward-Looking Statements...............    1

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.......................................    2
                         Selected Financial Data..........................    2
                         Capitalization and Indebtedness.........Not applicable
                         Reason for the Offer and Use of
                         Proceeds................................Not applicable
                         Risk Factors.....................................    5

          Item 4    Information on the Company............................   14
                         History and Development of the Company...........   14
                         Business Overview................................   16
                         Organizational Structure.........................   36
                         Properties.......................................   36

          Item 5    Operating and Financial Review and Prospects..........   39
                         Operating Results and Trend Information..........   39
                         Liquidity and Capital Resources..................   47
                         Research and Development.........................   49

          Item 6    Directors, Senior Management and Employees............   50
                         Directors and Senior Management and Board
                         Practices........................................   50
                         Compensation.....................................   53
                         Employees........................................   54
                         Share Ownership..................................   55

          Item 7    Major Shareholders....................................   55
                         Major Shareholders...............................   55
                         Related Party Transactions.......................   56

          Item 8    Financial Information.................................   58
                         Consolidated Statements and Other Financial
                         Information......................................   58
                         Legal Proceedings................................   58
                         Significant Changes..............................   58

          Item 9    Listing Details.......................................   58
                         Market Price Information and Markets.............   58

          Item 10   Additional Information ...............................   60
                         Articles of Incorporation........................   60
                         Material Contracts...............................   65

                                       i
<PAGE>


                                                                           Page
                                                                           ----
                         Exchange Controls................................   68
                         Taxation.........................................   68
                         Documents on Display.............................   72

          Item 11   Quantitative and Qualitative Disclosures About
                    Market Risk...........................................   72
                         Foreign Currency Exchange Rate Risk..............   72
                         Interest Rate Risk...............................   73

          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...........................   73
                         Material Modifications to the Rights of
                         Security Holders.................................   73

Part III  Item 17   Financial Statements..................................   74

          Item 18   Financial Statements..................................   74

          Item 19   Exhibits..............................................   74


                                       ii
<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 in 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 in the State
of California, (vi) "ASE Philippines" are to ASE Holdings Electronics
(Philippines) Inc., a company incorporated in the Philippines, (vii) "Universal
Scientific" are to Universal Scientific Industrial Co., Ltd., a company
incorporated in the ROC, (viii) "ASE Material" are to ASE Material Inc., a
company incorporated in the ROC, (ix) "ASE Korea" are to ASE (Korea) Inc., a
company incorporated under the laws of the Republic of Korea and (x) "ASE Chung
Li" are to ASE (Chung Li) Inc., a company incorporated in the ROC.

     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" are to the Republic of Korea.

     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$" are to United States Dollars and references
to "New Taiwan Dollars", "NT Dollars" and "NT$" are to New Taiwan Dollars.
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 (the "Noon Buying Rate") as of December 29, 2000,
which was NT$33.17=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.


               SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     This annual report contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934 including statements regarding our future
revenues, earnings, and other results of operations. Our actual results may
differ materially from the results discussed 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 assembly and testing services we offer and for such
outsourced services generally, our ability to maintain a high capacity
utilization rate relative to our fixed costs, competition in our industry, and
other reasons. You should not place undue reliance on these forward-looking
statements, which apply only as of the date of this annual report. These
forward-looking statements are based on our own information and on information
from other sources we believe to be reliable. Our actual results may be
materially less favorable than those expressed or implied by these
forward-looking statements as a result of the reasons noted above and other
risks and factors which could depress the market price of our shares.


                                       1

<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 following selected historical consolidated financial data have been
derived from the Consolidated Financial Statements. Our statements of income
for the years ended December 31, 1998, 1999 and 2000 and our balance sheets as
of December 31, 1999 and 2000 have been audited. The Consolidated Financial
Statements, and the report of T.N. Soong & Co. on those financial statements,
are included in this annual report. The selected consolidated financial
information for those periods and as of those dates are qualified by reference
to those financial statements and that report, and should be read in
conjunction with them and with "Item 5. Operating and Financial Review and
Prospects". The selected consolidated statement of income data for the years
ended December 31, 1996 and 1997 and selected consolidated balance sheet data
as of December 31, 1996, 1997 and 1998 set forth below are derived from our
audited consolidated financial statements not included in this annual report.
These financial statements have been audited by T.N. Soong & Co. The
Consolidated Financial Statements are 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. Notes 27 and 28 of Notes to Consolidated Financial
Statements contain additional disclosures required under U.S. GAAP and provide
descriptions of the significant differences between ROC GAAP and U.S. GAAP and
reconciliations of net income and shareholders' equity to U.S. GAAP as of and
for the years ended December 31, 1999 and 2000.

<TABLE>
                                                                      Year Ended and as of December 31,
                                         ----------------------------------------------------------------------------------------
                                             1996             1997            1998            1999                    2000
                                         ------------  -------------  -------------  --------------  --------------  ------------
                                                    (in millions, except share,  per share, per ADS and dividend data)
                                              NT$              NT$             NT$           NT$            NT$            US$
<S>                                      <C>                 <C>             <C>          <C>             <C>            <C>
Income Statement Data:
ROC GAAP:
Net revenues............................     17,833.9       19,088.2       20,762.4        32,609.6       50,893.4        1,534.3
Cost of revenues........................    (13,956.7)     (13,758.5)     (15,468.1)      (23,959.6)     (35,567.3)      (1,072.3)
                                       --------------  -------------  -------------   -------------  -------------  -------------
Gross profit............................      3,877.2        5,329.7        5,294.3         8,650.0       15,326.1          462.0
Operating expenses:
 Selling................................       (543.4)        (733.5)        (744.7)         (924.3)      (1,020.5)         (30.8)
 General and administrative(1)..........       (529.3)        (648.7)        (909.4)       (1,655.0)      (2,606.2)         (78.6)
 Goodwill amortization(2)...............            -          (53.2)        (345.7)         (507.8)        (559.8)         (16.8)
 Research and development...............       (382.3)        (372.9)        (453.6)         (714.3)      (1,262.5)         (38.1)
                                       --------------  -------------  -------------   -------------  -------------  -------------
Operating income........................      2,422.2        3,521.4        2,840.9         4,848.6        9,877.1          297.7
Net non-operating income (expense):
 Investment income (loss) on long-term
   investment(1)(3).....................       (108.1)         114.2           54.6           329.9          195.7            5.9
 Goodwill amortization(4)...............       (145.3)        (155.1)        (155.1)         (279.3)        (363.0)         (10.9)
 Gain on sale of investments............            -        4,870.9          606.9         5,544.2           91.7            2.8
 Foreign exchange gain (loss)...........        113.5         (133.8)        (935.5)         (538.4)         302.7            9.1
 Interest income (expense)(5)...........       (241.4)         (85.9)        (380.4)       (1,046.6)      (1,538.0)         (46.4)
 Others(6)..............................         85.9           11.0          (50.1)          204.0         (162.6)          (4.9)
                                       --------------  -------------  -------------   -------------  -------------  -------------
Income before tax.......................      2,126.8        8,142.7        1,981.3         9,062.4        8,403.6          253.3
Income tax benefit (expense)............        (61.2)        (374.9)          150.8         (459.5)      (1,065.8)         (32.1)
                                       --------------  -------------  -------------   -------------  -------------  -------------
Income before minority interest.........      2,065.6        7,767.8        2,132.1         8,602.9        7,337.8          221.2
Income before acquisition...............            -              -              -           (65.1)             -              -
</TABLE>


                                       2
<PAGE>


<TABLE>
                                                                      Year Ended and as of December 31,
                                       ------------------------------------------------------------------------------------------
                                             1996             1997            1998            1999                    2000
                                       --------------  -------------  -------------  --------------  -------------  -------------
                                                    (in millions, except share,  per share, per ADS and dividend data)
                                              NT$              NT$             NT$           NT$            NT$            US$
<S>                                      <C>                 <C>             <C>          <C>             <C>            <C>

Minority interest in net income of
subsidiary..............................        (94.1)        (364.3)        (528.1)         (743.1)      (1,500.6)         (45.2)
                                       --------------  -------------  -------------   -------------  -------------  -------------
Net income..............................      1,971.5       $7,403.5       $1,604.0        $7,794.7        5,837.2          176.0
                                       ==============  =============  =============   =============  =============  =============
Earnings per common share:
 Primary................................         0.75           2.76           0.57            2.91           2.13           0.06
                                       ==============  =============  =============   =============  =============  =============
 Fully diluted..........................         0.75           2.76           0.57            2.90           2.13           0.06
                                       ==============  =============  =============   =============  =============  =============
Dividends per common share(7)...........         8.00           3.80           7.20            1.07           3.15           0.09
                                       ==============  =============  =============   =============  =============  =============
Net income from operations per common
share...................................         0.91           1.33           1.07            1.83           3.69           0.11
                                       ==============  =============  =============   =============  =============  =============
Income from continuing operations.......      2,126.8        8,142.7        1,981.3         9,062.4        8,403.6          253.3
                                       ==============  =============  =============   =============  =============  =============
Income from continuing operations per
common share............................         0.80           3.07           0.75            3.42           3.14           0.09
                                       ==============  =============  =============   =============  =============  =============
Earnings per pro forma equivalent ADS:
 Primary................................         3.75          13.80           2.87           14.53          10.65           0.32
                                       ==============  =============  =============   =============  =============  =============
 Fully diluted..........................         3.75          13.80           2.87           14.51          10.65           0.32
                                       ==============  =============  =============   =============  =============  =============
Number of common shares(8)..............2,651,524,485  2,651,524,485  2,651,524,485   2,651,524,485  2,677,602,508  2,677,602,508
Number of pro forma equivalent ADSs.....  530,304,897    530,304,897    530,304,897     530,304,897    535,520,502    535,520,502

U.S.GAAP:
Net income..............................                                      298.9         4,641.3        3,930.0          118.5
Earnings per common share:
         Basic:.........................                                       0.11            1.75           1.47           0.04
                                                                      =============   =============  =============  =============
         Diluted........................                                       0.08            1.71           1.42           0.04
                                                                      =============   =============  =============  =============
Earnings per pro forma equivalent
         ADS:
         Basic..........................                                       0.56            8.75           7.34           0.22
                                                                      =============   =============  =============  =============
         Diluted........................                                       0.38            8.57           7.10           0.21
                                                                      =============   =============  =============  =============
Balance Sheet Data:
ROC GAAP:
Current assets:
         Cash and cash equivalents......      1,431.2       10,869.8        8,173.9        11,809.1       14,166.5          427.1
         Short-term investments.........      1,187.7        4,008.0          647.2           216.3        1,682.7           50.7
         Notes and accounts receivable..      3,458.0        4,094.3        3,636.7         7,463.4        9,260.6          279.2
         Inventories....................      1,838.7        2,059.0        1,744.8         2,449.7        3,246.3           97.9
         Other..........................        346.0          705.5          771.9         1,411.8        2,431.6           73.3
                                       --------------  -------------  -------------   -------------  -------------  -------------
         Total..........................      8,261.6       21,736.6       14,974.5        23,350.3       30,787.7          928.2
Long-term investments...................      4,113.7        5,501.7        7,317.0         9,674.4       10,712.2          322.9
Properties..............................     10,561.4       16,363.1       20,356.8        38,107.5       60,566.2        1,825.9
Other assets............................        379.6        1,557.7        4,363.2         6,198.6        6,275.1          189.2
                                       --------------  -------------  -------------   -------------  -------------  -------------
Total assets............................     23,316.3       45,159.1       47,011.5        77,330.8      108,341.2        3,266.2
                       ==              ==============  =============  =============   =============  =============  =============
Short-term bank borrowing/loans.........      3,506.1        5,946.0        6,810.2         9,868.2       13,768.0          415.0
Long-term bank borrowing/loans..........      3,575.2       11,872.9       12,235.0        24,551.5       25,976.9          783.2
Other liabilities and minority interest.      3,076.4        6,306.5        6,091.5        12,854.1       24,927.1          751.5
                                       --------------  -------------  -------------   -------------  -------------  -------------
Total liabilities and minority interest.     10,157.7       24,125.4       25,136.7        47,273.8       64,672.0        1,949.7
                       ==              ==============  =============  =============   =============  =============  =============
Shareholders' equity....................     13,158.6       21,033.7       21,874.8        30,057.0       43,669.2        1,316.5
U.S.GAAP:
Shareholders' equity....................                                   17,675.2        26,569.7       40,729.1        1,227.9
Segment Data:
Net revenues:
         Packaging......................     11,936.9       15,334.3       16,867.4        24,523.0       38,028.8        1,146.5
         Testing........................      1,549.0        2,383.4        3,131.3         7,793.2       12,768.4          384.9
         Other..........................      4,348.0        1,370.5          763.7           293.4           96.2            2.9
Gross profit:
         Packaging......................      2,795.2        3,990.5        3,693.8         5,753.0       10,016.9          302.0
</TABLE>



                                       3
<PAGE>


<TABLE>
                                                                      Year Ended and as of December 31,
                                         ----------------------------------------------------------------------------------------
                                             1996             1997            1998            1999                    2000
                                         ------------  -------------  -------------  --------------  --------------  ------------
                                                    (in millions, except share,  per share, per ADS and dividend data)
                                              NT$              NT$             NT$           NT$            NT$            US$
<S>                                      <C>                 <C>             <C>          <C>             <C>            <C>

         Testing........................        669.0        1,148.7        1,484.6         3,105.2        5,294.4          159.6
         Other..........................        413.0          190.5          115.9          (208.2)          14.8            0.4
Other Data:
Net cash outflow from acquisition of
fixed assets............................     (3,528.7)      (8,030.1)      (6,945.0)       (9,869.2)     (30,063.6)        (906.3)
Depreciation and amortization...........      1,731.5        2,301.6        3,237.2         5,554.4        8,593.8          259.1
Net cash inflow (outflow) from
operations..............................      3,534.3        2,185.3        5,194.2         7,017.2       17,643.2          531.9
Net cash inflow (outflow) from sale of
investments.............................           -         5,495.0          290.5         7,889.3              -              -
Net cash inflow (outflow) from investing
activities(9)...........................     (5,551.2)      (5,067.7)      (8,558.3)      (11,782.7)     (33,550.4)      (1,011.5)
Net cash inflow (outflow) from financing
activities..............................      1,071.8       11,290.3          589.3         8,569.1       17,582.4          530.1
</TABLE>

_______________
(1)  Excludes goodwill amortization.
(2)  Included in general and administrative expenses in the Consolidated
     Financial Statements.
(3)  Derived by netting "investment income under equity method -- net" in
     non-operating income and "investment loss under equity method -- net" in
     non-operating expense in the Consolidated Financial Statements.
(4)  Included in investment loss in the Consolidated Financial Statements.
(5)  Derived by netting interest income and interest expense in the
     Consolidated Financial Statements.
(6)  Derived by netting the "others" entry in non-operating income and the
     "others" entry in non-operating expenses in the Consolidated Financial
     Statements.
(7)  Dividends per common share issued as a stock dividend.
(8)  Represents the weighted average number of shares after retroactive
     adjustments to give effect to stock dividends.
(9)  Derived by aggregating proceeds from sales of shares of stock of ASE Inc.
     and ASE Test.


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 ADSs. Fluctuations will also affect the U.S. Dollar conversion by
the depositary 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.

     The following table sets forth, for the fiscal years 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. The
exchange rate was NT$34.50 per U.S. Dollar as of June 27, 2001.

 Year Ended December 31,                                Average Exchange Rate(1)
------------------------                                ------------------------
   1996.........................................................        27.48
   1997.........................................................        29.06
   1998.........................................................        33.50
   1999.........................................................        32.28
   2000.........................................................        31.37

Monthly                                                       High       Low
-------                                                      ------     -----
   December 2000........................................      33.18     33.02
   January 2001.........................................      33.08     32.38
   February 2001........................................      32.39     32.27
   March 2001...........................................      32.87     32.35
   April 2001...........................................      32.99     32.79
   May 2001.............................................      34.05     32.89
   June 2001 (through June 27)..........................      34.50     34.08
-------------------
(1)  Calculated by averaging the exchange rate on the last day of each month
     during the period.

Source: Federal Reserve Board database


                                       4

<PAGE>



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 earnings 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 earnings. From
time to time, the semiconductor industry has experienced significant, and
sometimes prolonged, downturns. Because 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, a worldwide
slowdown in demand for semiconductor devices led to excess capacity and
increased competition beginning in early 1998. As a result, price declines in
1998 accelerated more rapidly and adversely affected our operating results in
1998. Prices for packaging and testing services improved due to an upturn in
the industry in the second half on 1999 continuing through the first half of
2000, but have fallen since an industry downturn commencing in the fourth
quarter of 2000. This industry downturn places 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.

     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 communication, consumer electronic and personal computer
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, in turn, would likely have a material adverse effect on our
financial condition and results of operations. In 2000, approximately 67% of
our sales were attributable to the packaging and testing of semiconductors used
in personal computer and communications applications. Both industries are
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 earnings.

     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 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 earnings 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 which offer


                                       5

<PAGE>


turnkey packaging and testing services. We believe that the principal
competitive factors in the markets for our products and services are:

     o    technological expertise;

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

     o    production yield;

     o    responsiveness and flexibility;

     o    cycle time;

     o    capacity;

     o    production time;

     o    range and quality of packaging types and testing platforms available;
          and

     o    price.

     We face increasing competition from other packaging and testing companies
in Asia. In particular, most of our customers obtain packaging or testing
services from more than one source. Furthermore, 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 1998 and the first half of
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 profits 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 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 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 on 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 cause decreases in the market price of our ADSs and common shares.
Among the more important factors affecting our quarterly and annual operating
results are the following:

     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;


                                       6

<PAGE>


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

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

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

     Due to our high percentage of fixed costs, we will be unable to maintain
our profitability 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 in connection with the acquisition of new
packaging and testing equipment and new 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 can 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. In periods of low demand, we
experience relatively low capacity utilization rates in our operations due to
relatively low growth in demand, which leads to reduced margins during that
period. We cannot assure you that we will be able to maintain or surpass our
past profitability 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. In
particular, we intend to expand our operations geographically, 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.

     We need to successfully integrate and manage our acquisitions to maintain
profitability.

     We intend to grow in part through the acquisition of semiconductor
packaging and testing operations that complement our existing business. This
strategy will involve reviewing and potentially reorganizing acquired business
operations, corporate structures and systems and financial controls. The
success of our acquisition strategy may be limited because of unforeseen
expenses, difficulties, complications and delays encountered in connection with
these acquisitions. We may not be able to acquire or manage profitably
additional businesses or to integrate successfully any acquired businesses into
our existing business without substantial costs, delays or other operational or
financial difficulties. In addition, we may be required to incur additional
debt or issue additional equity to pay for future acquisitions.

     In 1999, we acquired the packaging and testing operations of ISE Labs, ASE
Chung Li and ASE Korea, as well as a controlling 22.6% interest in Universal
Scientific, later increased to 23.3%. We continue to evaluate acquisition
opportunities and plan to make additional acquisitions in the future if
suitable opportunities arise. These acquisitions and other acquisitions we may
make in the future may dilute our earnings per share as a result of the
specific scope of the businesses or condition of the operations being acquired.
In particular, acquisitions may involve risks, including:

     o    integration and management of the acquired operations;

     o    retention of select management personnel;




                                       7

<PAGE>



     o    integration of purchasing operations and information systems;

     o    coordination of sales and marketing efforts;

     o    cost of any pending or potential litigation against the acquired
          businesses prior to our acquisition;

     o    management of an increasingly larger and more geographically
          disparate business; and

     o    diversion of management's attention from other ongoing business
          concerns.

     If we are unable to successfully integrate and manage our acquisitions,
our growth plans may not be met and our profitability may decline.

     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 current cash and cash equivalents, cash flow
from operations and the proceeds from our offering of ADSs in September 2000
ADS will be sufficient to meet our anticipated needs at least through the end
of 2001, including for working capital and capital expenditure requirements.
However, future acquisitions 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.

     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 particular, we
will 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. 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 reasonable
cost.

     Criminal charges were brought in December 1998 by the district attorney
for Taipei against Jason C.S. Chang, our Chairman, Richard H.P. Chang, our Vice
Chairman and Chief Executive Officer, and Chang Yao Hung-ying, our director,
and others. ASE Inc. is not a party to these proceedings and we do not expect
that these charges will result in any liability to us. On January 5, 2001, the
District Court of Taipei rendered a judgment finding Jason C.S. Chang and Chang
Yao Hung-ying guilty and Richard H.P. Chang not guilty. In order to comply with
the Singapore Companies Act, Jason C.S. Chang and Chang Yao Hung-ying have both
resigned as directors of our subsidiary, ASE Test. Neither Jason


                                       8

<PAGE>



C.S. Chang nor Chang Yao Hung-ying believes that he or she committed any
offense in connection with such transactions, and the are appealing the
decision to the High Court of Taiwan, the ROC. If the convictions are not
overturned on appeal to the High Court or, if necessary, the Supreme Court of
Taiwan the ROC, they will be required under ROC law to resign as directors and
Jason C.S. Chang will be required to resign as Chairman of ASE Inc. See "Item
4. Information on the Company -- Business Overview -- Legal Proceedings".

     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 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 this equipment from a limited
number of suppliers, including, in the case of testers, Agilent Technology,
Advantest Corporation, Credence Systems Corporation, Electroglas, Inc.,
Megatest Corporation, Schlumberger Technologies and Teradyne, Inc., and, in the
case of wire bonders, Kulicke & Soffa Industries 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.

     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, including NT Dollars, U.S.
Dollars, Malaysian ringgit, Korean won, Philippine pesos, Singapore dollars and
Hong Kong dollars. 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. For example, we recorded foreign
exchange losses of NT$935.5 million in 1998 and NT$538.4 million in 1999, due
primarily to losses attributable to Japanese yen-denominated liabilities
created by us in the second half of 1998 to manage our foreign exchange
exposure. We closed our position on these Japanese yen-denominated liabilities
as of November 5, 1999, and currently our foreign currency denominated
liabilities are denominated principally in U.S. Dollars.

     The loss of a major customer or disruption of our strategic alliance with
TSMC may result in a decline in our revenues and profitability.

     Although we have over 200 customers, due in part to the concentration of
market share in the semiconductor industry, 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. Our five largest customers together
accounted for approximately 34%, 40% and 44% of our sales in 1998, 1999 and
2000, respectively. Other than Motorola in 1999, and Motorola and VIA
Technologies, Inc. in 2000, no customer accounted for more than 10% of our net
revenues in 1998, 1999 or 2000. In connection with our acquisition in July 1999
of Motorola's in-house packaging and testing operations in Chung Li and Korea,
we entered into manufacturing services agreements which expire in 2004 for
Motorola's continuing business at the Chung Li and Korea facilities. As a
result, Motorola accounted for approximately 16% of our 1999 sales and
approximately 22% of our sales in 2000. There has been significant variation in
the composition of our largest five customers over time. This variation is due
primarily to the high level of competition in the semiconductor industry in
which our customers operate. 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. As a result, we have been less dependent
on any particular customer over time.


                                       9

<PAGE>


     Our strategic alliance with Taiwan Semiconductor Manufacturing Company
Limited, the world's largest dedicated semiconductor foundry, enables us to
offer complete semiconductor manufacturing services to our customers. This
strategic alliance is terminable at will by either party. A termination of this
strategic alliance, and our failure to enter into a substantially similar
alliance, may adversely affect our competitiveness and our revenues and
profitability.

     All of our key customers operate in the cyclical semiconductor business
and have in the past, and may in the future, vary order levels significantly
from period to period. Moreover, over half of our customers are fabless
semiconductor companies which outsource substantially all of their wafer
fabrication and packaging requirements. Many of these companies are relatively
small, have limited operating histories and financial resources, and are highly
exposed to the cyclicality of the industry. There can be no assurance that
these customers or any other customers will continue to place orders with us in
the future at the same levels as in prior 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. These price reductions would in turn be likely to reduce our
margins and profitability.

     We depend on our agents for sales and customer service in North America
and Europe. Any serious interruption in our relationship with these agents, or
substantial loss in their effectiveness, could significantly reduce our
revenues and profitability.

     We depend on non-exclusive agents for sales and customer service in North
America and Europe. Our sales agents help us identify customers, monitor
delivery acceptance and payment by customers and, within parameters set by us,
help us negotiate price, delivery and other terms with our customers. Purchase
orders are placed directly with us by our customers. Our customer service
agents provide customer service and after-sales support to our customers.

     Currently, our sales and customer service agents perform services only for
us and ASE Test, our subsidiary, but they are not owned or controlled by us.
These agents are free to perform sales and support services for others,
including our competitors. In particular, we may not be able to find an
adequate replacement for these agents or to develop sufficient capabilities
internally on a timely basis. Any serious interruption in our relationship with
these agents or substantial loss in their effectiveness in performing their
sales and customer service functions could significantly reduce our revenues
and profitability.

     Our revenue 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 1997 and 1998,
the industry experienced a shortage in the supply of advanced substrates used
in ball grid array, or BGA, packaging. In 1997 we established ASE Material
Inc., a company engaged in the development, production and sales of substrates
and leadframes, to partially reduce this risk. However, ASE Material will not
meet all of our raw materials requirements and consequently we will remain
dependent on market supply and demand. We cannot assure you that we will be
able to obtain adequate supplies of raw materials in a timely manner and at a
reasonable price. Our revenues and earnings 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.

     Any environmental claims or failure to comply with any present or future
environmental regulations 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 process. 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. Any failure on our part to control the use of, or


                                       10

<PAGE>


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".
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, 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. For example, directors and
controlling shareholders of ROC companies do not owe fiduciary duties to
minority shareholders. Therefore, 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 U.S. corporation.

Risks Relating to Taiwan, Republic of China

     Strained relations between the Republic of China and the People's Republic
of China 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 75.2% of our net revenues in
2000 from packaging and testing services are derived from our operations in
Taiwan. The Republic of China has a unique international political status. The
People's Republic of China asserts sovereignty over all of China, including
Taiwan. The People's Republic of China government does not recognize the
legitimacy of the Republic of China government. Although significant economic
and cultural relations have been established in recent years between the
Republic of China and the People's Republic of China, relations have often been
strained and the government of the People's Republic of China has indicated
that it may use military force to gain control over Taiwan in some
circumstances, such as the declaration of independence by the Republic of
China. Relations between the Republic of China and the People's Republic of
China have been particularly strained in recent years. Past developments in
relations between the Republic of China and the People's Republic of China have
on occasion depressed the market price of the shares and ADSs of Taiwanese
companies. Relations between the Republic of China and the People's Republic of
China 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
ADSs and common shares.

     Because a substantial portion of our business and operations are located
in Taiwan, a severe earthquake in the future could severely disrupt the normal
operation of our business and adversely affect our earnings.

     Taiwan is susceptible to earthquakes. On September 21, October 22 and
November 2, 1999, Taiwan experienced severe earthquakes which caused
significant property damage and loss of life, particularly in the central part
of Taiwan.


                                       11

<PAGE>


These earthquakes damaged production facilities and adversely affected the
operations of many companies involved in the semiconductor and other
industries. We experienced no structural damage to our facilities and no damage
to our machinery and equipment as a result of these earthquakes. There were,
however, interruptions to our production schedule primarily as a result of
power outage caused by the earthquakes. 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, 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 in Taiwan could severely disrupt the normal operation of business
and have a material adverse effect on our financial condition and results of
operations.

Risks Relating to Ownership of ADSs

     If an active market for our ADSs fails be sustained, the price of our ADSs
may fall.

     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. 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 and, if a significant number
of withdrawals are effected, to reduce the liquidity of the ADSs. 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 with respect to our common shares.

     As a holder of ADSs, your voting rights are limited by the terms of the
deposit agreement. You will not be able to exercise your voting rights on an
individual basis.

     As a holder of ADRs evidencing ADSs, you will not be able to exercise
voting rights on an individual basis. You may exercise your voting rights with
respect to the underlying common shares only in accordance with the provisions
of the deposit agreement. In particular, for any resolution to be proposed at a
shareholders meeting, only holders who (1) have provided voting instructions in
a timely manner in accordance with the provisions of the deposit agreement, and
(2) together own at least 51% of the outstanding ADSs voting in the same
manner, will be able to vote the common shares representing their ADSs in the
manner set forth in their voting instructions. In all other cases, holders will
be deemed to have authorized and directed the depositary to give a
discretionary proxy to our Chairman or his designee to vote the common shares
represented by their ADSs in any manner he or his designee may wish, which may
not be in the interests of the holders.

     During any period in which your ADSs represent the irrevocable right to
receive our common shares evidenced by certificates of payment deposited with
the custodian, you may exercise your voting rights in the same manner as if
your ADSs represented our common shares.

     You may not be able to participate in rights offerings and may experience
dilution of your holdings.

     We may, from time to time, distribute rights to our shareholders,
including rights to acquire securities. Under the deposit agreement, the
depositary will not distribute rights to holders of ADSs unless the
distribution and sale of rights and the securities to which these rights relate
are either exempt from registration under the Securities Act of 1933 with
respect to all holders of ADSs, or are registered under the provisions of the
Securities Act. We can give no assurances that we can establish an exemption
from registration under the Securities Act, and we are under no obligation to
file a registration statement with respect to these rights or underlying
securities or to endeavor to have a registration statement declared effective.
In addition, if the depositary is unable to obtain the requisite approval from
the Central Bank of China for the conversion of the subscription payments into
NT Dollars or if the depositary determines that it is unlikely to obtain the
required approval, we may decide with the depositary not to make the rights
available to holders of ADSs.


                                       12

<PAGE>


Accordingly, holders of ADSs may be unable to participate in our rights
offerings and may experience dilution of their holdings as a result.

     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 you 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 further 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

     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 depositary receipt
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 of 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, 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;
          and

     o    any cash dividends or distribution received.

     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 others, 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 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 other 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 September 25, 2000, the Taiwan Stock Exchange Index closed
at 6,667.5. 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
liquidity of the securities of ROC companies, including our ADSs and common
shares, in both the domestic and the international markets.

     You may have difficulty enforcing any judgment obtained in the United
States against us or our directors and supervisors or executive officers.

     Our company is incorporated under the laws of the ROC. A substantial
majority of our directors, supervisors and executive officers reside in the
ROC. In addition, a substantial portion of our assets and the assets of those
persons are


                                       13

<PAGE>


located in the ROC. As a result, it may not be possible for investors to effect
service of process upon us or those persons within the United States, or it may
be difficult to enforce against us or them judgments obtained in the U.S.
courts, including those based upon the civil liability provisions of the
federal securities laws of the United States. In addition, we have been advised
by Lee and Li, our ROC counsel, that there is doubt as to whether ROC courts
will enter judgments in original actions brought in ROC courts based solely
upon the civil liability provisions of the federal securities laws of the
United States.

     Purchasers of ADSs may incur dilution as a result of the practice among
ROC technology companies of issuing stock bonuses to employees.

     Similar to other ROC technology companies, we issue from time to time
bonuses in the form of common shares valued at par under our employee stock
bonus plan. Because these shares are issued at par value, the issuance of these
shares may have a dilutive effect on your ADSs.

Item 4.  Information on the Company.

HISTORY AND DEVELOPMENT OF THE COMPANY

     Our legal name is Advanced Semiconductor Engineering, Inc. and we are also
known as "ASE". We were incorporated on March 23, 1984 under the laws of the
Republic of China as a company limited by shares. Our principal place of
business is at 26 Chin Third Road, Nantze Export Processing Zone, Nantze,
Kaohsiung, Taiwan, Republic of China and our phone number is 886-7-361-7131.
Our agent for service of process in the U.S. is CT Corporation System, 111
Eighth Avenue, New York, New York 10011and our agent's phone number is
212-894-8940.

     We were established in 1984 as a packaging and testing company, with
facilities in the Nantze Export Processing Zone. Our business grew and 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 also provides our customers with testing
and packaging services. In 1996 we established ASE Philippines, which conducts
testing and packaging services. In 1997 we established ASE Materials, which
manufactures etched leadframes, and assists us in reducing our dependency on
outsourced leadframes. In 1997 we constructed a new facility in Kaohsiung for
packaging services and established a research and development laboratory.

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. The businesses are now operated by ASE Chung Li and
ASE Korea. 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 of
US$80.0 million at closing and an additional US$70.0 million payable over three
years if sales volume targets are met. 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 of US$36.0 million and an additional US$104.0 million
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 at both facilities. Under the
acquisition agreements, ASE Inc. 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. Both facilities provide semiconductor
packaging and testing services for Motorola's Semiconductor Products Sector,
and will continue to do so for at least three to five years following the
completion of the acquisition under manufacturing services agreements with
Motorola.

ISE Labs

     In May 1999, we acquired 70.0% of the outstanding shares of ISE Labs, a
semiconductor testing company with principal facilities located in Fremont and
Santa Clara, California. The total purchase price for our 70.0% equity interest
in ISE Labs was US$98.0 million. The stock purchase agreement provides that in
the event ISE Labs (1) does not consummate an initial public offering of its
common stock prior to December 31, 2001 at or above a specified price or


                                       14

<PAGE>


(2) disposes of certain of its material assets, which in the aggregate is
greater than 15% of the total assets of ISE Labs as shown on the most recent
audited balance sheet of ISE Labs, then we will be obligated to purchase the
remaining shares for US$42 million plus accrued interest. The purchase price is
payable either in cash or in shares of ASE Test at the option of the holders of
the remaining shares, who are primarily founders and employees of ISE Labs or
its predecessors.

     In April, July and November, 2000, we purchased additional shares of ISE
Labs at an aggregate purchase price of US$70.9 million. As a result of these
purchases, we owned 80.4% of the outstanding shares of ISE Labs as of December
31, 2000.

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 (US$115.0
million), principally through open market purchases on the Taiwan Stock
Exchange. We subsequently increased our holding to 23.3% following the open
market purchase of additional shares in July and August of 2000. Six out of the
nine directors on the Universal Scientific board of directors, including the
chairman, are our representatives.


                                       15

<PAGE>


                               BUSINESS OVERVIEW

     We believe we are one of the world's largest independent providers of
semiconductor packaging services and, together with our subsidiary ASE Test
Limited, one of the world's largest independent providers of semiconductor
testing services, including front-end engineering testing, wafer probing and
final testing services. We believe that 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 because of:

     o    our broad range of advanced semiconductor packaging and testing
          services;

     o    our expertise in product and process technology for the manufacture
          of increasingly lighter and thinner semiconductor packages with lower
          power consumption and better thermal dissipation characteristics;

     o    our expertise in interconnect materials and assembly of electronics
          boards;

     o    our financial position which enables us to make significant
          investments for future growth through both the expansion of existing
          capacity and the acquisition of new businesses, technologies and
          operations;

     o    our experience in integrating acquired operations and using the
          acquired operations to provide services to their former owners;

     o    our strategic geographic locations with experienced teams in key
          centers for outsourced semiconductor manufacturing; and

     o    our strategic alliance with Taiwan Semiconductor Manufacturing
          Company Limited, or TSMC, the world's largest dedicated semiconductor
          foundry, to provide complete turnkey services.

     We plan to continue to expand our business and operations through both
internal growth and acquisitions in order to enhance our technological,
processing and materials capabilities, broaden our geographic coverage and
increase our production capacity, economies of scale and management resources.
In 2000, we incurred consolidated capital expenditures of NT$31,463.5 million
(US$948.6 million) for the expansion of our facilities. In addition, in 1999
and 2000 we acquired the semiconductor packaging and testing facilities of
Motorola in Taiwan and Korea, a 80.4% interest in ISE Labs, a front-end
engineering testing service provider, and a controlling 23.3% interest in
Universal Scientific, a leading contract provider of electronics board assembly
services in Taiwan.

     We offer packaging and testing services separately and on a turnkey basis.
Turnkey services consist of integrated packaging, testing and direct shipment
of semiconductors to end users designated by our customers. Through our
strategic alliance with and close geographic proximity to TSMC, we are able to
expand the traditional scope of turnkey services to offer total semiconductor
manufacturing services to our customers, including access to wafer fabrication
services, also called foundry services, in addition to our packaging, testing
and direct shipment services. We are developing similar strategic alliances
with other major foundries and providers of other complementary semiconductor
manufacturing services. Through the effective implementation of our strategy,
we have been able to address the advanced semiconductor engineering
requirements of our customers for packaging and testing services. Our global
base of over 200 customers includes leading semiconductor companies across a
wide range of end use applications:

     o    Advanced Micro Devices, Inc.

     o    Altera Corporation

     o    ATI Technologies Inc.

     o    Cirrus Logic International Ltd.

     o    Conexant Systems, Inc.


                                       16

<PAGE>


     o    Delphi Automotive Systems Corp.

     o    DSP Group

     o    LSI Logic Corporation

     o    Motorola, Inc.

     o    On Semiconductor Corp.

     o    Philips Electronics NV

     o    Qualcomm Incorporated

     o    ST Microelectronics Pte Ltd.

     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 process and design technologies have led to smaller, more complex
and more reliable devices at a lower cost per 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 markets of communications and personal computer equipment, and
has experienced increased growth in additional markets such as consumer
electronic devices, automotive products and industrial automation and control
systems.

   Outsourcing Trends in Semiconductor Manufacturing

     Historically, semiconductor companies designed, manufactured, packaged and
tested semiconductors primarily in their own facilities. In recent 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. We believe that many of these
manufacturers are significantly reducing their investments in new semiconductor
packaging and testing facilities and that several are contemplating the
divestment of their in-house packaging and testing operations. Motorola's sale
to us of its packaging and testing operations in Taiwan and Korea in 1999 is an
example of this divestment trend.

     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,
testing and packaging requirements to independent companies. Similarly, the
availability of technologically advanced independent manufacturing services has
encouraged "systems companies," which traditionally outsourced the
manufacturing of semiconductor components used in the assembly of their systems
products to integrated device manufacturers, to increasingly outsource 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 Sophistication 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. In addition, product
life cycles have been shortening, magnifying the need to


                                       17

<PAGE>


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 not only because of the high investment costs as well as their
inability to achieve sufficient economies of scales and utilization rates in
order 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.

     Focus on Core Competencies. As the cost of semiconductor manufacturing
facilities increases, 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.

     Growth of Fabless Semiconductor Companies and Outsourcing by Systems
Companies. The substantial growth in the number of fabless semiconductor
companies and systems companies that increasingly outsource their manufacturing
requirements to independent companies will also continue to drive growth in the
market for independent foundry, packaging and testing services.

   The Semiconductor Industry in Taiwan and Southeast Asia

     The semiconductor industry in Taiwan has been a leader in, and a major
beneficiary of, the trend in outsourcing. Most semiconductor companies in
Taiwan are engaged in only one or two stages of the semiconductor manufacturing
process. As a result, Taiwan's semiconductor industry tends to be more
efficient as companies focus on particular stages of the semiconductor
manufacturing process, develop economies of scale and maintain higher capacity
utilization rates.

     In addition, because companies which provide the major stages of the
production process are located near one another, Taiwanese semiconductor
companies are attractive to customers who wish to outsource several parts of
their semiconductor manufacturing. For instance, a semiconductor company in the
United States could obtain foundry, packaging, testing, and drop shipment
services from companies located near one another in Taiwan, and as a result,
reduce cycle times and unit costs while streamlining logistics. Moreover, a
significant portion of the manufacturing capacity for the global electronics
industry is located in Asia, further strengthening this competitive advantage.
Through this specialization and a close network of customers and supplier
partnerships, semiconductor companies in Taiwan can achieve superior economies
of scale, flexibility, and customer responsiveness. Furthermore, 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 business. Furthermore, the growth of
Taiwan's electronics industry, particularly in personal computer design and
manufacturing, has created substantial local demand for semiconductors.

     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


                                       18

<PAGE>


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.

   Overview of Semiconductor Manufacturing Process

     The manufacturing of semiconductors is a complex process that requires
increasingly sophisticated engineering and manufacturing expertise. The
following table sets forth the main stages of the manufacturing process. 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 th wafers using
                                    various advanced processes.

Wafer Probe                         Each individual die is electrically tested,
                                    or probed, for defects. Dies that fa this
                                    test are marked to be 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 wafer 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 ball
                                    grid array packages, the leads take the
                                    shape of small bumps or balls. Leads on the
                                    lead frame or the substrate are connected
                                    by extremely fine gold wires to the
                                    input/output terminals on the chips,
                                    through the use of automated machines known
                                    as "wire 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
                                    packages, or in the form of small bumps on
                                    a surface of the package as in the case of
                                    ball grid array or other laminate packages.

Final Test                          Final testing is conducted to ensure that
                                    the packaged semiconductor device meets
                                    performance specifications. Final testing
                                    involves using sophisticated testing
                                    equipment and customized software programs
                                    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.


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<PAGE>


Strategy

     Our objective is to provide leading-edge semiconductor packaging and
testing solutions which set industry standards and facilitate the industry
trend to outsource semiconductor manufacturing requirements. The principal
elements of our strategy are to:

   Expand Strategically Our Production Capacity and Product Expertise

     We plan to continue to expand strategically our production capacity and
product expertise, both through internal growth and through acquisitions, to
address the increasing demand for independent semiconductor packaging and
testing services. We evaluate acquisition opportunities on the basis of access
to new markets and technology, increased proximity to our existing and
potential customers, the enhancement of our production capacity and economies
of scale and our management resources.

     In 1999, we acquired ISE Labs, an independent testing company with
operations in California, Hong Kong and Singapore, as well as ASE Chung Li and
ASE Korea, formerly the semiconductor packaging and testing operations of
Motorola located in Chung Li, Taiwan and Paju, Korea. We acquired ISE Labs with
a view to combining its front-end engineering testing capabilities with our
final testing capabilities to provide our customers with complete semiconductor
packaging and testing solutions. Through the acquisition of ASE Chung Li and
ASE Korea, we gained access to specialized packaging and testing technologies
with a focus on wireless communications and automotive end-products. As part of
the acquisition, we also entered into service agreements for Motorola's
continuing business at the Taiwan and Korea facilities. Our acquisition of the
Motorola operations will serve as a model for our future acquisitions of
in-house packaging and testing facilities of integrated device manufacturers.

     We believe that the success of the Motorola acquisition will encourage
other integrated device manufacturers to divest their in-house operations to us
and then retain us to satisfy the packaging and testing requirements formerly
met by their in-house operations. We continue to evaluate acquisition
opportunities and plan to make additional acquisitions in the future if
suitable opportunities arise. Although our general strategy is to expand or
invest in new packaging facilities through ASE Inc. and new testing facilities
through ASE Test, we will continue to make these determinations on a
case-by-case basis. For opportunities such as the former Motorola facilities in
Taiwan and Korea with integrated packaging and testing operations, we may
continue to divide our investments among group companies to reflect our
estimates of the relative packaging and testing values at those facilities.

   Enhance Our Technological, Processing and Materials Capabilities

     We intend to continue our focus on developing advanced process and product
technology in order to provide our customers with leading-edge solutions for
their semiconductor packaging and testing requirements. Our expertise in
packaging technology has enabled us to develop solutions such as fine-pitch
bonding for leadframe packages, stacked die configuration for ball grid arrays
and bump chip carrier packaging for communications applications.

     We intend to enhance our expertise both upstream and downstream in the
semiconductor manufacturing process in order to better serve our customers in
our core services of packaging and testing. As product lives and production
cycles shorten and packaging and testing technologies advance more rapidly, our
customers increasingly value our ability, as a downstream service provider, to
work with them as an integral and strategic partner in the upstream development
of their products. Our acquisition of the front-end engineering testing
capabilities of ISE Labs has enhanced greatly our capabilities to participate
in the earlier stages of circuit design and the semiconductor manufacturing
process. Our establishment of ASE Material for the production of interconnect
materials such as leadframes and substrates has provided us with expertise in
interconnect technology, which has become an increasingly critical part of the
product development stage for our customers in terms of cost and production
time.

     The increasing miniaturization of semiconductors and the growing
complexity of interconnect technology have led to the blurring of the
traditional distinctions among assembly at different (that is, upstream and
downstream) levels of integration: chip, module, board and systems. Our
acquisition of a controlling interest in Universal Scientific has given us
access to process and product technologies at the levels of module, board and
systems assembly and test, which helps us to better anticipate industry trends
and the needs of our end users, who are the end-clients of our customers.


                                       20

<PAGE>


   Strengthen and Develop Strategic Alliances with Providers of Complementary
   Manufacturing Services

     We intend to strengthen existing and develop new strategic alliances 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.

     Since 1997, we have maintained a strategic alliance with TSMC, the world's
largest dedicated semiconductor foundry, which designates the ASE Group 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.

     We are also working with TSMC in developing the next generation of
packaging product technology. We are developing similar strategic relationships
with other major foundries and providers of other complementary semiconductor
manufacturing services in Taiwan and Southeast Asia with which we already have
close business relationships.

   Better Serve Our Customers Through Our Diversified Geographic Presence

     We are located in close geographic proximity to the facilities of our
customers and providers of complementary semiconductor manufacturing services,
including foundries, in key centers for outsourced semiconductor manufacturing.
This proximity enables us to work closely with our customers, and other service
providers, enhances our responsiveness to the requirements of our customers and
shortens production cycles by reducing the time required to ship semiconductors
from one stage of the manufacturing process to the next. We maintain packaging
or testing facilities in the following strategic locations in order to better
serve our customers:

     o    Taiwan -- currently the largest center for outsourced
          semiconductor manufacturing in Asia with its high concentration of
          foundries, customers and end users;

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

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

     o    Silicon Valley in California -- the pre-eminent center for
          semiconductor design with a concentration of fabless customers.

