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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 20-F
(Mark One)

[ ] Registration statement pursuant to Section 12(b) or 12(g) of the
    Securities Exchange Act of 1934

                                       or

[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act
    of 1934 For the fiscal year ended December 31, 2001

                                       or

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
    Exchange Act of 1934 For the transition period from          to

    Commission file number 333-93661

                          ST ASSEMBLY TEST SERVICES LTD
             (Exact Name of Registrant as Specified in Its Charter)

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<S>                                                            <C>
                  REPUBLIC OF SINGAPORE                          5 YISHUN STREET 23, SINGAPORE 768442
     (Jurisdiction of Incorporation or Organization)           (Address of Principal Executive Offices)
</TABLE>

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

                                      NONE

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

                  ORDINARY SHARES, PAR VALUE S$0.25 PER SHARE,
       INCLUDING ORDINARY SHARES REPRESENTED BY AMERICAN DEPOSITARY SHARES
                                (Title of Class)

        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.

        989,683,485 ORDINARY SHARES (PAR VALUE S$0.25 PER ORDINARY SHARE)
               OF REGISTRANT OUTSTANDING AS OF DECEMBER 31, 2001.

     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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                                       1
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                                TABLE OF CONTENTS

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                                                                                               PAGE
                                                                                               ----
<S>           <C>                                                                              <C>
Item 1.       Identity of Directors, Senior Management and Advisers                              3
Item 2.       Offer Statistics and Expected Timetable                                            3
Item 3.       Key Information                                                                    3
Item 4.       Information on Our Company                                                        16
Item 5.       Operating and Financial Review and Prospects                                      33
Item 6.       Directors, Senior Management and Employees                                        47
Item 7.       Major Shareholders and Related Party Transactions                                 56
Item 8.       Financial Information                                                             58
Item 9.       The Offer and Listing                                                             59
Item 10.      Additional Information                                                            60
Item 11.      Quantitative and Qualitative Disclosures about Market Risk                        67
Item 12.      Description of Securities other than Equity Securities                            68
Item 13.      Defaults, Dividend Arrearages and Delinquencies                                   68
Item 14.      Material Modifications to the Rights of Security Holders and Use of Proceeds      68
Item 15.      Not applicable                                                                    69
Item 16.      Not applicable                                                                    69
Item 17.      Financial Statements                                                              69
Item 18.      Financial Statements                                                              69
Item 19.      Exhibits                                                                          70
Signatures                                                                                      71
</TABLE>

     When we refer to "Singapore dollars" and "S$" in this Annual Report, we are
referring to Singapore dollars, the legal currency of Singapore. When we refer
to "U.S. dollars," "dollars," "$" and "US$" in this Annual Report, we are
referring to United States dollars, the legal currency of the United States. For
your convenience, the noon buying rate in the City of New York on December 31,
2001 for cable transfers in Singapore dollars as certified for customs purposes
by the Federal Reserve Bank of New York was S$1.85 per $1.00.

     No representation is made that the Singapore dollar or U.S. dollar amounts
shown in this Annual Report could have been or could be converted at such rate
or at any other rate.

                                       2
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     Certain of the statements in this Annual Report on Form 20-F, including
statements regarding industry growth, are forward-looking statements that
involve a number of risks and uncertainties which could cause actual results to
differ materially. Factors that could cause actual results to differ include
general business and economic conditions and the state of the semiconductor
industry; demand for end-use applications products such as communications
equipment and personal computers; reliance on a small group of principal
customers; decisions by customers to discontinue outsourcing of test and
assembly services; changes in customer order patterns; rescheduling or canceling
of customer orders; changes in product mix; capacity utilization; level of
competition; pricing pressures including declines in average selling prices;
continued success in technological innovations; delays in acquiring or
installing new equipment; shortages in supply of key components; availability of
financing; exchange rate fluctuations; litigation and other risks described in
"Item 3. Key Information -- D. Risk Factors."


ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

        Not applicable


ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

        Not applicable


ITEM 3. KEY INFORMATION


A.   SELECTED FINANCIAL DATA

     You should read the following selected consolidated financial data in
conjunction with our consolidated financial statements and the related notes,
and "Item 5. Operating and Financial Review and Prospects" included elsewhere in
this Annual Report. The selected consolidated financial data are derived from
our consolidated financial statements. Our consolidated financial statements as
of December 31, 2000 and 2001 and for the fiscal years ended December 31, 1999,
2000 and 2001, which have been audited by KPMG, independent auditors, are
included in "Item 18. Financial Statements." The selected consolidated financial
data as of December 31, 1997, 1998 and 1999 and for the fiscal years ended
December 31, 1997 and 1998 are derived from our audited consolidated financial
statements. However, we have not included our audited consolidated financial
statements for these periods in this Annual Report.

     Our consolidated financial statements are prepared in accordance with U.S.
GAAP.

                                       3
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<CAPTION>
                                                                            YEAR ENDED DECEMBER 31
                                                     -------------------------------------------------------------------
                                                       1997         1998(1)         1999           2000          2001
                                                     --------      --------       --------       --------      ---------
                                                         (in thousands, except per ordinary share and per ADS data)
<S>                                                  <C>           <C>            <C>            <C>           <C>
INCOME STATEMENT DATA:
Net revenues                                         $ 88,373      $113,920       $201,098       $331,271      $ 145,866
Cost of revenues                                       67,848        87,066        132,889        231,944        217,789
                                                     --------      --------       --------       --------      ---------
Gross profit (loss)                                    20,525        26,854         68,209         99,327        (71,923)
                                                     --------      --------       --------       --------      ---------
Operating expenses:
  Selling, general and administrative                  13,858        16,772         28,437         40,798         36,041
  Research and development                              2,157         3,482          7,283         14,636         15,160
  Asset impairments(2)                                     --            --             --             --         23,735
  Prepaid leases written off(3)                            --            --             --             --          3,145
  Stock-based compensation                                 --           384         25,327            448          1,024
  Other general expenses (income), net                     17          (582)            37            (22)           101
                                                     --------      --------       --------       --------      ---------
     Total operating expenses                          16,032        20,056         61,084         55,860         79,206
                                                     --------      --------       --------       --------      ---------
Operating income (loss)                                 4,493         6,798          7,125         43,467       (151,129)
Other income (expense):
  Interest income (expense), net                       (3,307)       (8,244)        (5,534)         8,214          5,222
  Foreign currency exchange gain (loss)                (1,258)          857          1,385          2,018            775
  Other non-operating income (expense), net                62         2,103          2,379          3,525          1,990
                                                     --------      --------       --------       --------      ---------
     Total other income (expense)                      (4,503)       (5,284)        (1,770)        13,757          7,987
                                                     --------      --------       --------       --------      ---------
Income (loss) before income taxes                         (10)        1,514          5,355         57,224       (143,142)
Income tax benefit (expense)                             (159)         (390)          (500)        (2,865)         8,810
                                                     --------      --------       --------       --------      ---------
Net income (loss) before minority interest           $   (169)     $  1,124       $  4,855       $ 54,359      $(134,332)
Minority interest                                          --            --             --             --      $     313
Net income (loss)                                    $   (169)     $  1,124       $  4,855       $ 54,359      $(134,019)
Other comprehensive income:
  Unrealized gain (loss) on available-for-sale
   marketable securities                                   --            --             --             --      $    (303)
  Translation adjustment                             $ (8,839)     $ (1,636)            --             --      $      93
Comprehensive income (loss)                          $ (9,008)     $   (512)      $  4,855       $ 54,359      $(134,229)
Net income (loss) per ordinary share:
  Basic                                              $     --      $     --       $   0.01       $   0.06      $   (0.14)
  Diluted                                            $     --      $     --       $   0.01       $   0.06      $   (0.14)
Net income (loss) per ADS:
  Basic                                              $     --      $   0.02       $   0.06       $   0.56      $   (1.36)
  Diluted                                            $     --      $   0.02       $   0.06       $   0.56      $   (1.36)
Ordinary shares (in thousands) used in per
 Ordinary share calculation:
  Basic                                               368,000       669,671        770,259        962,828        989,083
  Diluted                                             368,000       670,976        786,725        970,631        989,083
ADSs (in thousands) used in per ADS calculation:
  Basic                                                36,800        66,967         77,026         96,283         98,908
  Diluted                                              36,800        67,098         78,672         97,063         98,908
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                                        4
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<CAPTION>
                                                                            YEAR ENDED DECEMBER 31
                                                    --------------------------------------------------------------------
                                                       1997         1998(1)         1999           2000           2001
                                                    ---------      --------       --------       --------       --------
                                                                               (in thousands)
<S>                                                 <C>            <C>            <C>            <C>            <C>

BALANCE SHEET DATA:
Cash and cash equivalents                           $   1,051      $ 12,692       $ 16,568       $141,733       $115,214
Working capital (deficit)                            (140,474)      (24,606)       (74,030)       188,521        109,447
Total assets                                          225,477       236,720        351,965        711,758        576,578
Current installments of obligations under
 capital leases                                            --            --             --             --          2,564
Short-term debt and current installments
 of long-term debt                                    130,165        50,000         67,420         14,799         14,045
Obligation under capital leases, excluding
 current installments                                      --            --             --             --          7,689
Long-term debt, excluding current installments             --        54,282         46,360         29,599         14,045
Shareholders' equity                                   45,706       108,038        141,184        585,197        452,795
Share capital                                          64,900       129,042        129,827        159,461        159,961
Ordinary shares outstanding                            92,000       780,174        785,428        986,172        989,683
</TABLE>
------------
(1)  Effective July 1, 1998, we changed our functional currency from the
     Singapore dollar to the U.S. dollar.