   Achieve Economies of Scale From Our Expanded Production Capacity

     We are re-mapping our organizational management structure to better
integrate our operations in areas such as research and development, purchasing,
manufacturing processes and materials, marketing and sales and information
technology systems across our various facilities. Operations that were formerly
conducted more or less independently at our individual facilities will be
coordinated more closely and come under more centralized management. The
pooling of resources in a matrix organizational management structure will
enable all of our facilities to realize the benefits of the expanded scale of
our aggregate production, such as reduced cost of raw materials and equipment
purchased through collective bargaining with various raw materials suppliers
and equipment vendors, a broader range of solutions and services, enhanced
geographic coverage and increased flexibility in capacity allocation.

     We are developing procedures which will facilitate the sharing of the
different expertise in process technology and practical know-how among our
different facilities. The sharing of best practices will significantly reduce
the amount of time required by our facilities to install and operate a new
production line for the packaging or testing of new product types for which one
of our facilities may have greater expertise or know-how.


                                       21

<PAGE>


Principal Products and Services

     We offer a broad range of semiconductor packaging products and testing
services. Our packaging products are based primarily on surface mount
technology, also known as SMT, and employ either leadframes or laminate
substrates as interconnect materials. Our packaging products are used in a wide
range of end use markets, including for communications, consumer, industrial,
automotive, personal computer 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
offer our customers the integrated packaging, testing and direct shipment of
semiconductors to end users designated by our customers. In 2000, our packaging
revenues accounted for 74.7% of our net revenues and our testing revenues
accounted for 25.1% of our net revenues.

   Packaging

     We offer a broad range of semiconductor packages using primarily SMT
technology, including:

     o    plastic leaded chip carrier packages, also called PLCC;

     o    quad flat packages, also called QFP;

     o    thin quad flat packages, also called TQFP;

     o    small outline plastic packages, also called SOP;

     o    small outline plastic J-bend packages, also called SOJ;

     o    thin small outline plastic packages, also called TSOP; and

     o    ball grid array, also called BGA.

     Within our packaging product portfolio, we focus on the assembly of
semiconductor packages for which there is expected to be strong demand,
including high pin-count SMT packages, such as QFPs and TQFPs, both of which
are based on leadframes, and SMT packages based on laminate substrates, such as
BGAs.

     In SMT, the leads on semiconductors and other electronic components are
soldered to the surface of the printed circuit board rather than inserted into
holes, as compared with the older pin-through-hole technology, also called PTH.
Our principal PTH product is plastic dual in-line packages, also called PDIP.
SMT can accommodate a substantially higher number of leads than PTH, enabling
the board to interconnect a greater number of integrated circuits. This in turn
allows a reduction in the number of integrated circuits used and, together with
tighter component spacing, permits a reduction in the dimensions of the printed
circuit board. Because of their high lead counts, most very large scale
integrated circuits are configured for surface mounting. Additionally, SMT
allows components to be placed on both sides of the board, enabling even
greater density. The substantially finer lead-to-lead spacing, or pitch, in SMT
products requires a packaging process which is more exacting than the packaging
process for PTH products.

     Leadframe-based products are the traditional SMT packages which are
packaged by connecting the die, using wire bonders, to the leadframe with gold
wire leads. As the packaging technology improves, the number of leads per
package increases. In the process, packages have evolved from the lower
pin-count plastic leaded chip carriers to quad flat packages. The following
table sets forth our principal leadframe-based packaging products.


                                       22

<PAGE>


<TABLE>
<CAPTION>
                                  Number
Package Format                    of Leads     Description                                End Use Applications
--------------                    --------     -----------                                --------------------
<S>                               <C>          <C>                                        <C>
Quad Flat Package                 32-240       QFPs designed for advanced                 Multimedia applications, cellular
 (QFP)/Thin QFP (TQFP)                         processors and controllers, ASICs, and     phones, personal computers,
                                               DSPs.                                      automotive and industrial products,
                                                                                          hard disk drives, communication
                                                                                          boards such as ethernet, integrated
                                                                                          services digital network, also called
                                                                                          ISDN, and notebook computers.

Plastic Leaded Chip Carrier       20-84        Designed for applications that do not      Personal computers, scanners,
     (PLCC)                                    require low profile package with high      electronic games and monitors.
                                               density of interconnects.

Small Outline Plastic Package     8-54         Leadframe packages designed for            Consumer audio/video and
 (SOP)/ Thin SOP (TSOP)                        memory devices including logic and         entertainment products, cordless
                                               analog devices, SRAM, DRAM, fast           telephones, pagers, fax machines,
                                               static RAM, also called FSRAM, and         printers, copiers, personal computer
                                               flash memory devices.                      peripherals, automotive parts,
                                                                                          telecommunications products,
                                                                                          recordable optical disks and hard disk
                                                                                          drives.

Small Outline Plastic J-Bend      20-44        Package designed for memory and low        DRAM memory devices,
 Package (SOJ)                                 pin-count applications                     microcontrollers, digital analog
                                                                                          conversions and audio/video
                                                                                          applications.

Plastic Dual In-line Package      28-42        Package used in consumer electronic        Telephones, televisions, audio/video
 (PDIP)                                        products.                                  applications and computer peripherals.
</TABLE>


     Laminate-Based BGA Products.

     An important subset of SMT packages are BGA packages. In BGA technology,
the leads used to connect the semiconductor device to the circuit board take
the shape of small bumps or balls which are attached to the bottom of the
package surface, as opposed to traditional leadframe technology which has leads
protruding from the edges like pins. These small bumps or balls are typically
distributed evenly across the bottom surface of the package, allowing greater
distance between individual leads. BGA packages typically feature higher
pin-count, smaller package sizes, greater reliability, superior electrical
signal transmission, and better heat dissipation than traditional
leadframe-based packaging technology. 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. We also have
capabilities in stacked-die BGA, which assembles multiple dies into a single
package. As an extension to stacked-die BGA, we also assemble
systems-in-a-package products, which are integrated combinations of logic chips
assembled into the same package. We believe that we are among the leaders in
these packaging technologies.

     The industry demand for BGA packages has grown significantly in recent
years. In light of the continuing demand for packages with higher pin-counts
and smaller sizes, we commenced in July 2000 volume production in flip chip
packages. For interconnections within the package, flip chip BGA technology
replaces wire bonding with wafer bumping, which requires tiny solder balls,
instead of wires, to be placed 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.

     In addition, we are currently developing land grid array, or LGA, a type
of BGA package. Because LGA packages do not employ solder balls, it is a
lead-free packaging solution. LGA packages are designed for semiconductors
requiring a small, thin and light package. We expect LGA packages to be used in
end use applications such as portable personal computers, personal digital
assistants and cellular phones.


                                       23

<PAGE>

     The following table sets forth our principal BGA packaging products.

<TABLE>
                             Number
Package Format               of Leads      Description
--------------               --------      -----------
<S>                          <C>           <C>
Plastic BGA                  119-665       Designed for semiconductors which require the enhanced performance
                                           provided by plastic BGA, including personal computer chipsets, graphic
                                           controllers and microprocessors, ASICs, DSPs and memory devices.
                                           Applications include wireless products, cellular phones, global positioning
                                           systems, notebook computers, disk drives and video cameras.

Map BGA                       36-256       Smaller and thinner than conventional plastic BGA designed for
                                           semiconductors such as memory, analog, and ASICs requiring a smaller
                                           package. Applications include cellular and other telecommunications and
                                           wireless systems, global positioning systems, notebook/subnotebook
                                           computers and personal digital assistants, also called PDAs.

Film BGA                     112-280       Substrate-based package that has higher performance and lower profile than
                                           plastic BGA. Applications include cellular phones, pagers, wireless
                                           communications, DSPs and micro-controller applications and high
                                           performance disk drives.

Viper BGA                    256-480       Designed for memory devices such as flash memory devices, SRAM, DRAM
                                           and FSRAM, microprocessors/controllers and high value ASICs requiring a
                                           low profile, light and small package. Applications include cellular and other
                                           telecommunications products, wireless and consumer systems, PDAs, disk
                                           drives, notebook/subnotebook computers and memory boards.

Stacked-Die BGA              66-256        Combination of multiple dies in a single package enables package to have
                                           multiple functions within a small surface area. Applications include cellular
                                           phones, local area networks, also called LAN, graphic processors, digital
                                           cameras and pagers.

Flip Chip BGA                48-1500       Using advanced interconnect technology, flip chip BGA package 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. Applications include high performance
                                           networking and graphics and processor applications.

Systems-in-a-Package         256-665       Integrated combination of microprocessor, logic controller and memory chips
                                           assembled in one package. Applications include digital televisions, fax
                                           modems, personal computer peripherals, CD players and copiers.
</TABLE>

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

                                     Year Ended December 31,
                         ------------------------------------------------
                           1998                 1999               2000
                         --------             --------           --------
                               (percentage of packaging revenues)
Package Types:
 BGA............           22.0%                35.3%              44.2%
 TQFP...........           15.9                 18.4               18.2
 QFP............           35.4                 22.0               14.6
 SOJ/SOP........           11.2                  9.8                9.9
 PLCC...........            8.2                  4.4                3.0
 PDIP...........            6.5                  4.9                3.0





                                       24

<PAGE>


                                     Year Ended December 31,
                         ------------------------------------------------
                           1998                 1999               2000
                         --------             --------           --------
                               (percentage of packaging revenues)

 Other..........            0.8                  5.2                7.1
                          -----                -----              -----
   Total........          100.0%               100.0%             100.0%
                          =====                =====              =====


   Testing

     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. 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 overall net
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, or CPU, seconds.

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

     o Software Program Development. Design and test engineers develop a
customized software program and related hardware to test the semiconductor on
advanced testing equipment. A customized software program 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 submitted to electrical tests using advanced test equipment, customized
software programs and related hardware. 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.

     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 why it did not 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 logic/mixed-signal testing, and several of our testers
are also 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 in the
single digits to several hundreds and operating frequencies of up to 400 MHZ,
which is 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,
or ASICs, for various specialized applications.


                                       25

<PAGE>



     Memory Final Testing. We provide final testing services for a variety of
memory products, such as static random access memory, or SRAM, dynamic random
access memory, or DRAM, and single-bit electronical programmable read-only
memory semiconductors.

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

     o Burn-in Testing. Burn-in 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 majority 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,
                                  ---------------------------------------------
                                   1998                1999               2000
                                  ------              ------             ------
                                        (percentage of testing revenues)

Testing Services:
 Logic/mixed-signal final test...  88.2%               96.9%              97.7%
 Memory final test...............  11.8                 3.1                2.3
   Total......................... 100.0%              100.0%             100.0%


Expansion

     We commenced an expansion project in Chung Li, Taiwan in December 1999.
The first phase of the project was the construction of a building with
aggregate floor space of approximately 800,000 square feet to accommodate the
expected growth of our operations in Chung Li, which construction was completed
in the fourth quarter of 2000. The total value of the first phase of the
project, including land and the completed building, is estimated at NT$2.0
billion. Hung Ching, which is the developer of the project, bears all costs
relating to the development. The new building houses ASE Chung Li's testing
operations as well as part of the operations of other ASE Group companies.

     Furthermore, we commenced an expansion project in Kaohsiung, Taiwan in the
second quarter of 2000. The first phase of the project was the construction of
a building with aggregate floor space of 1.1 million square feet to accommodate
the expected growth of our operations in Kaohsiung. Construction was completed
in the third quarter of 2001 at a cost of NT$2.0 billion. The new building
houses part of ASE Inc.'s packaging operations in Kaohsiung, part of ASE Test
Taiwan's testing operations and part of ASE Material's substrate manufacturing
operations.

     We also commenced an expansion project in Penang, Malaysia in the fourth
quarter of 1999. The first phase of the project was the construction of a
building with floor space of approximately 100,000 square feet which was
completed in the third quarter of 2000. The aggregate cost of the project was
US$16 million.


                                       26

<PAGE>


Other Members of the ASE Group

   Consolidated Subsidiaries

     ASE Test. ASE Test, which is a Singapore company, is one of the largest
independent testing companies in the world, providing a complete range of
semiconductor testing services to leading international semiconductor
companies. In addition, ASE Test provides a broad range of leadframe and
laminate-based semiconductor packaging services. ASE Test has testing
operations in Taiwan, the United States, Hong Kong and Singapore, and also
maintains testing and packaging operations in Malaysia.

     ASE Test was incorporated in 1996 and its ordinary shares have been quoted
for trading on the Nasdaq National Market since June 1996 under the symbol
"ASTSF". Following the completion of ASE Test's follow-on offering of ordinary
shares on July 19, 2000, we held approximately 51.2% of the outstanding shares
of ASE Test. We also hold the equivalent of another 2.5% of the company through
options created on ASE Test's convertible notes issued in 1999. ASE Test is a
holding company whose significant assets are its ownership interests in the
following operating companies:

     o    100% of ASE Test Taiwan;

     o    100% of ASE Test Malaysia;

     o    80.4% of ISE Labs;

     o    30% of ASE Chung Li (the remaining 70% of which is owned by ASE
          Inc.); and

     o    30% of ASE Korea (the remaining 70% of which is owned by ASE Inc.).

     In 2000, ASE Test recorded net revenues of US$440.3 million, operating
income of US$114.9 million and net income of US$107.2 million. We currently
intend to maintain a majority ownership interest in ASE Test. We continue to
evaluate acquisition opportunities and plan to make additional acquisitions in
the future if suitable opportunities arise. Although our general strategy is to
expand or invest in new packaging facilities through ASE Inc. and new testing
facilities through ASE Test, we will make these determinations on a
case-by-case basis. For opportunities such as the former Motorola facilities in
Chung Li and Korea with integrated packaging and testing operations, we may
continue to divide our investments among group companies to reflect our
estimates of the relative packaging and testing values at those facilities.

     ASE Material. ASE Material, which is a ROC company, manufactures
leadframes and other substrates used in the packaging of semiconductors. ASE
Material currently supplies our packaging facilities in Kaohsiung with a
portion of our leadframe and substrate requirements. See "-- Raw Materials and
Suppliers -- Packaging". As of December 31, 2000, we held 50.5% of the
outstanding shares of ASE Material, comprising 43.8% held by ASE Inc. and 6.7%
held by ASE Test Taiwan. The supervisor and two of the five directors of ASE
Material are representatives of ASE Inc., one director is a representative of
ASE Test Taiwan and the remaining two directors of ASE Material are Jason C.S.
Chang, our Chairman, and Richard H.P. Chang, our Vice Chairman and Chief
Executive Officer, serving in their individual capacities.

     We believe that interconnect technology will play an increasingly
important role in semiconductor packaging as interconnect materials, such as
leadframes and substrates, account for a growing portion of the cost of a
semiconductor package. In anticipation of this trend, we established ASE
Material in December 1997 for the purpose of developing, producing and selling
leadframes and advanced substrates. In 2000, ASE Material supplied interconnect
materials that accounted for approximately 12.1% of our consolidated raw
material costs. Substantially all of these materials were leadframes. In 2000,
ASE Material supplied approximately 25.4% of the substrate requirements at our
packaging facilities in Kaohsiung. We expect to continue making investments in
ASE Material in order to further develop our in-house interconnect technology.

     ASE Material's facilities are located in the Nantze Export Processing Zone
near our packaging and testing facilities in Kaohsiung, Taiwan. ASE Material
recently expanded its production capacity with new facilities located near our


                                       27

<PAGE>


packaging and testing facilities in Kaohsiung and Chung Li, Taiwan. In 2000,
ASE Material recorded revenues of NT$1,793.5 million (US$54.1 million),
operating loss of NT$153.9 million (US$4.6 million) and net loss of NT$175.4
million (US$5.3 million). Substantially all of ASE Material's sales are to
other ASE Group companies, and accordingly, substantially all of its sales and
net income are eliminated by ASE Inc. in preparing our consolidated financial
statements.

     ASE Technologies. ASE Technologies, Inc., a ROC company, designs and
assembles notebook computers, set-top boxes and liquid crystal display
monitors, and assembles board and sub-systems. As of December 31, 2000, we held
98% of the outstanding shares of ASE Technologies.

     In 2000, ASE Technologies recorded revenues of NT$157 million (US$4.7
million), operating loss of NT$211 million (US$6.4 million) and net loss of
NT$188 million (US$5.7 million). We intend to wind down the business of ASE
Technologies upon approval from ASE Technologies' shareholders in September
2001.

   Unconsolidated Affiliates

     In addition to our consolidated subsidiaries, Universal Scientific and
Hung Ching are commonly referred to as member companies in the ASE Group. As of
December 31, 2000, we held approximately 23.3% of the outstanding shares of
Universal Scientific and 25.1% of the outstanding shares of Hung Ching.

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

     o    electronics 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 SMT 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 2000, Universal Scientific recorded net revenues of
NT$39,110 million (US$1,179.1 million), operating income of NT$1,835 million
(US$55.3 million) and net income of NT$1,339 million (US$40.4 million). The
shares of Universal Scientific are listed on the Taiwan Stock Exchange. As of
December 31, 2000, Universal Scientific had a market capitalization of
NT$10,664.9 million (US$321.5 million).

     Hung Ching. Hung Ching, which is a ROC company, is 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. Mrs. Chang is the mother of both Jason C.S. Chang,
our Chairman, and Richard H.P. Chang, our Vice Chairman and Chief Executive
Officer, and is a director of ASE Inc. As of December 31, 2000, we held 25.1%
of the outstanding shares of Hung Ching. Messrs. and Mdm. Chang and other
members of the Chang family are controlling shareholders of Hung Ching.

     In 2000, Hung Ching recorded net revenues of NT$1,601 million (US$48.3
million), operating income of NT$156 million (US$4.7 million) and net loss of
NT$35 million (US$1.1 million). The shares of Hung Ching are listed on the
Taiwan Stock Exchange. As of December 31, 2000, Hung Ching had a market
capitalization of NT$2,426.6 million (US$73.2 million).


                                       28

<PAGE>


Seasonality

     See "Item 5. Operating and Financial Review and Prospectus-- Operating
Results and Trend Information-- Consolidated Quarterly Results".

Sales and Marketing

   Sales and Marketing Offices

     We maintain sales and marketing offices in the United States, Taiwan and
Malaysia. Our Hsinchu and Kaohsiung offices are staffed with employees from
both ASE Inc. and ASE Test Taiwan. These employees often call on prospective
customers together. In addition, the sales agent for our packaging and testing
services maintains sales and marketing offices in San Jose, California; Tempe,
Arizona; Austin, Texas; and Beverly, Massachusetts in the United States; and
Brussels in Belgium. We conduct marketing research through our in-house
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 "-- 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,
ASE Chung Li and ASE Test Malaysia has appointed Gardex International Limited
as the non-exclusive sales agent for its services and products worldwide,
excluding Asia. Gardex helps us identify customers, monitor delivery acceptance
and payment by customers and, within parameters set by us, negotiate price,
delivery and other terms with our customers. Purchase orders are placed
directly with us by our customers. We pay Gardex a commission of between 0.6%
and 1.0% of our sales outside of Asia, payable monthly, depending on the amount
of these sales. In 2000, we paid US$10.5 million in commission to Gardex.

     Under service agreements, each of ASE Inc., ASE Test Taiwan, ASE Korea,
ASE Chung Li and ASE Test Malaysia has appointed ASE (U.S.) Inc. as its
non-exclusive agent to provide customer service and after-sales support to its
customers in Europe and North America. We pay ASE (U.S.) Inc. a monthly fee
based on ASE US's monthly services associated costs and expenses. In 2000, we
paid US$13.6 million in fees and service charges to ASE (U.S.) Inc.

     Both Gardex and ASE (U.S.) Inc. are wholly owned by Mr. Y.C. Hsu, who has
had a long personal relationship with Mr. Jason C.S. Chang, our Chairman, that
pre-dates the founding of our company. We have maintained business
relationships with Gardex, ASE (U.S.) Inc. and their predecessors since 1985.
Gardex and ASE (U.S.) Inc. currently perform services only for us.

   Customers

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

     o    Advanced Micro Devices, Inc.

     o    Altera Corporation

     o    ATI Technologies Inc.

     o    Cirrus Logic International Ltd.

     o    Conexant Systems, Inc.


                                       29

<PAGE>


     o    Delphi Automotive Systems Corp.

     o    DSP Group

     o    LSI Logic Corporation

     o    Motorola, Inc.

    o     On Semiconductor Corp.

     o    Philips Electronics NV

     o    Qualcomm Incorporated

     o    ST Microelectronics Pte Ltd.

     o    VIA Technologies, Inc.

     Our five largest customers together accounted for approximately 34%, 40%
and 44% of our sales in 1998, 1999 and 2000, respectively. Other than Motorola,
Inc. in 1999, and Motorola and VIA Technologies, Inc. in 2000, no customer
accounted for more than 10% of our net revenues in 1998, 1999 or 2000. In
connection with our acquisition in July 1999 of Motorola's in-house packaging
and testing operations in Chung Li and Korea, we entered into manufacturing
services agreements for Motorola's continuing business at the Chung Li and
Korea facilities. As a result, Motorola accounted for approximately 16% of our
1999 net revenues and 22% of our 2000 revenues. There has been significant
variation in the composition of our largest five customers over time and, as a
result, we have been less dependent on any particular customer over time. We
package and test for our customers a wide range of products with end use
applications in the personal computers, consumer, industrial and automotive,
and communications sectors.

     The following table sets forth the names, in alphabetical order, of our
five largest customers for each of 1998, 1999 and 2000:

<TABLE>
     1998                                 1999                                    2000
     -----                                -----                                   -----
<S>                                <C>                                     <C>
ATI Technologies Inc.              ATI Technologies Inc.                   LSI Logic Corporation
Motorola, Inc.                     LSI Logic Corporation                   Motorola, Inc.
VIA Technologies, Inc.             Motorola, Inc.                          On Semiconductor Corp.
Winbond Electronics                Silicon Integrated Systems Corp.        ST Microelectronics Pte Ltd.
3Dfx                               VIA Technologies, Inc.                  VIA Technologies, Inc.
</TABLE>

     The following table sets forth our 2000 revenues categorized by the
principal end use applications of the products which we packaged and tested, as
a percentage of our net revenues in 2000.


                                                             Year Ended
                                                         December 31, 2000
                                                    ----------------------------
                                                    (percentage of net revenues)
End Use Applications:
   Communications..................................            36.6%
   Consumer Industrial/Automotive..................            29.6
   Personal Computers..............................            30.4
   Other...........................................             3.4
                                                              -----
      Total........................................           100.0%
                                                              =====

     Many of our customers are leaders in their respective end use markets. For
example, we provide Motorola, an industry leader in automotive and wireless
communications semiconductor products, with most of its outsourced


                                       30

<PAGE>


packaging and testing requirements. The following table sets forth our largest
customers, categorized by the principal end use applications of the products
which we package and test for them.

<TABLE>
                                   Consumer/Industrial/
     Communications                    Automotive                     Personal Computers
     --------------              ----------------------               ------------------
<S>                              <C>                              <C>
Advanced Micro Devices, Inc.     Altera Corporation               Advanced Micro Devices, Inc.
Conexant Systems, Inc.           Delphi Automotive Systems        ATI Technologies, Inc.
DSP Group                        LSI Logic Corporation            Cirrus Logic International Ltd.
Motorola, Inc.                   Motorola, Inc.                   IBM
Philips Electronics NV           ST Microelectronics Pte Ltd.     S3 International Ltd.
Qualcomm Incorporated            ESS Technology, Inc.             Silicon Integrated Systems Corp.
ST Microelectronics Pte Ltd.                                      VIA Technologies, Inc.
                                                                  Silicon Integrated Systems Corp.
                                                                  Winbond Electronics Corporation
</TABLE>

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


                                  Year Ended December 31,
                           ---------------------------------------
                            1998             1999            2000
                           ------           ------          ------

North America......         59.4             57.2            65.1
Taiwan.............         30.4             28.9            24.7
Other Asia.........          7.2             11.3             6.5
Europe.............          3.0              2.6             3.7
                           -----            -----           -----
 Total.............        100.0%           100.0%          100.0%
                           =====            =====           =====

     In 2000, approximately 74% of the testing revenues of ASE Test Taiwan and
67% of the testing revenues of ASE Test Malaysia were accounted for by the
testing of semiconductors packaged at our packaging facilities in Kaohsiung and
Malaysia, respectively. The balance represented testing revenues from customers
who delivered packaged semiconductors directly to ASE Test Taiwan or ASE Test
Malaysia for testing. In 2000, approximately 29% of our packaging revenues in
Kaohsiung and 80% of our packaging revenues in Malaysia were accounted for by
the packaging of semiconductors which were subsequently tested at ASE Test
Taiwan and ASE Test Malaysia, respectively. We expect that more customers of
our packaging facilities in Kaohsiung and Malaysia 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 semiconductor 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.


                                       31

<PAGE>


   Pricing

     We price our packaging services primarily on a cost-plus basis and, to a
lesser extent, with reference to market prices. Prices are confirmed at the
time firm orders are received from customers, which is typically four to eight
weeks before delivery.

     We price our testing services primarily on the basis of the amount of
time, measured in CPU 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.

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 and substrates, gold wire
and molding compound represented approximately 58.1%, 19.2% and 10.1%,
respectively, of our total cost of packaging materials in 2000.

     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 generally receive the wafers from the
customer for which the semiconductor is being packaged. 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 1997 and 1998, the industry experienced a shortage in the supply of advanced
substrates used in BGA packages, which, at the time, was available from a
limited number of suppliers located primarily in Japan. In these instances, we
generally negotiate an extension of the delivery date from our customers.

     We believe that interconnect technology will play an increasingly
important role in semiconductor packaging as interconnect materials such as
leadframes and substrates account for a growing portion of the cost of a
semiconductor package. In anticipation of this trend, we established ASE
Material in December 1997 for the purpose of developing, producing and selling
leadframes and advanced substrates. In 2000, ASE Material supplied interconnect
materials that accounted for approximately 12.1% of our consolidated raw
material costs. Substantially all of these materials were leadframes. We expect
that by the end of 2000, ASE Material will supply approximately a third of the
substrate requirements at our packaging facilities in Kaohsiung. We expect to
continue making investments in ASE Material in order to further develop our
in-house interconnect technology.

   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.


                                       32

<PAGE>


Equipment

   Packaging

     The most important equipment used in the semiconductor packaging process
is the wire bonder. The number of wire bonders at a given facility is commonly
used as a measure of the packaging capacity of the facility. The wire bonders
connect the input/output terminals on the silicon die using extremely fine gold
wire to leads on leadframes or substrates. Typically, wire bonders may be used,
with minor modifications, for the packaging of different products. We purchase
wire bonders principally from Kulicke & Soffa Industries Inc. As of December
31, 2000, we operated an aggregate of 3,973 wire bonders, 20 of which were
consigned by customers. In addition to wire bonders, we maintain a variety of
other types of packaging equipment, such as wafer grind, wafer mount, wafer
saw, die bonders, automated molding machines, laser markers, solder plat, pad
printers, dejunkers, trimmers, formers, substrate saw and scanners.

   Testing

     Testing equipment is the most important and 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 testing equipment from major
international manufacturers, including Agilent Technology, Advantest
Corporation, Credence Systems Corporation, Electroglas, Inc., Megatest
Corporation, Schlumberger Technologies and Teradyne, Inc. Upon acquisition of
new testing equipment, we install, configure, calibrate, perform burn-in
diagnostic tests on and establish parameters for the testing equipment based on
the anticipated requirements of existing and potential customers and
considerations relating to market trends. As of December 31, 2000, we operated
an aggregate of 1,029 testers, 139 of which were consigned by customers. In
addition to testers, we maintain a variety of other types of testing equipment,
such as automated handlers and probers (with special handlers for wafer
probing), scanners, re-formers and personal computer workstations for use in
software development. Each tester is attached to one or two handlers or
probers, which transport individual dies to the tester for testing or probing.

     In general, particular semiconductors can be tested on only a limited
number of specially designed testers. As part of the qualification process,
customers will specify the machines on which their semiconductors may be
tested, and we often develop test program conversion tools that enable us to
test semiconductors on multiple equipment 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.

Material Patents, Licenses and Contracts

     We and our subsidiaries hold various patents and licenses covering a broad
range of packaging and testing technology and have various material contracts
as described in "Item 10. Additional Information -- Material Contracts" and
attached in "Item 19. Exhibits".

Material Effects of Government Regulations

     All of our operations in the Nantze Export Processing Zone, including ASE
Test Taiwan, ASE Material and our operations in Kaohsiung, are subject to
regulation by the Export Processing Zone Administration, Ministry of Economic
Affairs in relation to land use, company registration, factory establishment,
labor safety inspections, issuance of import and export licenses, foreign
exchange and international trade management. All of our operations in Taiwan,
including ASE Test Taiwan, our operations in Kaohsiung, ASE Chung Li, ASE
Material and ASE Technologies, are also subject to regulation and periodic
monitoring by the ROC Environmental Protection Administration and the local
environmental protection authorities. For ASE Test Taiwan, our operations in
Kaohsiung, ASE Material and ASE Technologies, the local environmental
protection authority is the Bureau of Environmental Protection, Kaohsiung City.
For ASE Chung Li, the local environmental protection authority as the Bureau of
Environmental Protection, Taoyuan County.


                                       33

<PAGE>


     ASE Test Malaysia operates under a license obtained from the Malaysian
Industrial Development Authority and issued by the Ministry of Trade and
Industry Malaysia. Some of the terms of the license are:

     o    ASE Test Malaysia's shares that are held by non-citizens of
          Malaysia cannot be sold without the prior written consent of the
          Ministry of International Trade and Industry.

     o    ASE Test Malaysia must recruit and train Malaysian citizens in
          a manner that reflects the multiracial composition of Malaysia for
          all levels of occupational classification.

     o    The prior approval of the Ministry of International Trade and
          Industry must be obtained before any changes, additions or reductions
          with respect to machinery or equipment are proposed, in cases where
          there will be a material effect on production volume or electricity
          consumption.

     o    ASE Test Malaysia must obtain the prior written consent of the
          Ministry of International Trade and Industry before executing any
          agreements on technology transfers with foreigners.

     o    ASE Test Malaysia must elect distributors of the "bumiputra"
          ethnicity, primarily ethnic Malays, to distribute at minimum 30% of
          its sales within Malaysia. The election of foreign companies as
          distributors requires the prior approval of the Ministry of
          International Trade and Industry.

     o    ASE Test Malaysia must export at minimum 85% of its production.

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 staff quality control stations along
production lines, monitor clean room environment 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. 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. All of our
facilities have been certified as meeting the ISO 9002 quality standards by the
International Standards Organization. Our facilities in Taiwan, Korea and
Malaysia have also been certified as meeting the Quality System 9000 or QS-9000
quality standards. The ISO 9002 certification is required by many countries in
connection with sales of industrial products in these countries. The QS-9000
quality standards provide for continuous improvement with an emphasis on the
prevention of defects and reduction of variation and waste in the supply chain.
Like the ISO 9002 certification, the QS-9000 certification is required by some
semiconductor manufacturers as a threshold indicating a company's quality
control standards. 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, especially
those that also offer turnkey packaging and testing services. 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,


                                       34

<PAGE>


or may commence, in-house packaging and testing operations in Asia.
Furthermore, several independent packaging companies in Asia may expand their
packaging capacities and enhance their testing capabilities.

     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 and lower costs while
maintaining equivalent or higher quality for several reasons. First, we tend to
have lower unit costs because our equipment generally has a higher utilization
rate as compared to that of the in-house testing operations of integrated
device manufacturers. Second, we tend to offer a wider range of products in
terms of complexity and technology as compared to the in-house testing
operations of integrated device manufacturers, since integrated device
manufacturers are less able to utilize individual testers for long periods of
time following the migration of product technology.

Environmental Matters

     The semiconductor packaging process generates gaseous chemical wastes,
principally at the stage at which the copper leads protruding from the plastic
or ceramic casings of the semiconductor, commonly referred to as moldings, are
plated with tin or lead to improve their electrical conductivity. Liquid waste
is produced at the stage where silicon wafers are diced into chips with the aid
of diamond saws and cooled with running water. In addition, excess materials on
leads and moldings are removed from packaged semiconductors in the trimming and
de-junking processes, respectively. 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 semiconductor
industry practice in the countries in which our facilities are located. 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 losses due to fire. These insurance
policies cover the buildings, machinery and equipment at our major production
facilities. We do not have business interruption insurance, except in
connection with fire. Significant damage to any of our production facilities,
whether as a result of fire or other causes, would have a material adverse
effect on our results of operations. We are not insured against the loss of key
personnel.


                                       35

<PAGE>


ORGANIZATIONAL STRUCTURE

     The following chart illustrates our corporate structure and effective
ownership interest in each of our principal operating subsidiaries and
affiliates.

<TABLE>
<S>    <C>      <C> <C>              <C>            <C>    <C>            <C>           <C>           <C>
                               ADVANCED SEMICONDUCTOR ENGINEERING, INC.(1)
                                                           |
                                                           |
-----------------------------------------------------------|--------------------------------------------
|              |                                           | 51.2%        |             |              |
| 70%          | 70%                                       |              | 43.8%       | 100%         | 23.3%
|              |                                           |              |             |              |
|       -------|-----------------------------------ASE Test Limited(2)    |             |              |
|       |      |    |                |              |             |       |             |              |
|       |      |    |                |              |             |       |             |              |
|       |      |    |                |              |             |       |             |              |
|       |      |    |                |              |             |       |             |              |
|       | 30%  |    | 30%            | 100%         | 84.4%       | 100%  |             |              |
|       |      |    |                |              |             |       |             |              |
|       |      |    |                |              |             |       |             |              |
ASE            ASE               ASE             ISE Labs,     ASE Test,  |         ASE Holding    Universal
(Chung Li)     (Korea)           Electronics     Inc.(3)       Inc.       |         Electronics    Scientific
Inc.           Inc.              (M) Sdn.                          |      |         (Philippines)  Industrial
                                  Bhd.                             |      |         Inc.           Co., Ltd.(1)
                                                                   |      |
                                                                   | 6.7% |
                                                                   |      |
                                                                   ASE    |
                                                              Material Inc.
                                                                   (4)
</TABLE>

--------
(1)  The common shares of ASE Inc. and Universal Scientific are listed on the
     Taiwan Stock Exchange.

(2)  The ordinary shares of ASE Test are quoted for trading on the Nasdaq
     National Market under the symbol "ASTSF".

(3)  The remaining shares of ISE Labs are owned primarily by the founders and
     employees of ISE Labs or its predecessors.

(4)  The remaining shares of ASE Materials are owned by management and
     employees of ASE Inc. and its affiliates.


PROPERTIES

     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. Our facilities range from our large-scale turnkey facilities in
Taiwan and Malaysia to our specialized Korea facility dedicated to wireless
communications and automotive end-products. 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 as of December 31, 2000, number of testers
and bonders we operated as of December 31, 2000, and net revenues recorded in
2000 of our packaging and testing facilities.


                                       36

<PAGE>


<TABLE>

                                                                                                                              Net
                                                                                                                            Revenues
                                                                                                                           (in US$
                                                                                                                           millions)
                                                                                                                           ---------
                                                                                                                               Year
                                                                                          Approximate                         Ended
                               Commencement                                               Floor Space                       December
   Facility      Location      of Operation                Primary Use                    (in sq. ft.)   Testers   Bonders  31, 2000
--------------   -----------   ------------       -------------------------------------   ------------   --------  -------  --------
<S>              <C>                 <C>                  <C>                             <C>            <C>       <C>      <C>
ASE's facility   Kaohsiung,    March 1984         Our primary packaging facility.            900,000          0     2,634     US$820
in Kaohsiung       Taiwan                         Offers complete semiconductor
                                                  manufacturing solutions in
                                                  conjunction with ASE Test Taiwan
                                                  and foundries located in Taiwan, such
                                                  as TSMC. Focuses primarily on
                                                  advanced BGA and QFP packages for
                                                  integrated device manufacturers,
                                                  fabless design companies and
                                                  communications systems companies.

ASE Test         Kaohsiung,    December 1987      Our primary testing facility. Offers       400,000        272         0        165
Taiwan             Taiwan                         complete semiconductor solutions in
                                                  conjunction with ASE's facility in
                                                  Kaohsiung and foundries located in
                                                  Taiwan, such as TSMC. Focuses
                                                  primarily on advanced logic and
                                                  mixed signal testing for integrated
                                                  devicemanufacturers, fabless design
                                                  companies and communications
                                                  systems companies.

ASE Test         Penang,       February 1991      An integrated packaging and testing        600,000        186       411        167
Malaysia           Malaysia                       facility which focuses primarily on the
                                                  requirements of integrated device
                                                  manufacturers and communications
                                                  systems companies.

ASE Chung Li     Chung Li,     April 1985(1)      An integrated packaging and testing        300,000        224       691        244
                   Taiwan                         facility which specializes in
                                                  semiconductors for communications
                                                  applications, particularly those
                                                  incorporating the
                                                  Motorola-proprietary Map BGA
                                                  technology.
</TABLE>


                                       37

<PAGE>




<TABLE>

                                                                                                                              Net
                                                                                                                            Revenues
                                                                                                                           (in US$
                                                                                                                           millions)
                                                                                                                           ---------
                                                                                                                               Year
                                                                                          Approximate                         Ended
                               Commencement                                               Floor Space                       December
   Facility      Location      of Operation                Primary Use                    (in sq. ft.)   Testers   Bonders  31, 2000
--------------   -----------   ------------       -------------------------------------   ------------   --------  -------  --------
<S>              <C>                 <C>                  <C>                             <C>            <C>       <C>      <C>

ASE Korea        Paju, Korea   March 1967(2)      An integrated packaging and testing        100,000        126       105        117
                                                  facility which specializes in
                                                  semiconductors for radio frequency,
                                                  sensor and automotive applications.

ISE Labs         San Jose,     November 1983(3)   Front-end engineering and final            200,000        187         0        108
                 California                       testing facilities located in northern
                 Fremont,                         California in close proximity to
                 California                       several of the world's largest fabless
                 Santa Clara,                     design companies.  Testing facilities
                 California                       located in close proximity to
                 Hong Kong                        integrated device manufacturers and
                 Singapore                        fabless companies in Hong Kong and
                                                  Southeast Asia.


ASE              Cavite,       November 1995      Focuses primarily on the packaging of       50,000         24       132         16
Philippines      Philippines                      commodity semiconductor products
                                                  for integrated device manufacturers in
                                                  the Philippines.
Total                                                                                      2,550,000      1,019     3,973      1,637
-------------------
(1)  We acquired a 70.0% interest in ASE Chung Li and ASE Test acquired the
     remaining 30.0% interest in July 1999.

(2)  We acquired a 70.0% interest in ASE Korea and ASE Test acquired the
     remaining 30.0% interest in July 1999.

(3)  We acquired a 70.0% interest in ISE Labs in May 1999, which was
     subsequently increased to 80.4% following ASE Test's purchase of
     additional shares of ISE Labs in 2000.
</TABLE>







                                       38

<PAGE>



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 the 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.

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 is the integrated packaging, testing and direct shipment of
semiconductors to end users designated by our customers. Our net revenues have
increased significantly from NT$20,762.4 million in 1998 to NT$50,893.4 million
(US$1,534.3 million) in 2000. After eliminating the results of the operations
we acquired in 1999 for comparative purposes, our net revenues were NT$36,325.9
million (US$1,095.1 million) in 2000. Our revenue growth is increasingly
diversified across a broad range of end user applications and clients. We have
experienced growth in communications and consumer-related sectors while
maintaining our strong market position in personal computer-related sectors.
Our volume growth is increasingly concentrated in the packaging of higher
priced package types and the testing of more complex semiconductor devices.

     We price our services based primarily on a cost-plus calculation of the
costs involved in providing these services, and with reference to market
prices. The majority of our prices and revenues are denominated in U.S.
Dollars. However, as more than half of our costs, including all 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. The average realized selling price for packaging a
semiconductor device is higher than the average realized selling price for the
final testing of the same device. Over the last three years, our testing
revenues have grown faster than our packaging revenues. In 1998, 1999 and 2000,
our packaging revenues accounted for 81.2%, 75.2% and 74.7%, while testing
revenues accounted for 15.1%, 23.9% and 25.1%, respectively, of our net
revenues. After eliminating the results of the operations we acquired in 1999
for comparative purposes, testing revenues as a percentage of net revenues in
1999 and 2000, at 16.1% and 17.6%, respectively, still show an increasing
trend. We expect this trend to continue as industry trends suggest a higher
growth rate for testing compared to packaging services. The portion of the
semiconductor testing market currently accounted for by independent testing
service providers is smaller than that for packaging, which we believe will
facilitate outsourced testing to grow at a faster rate than packaging. In
addition, the high capital expenditures needed for increasingly complex testing
equipment, as compared to less expensive packaging equipment, is leading to
further outsourcing of testing services by integrated device manufacturers. We
also expect to provide increasingly more turnkey services to our clients.

     Our results of operations have been affected by a number of factors,
including the proportionate contribution of packaging and testing to our net
revenues, our capacity utilization rates and the costs of raw materials. Over
the last three years, our net revenues have been affected by the volume of
units packaged and tested, the selling prices for these units, and currency
fluctuations. In 1999, our results of operations were affected by our
acquisition in May 1999 of 70% of the outstanding shares of ISE Labs, our
acquisitions in July 1999 of ASE Chung Li and ASE Korea and our purchase from
February through July 1999, in the open market, of a controlling 22.6% stake in
Universal Scientific. Our interest in ISE Labs was subsequently increased to
80.4% following ASE Test's purchase of additional shares of ISE Labs for an
aggregate purchase price of $70.9 million in 2000. In addition, we subsequently
increased our ownership interest in Universal Scientific to 23.3% through the
purchase of additional shares in the open market in July and August of 2000.


                                      39


<PAGE>


Pricing and Revenue Mix

     The semiconductor industry is characterized by a general trend towards
declining prices for products and services of a given technology over time.
During periods of intense competition and adverse conditions in the
semiconductor industry, the pace of this decline in prices of our services may
be more rapid than that experienced in other years. During such periods, the
selling prices in U.S. Dollar terms of our packaging and testing services
experience a sharp decline due to intense price competition from other
independent packaging and testing companies that attempt to maintain capacity
utilization levels in the face of reduced demand.

     Declines in selling prices have been partially offset over the last three
years by a change in our revenue mix. In particular, we have been packaging
more higher-priced package types, such as ball grid array, also called BGA, and
advanced thin quad flat packages, also called TQFPs, and testing more complex
semiconductor devices. We will continue to develop and offer new technology in
packaging and testing services, as well as improve production efficiencies for
older technology, in order to mitigate the effects of declining prices on our
profitability.

High Fixed Costs

     Our operations are capital intensive and are characterized by relatively
high fixed costs. Our primary fixed costs are for packaging and testing
equipment. Increases or decreases in capacity utilization rates can have a
significant effect on gross profit margins, as the unit cost of packaging and
testing services generally decreases as fixed charges, such as equipment
depreciation expense, are allocated over a larger number of units. Depreciation
is the principal component of our cost of testing revenues. Testers typically
cost between US$2.0 million and US$3.0 million each, while wire bonders used in
packaging typically cost approximately US$100,000 each. In 1998, 1999 and 2000,
our depreciation expense as a percentage of net revenues was 14.9%, 16.3% and
15.7%, respectively. The rise in depreciation expense partially reflects the
increased contribution of testing to net revenues, as well as an increase in
the cost of packaging and testing 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
selling prices, resulting in an increase in depreciation expense relative to
sales. With the improvement in industry conditions at the end of 1998,
utilization levels improved, along with a recovery in profitability.
Utilization levels remained high through 1999 and 2000.

Raw Material Costs

     Substantially all of our raw material costs are accounted for by
packaging, as testing requires minimal materials. In 1998, 1999 and 2000, raw
material cost as a percentage of our net revenues was 34.9%, 30.0% and 28.7%,
respectively. Raw material cost as a proportion of net revenues has been
decreasing because of the higher contribution of testing to net revenues and,
in 1999 and 2000, a decrease in raw material prices. However, we expect raw
materials to become an increasingly important component of the cost of our
packaging sales and we plan to continue our development and production of
interconnect material through ASE Material in order to help ensure an adequate
supply of raw materials at competitive prices and reduce production time.

Goodwill Amortization

     Our operating and non-operating income in recent years have been affected
by goodwill amortization charges in connection with acquisitions, the
restructuring of our investment holdings and other share repurchases. Under
generally accepted accounting principles in the ROC, additional purchases of
shares of consolidated subsidiaries (majority owned) or of companies accounted
for using the equity method (less than majority but greater than 20% owned)
will generate goodwill in an amount equal to the difference between the
purchase price and the book value per share of those shares. The goodwill
generated is amortized over ten years. Goodwill generated on the purchases of
shares of consolidated subsidiaries are recognized under general administrative
and selling expense. Goodwill generated on the purchases of shares of companies
which are less than majority but greater than 20% owned, and therefore
accounted for using the equity method, are recognized as a debit under
investment income. In addition to the acquisitions of ASE Korea and ISE Labs,
other transactions which created significant goodwill charges were the
open-market purchases of 22.6% of Universal Scientific shares in 1999, as well
as the open-market purchases of ASE Test shares by a wholly-owned


                                      40


<PAGE>


subsidiary as part of a share repurchase program in the period from December
1997 through March 1998. No goodwill was recognized in connection with the
acquisition of ASE Chung Li, which was structured as an asset purchase, due to
the appreciation of the fixed assets purchased.

Consolidation of ISE Labs, ASE Chung Li and ASE Korea

     Under the method of consolidation used by us to consolidate the statements
of income of ISE Labs, ASE Chung Li and ASE Korea for the year ended December
31, 1999: (1) ISE Labs' full-year 1999 net revenues, cost of revenues and
operating expenses are included in the Consolidated Financial Statements, and
the pre-acquisition income of ISE Labs for the year ended December 31, 1999
(from January 1 to May 4, 1999) is then subtracted from our net income for
1999; and (2) the net revenues, cost of revenues, operating expenses and net
income of ASE Chung Li and ASE Korea are included in the Consolidated Financial
Statements since the date of acquisition. Under the method of consolidation
used by ASE Test to consolidate the statement of income of ISE Labs for the
year ended December 31, 1999, ISE Labs' pre-acquisition net revenues, cost of
revenues and operating expenses are not included in ASE Test's consolidated
income statement. See Notes 2 and 28f of Notes to Consolidated Financial
Statements.

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,
                                                                  ----------------------------------------
                                                                  1998               1999             2000
                                                                  ----               ----             ----
                                                                       (percentage of net revenues)
<S>                                                                  <C>              <C>              <C>
Net revenues............................................             100.0%           100.0%           100.0%
 Packaging..............................................              81.2             75.2             74.7
 Testing................................................              15.1             23.9             25.1
 Other..................................................               3.7              0.9              0.2
Cost of revenues........................................             (74.5)           (73.5)           (69.9)
                                                                     -----            -----            -----
  Packaging.............................................             (63.5)           (57.6)           (55.0)
  Testing...............................................              (7.9)           (14.4)           (14.7)
  Other.................................................              (3.1)            (1.5)            (0.2)
Gross profit............................................              25.5             26.5             30.1
  Packaging.............................................              17.8             17.6             19.7
  Testing...............................................               7.2              9.5             10.4
  Other.................................................               0.5             (0.6)              --
Operating expenses......................................             (11.8)           (11.6)           (10.7)
                                                                     -----            -----            -----
Operating income........................................              13.7             14.9             19.4
Non-operating income (expenses).........................              (4.1)            12.9             (2.9)
                                                                      ----             ----             ----
Income before income tax and minority interest..........               9.6             27.8             16.5
Income tax benefit (expense)............................               0.7             (1.4)            (2.1)
                                                                       ---             ----             ----
Income before minority interest.........................              10.3             26.4             14.4
Pre-acquisition interest................................                --             (0.2)              --
Minority interest in net income of subsidiary...........              (2.6)            (2.3)            (2.9)
                                                                      ----             ----             ----
Net income..............................................               7.7%            23.9%            11.5%
                                                                      ====             ====             ====

</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,
                                       ----------------------------------
                                       1998            1999          2000
                                       ----            ----          ----
                                         (percentage of net revenues)
<S>                                       <C>           <C>           <C>
Cost of revenues
 Raw materials.................           34.9%         30.0%         28.7%
 Labor costs...................           12.5          13.0          12.9
 Depreciation..................           14.9          16.3          15.7
 Other.........................           12.2          14.4          12.6
                                          ----          ----          ----
 Total cost of revenues........           74.5%         73.5%         69.9%
                                          ====          ====          ====
Operating expenses
  Selling......................            3.6%          2.8%          2.0%
  General and administrative(1)            4.4           5.0           5.1
  Goodwill amortization(2).....            1.6           1.6           1.1
  Research and development.....            2.2           2.2           2.5
                                           ---           ---           ---
  Total operating expenses.....           11.8%         11.6%         10.7%
                                          ====          ====          ====
</TABLE>

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

(1)  Excludes goodwill amortization.

(2)  Included in general and administrative expense in the Consolidated
     Financial Statements.



Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

     Net Revenues. Net revenues increased by 56.1% to NT$50,893.4 million
(US$1,534.3 million) in 2000 from NT$32,609.6 million in 1999. Packaging
revenues grew 55.1% to NT$38,028.8 million (US$1,146.5 million) in 2000 from
NT$24,523.0 million in 1999. Testing revenues increased 63.8% to NT$12,768.4
million (US$384.9 million) in 2000 from NT$7,793.2 million in 1999. Increases
in packaging and testing revenues resulted primarily from an increase in net
revenues at our existing facilities, due to an upturn in the semiconductor
industry which continued from 1999 into 2000, partially offset by an industry
downturn commencing in the fourth quarter of 2000, as well as the effects of
the acquisitions of ISE Labs, ASE Chung Li and ASE Korea in 1999. After
eliminating the results of ISE Labs, ASE Chung Li and ASE Korea for comparative
purposes, our net revenues for 2000 increased by 44.4% compared to 1999,
reflecting a 45.2% increase in packaging revenues and a 59.4% increase in
testing revenues. This increase was partially offset by a decrease in the
average realized selling prices for packaging and testing services. The
decrease in the average realized selling prices reflects the general trend in
the semiconductor industry of declining prices for each input/output lead on a
semiconductor device. This decrease was partially offset by a change in the
revenue mix as our BGA packages, which typically command higher selling prices
as a result of the higher number of leads per device, accounted for a greater
portion of the packaging volume, and as we tested more complicated
semiconductor devices.

     Gross Profit. Gross profit increased by 77.2% to NT$15,326.1 million
(US$462.0 million) in 2000 from NT$8,650.0 million in 1999. Our gross margin
improved to 30.1% in 2000 compared to 26.5% in 1999 primarily as a result of a
higher revenue contribution from testing operations, which generally have
higher gross margins than packaging operations, and decreases in raw material
costs and depreciation as a percentage of net revenues. The improved gross
margin was also attributable to decreases in factory supplies and other
manufacturing overheads, partially offset by increases in equipment maintenance
expenses and provisions for inventory obsolescence, all as percentages of net
revenues. Raw material costs in 2000 were NT$14,620.4 million, or 28.7% of net
revenues compared to 30.0% in 1999. This decrease mainly resulted from a change
in the revenue mix, as testing services, which incur almost no raw material
costs, accounted for a greater portion of our net revenues, and a decrease in
raw material prices. Depreciation expense for the year was NT$8,127.6 million,
compared with NT$5,128.3 million in 1999. As a percentage of net revenues,
depreciation expense decreased slightly to 15.7% in 2000 from 16.3% in 1999,
primarily as a result of a higher machinery utilization rate in 2000 as
compared to 1999. Our gross margin for packaging increased to 26.3% in 2000
from 23.5% in 1999 primarily due to decreases in direct and indirect labor
costs, raw material costs and depreciation as percentages of packaging revenue.
Our gross margin for testing increased to 41.5% in 2000 from 39.8% in 1999
primarily due to a decrease in repair and maintenance costs, partially offset
by increases in depreciation and amortization as well as direct and indirect
labor costs, all as percentages of testing revenue.


                                       42


<PAGE>


     Operating Income. Operating income increased 103.7% to NT$9,877.1 million
(US$297.8 million) in 2000 from NT$4,848.6 million in 1999. Operating margin
increased to 19.4% in 2000 from 14.9% in 1999, reflecting the higher gross
margin and decreases in selling, general and administrative expenses, partially
offset by an increase in research and development expenses, all as a percentage
of net revenues. Selling, general and administrative expenses amounted to
NT$5,449.0 million (US$164.3 million) in 2000, representing 10.7% of net
revenues in 2000 compared to 11.6% in 1999. This decrease was primarily due to
economies of scale realized from increased sales volumes. Research and
development expenses in 2000 were NT$1,262.5 million (US$38.1 million), or 2.5%
of net revenues compared to 2.2% in 1999. The increase primarily resulted from
increases in the number of employees employed in research and development and
in depreciation of testers and other equipment dedicated to research and
development uses.

     Net Non-Operating Income/Loss. We recorded a net non-operating loss of
NT$1,473.6 million (US$44.4 million) in 2000 compared with net non-operating
income of NT$4,213.9 million in 1999. The difference primarily resulted from a
one-time capital gain of NT$5,544.1 million in 1999 in connection with the sale
of ASE Test ordinary shares by our subsidiary J&R Holding Limited through a
public offering of Taiwan Depositary Receipts and the sale of ASE Inc. common
shares by our subsidiaries and affiliates in a private placement of GDSs. Most
of the ASE Inc. common shares underlying the GDSs were acquired by our
subsidiaries between March 1996 and April 1998 as part of a share purchase
program instituted in support of ROC government policies. A small amount was
realized from open market sales of ASE Test Taiwan Depositary Receipts by our
subsidiaries and affiliates. Excluding this one-time capital gain, our non-
operating loss increased 10.8% from NT$1,330.2 million in 1999, primarily as a
result of a net foreign exchange gain in 2000 compared to a net loss in 1999,
partially offset by a net increase in interest expense. Non-operating income
for 2000 was NT$1,217.0 million (US$36.7 million), which primarily consisted of
interest revenues of NT$554.2 million (US$16.7 million), foreign exchange gains
of NT$302.7 million (US$9.1 million) and gain on sales of investments of
NT$91.7 million (US$2.8 million). We recorded a net foreign exchange gain in
2000 compared to a loss of NT$538.4 million in 1999, reflecting the unrealized
foreign exchange gains on assets that are denominated in foreign currency due
to the year-end depreciation of the NT Dollar. Non-operating expenses for 2000
were NT$2,690.6 million (US$81.1 million), which primarily consisted of
interest expenses of NT$2,092.2 million (US$63.1 million) and investment loss
under equity method of NT$237.2 million (US$7.2 million). Interest expense
increased 42.3% to NT$2,092.2 million (US$63.1 million) in 2000 from NT$1,469.8
million in 1999, primarily as a result of increased interest expenses from
convertible bonds due 2004 issued by ASE Test in June 1999 and other long-term
debts, which were used to finance our acquisitions of our interests in
Universal Scientific, ISE Labs, ASE Chung Li and ASE Korea.

     Net Income. Net income for 2000 declined 25.1% to NT$5,837.1 million
(US$176.0 million) from NT$7,794.7 million in 1999. Excluding the one-time
capital gains of NT$5,544.1 million in 1999, net income increased 159.4% on a
full-year basis. Adjusted net income increased in 2000 compared to 1999
primarily as a result of the foregoing factors, partially offset by an increase
in our effective tax rate to 12.7% in 2000 compared to 5.1% in 1999. Our
effective income tax rate was significantly lower in 1999 primarily as a result
of substantial capital gain income in those years that was not subject to ROC
corporate tax.

     Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

     Net Revenues. Our net revenues increased by 57.1% to NT$32,609.6 million
in 1999 from NT$20,762.4 million in 1998, reflecting in part the effects of the
acquisitions of ISE Labs in May 1999 and ASE Chung Li and ASE Korea in July
1999, as well as increases in net revenues at our existing facilities. For a
discussion of the consolidation principles relating to our acquisitions of ISE
Labs, ASE Chung Li and ASE Korea, see Note 2 of Notes to Consolidated Financial
Statements. After eliminating the results of ISE Labs, ASE Chung Li and ASE
Korea for comparative purposes, our net revenues for 1999 increased by 21.1% in
1999 compared to 1998, reflecting a 23.3% increase in packaging sales and a
29.7% increase in testing revenues. This increase was partially offset by a
decrease in revenues attributable to our subsidiary that designs and assembles
notebook computers, set-top boxes and liquid crystal display monitors, and
assembles board and sub-systems, ASE Technologies Inc., due primarily to the
continuing loss of one of its major customers in 1999. ASE Technologies intends
to wind down its business upon approval by its shareholders in September 2001.
See "Item 4. Information on the Company -- Business Overview -- Other Members
of the ASE Group" for more information on ASE Technologies. In 1999, our
adjusted packaging revenues accounted for 82.7% of our adjusted net revenues
and our adjusted testing revenues accounted for 16.1% of our adjusted net
revenues, compared to 81.2% and 15.1%, respectively, for 1998. The increase in
our adjusted net revenues for 1999 compared to 1998 resulted primarily from an
increase in packaging and testing volumes, which was partially offset by a
decrease in the


                                       43


<PAGE>


average realized selling prices for our packaging and testing services. The
decrease in the average realized selling prices reflected the general trend in
the semiconductor industry of declining prices for each input/output lead on a
semiconductor device. This decrease was partially offset by a change in our
revenue mix as our BGA packages, which typically command higher selling prices
as a result of the higher number of leads per device, accounted for a greater
portion of our packaging volume, and as we tested more complicated
semiconductor devices.

     Gross Profit. Our gross profit increased by 63.4% to NT$8,650.0 million in
1999 from NT$5,294.3 million in 1998, reflecting the effects of the
acquisitions of ISE Labs, ASE Chung Li and ASE Korea, as well as increases in
gross profit at our existing facilities. After eliminating the results of ISE
Labs, ASE Chung Li and ASE Korea for comparative purposes, our gross profit
increased by 28.2% in 1999 compared to 1998. Our adjusted gross margin
increased to 27.0% compared to 25.5% for 1998 primarily as a result of
decreases in raw material and labor costs, which were partially offset by
increases in depreciation, factory supplies and other manufacturing overheads,
as well as a decrease in provision for inventory obsolescence, all as a
percentage of net revenues. Depreciation increased and raw material costs
decreased as a percentage of net revenues primarily as a result of a change in
our revenue mix, as testing services, which incur significant depreciation but
almost no raw material costs, accounted for a greater portion of our net
revenues, and a decrease in raw material prices. Cost of revenues also
increased due to increases in factory supplies such as rinsing agents and
manufacturing overhead and development costs associated with the ramp-up in BGA
production capabilities. Our adjusted gross margin for packaging increased to
24.8% in 1999 from 21.9% in 1998 primarily due to decreases in direct and
indirect labor and raw material costs as percentages of packaging revenue. Our
gross margin for packaging in 1999 was 23.5%, compared with our adjusted gross
margin for packaging of 24.8% for the same year, reflecting lower packaging
margins at our facilities acquired in 1999 due to differences in product mix.
Our adjusted gross margin for testing decreased to 45.2% from 47.4% in 1998
primarily due to increases in depreciation and amortization and other
manufacturing costs, partially offset by a decrease in direct and indirect
labor cost, all as percentages of testing revenue. Our gross margin for testing
in 1999 was 39.8%, as compared to our adjusted gross margin for testing of
45.2% for the same year, reflecting lower testing margins at the facilities
acquired in 1999 due to differences in the mix of testing services.

     Operating Income. Our operating income increased by 70.7% to NT$4,848.6
million in 1999 from NT$2,840.9 million in 1998, reflecting in part the effects
of the acquisitions of ISE Labs, ASE Chung Li and ASE Korea, as well as
increases in operating income at our existing facilities. After eliminating the
results of ISE Labs, ASE Chung Li and ASE Korea for comparative purposes, our
operating income increased by 31.6% in 1999 compared to 1998. Our adjusted
operating margin increased to 15.0% compared to 13.7% for 1998, reflecting the
higher adjusted gross margin and decreases in selling expense, partially offset
by increases in research and development expense and other expense, all as a
percentage of net revenues. Selling expense as a percentage of net revenues
decreased primarily as a result of economies of scale realized from increased
sales volumes at our existing facilities. Amortization of goodwill expense
increased in 1999 compared to 1998 in absolute terms primarily as a result of
the acquisition of ISE Labs and ASE Korea in 1999, but remained relatively
unchanged as a percentage of net revenues.

     Net Non-Operating Income. In 1999, our non-operating income increased
significantly primarily as a result of an increase in capital gains recognized.
These capital gains amounted to NT$5,544.2 million and were mostly generated by
the sales of ASE Test ordinary shares by our subsidiary J&R Holding Limited
through a public offering of Taiwan Depositary Receipts and the sale of ASE
Inc. common shares by our subsidiaries and affiliates in a private placement of
GDSs. Most of the common shares underlying the GDSs were acquired by our
subsidiaries between March 1996 and April 1998 as part of a share purchase
program instituted in support of ROC government policies. A small amount was
realized from open market sales of ASE Test Taiwan Depositary Receipts by our
subsidiaries and affiliates.

     Net foreign exchange loss decreased in 1999 compared to 1998, reflecting
the higher than usual losses incurred in 1998 attributable to Japanese
yen-denominated liabilities created in the second half of 1998 to manage our
foreign exchange exposure. Net interest expense increased in 1999 compared to
1998 primarily as a result of increased debt financing incurred for our
acquisitions in 1999.

     Amortization of goodwill expense in connection with the acquisition of
shares of our affiliates increased in 1999 compared to 1998, primarily as a
result of our purchase of 22.6% of the outstanding shares of Universal
Scientific.


                                      44


<PAGE>


     Net Income. Our net income for 1999 was NT$7,794.7 million, or NT$7,225.4
million after eliminating the results of ISE Labs, ASE Chung Li and ASE Korea,
compared to NT$1,604.0 million for 1998. Our adjusted net income increased in
1999 compared to 1998 primarily as a result of the foregoing factors, partially
offset by an increase in our adjusted effective tax rate to 3.2% in 1999
compared to a benefit of 7.6% in 1998. Our net income for 1999, less capital
gains recognized upon the sale of long-term investments, was NT$2,250.5
million, compared to NT$997.1 million for 1998.

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         Sep. 30         Dec. 31          Mar. 31          Jun. 30          Sept. 30
                                 1999            1999             1999             2000             2000             2000
                                -------         -------         -------          -------          -------          --------
                                                                 unaudited (in millions)
<S>                          <C>             <C>             <C>              <C>              <C>              <C>
Consolidated Net Revenues:
   Packaging..............   NT$4,580.6      NT$7,190.0      NT$8,390.1       NT$8,378.4       NT$9,347.1       NT$10,458.9
   Testing................      1,432.0         2,182.7         2,837.8          2,776.2          3,013.3           3,440.1
   Other..................        105.0            11.7            83.5              7.0             75.2               5.2
                             ----------      ----------     -----------      -----------      -----------       -----------
     Total................   NT$6,117.6      NT$9,384.4     NT$11,311.4      NT$11,161.6      NT$12,435.6       NT$13,904.2
                             ==========      ==========     ===========      ===========      ===========       ===========
Consolidated Gross Profit:
   Packaging..............     NT$977.5      NT$1,797.3      NT$2,080.5       NT$2,320.1       NT$2,568.2        NT$2,688.7
   Testing................        585.3           872.8         1,096.7          1,208.7          1,285.8           1,433.9
   Other..................        (80.0)           (0.2)          (67.4)           (39.0)           (23.3)            (45.1)
                             ----------      ----------     -----------      -----------      -----------        ----------
     Total................   NT$1,482.8      NT$2,669.9      NT$3,109.8       NT$3,489.8       NT$3,830.7        NT$4,077.5
                             ==========      ==========     ===========      ===========      ===========        ==========
Consolidated Gross Margin:
   Packaging..............         21.3%           25.0%           24.8%            27.7%            27.5%            25.7%
   Testing................         40.9%           40.0%           38.6%            43.5%            42.7%            41.7%
                             ----------      ----------     -----------      -----------      -----------        ----------

     Total................         24.2%           28.5%           27.5%            31.3%            30.8%            29.3%
                             ==========      ==========     ===========      ===========      ===========        ==========



(table continued)

                                   Quarter Ended
                             --------------------------
                                Dec. 31         Mar. 31
                                  2000            2001
                                -------         -------
                                unaudited (in millions)

<S>                          <C>            <C>
Consolidated Net Revenues:
   Packaging..............   NT$9,844.4      NT$8,142.4
   Testing................      3,538.8         3,105.5
   Other..................          8.8             2.1
                            -----------     -----------
     Total................  NT$13,392.0     NT$11,411.4
                            ===========     ===========
Consolidated Gross Profit:
   Packaging..............   NT$2,439.9      NT$1,455.0
   Testing................      1,366.0           875.9
   Other..................        122.2            51.8
                            -----------     -----------
     Total................   NT$3,928.1      NT$2,382.7
                            ===========     ===========
Consolidated Gross Margin:
   Packaging..............         24.8%           17.9%
   Testing................         38.6%           28.2%
                            -----------     -----------
     Total................         29.3%           21.2%
                            ===========     ===========
</TABLE>

     Our results of operations have been adversely affected by the global
semiconductor industry downturn which commenced in the fourth quarter of 2000.
To a lesser extent, our results of operations have also been affected by
seasonality. Our first quarter net revenues have historically shown smaller
sequential increases over the preceding fourth quarter, compared to other
quarters of the year, primarily due to the combined effects of holidays in the
United States, Taiwan and Malaysia. 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 --
Our operating results are subject to significant fluctuations, which could
adversely affect the value of your investment". Our net revenues increased
significantly in the third and fourth quarters of 1999 compared to the second
quarter of 1999. These increases in net revenues resulted in part from the
revenues contributed by ASE Chung Li and ASE Korea which we acquired in July
1999 and in part as a result of increased volume and an upturn in the average
realized selling prices for packaging and testing services resulting from an
upturn in the semiconductor industry. Under ROC GAAP, the revenues contributed
by ISE Labs, which we acquired on May 4, 1999, have been included in our
consolidated net revenues as if we had acquired ISE Labs on January 1, 1999.

Taxation

     Based on their respective statuses either as a company which is engaged in
designated businesses in Taiwan or a "pioneer" company in Malaysia, the
operating companies in the ASE Group were granted exemptions from ROC or
Malaysia income taxes, as the case may be, generally for a period of four or
five years, both at the initial stages of their operations and following
subsequent capital increases with respect to income attributable to capital
increases. These tax holidays resulted in tax savings for us of approximately
NT$508.8 million, NT$779.4 million and NT$700.7 million (US$21.1 million) in
1998, 1999 and 2000, respectively. Our tax holiday under the ROC Statute for
Upgrading of Industries expired at the end of 2000, but we may apply for
another tax holiday for cash injections from shareholders, such as rights
offerings, the proceeds of which are used to purchase eligible machinery and
equipment. We conducted


                                       45


<PAGE>


a rights offering in 2000, and plan to apply for a tax holiday for that rights
offering. The ROC Ministry of Finance announced that commencing 2000, we may
also apply for this tax holiday after the capitalization of retained earnings,
that is, through the issuance of stock dividends. ASE Test Malaysia's tax
holiday in Malaysia expired on June 30, 1999 and ASE Test Malaysia has received
approval to be a "pioneer high technology" company in Malaysia, which entitles
us to a five-year tax holiday substantially similar to our previous tax
holiday. We expect this tax holiday to commence retroactively on July 1, 1999.
See Note 17 of Notes to Consolidated Financial Statements.

     With facilities located in special export zones such as the Nantze Export
Processing Zone in Taiwan and the Bayan Lepas Free Trade 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%, 5.1% and 12.7% in 1998, 1999 and
2000, respectively. The effective tax rate was significantly lower in 1998 and
1999 primarily as a result of substantial capital gains income in those years
that was not subject to ROC corporate tax.

Exchange Rate Fluctuations

     Currently, the majority of our revenues from packaging and testing
services are denominated in U.S. Dollars, with a portion denominated in NT
Dollars, while our costs of revenues and operating expenses associated with
packaging and testing services are incurred in several currencies, including
U.S. Dollars, NT Dollars, Malaysian ringgit, Korean won, Philippine pesos,
Singapore dollars and Hong Kong dollars. As a result, the depreciation of the
NT Dollar against the U.S. Dollar tends to increase our net revenues in NT
Dollar terms. In 1998, 1999 and 2000, the average exchange rate of the NT
Dollar to the U.S. Dollar was 33.50, 32.28 and 31.37, respectively. 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 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 foreign exchange
losses of NT$538.4 million in 1999 primarily as a result of losses incurred in
1998 attributable to Japanese yen-denominated liabilities created in the second
half of 1998 to manage our foreign exchange exposure. We recorded foreign
exchange gains of NT$302.7 million (US$9.1 million) in 2000, due primarily to
unrealized foreign exchange gains on foreign currency-denominated assets due to
the year-end depreciation of the NT Dollar relative to the U.S. Dollar.

U.S.GAAP Reconciliation

     Our financial statements are prepared 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. The following table sets forth a comparison of our net
income and shareholders' equity in accordance with ROC GAAP and U.S.GAAP for
the periods indicated:

<TABLE>
                                             Year Ended December 31,
                                    ----------------------------------------
                                        1999            2000           2000
                                        ----            ----           ----
                                                  (in millions)
<S>                                 <C>             <C>             <C>
Net income in accordance with:
ROC GAAP........................    NT$7,794.7      NT$5,837.1      US$176.0
U.S.GAAP........................    NT$4,641.3      NT$3,930.0      US$118.5
</TABLE>


<TABLE>
<CAPTION>
                                                  As of December 31,
                                    --------------------------------------------
                                        1999             2000             2000
                                        ----             ----             ----
                                                    (in millions)
<S>                                 <C>              <C>              <C>
Shareholders' equity in accordance
with:
ROC GAAP..........................  NT$30,057.0      NT$43,669.2      US$1,316.5
U.S.GAAP..........................  NT$26,569.7      NT$40,729.1      US$1,227.9
</TABLE>


                                      46


<PAGE>


     Note 27 of Notes to 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 have a material effect on our net income as reported under ROC GAAP
relate to gain from the sale of treasury stock and compensation expense
pertaining to bonuses to employees, directors and supervisors.

     In 1999, three of our consolidated subsidiaries sold an aggregate of 32.4
million ASE Inc. common shares in open market sales. Under U.S.GAAP, when a
subsidiary holds its parent's common shares as investments, the common shares
are treated as treasury stock and is presented in the consolidated balance
sheet as a deduction to shareholders' equity. The capital gain or loss from the
sale of treasury stock is added to or deducted from the balance of treasury
stock. Under ROC GAAP, this treatment is not required and, as a result, the
investment in ASE Inc. common shares by its subsidiaries is treated as
long-term investment in the balance sheets and the capital gain or loss from
the sale of treasury stock is recognized as income or loss. As a result of
these transactions, we recognized under ROC GAAP capital gains on sale of
investments of NT$1,388.5 million in 1999. Under U.S.GAAP, those investments in
ASE Inc.'s common shares should be classified as treasury stock and the capital
gain is not recognized as income but is deducted from treasury stock under
capital surplus.

     We paid employee bonuses in 1999 and 2000 in the form of common shares,
and expect to pay all or a portion of employee bonuses in future periods 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. 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 income. Under U.S.GAAP, however, we would be required
to charge the market value of the employee bonus shares to employee
compensation expense in the period to which they relate, correspondingly reduce
our net income and income per common share calculated in accordance with
U.S.GAAP.

     The amount and the form of the payment of this compensation is subject to
approval by our board of directors and is only determinable at the first board
meeting which is held after the issuance of our financial statements for the
relevant year. 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 board approval is obtained, which normally occurs during the
second quarter of each year. See Note 27 of Notes to Consolidated Financial
Statements. Net income and income per common share amounts calculated in
accordance with ROC GAAP and U.S.GAAP differ accordingly. The amount of the
adjustment for market price for the purpose of U.S.GAAP reconciliation for the
special stock bonus paid in 2000 was allocated over a period of three years
commencing in the second quarter of the year following the year in which the
bonus was paid, reflecting the additional length of service which we require
from employees who received the special stock bonus.

LIQUIDITY AND CAPITAL RESOURCES

     Our principal sources of cash are cash generated from operations and debt
financing and, in certain years, proceeds from the sale of investments. Our
primary uses of cash are to fund capital expenditures and working capital
requirements related to our operations and expansion. Our cash and cash
equivalents are held primarily in U.S. Dollars.

     Cash generated from our operations was NT$17,643.2 million (US$531.9
million) for 2000, as compared to NT$7,017.2 million for 1999. The increase in
cash generated from our operations in 2000 reflected an increase in recurring
net income (excluding extraordinary capital gains), partially offset by an
increase in accounts receivable. The increase in recurring net income
(excluding extraordinary capital gains) for 2000 compared to 1999 resulted from
an increase in the revenues and improvements in the operating margins of ASE
Inc. and the operations of ASE Chung Li and ASE Korea (which were acquired in
July 1999). Our cash generated from operations was NT$5,194.2 million in 1998.
The increase in our cash generated from operations in 1999 reflected an
increase in recurring net income (excluding ordinary capital gain), accounts
payable and accrued expenses, partially offset by an increase in accounts
receivable. Our accounts receivable, accounts payable and accrued expense
increased in 1999 compared to 1998


                                      47


<PAGE>


primarily as a result of the effect from our acquisition of ISE Labs, ASE Chung
Li and ASE Korea, as well as from revenue growth. Our accounts receivable
collection improved to an average of 60 days in 2000 from an average of 62 days
in 1999, while our average days inventory improved to 29 days in 2000 from 32
days in 1999. Our accounts receivable collection improved to 62 days in 1999
from 68 days in 1998, while our average days inventory improved to an average
of 32 days in 1999 from an average of 45 days in 1998.

     As of December 31, 2000, we had positive working capital in the amount of
NT$4,914.3 million (US$148.2 million) as a result of an increase in cash of
NT$2,357.4 million (US$71.1 million) from NT$11,809.1 million (US$356.0
million) to NT$14,166.5 million (US$427.1 million) and an increase in
short-term borrowings. Our working capital is supplemented by short-term
borrowings. The cash and short-term borrowings were used to fund capital
expenditures including the acquisition of additional packaging and testing
equipment and the expansion of existing facilities and additional investments.
We believe that our current cash and cash equivalents, cash flow from
operations and the proceeds from our September 2000 ADS offering will be
sufficient to meet our anticipated needs at least through the end of 2001,
including for working capital and capital expenditure requirements.

     In connection with the expansion of our production capacity, we have
incurred capital expenditures of NT$7,447.7 million, NT$11,097.4 million and
NT$31,463.5 million (US$948.6 million) in 1998, 1999 and 2000, respectively.
All of our capital expenditures are and have been in connection with the
expansion of our production capacity.

     As of December 31, 2000, we had total short-term lines of credit of
NT$23,933.1 million (US$721.5 million), of which NT$9,684.4 million (US$92.0
million) had been drawn. The interest rate for borrowings under these
facilities ranged from 0.975% to 10% during 2000. See Note 11 of Notes to
Consolidated Financial Statements. The majority of our short-term borrowings
are denominated in NT Dollars, with the remainder denominated principally in
U.S. Dollars.

     As of December 31, 2000, our outstanding long-term bank loans, less
current portion, were NT$10,329.9 million (US$311.4 million). Certain of our
bank loans are secured by machinery and equipment. Our long-term bank loans
bear interest at floating rates, which in 2000 ranged from 1.1% to 10.5%. For
information regarding our long-term bank loans, including the maturity profile,
see "Item 11. Quantitative and Qualitative Disclosures About Market Risk --
Foreign Currency Exchange Rate Risk". See Note 14 of Notes to Consolidated
Financial Statements. Most of our long-term bank loans are denominated in NT
Dollars. In addition, as of December 31, 2000, we had outstanding convertible
bonds denominated in U.S. Dollars in an aggregate amount of NT$12,229.1 million
(US$368.7 million), including amounts outstanding under bonds guaranteed by ASE
Test. See Note 13 of Notes to Consolidated Financial Statements.

     As of May 2001, we had budgeted total capital expenditures of US$200
million for 2001, all for the expansion of production capacity. As of December
31, 2000, we had long-term loan repayment obligations totaling NT$3,309.9
million (US$99.8 million) in long-term loan repayments due in 2001. In
addition, we had long-term loan repayment obligations totaling NT$12,484.8
million (US$376.4 million) due in 2002, including our US$200,000,000 Zero
Coupon Convertible Bonds Due 2002. We also had NT$9,684.4 million (US$292.0
million) of short-term borrowings outstanding, part of which we would expect to
renew. We expect to meet our long-term working capital, capital expenditure and
debt repayment requirements through cash from operations, the proceeds from our
September 2000 ADS offering and further debt financing and capital raising if
needed. We have also raised capital at the subsidiary level to meet investment
and capital requirements. In July 2000, ASE Test completed a US$276 million
offering of ordinary shares. In September 2000, we completed a US$140 million
offering of ADSs. As of December 31, 2000, we had a cash position of
NT$14,166.5 million (US$427.1 million), outstanding and unused short-term
credit lines of NT$14.248.7 million (US$429.6 million) and unused long-term
bank facilities of NT$5,869.8 million (US$177.0 million).

     We have from time to time also liquidated long-term or short-term
investments to provide cash for our operations and capital expenditures,
including offerings of ASE Test ordinary shares, sometimes in the form of
Taiwan Depositary Receipts, in 1997 and 1999 and the sale by our subsidiaries
of ASE Inc. common shares in the form of GDSs in 1999.

     From time to time, we evaluate possible investments, acquisitions or
divestments and may, if a suitable opportunity arises, make an investment,
acquisition or divestment. We currently have no commitments to make any
material




                                       48

<PAGE>



investment, acquisition or divestment. In July 2000 our shareholders approved a
resolution which authorizes our board of directors to make investments in the
People's Republic of China. At such time as such an investment is permitted by
the ROC investment law and policy and if suitable opportunities are available
at that time, we intend to consider establishing a semiconductor packaging
facility in the People's Republic of China.

RESEARCH AND DEVELOPMENT

   Packaging

     We centralize our research and development efforts in packaging technology
in our Kaohsiung facilities. After initial phases of development, we conduct
pilot runs in one of our facilities before the new techniques or technologies
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., a United States supplier of a substantial portion of our new wire
bonders, 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 through ASE Material. 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 the successful development of substrate production capability by ASE
Material will, among other things, help ensure a stable and cost-effective
supply of substrates for our BGA packaging operations and shorten production
time. In 2000, ASE Material supplied approximately 25.4% of the substrate
requirements at our packaging facilities in Kaohsiung.

     We have also entered into various non-exclusive technology license
agreements with licensors including Tessera Inc., Fujitsu Limited, Flip Chip
Technologies, Motorola, Inc. and LSI Logic Inc. The technology we license from
these companies includes solder bumping, redistribution, ultraCSP, assembly and
other technologies used in the production of package types such as bump chip
carrier, flip chip packages and micro BGA. We are also working with TSMC in
developing the next generation of packaging product technology. The license
agreement with Tessera will not expire until the expiration of the Tessera
patents licensed by the agreement. The license agreements with Fujitsu, Flip
Chip, and Motorola will expire on April 13, 2003, March 1, 2009, and December
31, 2002, respectively. We hold no material patents. We are currently
co-developing with TSMC wafer bumping technology to implant directly onto the
die input/output leads that will be connected to leads on laminate substrates
or leadframes.

   Testing

     Our research and development efforts in the area of testing have focused
primarily on improving the efficiency and technology of our testing processes.
Our current projects 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 semiconductors testing and
wafer probing, as well as software to optimize capacity utilization.

     For 1998, 1999 and 2000, our research and development expenditures totaled
approximately NT$453.6 million, NT$714.3 million and NT$1,262.5 million
(US$38.1 million), respectively. These expenditures represented approximately
2.2%, 2.2% and 2.5% of net revenues in 1998, 1999 and 2000, respectively. We
have historically




                                       49


<PAGE>


expensed all research and development costs as incurred and none is currently
capitalized. As of December 31, 2000, we employed 1,163 employees in research
and development.

Item 6.  Directors, Senior Management and Employees.

DIRECTORS AND SENIOR MANAGEMENT AND BOARD PRACTICE

     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 seven-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 July 11, 2000. The
terms of the directors will expire on July 10, 2003. 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.

     The following table sets forth the name of each of our directors, his or
her position in ASE Inc., the year they were elected as director and other
significant positions within the ASE Group held by them.


<TABLE>
                                                    Director
Name                            Position             Since    Other Significant Positions Held
----                            --------            --------  --------------------------------

<S>                          <C>                      <C>     <C>

Jason C.S. Chang(1)......... Director and Chairman    1984    Chairman of ASE Test Taiwan
Richard H.P. Chang(1)....... Vice Chairman            1984    Chairman of ASE Test;
                                                              Chairman of Universal Scientific
Leonard Y. Liu(2)........... Director and President   2000    Director and Chief Executive
                                                              Officer of ASE Test; Chief
                                                              Executive Officer and President of
                                                              Universal Scientific
Joseph Tung(2).............. Director and Chief       1997    Director of ASE Test;
                             Financial Officer                Supervisor of Universal Scientific
Chang Yao Hung-ying(1)(2)... Director                 1984    Director of ASE Test Taiwan
Chin Ko-Chien(2)............ Director and Executive   1997    Director of ASE Test
                             Vice President
David Pan(2)................ Director                 1997    Director and President of ASE
                                                              Test
</TABLE>

---------
(1)  Chang Yao Hung-ying is the mother of both Jason C.S. Chang and Richard
     H.P. Chang.

(2)  Representative of ASE Enterprises Limited, a company organized under the
     laws of Hong Kong, which held 20.4% of our outstanding common shares as of
     December 31, 2000. All of the outstanding shares of ASE Enterprises
     Limited are held by a company organized under the laws of the British
     Virgin Islands in trust for the benefit of Chang Yao Hung-ying, the mother
     of Jason C.S Chang, our Chairman, and Richard H.P. Chang, our Vice
     Chairman and Chief Executive Officer. Jason C.S. Chang is the sole
     shareholder and director of that company.

Supervisors

     We currently have five supervisors, each serving a three-year term.
Supervisors are typically elected at the time that directors are elected. The
current supervisors began serving on June 1, 2001, and will expire on May 31,
2004. 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


                                      50


<PAGE>


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 and that a
supervisor's term of office be no more than three years.

     The following table sets forth the name of each of our supervisors, his or
her position in ASE Inc., the year they were elected as supervisor and other
significant positions within the ASE Group held by them.

<TABLE>

    Name               Position        Supervisor Since    Other Significant Positions Held
    ----               --------        ----------------    --------------------------------
<S>                    <C>                   <C>           <C>

Feng Mei-Jean (1)      Supervisor            1984          Supervisor of ASE Chung Li
Yen-Yi Tseng (2)       Supervisor            2000          Vice Chairman of Hung Ching
Alan Cheng (2)         Supervisor            1997          Director of ASE Test; Chairman of Hung Ching
John Ho (2)            Supervisor            1998          Director of Universal Scientific
Raymond Lo (2)         Supervisor            2000          President of ASE Test Taiwan
</TABLE>

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


     In accordance with ROC law, each of our directors and supervisors is
elected either in the capacity as an individual shareholder or as an individual
representative of a corporate or governmental shareholder. Persons designated
to represent corporate or government shareholders as directors are typically
nominated by such shareholders at the annual general meeting. Of the current
directors and supervisors, nine represent ASE Enterprises Limited. The
remaining directors and supervisors serve in their capacity as individual
shareholders.

Executive Officers

     The following table sets forth information relating to our executive
officers.

Name                          Postion                                      Age
----                          -------                                      ---

Jason C.S. Chang..........    Chairman                                      56
Richard H.P. Chang........    Vice Chairman and Chief Executive Officer     52
Leonard Y. Liu............    President, ASE Inc.                           59
Chin Ko-Chien.............    Executive Vice President and General
                              Manager, Kaohsiung packaging facility         55
David Pan.................    President, ASE Test                           56
Raymond Lo................    President, ASE Test Taiwan                    47
Kanapathi A/L Kuppusamy...    President, ASE Test Malaysia                  49
Shih-Song Lee.............    President, ASE Chung Li                       60
James Stilson.............    President, ASE Korea                          54
Fu-Shing Chang............    President, ASE Philippines                    50
Gregory Lin...............    President, ASE Material                       57
Joseph Tung...............    Chief Financial Officer                       42

     Biographies of Directors, Supervisors and Executive Officers

     Jason C.S. Chang has served as Chairman of ASE Inc. since its founding in
March 1984. He holds a degree in electrical engineering from National Taiwan
University and a masters degree from the Illinois Institute of Technology. He
is the son of Chang Yao Hung-ying, a director of ASE Inc., and the brother of
Richard H.P. Chang, our Vice Chairman and Chief Executive Officer.

     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 was appointed Chief Executive Officer of ASE Inc. in July 2000. Mr.
Chang is also the Chairman of ASE Test. He holds a degree in industrial
engineering from Chung Yuan


                                       51


<PAGE>


Christian University of Taiwan. He is the son of Chang Yao Hung-ying, a
director of ASE Inc., and the brother of Jason C.S. Chang, our Chairman.

     Leonard Y. Liu has served as a director since July 2000 and President of
ASE Inc. since November 1999. Mr. Liu is also the Chief Executive Officer and a
director of ASE Test and the Chief Executive Officer of Universal Scientific.
Before joining ASE Inc., he was Chairman and Chief Executive Officer of Walker
Interactive System, Inc. Mr. Liu has held other top management positions at
leading technology companies, including Chief Operating Officer of Cadence
Design Systems, President of the Acer Group worldwide and General Manager of
IBM's application enabling software business unit. He holds a degree in
electrical engineering from National Taiwan University and a doctorate degree
in electrical engineering and computer science from Princeton University.

     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 masters degree in business administration from the University of Southern
California.

     Chang Yao Hung-ying has served as a director of ASE Inc. since 1996.
Before April 1997, she was the Chairman of Hung Ching. She holds a degree from
Shanghai University. She is the mother of Jason C.S. Chang and Richard H.P.
Chang, our Chairman and our Vice Chairman and Chief Executive Officer,
respectively.

     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 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.

     David Pan has served as a director of ASE Inc. since April 1997 and
President and a director of ASE Test since November 1995. Before joining ASE
Test, Mr. Pan was the Vice President responsible for research and development
at Ultratech Stepper Inc. He holds a degree in physics from the University of
Illinois and masters and doctorate degrees in physics from the University of
California at Berkeley.

     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 Chief Executive Officer.

     Yen-Yi Tseng has served as a supervisor of ASE Inc. since July 2000 and
Vice Chairman of Hung Ching since 1999. 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 masters 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.

     Alan Cheng has served as a supervisor of ASE Inc. since April 1997. Mr.
Cheng is also the Chairman of Hung Ching. He holds a degree in industrial
engineering from Chung-Yuan University.

     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 masters 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 Taiwan since December 1999, after serving as 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.

     Kanapathi A/L Kuppusamy has served as President of ASE Test Malaysia since
July 1999. Before joining ASE Test Malaysia, Mr. Kanapathi was President of
Motorola Asia Final Manufacturing. He holds a masters degree in business
administration from the University of East Asia in Kuala Lumpur, Malaysia.

     Shih-Song Lee has served as President of ASE Chung Li since July 1999.
Before joining ASE Chung Li, Mr. Lee


                                       52


<PAGE>


served as President of Motorola's Semiconductor Products Sector Businesses in
Chung Li, Taiwan before we acquired the company. He holds a degree in
electrical engineering from the Tatung Institute of Technology in Taiwan.

     James Stilson has served as President of ASE Korea since July 1999. Before
joining ASE Korea, Mr. Stilson served as President of Motorola's Semiconductor
Products Sector Businesses in Paju, Korea before we acquired the company. He
holds a degree in chemistry and a masters degree in business administration
from the University of California.

     Fu-Shing Chang has served as President of ASE Philippines since January
2000. Before joining ASE Philippines, Mr. Chang served as Vice President for
Quality Assurance and Customer Service. He holds a degree in mechanical
engineering from the National Cheng-kung University in Taiwan.

     Gregory Lin has served as President of ASE Material since its inception in
December 1997. Before joining ASE Material, Mr. Lin held research positions
with Xerox Palo Alto Research Center. He holds a degree in chemistry from
National Taiwan Chung Hsing University, and masters and doctorate degrees in
chemistry from the University of Illinois.

COMPENSATION

     In 2000, we paid to our directors, supervisors and executive officers
approximately NT$190.0 million (US$5.7 million) in cash remuneration. In
addition, an aggregate of 7,024,440 common shares of ASE Inc. were granted in
2000 to our directors, supervisors and executive officers. In 2000, we also set
aside an aggregate of NT$1.5 million (US$0.05 million) to provide pension,
retirement and similar benefits for our executive officers pursuant to existing
plans provided by or contributed to by our company or its subsidiaries. The
following table sets forth cash remuneration paid to our individual directors
and supervisors in 2000.