(2)  Due to the poor operating results and continued weakness in the
     semiconductor industry, we initiated a review in the fourth quarter of 2001
     to identify long-lived assets whose carrying amounts might not be
     recoverable. As a result of the review, we recorded asset impairment
     charges totaling $23,735.

(3)  We recorded an impairment charge of $3,145 to write off prepaid leases for
     testers for which we do not expect to use in the future.


B.   CAPITALIZATION AND INDEBTEDNESS

     Not applicable


C.   REASONS FOR THE OFFER AND USE OF PROCEEDS

     Not applicable


D.   RISK FACTORS

     In addition to the other information and risks described elsewhere in this
Annual Report, our business is subject to the following risks:


WE EXPERIENCED SUBSTANTIAL LOSSES IN 2001 AND MAY CONTINUE TO DO SO IN THE
FUTURE.

     We suffered substantial operating losses and net losses in 2001 amounting
to $151.1 million and $134.0 million, respectively, compared to operating income
of $43.5 million and net income of $54.3 million in 2000. In 2001, our cost of
revenues exceeded our net revenues resulting in negative gross margins and a
gross loss of $71.9 million. We expect to continue incurring operating and net
losses in 2002.

     We may incur operating losses and net losses in the future due to a variety
of factors, including if the semiconductor industry does not recover from the
current downturn or only makes a partial recovery.

                                       5
<PAGE>
DOWNTURNS IN THE SEMICONDUCTOR INDUSTRY HAVE ADVERSELY AFFECTED, AND MAY
CONTINUE TO ADVERSELY AFFECT, OUR OPERATING RESULTS.

     Our results from operations are significantly affected by conditions in the
semiconductor industry. The market for semiconductors is characterized by:

     -    rapid technological change;

     -    evolving industry standards;

     -    intense competition; and

     -    fluctuations in end-user demand.

     In addition, the semiconductor industry is cyclical and, at various times,
has experienced significant downturns because of production over-capacity and
reduced unit demand causing rapid erosion of average selling prices and low
capacity utilization. If demand for semiconductor capacity does not keep pace
with the growth of supply, or further declines, our business would be subject to
more intense competition and our results of operations may suffer as a result of
the resulting downward pricing pressure and capacity underutilization. The
industry began experiencing such a downturn in the fourth quarter of 2000 which
continued through 2001. The length and severity of the downturn resulted in
continued weakness in our customers' demand and significantly adversely affected
our financial results for 2001. If this downturn continues or if there is any
future downturn in the semiconductor industry, our business, financial condition
and results of operations are likely to be materially adversely affected.


IF WE ARE UNABLE TO INCREASE OUR CAPACITY UTILIZATION RATES, OUR PROFITABILITY
WILL BE ADVERSELY AFFECTED.

     As a result of the capital intensive nature of our business, our operations
are characterized by high fixed costs. Consequently, high capacity utilization
allows us to maintain higher gross margins because it allows us to allocate
fixed costs over a greater number of units we test and assemble. Insufficient
utilization of installed capacity can have a material adverse effect on our
profitability. In 2001, our capacity utilization rates declined substantially
from prior levels, primarily as a result of a decrease in demand for our test
and assembly services resulting from a downturn in the overall semiconductor
industry, particularly for communications applications. Due to our high level of
fixed costs, we suffered negative margins and substantial operating losses and
net losses in 2001.

     Our ability to restore or increase our profitability and enhance our gross
margins will continue to be dependent, in large part, upon our ability to
restore high capacity utilization rates. Capacity utilization rates may be
affected by a number of factors and circumstances, including:

     -    overall industry conditions;

     -    installation of new equipment in anticipation of future business;

     -    the level of customer orders;

     -    operating efficiencies;

     -    mechanical failure;

     -    disruption of operations due to expansion of operations, introduction
          of new packages or relocation of equipment;

                                       6
<PAGE>
     -    disruption in supply of raw materials;

     -    changes in product mix; and

     -    fire or other natural disasters.

     We cannot assure you that our capacity utilization rates will be able to
return to their former high levels or that we will not be materially adversely
affected by a continued decline or future declines in the semiconductor
industry, declines in industries that purchase semiconductors or other factors.
Any inability on our part to increase our capacity utilization rates could have
a material adverse effect on our business, financial condition and results of
operations.


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

     Substantially all of our net revenues are derived from customers who use
our test or assembly services for semiconductors used in communications
equipment and personal computers. In 2001, 96.2% of our net revenues was derived
from testing and assembly of semiconductors used in such applications. Any
significant decrease in the demand for communications equipment or personal
computers may decrease the demand for our services and could seriously harm our
company. In 2001, our financial and operating results were substantially
affected by a decrease in demand for communications equipment. In addition, the
declining average selling price of communications equipment and personal
computers places significant pressure on the prices of the components that are
used in this equipment. If the average selling prices of communications
equipment and personal computers continue to decrease, the pricing pressure on
services provided by us may reduce our net revenues and therefore significantly
reduce our gross profit margin.


OUR RESULTS FLUCTUATE FROM QUARTER TO QUARTER.

     Our operating results have fluctuated and may continue to fluctuate
substantially from quarter to quarter due to a wide variety of factors,
including:

     -    general economic conditions in the semiconductor industry;

     -    a shift by integrated device manufacturers or IDMs between internal
          and outsourced test and assembly services;

     -    general economic conditions in the markets addressed by end-users of
          semiconductors;

     -    the seasonality of the semiconductor industry;

     -    the short-term nature of our customers' commitments;

     -    the rescheduling or cancellation of large orders;

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

     -    changes in capacity utilization;

     -    the rapid erosion of the selling prices of packages;

     -    changes in our product mix;

     -    the rescheduling, cancellation and timing of expenditures in
          anticipation of future orders;

                                       7
<PAGE>
     -    possible disruptions caused by the installation of new equipment;

     -    the ability to obtain adequate equipment on a timely basis;

     -    any exposure to currency and interest rate fluctuations that may not
          be adequately covered under our hedging policy; and

     -    weakness in the supply of wafers.

     As a result of all of these factors, we believe that period-to-period
comparisons of our operating results are not meaningful, and you should not rely
on such comparisons to predict our future performance. Unfavorable changes in
any of the above factors may adversely affect our business, financial condition
and results of operations. In addition, such unfavorable changes could cause
volatility in the price of our ordinary shares and American Depositary Shares or
ADSs.

     For example, during the second quarter of 1998 and again in the fourth
quarter of 2000 and throughout 2001, the average selling prices of many of our
test and assembly services decreased because of an excess of worldwide capacity
relative to demand which resulted in intense competition among independent test
and assembly service providers. This resulted in decreased demand for our test
and assembly services which adversely impacted our financial results. We expect
intense competitive conditions to continue. If we cannot offset declines in
selling prices by reducing our costs of delivering those services, increasing
the number of units tested or assembled, or shifting our focus to higher margin
test and assembly services, our business, financial condition and results of
operations could be adversely affected. See "Item 5. Operating and Financial
Review and Prospects - Quarterly Results."


OUR PROFITABILITY IS AFFECTED BY AVERAGE SELLING PRICES WHICH TEND TO DECLINE.

     Decreases in the average selling prices of our test and assembly services
can have a material adverse effect on our profitability. The average selling
prices of test and assembly services have declined historically, with assembly
services in particular experiencing severe pricing pressure. This pricing
pressure for test and assembly services is likely to continue. Our ability to
maintain or increase our profitability will continue to be dependent, in large
part, upon our ability to offset decreases in average selling prices by
improving production efficiency, increasing unit volumes tested or assembled, or
by shifting to higher margin test and assembly services. If we are unable to do
so, our business, financial condition and results of operations could be
materially adversely affected.