<TABLE>

Name                      Position                                     Compensation(1)     Share Bonuses
----                      --------                                     ---------------     -------------
                                                                              NT$
                                                                        (in thousands)
<S>                      <C>                                                <C>             <C>

Jason C.S. Chang........ Chairman                                            3,503                 --
Richard H.P. Chang...... Director                                            3,358          6,034,260
Leonard Y. Liu(6)....... Director (Representative of ASE Enterprises
                         Limited)                                              (2)             57,900
Chang Yao Hung-ying .... Director (Representative of ASE Enterprises
                         Limited)                                              (2)                 --
Chin Ko-Chien........... Director (Representative of ASE Enterprises
                         Limited)                                              (2)            150,800
David Pan............... Director (Representative of ASE Enterprises
                         Limited)                                              (2)            111,000
Raymond Lo(5)........... Director and Supervisor (Representative of
                         ASE Enterprises Limited)                              (2)            126,440
Joseph Tung............. Director (Representative of ASE Enterprises
                         Limited)                                              (2)            104,920
Feng Mei-Jean........... Supervisor                                          1,000                 --
Yen-Yi Tseng(6)......... Supervisor (Representative of ASE Enterprises
                         Limited)                                              (2)             30,000
Roger Cheung(3)......... Supervisor (Representative of ASE Enterprises
                         Limited)                                              (2)                 --
John Ho................. Supervisor (Representative of ASE Enterprises
                         Limited)                                              (2)             93,330
Alan Cheng.............. Supervisor (Representative of ASE Enterprises
                         Limited)                                              (2)                 --
Walt Delauder(3)........ Supervisor (Representative of ASE Enterprises         (2)                 --
                         Limited)
</TABLE>
----------------

(1) Does not include share bonuses of ASE Inc. or options to purchase
    ordinary shares of ASE Test.

(2) A total of NT$76,200 was paid to ASE Enterprises Limited on account of its
    representative directors and a total


                                       53


<PAGE>


      of NT$60,000 was paid to ASE Enterprises Limited on account of its
      representative supervisors. Such payments were not to the directors and
      supervisors in their individual capacities.
(3)   Term expired on July 11, 2000.
(4)   All share bonuses were for shares of ASE Inc.
(5)   Term as director expired on July 11, 2000.  Term as supervisor began on
      July 11, 2000.
(6)   Term began on July 11, 2000.

ASE Test Share Option Plans

   ASE Test currently maintains four option plans approved in 1997, 1998, 1999
and 2000. As of May 31, 2001, ASE Test had no outstanding options under the IPO
option plan of 1996 and the 1996 option plan, and these plans have expired.
Under ASE Test's share option plans, its directors, employees, advisors and
consultants and those of its affiliates 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 to be in effect for each option grant and the
maximum term for which each granted option is to remain outstanding, up to a
maximum term of five, or in the case of the 1999 and 2000 option plans, ten
years. ASE Test's board of directors may amend or modify the plans at any time.
As of May 31, 2001, an aggregate of 18,800,000 of ASE Test's shares had been
reserved for issuance and 16,221,853 options to purchase its shares remained
outstanding under its various option plans. An aggregate of 6,790,000 options
had been granted to the directors and executive officers of ASE Test. Options
granted under the various plans are exercisable at an exercise price ranging
from $2.06 to $25.00 per share. Options granted under the 1997 and 1998 option
plans will expire five years from the date of grant, and in the case of the
1999 and 2000 plans, ten years from the date of grant.

   The following table sets forth options of ASE Test granted in the year ended
December 31, 2000 with respect to our officers, directors and supervisors. No
other officers, directors or supervisors were granted options in 2000. No
options exercisable for our shares were granted in the year ended December 31,
2000.


                            Number of Options  Exercise Price    Expiration Date
Officer or Director             Granted(1)       of Options        of Options
--------------------------  -----------------  --------------    ---------------
Raymond Lo................      35,000               25           April 18, 2009
Kanapathi A/L Kuppusamy...      25,000               25           April 18, 2009

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

(1) Each option covers one ordinary share of ASE Test.


ASE Inc. Employee Bonus Plan

     We award bonuses to the employees of ASE Group companies based on overall
income and individual performance targets. These employees are eligible to
receive bonuses in the form of common shares of ASE Inc. valued at par. Actual
amounts of bonuses to individual employees are determined based upon the
employee meeting specified individual performance objectives. We granted an
aggregate of 30,760,000 common shares, 9,540,000 common shares and 47,833,062
common shares in 1998, 1999 and 2000, respectively, as stock awards to our
employees with a fair market value at the date of grant of NT$2,311.1 million,
NT$754.7 million and NT$3,429.0 million (US$103.4 million), respectively. We
expect this practice to continue in future periods.

EMPLOYEES

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

<TABLE>
                                              As of December 31,
                                         -----------------------------
                                         1998        1999        2000
                                         ----        ----        ----
<S>                                    <C>         <C>         <C>
Total .............................       8,737      14,184      18,121
     Function
Direct labor.......................       5,583       9,495      12,011
Indirect labor (manufacturing).....       1,937       2,995       3,577
Indirect labor (administration)....         799       1,067       1,370
Research and development...........         418         627       1,163
     Location
Taiwan.............................       6,390       9,360      12,430
Korea..............................          --         972         965
Malaysia...........................       2,167       2,625       3,407
United States......................          --         369         523
Philippines........................         180         582         568
Singapore..........................          --          36         104
Hong Kong..........................          --         137         124
</TABLE>

     Eligible employees may participate in the ASE Inc. Employee Share Bonus
Plan and the ASE Test Share Option Plans. See "--Compensation" and "--Share
Ownership".

     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
officers and directors as of March 31, 2001.


                                    Number of ASE    Percentage of Total of our
                                     Inc. Common        Common Shares Issued
Officer or Director                  Shares Held          and Outstanding
-------------------------------------------------------------------------------
Jason C.S. Chang..................     17,311,832         0.63%
Richard H.P. Chang................     32,353,782          1.18
Leonard Y. Liu....................         57,900          --
Joseph Tung.......................        602,722          0.02
Chang Yao Hung-Ying...............     16,139,604          0.59
Chin Ko-Chien.....................        376,718          0.01
David Pan.........................        210,518          0.01
Feng Mei-Jean.....................     49,803,131          1.81
Yen-Yi Tseng......................         30,000          --
Alan Cheng........................        245,895          0.01
John Ho...........................        183,787          0.01
Raymond Lo........................        375,911          0.01
Kanapathi A/L Kuppusamy...........             --          --
Shih-Song Lee.....................        120,000          0.01
James Stilson.....................             --          --
Fu-Shing Chang....................         73,203          0.01
Gregory Lin.......................        285,567          0.01


Item 7.  Major Shareholders.

MAJOR SHAREHOLDERS

     The following table sets forth information known to us with respect to the
beneficial ownership of our common shares as of December 31, 2000, by (1) each
shareholder known by us to own beneficially more than 5% of our common shares
and (2) all directors, supervisors and executive officers as a group.


                                      55


<PAGE>


Name of Shareholder or group                   Common Shares Beneficially Owned
----------------------------                   --------------------------------
                                                      Number       Percentage
                                                      ------       ----------

ASE Enterprises Limited(1)......................   560,889,602      20.4%
Directors, supervisors and executive officers
  as a group(2).................................   680,210,777      24.7%

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

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

(2) Includes shareholding of ASE Enterprises Limited.

     The following table sets forth information relating to our common shares
held by our consolidated subsidiaries and non-consolidated affiliates as of
December 31, 2000.

Name of Shareholder                             Common Shares Beneficially Owned
-------------------                             --------------------------------
                                                      Number       Percentage
                                                      ------       ----------


ASE Capital(1)................................      17,907,964      0.7%
ASE Investment(1)(2)..........................     117,401,760      4.3%
ASE Test Taiwan(3)............................         557,875      0.02%
Hung Ching(4).................................      33,791,301      1.2%

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

(1)  ASE Capital and ASE Investment are our wholly-owned subsidiaries.

(2)  Of the 117,401,760 common shares owned by ASE Investment 13,873,890 are
     currently represented by an aggregate of 2,774,778 ADSs.

(3)  ASE Test Taiwan is a subsidiary of ASE Test, our 51.2% owned subsidiary.

(4)  As of December 31, 2000, we held 25.1% of the outstanding shares of Hung
     Ching. Our director Chang Yao Hung-ying, our Chairman Jason C.S. Chang,
     our Vice Chairman and Chief Executive Officer Richard H.P. Chang and other
     members of the Chang family are controlling shareholders of Hung Ching.
     See "Item 4. Information on the Company-- Business Overview-- Other
     Members of the ASE Group--Unconsolidated Affiliates".

     In addition to the common shares held by our consolidated subsidiaries and
unconsolidated affiliates set forth above, as of December 31, 2000, J&R
Holding, our wholly-owned subsidiary, held options exercisable for 76,703,517,
or 2.8%, of our common shares at an exercise price of NT$59.7 per common share.
The number of common shares covered by the options and the exercise price are
subject to adjustments if specified events take place, such as the declaration
of dividends in our common shares or the issuance of our common shares at less
than the market price. The options expire in November 2002.

     As of May 31, 2001, approximately 37.3 million of our ADSs were
outstanding, representing approximately 6.8% of our outstanding shares. We
believe that, of such ADSs, approximately 26.7 million were held by
approximately 700 holders in the United States.

RELATED PARTY TRANSACTIONS

     In recent years, ASE Inc. has made awards of ASE Inc.'s common shares to
the employees of ASE Group companies as part of their compensation, based in
part on the consolidated net income of ASE Inc. and the member companies'
contribution to the consolidated income. ASE Inc. granted an aggregate of
13,510,250 common shares in 2000, 1,305,000 common shares in 1999 and 6,105,410
common shares in 1998 as stock awards to employees of other companies of the
ASE Group with a fair market value at the time of grant of NT$968.5 (US$29.2
million), NT$103.2 million and NT$458.7 million, respectively. ASE Inc. expects
this practice to continue in future periods.

     ASE Material sold interconnect material, principally leadframes, in the
aggregate amount of NT$1,765.6 million (US$53.2 million), NT$779.9 million and
NT$452.1 million to ASE Inc. for 2000, 1999 and 1998, respectively. In 2000, we
purchased approximately 25.4% of our substrate requirements for our packaging
facilities in Kaohsiung from ASE Material. We purchase, and plan to continue to
purchase, materials from ASE Material at prevailing market prices.


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<PAGE>


     ASE Test Taiwan has historically charged ASE Inc. fees for the testing of
semiconductors packaged for a small number of customers that prefer to be
billed through ASE Inc. for testing services performed by ASE Test Taiwan.
These fees amounted to NT$142.7 million (US$4.3 million), NT$81.5 million and
NT$155.7 million for 2000, 1999 and 1998, respectively. ASE Inc. sold to ASE
Test Taiwan at book value a building at an aggregate price of NT$18.4 million
(US$0.6 million) in 2000.

     ASE Test Malaysia and ASE Philippines have historically purchased a
portion of the raw materials used in their packaging operations, principally
leadframes, from ASE Inc. when they face a shortage in the supply of these
types of raw materials. These types of raw materials are typically resold by
ASE Inc. to ASE Test Malaysia and ASE Philippines at book value. Purchases of
raw materials by ASE Test Malaysia amounted to NT$3.6 million (US$0.1 million),
NT$14.6 million and NT$28.0 million for 2000, 1999 and 1998, respectively.
Purchases of raw materials by ASE Philippines amounted to NT$1.8 million
(US$0.05 million), NT$2.1 million and NT$4.1 million for 2000, 1999 and 1998,
respectively. In addition, ASE Inc. purchased raw materials, principally
leadframes, from ASE Test Malaysia in an amount of NT$11.9 million (US$0.4
million), NT$4.3 million and NT$3.2 million for 2000, 1999 and 1998,
respectively.

     ASE Inc. has historically guaranteed the short-term borrowing of many of
its subsidiaries. As of December 31, 2000, ASE Inc. had endorsed and guaranteed
an aggregate amount of NT$8,423.9 million (US$254.0 million) of the outstanding
promissory notes of its subsidiaries.

     ASE Inc. sold to ASE Philippines at book value machinery and equipment for
the packaging of plastic dual in-line packages at an aggregate price of NT$22.8
million (US$0.7 million) and NT$12.9 million in 2000 and 1999, respectively.

     In January 2000, ASE Chung Li and Hung Ching, our affiliate company,
entered into an agreement for the development of buildings on land currently
owned by ASE Chung Li. Hung Ching will bear all costs relating to the
development. Upon completion of the development, floor space in the buildings
will be sold by Hung Ching at prices to be negotiated between Hung Ching and
the buyers. ASE Chung Li and its affiliates will have priority in the purchase
of the floor space. In the event that floor space is sold to persons other than
ASE Chung Li, ASE Chung Li will receive 25% of the purchase price. The first
phase of the development project is the construction of a building with
aggregate floor space of approximately 800,000 square feet, which was completed
in September 2000. The total value of the first phase of the project, including
land and the completed building, is estimated at NT$2.0 billion. The new
building is expected to house ASE Chung Li's testing operations as well as part
of the operations of other ASE Group companies.

     In October 1997, J&R Holding entered into agreements with Swiss Bank
Corporation to purchase call options on a portion of our US$200 million Zero
Coupon Convertible Bonds due 2002. The call options were offered by Swiss Bank
Corporation as a part of the repackaging of our convertible bonds by SBC
Warburg, an affiliate of Swiss Bank Corporation, into two separate instruments
consisting of: (1) US$200 million callable floating rate notes secured by the
convertible bonds and (2) call options on the convertible bonds. SBC Warburg
decided to repackage the convertible bonds because the adverse market
conditions resulting from the Asian financial crisis during the second half of
1997 made it difficult to market the convertible bonds. SBC Warburg was able to
obtain commitments for the entire issue of the floating rate notes but, as a
result of the adverse market conditions described above, was able to obtain
commitments for only a portion of the call options. As a result, Swiss Bank
Corporation approached a number of large institutional investors, including J&R
Holding, with a proposal to sell a portion of the call options.

     J&R Holding decided to purchase the call options because its management
considered the call options to be a good investment. Under the first agreement
with Swiss Bank Corporation, J&R Holding is required to make four cash payments
to Swiss Bank Corporation in November 1998, 1999, 2000 and 2001. In return, J&R
Holding has the right to call the convertible bonds back at any time during the
period from November 1998 through November 2002. Under the second agreement,
Swiss Bank Corporation paid US$200,000 to J&R Holding. In return, Swiss Bank
Corporation had the right to sell a portion of the call options to J&R Holding
at any time between November 4, 1997 and November 1, 1998. In any event, J&R
Holding was required under the automatic exercise provision of the second
agreement to purchase these call options upon the expiration of the agreement
on November 1, 1998.

     ASE Holding Limited, one of our subsidiaries through which we hold ASE
Test's shares, entered into a share purchase agreement dated as of May 19, 2001
with our Chairman, Jason C.S. Chang, and Vice-Chairman, Richard H.P.


                                       57


<PAGE>


Chang, under which ASE Holding Limited would purchase 2,480,000 shares of ASE
Test from Jason C.S. Chang and Richard H.P. Chang upon the exercise of certain
options granted to them under ASE Test's 1996 IPO option plan for an aggregate
purchase price of US$35,389,600. The closing date of this acquisition of shares
was May 22, 2001. We engaged in this acquisition principally for investment
purposes.

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.

     Criminal charges were brought in December 1998 by the district attorney
for Taipei against Jason C.S. Chang, Richard H.P. Chang, Chang Yao Hung-ying
and four others for alleged breach of fiduciary duties owned to Hung Ching
Development & Construction Co. Ltd. ("Hung Ching"), an affiliate of ASE Inc.,
in their capacity as directors and officer of Hung Ching in connection with a
land sale transaction in 1992 valued at approximately NT$1.7 billion. It was
alleged that the transaction in which Jason C.S. Chang sold the land to Hung
Ching unfairly benefitted Jason C.S. Chang to the detriment of Hung Ching. Hung
Ching at that time was a privately owned company whose principal shareholders
were members of the Chang family. Ancillary charges were brought against Jason
C.S. Chang, Chang Yao Hung-ying and another for alleged forgery of Hung Ching
board resolutions relating to that transaction. On January 5, 2001, the
District Court of Taipei rendered a judgment in the matter, finding Jason C.S.
Chang and Chang Yao Hung-ying guilty with sentences of six years' imprisonment
each and Richard H.P. Chang not guilty. In order to comply with the particular
requirements of the Singapore Companies Act, Jason C.S. Chang and Chang Yao
Hung-ying have both resigned as directors of ASE Test.

     Neither Jason C.S. Chang nor Chang Yao Hung-ying believes that he or she
committed any offense in connection with such transactions, and they are
appealing the decision to the High Court of Taiwan, the ROC. Counsel to Jason
C.S. Chang and Chang Yao Hung-ying have advised that, as these proceedings may
not be finally determined until the case has been considered by the High Court
and the Supreme Court of Taiwan, the ROC, two or three years may elapse until
they are fully resolved. If the convictions are not overturned on appeal to the
High Court or, if necessary, the Supreme Court of Taiwan, the ROC, they will be
required under ROC law to resign as directors and Jason C.S. Chang will be
required to resign as Chairman of ASE Inc.

SIGNIFICANT CHANGES

     We have not experienced any significant changes since the date of the
annual financial statements.

Item 9.  Listing Details.

MARKET PRICE INFORMATION AND MARKETS

     Our shares are traded on the Taiwan Stock Exchange under the symbol
"2311". Public trading of our shares, par value NT$10, commenced in July 1989.
Prior to that time, there was no public market for our shares. As of December
31, 2000, there were an aggregate of 2,752,000,000 of our common shares
outstanding. The following table sets forth the high and low closing prices for
the shares for the periods indicated as reported by Bloomberg for the periods
indicated.


                                                         Closing Price(1)
                                                         -----------------
                                                         High          Low
                                                         -----        ----
Year Ended December 31,
   1996 ...............................................  15.63        8.44


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<PAGE>


   1997................................................  63.10       14.90
   1998................................................  76.94       32.29
   1999................................................  85.17       35.03
   2000................................................  93.54       21.90
Year Ended December 31, 1999
   First Quarter.......................................  58.39       35.03
   Second Quarter .....................................  75.56       51.18
   Third Quarter.......................................  82.43       56.27
   Fourth Quarter......................................  85.17       65.78
Year Ended December 31, 2000
   First Quarter.......................................  93.54       69.20
   Second Quarter .....................................  90.87       68.06
   Third Quarter ......................................  72.24       40.10
   Fourth Quarter .....................................  43.00       21.90
Year Ending December 31, 2001
   First Quarter.......................................  38.80       22.50
Monthly
   December 2000.......................................  34.50       21.90
   January 2001........................................  34.80       22.50
   February 2001.......................................  38.80       31.10
   March 2001..........................................  31.70       28.20
   April 2001..........................................  29.40       27.00
   May 2001 ...........................................  27.50       24.50
   June 2001 (through June 28) ........................  25.10       21.00

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

(1)  As adjusted retroactively by the Taiwan Stock Exchange to give effect to
     stock dividends paid in the periods indicated.

     The last reported price of our shares was NT$21.00 per share on June 28,
2001.

     We offered and sold 8,600,000 GDSs in July 1995 comprising of GDSs sold in
the United States under Rule 144A and GDSs sold outside the United States
pursuant to Regulation S. Each GDS represented five common shares of ASE Inc.
The GDSs sold under Rule 144A were designated as eligible for trading in the
PORTAL System of the National Association of Securities Dealers, Inc. in the
United States. The GDSs sold pursuant to Regulation S were listed on the Stock
Exchange of Singapore and the Luxembourg Stock Exchange and quoted on SEAQ
International. Some of our affiliates offered and sold an additional 10,489,902
GDSs in December 1999. Concurrently with an offering of ADSs in on September
25, 2000, we are offered to exchange one ADS for each GDS sold under Rule 144A.
We also converted each of the outstanding GDSs sold pursuant to Regulation S
into one ADS. Upon completion of the conversion of the GDSs sold pursuant to
Regulation S into ADSs, we delisted these GDSs from the Stock Exchange of
Singapore and the Luxembourg Stock Exchange on September 26, 2000 and from the
SEAQ International on October 12, 2000. The following table sets forth, for the
periods indicated, the high and low closing prices of our GDSs as quoted on
SEAQ International.

                                                       Closing Price of GDSs(1)
                                                       ------------------------
                                                          High          Low
                                                          ----         ---
Year Ended December 31,
   1996............................................... US$2.97         US$1.50
   1997 ..............................................   11.65            2.79
   1998 ..............................................   14.78            4.88
   1999...............................................   17.79            6.27
   2000 (through October 12)..........................   19.20            5.88
Year Ended December 31, 1999
   First Quarter .....................................   10.27            6.27


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<PAGE>


   Second Quarter.....................................   15.46            9.77
   Third Quarter......................................   16.16           11.20
   Fourth Quarter.....................................   17.79           13.81
Year Ended December 31, 2000
   First Quarter......................................   19.20           14.52
   Second Quarter ....................................   16.35           12.17
   Third Quarter .....................................   12.89            6.83
   Fourth Quarter (through October 12)................    6.58            5.88
Monthly
   October 2000 (through October 12)..................    6.58            5.88

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

(1)   Adjusted retroactively to give effect to stock dividends.
      Source: Bloomberg.

     The last reported sale price of the GDSs before delisting on the SEAQ
International was US$5.95 per GDS on October 12, 2000.

     We offered and sold 20,000,000 ADSs on September 25, 2000. Our ADSs are
traded on the New York Stock Exchange under the symbol "ASX". Public trading of
our ADSs, each representing five common shares, commenced in September 2000.
Prior to that time, there was no public market for our ADSs. As of April 12,
2001, there were an aggregate of 35,656,653 of our ADSs outstanding. The
following table sets forth the high and low sales prices for the shares for the
periods indicated as reported by the New York Stock Exchange for the periods
indicated.


                                                       Closing Price of ADSs
                                                       ---------------------
                                                          High         Low
                                                          ----         ---
Year Ended December 31,
   2000 (from September 25)........................... US$6.75      US$3.06
Year Ended December 31, 2000
   Fourth Quarter (including September 25 -
   October 1 of third quarter)........................    6.75         3.06
Year Ending December 31, 2001
   First Quarter .....................................    6.05         3.31
Monthly
   December 2000 .....................................    5.06         3.06
   January 2001 ......................................    5.75         3.31
   February 2001 .....................................    6.05         4.75
   March 2001 ........................................    5.05         4.20
   April 2001.........................................    4.40         4.00
   May 2001 ..........................................    4.40         3.74
   June 2001 (through June 27)........................    3.65         3.05
-------------
     Source: Bloomberg.

     The last reported sale price of the ADSs on the NYSE was US$2.99 per ADS on
June 27, 2001.

Item 10.  Additional Information.

ARTICLES OF INCORPORATION

     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:


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<PAGE>


     1. The manufacture, assembly, processing, testing and export of various
types of integrated circuitry;

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

     3. General import and export trading business (to the exclusion of certain
approved businesses that require trading permits).

     Directors

     Our Articles of Incorporation provide that we are to have from five to
seven directors with tenures of three years who are elected from among the
shareholders. There is no minimum amount of shares necessary to stand for
election to a directorship. Many of our directors are corporate shareholders,
who appoint 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 or managers, 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 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.

      The 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.

     General

     We were incorporated on March 23, 1984 as a company limited by shares
under the ROC Company Law. Before our annual general shareholders' meeting held
on July 11, 2000, our authorized and paid-in share capital was
NT$24,000,000,000, divided into 2,400,000,000 common shares, all of which were
in registered form and 1,980,355,086 of which were issued and outstanding. At
the meeting, our shareholders:

     o approved an increase in our authorized share capital to
NT$32,000,000,000, divided into 3,200,000,000 common shares; and

     o approved the distribution of a stock dividend of NT$3.15 per common
share.

     Currently, 2,752,000,000 common shares are issued and outstanding,
including common shares represented by our ADSs. We do not have any equity in
the form of preference shares or otherwise outstanding.

     We have 200,000,000 common shares reserved for the issuance of common
shares upon conversion of any convertible bonds issued by us, including
94,607,641 common shares reserved in connection with our US$200 million Zero
Coupon Convertible Bonds Due 2002 issued in November 1997. As of August 15,
2000, these convertible bonds were convertible into our common shares at a
conversion price of NT$59.7 per common share. The conversion price is subject
to adjustment in the following circumstances:

     (1)  the making of a free distribution or bonus issue of common shares;

     (2)  subdivisions, consolidations or reclassifications of common shares;

     (3)  the declaration of a dividend in common shares;

     (4) the grant, issue or offer to the holders of common shares or rights or
warrants to subscribe for or purchase common shares at less than the current
market price or to subscribe for or purchase any securities convertible into or
exchangeable


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<PAGE>


for common shares at less than the then current market price;

     (5) the distribution to the holders of common shares of evidences of
indebtedness of ASE Inc. or of shares of capital stock of ASE Inc. (other than
common shares) or of assets (other than regular periodic dividends in cash) or
of rights or warrants to subscribe for or purchase shares or securities (other
than those mentioned in (4) above);

     (6) the issue of securities (other than the bonds, certificates of payment
issued on conversion of bonds and those mentioned in (4) above) convertible
into or exchangeable for common shares at less than the then current market
price or of rights or warrants (other than those mentioned in (4) above) to
subscribe for or purchase common shares at less than the then current market
price or to subscribe for or purchase securities convertible into or
exchangeable for common shares at less than the then current market price;

     (7) the issue of common shares (other than common shares or certificates
of payment issued on conversion of the bonds or in any of the circumstances
described above, but including to employees under any employee bonus
arrangements) at less than the current market price; and

     (8) any other event or circumstances which would have in our determination
or in the determination of the trustee an analogous effect to any of the events
in (1) to (7) above including, but not limited to, issues of receipts or
certificates entitling holders to receive securities.

     Certificates of Payment

     Under current ROC law, whenever we issue common shares, we will deliver
one or more certificates of payment evidencing the aggregate number of common
shares purchased to the purchaser (or the holder, in the case of a distribution
of common shares to existing holders, or the subscriber, in the case of a
holder subscribing for additional common shares under a rights offering). Each
certificate of payment will represent the irrevocable right to receive the
relevant number of common shares after all required ROC share issuance
procedures have been complied with. We are required under ROC law to file an
amendment to our corporate registration within 15 days after we receive the
proceeds of an offering.

     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. Our shareholders are not entitled to the benefits of any sinking fund
and are not entitled to redeem their shares. 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 any gains on the disposal
of fixed assets, prior years' losses and additions to 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 any gains on the
disposal of fixed assets, 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 the form of stock bonuses in accordance with
our employee stock bonus plan, 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.

     At the annual general shareholders' meeting, our board of directors
submits to the shareholders for their approval any proposal for the
distribution of a dividend 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. Our Articles of
Incorporation provide that our dividend policy is to give priority to stock
dividends and the amount of cash dividends is not to exceed 20% of the total
dividends distributable in that year.


                                       62

<PAGE>



     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.

     Cash dividends that are unclaimed for a period of five years from the date
of the relevant notice of distribution may no longer be claimed. Such unclaimed
cash dividends will, upon expiry of such five-year period, become our property.
However, stock dividends are not subject to any prescription period under ROC
law. Accordingly, uncollected stock dividends will remain in our safekeeping
and continue to be claimable by the relevant shareholders.

     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 ASE Inc., the approval
of the ROC Securities and Futures Commission 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.

     Preemptive Rights

     Under the ROC Company Law, when a 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.

     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. Extraordinary
shareholders' meetings may also be convened by a supervisor. Notice in writing
of meetings of shareholders, stating the place, time and purpose, must be
dispatched to each shareholder at least 20 days, in the case of ordinary
meetings, and 10 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.

     Under the ROC Company Law, the applicable rules of the Taiwan Stock
Exchange and our Articles of Incorporation, we are required to hold an ordinary
meeting of our shareholders within six months following the end of each fiscal
year.

     Voting Rights

     Our Articles of Incorporation provide that a holder of common shares has
one vote for each common share, except that a holder of more than 3% of the
total outstanding common shares is not permitted to vote 0.1% of the number of
common shares held by the holder in excess of 3%. There is cumulative voting
for the election of directors and supervisors. Elections for directors are not
staggered.

     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:


                                       63


<PAGE>


    o     amendment to the Articles of Incorporation;

    o     increase in authorized share capital;

    o     transfer of the whole or substantial part of its business or assets;

    o     taking over of the whole of the business of any other company; or

    o     distribution of any stock dividend.

     In case of a dissolution or amalgamation of the company, approval by a
majority of the common shares represented at a shareholders' meeting in which a
quorum of at least three-fourths of all issued and outstanding common shares
are represented is required.

     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.

     Register of Shareholders and Record Dates

     Our share registrar, President Securities Corp., maintains our register of
shareholders at its offices in Taipei, Taiwan, and enters transfers of common
shares in our register upon presentation of, among other documents,
certificates representing the common shares transferred. 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 -- one month;

    o     extraordinary shareholders' meeting -- 15 days;

    o     relevant record date -- five days.

     Annual Financial Statements

     At least 10 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, effected on July 21, 2000, we
may purchase our own common shares for treasury stock in limited circumstances,
including:

     o    to transfer common shares to our employees;

     o    to reserve common shares to be issued upon conversion of convertible
          securities; and

     o    to maintain our credit and our shareholders' equity.


                                       64


<PAGE>


     We may purchase our common shares (1) on the Taiwan Stock Exchange or (2)
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.

     These restrictions on acquiring our common shares do not apply to our
subsidiaries or affiliates.

     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.

     Substantial Shareholders and Transfer Restrictions

     The ROC Securities and Exchange Law currently requires (1) each director,
supervisor, manager 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 publicly listed company) to report any change in that
person's shareholding to the issuer of the shares which shall later report such
information to the ROC Securities and Futures Commission and (2) each director,
supervisor, manager or substantial shareholder holding those common shares for
more than a 90-day period to report his or her intent to transfer any shares on
the Taiwan Stock Exchange to the ROC Securities and Futures Commission at least
three days before the intended transfer, unless the number of shares to be
transferred is less than 10,000 shares per trading day.

     Limitations on the Right to Own Securities

     Investments in us by foreigners are not subject to any individual or
aggregate foreign ownership limits. The exercise of voting rights by such
foreign shareholders is not subject to any restriction.

     Other Provisions

     There are no special provisions in the Articles of Incorporation that
would delay, defer or prevent a change of control and would operate only in
respect to a merger, acquisition or restructuring involving us or our
subsidiaries. There are no provisions in the Articles of Incorporation
governing the ownership threshold above which shareholder ownership must be
disclosed.

MATERIAL CONTRACTS

     Stock Purchase Agreement dated as of March 15, 1999 between ASE Test
Limited and the Selling Shareholders relating to the purchase and sale of
12,250,000 shares of Common Stock of ISE Labs, Inc.

     Our subsidiary, ASE Test, entered into this agreement in order to take
control and a majority stake in ISE Labs, Inc., a California corporation
engaged in the business of testing integrated circuits. Our subsidiary paid
$8.00 per share to the selling shareholders at the closing. The contract
contemplates either an initial public offering meeting certain qualifications
or a material asset sale meeting certain qualifications which must occur by
December 31, 2001. This offering or sale has not yet occurred. If this offering
or sale does not occur by the mandated time, each seller will have the right to
exchange his outstanding common stock of ISE Labs for ASE Test shares deemed to
have a value equivalent to $8.00, plus interest. Alternatively, such selling
shareholder may sell its stock to ASE Test. ___ See "Item 4. Information on the
Company -- History and Development of the Company -- ISE Labs".

     Asset Purchase Agreement dated as of July 3, 1999 among ASE (Chung Li)
Inc., ASE Inc., Motorola Electronics Taiwan, Ltd. and Motorola, Inc.

     We entered into this asset purchase agreement to acquire Motorola's
integrated circuit testing and packaging unit located in Chung Li, ROC.
Pursuant to this agreement, substantially all of Motorola Electronics Taiwan,
Ltd.'s assets were transferred to our subsidiary, ASE Chung Li. The base
purchase price as set forth in the contract was $80 million, subject


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<PAGE>


to certain adjustments. 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 of US$80.0 million at closing and an additional US$70.0 million payable
over three years if sales volume targets are met. See "Item 4. Information on
the Company -- History and Development of the Company -- ASE Chung Li and ASE
Korea".

     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.

     We entered into this stock purchase agreement to acquire Motorola's
integrated circuit testing and packaging unit located in Paju, Korea. Pursuant
to this agreement, substantially all of Motorola Asia Ltd.'s assets were
transferred to our subsidiary, ASE Korea. The base purchase price as set forth
in the contract was $36 million, plus an additional purchase price of
$51,095,000, subject to certain adjustments. 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 of US$36.0 million and an additional US$104.0
million payable over five years. See "Item 4. Information on the Company --
History and Development of the Company -- ASE Chung Li and ASE Korea".

     Manufacturing Services Agreement dated as of July 3, 1999 among Motorola,
Inc., ASE Inc. and ASE (Chung Li) Inc.

     This contract was entered into to provide a strategic supplier
relationship in which we use our ASE Chung Li subsidiary to provide testing and
packaging services to Motorola on a priority basis. This contract has a
duration of five years. The contract governs capacity reservation by Motorola
at the Chung Li facility as well as our facilities in Kaohsiung or the
facilities of ASE Test Taiwan and specifications of the work to be performed.
Remuneration to us is confidential and the contract, as filed as an exhibit
to our Form F-1 Registration Statement in 2000, was granted confidential
treatment by the Commission.

     Manufacturing Services Agreement dated as of July 3, 1999 among Motorola,
Inc., ASE Inc. and ASE (Korea) Inc.

     This contract was entered into to provide a strategic supplier
relationship in which we use our ASE Korea subsidiary to provide testing and
packaging services to Motorola on a priority basis. This contract has a
duration of five years. The contract governs capacity reservation by Motorola
at the Korea facility and specifications of the work to be performed.
Remuneration to us is confidential and the contract, as filed as an exhibit to
our Form F-1 Registration Statement in 2000, was granted confidential treatment
by the Commission.

     BGA Immunity Agreement dated as of January 25, 1994 between ASE Inc. and
Motorola, Inc.

     Pursuant to this contract, Motorola released, acquitted and forever
discharged us and our subsidiaries from any and all claims or liability for
infringement or alleged infringement of any Motorola patents, as defined in the
contract. Motorola granted us and our subsidiaries immunity from suit for
Motorola patents involving BGA packages. We and our subsidiaries released,
acquitted and forever discharged Motorola and its subsidiaries for any time
prior to the date of the contract, from any and all claims or liability for
infringement of any of our patents. We granted Motorola and its subsidiaries
immunity from suit for our patents involving BGA packages. Remuneration to
Motorola is confidential and the contract, as filed as an exhibit to our Form
F-1 Registration Statement in 2000, was granted confidential treatment by the
Commission. The agreement terminates on December 31, 2002.

     Service Agreement dated as of July 1, 2000 between ASE Electronics (M)
Sdn. Bhd. and ASE (U.S.) Inc.

     This contract established ASE (U.S.) as our subsidiary, ASE Test
Malaysia's non-exclusive sales service and sales support agent in Europe and
North America for its products and services. For such services, our subsidiary
pays ASE (U.S.) 12.5% of their monthly incurred services associated costs and
expenses plus 10%. ASE (U.S.) agreed to reimburse our subsidiary for expenses
for any employee traveling to the U.S. or Europe if such travel was necessary
to ASE (U.S.)'s services. This agreement will expire on June 30, 2001.


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<PAGE>


     Service Agreement dated as of July 1, 2000 between ASE Test Inc. and ASE
(U.S.) Inc.

     This contract established ASE (U.S.) as our subsidiary, ASE Test Inc.'s
non-exclusive sales service and sales support agent in Europe and North America
for its products and services. For such services, our subsidiary pays ASE
(U.S.) 15% of their monthly incurred services associated costs and expenses
plus 10%. ASE (U.S.) agreed to reimburse our subsidiary for expenses for any
employee traveling to the U.S.or Europe if such travel was necessary to ASE
(U.S.)'s services. This agreement will expire on June 30, 2001.

     Service Agreement dated as of July 1, 2000 between ASE (Korea) Inc. and
ASE (U.S.) Inc.

     This contract established ASE (U.S.) as our subsidiary, ASE Korea's
non-exclusive sales service and sales support agent in Europe and North America
for its products and services. For such services, our subsidiary pays ASE
(U.S.) 5% of their monthly incurred services associated costs and expenses plus
10%. ASE (U.S.) agreed to reimburse our subsidiary for expenses for any
employee traveling to the U.S.or Europe if such travel was necessary to ASE
(U.S.)'s services. This agreement will expire on June 30, 2001.

     Service Agreement dated as of July 1, 2000 between ASE (Chung-Li) Inc. and
ASE (U.S.) Inc.

     This contract established ASE (U.S.) as our subsidiary, ASE Chung Li's
non-exclusive sales service and sales support agent in Europe and North America
for its products and services. For such services, our subsidiary pays ASE
(U.S.) 10% of their monthly incurred services associated costs and expenses
plus 10%. ASE (U.S.) agreed to reimburse our subsidiary for expenses for any
employee traveling to the U.S.or Europe if such travel was necessary to ASE
(U.S.)'s services. This agreement will expire on June 30, 2001.

     Service Agreement dated as of July 1, 2000 between ASE Inc. and ASE (U.S.)
Inc.

     This contract established ASE (U.S.) as our non-exclusive sales service
and sales support agent in Europe and North America for our products and
services. For such services, we pay ASE (U.S.) 50% of their monthly incurred
services associated costs and expenses plus 10%. ASE (U.S.) agreed to reimburse
us for expenses for any employee traveling to the U.S.or Europe if such travel
was necessary to ASE (U.S.)'s services. This agreement will expire on June 30,
2001.

     Commission Agreement dated as of July 1, 2000 between ASE Electronics (M)
Sdn, Bhd. and Gardex International Limited

     This contract established Gardex as our subsidiary, ASE Test Malaysia's
non-exclusive worldwide sales agent for all its products and services. For such
services, our subsidiary pays Gardex monthly, in respect of net export sales
outside Malaysia, 0.7% of the sales amount for monthly sales. ___ This
agreement expires on June 30, 2001

     Commission Agreement dated as of July 1, 2000 between ASE Test Inc. and
Gardex International Limited

     This contract established Gardex as our subsidiary, ASE Test Inc.'s
non-exclusive worldwide sales agent for all its products and services. For such
services, our subsidiary pays Gardex monthly, in respect of net export sales
outside Taiwan, 0.7% of the sales amount for monthly sales. This agreement will
expire on June 30, 2001.

     Commission Agreement dated as of July 1, 2000 between ASE (Korea) Inc. and
Gardex International Limited

     This contract established Gardex as our subsidiary, ASE Korea's
non-exclusive worldwide sales agent for all its products and services. For such
services, our subsidiary pays Gardex monthly, in respect of net export sales
outside Korea, 0.6% of the sales amount for monthly sales. This agreement will
expire on June 30, 2001.

     Commission Agreement dated as of July 1, 2000 between ASE (Chung Li) Inc.
and Gardex International Limited


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<PAGE>


     This contract established Gardex as our subsidiary, ASE Chung Li's
non-exclusive worldwide sales agent for all its products and services. For such
services, our subsidiary pays Gardex monthly, in respect of net export sales
outside Taiwan, 0.6% of the sales amount for monthly sales. This agreement will
expire on June 30, 2001.

     Commission Agreement dated as of July 1, 2000 between ASE Inc. and Gardex
International Limited

     This contract established Gardex as our non-exclusive worldwide sales
agent for all its products and services. For such services, we pay Gardex
monthly, in respect of net export sales outside Taiwan, 1.0% of the sales
amount for monthly sales. This agreement will expire on June 30, 2001.

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 Ministry of Finance or by the Central Bank of China.
Current regulations favor trade-related foreign exchange transactions and
Foreign Investment Approval investments. 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 outside the ROC foreign currency of up to
US$50,000,000 (or its equivalent) and US$5,000,000 (or its equivalent)
respectively in each calendar year. In addition, ROC companies and resident
individuals may, without foreign exchange approval, remit into the ROC foreign
currency of up to US$50,000,000 (or its equivalent) and US$5,000,000 (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 is the opinion of Lee and Li. The discussion
describes the principal ROC tax consequences of the ownership and disposition
of ADSs representing common shares to a non-resident individual or entity. It
applies to you only if you are:

     o    an individual who is not a ROC citizen, who owns ADSs and who
          is not physically present in the ROC for 183 days or more during any
          calendar year; or

     o    a corporation or a non-corporate body that is organized under
          the laws of a jurisdiction other than the ROC for profit-making
          purposes and has no fixed place of business or other permanent
          establishment in the ROC.

     You should also consult your tax advisors concerning the ROC tax
consequences of owning ADSs.


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<PAGE>


     Dividends

     Dividends declared by us out of our retained earnings and distributed to
you 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 common shares in the case of stock dividends. However, a 10% ROC retained
earnings tax paid by us on our undistributed after-tax earnings, if any, would
provide a credit up to 10% of the gross amount of any dividends declared out of
such earnings that would reduce the 20% ROC tax imposed on these distributions.

     Dividends paid by us out of our capital reserves previously were not
subject to ROC withholding tax. However, due to the fact that a tax ruling
confirming the foregoing has been removed from the government tax publication,
it is now unclear whether dividends paid out of capital reserve are free from
ROC withholding tax. The ROC tax authority is currently studying the issue.

     Capital Gains

     Under ROC law, capital gains on share securities transactions are exempt
from income tax.

     Subscription Rights

     Distributions of statutory subscription rights for common shares in
compliance with ROC law are not subject to any ROC tax. Proceeds derived from
sales of statutory subscription rights evidenced by securities are exempted
from income tax but are subject to securities transaction tax 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:

     o    35% of the gains realized if you are a natural person; or

     o    25% of the gains realized if you are an entity that is not a natural
          person.

     Subject to compliance with ROC law, we, at our sole discretion, can
determine whether statutory subscription rights shall be evidenced by issuance
of securities.

     Securities Transaction Tax

     A securities transaction tax, at the rate of 0.3% of the gross amount
received, will be withheld upon a sale of common shares in the ROC. Transfers
of ADSs are not subject to ROC securities transaction tax. Withdrawal of common
shares from the deposit facility is not subject to ROC securities transaction
tax.

     Estate and Gift Tax

     ROC estate tax is payable on any property within the ROC of a deceased who
is an individual, and ROC gift tax is payable on any property within the ROC
donated by any such person. Estate tax is currently payable at rates ranging
from 2% of the first NT$600,000 to 50% of amounts over NT$100,000,000. Gift tax
is payable at rates ranging from 4% of the first NT$600,000 to 50% of amounts
over NT$45,000,000. Under ROC estate and gift tax laws, common shares issued by
ROC companies are deemed located in the ROC regardless of the location of the
holder. It is unclear whether a holder of ADSs will be considered to hold
common shares for this purpose since there is no authority directly indicating
whether an ADR holder will be treated as owning the shares represented by the
ADR. However, despite this lack of direct authority, we are of the view that
a holder of ADSs will not be subject to the ROC estate and gift tax because (1)
the ADSs are not considered property within the ROC and (2) the transfer of
ADSs is not deemed to be a transfer of the underlying common shares.

     Tax Treaty

     The ROC does not have an income tax treaty with the United States. On the
other hand, the ROC has income tax treaties with Indonesia, Singapore, South
Africa, Australia, Vietnam, New Zealand, Malaysia, Macedonia, Swaziland and
Gambia, which may limit the rate of ROC withholding tax on dividends paid with
respect to common shares of ROC


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<PAGE>


companies. It is unclear whether if you hold ADSs, you will be considered to
hold common shares for the purposes of these treaties. Accordingly, if you may
otherwise be entitled to the benefits of the relevant income tax treaty, you
should consult your tax advisors concerning your eligibility for the benefits
with respect to the ADSs.

     United States Federal Income Taxation

     The following discussion describes the material U.S. federal income tax
consequences of the acquisition, ownership and disposition of ADSs to those
U.S. holders described below. For these purposes, you are a U.S. holder if you
are a beneficial owner of ADSs that, for U.S. federal income tax purposes, is:

     o    a citizen or resident of the United States;

     o    a corporation or other entity taxable as a corporation 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 includable in gross income
          for U.S. federal income tax purposes regardless of its source.

     This discussion only applies to ADSs that you hold as capital assets.

     This discussion assumes that ASE Inc. will not be considered a passive
foreign investment company. Please see our discussion of the passive foreign
investment company rules below.

     Please note that 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 investors 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    persons who hold or will hold common shares as part of an
          integrated investment, including a straddle, hedging or conversion
          transaction, comprised of common shares and one or more other
          positions for tax purposes;

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

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

     This discussion is based on the Internal Revenue Code of 1986, 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.

     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. However,
the U.S. Treasury has expressed concerns that parties to whom depositary shares
are pre-released may be taking actions that are inconsistent with the claiming
of foreign tax credits by the holders of ADSs. Accordingly, the analysis of the
creditability of ROC taxes described below could be affected by future actions
that may be taken by the U.S. Treasury.


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<PAGE>


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

     Dividends

     Any dividends you receive on ADSs, including the amount of any ROC taxes
withheld thereon, reduced by any credit against the withholding tax on account
of the 10% retained earnings tax imposed on us, other than pro rata
distributions of common shares to all shareholders including holders of ADSs,
will constitute foreign source dividend income to the extent paid out of
earnings and profits as calculated for U.S. federal income tax purposes. 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, calculated by
reference to the exchange rate in effect on the date the depositary receives
the dividend. If you realize gain or loss on a sale or other disposition of NT
Dollars, it will be U.S. source ordinary income or loss. You will not be
entitled to a dividends-received deduction for dividends you receive.

     Subject to applicable limitations and restrictions, 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 liabilities. The limitation on foreign
taxes eligible for credit is calculated separately with respect to specific
classes of income including, amongst others, "passive income", "financial
services income" and "general limitation income". For this purpose, dividends
paid with respect to the common shares will constitute "passive income" or, in
the case of U.S. financial services providers may be, "financial services
income".

     Pro rata distributions of common shares by a company to 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 limitation
income" class and not "passive income" or "financial services income", subject
to applicable limitations and restrictions.

     Capital Gains

     You will recognize capital gain or loss for U.S. federal income tax
purposes on the sale or exchange of ADSs in the same manner as you would on the
sale or exchange of any other common shares held as capital assets. The gain or
loss will be U.S. source income or loss. 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

     Based on management estimates and the available financial data, we do not
believe that we were a passive foreign investment company for 2000 nor do we
expect to be a passive foreign investment company. 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 may be
considered 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 fiscal year. If we are
a passive foreign investment company at any time that you own ADSs:

     o    Any gain realized on a disposition of ADSs and certain "excess
          distributions" will be allocated over your holding period in the
          ADSs. Amounts allocated to the year of the sale and any year prior to
          our becoming a passive foreign investment company will be treated as
          ordinary income. Amounts allocated to other years will be assessed at
          the highest rates applicable for corporate or individual taxpayers,
          as appropriate, for the relevant year and will be subject to an
          interest charge; and


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<PAGE>


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

     Estate and Gift Tax

     As discussed in "-- ROC Taxation", you might be required to pay ROC estate
and gift tax. You should consult your tax advisor regarding the effect of these
taxes.

DOCUMENTS ON DISPLAY

     The documents concerning us which are referred to herein may be inspected
at the Securities and Exchange Commission. You may read and copy any document
filed or furnished by us at the SEC's public reference rooms in Washington,
D.C., New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for
further information on the reference rooms.

Item 11.  Quantitative and Qualitative Disclosures About Market Risk.

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

FOREIGN CURRENCY EXCHANGE RATE RISK

     Our foreign currency exposures give rise to market risk associated with
exchange rate movements against the NT Dollar, our functional currency. Foreign
currency denominated liabilities as of December 31, 2000 include U.S. Dollar
debt and Japanese yen debt. As of December 31, 2000, approximately 69% 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, 2000, approximately 86% 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 exchange rates, we may 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. As of December 31, 2000, we had seven
foreign currency forward exchange contracts outstanding, all to hedge Malaysian
Ringgit against U.S. Dollars or Japanese Yen. These contracts were for a total
of US$6,045,000 and JPY150,000,000. For more information concerning these
forward exchange contracts, please see Note 23(b) to Notes to Consolidated
Financial Statements. The following table provides information about our
significant obligations that are sensitive to foreign currency exchange rate
fluctuations. The principal amounts are presented by year of maturity and
translated into U.S. Dollars based on the current exchange rate.

<TABLE>
                                                                     As of  December 31, 2000
                                     -----------------------------------------------------------------------------------------
                                                                      Expected Maturity Date
                                     -----------------------------------------------------------------------------------------
                                     2001         2002         2003        2004         2005         Total         Fair Value
                                     ----         ----         ----        ----         ----         -----         ----------
                                                                          (in millions)
<S>                               <C>             <C>          <C>        <C>          <C>         <C>             <C>
Short-term debt:
U.S. Dollars average interest
 rate: 7.4% to 9.1%...........    US$     28      --           --         --           --          US$28           US$      28
Japanese yen average
 interest rate: 0.975% to
 1.6%.........................    JPY$ 7,671      --           --         --           --          JPY$   7,671    JPY$  7,671
Swiss France average
 interest rate: 4.505% to
 4.905%.......................    CHF$   3.5      --           --         --           --          CHF$     3.5    CHF$    3.5
Malaysia Ringgit average
 interest rate: 3.54% to
 4.2%.........................    MYR$  67.3      --           --         --           --          MYR$    67.3    MYR$   67.3
Long-term borrowing:
U.S. Dollars average interest
 rate: 7.75% to 10.50%........    US$   12.5    US$    256.3   US$ 9.6    US$ 180.9    US$ 10.0    US$    469.3    US$    469.3


                                      72
<PAGE>


(table continued)

                                                                     As of  December 31, 2000
                                     -----------------------------------------------------------------------------------------
                                                                      Expected Maturity Date
                                     -----------------------------------------------------------------------------------------
                                     2001         2002         2003        2004         2005         Total         Fair Value
                                     ----         ----         ----        ----         ----         -----         ----------
                                                                          (in millions)
Japanese yen average
 interest rate: 1.1% to 5%....    JPY$ 866.7    JPY$ 4,202.9   --         --           --          JPY$ 5,069.6    JPY$ 5,069.6
</TABLE>


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, primarily capital expenditures. We currently do not enter into
derivative transactions with regard to interest rates, but would consider
engaging in currency interest rate swaps to lock in favorable currency and
interest rate levels from time to time, if available, on terms considered
attractive by us. No derivative contract was outstanding as of December 31,
2000.

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.

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS

     In July 1995, we established with Citibank, N.A., as GDS depositary, two
depositary receipts facilities, one for the purpose of facilitating the
issuance of GDSs sold under Rule 144A and the other for the purpose of
facilitating the issuance of GDSs sold pursuant to Regulation S. Each GDS
represented five of our common shares. In December 1999, some of our affiliates
offered and sold additional GDSs. The GDSs sold under Rule 144A were designated
as eligible for trading in the PORTAL System of the National Association of
Securities Dealers, Inc. in the United States. The GDSs sold pursuant to
Regulation S were listed on the Stock Exchange of Singapore and the Luxembourg
Stock Exchange and quoted on SEAQ International.

     Concurrently with our offering of ADSs on September 25, 2000, we arranged
with our GDS depositary and our ADS depositary for the automatic conversion of
each of our outstanding GDSs sold pursuant to Regulation S into one ADS. The
ADSs issued upon conversion of our GDSs sold pursuant to Regulation S were
identified by a new CUSIP number. We have listed these ADSs for trading on the
NYSE under the symbol "ASX". We delisted these GDSs from the Stock Exchange of
Singapore and the Luxembourg Stock Exchange and suspended quotation on SEAQ
International.

     Concurrently with our offering of ADSs of September 25, 2000, we offered
to exchange one ADS for each of our outstanding GDSs sold under Rule 144A. The
ADSs issued upon exchange of the GDSs sold under Rule 144A are identified by
the same CUSIP number as that which identifies the ADSs issued upon conversion
of the GDSs sold pursuant to Regulation S as described above, and all of those
ADSs are fully fungible for trading on the NYSE. Upon the completion of the
exchange offer, we instructed the GDS depositary to terminate the global
depositary receipt facility.


                                       73
<PAGE>


                                    PART III

Item 17.  Financial Statements.

     The Company has elected to provide financial statements for fiscal year
2000 and the related information pursuant to Item 18.

Item 18.  Financial Statements.

     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 Auditors of the Company dated March 27, 2001
          (page F-1).

     (b)  Consolidated Balance Sheets of the Company and subsidiaries as of
          December 31, 1999 and 2000 (page F-3).

     (c)  Consolidated Statements of Income of the Company and subsidiaries for
          the years ended December 31, 1998, 1999 and 2000 (page F-4).

     (d)  Consolidated Statements of Changes in Stockholders' Equity of the
          Company and subsidiaries for the years ended December 31, 1998, 1999
          and 2000 (page F-6).

     (e)  Consolidated Statements of Cash Flows of the Company and subsidiaries
          for the years ended December 31, 1998, 1999 and 2000 (page F-9).

     (f)  Notes to Consolidated Financial Statements of the Company and
          subsidiaries (page F-11).

<PAGE>












      Advanced Semiconductor Engineering, Inc.
      and Subsidiaries



      Consolidated Financial Statements as of December 31, 1998, 1999 and 2000

      Together with Independent Auditors' Report



<PAGE>




                          Independent Auditors' Report




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 "Corporation") as
of December 31, 1999 and 2000 and the related consolidated statements of
income, changes in shareholders' equity and cash flows for the years ended
December 31, 1998, 1999 and 2000, all expressed in New Taiwan dollars. These
financial statements are the responsibility of the Corporation's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with generally accepted auditing
standards in the Republic of China and the United States of America. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
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 Corporation as
of December 31, 1999 and 2000, and the results of their operations and their
cash flows for the years ended December 31, 1998, 1999 and 2000, in conformity
with generally accepted accounting principles in the Republic of China.


                                      -1-
<PAGE>


Certain accounting practices of the Corporation used in preparing the
accompanying financial statements conform with generally accepted accounting
principles in the Republic of China, but do not conform with generally accepted
accounting principles in the United States of America ("US GAAP"). A
description of the differences and the adjustments required to conform the
financial statements to US GAAP are set forth in Note 27.




March 27, 2001

T N Soong & Co
A Member Firm of Andersen Worldwide, SC
Taipei, Taiwan
Republic of China


                                      -2-
<PAGE>


<TABLE>
                             ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND SUBSIDIARIES

                                          CONSOLIDATED BALANCE SHEETS
                                                 (In Thousands)

                                                                     December 31
                                                     -----------------------------------------------
                                                         1999                      2000
                                                     --------------    -----------------------------
A S S E T S                                               NT$               NT$              US$
-----------                                          --------------    --------------   ------------

CURRENT ASSETS
<S>                                                  <C>               <C>              <C>
Cash and cash equivalents (Note 2)                       11,809,112        14,166,495        427,088
Short-term investments (Notes 2 and 3)                      216,280         1,682,679         50,729
Notes receivable                                            201,042           219,641          6,622
Accounts receivable - net (Notes 4)                       7,262,415         9,040,934        272,563
Inventories (Notes 2 and 5)                               2,449,691         3,246,327         97,869
Deferred income tax assets - net (Notes 2 and 17)           492,533         1,160,727         34,993
Prepayments and other (Note 21)                             919,219         1,270,859         38,314
                                                     --------------    --------------   ------------
Total Current Assets                                     23,350,292        30,787,662        928,178
                                                     --------------    --------------   ------------

LONG-TERM INVESTMENTS
Shares of stock (Notes 2, 6, 10 and 21)                   9,184,681        10,485,459        316,113
Bonds (Notes 2 and 7)                                       489,751           226,740          6,835
                                                     --------------    --------------   ------------
Total Long-Term Investments                               9,674,432        10,712,199        322,948
                                                     --------------    --------------   ------------

PROPERTIES (Notes 2, 8,13 and 21)
Cost
     Land and land improvements                           4,167,529         3,798,835        114,526
     Buildings and improvements                           7,304,856         9,390,206        283,093
     Machinery and equipment                             36,187,779        59,631,388      1,797,751
     Transportation equipment                               115,136           101,409          3,057

     Furniture and fixtures                                 653,710         1,458,138         43,960
     Leased assets and leasehold improvements               363,701           486,275         14,660

     Long leasehold land                                     56,275             1,389             42
                                                     --------------    --------------   ------------
     Total cost                                          48,848,986        74,867,640      2,257,089

Accumulated depreciation                                (14,961,384)      (22,690,292)      (684,061)
                                                     --------------    --------------   ------------
                                                         33,887,602        52,177,348      1,573,028
Construction in progress                                    894,935         3,438,426        103,661

Machinery in transit and prepayments                      3,324,929         4,950,426        149,244
                                                     --------------    --------------   ------------
Net Properties                                           38,107,466        60,566,200      1,825,933
                                                     --------------    --------------   ------------

OTHER ASSETS (Notes 2, 9 and 21)                            952,757         1,275,557         38,455
                                                     --------------    --------------   ------------

CONSOLIDATED DEBITS (Notes 2 and 10)                      5,245,828         4,999,546        150,725
                                                     --------------    --------------   ------------

TOTAL ASSETS                                             77,330,775       108,341,164      3,266,239
                                                     ==============    ==============   ============
(Forward)

                     The accompanying notes are an integral part of the financial statements.

                                                  -3-
<PAGE>
                                                                                         December 31
                                                                       ------------------------------------------------
                                                                           1999                      2000
                                                                       --------------   -------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY                                         NT$               NT$             US$
------------------------------------                                   --------------    --------------  --------------

CURRENT LIABILITIES
<S>                                                                    <C>               <C>             <C>
Short-term borrowings (Notes 11 and 21)                                     3,787,647         5,402,597         162,876
Commercial papers and bank acceptances payable (Note 12)                    1,703,593         4,281,805         129,087
Accounts payable                                                            3,152,353         3,859,909         116,368
Payable for fixed assets (Note 8)                                           2,779,513         4,179,324         125,997
Income tax payable                                                            458,425         1,100,964          33,192
Current portion of long-term debts (Notes 14 and 21)                        2,886,351         3,309,935          99,787
Current portion of long-term payable for investments (Note 26)              1,490,599           773,616          23,323

Accrued expenses (Note 19)                                                    921,907         1,613,207          48,635

Other                                                                         455,815         1,352,002          40,759
                                                                       --------------    --------------  --------------
Total Current Liabilities                                                  17,636,203        25,873,359         780,024

LONG-TERM BONDS PAYABLE (Note 13)                                          10,827,663        12,229,179         368,682

LONG-TERM DEBTS (Notes 14 and 21)                                           9,739,639        10,329,851         311,421

LONG-TERM PAYABLE FOR INVESTMENTS (Note 26)                                 3,984,181         3,417,912         103,042

ACCRUED PENSION COST (Notes 2 and 18)                                         189,189           248,425           7,489

DEFERRED INCOME TAX LIABILITIES - NET (Notes 2 and  17)                         6,590           511,462          15,419
                                                                       --------------    --------------  --------------

Total Liabilities                                                          42,383,465        52,610,188       1,586,077
                                                                       --------------    --------------  --------------

MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES                              4,890,274        12,061,762         363,635
                                                                       --------------    --------------  --------------

SHAREHOLDERS' EQUITY (Note 15)
Capital stock - NT$10 par value                                            19,800,000        27,520,000         829,665
                                                                       --------------    --------------  --------------
     Authorized - 2,400,000 thousand shares in 1999 and
       3,200,000 thousand shares in 2000

     Issued - 1,980,000 thousand shares in 1999 and 2,752,000
       thousand shares in 2000

Capital surplus
     Capital in excess of par value                                             1,921         3,171,933          95,627
     Net gain on disposal of properties                                        11,879            23,109             697
     Adjustment of equity in subsidiary due to change in
       percentage of ownership                                                669,874         4,075,783         122,875
                                                                       --------------    --------------  --------------
     Total capital surplus                                                    683,674         7,270,825         219,199
                                                                       --------------    --------------    ------------
Retained earnings                                                           9,243,346         8,200,947         247,240
                                                                       --------------    --------------  --------------
     Unrealized loss on long-term investment in shares of stock                     -          (546,829)        (16,486)
                                                                       --------------    --------------  --------------
     Cumulative translation adjustments                                       330,016         1,224,271          36,909
                                                                       --------------    --------------    ------------
     Total Shareholders' Equity                                            30,057,036        43,669,214       1,316,527
                                                                       --------------    --------------    ------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                 77,330,775       108,341,164       3,266,239
                                                                       ==============    ==============    ============

                     The accompanying notes are an integral part of the financial statements.
</TABLE>
                                                  -3-
<PAGE>

           ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF INCOME
          (In Thousands, Except Earnings Per Share and Equivalent ADS)

<TABLE>
                                                                            Years Ended December 31
                                                              -----------------------------------------------------
                                                                 1998          1999                  2000
                                                              -----------   -----------    ------------------------
                                                                   NT$           NT$            NT$           US$
                                                              -----------   -----------    -----------   ----------
<S>                                                           <C>           <C>            <C>           <C>
NET REVENUES (Note 25)
Packaging                                                      16,867,404    24,522,968     38,028,799    1,146,482
Testing                                                         3,131,278     7,793,198     12,768,361      384,937
Other                                                             763,741       293,395         96,217        2,901
                                                              -----------   -----------    -----------   ----------
Subtotal                                                       20,762,423    32,609,561     50,893,377    1,534,320
                                                              -----------   -----------    -----------   ----------

COST OF REVENUES
Packaging                                                      13,173,587    18,769,995     28,011,934      844,496
Testing                                                         1,646,706     4,687,939      7,473,964      225,323
Other                                                             647,840       501,632         81,380        2,454
                                                              -----------   -----------    -----------   ----------
Subtotal                                                       15,468,133    23,959,566     35,567,278    1,072,273
                                                              -----------   -----------    -----------   ----------

GROSS PROFIT                                                    5,294,290     8,649,995     15,326,099      462,047
                                                              -----------   -----------    -----------   ----------

OPERATING EXPENSES
Selling                                                           744,742       924,347      1,020,451       30,764
General and administrative (Note 10)                            1,255,081     2,162,765      3,166,006       95,448
Research and development                                          453,611       714,324      1,262,516       38,062
                                                              -----------   -----------    -----------   ----------
Total Operating Expenses                                        2,453,434     3,801,436      5,448,973      164,274
                                                              -----------   -----------    -----------   ----------

INCOME FROM OPERATIONS                                          2,840,856     4,848,559      9,877,126      297,773
                                                              -----------   -----------    -----------   ----------

NON-OPERATING INCOME
Interest (Notes 2 and 23)                                         605,397       423,158        554,180       16,707
Gain on sales of investments (Notes 2 and 16)                     606,944     5,544,155         91,666        2,763
Investment income under equity method (Notes 2 and 6)              29,149        81,466         69,915        2,108
Foreign exchange gain-net (Notes 2 and 23)                              -             -        302,745        9,127
Other                                                             146,516       314,549        198,518        5,985
                                                              -----------   -----------    -----------   ----------
Total Non-Operating Income                                      1,388,006     6,363,328      1,217,024       36,690
                                                              -----------   -----------    -----------   ----------

NON-OPERATING EXPENSES
Interest (Notes 2 and 8)                                          985,796     1,469,795      2,092,238       63,076
Investment loss under equity method (Notes 2 and 6)               129,698        30,871        237,152        7,150
Foreign exchange loss - net (Notes 2 and 23)                      935,474       538,368              -            -
Other                                                             196,613       110,412        361,200       10,889
                                                              -----------   -----------    -----------   ----------
Total Non-Operating Expenses                                    2,247,581     2,149,446      2,690,590       81,115
                                                              -----------   -----------    -----------   ----------

INCOME BEFORE INCOME TAX AND MINORITY
INTEREST AND ACQUISITION                                        1,981,281     9,062,441      8,403,560      253,348

INCOME TAX BENEFIT (EXPENSE) (Notes 2 and 17)                     150,777  (    459,543)  (  1,065,768) (    32,130)
                                                              -----------   -----------    -----------   ----------

INCOME BEFORE MINORITY INTEREST AND
ACQUISITION                                                     2,132,058     8,602,898      7,337,792      221,218

(Forward)

                                      -4-
<PAGE>


INCOME BEFORE ACQUISITION (Note 2)                                      -       (65,167)             -            -

MINORITY INTEREST IN NET INCOME OF
SUBSIDIARIES                                                     (528,097)     (743,065)    (1,500,643)     (45,241)
                                                              -----------   -----------    -----------   ----------

NET INCOME                                                      1,603,961     7,794,666      5,837,149      175,977
                                                              ===========   ===========    ===========   ==========

EARNINGS PER SHARE (Notes 2 and 20)
Based on weighted average number of outstanding
  shares of 2,677,602,508 in 2000 and 1,980,000,000 in 1999
  and 1,780,000,000 in 1998
      Primary                                                        0.85          3.90           2.13         0.06
                                                                     ====          ====           ====         ====
      Fully diluted                                                  0.85          3.90           2.13         0.06
                                                                     ====          ====           ====         ====
Based on weighted average number of outstanding shares
  after giving retroactive adjustment to 1999 and 2000
  stock dividends
      Primary                                                        0.57          2.91
                                                                     ====          ====
      Fully diluted                                                  0.57          2.90
                                                                     ====          ====

EARNINGS PER EQUIVALENT ADS (Note 2 and 20)
Based on weighted average number of outstanding
  shares of 2,677,602,508 in 2000 and 1,980,000,000 in 1999
  and 1,780,000,000 in 1998
      Primary                                                        4.27         19.51          10.65         0.32
                                                                     ====         =====          =====         ====
      Fully diluted                                                  4.27         19.49          10.65         0.32
                                                                     ====         =====          =====         ====
Based on weighted average number of outstanding
  shares after giving retroactive adjustment to
  1999 and 2000 stock dividends
      Primary                                                        2.87         14.53
                                                                     ====         =====
      Fully diluted                                                  2.87         14.51
</TABLE>

    The accompanying notes are an integral part of the financial statements.


                                      -5-
<PAGE>


<TABLE>
                             ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND SUBSIDIARIES

                            CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                        (In Thousands, Except Share Data)


                                                                                   CAPITAL STOCK (NT$10 Par Value)
                                                                         -----------------------------------------------
                                                                                              Issued and Outstanding
                                                                           Authorized     -------------------------------
                                                                            Shares             Shares           Amount
                                                                         ---------------  ---------------   -------------
<S>                                                                        <C>              <C>               <C>
BALANCE, JANUARY 1, 1998                                                   1,400,000,000    1,017,000,000   NT$ 10,170,000

Increase in authorized capital, March 21, 1999                               800,000,000                -                -
Appropriations of 1997 earnings (Note 15)
      Legal reserve                                                                    -                -                -
      Compensation to directors and supervisors                                        -                -                -
      Stock dividends - 60%                                                            -      610,200,000        6,102,000
      Bonus to employees - stock                                                       -       30,760,000          307,600
      Bonus to employees - cash                                                        -                -                -
Stock dividends from capital surplus - 2.9%                                            -      122,040,000        1,220,400
Transfer of subsidiary's gain on disposal of properties                                -                -                -
Adjustment of equity in subsidiary due to change in
  percentage of ownership                                                              -                -                -
Net income in 1998                                                                     -                -                -
Transfer of net gain on disposal of properties                                         -                -                -
Unrealized loss on long-term investment in shares of stock                             -                -                -
Cumulative translation adjustments (Note 2)                                            -                -                -
                                                                         ---------------  ---------------   --------------

BALANCE, DECEMBER 31, 1998                                                 2,200,000,000    1,780,000,000       17,800,000

Increase in authorized capital, June 9, 1999                                 200,000,000                -                -
Appropriations of 1998 earnings (Note 15)
      Legal reserve                                                                    -                -                -
      Compensation to directors and supervisors                                        -                -                -
      Stock dividends - 7.8%                                                           -      138,840,000        1,388,400
      Bonus to employees - stock                                                       -        9,540,000           95,400
      Bonus to employees - cash                                                        -                -                -
Stock dividends from capital surplus - 2.9%                                            -       51,620,000          516,200
Transfer of subsidiary's net gain on disposal of properties                            -                -                -
Transfer of net gain on disposal of properties                                         -                -                -
Adjustment of equity in subsidiary due to change in
  percentage of ownership                                                              -                -                -
Net income in 1999                                                                     -                -                -
Reversal of unrealized loss on long-term investment in shares of stock                 -                -                -
Cumulative translation adjustments (Note 2)                                            -                -                -
                                                                         ---------------  ---------------   --------------

BALANCE, DECEMBER 31, 1999                                                 2,400,000,000    1,980,000,000       19,800,000

(Forward)

                                                       -6-
<PAGE>


Convertible bonds converted into common shares                                         -          355,086   NT$      3,551
Increase in authorized capital, July 11, 2000                                800,000,000                -                -
Appropriations of 1999 earnings (Note 15)
      Legal reserve                                                                    -                -                -
      Compensation to directors and supervisors                                        -                -                -
      Bonus to employees -cash                                                         -                -                -
      Bonus to employees -stock                                                        -       47,833,062          478,331
      Stock dividends - 31.5%                                                          -      623,811,852        6,238,118
Capital increase in cash through the issuance of American
  Depositary Receipts - September 29                                                   -      100,000,000        1,000,000
Transfer of subsidiary's net gain on disposal of properties                            -                -                -
Adjustment of equity in subsidiary due to change in
  percentage of ownership                                                              -                -                -
Unrealized loss on long-term investment
  in shares of stock                                                                   -                -                -
Net income in 2000                                                                     -                -                -
Transfer of net gain on disposal of properties                                         -                -                -
Cumulative translation adjustment (Note 2)                                             -                -                -
                                                                         ---------------  ---------------   --------------

BALANCE, DECEMBER 31, 2000                                                 3,200,000,000    2,752,000,000   NT$ 27,520,000
                                                                         ===============  ===============   ==============
(Forward)
                         The accompanying notes are an integral part of the financial statements.


                                                            -7-
<PAGE>

                                                                                              RETAINED EARNINGS
                                                                  CAPITAL        ------------------------------------------------
                                                                  SURPLUS           Legal        Unappropriated
                                                                  (Note 2)         Reserve          Earnings            Total
                                                               --------------    ------------  ------------------   -------------
<S>                                                            <C>               <C>               <C>              <C>
BALANCE, JANUARY 1, 1998                                       NT$  2,352,354    NT$   649,411     NT$7,455,769     NT$ 8,105,180

Increase in authorized capital, March 21, 1999                              -                -                -                 -
Appropriations of 1997 earnings (Note 15)
      Legal reserve                                                         -          740,118         (740,118)                -
      Compensation to directors and supervisors                             -                -         (120,000)         (120,000)
      Stock dividends - 60%                                                 -                -       (6,102,000)       (6,102,000)
      Bonus to employees - stock                                            -                -         (307,600)         (307,600)
      Bonus to employees - cash                                             -                -          (92,400)          (92,400)
Stock dividends from capital surplus - 2.9%                        (1,220,400)               -                -                 -
Transfer of subsidiary's gain on disposal of properties                   204                -             (204)             (204)
Adjustment of equity in subsidiary due to change in
  percentage of ownership                                              55,605                -                -                 -
Net income in 1998                                                          -                -        1,603,961         1,603,961
Transfer of net gain on disposal of properties                          1,410                -           (1,410)           (1,410)
Unrealized loss on long-term investment in shares of stock                  -                -                -                 -
Cumulative translation adjustments (Note 2)                                 -                -                -                 -
                                                               --------------    -------------     ------------     -------------

BALANCE, DECEMBER 31, 1998                                          1,189,173        1,389,529        1,695,998         3,085,527

Increase in authorized capital, June 9, 1999                                -                -                -                 -
Appropriations of 1998 earnings (Note 15)
      Legal reserve                                                         -          160,255         (160,255)                -
      Compensation to directors and supervisors                             -                -          (28,800)          (28,800)
      Stock dividends - 7.8%                                                -                -       (1,388,400)       (1,388,400)
      Bonus to employees - stock                                            -                -          (95,400)          (95,400)
      Bonus to employees - cash                                             -                -           (5,500)           (5,500)
Stock dividends from capital surplus - 2.9%                          (516,200)               -                -                 -
Transfer of subsidiary's net gain on disposal of properties             4,931                -           (4,931)           (4,931)
Transfer of net gain on disposal of properties                            736                -             (736)             (736)
Adjustment of equity in subsidiary due to change in
  percentage of ownership                                               5,034                -         (113,080)         (113,080)
Net income in 1999                                                          -                -        7,794,666         7,794,666
Reversal of unrealized loss on long-term investment in shares
  of stock                                                                  -                -                -                 -
Cumulative translation adjustments (Note 2)                                 -                -                -                 -
                                                               --------------    -------------     ------------     -------------

BALANCE, DECEMBER 31, 1999                                            683,674        1,549,784        7,693,562         9,243,346

(Forward)
                                                                 -6-
<PAGE>


<S>                                                            <C>               <C>               <C>              <C>
Convertible bonds converted into common shares                 NT$     32,102    NT$         -     NT$        -     NT$         -
Increase in authorized capital, July 11, 2000                               -                -                -                 -
Appropriations of 1999 earnings (Note 15)
      Legal reserve                                                         -          779,393         (779,393)                -
      Compensation to directors and supervisors                             -                -         (139,200)         (139,200)
      Bonus to employees -cash                                              -                -          (12,669)          (12,669)
      Bonus to employees -stock                                             -                -         (478,331)         (478,331)
      Stock dividends - 31.5%                                               -                -       (6,238,118)       (6,238,118)
Capital increase in cash through the issuance of American
  Depositary Receipts - September 29                                3,137,910                -                -                 -
Transfer of subsidiary's net gain on disposal of properties             9,470                -           (9,470)           (9,470)
Adjustment of equity in subsidiary due to change in
  percentage of ownership                                           3,405,909                -                -                 -
Unrealized loss on long-term investment
  in shares of stock                                                        -                -                -                 -
Net income in 2000                                                          -                -        5,837,149         5,837,149
Transfer of net gain on disposal of properties                          1,760                -           (1,760)           (1,760)
Cumulative translation adjustment (Note 2)                                  -                -                -                 -
                                                               --------------    -------------     ------------     -------------

BALANCE, DECEMBER 31, 2000                                     NT$  7,270,825    NT$ 2,329,177     NT$5,871,770     NT$ 8,200,947
                                                               ==============    =============     ============     =============
(Forward)

                     The accompanying notes are an integral part of the financial statements.

                                                       -7-
<PAGE>


                                                                   UNREALIZED
                                                                    LOSS ON
                                                                   LONG-TERM
                                                                   INVESTMENT        CUMULATIVE
                                                                    IN SHARES        TRANSLATION            TOTAL
                                                                     OF STOCK        ADJUSTMENTS        SHAREHOLDERS'
                                                                    (Note 2)           (Note 2)             EQUITY
                                                                ----------------- -----------------     ----------------
<S>                                                                 <C>              <C>                <C>
BALANCE, JANUARY 1, 1998                                            NT$       -      NT$   406,119      NT$   21,033,653

Increase in authorized capital, March 21, 1999                                -                  -                     -
Appropriations of 1997 earnings (Note 15)
      Legal reserve                                                           -                  -                     -
      Compensation to directors and supervisors                               -                  -              (120,000)
      Stock dividends - 60%                                                   -                  -                     -
      Bonus to employees - stock                                              -                  -                     -
      Bonus to employees - cash                                               -                  -               (92,400)
Stock dividends from capital surplus - 2.9%                                   -                  -                     -
Transfer of subsidiary's gain on disposal of properties                       -                  -                     -
Adjustment of equity in subsidiary due to change in
  percentage of ownership                                                     -                  -                55,605
Net income in 1998                                                            -                  -             1,603,961
Transfer of net gain on disposal of properties                                -                  -                     -
Unrealized loss on long-term investment in shares of stock             (703,865)                 -              (703,865)
Cumulative translation adjustments (Note 2)                                   -             97,854                97,854
                                                                ----------------- -----------------     ----------------

BALANCE, DECEMBER 31, 1998                                             (703,865)           503,973            21,874,808

Increase in authorized capital, June 9, 1999                                  -                  -                     -
Appropriations of 1998 earnings (Note 15)
      Legal reserve                                                           -                  -                     -
      Compensation to directors and supervisors                               -                  -               (28,800)
      Stock dividends - 7.8%                                                  -                  -                     -
      Bonus to employees - stock                                              -                  -                     -
      Bonus to employees - cash                                               -                  -                (5,500)
Stock dividends from capital surplus - 2.9%                                   -                  -                     -
Transfer of subsidiary's net gain on disposal of properties                   -                  -                     -
Transfer of net gain on disposal of properties                                -                  -                     -
Adjustment of equity in subsidiary due to change in
  percentage of ownership                                                     -                  -              (108,046)
Net income in 1999                                                            -                  -             7,794,666
Reversal of unrealized loss on long-term investment in shares
  of stock                                                              703,865                  -               703,865
Cumulative translation adjustments (Note 2)                                   -           (173,957)             (173,957)
                                                                ----------------- -----------------     ----------------

BALANCE, DECEMBER 31, 1999                                                    -            330,016            30,057,036

(Forward)
                                                          -6-
<PAGE>


<S>                                                                 <C>              <C>                <C>
Convertible bonds converted into common shares                      NT$       -      NT$         -      NT$       35,653
Increase in authorized capital, July 11, 2000                                 -                  -                     -
Appropriations of 1999 earnings (Note 15)
      Legal reserve                                                           -                  -                     -
      Compensation to directors and supervisors                               -                  -              (139,200)
      Bonus to employees -cash                                                -                  -               (12,669)
      Bonus to employees -stock                                               -                  -                     -
      Stock dividends - 31.5%                                                 -                  -                     -
Capital increase in cash through the issuance of American
  Depositary Receipts - September 29                                          -                  -             4,137,910
Transfer of subsidiary's net gain on disposal of properties                   -                  -                     -
Adjustment of equity in subsidiary due to change in
  percentage of ownership                                                     -                  -             3,405,909
Unrealized loss on long-term investment
  in shares of stock                                                   (546,829)                 -              (546,829)
Net income in 2000                                                            -                  -             5,837,149
Transfer of net gain on disposal of properties                                -                  -                     -
Cumulative translation adjustment (Note 2)                                    -            894,255               894,255
                                                                    -------------    --------------     ----------------

BALANCE, DECEMBER 31, 2000                                          NT$(546,829)     NT$ 1,224,271      NT$   43,669,214
                                                                    =============    =============      ================


                     The accompanying notes are an integral part of the financial statements.
</TABLE>


                                                       -7-
<PAGE>


<TABLE>
                                          ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND SUBSIDIARIES

                                          CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                                      (In Thousands, Except Share Data)

<S>                                                                      <C>              <C>             <C>
BALANCE, JANUARY 1, 2000                                                 2,400,000,000    1,980,000,000   US$   596,925
Convertible bonds converted into common shares                                       -          355,086             107
Increase in authorized capital, July 11, 2000                              800,000,000                -               -
Appropriations of 1999 earnings (Note 15)
      Legal reserve                                                                  -                -               -
      Compensation to directors and supervisors                                      -                -               -
      Bonus to employees - cash                                                      -                -               -
      Bonus to employees - stock                                                     -       47,833,062          14,420
      Stock dividends - 31.5%                                                        -      623,811,852         188,065
Capital increase in cash through the issuance of American Depositary
  Receipts - September 29                                                            -      100,000,000          30,148
Transfer of subsidiary's net gain on disposal of properties                          -                -               -

Adjustment of equity in subsidiary due to change in percentage of
  ownership                                                                          -                -               -
Unrealized loss on long-term investment in shares of stock                           -                -               -
Net income in 2000                                                                   -                -               -
Transfer of net gain on disposal of properties                                       -                -               -
Cumulative translation adjustment (Note 2)                                           -                -               -
                                                                        --------------   --------------   -------------
BALANCE, DECEMBER 31, 2000                                               3,200,000,000    2,752,000,000   US$   829,665
                                                                        ==============   ==============   =============
(Forward)

                     The accompanying notes are an integral part of the financial statements.


                                                            -8-
<PAGE>


                                          ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND SUBSIDIARIES

                                          CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                                      (In Thousands, Except Share Data)


<S>                                                                   <C>            <C>              <C>             <C>
BALANCE, JANUARY 1, 2000                                              US$   20,611   US$   46,722     US$  231,943    US$   278,665
Convertible bonds converted into common shares                                 968              -                -                -
Increase in authorized capital, July 11, 2000                                    -              -                -                -
Appropriations of 1999 earnings (Note 15)
      Legal reserve                                                              -         23,497          (23,497)               -
      Compensation to directors and supervisors                                  -              -           (4,197)          (4,197)
      Bonus to employees - cash                                                  -              -             (382)            (382)
      Bonus to employees - stock                                                 -              -          (14,420)         (14,420)
      Stock dividends - 31.5%                                                    -              -         (188,065)        (188,065)
Capital increase in cash through the issuance of American Depositary
  Receipts - September 29                                                   94,601              -                -                -
Transfer of subsidiary's net gain on disposal of properties                    285              -             (285)            (285)

Adjustment of equity in subsidiary due to change in percentage of
  ownership                                                                102,681              -                -                -
Unrealized loss on long-term investment in shares of stock                       -              -                -                -
Net income in 2000                                                               -              -          175,977          175,977
Transfer of net gain on disposal of properties                                  53              -              (53)             (53)
Cumulative translation adjustment (Note 2)                                       -              -                -                -
                                                                      ------------   ------------     ------------    -------------
BALANCE, DECEMBER 31, 2000                                            US$  219,199   US$   70,219     US$  177,021    US$   247,240
                                                                      ============   ============     ============    =============
(Forward)

                     The accompanying notes are an integral part of the financial statements.

                                                       -8-
<PAGE>


                                          ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND SUBSIDIARIES

                                          CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                                      (In Thousands, Except Share Data)


<S>                                                                         <C>               <C>                <C>
BALANCE, JANUARY 1, 2000                                                    US$       -       US$   9,949        US$   906,150
Convertible bonds converted into common shares                                        -                 -                1,075
Increase in authorized capital, July 11, 2000                                         -                 -                    -
Appropriations of 1999 earnings (Note 15)
      Legal reserve                                                                   -                 -                    -
      Compensation to directors and supervisors                                       -                 -               (4,197)
      Bonus to employees - cash                                                       -                 -                 (382)
      Bonus to employees - stock                                                      -                 -                    -
      Stock dividends - 31.5%                                                         -                 -                    -
Capital increase in cash through the issuance of American Depositary
  Receipts - September 29                                                             -                 -              124,749
Transfer of subsidiary's net gain on disposal of properties                           -                 -                    -

Adjustment of equity in subsidiary due to change in percentage of
  ownership                                                                           -                 -              102,681
Unrealized loss on long-term investment in shares of stock                      (16,486)                -              (16,486)
Net income in 2000                                                                    -                 -              175,977
Transfer of net gain on disposal of properties                                        -                 -                    -
Cumulative translation adjustment (Note 2)                                            -            26,960               26,960
                                                                            -----------       -----------        -------------
BALANCE, DECEMBER 31, 2000                                                  US$ (16,486)      US$  36,909        US$ 1,316,527
                                                                            ===========       ===========        =============


                     The accompanying notes are an integral part of the financial statements.
</TABLE>

                                                       -8-
<PAGE>


<TABLE>
                             ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND SUBSIDIARIES

                                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                   (In Thousands)


                                                                                    Years Ended December 31
                                                                    ------------------------------------------------------
                                                                       1998           1999                 2000
                                                                    -----------    -----------    ------------------------
                                                                        NT$            NT$            NT$           US$
                                                                    -----------    -----------    -----------   ----------
<S>                                                                 <C>            <C>            <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                            1,603,961      7,794,666      5,837,149      175,977
Adjustments to reconcile net income to net cash provided by
  operating activities:
     Minority interest in net income of subsidiaries                    528,097        743,065      1,500,643       45,241
     Depreciation                                                     2,960,604      5,128,282      8,127,561      245,027
     Amortization                                                       276,585        426,085        466,238       14,056
     Exchange (gain) loss on long-term foreign:
         Bonds payable                                                  (91,392)      (191,895)       628,058       18,935
         Debts                                                          (63,913)        (3,927)             -            -
         Investment payable                                                   -              -        170,351        5,136
         Bonds investment                                                 8,285         11,066        (21,290)        (642)
     Accrued interest on convertible bonds                              437,768        615,805        837,846       25,259
     Provision for doubtful accounts and sales allowance                 44,789        109,263        155,458        4,687
     Gain on sale of investments                                       (606,944)    (5,544,155)       (91,666)      (2,763)
     Investment (income)loss under equity method                        100,549        (50,595)       167,237        5,042
     Gain on disposal of properties                                        (546)       (20,903)        19,298          582
     Provision (reversal of allowance) for loss on
       short-term investments                                           (10,779)       (10,721)         4,849          146
     Provision for loss on long-term bonds investments                        -              -        284,301        8,571
     Amortization of consolidated debit                                 345,726        507,816        559,807       16,877
     Deferred income taxes                                             (267,511)      (343,180)      (226,898)      (6,840)
     Changes in operating assets and liabilities, net of effects
       from purchases of Motorola SPS Businesses and ISE Labs,
       Inc.
         Notes receivable                                               333,717        189,530        (18,599)        (561)
         Accounts receivable                                             79,131     (2,722,498)    (1,933,977)     (58,305)
         Inventories                                                    314,207       (444,885)      (796,636)     (24,017)
         Prepayments and other                                          (86,985)      (284,376)      (327,757)      (9,881)
         Notes payable                                                 (136,030)      (214,858)             -            -
         Accounts payable                                               318,435        869,713        707,556       21,331
         Income tax payable                                            (136,221)       238,982        642,539       19,371
         Accrued expenses and other                                    (745,419)       598,025      1,574,097       47,455
         Accrued pension cost                                            66,941       (551,421)        59,236        1,786
Effect of exchange rate changes                                         (78,905)       168,350       (682,197)     (20,567)
                                                                    -----------    -----------    -----------   ----------
Net Cash Provided by Operating Activities                             5,194,150      7,017,234     17,643,204      531,903
                                                                    -----------    -----------    -----------   ----------

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of Motorola SPS Businesses                                        -     (4,259,541)             -            -
Acquisition of ISE Labs, Inc.                                                 -     (3,014,427)             -            -
Acquisition of fixed assets                                          (6,944,980)    (9,869,161)   (30,063,640)    (906,350)
(Increase) decrease in short-term investments                         3,530,471        569,099     (1,471,248)     (44,355)
Payments for long-term investments:
     Shares of stock                                                 (2,598,519)    (3,538,728)    (2,026,047)     (61,081)
     Bonds                                                             (190,039)             -              -            -
Increase in other assets                                               (462,699)      (202,668)      (787,246)     (23,734)
Proceeds from sales of:
     Properties                                                         493,898        361,149        697,126       21,017
     Shares of stock:
         ASE Inc.                                                        75,672      3,170,957              -            -
         ASE Test Ltd.                                                  214,865      4,718,324              -            -

(Forward)

                                                                      -9-
<PAGE>


         Bonds                                                                -        282,306              -            -
         Others                                                               -              -        100,666        3,035
Purchase of ASE Test Ltd. shares                                     (2,676,952)             -              -            -
                                                                    -----------    -----------    -----------   ----------
Net Cash Used in Investing Activities                                (8,558,283)   (11,782,690)   (33,550,389)  (1,011,468)
                                                                    -----------    -----------    -----------   ----------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from (repayments of):
     Capital increase through the issuance of American
       Depositary Shares                                                      -              -      4,151,300      125,152
     Issuance of foreign convertible bonds                                    -      3,460,050              -            -
     Long-term debts                                                    828,345      4,201,517      1,013,796       30,563
     Investment payable                                                       -              -     (1,453,603)     (43,823)
     Commercial papers and bank acceptances payable                     807,665       (517,031)     2,578,212       77,727
Proceeds from (repayments of) short-term borrowings                    (692,274)     1,218,200      1,614,950       48,687
Repayments for long-term foreign bonds interest                               -              -        (24,915)        (751)
Decrease in deferred intercompany profit                                (22,008)             -              -            -
Increase (decrease) in minority interest                               (119,994)       235,081      9,854,500      297,091
Compensation to directors and supervisors and bonus
  to employees                                                         (212,400)       (28,800)      (151,869)      (4,578)
                                                                    -----------    -----------    ----------- - ----------
Net Cash Provided by Financing Activities                               589,334      8,569,017     17,582,371      530,068
                                                                    -----------    -----------    -----------   ----------

EFFECT OF EXCHANGE RATE CHANGES                                          78,905       (168,350)       682,197       20,567
                                                                    -----------    -----------    -----------   ----------

NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS                                                          (2,695,894)     3,635,211      2,357,383       71,070

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                         10,869,795      8,173,901     11,809,112      356,018
                                                                    -----------    -----------    -----------   ----------

CASH AND CASH EQUIVALENTS, END OF YEAR                                8,173,901     11,809,112     14,166,495      427,088
                                                                    ===========    ===========    ===========   ==========

SUPPLEMENTAL INFORMATION
Interest paid (excluding capitalized interest)                          542,590        787,106      1,217,052       36,691
Income tax paid                                                         293,901        397,065        497,882       15,010
Cash paid for acquisition of fixed assets
     Acquisition of fixed assets                                      7,447,692     11,097,395     31,463,451      948,551
     Increase in payable                                               (502,712)    (1,228,234)    (1,399,811)     (42,201)
                                                                    -----------    -----------    -----------   ----------
                                                                      6,944,980      9,869,161     30,063,640      906,350
                                                                    ===========    ===========    ===========   ==========

Total assets acquired from acquisition of Motorola SPS businesses             -     12,783,224              -            -
Less:  Liabilities assumed                                                    -      1,627,383              -            -
                                                                    -----------    -----------    -----------   ----------
Payable amounts                                                               -     11,155,841              -            -
Less:  Payable balance at end of year                                         -      5,474,780              -            -
                                                                    -----------    -----------    -----------   ----------
Cash paid                                                                     -      5,681,061              -            -
Less:  Cash received at the date of acquisition                               -      1,421,520              -            -
                                                                    -----------    -----------    -----------   ----------
Net cash outflow                                                              -      4,259,541              -            -
                                                                    ===========    ===========    ===========   ==========

Total assets acquired from acquisition of ISE Labs, Inc.                      -      4,671,849              -            -
Less:  Liabilities assumed                                                    -      1,371,453              -            -
                                                                    -----------    -----------    -----------   ----------
Cash paid                                                                     -      3,300,396              -            -
Less:  Cash received at the date of acquisition                               -        285,969              -            -
                                                                    -----------    -----------    -----------   ----------
Net cash outflow                                                              -      3,014,427              -            -
                                                                    ===========    ===========    ===========   ==========

Cash received from capital increase through the issuance of
  American Depositary Shares
     Net proceeds                                                             -              -      4,137,910      124,748
     Increase in payable                                                      -              -         13,390          404
                                                                    -----------    -----------    -----------   ----------
     Net cash inflow                                                          -              -      4,151,300      125,152
                                                                    ===========    ===========    ===========   ==========

                     The accompanying notes are an integral part of the financial statements.
</TABLE>

                                                       -10-

<PAGE>


           ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 2000
     (Amounts In Thousands of New Taiwan Dollars, Unless Otherwise Stated)


1.   GENERAL

     Advanced Semiconductor Engineering, Inc. ("ASE"), a corporation
     incorporated under the laws of the Republic of China (the "ROC"), is an
     independent provider of semiconductor packaging and testing services.
     ASE's common shares are traded on the Taiwan Stock Exchange and in
     September 2000, ASE's common shares in the form of American Depositary
     Shares are traded on the New York Stock Exchange. ASE and its consolidated
     subsidiaries and affiliates are referred to as the "ASE Group".