DECISIONS BY OUR INTEGRATED DEVICE MANUFACTURER OR IDM CUSTOMERS TO CURTAIL
OUTSOURCING MAY ADVERSELY AFFECT OUR COMPANY.

     Historically, we have been dependent on the trend in outsourcing of test
and assembly services by IDMs. Our IDM customers continually evaluate our
services against their own in-house test and assembly services. As a result, at
any time, IDMs may decide to shift some or all of their outsourced test and
assembly services to internally sourced capacity. Any such shift or a slowdown
in this trend of outsourcing test and assembly services is likely to adversely
affect our business, financial condition and results of operations.

     In a downturn in the semiconductor industry, IDMs may respond by shifting
some outsourced test and assembly services to internally serviced capacity on a
short term basis. This would have a material adverse effect on our business,
financial condition and results of operations, especially during a prolonged
industry downturn.

                                       8
<PAGE>
WE DEPEND ON A SMALL NUMBER OF CUSTOMERS FOR A SIGNIFICANT PORTION OF OUR
REVENUES.

     We are dependent on a small group of customers for substantially all of our
net revenues. Our ten largest customers accounted for 89.5%, 88.3% and 85.6% of
our net revenues in 1999, 2000 and 2001, respectively. In the year ended
December 31, 2001, our three largest customers, Analog Devices, Broadcom and
Marvell, each represented in excess of 10% of our net revenues and in the
aggregate represented 51.9% of our net revenues. In 1999, 2000 and 2001, 76.0%,
78.0% and 78.4% of our net revenues came from customers based in the United
States. We anticipate that for the foreseeable future our ten largest customers,
which includes our affiliate, Chartered Semiconductor, will continue to account
for most of our net revenues and that we will continue to be significantly
dependent on net revenues from customers based in the United States. Our ability
to retain these customers, as well as other customers, and to add new customers
is important to the ongoing success of our company. The loss of one or more of
our key customers, or reduced orders from any of our key customers, could have a
material adverse effect on our business, financial condition and results of
operations. See "Item 4. Information on the Company - Customers."


OUR CUSTOMERS ARE NOT CONTRACTUALLY OBLIGATED TO BUY OUR SERVICES OR PRODUCTS
AND DO NOT PLACE ORDERS IN ADVANCE. WE DO NOT HAVE SIGNIFICANT BACKLOG.

     Almost none of our customers are obligated, pursuant to any contractual
commitment or otherwise, to purchase any minimum amount of our test or assembly
services or to place orders far in advance or to provide us with binding
forecasts for any period. As a result, we have no significant backlog. The lack
of significant backlog makes it difficult for us to forecast our net revenues
for any future period. We expect that in the future, net revenues in any quarter
will continue to be substantially dependent on orders placed within that
quarter. Moreover, all of our customers operate in the cyclical semiconductor
industry and have varied, and may continue to vary, order levels significantly
from period to period. In addition, our customers are generally not responsible
for any unused raw materials that result from a forecast exceeding actual
orders. Accordingly, we cannot assure you that any of our customers will
continue to place orders with us in the future at the same levels as they had in
prior periods.


THE TESTING PROCESS IS COMPLEX AND THEREFORE MORE PRONE TO "BUGS" AND OPERATOR
ERROR.

     Semiconductor testing is a complex process involving sophisticated testing
equipment and computer software. We develop computer software which is used to
test our customers' semiconductors. We also develop conversion software programs
which enable us to test semiconductors on different types of testers. Similar to
most software programs, these software programs are complex and may contain
programming errors or "bugs." In addition, the testing process is subject to
operator error by our employees who operate our testing equipment and related
software. Any significant defect in our testing or conversion software,
malfunction in our testing equipment or operator error could reduce our
production yields, damage our customer relationships and materially harm our
business.


WE MAY NOT BE ABLE TO DEVELOP OR ACCESS LEADING TECHNOLOGY WHICH MAY AFFECT OUR
ABILITY TO COMPETE EFFECTIVELY.

     The semiconductor test and assembly market is characterized by rapid
technological change. We must be able to offer our customers test and assembly
services based upon the most advanced technology. This requirement could result
in significant capital expenditures in the future. Advances in technology
typically lead to rapid and significant price declines and decreased margins for
older package types and may also affect demand for test services. Technology
advances could also cause our test or assembly capabilities to be less
competitive with new technologies and, in certain cases, to be obsolete.

     If we fail to develop advanced test and assembly services or to access
those developed by others in a timely manner, we could lose existing customers
or miss potential customers demanding these advanced services. Also, we would
miss the opportunity to benefit from the higher average selling prices which are
derived from newer and emerging test and assembly services. In addition, the
choice of test equipment is important to us because obtaining the wrong test
equipment or failing to understand market requirements will make us less
competitive and will lower our asset utilization. In order to remain
competitive, we must be able to upgrade or migrate our test equipment to respond
to changing technological requirements.

                                       9
<PAGE>
THE ASSEMBLY PROCESS IS COMPLEX AND OUR PRODUCTION YIELDS MAY SUFFER FROM
DEFECTIVE PACKAGES AND THE INTRODUCTION OF NEW PACKAGES.

     The assembly process is complex and involves a number of precise steps.
Defective packages primarily result from:

     -    contaminants in the manufacturing environment;

     -    human error;

     -    equipment malfunction;

     -    defective raw materials; or

     -    defective plating services.

     These and other factors have, from time to time, contributed to lower
production yields. They may do so in the future, particularly as we expand our
capacity or change our processing steps. In addition, to be competitive, we must
continue to expand our offering of packages. Our production yields on new
packages typically are significantly lower than our production yields on our
more established packages.

     Our failure to maintain high standards or acceptable production yields, if
significant and prolonged, could result in lost customers, increased costs of
production, delays, substantial amounts of returned goods and claims by
customers relating thereto. Any of these problems could have a material adverse
effect on our business, financial condition and results of operations.


WE MAY BE UNABLE TO OBTAIN TESTING OR ASSEMBLY EQUIPMENT WHEN WE REQUIRE IT.

     The semiconductor test and assembly business is capital intensive and
requires investment in expensive capital equipment manufactured by a limited
number of suppliers, which are located principally in the United States, Europe
and Japan. The market for capital equipment used in semiconductor testing is
characterized, from time to time, by intense demand, limited supply and long
delivery cycles. Our operations and expansion plans are highly dependent upon
our ability to obtain a significant amount of such capital equipment from a
limited number of suppliers. If we are unable to obtain certain equipment,
including testers and wire bonders, in a timely manner, we may be unable to
fulfill our customers' orders which would negatively impact our business,
financial condition and results of operations.

     Generally, we have no binding supply agreements with any of our suppliers
and we acquire our equipment on a purchase order basis, which exposes us to
substantial risks. For example, increased levels of demand for the type of
capital equipment required in our business may cause an increase in the price of
such equipment and may lengthen delivery cycles, which could have a material
adverse effect on our business, financial condition and results of operations.
In addition, adverse fluctuations in foreign currency exchange rates,
particularly the Japanese yen, could result in increased prices for certain
equipment purchased by us, which could have a material adverse effect on our
business, financial condition and results of operations.

                                       10
<PAGE>
WE EXPECT TO INCUR SIGNIFICANT CAPITAL EXPENDITURES IN THE FUTURE AND THEREFORE
MAY REQUIRE ADDITIONAL FINANCING IN THE FUTURE.

     Our capital expenditures are largely driven by the demand for our services.
Our capital expenditures declined from $276.9 million in 2000 to $62.4 million
in 2001 primarily as a result of the substantial drop in demand for our
services. To grow our business, we will need to increase our test and assembly
capacity as well as replace existing equipment from time to time. This will
require substantial capital expenditures for additional equipment and further
expenditure to recruit and train new employees. These expenditures will likely
be made in advance of increased sales. We cannot assure you that our net
revenues will increase after these expenditures. Our failure to increase our net
revenues after these expenditures could have a material adverse effect on our
business, financial condition and results of operations.

     In addition, we may need to obtain additional debt or equity financing to
fund our capital expenditures. Additional equity financing may result in
dilution to the holders of ADSs and ordinary shares. Additional debt financing
may be required which, if obtained, may:

     -    limit our ability to pay dividends or require us to seek consents for
          the payment of dividends;

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

     -    limit our ability to pursue our growth plan;

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

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

     We cannot assure you that we will be able to obtain the additional
financing on terms that are acceptable to us or at all.