     ASE has five wholly-owned subsidiaries: a) ASE Holding Limited
     (incorporated in Bermuda in 1990) holds shares in ASE Group companies; b)
     ASE Marketing Services Ltd. (incorporated in Hong Kong in 1991) engages in
     trading; c) ASE Investment Co. (incorporated in the ROC in March 1996)
     holds shares in ASE Group companies; d) J&R Holding Limited (incorporated
     in Bermuda in May 1996) holds shares in ASE Group companies; and e) ASE
     Capital Co. (incorporated in Taiwan in November 1997) holds shares in ASE
     Group companies. As of December 31, 2000, ASE also has a 98% equity stake
     in ASE Technologies, Inc., a company incorporated in the ROC engaged in
     the research and development, manufacture and sales of computers and
     related accessories, and a 44% equity stake in ASE Material Inc. ("ASE
     Material"), a company incorporated in the ROC engaged in manufacturing and
     processing of leadframes for semiconductors. In addition, ASE Test, Inc.
     has a 7% equity stake in ASE Material.

     In 1999, ASE (Chung Li) Inc. ("ASE Chung Li") and ASE Investment (Labuan)
     Inc., a holding company, were incorporated to acquire a 100% interest in
     the Motorola Semiconductor Product Sector Businesses ('Motorola SPS
     Businesses") in Chung-Li, Taiwan and Paju, Korea on July 4, 1999. ASE and
     ASE Test Limited ("ASE Test") own 70% and 30% equity stakes in the two
     subsidiaries, respectively. ASE Investment (Labuan) Inc. owns 100% of the
     equity of ASE Korea Inc. The acquisition transaction was accounted for as
     a purchase, and the purchase price was approximately US$350.1 million (see
     Note 26).

     ASE Holding Limited has the following wholly-owned subsidiaries: a) ASEP
     Realty Corporation (incorporated in the Philippines in December 1995) is
     engaged in developing and investing in real estate; b) ASE Holding
     Electronics (Philippines) (incorporated in the Philippines in December
     1995) is engaged in the manufacture of electronic products, components and
     semiconductors; and c) ASE Holding (Singapore) Pte. Ltd. (incorporated in
     Singapore in December 1994) holds shares in ASE Group companies. A portion
     of the share capital of the Philippine subsidiaries are held by certain
     individuals due to legal limitations; share transfer agreements have been
     signed to safeguard such investments. ASE Holding (Singapore) Pte. Ltd.
     has 100% equity in ASE Electronics (M) Sdn, Bhd. ("ASE Test Malaysia")
     (incorporated in Malaysia in 1991), which is engaged in the manufacture,
     processing, testing and sales of integrated circuits. In April 1997, ASE
     Holding Limited transferred its shareholding in ASE Test Malaysia to ASE
     Test.


                                     -11-
<PAGE>


     J&R Holding Limited has a 43%-owned subsidiary, namely ASE Test
     (incorporated in Singapore in May 1996) and holds shares in ASE Group
     companies. In addition, ASE Holding Limited has a 8% 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 four majority-owned subsidiaries: a) ASE Test, Inc., which is
     engaged in testing of semiconductors; b) ASE Test Malaysia, which is
     engaged in packaging and testing of semiconductors; c) ASE Test Holding,
     which mainly hold shares in ASE Group companies; and d) ASE Test Finance
     Limited (incorporated in Mauritius in June 1999) which is engaged in
     financing activities.

     ASE Test, Inc. has a wholly-owned subsidiary, ASE Test (USA) Inc., which
     is engaged in the after-sale service of tested semiconductors.

     In May 1999, ASE Test acquired 70% of the outstanding shares of ISE Labs,
     Inc. ("ISE Labs"), which is engaged in front-end engineering testing,
     final testing and packaging of semiconductors. The purchase cost,
     including transaction costs, was approximately US$100.1 million
     (NT$3,320.3 million). ASE Test has committed to the minority shareholders
     of ISE Labs that if ISE Labs (i) does not consummate its initial public
     offering in the United States by December 31, 2001 at or above a
     predetermined price or (ii) disposes of certain material assets, ASE Test
     will be obligated to purchase the remaining 30% of equity of ISE Labs for
     US$42 million (NT$1,393.1 million) plus accrued interest (payable either
     in cash or shares at the option of the minority shareholders) (see Note
     26). Any future acquisition of the remaining 30% equity of ISE Labs will
     be accounted for as step-acquisitions using the purchase method. In June
     1999, ASE Test Finance Limited issued US$160 million (NT$5,307.2 million)
     of convertible notes to finance the acquisitions of ISE Labs and Motorola
     SPS Businesses by ASE Test (see Note 13).

     ASE Technologies, Inc. has two subsidiaries: a) ASE Technologies (U.S.A.),
     Inc. (100% ownership), which is mainly engaged in research and
     development, manufacture and sales of computers and related accessories;
     and b) Transmonde Technologies, Inc. (83% ownership), which is mainly
     engaged in sales of computers and related accessories.


2.   SIGNIFICANT ACCOUNTING POLICIES

     The accompanying financial statements have been prepared in conformity
     with generally accepted accounting principles in the ROC ('ROC GAAP").
     Significant accounting polices are summarized as follows:

     Presentation of financial statements

     ASE prepared its financial statements using ROC GAAP and made
     reconciliation to US GAAP (Note 27) and the accompanying balance sheets
     are presented for two year-ends as at December 31, 1999 and 2000, and the
     accompanying statements of income, changes in shareholders' equity and
     cash flows are presented for three years ended December 31, 1998, 1999 and
     2000.

     Unless otherwise stated, amounts presented are in thousands of New Taiwan
     dollars (NT$) or US dollars (US$).


                                     -12-
<PAGE>


     Consolidation

     The consolidated financial statements include the accounts of ASE and all
     of the aforementioned companies (hereinafter, individually or collectively
     referred to as "the Corporation").

     The consolidated method used by the Corporation to consolidate the
     statement of income of ISE Labs for the year ended December 31, 1999, ISE
     Labs' full year 1999 net revenues, cost of revenues and operating expenses
     are included in the Corporation's consolidated statements of income. The
     pre-acquisition income of ISE Labs for the period (from January 1, 1999 to
     May 4, 1999) is then subtracted from the Corporation's net income for
     1999.

     The statements of income for both ASE Chung Li Inc. and ASE Korea Inc.
     (representing the acquirees from acquisitions of Motorola SPS Businesses)
     are consolidated since the date of acquisitions due to the change of
     business type after acquisition in ASE Chung Li and ASE Korea for the
     accounting of silicon wafers from previous purchase and sale transaction
     to customers' consignments (see accounting policy for inventories).

     The accounts of ASE Material for 1999 are consolidated because ASE in
     effect controls ASE Material as follows: First, two of the five board
     members of ASE Material are appointed by ASE and one board member is
     appointed by ASE Test, Inc., a consolidated subsidiary of ASE. Second, Mr.
     Jason Chang, the Chairman of ASE, also serves as the Chairman of ASE
     Material. Third, ASE appoints ASE Material's sole Supervisor, whose duty
     under the ROC Company Law is to monitor ASE Material's business and
     financial condition. Finally, Mr. Jason Chang has committed to vote his
     shares of ASE Material as of December 31, 1999, which represented a 11.4%
     ownership interest in ASE Material, in concert with ASE.

     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 financial statements. The
     differences between the costs of investments and the proportionate equity
     in each subsidiary when the stocks were acquired are recorded as
     consolidated credits (debits) and are amortized on the straight-line
     method over ten years.

     Use of estimates

     The preparation of financial statements both in conformity with ROC GAAP
     and the generally accepted accounting principles in the United States ("US
     GAAP") requires management to make estimates and assumptions that affect
     certain reported amounts and disclosures. Actual results could differ from
     those estimates.

     Cash and cash equivalents

     The Corporation considers all highly liquid investments within an original
     maturity from date of purchase of three months or less to be cash
     equivalents. As of December 31, 1999 and 2000, cash equivalents were
     investments in money market funds stated at cost, which approximated fair
     value.

     Short-term investments

     Marketable securities are carried at cost less allowance for decline in
     market value.


                                     -13-
<PAGE>


     Allowances for doubtful accounts

     Allowance for doubtful accounts is provided based on evaluation of the
     collectibility of receivables.

     Inventories

     Inventories are stated at the lower of weighted average cost or market
     value. Unbilled processing charges incurred (included in finished goods
     and work in process) 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 silicon wafers,
     are excluded from inventories.

     Long-term investments in shares of stock

     Long-term investments of which ASE owns at least 20% of the outstanding
     voting shares and where ASE exercises significant influence on the
     investee companies' operations are accounted for by the equity method.
     Under the equity method, the investments are initially carried at cost and
     subsequently adjusted for ASE'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 received are reflected as a reduction in the carrying value of
     the investments. The goodwill representing the excess of the investment
     costs over ASE's proportionate equity in 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 ASE's ownership percentage
     of investees accounted for by equity method are accounted for as
     adjustments of long-term investments and capital surplus. The writedown of
     carrying value of long-term investments has been taken on the basis of the
     discounted cash flows expected to be realized in the future.

     Other long-term investments (including ASE common shares) in shares of
     stock are carried at cost. An allowance for decline in value is made for
     any permanent impairment in the carrying value of the investments and such
     decline in value is charged to current income. Cash dividends received are
     recognized as income. The sales of ASE stocks are reflected as gain from
     sales of long-term investment in the statement of income.

     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 the percentage of ownership.

     Long-term investments in bonds

     Bond securities being held to maturity are stated at amortized cost.
     Allowance for loss in bond securities is provided based on the evaluation
     of recoverability of the carrying value of these securities.


                                     -14-
<PAGE>


     Properties

     Properties, except leased equipment, machinery in transit, construction in
     progress and prepayments, are stated at cost. Equipment held under capital
     leases and related obligations are stated at the lower of the fair value
     of the equipment at the beginning of the lease period or the present value
     of the total rental payments and the purchase price at the end of the leas
     period. Machinery in transit, construction in progress and prepayments
     under construction are stated at cost. These include cost of machinery,
     construction, down payments and other direct cost plus interest charges
     attributable to the borrowings used to finance these assets. Major
     renewals and improvements are capitalized, while maintenance and repairs
     are expensed currently.

     Depreciation is provided on the straight-line method over estimated
     service lives which range as follows: long leasehold land, 60 years (lease
     period); buildings and improvements, 3 to 40 years; machinery and
     equipment, 3 to 8 years; furniture and fixtures, 5 to 10 years;
     transportation equipment, 3 to 10 years, and leased assets and leasehold
     improvements, 3 to 10 years. In the event that an asset depreciated to its
     residual value is deemed to have a continual useful life to the company,
     the residual value is depreciated over the remaining life, not to exceed 2
     years.

     When properties are retired or disposed of, their costs and accumulated
     depreciation are removed from the accounts and any loss is charged to
     income; any gain is credited to income and, after deducting applicable
     income tax, is transferred to capital surplus.

     Deferred charges

     Deferred charges are amortized on the straight-line method as follows:
     tooling, 2 years; issuance costs of convertible bonds, 5 years;
     telecommunications, electrical and computer network systems, 5 years; and
     others, 2 to 5 years.

     Consolidated debits

     The consolidated debits as shown in the balance sheet representing
     goodwill arising from the excess of the acquisition costs of investments
     over ASE's proportionate equity in the net assets of the consolidated
     subsidiaries at the time of acquisitions or investments, are amortized on
     the straight line method over 10 years.

     Revenue recognition

     Revenue from the sale of semiconductor and computer products and testing
     services is recognized upon shipment of the products or completion of the
     services, with a provision for estimated returns and allowances recorded
     at the time of recognition of revenue.

     Income tax

     Tax effects of deductible temporary differences and unused tax credits are
     recognized as deferred income tax assets, while those taxable temporary
     differences are recognized as deferred income tax liabilities. Valuation
     allowance is provided for deferred income tax assets based on the
     estimated realizability.

     Adjustments of prior years' income tax are added to or deducted from the
     current year's tax provision.


                                     -15-
<PAGE>


     Income taxes on undistributed earnings (10%) 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.

     Pension cost

     Pension cost is recorded based on actuarial calculations.

     Convertible bonds

     Conversion of convertible bonds into common shares is accounted for by
     book value method. Under this method, unamortized bond issuance cost,
     accrued interest no longer payable and the carrying value of the bond are
     written off. In addition, common shares are recorded at par value of the
     shares issued and the excess is recorded as capital surplus.

     Foreign currency transactions and translation of foreign-currency
     financial statements

     ASE and its subsidiaries maintain their accounts in the currency of their
     respective countries of incorporation (local currencies) and functional
     currencies.

     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
     New Taiwan 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

     Premiums or discounts on foreign currency forward exchange contracts which
     hedge foreign currency assets or liabilities arising from the difference
     between the forward rate and the spot rate at the date of each contract
     are deferred and amortized over the contract period. At year end, the
     balances of the forward exchange receivables or payables are restated
     based on prevailing exchange rates and the resulting gain or loss is
     credited or charged to income. Any exchange gain or loss when the contract
     is settled is also credited or charged to income. The difference between
     receivable and payable balances arising from forward exchange contracts is
     accounted for as either current asset or current liability.

     Written option contracts to purchase foreign currencies and currency and
     interest rate swap contracts entered into for hedging purposes are not
     recorded as assets or liabilities on the contract dates. Gains or losses
     upon settlement are credited or charged to income. Amounts received or
     paid are amortized over each contract period. The outstanding written
     option contracts, and currency and interest rate swap contracts are marked
     to market with charges to income.


                                     -16-
<PAGE>


     Interest rate swap agreements to limit the impact of the variable interest
     rate of certain long-term debts are not recorded as assets or liabilities
     on the contract date. The variable rates on swaps are based primarily on
     US dollar LIBOR. The differential between fixed and variable rates to be
     paid or received on swaps is accrued as interest rates change in
     accordance with the agreements and is included in current interest
     expense.

     Earnings per share ("EPS") and earnings per equivalent ADS

     Common shares of ASE's convertible bonds are not considered in the
     calculation of primary and fully diluted EPS because they have
     anti-dilutive effect. Common share equivalents of the employees' stock
     options of ASE Test are included in the EPS calculation (see Note 20).

     Earnings per equivalent American depositary share (ADS) are calculated by
     multiplying earnings per share by five (each of the ADS represents five
     common shares).

     US dollar amount

     ASE prepares its consolidated financial statements in New Taiwan dollars.
     Translations into US dollars for 2000 financial statements are included
     solely for the convenience of the readers, and are based on the US Federal
     Reserve Bank of New York noon buying rate of NT$33.17 to US$1.00 in effect
     as at December 31, 2000. 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 rates.

3.   SHORT-TERM INVESTMENTS

<TABLE>
                                                                  December 31
                                                --------------------------------------------
                                                    1999                     2000
                                                ------------     ---------------------------
                                                     NT$              NT$             US$
                                                ------------     ------------     ----------
<S>                                             <C>              <C>              <C>
     Mutual funds                                    186,667        1,603,362         48,338
     Stocks                                           19,613           63,978          1,929
     Convertible bonds and government bonds           10,000           20,188            608
                                                ------------     ------------     ----------
                                                     216,280        1,687,528         50,875
     Allowance for loss                                    -            4,849            146
                                                ------------     ------------     ----------
                                                     216,280        1,682,679         50,729
                                                ============     ============     ==========
</TABLE>

4.   ACCOUNTS RECEIVABLE - NET

<TABLE>
                                                                  December 31
                                                --------------------------------------------
                                                    1999                     2000
                                                ------------     ---------------------------
                                                     NT$              NT$             US$
                                                ------------     ------------     ----------
<S>                                             <C>              <C>              <C>
     Accounts receivable                           7,496,669        9,393,853        283,203
     Allowance for doubtful accounts                (187,162)       (314,243)         (9,474)
     Allowance for sales allowances                  (47,092)        (38,676)         (1,166)
                                                ------------     ------------     ----------
                                                   7,262,415        9,040,934        272,563
                                                ============     ============     ==========
</TABLE>


                                     -17-
<PAGE>


     The movement of allowance for doubtful accounts and sales allowances are
     as follows:

                                                   Doubtful          Sales
                                                   Accounts       Allowances
                                                 ------------   --------------
                                                      NT$             NT$
                                                 ------------   ---------------
     Balance, beginning of 1998                        80,419           12,500
     Additions                                          4,289           40,500
     Deductions                                             -                -
                                                 ------------     ------------
     Balance, end of 1998                              84,708           53,000
     Additions                                        109,263                -
     Deductions                                        (6,809)          (5,908)
                                                 ------------     ------------
     Balance, end of 1999                             187,162           47,092
     Additions                                        148,834            6,624
     Deductions                                       (21,753)         (15,040)
                                                 ------------     ------------

     Balance, end of 2000                             314,243           38,676
                                                 ============     ============
     (Forward)

                                                      US$              US$
                                                 ------------     ------------

     Balance, beginning of 2000                         5,643            1,420
     Additions                                          4,487              199
     Deductions                                          (656)            (453)
                                                 ------------     ------------

     Balance, end of 2000                               9,474            1,166
                                                 ============     ============


5.   INVENTORIES
<TABLE>
                                                           December 31
                                           ---------------------------------------------
                                             1999                   2000
                                           ------------     ----------------------------
                                                NT$              NT$             US$
                                           ------------     ------------     ----------
<S>                                        <C>              <C>              <C>
     Finished goods                             122,193          246,812          7,441
     Work in process                            349,910          337,320         10,169
     Raw materials                            1,685,424        2,099,058         63,282
     General supplies and spare parts           379,775          630,979         19,023
                                           ------------     ------------     ----------
                                              2,537,302        3,314,169         99,915
     Allowance for obsolescence                (176,205)        (155,061)        (4,675)
                                           ------------     ------------     ----------
                                              2,361,097        3,159,108         95,240
     Supplies in transit                         88,594           87,219          2,629
                                           ------------     ------------     ----------

                                              2,449,691        3,246,327         97,869
                                           ============     ============     ==========
</TABLE>

                                     -18-
<PAGE>


     The movement of allowance for obsolescence is as follows:

                                                                      NT$
                                                                ------------
     Balance, beginning of 1998                                      203,276
     Additions                                                       106,708
     Deductions                                                     (110,966)
                                                                ------------
     Balance, end of 1998                                            199,018
     Additions                                                        50,566
     Deductions                                                      (73,379)
                                                                ------------
     Balance, end of 1999                                            176,205
     Additions                                                       115,928
     Deductions                                                     (137,072)
                                                                ------------
     Balance, end of 2000                                            155,061
                                                                ============

                                                                     US$
                                                                ------------
     Balance, beginning of 2000                                        5,312
     Additions                                                         3,495
     Deductions                                                       (4,132)
                                                                ------------
     Balance, end of 2000                                              4,675
                                                                ============

6.   LONG-TERM INVESTMENTS - COMMON STOCKS

<TABLE>
                                                                                       December 31
                                                                  ------------------------------------------------------
                                                                                1999                       2000
                                                                  ---------------------   ------------------------------
                                                                                 % of                               % of
                                                                               Direct                             Direct
                                                                               Owner-                             Owner-
                                                                     NT$         ship        NT$          US$      ship
                                                                  -----------  --------   -----------   --------  -------
<S>                                                               <C>             <C>       <C>          <C>        <C>
    Equity method
          Hung Ching Development & Construction Co.
            (HCDC) (Note 10)                                        2,405,571     25.1      2,154,627     64,957     25.4
          Hung Ching Kwan Co. (HCKC)                                  401,664     27.3        405,549     12,226     27.3
          Universal Scientific Industrial Co., Ltd. (USI)
            (Note 10)                                               3,600,626     22.7      3,931,810    118,535     21.3
          Universal Access Technology Inc. (UAT)                            -      -           92,775      2,797     25.0
     Cost method
          ASE stock held by subsidiaries                            2,922,561      5.2      2,919,411     88,014      4.9
          InveStar Burgeon Venture Capital, Inc.                      145,408     13.0        153,035      4,614     13.0
          Taiwan Fixed Network Co., Ltd.                                    -      -        1,500,000     45,222      1.6
          Core-Pacific Securities Investment Trust Co.                  9,000      3.0              -          -      -
     Preferred stock
          Intergrated Programmable Communication, Inc.
          (IPC)                                                             -      -          118,681      3,578      -
                                                                  -----------             -----------   --------
                                                                    9,484,830              11,275,888    339,943
     Adjustment for evaluation of ASE stock                                 -               (490,280)    (14,781)
     Unrealized gain on sale of land                                 (300,149)              (300,149)     (9,049)
                                                                  -----------             -----------   --------
                                                                    9,184,681              10,485,459    316,113
                                                                  ===========             ===========   ========
</TABLE>

                                     -19-
<PAGE>


     ASE 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 valuation of NT$390,470. The resulting gain of NT$300,149, 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, 2000, ASE has a 43.4% (1999: 43.2%)
     effective interest in HCKC, which consists of 27.3% interest directly
     owned by ASE, and 15.9% (1999: 16.1%) interest indirectly owned through
     Hung Ching Development & Construction Co. ("HCDC") (based on HCDC's 63.5%
     interest in HCKC).

     ASE made investments in UAT in December 2000 and directly acquired its 25%
     equity interest. In addition, HCDC and USI have 10% and 25% equity
     interest in UAT. Accordingly, as of December 31, 2000, ASE has a 32.9%
     effective interest in UAT. UAT is engaged in the design of related
     computer products and software service.

     As of December 31, 2000, the undistributed earnings for each investee are
     NT$491,859 (US$14,828) for HCDC, NT$1,341,435 (US$40,441) for USI, and
     NT$55,215 (US$1,665) for HCKC. HCKC did not declare dividends in 1999 and
     2000. USI declared stock dividends for NT$4.00 per share in 2000, and did
     not declare dividends in 1999. HCDC declared stock and cash dividends in
     2000 for NT$0.8 and NT$0.2 per share, respectively, but these dividends
     have not been distributed.

     ASE had net investment losses of NT$100,549 in 1998, net investment income
     of NT$50,595 in 1999, and net investment losses of NT$167,237 (US$5,042)
     in 2000 from its investments in the aforementioned equity investees.

7.   LONG-TERM BOND INVESTMENTS
<TABLE>
                                                                                               December 31
                                                                              --------------------------------------------
                                                                                 1999                     2000
                                                                              ------------     ---------------------------
                                                                                   NT$              NT$             US$
                                                                              ------------     ------------     ----------
<S>                                                                           <C>              <C>              <C>
     APP Global Finance Ltd. (APP) bond:  maturity date on
       October 4, 2001; bearing interest at 9.75%; and payable
       semiannually                                                                304,166          320,432          9,660
     Federal National Mortgage Association:  maturity date
       on May 2, 2001; bearing interest at 6.40%; and payable
       semiannually                                                                185,585          195,320          5,888
                                                                              ------------     ------------     ----------
                                                                                   489,751          515,752         15,548
     Allowance for loss                                                                  -         (289,012)        (8,713)
                                                                              ------------     ------------     ----------
                                                                                   489,751          226,740          6,835
                                                                              ============     ============     ==========
</TABLE>

     In 2000, ASE provided allowance for loss amounting to NT$289,012
     (US$8,713) for the bond investment in APP because APP incurred financial
     difficulties.

                                     -20-
<PAGE>


8.   PROPERTIES

     Accumulated depreciation consists of:
<TABLE>
                                                                        December 31
                                                       -----------------------------------------------
                                                            1999                      2000
                                                       -------------     -----------------------------
                                                            NT$               NT$               US$
                                                       -------------     -------------     -----------
<S>                                                    <C>               <C>               <C>
     Buildings and improvements                              966,103         1,335,682           40,268
     Machinery and equipment                              13,451,590        20,586,431          620,634
     Transportation equipment                                 21,949            56,731            1,710
     Furniture and fixtures                                  369,481           469,584           14,157
     Leased assets and leasehold improvements                147,336           235,634            7,104
     Long leasehold land                                       4,925             6,230              188
                                                       -------------     -------------     ------------
                                                          14,961,384        22,690,292          684,061
                                                       =============     =============     ============
</TABLE>

     Capitalized interest expenses were NT$144,416, NT$123,347 and NT$163,916
     (US$4,942) for the years ended December 31, 1998, 1999 and 2000,
     respectively.

     ASE Chung Li and HCDC entered into an agreement for the joint development
     of buildings on the land owned by ASE Chung Li in 1999, which construction
     was completed in October 2000. In addition, ASE Chung Li and ASE Material
     entered into purchase agreements with HCDC to purchase the building. The
     contract price, which was based on appraisal, totaled NT$1,044,341
     (US$31,485) and NT$358,442 (US$10,806), respectively. As of December 31,
     2000, ASE Chung Li and ASE Material have paid NT$313,333 (US$9,446) and
     NT$107,500 (US$3,241), respectively, and the balance will be paid in the
     2001. The building is shown as construction in progress in the 2000
     consolidated balance sheet.

     Machinery in transit and prepayments pertain to the purchase of packaging
     and testing equipment, which are associated with machinery purchased with
     title transferred but are not yet in ready-for-use condition, and down
     payments for machinery purchased with non-cancelable purchase orders.

     Major components for machinery in transit and prepayments are as follows:

                                             December 31
                               --------------------------------------------
                                   1999                    2000
                               ------------     ---------------------------
                                    NT$              NT$             US$
                               ------------     ------------     ----------
     Bonders                        460,551          405,595         12,228
     Testers                        640,250        1,063,911         32,074
     Others                       2,224,128        3,480,920        104,942
                               ------------    -------------     ----------
     Total                        3,324,929        4,950,426        149,244
                               ============    =============     ==========


                                     -21-
<PAGE>


9.   OTHER ASSETS
<TABLE>
                                                                                 December 31
                                                                 --------------------------------------------
                                                                     1999                    2000
                                                                 ------------     ---------------------------
                                                                      NT$              NT$             US$
                                                                 ------------     ------------     ----------
<S>                                                              <C>              <C>              <C>
     Deferred charges (Note2)
          Tooling                                                     271,646          124,468          3,752
          Issuance costs of convertible bonds                         189,730          139,244          4,198
          Telecommunications, electrical and Computer
            network systems                                           142,266          290,208          8,749
          Other                                                        72,035          346,130         10,435
                                                                 ------------     ------------     ----------
                                                                      675,677          900,050         27,134
     Guarantee deposits                                                86,542          204,112          6,154
     Non-operating properties                                          54,860          147,686          4,452
     Other                                                            135,678           23,709            715
                                                                 ------------     ------------     ----------
                                                                      952,757        1,275,557         38,455
                                                                 ============     ============     ==========
</TABLE>

10.  CONSOLIDATED DEBITS

     These represent goodwill arising from the purchases of:
<TABLE>
                                                                                 December 31
                                                                 --------------------------------------------
                                                                     1999                    2000
                                                                 ------------     ---------------------------
                                                                      NT$              NT$             US$
                                                                 ------------     ------------     ----------
<S>                                                              <C>              <C>              <C>

     Motorola SPS Businesses (Note 26)                                427,944          417,760         12,595
     ISE Labs shares (Note 26)                                      2,056,775        2,008,793         60,561
     ASE Test shares                                                2,749,558        2,554,869         77,023
     Other                                                             11,551           18,124            546
                                                                 ------------     ------------     ----------
                                                                    5,245,828        4,999,546        150,725
                                                                 ============     ============     ==========
</TABLE>

     Amortization of the above-mentioned goodwill for consolidated subsidiaries
     (as reflected in general and administrative expenses in the statement of
     income) were NT$345,726, NT$507,816 and NT$559,807 (US$16,877) for the
     years ended December 31, 1998, 1999 and 2000, respectively.

     In addition, the carrying values of investments in HCDC and USI as
     discussed in Note 6 as of December 31, 1999 and 2000 included unamortized
     goodwill, which is being amortized over ten years through April 2006 for
     HCDC and July 2010 for USI, resulting from the purchases of HCDC shares in
     1995 and 1996, and USI shares in 1999 and 2000, as follows:

<TABLE>
                                                                                 December 31
                                                                 --------------------------------------------
                                                                     1999                    2000
                                                                 ------------     ---------------------------
                                                                      NT$              NT$             US$
                                                                 ------------     ------------     ----------
<S>                                                              <C>              <C>              <C>
     HCDC                                                             935,886          780,798         23,539
     USI                                                            1,862,225        1,872,342         56,447
                                                                 ------------     ------------     ----------
                                                                    2,798,111        2,653,140         79,986
                                                                 ============     ============     ==========
</TABLE>


                                     -22-
<PAGE>


     Amortization of the above-mentioned goodwill for equity investees (as
     reflected in investment income (loss) by equity method in the statement of
     income) were NT$155,088, NT$279,242 and NT$362,971 (US$10,943) for the
     years ended December 31, 1998, 1999 and 2000, respectively.

11.  SHORT-TERM BORROWINGS
<TABLE>
                                                                            December 31
                                             -----------------------------------------------------------------------------
                                                          1999                                    2000
                                             ------------------------------  ---------------------------------------------
                                                Interest                        Interest
                                                Rate (%)            NT$         Rate (%)            NT$             US$
                                             --------------    ------------  --------------    ------------     ----------
<S>                                          <C>               <C>           <C>               <C>              <C>
     Letters of credit                         6.57~8.515         1,160,916    0.975-7.5          1,733,626         52,265
     Revolving                                   1.4~8            1,601,589      1.6-10           2,741,038         82,636
     Promissory notes                          6.66~8.45          1,025,142     8.1-8.7             927,933         27,975
                                                               ------------                    ------------     ----------
                                                                  3,787,647                       5,402,597        162,876
                                                               ============                    ============     ==========
</TABLE>

     As of December 31, 1999 and 2000, unused credit lines for short-term
     borrowings and commercial papers and bank acceptances payable total
     approximately NT$11,191,775 and NT$14,248,718 (US$429,566), respectively.

12.  COMMERCIAL PAPER AND BANK ACCEPTANCES PAYABLE

     Commercial paper and bank acceptances payable bore interest rates ranging
     from 4.7% to 6.76% in 1999 and 5.2% to 11.5% in 2000, respectively.

13.  LONG-TERM BONDS PAYABLE
<TABLE>
                                                                                             December 31
                                                                          ------------------------------------------------
                                                                               1999                    2000
                                                                          -------------     ------------------------------
                                                                                NT$              NT$               US$
                                                                          -------------     -------------     ------------
<S>                                                                       <C>               <C>               <C>
     Foreign convertible bonds - US$200 million issued by
       ASE                                                                    6,292,000         6,597,845          198,910
     Foreign convertible bonds - US$110 million issued by
       ASE Test Finance Limited                                               3,460,050         3,637,908          109,675
     Accrued interest                                                         1,075,613         1,993,426           60,097
                                                                          -------------     -------------     ------------
                                                                             10,827,663        12,229,179          368,682
                                                                          =============     =============     ============
</TABLE>

     Set forth below is information on the long-term bonds payable:

     A.  US$200 million issued by ASE

         In November 1997, ASE issued bonds, consisting of 200 units with face
         value of US$1 million (NT$30.8 million) each, with zero coupon, due
         November 2002. The bonds bear an implicit interest rate of 6.372%.


                                     -23-
<PAGE>


         Starting from December 1997 through October 2002, the bondholders may
         convert the bonds into common shares at the specified conversion
         price. The conversion rate was based on the current market price at
         the time of sale. As of December 31, 2000, 355,086 common shares were
         issued as a result of the conversion of such bonds, resulting in
         capital surplus of NT$32,102 (US$968). As of December 31, 2000, the
         outstanding convertible bonds aggregated US$199 million (NT$6,601
         million).

         On or at any time after October 14, 2000, ASE may redeem the bonds at
         the redemption price if:

         a)   (i) the closing price of the common shares for a period of 30
              consecutive trading days is higher than 140% of the conversion
              price (NT$59.7 per share as at December 31, 2000) in effect on
              each such trading day and (ii) the closing price of the common
              shares translated into US dollars at the prevailing rate for a
              period of 30 consecutive trading days is higher than 140% of the
              conversion price then in effect translated into US dollars at the
              rate of NT$28.62=US$1.00; or

         b) at least 95% of the bonds have already been converted, redeemed, or
         purchased and cancelled.

         In addition, ASE may, if the applicable tax law is unfavorably
         changed, redeem at any time all, but not some, of the bonds.

         On September 5, 1997, ASE entered into a firm commitment subscription
         agreement with SBC Warburg Securities Pte. Ltd. ("SBC Warburg") for
         the sale by ASE to SBC Warburg of US$200 million Zero Coupon
         Convertible Bonds due 2002 (the "Convertible Bonds"). The closing of
         the sale of the Convertible Bonds was initially scheduled to occur on
         October 6, 1997. Due to the adverse market conditions prevailing
         during this period of time as a result of the Asian financial crisis,
         however, SBC Warburg requested that the closing date for the sale of
         the Convertible Bonds be extended.

         During the extension period (the "Extension Period"), SBC Warburg
         decided to market the Convertible Bonds to potential investors as two
         separate instruments by repackaging them into: (1) a debt portion
         consisting of US$200 million callable floating rate notes which are
         secured by the Convertible Bonds (the "FRNs") and (2) an equity
         portion consisting of options to purchase the Convertible Bonds (the
         "Call Options"). SBC Warburg was able to obtain commitments for the
         entire issue of the FRNs but, as a result of the adverse market
         conditions described above, was able to obtain commitments for only a
         portion of the Call Options. As a result, Swiss Bank Corporation
         ("SBC"), an affiliate of SBC Warburg, approached a number of large
         institutional investors, including J&R Holding Limited ("J&R
         Holding"), a consolidated subsidiary of ASE, with a proposal to sell a
         portion of the Call Options. Subsequently, J&R Holding entered into
         two agreements with SBC to purchase options on a portion of the
         Convertible Bonds.


                                     -24-
<PAGE>


         Under the first agreement with SBC, J&R Holding is required to make
         four cash payments to SBC on November 4, 1998, 1999, 2000 and 2001 as
         long as the Call Options remain unexercised and outstanding. In
         return, J&R Holding has the right to call the Convertible Bonds at any
         time during the period from November 1998 through November 2002. The
         exercise price of the Call Options is equal to the accreted carrying
         value of the Convertible Bonds as shown on the Corporation's balance
         sheet at the date exercised. Pursuant to the second agreement, SBC
         paid US$200,000 to J&R Holding. In return, SBC has the right to sell a
         portion of the Call Options to J&R Holding at any time between
         November 4, 1997 and November 1, 1998. In any event, J&R Holding was
         required under the automatic exercise provision of this agreement to
         purchase the Call Options upon the expiration of the agreement on
         November 1, 1998.

         The closing of the sale of the Convertible Bonds eventually took place
         on November 4, 1997. Upon the closing of the sale of the Convertible
         Bonds, SBC Warburg immediately resold the Convertible Bonds to a
         subsidiary of SBC Warburg. Such subsidiary in turn repackaged the
         Convertible Bonds into the FRNs and the Call Options for resale to the
         investors that had indicated an interest in purchasing the FRNs and/or
         the Call Options during the Extension Period. The closing of the sale
         of the FRNs and the Call Options took place on November 5, 1997.

         SBC Warburg and its subsidiary have entered into a swap transaction,
         which stipulates that SBC Warburg will pay the interest on the FRN
         (aggregating to US$80 million (NT$2,654 million)) on the subsidiary's
         behalf. The subsidiary will repay the interest to SBC Warburg at the
         maturity date of the Convertible Bonds. ASE has contracted with
         certain banks to issue letters of credit for US$71,834 (NT$2,382,734)
         to SBC Warburg to guarantee the interest payment obligation of the
         subsidiary. Under the contract with these banks, ASE may not, among
         other things, change its scope of operations and is required to
         maintain certain financial ratios.

     B.  US$110 million of Foreign Convertible Notes

         In June 1999, ASE Test (the "Guarantor"), in connection with the
         acquisitions of ISE Labs and Motorola SPS Businesses, issued US$160
         million (NT$5,307 million) of 1% guaranteed convertible notes (the
         "Convertible Notes") due July 1, 2004 through its subsidiary, ASE Test
         Finance Limited (the "Issuer"). ASE subscribed to US$50 million
         (NT$1,659 million) of the Convertible Notes and, accordingly, as of
         December 31, 2000, the net balance of US$109,890 thousand (NT$3,645
         million) is shown in the accompanying balance sheet.

         The holders of the Convertible Notes are entitled to convert the
         Convertibles into ASE Test's ordinary shares at the specified
         conversion price at any time after December 29, 1999 and before or on
         July 1, 2004.

         The Convertible Notes may be redeemed under the following
         circumstances:

         a)   Redemption for taxation reasons:

              If the applicable tax law or treaty is unfavorablely revised, the
              Issuer or ASE Test may redeem the Convertible Notes in whole at
              early redemption price, at any time upon giving written notice
              not less than 30 days and not more than 60 days to the
              bondholders.


                                     -25-
<PAGE>


         b)   Redemption at the option of the Issuer:

              On or at any time after July 1, 2002, the Issuer may redeem all
              or a part of the Convertible Notes at the early redemption price.

14.  LONG-TERM DEBTS

     Long-term debts consist of the following:

<TABLE>
                                                                           December 31
                                                           -----------------------------------------------
                                                               1999                       2000
                                                           -------------     -----------------------------
                                                                NT$               NT$               US$
                                                           -------------     -------------     ------------
<S>                                                        <C>               <C>               <C>
     Mortgage bank loans for purchase of machinery             4,272,641         4,989,564          150,424
     Acceptances payable to syndicate banks                    6,947,225         6,678,815          201,351
     Bank loans secured by assets                                921,978         1,540,747           46,450
     Revolving bank loans                                        315,317           250,708            7,558
     Obligation under capital leases (Note 22)                   168,829           179,952            5,425
                                                           -------------     -------------     ------------
                                                              12,625,990        13,639,786          411,208
     Current portion                                           2,886,351         3,309,935           99,787
                                                           -------------     -------------     ------------
                                                               9,739,639        10,329,851          311,421
                                                           =============     =============     ============
</TABLE>

     A.  Mortgage bank loans for purchases of machinery:

         These represent various bank loans obtained by ASE, ASE Test, Inc.,
         ASE Chung Li, ASE Technologies, Inc., and ASE Material. These mortgage
         bank loans are repayable in monthly, quarterly or semi-annually
         installments and bear interest at rates ranging from 1.3% to 8.3% in
         1999 and 1.1% to 8.12% in 2000.

         ASE has syndicate loan agreements with banks that stipulate, among
other things, the following:

          1)   Without the prior written consent from the majority of the
               banks, ASE cannot:
              a) Give guarantees to or assume direct or indirect liabilities of
                 other parties, except for its existing obligations, in excess
                 of US$40 million (NT$1,327 million).
              b) Enter into a merger agreement.
              c) Transfer or sell more than 20% of its total assets, including
                 equipment and receivables.
              d) Provide collateral to other parties involving 25% of its total
                 assets.
              e) Make loans to other parties.
              f) Enter into contracts with terms and conditions which are not at
                 arm's length.
              g) Change significantly its accounting practices.
              h) Invest up to 50% of its equity in shares of HCDC.

         2) Maintenance by ASE of certain financial ratios.

              The syndicate loan has expired in November 2000.


                                     -26-
<PAGE>


     B.  Acceptances payable to syndicate banks
<TABLE>
                                                                                   December 31
                                                                   --------------------------------------------
                                                                       1999                     2000
                                                                   ------------     ---------------------------
                                                                        NT$              NT$             US$
                                                                   ------------     ------------     -----------
<S>                                                                <C>              <C>              <C>
         Principal - five-year revolving credit lines
            aggregating NT$8,000,000 (US$241,182) through
            June 2003, interest at 4.66%-6.2558% in 1999
           and 5.223%-6.378% in 2000                                  7,075,000        6,775,000        204,251
         Unamortized discounts                                          127,775)         (96,185)        (2,900)
                                                                   ------------     ------------     ----------

                                                                      6,947,225        6,678,815        201,351
                                                                   ============     ============     ==========
</TABLE>

         Acceptances payable to syndicate banks were covered by several bank
         acceptance agreements made by ASE and ASE Test, Inc. which stipulate,
         among other things, the following:

         1)   Without the prior written consent from the majority of the banks,
              ASE can not pledge its assets or assume liabilities or change its
              operating items or merge with any other entity or dispose of more
              than 20% of total assets, or provide financing to other entity,
              or make such investment that will unfavorably affect its
              financial conditions.

         2)   ASE's tangible net worth (as defined) should not be less than
              NT$19 billion (US$573 million).

         3)   ASE can only invest up to 50% of its tangible net worth
              (as defined) in the shares of HCDC.

         4)   ASE is required to maintain certain financial ratios.

         5)   ASE is required to pay an annual commitment fee at 0.15-0.2% of
              the difference between the authorized and utilized credit line.

         6)   ASE should not change its accounting policies significantly.

         ASE Test provided a guaranty on the bank acceptance agreement entered
         into by ASE Test, Inc. Under the guaranty, ASE Test is required to
         maintain certain financial ratios and, without written consent of the
         majority banks, shall not:

         1)   Merge or consolidate with any other entity or take any action to
              dissolve, liquidate or reorganize.

         2)   Purchase or redeem its shares or reduce its share capital.

         3)   Reduce its ownership in ASE Test, Inc. to less than 51%.

         4)   Transfer, sell, lease or dispose of a substantial portion of its
              assets.


                                     -27-
<PAGE>


     C.  Bank loans secured by assets

         These represent various bank loans obtained by ISE Labs and ASE Korea
         secured by all their assets. The maturities of the loans are May 2009
         and November 2003, respectively, and the loans bear interest ranging
         from 7.75% to 9.5% or at prime rate and 8.45%-10.5%, respectively.
         These agreements contain certain covenant and default provisions that
         require ISE Labs to maintain certain financial ratios, dividend and
         capital expenditure restrictions and maintenance of working capital
         requirements.

     D.  Revolving bank loans

         These represent a loan of JPY1.3 billion in 1999 and loans of 2000.
         The loan is repayable in the equivalent amount of US$10 million
         (NT$301 million) over three equal semi-annual installments starting
         October 9, 2000 with an interest rate equal to LIBOR plus 0.5% margin.

     As of December 31, 1999 and 2000, unused long-term bank facilities totaled
     approximately NT$3,106,827 and NT$5,869,764 (US$176,960), respectively.

     As of December 31, 1999 and 2000, the future maturities of long-term debts
     (including long-term bond payable) are as follows:

<TABLE>
                                                                   December 31
                                                 ------------------------------------------------
                                                      1999                      2000
                                                 -------------     ------------------------------
                                                      NT$               NT$               US$
                                                 -------------     -------------     ------------
<S>                                              <C>               <C>               <C>
     Within the following year                       2,886,351         3,309,935           99,787
     During the second year                          3,419,632        12,484,848          376,390
     During the third year                           7,991,629         3,257,243           98,198
     During the fourth year                          5,201,909         4,939,819          148,924
     During the fifth year and thereafter            3,954,132         1,877,120           56,591
                                                 -------------     -------------     ------------
                                                    23,453,653        25,868,965          779,890
                                                 =============     =============     ============
</TABLE>

     Long-term debts (including long-term bond payable) by currencies are
     detailed as follows:

                                                 1999              2000
                                           ----------------   --------------

     New Taiwan Dollars                    NT$ 9,296,544      NT$ 12,128,557
     US Dollars                            US$   361,117      US$    469,339
     Deutsche Mark                         DM      2,897      DM         940
     Japanese Yen                          Yen 2,344,208      Yen  5,069,552
     Singapore Dollars                     SGD        24      SGD          7
     British Pound                                            GBP         91
     European Currency Unit                                   EUR          4


                                     -28-
<PAGE>


15.  SHAREHOLDERS' EQUITY

     In September 2000, ASE issued 20,000,000 ADSs, representing 100,000,000
     common shares. In July 1995, ASE issued 8,600,000 GDSs, representing
     43,000,000 common shares. Concurrently with the ADS issuance, the GDS
     holders have converted their outstanding GDSs into ADSs. As of December
     31, 2000, the GDS holders have converted aggregated 7,536,000 ADSs,
     representing aggregated 37,679,000 common shares.