WE MAY NOT BE SUCCESSFUL IN OUR ACQUISITIONS AND INVESTMENTS IN OTHER COMPANIES
AND BUSINESSES.

     As part of our growth strategy, from time to time, we may make acquisitions
and investments in companies or businesses. For example, in 2001, we acquired a
majority interest in Winstek Semiconductor Corporation, or Winstek, to enhance
our position in the Taiwanese market. The success of our acquisitions and
investments depends on a number of factors, including:

     -    our ability to identify suitable opportunities for investment or
          acquisition;

     -    whether we are able to reach an acquisition or investment agreement on
          terms that are satisfactory to us or at all;

     -    the extent to which we are able to exercise control over the acquired
          company;

     -    the economic, business or other strategic objectives and goals of the
          acquired company compared to those of our company; and

     -    our ability to successfully integrate the acquired company or business
          with our company.

     If we are unsuccessful in our acquisitions and investments, our financial
condition may be materially adversely affected.

                                       11
<PAGE>
WE HAVE ENTERED INTO A NUMBER OF FINANCING ARRANGEMENTS THAT IMPOSE LIMITATIONS
ON OUR ACTIONS.

     Our loan agreement with the Economic Development Board restricts us from
paying dividends, from incurring further indebtedness or creating any security
interests, from making equity investments and from undertaking any form of
reconstruction, including amalgamation with another company, which would result
in a change in the control of our company, in each case without prior lender
consent. Our medium term note program, or MTN Program, limits our ability to pay
dividends while the interest on the notes is unpaid and to create security
interests to secure our indebtedness.

     As a result of these limitations, we may encounter difficulties obtaining
the required consents from our existing lenders to conduct our business, in
particular, to obtain the necessary financing to maintain or grow our business,
on a timely basis or at all. This could have a material adverse effect on our
business, financial condition and results of operations.


WE ARE DEPENDENT ON RAW MATERIAL SUPPLIERS AND DO NOT HAVE ANY LONG-TERM SUPPLY
CONTRACTS WITH THEM.

     We obtain the materials we need for our assembly services from outside
suppliers. We purchase all of our materials on a purchase order basis. We have
no long-term contracts with any of our suppliers. If we cannot obtain sufficient
quantities of materials at reasonable prices or if we are not able to pass on
higher materials costs to our customers, this could have a material adverse
effect on our business, financial condition and results of operations.


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

     The independent semiconductor test and assembly service industry is very
competitive and diverse and requires us to be capable of testing increasingly
complex semiconductors as well as bringing the most technologically advanced
packages to market as quickly as our competitors. The industry comprises both
large multi-national companies and small niche market competitors. We face
substantial competition from a number of competitors that are much larger in
size than us. These competitors include Advanced Semiconductor Engineering,
Inc., Amkor Technology, Inc., ASE Test Limited, ASAT Holdings Limited, ChipPAC
Incorporated and Siliconware Precision Industries Co., Ltd. Their facilities are
primarily located in Asia.

     Each of these companies has significant manufacturing capacity, financial
resources, research and development operations, marketing and other capabilities
and has been in operation for some time. Such companies have also established
relationships with many of our current or potential customers. Some of our
competitors have established testing facilities in North America and may
commence independent testing operations in Asia. These activities would compete
directly with us.

     We also face competition from the internal capabilities and capacity of
many of our current and potential IDM customers. Many IDMs have greater
financial and other resources than we do and may rely on internal sources for
test and assembly services due to:

     -    their desire to realize higher utilization of their existing test and
          assembly capacity;

     -    their unwillingness to disclose proprietary technology;

     -    their possession of more advanced testing or assembly technologies;
          and

     -    the guaranteed availability of their own test and assembly capacity.

     We cannot assure you that we will be able to compete successfully in the
future against our existing or potential competitors or that our customers will
not rely on internal sources for test and assembly services, or that our
business, financial condition and results of operations will not be adversely
affected by such increased competition.

                                       12
<PAGE>
OUR INTELLECTUAL PROPERTY IS IMPORTANT TO OUR ABILITY TO SUCCEED IN OUR BUSINESS
BUT MAY BE DIFFICULT TO PROTECT.

     Our ability to compete successfully and achieve future growth in net
revenues will depend, in part, on our ability to protect our intellectual
property and the intellectual property of our customers. We seek to protect
proprietary information and know-how through the use of confidentiality and
non-disclosure agreements and limited access to and distribution of proprietary
information. We currently have 13 issued patents and we have applied for 30
additional patents in the United States and certain other countries. We cannot
assure you that any of our filed applications for patents will be granted, or,
if granted, will not be challenged, invalidated or circumvented or will offer us
any meaningful protection. Further, we cannot assure you that the Asian
countries in which we market our products will protect our intellectual property
rights to the same extent as the United States. Additionally, we cannot assure
you that our competitors will not develop, patent or gain access to similar
know-how and technology, or reverse engineer our assembly services, or that any
confidentiality and non-disclosure agreements upon which we rely to protect our
trade secrets and other proprietary information will be adequate protection. The
occurrence of any such events could have a material adverse effect on our
business, financial condition and results of operations.


WE MAY BE SUBJECT TO INTELLECTUAL PROPERTY RIGHTS DISPUTES.

     Our ability to compete successfully will depend, in part, on our ability to
operate without infringing the proprietary rights of others. When we are aware
of intellectual property of others that may pertain to or affect our business,
we will attempt to either avoid such processes, cross-license, or otherwise
obtain certain process or package technologies that we feel are required.
However, we have no means of ascertaining what patent applications have been
filed in the United States until they are granted. In addition, we may not be
aware of the intellectual property rights of others or be familiar with the laws
governing such rights in certain countries in which our products are or may be
sold. As the number of patents, copyrights and other intellectual property
rights in our industry increases, and as the coverage of these rights increases,
we believe that companies in our industry will face more frequent patent
infringement claims.

     On February 20, 2001, a lawsuit was filed by Amkor Technology, Inc. against
us and our subsidiary, ST Assembly Test Services, Inc., or STATS Inc., alleging
patent infringement in respect of certain integrated circuit packages. On
September 7, 2001, we announced that we had settled the lawsuit. We cannot
assure you that we will be able to settle any future claims against us on terms
that are acceptable to us or at all.

     In the event that any valid claim is made against us, we could be required
to:

     -    stop using certain processes;

     -    cease manufacturing, using, importing or selling infringing packages;

     -    pay substantial damages;

     -    develop non-infringing technologies; or

     -    attempt to acquire licenses to use the infringed technology.

     It is the nature of the semiconductor industry that, from time to time, we
may receive communications alleging that we have infringed intellectual property
rights of others. We may also, from time to time, receive from customers
requests for indemnification against pending or threatened infringement claims.
Recently, we received two requests for indemnification from one of our major
customers. We do not believe that the resolution of these requests for
indemnification will have a material adverse effect on our business or financial
condition. However, we cannot assure you that the resolution of these requests
or any future allegations or requests for indemnification will not have a
material adverse effect on our business or financial condition.

                                       13
<PAGE>
     Although, in the above instances and in the future we may seek licenses
from or enter into agreements with third parties covering the intellectual
property that we are allegedly infringing, we cannot guarantee that any such
licenses could be obtained on acceptable terms, if at all. We may also have to
commence lawsuits against companies who infringe our intellectual property
rights. Such claims could result in substantial costs and diversion of our
resources.

     Should any of the disputes described above occur, our business, financial
condition and results of operations could be materially adversely affected.


SINGAPORE TECHNOLOGIES PTE LTD CONTROLS OUR COMPANY AND THEREBY MAY DELAY, DETER
OR PREVENT ACTS THAT WOULD RESULT IN A CHANGE OF CONTROL.

     As of January 31, 2002, Singapore Technologies Pte Ltd beneficially owned
approximately 71.9% of our ordinary shares. As of January 31, 2002, Temasek
Holdings (Private) Limited directly owns 78.6% of Singapore Technologies Pte
Ltd. The remaining 21.4% is owned by Singapore Technologies Holdings Pte Ltd,
which is in turn 100% owned by Temasek Holdings (Private) Limited, the principal
holding company through which the corporate investments of the Government of
Singapore are held. As a result, Singapore Technologies Pte Ltd is able to
exercise direct or indirect control over matters requiring shareholder approval.
Matters that typically require shareholder approval include, among other things:

     -    the election of directors;

     -    our merger or consolidation with any other entity;

     -    any sale of all or substantially all of our assets; and

     -    the timing and payment of dividends.

     This concentration of ownership may delay, deter or prevent acts that would
result in a change of control, which may be against the interests of holders of
our ADSs and ordinary shares.


A CHANGE IN CONTROL OF OUR COMPANY COULD RESULT IN A BREACH OF CERTAIN OF OUR
AGREEMENTS.

     The provisions of our loan agreement with the Economic Development Board
restrict us from, among others, undertaking any form of reconstruction which
would result in a change in control of our company. Our MTN Program provides
that noteholders may require us to redeem the notes if Singapore Technologies
Pte Ltd ceases to hold, directly or indirectly, at least 51% of our issued share
capital. From time to time, we may agree to similar terms in our financing or
other arrangements. We cannot assure you that Singapore Technologies Pte Ltd
will not directly or indirectly reduce its shareholding in our company to an
extent that would result in a breach of these agreements, or any future
agreements we may enter into. If this were to occur, our financial condition may
be materially adversely affected. This restriction may also limit our ability to
raise funds through the issuance of equity or equity-linked securities.


WE MAY HAVE CONFLICTS OF INTEREST WITH OUR AFFILIATES.

     In the past, a substantial portion of our financing, as well as our net
revenues, have come from our affiliates, and we have paid a management fee to
Singapore Technologies Pte Ltd for certain services. We will continue to have
certain contractual and other business relationships and may engage in material
transactions with the Government of Singapore, companies within the Singapore
Technologies Group (including Chartered Semiconductor which is one of our key
customers) and EDB Investments Pte Ltd or EDBI. Sales to our affiliate,
Chartered Semiconductor, in 1999, 2000 and 2001 were approximately 16.4%, 7.3%
and 5.6%, respectively, of our net revenues. Although all new material related
party transactions generally require the approval of the Audit Committee and in
certain circumstances may also require separate approval of a majority of our
Board of Directors, circumstances may arise in which the interests of our
affiliates may conflict with the interests of our other

                                       14
<PAGE>
shareholders. In addition, both EDBI and Singapore Technologies Pte Ltd make
investments in various companies. They have invested in the past, and may invest
in the future, in entities that compete with us. For example, affiliates of
Singapore Technologies Pte Ltd have investments in United Test Assembly Center
(S) Pte Ltd, a Singapore-based provider of semiconductor assembly and testing
services for semiconductor logic/ASIC and memory products. In the context of
negotiating commercial arrangements with affiliates, conflicts of interest have
arisen in the past and may arise, in this or other contexts, in the future. We
cannot assure you that any conflicts of interest will be resolved in our favor.
See "Item 7. Major Shareholders and Related Party Transactions."


WE DEPEND ON CERTAIN KEY EMPLOYEES, LOSS OF CERTAIN OF THEM COULD ADVERSELY
AFFECT OUR BUSINESS.

     Our future performance will largely depend on our ability to attract and
retain key technical, customer support, sales and management personnel. The loss
of certain of such persons could have a material adverse effect on our business,
financial condition and results of operations. We do not maintain "key man" life
insurance.


WE NEED A CLEAN ROOM ENVIRONMENT FOR OUR OPERATIONS.

     Our testing and assembly operations take place in areas where air purity,
temperature and humidity are controlled. If we are unable to control our testing
or assembly environment, our test or assembly equipment may become nonfunctional
or the semiconductors we test and assemble may be defective. See "Item 4.
Information on the Company - B. Business Overview - Quality Control." If we
experience prolonged interruption in our operations due to problems in the clean
room environment, this could have a material adverse effect on our business,
financial condition and results of operations.


OUR FAILURE TO COMPLY WITH CERTAIN ENVIRONMENTAL REGULATIONS COULD REQUIRE US TO
SPEND ADDITIONAL FUNDS AND COULD SERIOUSLY AFFECT OUR FINANCIAL CONDITION AND
RESULTS OF OPERATION.

     We are subject to a variety of laws and regulations in Singapore relating
to the use, storage, discharge and disposals of chemical by-products of, and
water used in, our packaging process. While we believe that we are currently in
compliance with such laws and regulations, failure to comply with such laws and
regulations in the future could subject us to liabilities that may have an
adverse effect on our financial condition and results of operations.


A FIRE OR OTHER CALAMITY AT ONE OF OUR FACILITIES COULD ADVERSELY AFFECT OUR
COMPANY.

     We conduct our testing and assembly operations at a limited number of
facilities. A fire or other calamity resulting in significant damage at any of
these facilities would have a material adverse effect on our business, financial
conditions and results of operations. While we maintain insurance policies
covering losses, including losses due to fire, which we consider to be adequate,
we cannot assure you that it would be sufficient to cover all of our potential
losses. Our insurance policies cover our buildings, machinery and equipment.


OUR RESEARCH AND DEVELOPMENT INVESTMENTS MAY NOT YIELD PROFITABLE AND
COMMERCIALLY VIABLE PACKAGES OR TEST SERVICES AND THUS WILL NOT NECESSARILY
RESULT IN INCREASES IN REVENUES FOR OUR COMPANY.

     We invest significant resources in research and development. Our research
and development expenses were approximately $7.3 million in 1999, $14.6 million
in 2000 and $15.2 million in 2001. However, our research and development efforts
may not yield commercially viable packages or test services. The qualification
process for new packages and test services is conducted in various stages which
may take one or more years to complete, and during each stage there is a
substantial risk that we will have to abandon a potential package or test
service which is no longer marketable and in which we have invested significant
resources. In the event we are able to qualify new packages or test services, a
significant amount of time will have elapsed between our investment in new
packages or test services and the receipt of any related revenues.

                                       15
<PAGE>
WE MAY BE AFFECTED BY SIGNIFICANT FLUCTUATIONS IN EXCHANGE RATE.

     Our financial statements are prepared in U.S. dollars. Our net revenues are
generally denominated in U.S. dollars and our operating expenses are generally
incurred in U.S. dollars and Singapore dollars. Our capital expenditures are
generally denominated in U.S. dollars, Japanese yen, Singapore dollars and other
currencies. As a result, we are affected by fluctuations in foreign currency
exchange rates among the U.S. dollar, the Japanese yen, the Singapore dollar and
other currencies. For example, substantially all of our revenues and the
majority of our cost of revenues are denominated in U.S. dollars. In 2001, if
the Singapore dollar had strengthened against the U.S. dollar by 2.0%, our cost
of revenues would have increased by approximately 0.8%. Likewise, if the
Singapore dollar had weakened against the U.S. dollar by 2.0%, our cost of
revenues would have decreased by approximately 0.8%. We are particularly
affected by fluctuations in the exchange rate between the U.S. dollar and the
Singapore dollar. Any significant fluctuation in currency exchange rates may
harm our company.


TERRORIST ATTACKS, SUCH AS THE ATTACKS THAT OCCURRED IN THE UNITED STATES IN NEW
YORK AND WASHINGTON, D.C. ON SEPTEMBER 11, 2001, AND OTHER ACTS OF VIOLENCE OR
WAR MAY AFFECT THE MARKETS ON WHICH OUR SECURITIES TRADE, THE MARKETS IN WHICH
WE OPERATE, OUR OPERATIONS AND OUR PROFITABILITY.

     Terrorist attacks may negatively affect our operations. There can be no
assurance that there will not be further terrorist attacks against the United
States or United States businesses and these attacks or armed conflicts may
directly impact our physical facilities or those of our suppliers or customers.
Furthermore, these attacks may make travel and the transportation of our
supplies and products more difficult and expensive. Political and economic
instability in some regions of the world may also result and could negatively
impact our business. The consequences of any of these armed conflicts are
unpredictable, and we may not be able to foresee events that could have an
adverse effect on our business.


ITEM 4. INFORMATION ON OUR COMPANY

A.   HISTORY AND DEVELOPMENT OF OUR COMPANY

     ST Assembly Test Services Ltd was incorporated in Singapore as a limited
liability company on October 31, 1994 and began operations in January 1995.

     In February 2000, we completed our initial public offering. Our ordinary
shares are listed on the Singapore Exchange Securities Trading Limited or SGX-ST
(SGX-ST: ST Assembly) and our ADSs are quoted on the Nasdaq National Market or
Nasdaq (NASDAQ: STTS). Our registered office is at No. 5, Yishun Street 23,
Singapore 768442, Republic of Singapore, Telephone:(65) 6824 5885, Facsimile:
(65) 6824 9006, Website: www.stts.com, and our agent for service in the United
States is the current Company Secretary of ST Assembly Test Services, Inc., 1768
McCandless Drive, Milpitas, CA. 95035, United States of America, Telephone: (1
408) 586-0600 Fax: (1 408) 586-0601. Our principal place of operations is in
Singapore and our global operations are mainly carried out in the United States,
United Kingdom, Japan, Germany and Taiwan.