     The ADS or GDS holders generally have the same rights and obligations as
     the shareholders, subject to the provision of relevant ROC 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 ADS or GDS holders can, through Citicorp Financial
     Services Limited, as nominee holder: (a) exercise their voting rights; (b)
     sell their ADS or GDSs; and, (c) receive dividends declared and subscribe
     to the issuance of new shares.

     Under the ROC Company Law, capital surplus can only be used to offset
     against deficit or be transferred to capital. Under relevant regulations,
     the paid-in capital in excess of par value can be transferred to capital
     only once a year and is subject to a specified limit.

     ASE's Articles of Incorporation provide that the annual net income shall
be appropriated as follows:

     a.   gain on disposal of properties, less applicable income tax, as
          capital surplus;

     b.  offset against deficit, if any;

     c.   10% of the remainder as legal reserve, until the accumulated amount
          equals paid-in capital;

     d.   an amount (Note 6) equal to the income from long-term investments in
          shares of stock accounted for by equity method, excluding cash
          dividends, as special reserve;

     e.   not more than 2% of the remainder, as compensation to directors and
          supervisors;

     f.   5% to 7% of the remainder, as bonus to employees, of which 5% will be
          distributed in shares based on the employee stock bonus plan and the
          excess to be distributed to specific employees as decided by the
          board of directors; and

     g.  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% of capital, up to
     50% thereof may be transferred to capital.

     ASE is currently going through a growth phase. In order to meet the needs
     of operational expansion, both current and future, and to satisfy
     shareholders' need for cash inflow, in the Corporation's dividend policy
     priority shall be given to stock dividends; cash dividends may also be
     issued. In principle, the percentage of cash dividends issued shall not
     exceed 20%. Cash dividends shall not be issued if the dividend per share
     is less than NT$0.1; stock dividends shall be used instead.


                                     -29-
<PAGE>


     With respect to the percentage of cash dividends to be issued referred to
     in the previous paragraph, ASE may decide on the most suitable dividend
     policy and method to issue in accordance with its current operational
     status, and taking into consideration the budget plan for the following
     year. The board of directors shall draw up a profit distribution plan,
     which shall be submitted to the shareholders' meeting for approval before
     implementation.

     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 ASE on earnings generated in 1998 and
     onwards. An Imputation Credit Account (ICA) is maintained by ASE 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, 2000 the creditable taxes aggregated NT$6,380 (US$192).
     The actual and estimated percentage for the distribution of 1999 and 2000
     net income was 4.74% and 9.77%, respectively.

     As of December 31, 2000, the unappropriated earnings prior to 1998 (the
     year that Integrated Income Tax System became effective) amounted to
     NT$17,644 (US$532).

16.  GAIN ON SALES OF INVESTMENTS

     This consists of the gross gain on sales of:
<TABLE>
                                                                Year Ended December 31
                                                      ------------------------------------------------------------
                                                          1998            1999                    2000
                                                      ------------    ------------     ---------------------------
                                                           NT$             NT$              NT$             US$
                                                      ------------    ------------     ------------     ----------
<S>                                                   <C>             <C>              <C>              <C>
     Sale of ASE Test's shares                             190,999       4,007,674                -              -
     Sale of ASE's shares held by subsidiaries
       (Note 27)                                            42,692       1,388,523                -              -
     Other                                                 373,253         147,958           91,666          2,763
                                                      ------------    ------------     ------------     ----------
                                                           606,944       5,544,155           91,666          2,763
                                                      ============    ============     ============     ==========
</TABLE>


                                     -30-
<PAGE>


         The gain on sale of ASE Test's ordinary shares, as shown above, is
         broken out as follows:

<TABLE>
                                                                               Year Ended December 31
                                                              ------------------------------------------------------------
                                                                  1998            1999                  2000
                                                             -------------   -------------    ----------------------------
                                                                   NT$             NT$              NT$             US$
                                                             -------------   -------------    -------------     ----------
<S>                                                          <C>             <C>              <C>               <C>
     US secondary public offering of 2,244
       thousand shares in June and July 1997                             -               -                -              -
     First offering of 1,400 thousand shares sold
       to third party investors for issuances of
       Taiwan Depositary Receipts (TDRs) in
       December 1997                                                     -               -                -              -
     Sale of 100 thousand shares for issuance of
       TDR from January to March 1998                              190,999               -                -              -
     Secondary offering of 2,500 thousand
       shares for issuances of TDRs in March
       1999                                                              -       4,007,674                -              -
                                                             -------------   -------------    -------------     ----------
                                                                   190,999       4,007,674                -              -
                                                             =============   =============    =============     ==========
</TABLE>

         The gain on sale of ASE's common shares, as shown above, is broken out
         as follows:

<TABLE>
                                                                               Year Ended December 31
                                                              ------------------------------------------------------------
                                                                  1998            1999                  2000
                                                             -------------   -------------    ----------------------------
                                                                   NT$             NT$              NT$             US$
                                                             -------------   -------------    -------------     ----------
<S>                                                          <C>             <C>              <C>               <C>

     1,405 thousands shares sold in December
       1998                                                         42,692               -                -              -
     32,450 thousand shares sold in December
       1999 through the re-issuance of GDSs                              -       1,388,523                -              -
                                                             -------------   -------------    -------------     ----------
                                                                    42,692       1,388,523                -              -
                                                             =============   =============    =============     ==========
</TABLE>


17.  INCOME TAX

     a.  Income tax expense (benefit) is summarized as follows:

<TABLE>
                                                                               Year Ended December 31
                                                              ------------------------------------------------------------
                                                                  1998            1999                  2000
                                                             -------------   -------------    ----------------------------
                                                                   NT$             NT$              NT$             US$
                                                             -------------   -------------    -------------     ----------
<S>                                                          <C>             <C>              <C>               <C>
         Current
               Tax based on pre-tax accounting
                 income at statutory rate                          819,508       3,218,520        3,211,156         96,809
               Add (less) tax effects of:
                     Permanent differences
                            Tax-exempt income
                                 -  Tax holiday                   (508,822)       (779,437)        (700,749)       (21,126)

(Forward)

                                      -31-
<PAGE>


                                 -  Gain from sales
                                    of securities                        -        (384,079)         (51,415)        (1,550)
                            Investment income
                                 - Sale of ASE Test
                                   shares                          (47,750)     (1,001,919)               -              -
                            Unamortized expense
                              for issuance of GDS                   (4,770)              -                -              -
                     Temporary differences
                            Investment income                     (132,528)       (398,886)        (523,941)       (15,796)
                            Unfunded pension cost                   16,357           8,494           12,214            368
                            Unrealized foreign
                              exchange (gain) loss                  (6,265)        (38,701)          91,102          2,747
                            Bond interest payable                  109,442         112,318          114,798          3,461
                            Other                                   53,895         248,765          158,786          4,787
                                                              ------------    ------------     ------------     ----------
                                                                   299,067         985,075        2,311,951         69,700
         Credits for investments and research
           and development                                        (138,923)       (401,525)      (1,231,247)       (37,119)
         Deferred                                                 (267,511)       (155,437)        (152,138)        (4,587)
         Income taxes (10%) on undistributed
           earnings generated in 1998 and
           onwards                                                       -          44,539          147,379          4,443
         Adjustment of prior year's income tax                     (43,410)        (13,109)         (10,177)          (307)
                                                              ------------    ------------     ------------     ----------

         Income tax (benefit) expense                             (150,777)        459,543        1,065,768         32,130
                                                              ============    ============     ============     ==========
</TABLE>

         b. The above-mentioned taxes on pre-tax accounting income at the
            statutory rates for domestic and foreign entities are shown below:

<TABLE>
                                                                               Year Ended December 31
                                                              ------------------------------------------------------------
                                                                  1998            1999                  2000
                                                             -------------   -------------    ----------------------------
                                                                   NT$             NT$              NT$             US$
                                                             -------------   -------------    -------------     ----------
<S>                                                          <C>             <C>              <C>               <C>
         Domestic entities in ROC
           (25% statutory rate)                                    537,192       2,717,796        2,542,888         76,662
         Foreign entities
               ASE Korea Inc. (30.8% statutory
                 rate)                                                   -          55,770            2,153             65
               ISE Labs, Inc. (federal tax rate 35%
                 and state tax rate 6%)                                  -         163,240          439,169         13,240
               ASE Test Malaysia (30% statutory
                 rate)                                             282,316         281,714          226,946          6,842
                                                              ------------    ------------     ------------     ----------
                                                                   819,508       3,218,520        3,211,156         96,809
                                                              ============    ============     ============     ==========
</TABLE>


                                     -32-
<PAGE>


         c. Deferred income tax assets and liabilities as of December 31, 1999
           and 2000 are summarized as follows:

<TABLE>
                                                                                                December 31
                                                                              --------------------------------------------
                                                                                  1999                  2000
                                                                              ------------     ---------------------------
                                                                                   NT$              NT$             US$
                                                                              ------------     ------------     ----------
<S>                                                                           <C>              <C>              <C>
         Current assets
              Unused tax credits                                                   470,956        1,028,885         31,019
              Provision for inventory obsolescence                                  35,141           29,060            876
              Provision for doubtful accounts and sales
                allowance                                                           34,500           73,766          2,224
              Unrealized foreign exchange loss                                       2,292            7,626            230
              Other                                                                129,184          129,139          3,893
                                                                              ------------     ------------     ----------
                                                                                   672,073        1,268,476         38,242
              Valuation allowance                                                 (152,738)         (85,057)        (2,565)
                                                                              ------------     ------------     ----------
                                                                                   519,335        1,183,419         35,677
         Deferred income tax liability - unrealized foreign
           exchange gain                                                           (26,802)         (22,692)          (684)
                                                                              ------------     ------------     ----------
                                                                                   492,533        1,160,727         34,993
                                                                              ============     ============     ==========

         Non-current assets (liabilities)
              Unused tax credits                                                 1,152,528          754,914         22,759
              Accrued pension costs                                                 44,203           57,403          1,731
              Accrued interest on convertible bonds                                229,186          362,663         10,933
              Loss carryforward                                                    260,523           24,645            743
              Others                                                                11,909           83,382          2,514
                                                                              ------------     ------------     ----------
                                                                                 1,698,349        1,283,007         38,680
              Valuation allowance                                                 (589,916)        (343,825)       (10,366)
                                                                              ------------     ------------     ----------
                                                                                 1,108,433          939,182         28,314
                                                                              ------------     ------------     ----------
         Deferred income tax liability
              Investment income                                                   (675,000)      (1,159,500)       (34,956)
              Unrealized foreign exchange gain                                     (56,600)          (7,500)          (226)
              Goodwill amortization                                               (156,952)         (75,744)        (2,283)
              Others                                                              (226,471)        (207,900)        (6,268)
                                                                              ------------     ------------     ----------
                                                                                (1,115,023)      (1,450,644)       (43,733)
                                                                              ------------     ------------     ----------
                                                                                    (6,590)        (511,462)       (15,419)
                                                                              ============     ============     ==========
</TABLE>

         In assessing the realizability of deferred tax assets, ASE considered
         its future taxable earnings and expected timing for the reversal of
         temporary differences. The valuation allowance is provided to reduce
         the gross deferred tax assets to an amount which ASE believes will
         more likely be realized. Deferred tax assets and liabilities are
         classified in the consolidated balance sheet based on the
         classification of the related assets or liabilities or the expected
         timing of the reversal of temporary differences.

         Due to new tax rulings effective in 2000, ASE Test, Inc. is allowed to
         utilize a greater proportion of its tax credits. As a result, the
         valuation allowance for non-current deferred tax asset is reversed and
         credited to income tax benefits.


                                     -33-
<PAGE>


         The gain on sales of the ASE Test's ordinary shares in 1997 and 1999,
         as discussed in Note 16, was considered as a permanent difference
         because management decided to re-invest and not to distribute the gain
         and, accordingly, no deferred tax liability is recognized.

     d.  As of December 31, 2000, unused tax credits of ROC subsidiaries which
         can be utilized to offset their future income tax are set forth below:

<TABLE>
                                                         December 31, 2000
                           ------------------------------------------------------------------------------
                                                 ASE             ASE              ASE
         Year of Expiry         ASE          (Chung-Li)      Material          Test, Inc.         Total
         --------------    ------------     ------------    ------------     ------------    ------------
<S>                        <C>              <C>             <C>              <C>             <C>
         2001              $          -     $          -    $          -     $    221,870    $    221,870
         2002                         -                -               -          150,793         150,793
         2003                         -                -               -          221,141         221,141
         2004                   692,982          114,000         119,000          264,013       1,189,995
                           ------------     ------------    ------------     ------------    ------------
                           $    692,982     $    114,000    $    119,000     $    857,817    $  1,783,799
                           ============     ============    ============     ============    ============
</TABLE>

         In the ROC, the tax credits may be utilized to reduce up to 50% of
         income tax payable each year. In the expiring year, any remainder of
         unused tax credits can be used entirely.

         The Federal and State net operating loss carryforward of ISE Labs,
         Inc. as of December 31, 2000 are approximately US$2.5 million and
         US$1.0 million with expiration in 2020 and 2005, respectively.

         A portion of ASE's and ASE Test, Inc.'s income from the manufacture,
         processing and testing of semiconductors is exempt from income tax for
         five years ending December 2000 and 2005, respectively. The income of
         ASE Test Malaysia (during the "pioneer" status tax period) was exempt
         from income tax for five years through June 1999. ASE Test Malaysia
         has been granted approval of "hi-tech pioneer" status for an
         additional five years and is expected to commence the tax holiday
         retroactively from July 1, 1999. The per share effect of tax holiday
         is NT$0.3 in 1998, NT$0.4 in 1999, and NT$0.3 (US$0.01) in 2000.

         Income tax returns of ASE and ASE Test, Inc. has been examined by the
         ROC Tax authorities through 1999 and ASE Materials and ASE
         Technologies have been examined by the ROC tax authorities through
         1998. As a result of the examination by the ROC tax authorities, ASE
         has recorded and paid additional taxes of NT$40,000 (US$1,206). ASE
         has appealed the rulings of the ROC tax authorities relating to the
         aforementioned additional taxes and is awaiting the outcome of the
         appeal. No additional taxes were required to be paid by ASE Test, Inc.
         and ASE Materials.

18.  PENSION PLANS

     The consolidated entities (including ASE) in the ROC have pension plans
     for their regular employees. Retirement benefits are based on the length
     of service and average salaries or wages of the last six months before
     retirement. Those entities make monthly contributions, at 2% 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. The
     changes in the retirement funds are summarized as follows:


                                     -34-
<PAGE>


<TABLE>
                                                                               Year Ended December 31
                                                              ------------------------------------------------------------
                                                                  1998            1999                     2000
                                                              ------------    ------------     ---------------------------
                                                                   NT$             NT$              NT$             US$
                                                              ------------    ------------     ------------     ----------
<S>                                                           <C>             <C>              <C>              <C>
     Balance, beginning of year                                    145,726         186,412          232,205          7,000
     Contributions                                                  32,358          34,410           92,211          2,780
     Payments                                                       (2,738)           (574)            (435)           (13)
     Interest income                                                11,066          11,957           15,519            468
                                                              ------------    ------------     ------------     ----------
     Balance, end of year                                          186,412         232,205          339,500         10,235
                                                              ============    ============     ============     ==========
</TABLE>

     Pension costs for these entities consist of:

<TABLE>
                                                                               Year Ended December 31
                                                              ------------------------------------------------------------
                                                                  1998            1999                     2000
                                                              ------------    ------------     ---------------------------
                                                                   NT$             NT$              NT$             US$
                                                              ------------    ------------     ------------     ----------
<S>                                                           <C>             <C>              <C>              <C>
     Service costs                                                  76,656          56,870          120,528          3,634
     Interest                                                       28,075          23,243           30,234            911
     Projected return on pension assets                            (11,491)        (12,543)         (14,575)          (439)
     Amortization of prior period service cost,
       gain or loss on plan assets, etc.                             6,426           2,689            4,231            127
                                                              ------------    ------------     ------------     ----------
                                                                    99,666          70,259          140,418          4,233
                                                              ============    ============     ============     ==========
</TABLE>

     Other pension information based on actuarial calculations of the plan are
     as follows:

<TABLE>
                                                                               Year Ended December 31
                                                              ------------------------------------------------------------
                                                                  1998            1999                     2000
                                                              ------------    ------------     ---------------------------
                                                                   NT$             NT$              NT$             US$
                                                              ------------    ------------     ------------     ----------
<S>                                                           <C>             <C>              <C>              <C>
     a.  Benefit obligations
              Accumulated benefit obligation                       163,174         209,543          347,107         10,465
              Additional benefits based on future
                salaries                                           196,843         228,743          302,925          9,132
                                                              ------------    ------------     ------------     ----------
              Projected benefit obligation                         360,017         438,286          650,032         19,597
              Fair value of assets                                (188,433)       (211,576)        (311,758)        (9,399)
                                                              ------------    ------------     ------------     ----------
              Funded status                                        171,584         226,710          338,274         10,198
              Unrealized prior service costs                        (7,299)         (6,951)               -              -
              Unrecognized net transition
                obligation                                        (118,034)       (114,468)        (114,550)        (3,453)
              Unrecognized gain (loss) of
                pension assets                                     124,207          92,854           30,580            921
              Additional liability                                       -               -                -              -
              Portion in other current liabilities                  (2,397)         (8,956)          (5,879)          (177)
                                                              ------------    ------------     ------------     ----------
              Accrued pension cost                                 168,061         189,189          248,425          7,489
                                                              ============    ============     ============     ==========

     b.  Vested obligation                                             240           2,162            7,124            215
                                                              ============    ============     ============     ==========
(Forward)


                                     -35-
<PAGE>


     c.  Actuarial assumption
              Discount rate                                        6.5%-7%         6.5%-7%               6%
              Increase in future salary level                        5%-6%         4%-5.5%            4%-5%
              Expected rate of return on plan
                assets                                             6.5%-7%         6.5%-7%               6%
</TABLE>

19.  STOCK OPTION PLANS

     ASE Test has six stock option plans, the 1996 Option Plan (the "Pre-IPO
     Plan"), the 1996 Executive Management Option Plan (the "1996 Plan"), and
     the 1997, 1998, 1999 and 2000 Option Plans. Stock options granted under
     these plans are exercisable for ASE Test ordinary shares based on a
     vesting schedule over five years until the options expire. Because the
     exercise price is equal to the market price of the shares on the date of
     grant, no compensation cost was recognized.

20.  EARNINGS PER SHARE AND ADS

     Primary and fully diluted earnings per share for the years ended December
     31, 1998, 1999 and 2000 and are calculated as follows:

     The denominator is the weighted average number of outstanding shares of
     common stock of 1,780,000,000 and 1,980,000,000 and 2,677,602,508 shares
     in 1998, 1999 and 2000, respectively. The numerator is the net income with
     the primary and fully diluted EPS adjustment for the employee stock
     options of ASE Test.

     Primary and fully diluted earnings per ADS for the years ended December
     31, 1998, 1999 and 2000 are calculated as follows:

     The denominator is the above-mentioned weighted average outstanding shares
     divided by five (one ADS represents five common shares). The numerator is
     the same as mentioned in the above EPS calculation.

21.  ASSETS PLEDGED OR MORTGAGED

     The following assets have been pledged or mortgaged as first priority
     collateral for short-term and long-term debts, recruitment of foreign
     laborers and for tax appeal to the tax authorities:

<TABLE>
                                                               December 31
                                              --------------------------------------------
                                                  1999                  2000
                                              ------------     ---------------------------
                                                   NT$              NT$             US$
                                              ------------     ------------     ----------
<S>                                           <C>              <C>              <C>
     Buildings and improvements                          -          710,327         21,415
     Machinery and equipment                     4,427,859        7,487,835        225,741
     Long-term investments                       1,785,323        1,266,164         38,172
     Time deposits                                 428,137          297,079          8,956
     Guarantee deposits - time deposits             55,219           73,599          2,219
                                              ------------     ------------     ----------
                                                 6,696,538        9,835,004        296,503
                                              ============     ============     ==========
</TABLE>


                                     -36-
<PAGE>


     In addition, the total assets of ISE Labs amounting to NT$6,927,897
     (US$208,860) as of December 31, 2000, have been pledged as collaterals for
     its long-term and short-term debts.

22.  COMMITMENTS AND CONTINGENCIES AS OF DECEMBER 31, 2000

     a.  ASE, ASE Test, Inc., and ASE Material lease the land on which their
         buildings are situated under various operating lease agreements with
         the government expiring on various dates through September 2009. The
         agreements grant these entities 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. ASE Technologies (U.S.A.), Inc. has three
         operating lease agreements for office facilities. The rental expense
         for the years ended December 31, 1998, 1999 and 2000 was approximately
         NT$10,947, NT$59,973 and NT$118,929 (US$3,585), respectively. In
         addition, ASE and ASE Test, Inc. and ISE Labs also lease equipment
         under non-cancellable capital lease agreements. The net book value as
         of December 31, 1999 and 2000 of the equipment acquired under the
         capital obligations amounted to NT$325,473 and NT$200,429,
         respectively. The future minimum lease payments under the
         above-mentioned operating leases are as follows:

     Operating leases                                NT$             US$
     ----------------                           ------------     ----------
         2001                                        275,997          8,321
         2002                                        246,250          7,424
         2003                                        243,367          7,337
         2004                                        241,075          7,268
         Thereafter                                1,044,099         31,477
                                                ------------     ----------
         Total minimum lease payments              2,050,788         61,827
                                                ============     ==========

         The future minimum lease payments under above-mentioned capital leases
         as of December 31, 2000 are as follows:

                                                        NT$             US$
                                                    -----------     ----------

         Within the following year                       92,155          2,778
         Within the second year                          82,183          2,478
         Within the third year                           23,540            709
                                                    -----------     ----------
         Total minimum lease payments                   197,878          5,965
         Less:  Imputed interest                         17,926)          (540)
                                                    -----------     ----------
         Present value of future lease obligations      179,952          5,425
         Capital lease obligation, current               80,027)        (2,413)
                                                    -----------     ----------
         Capital lease obligation, long-term             99,925          3,012
                                                    ===========     ==========

     b.  ASE, ASE Test, Inc., ASE Test Malaysia and ASE Chung Li (since 1999)
         engage outside sales agencies. Commissions and service fees were paid
         based on monthly incurred services-related cost and expenses plus 15%
         or based on 1%-3% (decreased to 1% after July 2000) of net export
         sales. Commissions paid in 1998, 1999 and 2000 totaled approximately
         NT$469,613, NT$570,729 and NT$762,159 (US$22,977), respectively.

     c.   As of December 31, 2000, commitments to purchase machinery and
          equipment totaled approximately NT$5,469,766 (US$164,901).


                                     -37-
<PAGE>


     d.   As of December 31, 2000, commitments for construction of buildings
          totaled approximately NT$682,796 (US$20,585).

     e.  ASE entered into technology agreements which will expire in 2019 (with
         foreign companies) for the procurement of manufacturing technology for
         certain products. Based on the agreements, ASE shall pay royalties at
         a specified percentage of sales quantities. Such royalties in 1998,
         1999 and 2000 were approximately NT$86,516, NT$112,025 and NT$199,836
         (US$6,025), respectively.

     g.   As of December 31, 2000, ASE has endorsed and guaranteed the
          promissory notes of its subsidiaries and equity investees, as
          follows:

             Subsidiaries                       NT$             US$
         ------------------------          ------------     ----------
         ASE (Labuan)                         2,648,289         79,840
         ASE Technologies                       132,000          3,980
         ASE Holding                            132,620          3,998
         ASE (Philippines)                    1,823,525         54,975
         ASE Investment                         300,000          9,044
         ASE Material                           714,438         21,539
         ASE Chung Li                         1,713,008         51,643
                                           ------------     ----------
                                              7,463,880        225,019
           Equity Investee
         -----------------------
         HCDC                                   960,000         28,942
                                           ------------     ----------
                                              8,423,880        253,961
                                           ============     ==========

23.  DERIVATIVE FINANCIAL INSTRUMENTS

     Information on derivative transactions are as follows:

     a.  Interest rate swap

         ASE entered into two interest rate swap contracts with a foreign bank,
         which expired in January and December 1999. Under these contracts, ASE
         paid interest based on a nomimal principal amount of US$20 million
         (NT$663 million) and floating interest at a rate of 4.85%-5.19% of
         LIBOR minus 0.21%-0.25%, whichever was higher. The foreign bank paid
         interest to ASE based on the same nominal principal and floating
         interest rate of 3 months' USD LIBOR. The interest settlement was made
         on net basis. The net interest income from such contracts amounted to
         NT$3,116 in 1998 and NT$842 in 1999. As of December 31, 2000, there
         were no outstanding contracts.


                                     -38-
<PAGE>


     b.  Forward exchange contracts

         ASE Test Malaysia entered into forward contracts to hedge foreign
         exchange fluctuations associated with foreign currency liabilities. As
         of December 31, 2000, the outstanding contracts are as follows:

<TABLE>
                                 Contract Value                           Carrying
         Forward Contract         (Thousand)       Forward Rate             Value        Fair Value     Maturity Date
         ----------------        --------------   -------------------- --------------- --------------  ---------------
<S>                              <C>              <C>                  <C>             <C>             <C>
         Purchase                US$         45   3.7909 (US$/RM)        $     0.1       $     0.1     January 4, 2001
         Purchase                US$      3,000   3.7677 (US$/RM)             25.5            25.3     January 4, 2001
         Purchase                JPY     50,000   0.0351 (JPY$/RM)           ( 0.9)          (52.2)    January 4, 2001
         Purchase                US$      3,000   3.7721 (JPY$/RM)            22.0            15.3     January 31, 2001
         Purchase                JPY     50,000   0.0347 (JPY$/RM)             3.5           (29.4)    January 31, 2001
         Purchase                JPY     20,000   0.0333 (JPY$/RM)             8.9               -     February 28, 2001
         Purchase                JPY     30,000   0.0346 (JPY$/RM)             2.7           (10.7)    February 28, 2001
</TABLE>

         The gain arising from such contracts based on mark-to-market valuation
         were approximately NT$78,194 (US$2,357) in 2000.

     c.  European options

         Because ASE and ASE Test, Inc. expect to receive U.S. dollars from
         export sales and to pay Japanese yen or New Taiwan Dollars for
         long-term debts, ASE and ASE Test, Inc. entered into foreign currency
         option contracts to hedge risks of exchange rate fluctuations.

         As of December 31, 2000, the outstanding contract is as follows:

<TABLE>
                                                                  Strike Price
               Contract                        Amount                US$/NT$            Maturity Date
         ------------------------          -------------          ------------        -----------------
<S>                                        <C>                    <C>                 <C>
         Selling US$ call/TWD put          US$20 million          US$1:  NT$34        December 26, 2001
</TABLE>

         The loss arising from such contract based on mark-to-market valuation
         was approximately NT$21,832 (US$658) in 2000.

     d.  Currency and interest rate swap contract

         Because ASE will repay U.S. dollars for long-term bonds payable at
         maturity, ASE entered into currency and interest rate swap contract to
         hedge risks of exchange rate fluctuations.

         Under the contract, ASE will pay NT$1,942.5 million (NTD Notional) and
         receive US$60.7 million (USD Notional) (the Strike Price is US$1:
         NT$32) on November 4, 2002. In addition, ASE will pay interest based
         on a NTD Notional principal amount of NT$1,942.5 million at 9.7%
         interest rate and receive interest based on a USD Notional principal
         amount of US$60.7 million at 6.0685% interest rate on November 4,
         2002. The principal and interest settlement are to be made on net
         basis.

         The gain arising from such contract based on mark-to-market valuation
         was approximately NT$21,446 (US$647) in 2000.


                                     -39-
<PAGE>


     e.  Transaction risk

         1)   Credit risk

              ASE is exposed to credit risk in the event of non-performance of
              the counterparties to forward contracts on maturity. In order to
              manage this risk, ASE transacts only with financial institutions
              with good credit ratings. As a result, no material losses
              resulting from counterparty defaults are anticipated.

         2)   Market risk

              ASE entered into European option and interest rate swap contracts
              and currency and interest rate swaps to hedge the effects of
              foreign currency fluctuations on net assets or net liabilities,
              and the fluctuations in interest rates. Hence, the impact of
              market risk was reduced.

         3)   Liquidation risk and cash-flow risk

              ASE entered into forward exchange contracts and European option
              contracts and currency and interest rate swaps to hedge its
              exposure to the effect of exchange rate fluctuations on net
              assets or net liabilities. At the maturity of the contracts, ASE
              has enough operating capital to meet cash requirements, so there
              is no fund raising risk. Therefore, ASE believes there are no
              significant exposures to liquidation risk and cash flow risk.


24.  FINANCIAL INSTRUMENTS
<TABLE>
                                                                                 December 31
                                                  -----------------------------------------------------------------------
                                                             1999                               2000
                                                   -----------------------  ---------------------------------------------
                                                   Carrying       Fair        Carrying       Fair      Carrying    Fair
                                                    Values       Values        Values       Values      Values    Values
                                                  -----------  -----------  -----------   -----------  --------  --------
     Non-Derivative Financial Instruments             NT$          NT$          NT$           NT$         US$       US$
<S>                                               <C>          <C>          <C>           <C>          <C>       <C>
     Assets
         Cash and cash equivalents                $11,809,112  $11,809,112  $14,166,495   $14,166,495  $427,088  $427,088
         Short-term investments                       216,280      228,864    1,682,679     1,717,617    50,729    51,782
         Notes receivable                             201,042      201,042      219,641       219,641     6,622     6,622
         Accounts receivable - net                  7,262,415    7,262,415    9,040,934     9,040,934   272,563   272,563
         Long-term investments                      9,674,432   19,974,481   10,712,199    10,303,014   322,948   310,612
     Liabilities
         Short-term borrowings                      3,787,647    3,787,647    5,402,597     5,402,597   162,876   162,876
         C/P and B/A payable                        1,703,593    1,703,593    4,281,805     4,281,805   129,087   129,087
         Accounts payable                           3,152,353    3,152,353    3,859,909     3,859,909   116,368   116,368
         Long-term bonds payable                   10,827,663   10,827,663   12,229,179    12,229,179   368,682   368,682
         Long-term debts (included current
           portion)                                12,625,990   12,625,990   13,639,786    13,639,786   411,208   411,208
         Long-term payable for investments
           (included current portion)               5,474,780    5,474,780    4,191,528     4,191,528   126,365   126,365
</TABLE>

         The carrying values of cash, notes receivable, accounts receivable,
         short-term borrowings, C/P and B/A payable, and notes and accounts
         payable approximate fair values because of the short maturity of these
         instruments. The fair values of short-term and long-term investments
         are determined based on market values or net equity values. The fair
         values of long-term liabilities are determined based on the estimated
         present value of future cash flows using the interest rates of similar
         long-term debt instruments which ASE is able to obtain as the discount
         date. Fair value of long-term debts is carrying value because floating
         interest rates are applied.


                                     -40-
<PAGE>


25.  SEGMENT AND GEOGRAPHICAL INFORMATION

     a.  Geographical sales information

         1)   Net revenue:
<TABLE>
                                                                        Year Ended December 31
                                                 -------------------------------------------------------------------------
                                                        1998                 1999                       2000
                                                 ------------------   ------------------   -------------------------------
                                                              % of                 % of                              % of
                                                              Total                Total                             Total
                                                     NT$      Sales       NT$      Sales       NT$           US$     Sales
                                                 -----------  -----   -----------  -----   -----------   ----------  -----
<S>                                              <C>          <C>     <C>          <C>     <C>           <C>         <C>
              America                             12,331,369    59     18,645,953    57     33,089,214      997,565     65
              Domestic                             6,301,536    31      9,427,343    29     12,639,373      381,048     25
              Europe                                 625,742     3        852,110     3      1,905,646       57,451      4
              Asia and other areas                 1,503,776     7      3,684,155    11      3,259,144       98,256      6
                                                 -----------   ---    -----------   ---    -----------   ----------    ---
                                                  20,762,423   100     32,609,561   100     50,893,377    1,534,320    100
                                                 ===========   ===    ===========   ===    ===========   ==========    ===
</TABLE>

         2)   Long-lived assets:
<TABLE>
                                                                                    Year Ended December 31
                                                                      ----------------------------------------------------
                                                                           1999                       2000
                                                                      ------------------   -------------------------------
                                                                                  % of
                                                                                  Total
                                                                                  Long-                              % of
                                                                                  Lived                              Total
                                                                          NT$     Assets       NT$           US$     Sales
                                                                      ----------- ------   -----------   ----------  -----
<S>                                                                   <C>         <C>      <C>           <C>         <C>
              Domestic                                                 27,849,826    73     43,309,343    1,305,678     72
              Asia                                                      8,567,995    22     14,271,843      430,264     23
              America                                                   1,689,645     5      2,985,014       89,991      5
                                                                      -----------   ---    -----------   ----------    ---
                                                                      38,107,466    100     60,566,200    1,825,933    100
                                                                      ==========    ===    ===========   ==========    ===
</TABLE>

     b.  Major customers

         Customer accounting with 10% or more of total revenues are showed
         below:

<TABLE>
                                                                        Year Ended December 31
                                                 -------------------------------------------------------------------------
                                                        1998                 1999                       2000
                                                 ------------------   ------------------   -------------------------------
                                                              % of                 % of                              % of
                                                              Total                Total                             Total
                                                     NT$      Sales       NT$      Sales       NT$           US$     Sales
                                                 -----------  -----   -----------  -----   -----------   ----------  -----
<S>                                              <C>          <C>     <C>          <C>     <C>           <C>         <C>
         Motorola, Inc.                            1,508,662     7      5,155,573    16     11,256,760      339,366     22
                                                 ===========   ===    ===========   ===    ===========   ==========    ===

         VIA Technologies Inc.                     1,328,795     6      2,576,155     8      5,185,434      156,329     10
                                                 ===========   ===    ===========   ===    ===========   ==========    ===
</TABLE>


     c.  Reported segment information

         ASE has three reportable segments: Packaging, Testing and Investing,
         each of which requires different development and production. The
         packaging division packages bare semiconductors into finished
         semiconductors with enhanced electrical and thermal characteristics.
         The testing division provides testing services, including front-end
         engineering testing, wafer probing and final testing services. The
         investing division is engaged in investing activities. The accounting
         policies of the segments are the same as


                                     -41-
<PAGE>


         those described in Note 2. Segment information for the years ended
         December 31, 1999 and 2000 is as follows:

<TABLE>
                                                  Packaging      Testing        Investing     All other          Total
                                              --------------  -------------   ------------  -------------   -------------
<S>                                           <C>             <C>             <C>           <C>             <C>
         1998

         Revenue from external customer       NT$ 16,867,404  NT$ 3,286,944   NT$        -  NT$ 1,317,230   NT$21,471,578
         Inter-segment revenues                            -       (155,666)             -       (553,489)       (709,155)
         Interest revenue                            380,470         18,471        186,069         20,387         605,397
         Interest expense                            655,684        149,224        138,439         42,449         985,796
         Net interest revenue (expense)             (275,214)      (130,753)        47,630        (22,062)       (380,399)
         Depreciation and amortization             2,240,323        979,234            116         53,516       3,237,189
         Segment profit                            1,592,322        792,924       (209,595)      (194,370)      1,981,281
         Segment asset                            25,435,533      8,409,405     10,575,845      2,590,684      47,011,467
         Expenditures for segment assets           4,225,601      1,976,084              -      1,246,007       7,447,692

         1999

         Revenue from external customer        NT$24,522,968  NT$ 7,874,728   NT$        -  NT$ 1,207,287   NT$33,604,983
         Inter-segment revenues                            -        (81,530)             -       (913,892)       (995,422)
         Interest revenue                             25,219        227,616         84,567         85,756         423,158
         Interest expense                            714,780        264,939        137,515        352,561       1,469,795
         Net interest revenue (expense)             (689,561)       (37,323)       (52,948)      (266,805)     (1,046,637)
         Depreciation and amortization             2,994,302      2,418,278            140        141,647       5,554,367
         Segment profit                            3,131,508      2,224,801      4,642,002       (935,870)      9,062,441
         Segment asset                            35,318,472     16,203,198     11,840,510     13,968,595      77,330,775
         Expenditures for segment assets           5,617,480      4,808,413              -        671,502      11,097,395

         2000

         Revenue from external customer        NT$38,028,799  NT$12,911,073   NT$        -  NT$ 2,001,604   NT$52,941,476
         Inter-segment revenues                            -       (142,712)             -     (1,905,387)     (2,048,099)
         Interest revenue                            265,737         45,112        182,915         60,416         554,180
         Interest expense                          1,200,236        375,257        461,791         54,954       2,092,238
         Net interest revenue (expense)             (934,499)      (330,145)      (278,876)         5,462      (1,538,058)
         Depreciation and amortization             4,423,814      3,815,237         59,704        295,044       8,593,799
         Segment profit                            6,191,070      3,541,102     (1,125,536)      (203,076)      8,403,560
         Segment asset                            53,385,822     31,155,426     16,810,253      6,989,663     108,341,164
         Expenditures for segment assets          12,412,225     14,720,913              -      4,330,313      31,463,451

         2000

         Revenue from external customer        US$ 1,146,482  US$   389,239   US$        -  US$    60,344   US$ 1,596,065
         Inter-segment revenues                            -         (4,302)             -        (57,443)        (61,745)
         Interest revenue                              8,011          1,360          5,515          1,821          16,707
         Interest expense                             36,184         11,313         13,922          1,657          63,076
         Net interest revenue (expense)              (28,173)        (9,953)        (8,407)           164         (46,369)
         Depreciation and amortization               133,368        115,020          1,800          8,895         259,083
         Segment profit                              186,646        106,756        (33,932)        (6,122)        253,348
         Segment asset                             1,609,461        939,265        506,791         210,722       3,266,239
         Expenditures for segment assets             374,200        443,802              -         130,549        948,551
</TABLE>

26.  ACQUISITIONS

     In May 1999, ASE Test acquired 70% equity of ISE Labs, which is engaged in
     the testing and packaging of semiconductors. The purchase cost, including
     transaction costs, was approximately US$100.1 million (NT$3,320.3
     million), which was paid in May 1999.


                                     -42-
<PAGE>


     In July 1999, ASE and ASE Test purchased 70% and 30%, respectively, of the
     interest of the Motorola SPS Businesses. The purchase cost was
     approximately US$350.1 million (NT$11,612.8 million). As of December 31,
     2000, US$223.5 million (NT$7,413.5 million) has been paid and the balance
     of US$126.6 million (NT$4,199.3 million), plus interest (commencing as of
     the acquisition date-July 1999) is payable, US$46.7 million (NT$1,549.0)
     of which is subject to target sales volumes being met for the Motorola SPS
     Business in Chung Li, Taiwan, based on specified payment dates within
     three years. ASE believes the contingent payments of US$46.7 million
     (NT$1,549.0) are determinable beyond a reasonable doubt. As of December
     31, 2000, ASE has provided guaranteed letters of credit of US$131,741
     (NT$4,369,849) to Motorola. Both acquirees currently provide packaging and
     testing of semiconductors. A portion of the purchase price was financed
     through a convertible notes offering completed on June 29, 2000 by ASE
     Test Finance Limited and fully and unconditionally guaranteed by ASE Test
     (see Note 13).

     Future payments for investments in Motorola as of December 31, 2000 are as
follows:

                                          NT$              US$
                                      ------------     ----------
     Within the following year             773,616         23,323
     Within the second year                772,450         23,288
     Within the third year               2,645,462         79,755
                                      ------------     ----------
                                         4,191,528        126,366
                                      ============     ==========

     The acquisitions of the Motorola SPS Businesses and ISE Labs were
     accounted for by the purchase method. Assets acquired and liabilities
     assumed have been recorded at their estimated fair values as of the
     acquisition date. The purchase prices exceeded the fair value of the net
     tangible assets by about US$81.9 million for Motorola SPS Businesses and
     US$76.5 million for ISE Labs, Inc. The purchase cost in excess of fair
     value of net tangible assets was allocated to various intangible assets,
     which will be amortized on a straight-line basis over 3 to 38 years.

     The purchase prices and calculation of goodwill for those acquisitions
     described above are as follows (in millions):

     Acquires                     Purchase Cost     Net Book Value      Excess
     --------                     -------------     --------------    ----------
     ISE Labs                      US$   100.1       US$    23.6      US$   76.5
     Motorola SPS Businesses       US$   350.1       US$   268.2      US$   81.9

     The excess purchase price was allocated as follows (in millions):

<TABLE>
                                                                             Motorola SPS
                                                    ISE Labs                  Businesses
                                             -----------------------    ----------------------
                                                 NT$          US$           NT$          US$
                                             -----------    -------     -----------    -------
     Item
<S>                                          <C>            <C>         <C>            <C>
     Write-up of land                               82.8        2.5         2,903.3       87.7
     Write-up (write-down) in buildings             92.7        2.8          (380.7)     (11.5)
     Write-up (write-down) in machinery            297.9        9.0          (278.1)      (8.4)
     Deferred tax liability                        188.7       (5.7)              -          -
     Goodwill                                    2,251.1       67.9           466.8       14.1
                                             -----------    -------     -----------    -------
                                                 2,535.8       76.5         2,711.3       81.9
                                             ===========    =======     ===========    =======
</TABLE>


                                     -43-
<PAGE>


     In the first quarter of 2000, ASE Test adjusted its allocation of purchase
     price by reducing the allocation to land by US$0.2 million, buildings by
     US$2.3 million, machinery by US$2.3 million, deferred tax liabilities by
     US$1.9 million and increasing the allocation to goodwill by US$3.8 million
     because impairment loss incurred arising from the disposition of the
     packaging operation of ISE Labs subsequent to the acquisition.

     The purchase prices for Motorola SPS Businesses and ISE Labs acquisitions,
     respectively, are allocated as follows (in millions):

                                      Motorola SPS
                                        Businesses           ISE Labs
                                    ----------------    ----------------
                                           NT$                  NT$
                                      ------------         -----------
     Cash                                1,418.8                135.0
     Accounts receivable                   951.1                448.9
     Other current assets                  216.6                 22.0
     Fixed assets - net                  9,504.9              2,589.7
     Other assets                           81.6                109.9
     Goodwill                              442.6              2,134.5
     Total liabilities                  (1,626.0)            (1,864.6)
     Minority interest                         -               (433.2)
                                      ----------           ----------
                                        10,989.6              3,142.2
                                      ==========           ==========

     The unaudited pro forma consolidated results of operations are presented
     as if the acquisitions of the Motorola SPS Businesses had been made at the
     beginning of 1998 and 1999, and in the case of ISE Labs, at the beginning
     of 1998:

                                                         Year Ended December 31
                                                        ------------------------
                                                           1998          1999
                                                        ----------    ----------
                                                            NT$           NT$
                                                        ----------    ---------

     Revenue                                            46,555,084    49,804,626
     Net income                                          1,926,805     6,937,554
     Earnings per share - outstanding common shares
         Primary                                              0.80          3.46
                                                              ====          ====
         Fully diluted                                        0.80          3.45
                                                              ====          ====
     Earnings per equivalent ADS
         Primary                                              4.01         17.29
                                                              ====         =====
         Fully diluted                                        4.01         17.27
                                                              ====         =====

     The pro forma results of operations include adjustments to give effect to
     the net decrease in depreciation and the amortization of goodwill related
     to the increased value of acquired fixed assets and identifiable
     intangible assets, and interest expense on debt assumed to finance the
     purchases. The unaudited pro forma information is not necessarily
     indicative of the results of operations that would have occurred had the
     purchases been made at the beginning of the periods or the future results
     of the combined operations.

     The above pro forma consolidated results of operations include the
     pre-acquisition revenues and net income as follows:


                                     -44-
<PAGE>


<TABLE>
                                    ISE Labs               Motorola SPS Businesses
                           -------------------------    ----------------------------
                              1998          1999            1998          1999
                           -----------   -----------    -------------   ------------
                               NT$           NT$             NT$            NT$
                           -----------   -----------    -------------   ------------
<S>                        <C>           <C>            <C>             <C>
     Net revenues            2,152,538       736,765       23,640,123     17,195,065
     Net income (loss)         154,188        65,167          809,862       (106,946)
</TABLE>

     Under the method of consolidation used by the Corporation to consolidate
     the statement of income of ISE Labs for the year ended December 31, 1999,
     ISE Labs' full-year 1999 net revenues, cost of revenues and operating
     expenses are included in the corporation's consolidated statements of
     income.

27.  SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING
     PRINCIPLES FOLLOWED BY THE CORPORATION AND GENERALLY
     ACCEPTED ACCOUNTING PRINCIPLES IN THE UNITED STATES

     The accompanying financial statements have been prepared in accordance
     with generally accepted accounting principles in the Republic of China
     ("ROC GAAP"), which differ in the following respects from generally
     accepted accounting principles in the United States ("US GAAP"):

     a.  Pension benefits

         US Financial Accounting Standards (FAS) 87, "Accounting for Pensions",
         was effective no later than the beginning of the first period for
         which a US GAAP reconciliation is required. A portion of the
         unrecognized net transition obligation at the adoption date is to be
         allocated directly to equity. The adoption date of ASE for US FAS 87
         is the beginning of 1987. ROC SFAS 18, which is substantially similar
         to US FAS 87, was effective in 1996 for listed companies in Taiwan.
         Therefore, pension expense due to different adoption dates is
         adjusted.

     b.  Short-term investments

         Under ROC GAAP, marketable equity securities are carried at the lower
         of aggregate cost or market value, and debt securities at cost. Under
         US FAS 115, "Accounting for Certain Investments in Debt and Equity
         Securities", except for debt securities classified as
         "held-to-maturity securities", investments in debt and equity
         securities, other than those recorded on the equity method, should be
         stated at fair value.