B.   BUSINESS OVERVIEW

     We are a leading independent provider of a full range of semiconductor test
and assembly services, including:

     -    TEST SERVICES: including final testing and wafer probe, on a diverse
          selection of test platforms, as well as test-related services such as
          burn-in process support, reliability testing, thermal and electrical
          characterization, dry pack and tape and reel;

     -    ASSEMBLY SERVICES: for leaded and array packages, as well as assembly
          related services such as package design and leadframe and substrate
          design; and

                                       16
<PAGE>
     -    PRE-PRODUCTION AND POST-PRODUCTION SERVICES: such as package, test
          software and related hardware development and drop shipment services.

     We are a leader in testing mixed-signal semiconductors, while offering our
customers a full range of test and assembly services for most types of
semiconductors, including high performance digital semiconductors. We provide
these test and assembly services to semiconductor companies which do not have
their own manufacturing facilities (fabless companies), vertically integrated
device manufacturers (IDMs), and independent semiconductor wafer foundries
(foundries). In the year ended December 31, 2001, 46.2% of our net revenues were
from test services and 53.8% of our net revenues were from assembly services.

     Most of our test and assembly services are provided at our headquarter
facility in Singapore. We believe that our Singapore location provides us with
an ideal stable base. However, we have built, and will continue to consider
building or developing, additional facilities in other locations in order to
provide our customers with more access to our services. Through our 51% owned
subsidiary, Winstek, we provide test services in Taiwan. Our two wholly-owned
subsidiaries in the United States, STATS Inc. and FastRamp Test Services, Inc.,
or FastRamp, provide sales and marketing, design support, research and
development, high-end engineering and pre-production test services and tester
rental services to customers in the United States. We also have two assembly
design centers in Arizona and California, in the United States and two test
development centers in California and in Surrey, in the United Kingdom.


SEMICONDUCTOR INDUSTRY BACKGROUND

     Semiconductors are critical components used in an increasingly wide variety
of applications such as computer systems, communications equipment and systems,
automobiles, consumer products and industrial automation and control systems. As
performance has increased and size and cost have decreased, the use of
semiconductors in these applications has grown significantly.

     According to a November 2001 report by the Semiconductor Industry
Association, or SIA, total worldwide semiconductor device market revenue dropped
from $204.4 billion in 2000 to $140.7 billion in 2001 as the industry
experienced a cyclical downturn due to inventory overhang and an overall decline
in semiconductor demand. However, in its November 2001 report, SIA predicts that
worldwide semiconductor revenues will grow at a compounded annual growth rate of
15.8% between 2001 and 2004, reaching a total market size of $218.3 billion in
2004. As a consequence of the cyclical nature of the semiconductor industry, SIA
may announce revised forecasts from time to time. We do not have any obligation
to announce or otherwise make publicly available updates or revisions to these
forecasts.


SEMICONDUCTOR MANUFACTURING PROCESS

     The production of a semiconductor is a complex process that requires
increasingly sophisticated engineering and manufacturing expertise. The
production process can be broadly divided into three primary stages:

     -    wafer fabrication, including wafer probe;

     -    assembly of bare semiconductors, or die, into finished semiconductors
          (referred to as "assembly" or "packaging"); and

     -    final testing of assembled semiconductors.

     Wafer Fabrication.  The wafer fabrication process begins with the
generation of a mask that defines the circuit patterns for the transistors and
interconnect layers that will be formed on the raw silicon wafer. The
transistors and other circuit elements are formed by repeating a series of
process steps where photosensitive material is deposited onto the wafer. The
material is

                                       17
<PAGE>
then exposed to light through the mask in a photolithography process and the
unwanted material is removed through an etching process, leaving only the
desired circuit pattern on the wafer.

     Wafer Probe.  Wafer probe is a process whereby each individual die on the
wafer is electrically tested in order to identify the operable semiconductors
for assembly.

     Assembly.  Assembly protects the semiconductor, facilitates its integration
into electronic systems and enables the dissipation of heat. In the assembly
process, the wafer is diced into individual dies that are then attached to a
substrate with an epoxy adhesive. Leads on the substrate typically are then
connected by extremely fine gold wires to the input/output, or I/O, terminals on
the die through the use of automated equipment known as "wire bonders." Each die
is then encapsulated in a molding compound, thus forming the package.

     Final Testing.  Final testing is the last step in semiconductor production.
It is a highly complex process that uses sophisticated testing equipment and
customized software programs to electrically test a number of attributes of
assembled semiconductors, including functionality, speed, predicted endurance,
power consumption and electrical characteristics. After final testing, the
semiconductors are shipped as directed by the customer for integration into the
end-products.


TRENDS TOWARD OUTSOURCING

     Historically, IDMs conducted most of the manufacturing process in their own
facilities, outsourcing only the lower-technology aspects of the process and
keeping advanced or proprietary technology in-house.

     Fabless semiconductor companies, which concentrated their efforts and
resources on the design, marketing and sale of semiconductors, emerged in the
mid-1980s. Fabless companies outsource virtually every step of the production
process - fabrication, packaging and testing - to independent companies,
allowing them to utilize the latest test and assembly technology without
committing significant amounts of capital and other resources to manufacturing.

     In response to competition from fabless companies, IDMs began utilizing
outsourcing as a means of cost-effective access to state-of-the-art technology,
faster time to market and lower unit costs. This has enabled IDMs to streamline
their operations and consider divestment of existing facilities. Given the IDMs'
significant market share in the semiconductor market and increasing comfort with
outsourcing advanced technology, this trend presents a significant opportunity
for independent test and assembly providers.

     Several benefits of outsourced test and assembly services continue to drive
growth in the industry:

     Technological sophistication and complexity.  The increasing technological
complexity of semiconductors, including systems-level semiconductors which
integrate multiple functions onto a single semiconductor, has driven the need
for increasingly complex test and assembly services able to support these
devices. More sophisticated semiconductors require an increasing number of I/Os,
higher operating speed, higher thermal dissipation and smaller form-factors. As
a result, testing and assembly is increasingly being seen as an enabling
technology critical to the overall advancement of semiconductor designs.

     Independent providers of test and assembly services have now developed
extensive and advanced expertise in the area and have dedicated substantial
resources toward technological innovation. They are able to spread the cost of
development efforts over a broad range of customers and products and offer
leading technologies below the internal costs of IDMs. As IDMs have found it
difficult to keep pace with test and assembly technology while maintaining a
leading position in the general semiconductor industry, they are increasingly
relying on independent test and assembly service providers.

     Time to market.  As the semiconductor market becomes increasingly
competitive and product life cycles decrease, semiconductor companies are
seeking to shorten their time to market. Semiconductor companies frequently do
not have the time to optimally develop the necessary in-house test and assembly
capabilities to implement these solutions for rapid product

                                       18
<PAGE>
rollouts in volume. Instead, semiconductor companies are turning to independent
test and assembly service providers to quickly deliver new products to the
market. To further accelerate the process, semiconductor companies are also
increasingly requiring that test and assembly functions be performed at the same
location.

     Asset utilization.  The testing and assembly of semiconductors is a complex
process that requires substantial capital investment in specialized equipment
and facilities. Faced with shorter product life cycles and more frequent new
product introductions, it is becoming more difficult for IDMs to sustain high
levels of capacity utilization of their test equipment. Therefore, to maximize
allocation of limited resources, reduce capital expenditures and control
research and development costs, IDMs are increasingly turning to the outsourcing
of test and assembly services. By comparison, independent test and assembly
companies can allocate their fixed cost investments across a wider portfolio of
customers and products to maximize capacity utilization and extend the useful
life of equipment. Additionally, independent providers are able to reduce costs
through the realization of economies of scale in their purchasing activities.


OUR SERVICES

     We are in the semiconductor backend outsource business. We offer full
backend turnkey services from wafer probe to final test and drop ship. The
services we offer are customized to the needs of our individual customers. In
2001, 46.2% of our net revenues were from test services and 53.8% of our net
revenues were from assembly services.


TEST SERVICES

     We offer wafer probe and final testing on many different platforms,
covering at least 15 of the major test platforms in the industry. Final testing
is the last stage in semiconductor production which involves using sophisticated
test equipment and customized software programs to electronically test a number
of attributes of packaged semiconductors for functionality. Wafer probe is the
step immediately prior to the assembly of semiconductors and involves electrical
testing of the processed wafer for defects. Wafer probe services require similar
expertise and testing equipment to that used in final testing, and several of
our testers (with the substitution of different handlers or probers) are used
for wafer probe services. To date, substantially all wafer probe has been
performed for customers whose wafers are then assembled by us.

     We have invested in state-of-the-art testing equipment that allows us to
test a broad variety of semiconductors, especially mixed-signal and high
performance digital devices.

     Mixed-signal Testing.  We test a variety of mixed-signal semiconductors,
including those used in communications applications such as network routers,
switches and interface cards; broadband products such as cable set-top boxes;
and wireless telecommunications products such as cellular phones, base stations
and Bluetooth(TM) devices. Bluetooth(TM) is a technology that enables short
range wireless communication between different electronic appliances. We are a
member of the Bluetooth(TM) Special Interest Group (SIG). We also test
mixed-signal semiconductors for computer and consumer components including audio
devices, CD-ROM, hard disk drive controllers, DVD drives and game consoles.

     Digital Testing.  We test a variety of digital semiconductors, including
high performance semiconductors used in PCs, disk drives, modems and networking
systems. Specific digital semiconductors tested include digital signal
processors, or DSPs, field programmable gate arrays, or FPGAs, microcontrollers,
central processing units, bus interfaces, and digital application specific
integrated circuits, or ASICs, and application specific standard products, or
ASSPs.

     Memory Testing.  We provide wafer probe services covering a variety of
memory devices including static and non-volatile memories.

                                       19
<PAGE>
The following table sets forth, for the periods indicated, the percentage of our
net revenues from testing services by type of semiconductor.

<TABLE>
<CAPTION>
                                YEAR ENDED DECEMBER 31
                          -------------------------------
                          1999          2000         2001
                          -----        -----        -----
<S>                       <C>          <C>          <C>
Mixed-signal               72.4%        76.0%        84.3%
Digital                    26.8         23.5         15.1
Memory                      0.8          0.5          0.6
                          -----        -----        -----
                          100.0%       100.0%       100.0%
                          =====        =====        =====
</TABLE>

Test-Related Services.

     We offer a variety of additional test-related services, including:

     -    "Burn-in process support." Burn-in is the process of electrically
          stressing semiconductors, usually at high temperature and voltage, for
          a period of time long enough to cause the failure of marginal
          semiconductors. During burn-in process support, we perform an analysis
          of burn-in rejects in order to determine the cause of failure.

     -    "Reliability testing." Reliability testing is the process of testing a
          semiconductor to evaluate its life span. It is performed on a sample
          of devices that have passed final testing.

     -    "Thermal and electrical characterization." Thermal and electrical
          characterization is the process of testing a semiconductor for
          performance consistency under thermal and electrical stress.

     -    "Dry pack." Dry pack is the process of baking the semiconductors in
          order to remove moisture before packing and shipment to customers.

     -    "Tape and reel." Tape and reel is the process of transferring
          semiconductors from tray or tube into a tape-like carrier on reel
          format for shipment to customers. Tape and reel is desired for high
          throughput pick and placement of components.

ASSEMBLY SERVICES

     We offer a broad range of array and leaded packages designed to provide
customers with a full range of packaging solutions and full backend turnkey
services. Packaging serves to protect the die and facilitate electrical
connection and heat dissipation. As part of customer support on assembly
services, we also offer complete package design, electrical and thermal
simulation, measurement and design of leadframes and substrates.

     Our current and ongoing investment is in line with our packaging
development focus which has primarily been on high-pin count surface mount
technology, or SMT, packages. SMT packages typically incorporate leads or
interconnects which are soldered to the surface of the printed circuit board
rather than inserted into holes, as is the case in older plated-through-hole, or
PTH, technology packages. SMT packages accommodate a substantially higher number
of leads than PTH packages, enabling greater package integration, and a
reduction in the area dimensions of the printed circuit board. Because SMT
enables higher pin counts on a semiconductor device, SMT is typically the
preferred technology for most advanced semiconductors.

                                       20
<PAGE>
     Our SMT packages are divided into three families: standard leadframe,
enhanced leadframe and array. The differentiating characteristics of our
packages include the size of the package, the number of electrical connections
or interconnects the package can support, the means of connection to the printed
circuit board and the thermal and electrical characteristics of the package.

     Standard Leadframe Packages.  Standard leadframe packages, which are the
most widely recognized package types, are characterized by a semiconductor die
encapsulated in a plastic mold compound with metal leads surrounding the
perimeter of the package. The semiconductor die is connected to the metal leads
by extremely fine gold wires in a process known as wire bonding.

     We focus on high performance, thin profile and near chip scale leadframe
packages. Our standard leadframe packages are used in a variety of applications,
including mobile phones, notebook computers and networking systems.

     The following table summarizes our standard leadframe packages.

<TABLE>
<CAPTION>
                               NUMBER OF
PACKAGE FORMAT                   LEADS                     DESCRIPTION                          TYPICAL APPLICATIONS
--------------                 ---------                   -----------                          --------------------
<S>                            <C>            <C>                                          <C>
Thin Shrink Small Outline        14-38        Traditional leadframe package with           Mobile phone, mass storage,
 Package or TSSOP                             thickness below 1.0mm designed for           multimedia and PDA
                                              logic, analog and memory devices, such
                                              as Flash, SRAM, EPROM, EEPROM, and DRAM

Thin Quad Flat Package          32-128        Advanced QFP with thickness of 1.0mm         Mobile phone, mass storage
 or TQFP                                      for use in low profile, space                and multimedia
                                              constrained applications

Low Quad Flat Package           32-208        Advanced QFP with thickness of 1.4mm         Mobile phone, mass storage
 or LQFP                                      for use in low profile, space                and multimedia
                                              constrained applications

Metric Quad Flat Package        64-240        Traditional QFP designed for ASICs,          Access/LAN equipment,
 or MQFP                                      FPGAs and DSPs                               multimedia and mass storage

Plastic Leaded Chip              44-84        Traditional leadframe package designed       PC, access equipment and
 Carrier or PLCC                              for applications that do not have space      multimedia
                                              constraints and do not require a high
                                              number of interconnects
</TABLE>

                                       21
<PAGE>
     Enhanced Leadframe Packages.  Our enhanced leadframe packages are similar
in design to our standard leadframe packages but are generally thinner and
smaller and have advanced thermal and electrical characteristics which are
necessary for many of the leading-edge semiconductors designed for
communications applications.

     The following table summarizes our enhanced leadframe packages.

<TABLE>
<CAPTION>
                                  NUMBER OF
PACKAGE FORMAT                      LEADS                   DESCRIPTION                          TYPICAL APPLICATIONS
--------------                    ---------                 -----------                          --------------------
<S>                               <C>             <C>                                         <C>
Quad Leadless Package or QLP         8-64         Lead frame based near chip scale            Mobile phone, PDA, GPS and
                                                  package                                     multimedia

Exposed Pad Quad Flat Package      48-208         Thermally enhanced QFP with 30%             Access/WAN/LAN equipment and
 or EPQFP                                         greater thermal dissipation than MQFP       PC/graphics

Exposed Drop-in Heat Sink          44-208         Thermally enhanced QFP with 60%             Access/WAN/LAN equipment and
 Quad Flat Package or EDQFP                       greater thermal dissipation than MQFP       PC/graphics

Drop-in Heat Sink Quad Flat        64-208         Thermally enhanced QFP with 30%             Access/WAN/LAN equipment and
 Package or DQFP                                  greater thermal dissipation than MQFP       PC/graphics

Die Pad Heat Sink Quad Flat       100-208         Thermally enhanced QFP with 60%             Mass storage and multimedia
 Package or DPHQFP                                greater thermal dissipation than MQFP

Heat Sink Quad Flat Package       100-240         Thermally enhanced QFP with 80%             Base station, PC/graphics and
 or HQFP                                          greater thermal dissipation than MQFP       multimedia

Exposed Pad Thin Shrink Small       14-38         Thermally enhanced TSSOP with 30%           Mobile Phone, mass storage
 Outline Package or EPTSSOP                       greater thermal dissipation than TSSOP      multimedia and PDA

Stacked Die Quad Flat Package      64-176         Compact multiple die designed for           Mobile phone, PDA, GPS, Disk
 or SDQFP                                         space constrained applications              drive and multimedia
</TABLE>

                                       22
<PAGE>
     Array Packages.  Our array packages include Ball Grid Array or BGA packages
which employ leads, also known as interconnects, on the bottom of the package in
the form of small bumps, or balls, in a matrix or array pattern. These BGA
packages utilize a plastic laminate or film tape based substrate rather than a
leadframe substrate. The BGA format enables a higher density of interconnects
within a smaller surface area.