         All of the Corporation's short-term investments are classified as
         trading securities under US GAAP, with gains and losses recognized
         currently in income. The unrealized holding gain included in earnings
         under US GAAP were NT$12,584 in 1999 and NT$22,354 (US$674) in 2000.
         All of the Corporation's short-term investments in mutual funds, stock
         and convertible debt are bought and held principally for the purpose
         of selling them in the near term.


                                     -45-
<PAGE>


     c.  Bonuses to employees, directors and supervisors

         According to ROC regulations and the Articles of Incorporation of the
         ASE, 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 board of directors and
         resolved by the shareholders in the following year. Under US GAAP,
         such bonuses are charged to income currently in the year earned. Stock
         issued as part of these bonuses is recorded at fair market value.
         Since the amount and form of such bonuses are not finally determinable
         until the board of directors meeting in the subsequent year, the total
         amount of the aforementioned bonuses ("regular bonuses") is initially
         accrued based on the management's estimate regarding the amount to be
         paid based on ASE's Articles of Incorporation. Any difference between
         the initially accrued amount and the fair market value of the bonuses
         settled by the issuance of shares is recognized in the year of
         approval by the board of directors. The management estimates that the
         regular annual employee bonuses, including cash and stock, will
         approximate three to four months' salaries and wages.

         Aside from the aforementioned regular bonus plan, ASE decided to grant
         a special stock bonus to employees in 1997 and 2000 due to excellent
         profits for ASE in 1997 and 2000. Employees who received the special
         stock bonus are required to continue working for ASE for an additional
         three years. Accordingly, the amount of special stock bonuses is being
         allocated over three years as special compensation expenses in the
         statement of income.

     d.  Treasury stock

         Under US GAAP, when a subsidiary holds its parent's stock as
         investments, the stock should be treated as treasury stock and is
         presented in the consolidated balance sheet as a deduction to
         shareholders' equity. The capital gain (loss) from sales of treasury
         stock is added to or deducted from the balance of treasury stock.
         Under ROC GAAP, such treatment is not required and, as a result, the
         investment in ASE common shares is presented as a long-term investment
         in the balance sheets and capital gain (loss) from sale of treasury
         stock is recognized and included in the statement of income.

     e.  Depreciation of buildings

         Under ROC GAAP, the estimated life of a building can be as long as 40
         years based on ROC practices. For US GAAP purposes, an assessment for
         useful lives of buildings is estimated to be 25 years.

     f.  Excess of book value on transfer of buildings between related parties

         ASE Test, Inc., a consolidated subsidiary, purchased buildings and
         facilitates from another consolidated subsidiary, ASE Technologies, in
         1997. The actual costs purchased from ASE Technologies were based on
         market value. Such additional payment for the excess of book value of
         NT$17,667 was capitalized by ASE Test, Inc. as allowed under ROC GAAP.
         Under US GAAP, transfers of assets from related parties should not be
         recorded by the transferee at stepped-up values.


                                     -46-
<PAGE>


     g.  Gain on sales of subsidiary's stock

         The carrying value of stock investments in ASE Test by J&R Holding
         under ROC GAAP is different from that under US GAAP mainly due to the
         differences in accounting for bonuses to employees, directors and
         supervisors. Since parts of such stock investments were sold in 1997
         and 1999, the disposal gain (loss) under US GAAP was different from
         that under ROC GAAP as a result of the difference in carrying values.

     h.  Effects of US GAAP adjustments on equity long-term investment

         The carrying values of equity-basis investments and the investment
         income (loss) accounted for by the equity method in HCDC, HCKC and USI
         are reflected in the financial statements under ROC GAAP. The
         financial statements of these equity investees under ROC GAAP are
         different from the financial statements had those financial statements
         been prepared under US GAAP mainly due to the differences in
         accounting for bonuses to employees, directors and supervisors and
         deprecation of buildings. Therefore, the investment income (loss) has
         been adjusted to reflect the differences between ROC and US GAAP in
         the investees' financial statements.

     i.  Impairment of long-lived assets

         US FAS 121 requires entities to perform separate calculations for
         assets to be held and used to determine whether recognition of an
         impairment loss is required, and if so, to measure the impairment. If
         the sum of expected future cash flows, undiscounted and without
         interest charges, is less than an asset's carrying value, an
         impairment loss is recognized; if the sum of the expected future cash
         flows is greater than an asset's carrying value, an impairment loss
         can not be recognized. Measurement of an impairment loss is based on
         the fair value of the asset. US FAS 121 also generally requires
         long-lived assets and certain identifiable intangibles to be disposed
         of should be reported at the lower of the carrying value or fair value
         less cost to sell. Based on an assessment by ASE of the potential
         impact of U.S. FAS 121, there is no impairment loss as of December 31,
         2000 for ASE.

     j.  Stock dividends

         Under ROC GAAP, stock dividends are recorded at par with a charge to
         retained earnings. Under US 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 1999 stock dividends would be treated as an additional
         reduction to retained earnings and increase to Capital Surplus
         amounting to NT$9,580 million.

     The following reconciles net income and shareholders' equity under ROC
     GAAP as reported in the consolidated financial statements to the
     approximate net income and shareholders' equity amounts as determined
     under US GAAP, giving effect to adjustments for the differences listed
     above.


                                     -47-
<PAGE>


<TABLE>
                                                                            Years Ended December 31
                                                        ------------------------------------------------------------------
                                                            1998              1999                       2000
                                                        -------------     -------------     ------------------------------
                                                             NT$               NT$               NT$               US$
                                                        -------------     -------------     -------------     ------------
<S>                                                     <C>               <C>               <C>               <C>
     Net income

     Net income based on ROC GAAP                           1,603,961         7,794,666         5,837,149          175,977
                                                        -------------     -------------     -------------     ------------
     Adjustments:
         a.  Pension benefits (cost)                           26,075           (15,799)            5,635              170
         b.  Short - term investments                         (12,973)           12,584            22,354              674
         c.  Bonuses to employees, directors and
               supervisors:
                  Accrued regular bonuses                    (812,960)       (1,089,135)        (929,348)          (28,018)
                  Special stock bonuses                      (433,224)         (577,500)        (929,901)          (28,034)
         d.  Gain from sale of treasury stock                 (42,692)       (1,388,523)               -                -
         e.  Depreciation of building                         (21,718)          (30,731)         (32,127)             (969)
         f.  Excess of book value of building
               transferred between related parties                432               432               432               13
         g.  Capital gain from sale of long-term
               investment                                       7,433            (5,180)                -                -
         h.  Effects for US GAAP adjustments
               on equity long-term
               investments                                    (21,966)         (154,218)          (51,825)          (1,562)
         i.  Effect of US GAAP adjustment on
               income tax                                       4,538             5,691             6,553              197
         j.  Effect of US GAAP adjustments on
               minority interest                                1,944            89,014             1,074               32
                                                        -------------     -------------     -------------     ------------
     Net decrease in net income                            (1,305,111)       (3,153,365)       (1,907,153)         (57,497)
                                                        -------------     -------------     -------------     ------------

     Net income based on US GAAP                              298,850         4,641,301         3,929,996          118,480
                                                        =============     =============     =============     ============

     Earnings per share
         Basic                                                   0.11              1.75              1.47             0.04
                                                        =============     =============     =============     ============
         Diluted                                                 0.08              1.71              1.42             0.04
                                                        =============     =============     =============     ============

     Earnings per ADS
         Basic                                                   0.56              8.75              7.34             0.22
                                                        =============     =============     =============     ============
         Diluted                                                 0.38              8.57              7.10            0.21
                                                        =============     =============     =============    ============

     Number of weighted average shares
       outstanding                                      2,651,524,485     2,651,524,485     2,677,602,508    2,677,602,508
                                                        =============     =============     =============    =============
     Number of ADS                                        530,304,897       530,304,897       535,520,502     535,520,502
                                                        =============     =============     =============    ============

                                                                            Years Ended December 31
                                                        ------------------------------------------------------------------
                                                            1998              1999                       2000
                                                        -------------     -------------     ------------------------------
                                                             NT$               NT$               NT$               US$
                                                        -------------     -------------     -------------     ------------
<S>                                                     <C>               <C>               <C>               <C>
     Shareholders' equity

     Shareholders' equity based on ROC
       GAAP                                                21,874,808        30,057,036        43,669,214        1,316,527
                                                        -------------     -------------     -------------     ------------
     Adjustments:
         a.   Pension benefits                                (31,996)          (47,794)          (42,159)          (1,271)
         b.   Restatement of short - term
                investments                                         -            12,584            34,938            1,053
         c.   Bonuses to employees,
                directors and supervisors                     (34,300)         (217,827)         (113,600)          (3,425)
         d.   Treasury stocks
              d1. reversal of unrealized loss                 703,865                 -           487,752           14,705
(Forward)

                                     -48-
<PAGE>


              d2. classification of treasury
                    stock                                  (4,704,995)       (2,922,561)       (2,919,411)         (88,014)
         e.   Effect of US GAAP
                adjustments on useful life                    (64,564)          (95,296)         (127,423)          (3,841)
         f.   Excess of book value of
                building transferred
                between related
                parties                                       (17,055)          (16,623)          (16,191)            (488)
         g.   Restate carrying value of
                subsidiaries' long-term
                investment                                    (42,441)          (47,621)          (47,621)          (1,436)
              h.  Effects of the above
                adjustments on equity
                investment                                    (32,830)         (187,048)         (238,873)          (7,201)
         i.   Effect of US GAAP
                adjustments on income tax                       9,479            15,170            21,723              655
         j.   Effect on US GAAP
                adjustments on minority
                interest                                       15,228            19,667            20,741              625
                                                        -------------     -------------     -------------     ------------
     Net decrease in shareholders' equity                  (4,199,609)       (3,487,349)       (2,940,124)         (88,638)
                                                        -------------     -------------     -------------     ------------

 Approximate shareholders' equity
     based on US GAAP                                      17,675,199        26,569,687        40,729,090        1,227,889
                                                        =============     =============     =============     ============

     Changes in shareholders' equity based
       on US GAAP

     Balance, beginning of year                            18,533,750        17,675,199        26,569,687          801,015
     Convertible bonds converted into
       common shares                                                -                 -            35,653            1,075
     Capital increase in cash through the
       issuance of American Depositary
       Shares                                                       -                 -         4,137,910          124,749
     Net income for the year                                  298,850         4,641,301         3,929,996          118,480
     Adjustment for common shares issued
       as bonuses to employees, directors
       and supervisors                                      1,211,884         1,448,808         1,811,607           54,616
     Translation adjustment for
       subsidiaries                                            97,854          (173,957)          894,255           26,960
     Adjustment from changes in
       ownership percentage of investees                       55,605          (108,046)        3,405,909          102,680
     Unrealized loss on long-term
       investment in shares of stock                                -                 -           (59,077)          (1,781)
     Effect of change in exchange rate                              -                 -             3,150               95
     Purchase of treasury stock                            (2,598,416)                -                 -                -
     Sale of treasury stock                                    32,980         1,782,434                 -                -
     Capital gain from sale of treasury
       stock                                                   42,692         1,303,948                 -                -
                                                        -------------     -------------     -------------     ------------

     Balance, end of year                                  17,675,199        26,569,687        40,729,090        1,227,889
                                                        =============     =============     =============     ============
</TABLE>


                                     -49-
<PAGE>


     A reconciliation of the significant balance sheet accounts to the
     approximate amounts as determined under US GAAP is as follows:

<TABLE>
                                                                                     Years Ended December 31
                                                                          ------------------------------------------------
                                                                               1999                      2000
                                                                          -------------     ------------------------------
                                                                                NT$               NT$               US$
                                                                          -------------     -------------     ------------
<S>                                                                       <C>               <C>               <C>
     Short-term investments

     As reported                                                                216,280         1,682,679           50,729
     US GAAP adjustments
          Restatement of investments to fair value                               12,584            34,938            1,053
                                                                          -------------     -------------     ------------
     As adjusted                                                                228,864         1,717,617           51,782
                                                                          =============     =============     ============

     Long-term investments

     As reported                                                              9,674,432        10,712,199          322,948
     US GAAP adjustments
          Treasury stock                                                     (2,922,561)       (2,429,131)         (73,233)
          Equity investments                                                   (187,048)         (238,837)          (7,200)
                                                                          -------------     -------------     ------------
     As adjusted                                                              6,564,823         8,044,231          242,515
                                                                          =============     =============     ============

     Buildings and improvement

     As reported                                                              7,304,856         9,390,206          283,093
     US GAAP adjustments
          Effect of US GAAP adjustments on useful life                          (95,296)         (127,423)          (3,841)
          Excess of book value of building transferred
            between related parties                                             (16,623)          (16,191)            (488)
                                                                          -------------     -------------     ------------
     As adjusted                                                              7,192,937         9,246,592          278,764
                                                                          =============     =============     ============

     Other assets

     As reported                                                                952,757         1,275,557           38,455
     US GAAP
          Effect of US GAAP adjustments on income tax                            15,170                 -                -
     Classification of deferred income tax liabilities                           (6,590)                -                -
                                                                         --------------     -------------     ------------
     As adjusted                                                                961,337         1,275,557           38,455
                                                                          =============     =============     ============

     Deferred income tax liabilities - net

     As reported                                                                  6,590           511,462           15,419
     US GAAP
          Effect of US GAAP adjustments on income tax                                 -           (21,723)            (655)
     Classification of deferred income tax assets                                (6,590)                -                -
                                                                         --------------     -------------     ------------
                                                                                      -           489,739           14,764
                                                                          =============     =============     ============

(Forward)

                                     -50-
<PAGE>


     Consolidated debits

     As reported                                                              5,245,828         4,999,546          150,725
     US GAAP adjustments
          Restated carrying value of subsidiaries'
            long-term investment                                                (47,621)          (47,621)          (1,436)
                                                                          -------------     -------------     ------------
     As adjusted                                                              5,198,207         4,951,925          149,289
                                                                          =============     =============     ============

     Current liabilities

     As reported                                                             17,636,203        25,873,359          780,024
     US GAAP adjustments - bonuses to employees,
       directors and supervisors                                                217,827           113,600            3,425
                                                                          -------------     -------------     ------------
     As adjusted                                                             17,854,030        25,986,959          783,449
                                                                          ==============    ==============    ============

     Accrued pension cost

     As reported                                                                189,189           248,425            7,489
     US GAAP adjustments - pension benefits                                      42,691            42,159            1,271
                                                                          -------------     -------------     ------------
     As adjusted                                                                231,880           290,584            8,760
                                                                          =============     ==============    ============
</TABLE>

     As a result of the adjustments presented above, the approximate amounts of
     total assets based on US GAAP are NT$74,082,790 and NT$105,516,899
     (US$3,181,094) as of December 31, 1999 and 2000, respectively.

28.  ADDITIONAL DISCLOSURES REQUIRED BY US GAAP

     ASE is required by SEC Staff Accounting Bulletin No. 74, to disclose the
     impact recently issued accounting standards will have on its financial
     statements when adopted in a future period, as well as make certain
     disclosures about recently issued accounting standards.

     In June 1998, the Financial Accounting Standards Board issued Statement of
     Financial Accounting Standards No. 133 ("FAS 133"), accounting for
     derivative instruments and hedging activities. SFAS No.133 has been
     amended by FAS No.138, issued in June 2000.

     The adoption of FAS 133 is effective commencing January 1, 2001 and ASE
     will adopt FAS No.133, as amended, in its fiscal year ending December 31,
     2001 and does not expect adoption to have a material impact on its
     financial position or results of operations.


                                     -51-
<PAGE>


     a.  Pension

         Set forth below is pension information disclosed in accordance with US
         FAS 132:

<TABLE>
                                                                               Years Ended December 31
                                                             -------------------------------------------------------------
                                                                 1998             1999                   2000
                                                             ------------     ------------     ---------------------------
                                                                  NT$              NT$              NT$             US$
                                                             ------------     ------------     ------------     ----------
<S>                                                          <C>              <C>              <C>              <C>
         Components of net periodic benefit
           cost
                 Service cost                                      59,531           81,240          120,528          3,634
                 Interest cost                                     19,569           23,796           30,241            912
                 Expected return on plan assets                   (13,023)         (12,242)         (14,575)          (440)
                 Amortization of prior service
                   cost                                               777              642                8              -
                                                             ------------     ------------     ------------     ----------
         Net periodic benefit cost                                 66,854           93,436          136,202          4,106
                                                             ============     ============     ============     ==========
</TABLE>

<TABLE>
                                                                               Years Ended December 31
                                                             -------------------------------------------------------------
                                                                 1998             1999                   2000
                                                             ------------     ------------     ---------------------------
                                                                  NT$              NT$              NT$             US$
                                                             ------------     ------------     ------------     ----------
<S>                                                          <C>              <C>              <C>              <C>
         Changes in benefit obligation
                 Benefit obligation at beginning of
                   year                                           286,215          359,510          465,674         14,039
                 Service cost                                      57,234           79,410          120,528          3,633
                 Interest cost                                     18,604           23,369           30,241            912
                 Actuarial gain                                         -            3,586           34,025          1,026
                 Benefits paid                                     (2,543)            (201)            (436)           (13)
                                                             ------------     ------------     ------------     ----------
         Benefit obligation at end of year                        359,510          465,674          650,032         19,597
                                                             ------------     ------------     ------------     ----------

         Change in plan assets
                 Fair value of plan assets at
                   beginning of year                              127,275          165,155          208,289          6,279
                 Actual return on plan assets                      11,153           10,790           12,408            374
                 Employer Contribution                             29,270           32,545           91,476          2,758
                 Benefits paid                                     (2,543)            (201)            (436)           (13)
                                                             ------------     ------------     ------------     ----------
                                                                  165,155          208,289          311,737          9,398
                                                             ------------     ------------     ------------     ----------
         Funded Status                                            194,355          257,385          338,295         10,199
         Unrecognized actuarial loss                               (8,214)         (16,549)         (45,795)        (1,381)
                                                             ------------     ------------     -------------    -----------

         Net amount recognized (recognized as
           accrued pension cost)                                  186,141          240,836          292,500          8,818
                                                             ============     ============     ============     ==========

         Actuarial assumptions:
                                                                                                         1998~2000
                                                                                                         ---------
         Discount rate                                                                                        6.5%
         Rate of compensation increase                                                                     4.0%~5.5%
         Expected return on plan assets                                                                       6.5%
</TABLE>

         ASE has no other post-retirement or post-employment benefit plans.


                                     -52-
<PAGE>


     b.  Short-term investments

         At December 31, 2000, certain investments carried at cost under ROC
         GAAP were restated under US FAS 115:

<TABLE>
                                                                           December 31
                               ----------------------------------------------------------------------------------------------------
                                              1999                                                2000
                               ----------------------------------   ---------------------------------------------------------------
                                                       Unrealized                        Unrealized                      Unrealized
                                 Carrying     Fair       Holding    Carrying    Fair       Holding   Carrying  Carrying    Holding
                                  Value       Value       Gains       Value     Value       Gains     Value     Value       Gains
                                 --------   --------   ----------   --------   --------  ----------  --------  --------  ----------
                                    NT$        NT$         NT$        NT$         NT$        NT$       US$        US$       US$
                                 --------   --------    --------    --------   --------   --------   --------  --------    ------
<S>                              <C>        <C>         <C>         <C>        <C>        <C>        <C>       <C>         <C>
         Short-term investments
           (Note 3)               216,280    228,864      12,584   1,682,679  1,717,617     34,938     50,729    51,782     1,053
</TABLE>

     c.  Income taxes expense (benefit)

<TABLE>
                                                                                Year Ended December 31
                                                            --------------------------------------------------------------
                                                                1998              1999                  2000
                                                            ------------      ------------     ---------------------------
                                                                 NT$               NT$              NT$             US$
                                                            ------------      ------------     ------------     ----------
<S>                                                         <C>               <C>              <C>              <C>
         Income tax currently payable                            160,144           583,550        1,080,704         32,581
         Deferred                                               (272,049)         (161,128)        (158,691)        (4,784)
         Income tax on undistributed earnings
           generated in 1998                                           -            44,539          147,379          4,443
         Adjustment of prior years' income
           taxes                                                 (43,410)          (13,109)         (10,177)          (307)
                                                            ------------      ------------     ------------     ----------
                                                                (155,315)          453,852        1,059,215         31,933
                                                            ============      ============     ============     ==========
</TABLE>

         Reconciliation between the income tax calculated on pretax financial
         statement income based on the statutory tax rate and the income tax
         expense (benefit) which conforms to US GAAP is as follows:

<TABLE>
                                                                                Year Ended December 31
                                                            --------------------------------------------------------------
                                                                1998              1999                  2000
                                                            ------------      ------------     ---------------------------
                                                                 NT$               NT$              NT$             US$
                                                            ------------      ------------     ------------     ----------
<S>                                                         <C>               <C>              <C>              <C>
         Income tax at statutory rate                       $    491,610      $  2,406,503     $  2,732,461     $   82,377
         Add (less) tax effects of:
               Permanent differences
                      Tax-exempt income
                           -  Tax holiday                       (508,822)       (1,163,516)        (700,749)       (21,126)
                           -  Gain from sale of
                                securities                       (38,935)         (653,493)         (51,415)        (1,550)
                      Unamortized expense for
                        issuance of GDS                           (4,770)                -                -              -
                      Bonus to employee and
                        directors                                311,546           416,659          464,812         14,013
                      Other                                        8,734            35,408         (133,158)        (4,014)

(Forward)

-53-6
<PAGE>


         Tax credits
               Utilized                                         (138,923)         (401,525)      (1,231,247)       (37,119)
               Deferred                                         (650,317)         (431,695)         155,081          4,675
               Provision for (reversal of)
                 valuation allowance                             417,972           214,081         (313,772)        (9,459)
         Income taxes (10%) on undistributed
           earnings generated in 1998                                  -            44,539          147,379          4,443
         Adjustment of prior year's income tax                   (43,410)          (13,109)         (10,177)          (307)
                                                            ------------      ------------     ------------     ----------
         Income tax expense                                     (155,315)          453,852        1,059,215         31,933
                                                            ============      ============     ============     ==========
</TABLE>

         The abovementioned taxes on pretax accounting income at the statutory
         rates for domestic and foreign entities are shown below:

<TABLE>
                                                                                         Year Ended December 31
                                                                              ---------------------------------------------
                                                                                  1999                    2000
                                                                              ------------     ----------------------------
                                                                                   NT$               NT$            US$
                                                                              ------------     ------------     -----------
<S>                                                                           <C>              <C>              <C>
         Domestic entities in ROC (25% statutory rate)                        $  1,853,314     $  2,064,193     $   62,231
         Foreign entities
              ASE Korea Inc. (30.8% statutory rate)                                 55,770            2,153             65
              ISE Labs, Inc. (33% statutory rate)                                  163,240          439,169         13,240
              ASE Test Malaysia (30% statutory rate)                               281,714          226,946          6,842
                                                                              ------------     ------------     ----------
                                                                              $  2,354,038     $  2,732,461     $   82,378
                                                                              ============     ============     ==========
</TABLE>

     d.  Stock option plans

         ASE Test has six stock option plans, the 1996 Option Plan ("Pre-IPO
         Plan"), the 1996 Executive Management Option Plan ("1996 Plan"), the
         1997 Option Plan, the 1998 Option Plan, the 1999 Option Plan and the
         2000 Option Plan. The Pre-IPO Plan provided for grants of option,
         which are currently exercisable, to ASE Test's directors, officers,
         employees and independent consultants to purchase 1,500,000 shares at
         US$2.0625 (NT$68.41) per share. Up to 10,000,000 shares, 3,200,000
         shares, 1,600,000 shares, 2,000,000 shares and 12,000,000 shares have
         been reserved for issuance under the 1996, 1997, 1998, 1999 and 2000
         Option Plans, respectively.

         The 1996, 1997, 1998, 1999 and 2000 Option Plans granted the following
         stock options to purchase ASE Test's ordinary shares, which are
         exercisable based on a vesting schedule over a period of five years
         until the expiration of options, to directors, officers, key employees
         and independent consultants.

         If any granted shares are forfeited, the shares may be granted again,
         to the extent of any such forfeiture.


                                     -54-
<PAGE>


<TABLE>
                                                                                                            Weight
                                                                                                            Average
                                                                                                           Remaining
                                                                                                          Life as of
                                                                                                         December 31,
           Stock Option Plans                   Exercise Price          Number of Shares Granted          2000 (Years)
         -----------------------------        -----------------------   ------------------------         -------------
                                                 US$             NT$
<S>                                           <C>                <C>    <C>                              <C>
         1996 Option Plan
               I     R&F 2                     3                 100            40,000                        0.7
               II    DIR/R&F                   3.5               116         7,750,000                        0.4
               III   R&F 3                     5                 166            12,000                        1.0
               IV    R&F 4                     5.46875           181         2,010,000                        1.2
               V     C961                     14                 464           163,200                        1.9
               VI    C962                     13.4375            446            45,800                        2.8
               VII   R&F 5                    20                 663           187,500                        3.6
               VIII  C963                     25                 829            34,900                        4.3
         1997 Option Plan
               I     P971                      9.5625            317         2,720,000                        1.5
               II    C971                     14                 464            16,000                        1.9
               III   C972                     13.4375            446            16,600                        2.8
               IV    P972                     20                 663           480,000                        3.6
               V     C973                     25                 829            16,100                        4.3
         1998 Option Plan
               I  )  P981                     11                 365         1,269,680                        2.7
               II    P982                     20                 663           325,000                        3.6
               III   C981                     25                 829             9,000                        4.3
         1999 Option Plan
          (cent)(1)  P991 and P992            20                 663         1,750,000                        8.6
               II    C991 and P994            25                 829           352,000                        9.3
         2000 Option Plan                Not applicable    Not applicable      None                           None
</TABLE>

         The exercise price of each option was equal to the stock's market
         price on the date of grant and all options will expire after five
         years, except for options granted under the 1999 Option Plan, which
         will expire after ten years.

         FAS 123, "Stock-Based Compensation" ("FAS 123") effective in 1996,
         establishes accounting and disclosure requirements using a fair
         value-based method of accounting for stock-based employee compensation
         plans. Under FAS 123, ASE Test has elected to continue using 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 statements had been adopted.

         ASE has computed for pro forma disclosure purposes the fair value of
         each option grant, as defined by FAS 123, using the Black-Scholes
         option pricing model with the following assumptions:


                                      -55-
<PAGE>


<TABLE>
                                     Pre-IPO Plan       1996 Plan         1997 Plan          1998 Plan        1999 Plan
                                     ------------   ----------------   ----------------   ----------------   -----------
<S>                                  <C>              <C>              <C>                <C>                <C>
         Risk free interest rate         5.41%            6.61%          4.29-6.61%          4.56-6.61%       6.01-6.75%
         Expected dividend
           yield                           0%               0%               0%                  0%               0%
         Expected lives                1.5 years       3.4-4 years      3.4-3.8 years       3.4-3.8 years       5 years
         Volatility                      54.64%           54.64%           54.64%            55.53-82.08%       55.53%
</TABLE>

         For purposes of pro forma disclosure, the estimated fair value of the
         options are amortized to expense over the option rights vesting
         periods. Had ASE Test recorded compensation costs based on the
         estimated grant date fair value, as defined by FAS 123, ASE's net
         income under US GAAP would have been reduced to the pro forma amounts
         below.

<TABLE>
                                                                                Year Ended December 31
                                                            --------------------------------------------------------------
                                                                1998              1999                     2000
                                                            ------------      ------------     ---------------------------
                                                                 NT$              NT$               NT$             US$
                                                            ------------      ------------     ------------     ----------
<S>                                                         <C>               <C>              <C>              <C>
         Net income based on US GAAP                             298,850         4,641,301        3,929,996        118,480
         Pro forma net income                                    109,497         4,479,803        3,682,196        111,010
         Pro forma EPS     - Basic                                  0.06              2.26             1.38           0.04
                                                                    ====              ====             ====           ====
                           - Diluted                                0.04              2.21             1.33           0.04
                                                                    ====              ====             ====           ====
</TABLE>

     e.  According to FAS 130, the statement of comprehensive income for the
         years ended December 31, 1999 and 2000 are present below:

<TABLE>
                                                                                Year Ended December 31
                                                            --------------------------------------------------------------
                                                                1998              1999                     2000
                                                            ------------      ------------     ---------------------------
                                                                 NT$              NT$               NT$             US$
                                                            ------------      ------------     ------------     ----------
<S>                                                         <C>               <C>              <C>              <C>
         Net income based on US GAAP                             298,850         4,641,301        3,929,996        118,480
         Translation adjustment on subsidiaries -
           net of income tax expense of NT$24,463
           in 1998 and income tax benefit of NT$43,489
           in 1999 and income tax expense of
           NT$223,564 in 2000                                     73,391          (130,468)         670,691         20,220
                                                            ------------      ------------     ------------     ----------
         Comprehensive Income                                    372,241         4,510,833        4,600,687        138,700
                                                            ============      ============     ============     ==========
</TABLE>


                                     -56-
<PAGE>


     f.  Consolidation

         The 1999 net revenues, cost of revenues and operating expense of ISE
         Labs before the date of acquisition in the amounts of NT$736,765
         (US$22,212) NT$475,250 (US$14,328) and NT$117,880 (US$3,554),
         respectively, were consolidated in the 1999 consolidated financial
         statements. The net revenues for the pre-acquisition period only
         represented 2% of the ASE's consolidated net revenues in 1999 and such
         presentation has no impact on the 1999 consolidated net income and
         shareholders' equity under US GAAP. If the results of ISE Labs were
         consolidated from the date of acquisition, the net revenues, gross
         profit and income from operation of 1999 consolidated statement of
         income will be NT$31,872,796, NT$8,388,480 and NT$4,704,924.

     g.  US GAAP cash flow information

         The following represents the major caption of cash flow under US GAAP
         pursuant to SFAS No. 95:

<TABLE>
                                                                                      Years Ended December 31
                                                                          ------------------------------------------------
                                                                               1999                    2000
                                                                          -------------     ------------------------------
                                                                               NT$               NT$               US$
                                                                          -------------     -------------     ------------
<S>                                                                       <C>               <C>               <C>
         Cash flows
               Net cash provided by operating activities                      6,988,434        17,491,335          527,324
               Net cash used in investing activities                        (14,953,647)      (33,550,389)      (1,011,468)
               Net cash provided by financing
                 activities                                                  11,768,774        17,734,240          534,647
                                                                          -------------     -------------     ------------
               Net increase in cash                                           3,803,561         1,675,186           50,503
               Cash, beginning of year                                        8,173,901        11,809,112          356,018
               Effect of exchange rate changes in cash                         (168,350)          682,197           20,567
                                                                          -------------     -------------     ------------
                                                                             11,809,112        14,166,495          427,088
                                                                          =============     =============     ============
</TABLE>

         The significant reclassifications for US GAAP cash flow statement
         pertain to the following:

         1)   the effect of exchange rate changes on cash is shown in the
              reconciliation of the beginning balance and ending balance of
              cash (as opposed to operating activities under ROC GAAP)

         2)   compensation to directors and supervisors and bonuses to
              employees is shown in the operating activity under US GAAP (as
              opposed to financing activities under ROC GAAP)

         3)   proceeds from sales of treasury stock and purchases of treasury
              stock are shown in the financing activities under US GAAP (as
              opposed to investing activities under ROC GAAP).


                                     -57-
<PAGE>


                 SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
                                                                   Additions
                                                         ------------------------------
                                                               (1)               (2)
                                         Balance at        Charged to         Charged to
                                         beginning          costs and           other                      Balance at
         Description                      of year           expenses           accounts      Deductions    end of year
-------------------------------       ----------------   ---------------   ---------------   -----------   ------------
<S>                                   <C>                <C>               <C>               <C>           <C>
2000
Allowance for doubtful
  accounts                            NT$     187,162    NT$     148,834   NT$           -   NT$ (21,753)  NT$  314,243
Allowance for sales
  allowances                                   47,092              6,624                 -       (15,040)        38,676
Allowance for obsolescence                    176,205            115,928                 -      (137,072)       155,061


1999
Allowance for doubtful
  accounts                                     84,708            109,263                 -        (6,809)       187,162
Allowance for sales
  allowances                                   53,000                  -                 -        (5,908)        47,092
Allowance for obsolescence                    199,018             50,566                 -       (73,379)       176,205


1998
Allowance for doubtful
  accounts                                     80,419              2,944             1,345             -         84,708
Allowance for sales
  allowances                                   12,500             40,500                 -             -         53,000
Allowance for obsolescence                    203,276            106,708                 -      (110,966)       199,018


</TABLE>
                                     -58-

<PAGE>


Item 19.  Exhibits.

     1.   (a) Memorandum and Articles of Association of the Registrant
              (incorporating all amendments as of July 11, 2000) (incorporated
              by reference to Exhibit 3.1 to the Company's registration
              statement on Form F-1 (file no. 333-44622) (the "Form F-1")).

     2.   (a) Amended and Restated Deposit Agreement among ASE Inc., Citibank
              N.A., as depositary, and Holders and Beneficial Holders of
              American Depositary Shares evidenced by 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 the Form F-1).

          (b) Form of Underwriting Agreement (incorporated by reference to
              Exhibit 1.1 to the Form F-1).

     4.   (a) Stock Purchase Agreement dated as of March 15, 1999 between ASE
              Test Limited and the Selling Shareholder relating to the purchase
              and sale of 12,250,000 shares of Common Stock of ISE Labs, Inc.
              (incorporated by reference to Exhibit 10.1 of ASE Test Limited's
              registration statement on Form F-3 (File No. 333-10892) which was
              declared effective by the SEC on December 22, 1999 (the "ASE Test
              1999 Registration Statement")).

          (b) 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 the
              ASE Test 1999 Registration Statement).

          (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 Registration Statement).


                                       74


<PAGE>


          (d) Manufacturing Services Agreement dated as of July 3, 1999 among
              Motorola, Inc., ASE Inc. and ASE (Chung Li) Inc. (incorporated by
              reference to Exhibit 10.4 to the Form F-1).

          (e) Manufacturing Services Agreement dated as of July 3, 1999 among
              Motorola, Inc., ASE Inc. and ASE (Korea) Inc. (incorporated by
              reference to Exhibit 10.5 to the Form F-1).

          (f) 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).

          (g) Land Lease effective October 1, 1999 until September 30, 2009
              between ASE Inc. and the Nantze Export Processing Zone
              (incorporated by reference to Exhibit 10.14 to the Form F-1).

          (h) Land Lease effective September 1, 1999 until August 30, 2009
              between ASE Inc. and the Nantze Export Processing Zone
              (incorporated by reference to Exhibit 10.15 to the Form F-1).

          (i) Land Lease effective April 1, 1998 until March 31, 2008 between
              ASE Inc. and the Nantze Export Processing Zone (incorporated by
              reference to Exhibit 10.16 to the Form F-1).

          (j) Land Lease effective October 1, 1997 until September 30, 2007
              between ASE Inc. and the Nantze Export Processing Zone
              (incorporated by reference to Exhibit 10.17 to the Form F-1).

          (k) Land Lease effective October 1, 1997 until September 30, 2007
              between ASE Inc. and the Nantze Export Processing Zone
              (incorporated by reference to Exhibit 10.18 to the Form F-1).

          (l) Land Lease effective August 1, 1997 until July 31, 2007 between
              ASE Inc. and the Nantze Export Processing Zone (incorporated by
              reference to Exhibit 10.19 to the Form F-1).

          (m) Land Lease effective January 1, 1996 until December 31, 2005
              between ASE Inc. and the Nantze Export Processing Zone
              (incorporated by reference to Exhibit 10.20 to the Form F-1).

          (n) Land Lease effective January 1, 1995 until October 31, 2005
              between ASE Inc. and the Nantze Export Processing Zone
              (incorporated by reference to Exhibit 10.21 to the Form F-1).

          (o) Land Lease effective October 1, 1999 until September 30, 2009
              between ASE Inc. and the Nantze Export Processing Zone
              (incorporated by reference to Exhibit 10.14 to the Form F-1).

          (p) Land Lease effective July 1, 1995 until June 30, 2005 between ASE
              Inc. and the Nantze Export Processing Zone (incorporated by
              reference to Exhibit 10.22 to the Form F-1).

          (q) Land Lease effective July 1, 1995 until June 30, 2005 between ASE
              Inc. and the Nantze Export Processing Zone (incorporated by
              reference to Exhibit 10.23 to the Form F-1).

          (r) Land Lease effective August 1, 1994 until July 31, 2004 between
              ASE Inc. and the Nantze Export Processing Zone (incorporated by
              reference to Exhibit 10.24 to the Form F-1).

          (s) Land Lease effective April 6, 1994 until April 5, 2004 between
              ASE Inc. and the Nantze Export Processing Zone (incorporated by
              reference to Exhibit 10.25 to the Form F-1).

          (t) Exchange Agency Agreement between ASE Inc. and Citibank, N.A., as
              exchange agent (incorporated by reference to Exhibit 10.26 to the
              Form F-1).

          (u) License Agreement dated as of January 16, 2001 between 1st
              Silicon (Malaysia) Sdn. Bhd. and ASE Electronics (M) Sdn. Bhd.

          (v) Service Agreement dated as of July 1, 2000 between ASE
              Electronics (M) Sdn. Bhd. and ASE (U.S.) Inc.


                                       75


<PAGE>


          (w) Service Agreement dated as of July 1, 2000 between ASE Test Inc.
              and ASE (U.S.) Inc.

          (x)  Service Agreement dated as of July 1, 2000 between ASE (Korea)
               Inc. and ASE (U.S.) Inc.

          (y)  Service Agreement dated as of July 1, 2001 between ASE
               (Chung-Li) Inc. and ASE (U.S.) Inc.

          (z)  Service Agreement dated as of July 1, 2001 between Advanced
               Semiconductor Engineering, Inc. and ASE (U.S.) Inc.

          (aa) Commission Agreement dated as of July 1, 2000 between ASE
               Electronics (M) Sdn. Bhd. and Gardex International Limited.

          (bb) Commission Agreement dated as of July 1, 2000 between ASE Test
               Inc. and Gardex International Limited.

          (cc) Commission Agreement dated as of July 1, 2000 between ASE
               (Korea) Inc. and Gardex International Limited.

          (dd) Commission Agreement dated as of July 1, 2000 between ASE (Chung
               Li) Inc. and Gardex International Limited.

          (ee) Commission Agreement dated as of July 1, 2000 between Advanced
               Semiconductor Engineering, Inc. and Gardex International
               Limited.

          (ff) Land Lease effective July 1, 2000 until June 30, 2010 between
               ASE Inc. and the Nantze Export Processing Zone.

          (gg) Land Lease effective July 1, 2000 until June 30, 2010 between
               ASE Inc. and the Nantze Export Processing Zone.

          (hh) Land Lease effective October 1, 2000 until September 30, 2010
               between ASE Inc. and the Nantze Export Processing Zone.

          (ii) Land Lease effective March 16, 2001 until March 15, 2011 between
               ASE Inc. and the Nantze Export Processing Zone.

          (jj) Land Lease effective March 1, 2001 until February 28, 2011
               between ASE Inc. and the Nantze Export Processing Zone.

          (kk) First Amendment to Lease Agreement dated June 7, 2000 between
               ISE Labs, Inc. and RND Funding Company, Inc.

          (ll) Sub-lease Agreement dated October 3, 2000 between ISE Labs
               Singapore Pte Ltd and Wan Tien Realty (Pte) Ltd.

          (mm) Sub-lease Agreement dated June 3, 1999 between ISE Labs
               Singapore Pte Ltd and Wan Tien Realty (Pte) Ltd.

          (nn) Sublease Agreement dated June 2000 between ISE Labs, Inc. and
               Cirrus Logic, Inc.

          (oo) Sublease Agreement dated June 2000 between ISE Labs, Inc. and
               Cirrus Logic, Inc.

          (pp) Tenancy Agreement dated April 1, 1999 between ISE Labs (HK)
               Limited and Hing Seng Plastic Factory Limited


                                       76
<PAGE>


          (qq) Lease dated September 28, 2000 between ISE Labs Hong Kong
               Limited and Shinano Kenshi (HK) Co., Ltd.

          (rr) Lease dated October 20, 2000 between ISE Labs Hong Kong and
               Bless Silver Development Limited.

          (ss) Lease Agreement between ASE Test Malaysia and Penang Development
               Corporation (incorporated by reference to Exhibit 2(c) to ASE
               Test Limited's annual report on Form 20-F for the year ended
               December 31, 1997).

          (tt) Sale and Purchase Agreement between Afasia Knitting Factory
               (Malaysia) Sdn. Bhd. and ASE Electronics (M) Sdn. Bhd. dated
               February 24, 1997

     8.   List of Subsidiaries

     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.


                                       77
<PAGE>


                                   SIGNATURES

     Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant certifies that it meets all of the requirements for
filing on Form 20-F and has duly caused this annual report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                                      ADVANCED SEMICONDUCTOR ENGINEERING, INC.


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


Date: June 28, 2001


<PAGE>


EXHIBITS INDEX


                                                                   Sequentially
Exhibit                                                              Numbered
Number                                  Description                     Page
-------                                 -----------                ------------

 4(u)     License Agreement dated as of January 16, 2001 between
          1st Silicon (Malaysia) Sdn. Bhd. and ASE Electronics
          (M) Sdn. Bhd.

 4(v)     Service Agreement dated as of July 1, 2000 between ASE
          Electronics (M) Sdn. Bhd. and ASE (U.S.) Inc.

 4(w)     Service Agreement dated as of July 1, 2000 between ASE
          Test Inc. and ASE (U.S.) Inc.

 4(x)     Service Agreement dated as of July 1, 2000 between ASE
          (Korea) Inc. and ASE (U.S.) Inc.

 4(y)     Service Agreement dated as of July 1, 2001 between ASE
          (Chung-Li) Inc. and ASE (U.S.) Inc.

 4(z)     Service Agreement dated as of July 1, 2001 between
          Advanced Semiconductor Engineering, Inc. and ASE (U.S.)
          Inc.

 4(aa)    Commission Agreement dated as of July 1, 2000 between
          ASE Electronics (M) Sdn. Bhd. and Gardex International
          Limited.

 4(bb)    Commission Agreement dated as of July 1, 2000 between
          ASE Test Inc. and Gardex International Limited.

 4(cc)    Commission Agreement dated as of July 1, 2000 between
          ASE (Korea) Inc. and Gardex International Limited

 4(dd)    Commission Agreement dated as of July 1, 2000 between
          ASE (Chung Li) Inc. and Gardex International Limited.

 4(ee)    Commission Agreement dated as of July 1, 2000 between
          Advanced Semiconductor Engineering, Inc. and Gardex
          International Limited.

 4(ff)    Land Lease effective July 1, 2000 until June 30, 2010
          between ASE Inc. and the Nantze Export Processing Zone.

 4(gg)    Land Lease effective July 1, 2000 until June 30, 2010
          between ASE Inc. and the Nantze Export Processing Zone.

 4(hh)    Land Lease effective October 1, 2000 until September
          30, 2010 between ASE Inc. and the Nantze Export
          Processing Zone.

 4(ii)    Land Lease effective March 16, 2001 until March 15,
          2011 between ASE Inc. and the Nantze Export Processing
          Zone.

 4(jj)    Land Lease effective March 1, 2001 until February 28,
          2011 between ASE Inc. and the Nantze Export Processing
          Zone.

 4(kk)    First Amendment to Lease Agreement dated June 7, 2000
          between ISE Labs, Inc. and RND Funding Company, Inc.


<PAGE>


                                                                   Sequentially
Exhibit                                                              Numbered
Number                                  Description                     Page
-------                                 -----------                ------------

 4(ll)    Sub-lease Agreement dated October 3, 2000 between ISE
          Labs Singapore Pte Ltd and Wan Tien Realty (Pte) Ltd.

 4(mm)    Sub-lease Agreement dated June 3, 1999 between ISE Labs
          Singapore Pte Ltd and Wan Tien Realty (Pte) Ltd.

 4(nn)    Sublease Agreement dated June 2000 between ISE Labs,
          Inc. and Cirrus Logic, Inc.

 4(oo)    Sublease Agreement dated June 2000 between ISE Labs,
          Inc. and Cirrus Logic, Inc.

 4(pp)    Tenancy Agreement dated April 1, 1999 between ISE Labs
          (HK) Limited and Hing Seng Plastic Factory Limited.

 4(qq)    Lease dated September 28, 2000 between ISE Labs Hong
          Kong Limited and Shinano Kenshi (HK) Co., Ltd.

 4(rr)    Lease dated October 20, 2000 between ISE Labs Hong Kong
          and Bless Silver Development Limited.

 4(tt)    Sale and Purchase Agreement between Afasia Knitting
          Factory (Malaysia) Sdn. Bhd. and ASE Electronics (M)
          Sdn. Bhd. dated February 24, 1997.

   8      List of Subsidiaries.