     BGA packaging was designed to address the need for higher lead counts and
smaller package size required by advanced semiconductors used in applications
such as portable computers and wireless telecommunications. As the required
number of leads on the peripheral sides of the package increased, the lead pitch
(which is the distance between leads) decreased. The nearness of one lead to
another at very fine pitches resulted in potential electrical shorting problems
during the SMT process. This necessitated the development of sophisticated and
expensive techniques for producing circuit boards to accommodate the high number
of leads at fine pitches.

     The BGA format solved this problem by employing lead terminals on the
bottom of the package in the form of small bumps or balls. These balls can be
evenly distributed across the entire bottom surface of the package, allowing
greater distance between the individual leads. For the highest lead count
devices, the BGA format can be manufactured less expensively and requires less
delicate handling.

     Our BGA packages are typically used in semiconductors that require enhanced
performance, including digital signal processors or DSPs, microprocessors and
microcontrollers, application-specific integrated circuits or ASICs, FPGAs,
memory and PC chip sets. Our BGA packages typically have between 16 and 900
balls.

     Several of these packages have been developed as Chip Scale Packages or
CSPs. The emphasis of these packages is on low profile, small footprint and
lightweight characteristics. These are ideal for medium pin- count applications
which require dense arrays in very small package sizes such as hand-held
wireless equipment, mobile base stations and digital photography.

     In its January 2002 report, Electronic Trends predicts that from 2001 to
2005, BGA packaging revenues will grow at a rate of 16.3% to a total market size
of around $8,877 million. Chip scale packaging revenues are predicted to grow at
a rate of 26.4% to reach a total market size of $4,297 million in 2005. This is
compared to forecasted revenue growth for all packages of 12.6% over the same
time period. As a consequence of the cyclical nature of the semiconductor
industry, Electronic Trends may announce revised forecasts from time to time. We
do not have any obligation to announce or otherwise make publicly available
updates or revisions to these forecasts.

                                       23
<PAGE>
     Our BGA packages (including CSPs) are described below:

<TABLE>
<CAPTION>
                                  NUMBER OF
PACKAGE FORMAT                      BALLS                     DESCRIPTION                        TYPICAL APPLICATIONS
--------------                    ---------                   -----------                        --------------------
<S>                               <C>              <C>                                      <C>
Tape Chip Scale Package             72-256         CSP BGA characterized by flex-tape       Mobile phone, PDA and
 or TCSP                                           substrate for high density circuits      multimedia

Stacked Die BGA or SDBGA            80-160         Compact multiple die designed for        Mobile phone, PDA and
                                                   space constrained applications           multimedia

Tape Enhanced Plastic              256-600         BGA characterized by a flex-tape         WAN/LAN equipment and base
 BGA or TBGA                                       substrate replacing the laminate         station
                                                   substrate

Enhanced BGA or EBGA               256-600         High pin count, thermally enhanced       WAN/LAN equipment and base
                                                   BGA package suitable for high power      station
                                                   applications which utilize heat
                                                   sinks for thermal dissipation

Small Thin Plastic BGA              16-324         Smaller and thinner BGA designed         Mobile phone, PDA, GPS and
 or STPBGA                                         for applications which are space         multimedia
                                                   constrained and require electrical
                                                   performance

Plastic Ball Grid Array            208-492         Electrically enhanced BGA package        Access/ LAN equipment,
 or PBGA                                           designed for high I/O replacement        PC/graphics and base station

Matrix Tape Chip Scale Package      16-180         Thin (<1.0mm) and highly dense CSP       Mobile phone, PDA and multimedia
 BGA or TCSP-M                                     BGA using a flexible tape substrate

Low Profile Small Thin Plastic      16-324         CSP BGA characterized by a thin          Mobile phone, PDA and multimedia
 BGA or STPBGA-L                                   core laminate substrate

Exposed Drop-in Heat Spreader      208-600         Thermally Enhanced PBGA with 20%         Access/LAN/PC/graphics and base
 Plastic BGA or XDPBGA                             greater thermal dissipation than         station equipment
                                                   PBGA

Multi Chip Module Plastic BGA       80-600         BGA integrated with two or more          Access/LAN/PC graphics and base
 or MCMBGA                                         multiple die within a PBGA or STPBGA     station equipment
</TABLE>

     In response to certain governmental and industry trends toward
environmentally friendly products, our assembly operations introduced a green
molding compound and set up a dedicated lead-free line. This line processes
lead-free packaging for our leaded packages using a pure tin solder alternative.
We introduced lead-free array packaging in 2001.

     A waste treatment system that detoxifies waste materials is now in place to
support the grinding and sawing of gallium arsenide or GaAs wafers. This is an
important development as it demonstrates our commitment to develop packages and

                                       24
<PAGE>
services in response to the specialized needs of our customers. We believe GaAs
semiconductors currently play and will continue to play an important role in
high-speed networking and high-speed transmission equipment with data rates
exceeding 10 Gbps or OC192.

     We have improved our fine pitch wire bonding capability to handle up to
50(mu)m in-line bond pad pitch and 80/40 (mu)m staggered bond pitch in response
to industry trends toward fine line and space wafer fabrication technology. We
have also established complete handling and packaging processes for GaAs
semiconductors.


PRE-PRODUCTION AND POST-PRODUCTION SERVICES

     We have developed and enhanced our pre-production and post-production
services to provide a total solution for our customers. Our pre-production
services for assembly include package development, and for testing include
software and hardware development. In addition, we have recently established
FastRamp, which provides an extended range of pre-production volume testing
services. We also provide post-production drop shipment services for our
customers.

     Package Development.  Our package development group interacts with
customers early in the design process to optimize package design and
manufacturability. For each project, our engineers create a design strategy in
consultation with each customer to address the customer's requirements, package
attributes, design guidelines and previous experience with similar products.
After a design is finished, we provide quick-turn prototype services. By
offering package design and prototype services, we can reduce our customer's
development costs, accelerate time-to-volume production and ensure that new
designs can be properly packaged at a reasonable cost. We offer these services
at our facilities in Singapore, Arizona and California.

     Test Software and Hardware Development.  We work closely with our customers
to provide sophisticated software engineering services, including test program
development, conversion and optimization. Generally, testing requires customized
software to be developed for each particular semiconductor device. Software is
typically provided by the customer and may be converted by us for use on one or
more of our tester platforms. Once a conversion test program has been developed,
we correlate the test software through "test program verification." During this
test program verification process, which typically takes from two days to two
weeks, 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. Customer feedback on the test results enables us to adjust
the conversion test programs accordingly prior to actual production testing. We
then assist our customers in collecting and analyzing the test results and
develop engineering solutions to improve their design and production process. We
also provide customers with test development services where we will create a
test plan based on their specifications. Once the test plan is approved by the
customer, we design the test fixtures, or parameters, and develop the test
program. Once the test programs are developed, we perform the device
characterization to enable our customer to determine the optimum conditions for
their device performance. We offer these services at our facilities in
Singapore, California and Surrey, United Kingdom.

     FastRamp.  In October 2001, we established our wholly-owned subsidiary,
FastRamp in Silicon Valley, to deliver an extended range of high-end
pre-production test services to new and existing customers. FastRamp commenced
operations in January 2002, providing test hardware and software development,
pre-production volume testing services, tester rentals and a unique
customer-to-lab-to-factory relay for fast production offloads and capacity
coordination. At our customers' request, certain finished and piloted test
programs are then transferred to our facility in Singapore for full production.
As FastRamp offers a similarly configured and substantial range of tester
platforms, handlers, probers, interface hardware and manufacturing processes as
our Singapore facility, this transfer is relatively seamless.

     Drop Shipment Services.  We provide full drop shipment services including
the delivery of final tested semiconductors to our customers' end-customers in
any part of the world. We either directly bill our customers for the cost of
drop shipment or incorporate this into the price of our services.

                                       25
<PAGE>
RESEARCH AND DEVELOPMENT

     Our research and development efforts are focused on developing test and
assembly services required by our existing customers and that are necessary to
attract new customers. We spent approximately $7.3 million in 1999, $14.6
million in 2000 and $15.2 million in 2001 on research and development. We
currently employ 154 dedicated professionals for packaging and test development.
We consider this as a core element of our total service offering and expect to
continue to invest significant resources in research and development.

     Test Services.  We focus on developing new technologies, software and
processes to enhance efficiency and reliability and to shorten test times. These
include multi-site testing, strip testing, test program optimization and
hardware improvements designed to permit improved utilization of existing test
equipment. When necessary we also design and build specialized equipment that is
not available from outside vendors. Our test development centers are an
important part of our research and development efforts and are utilized to
develop and debug test software prior to production, complete test software
conversions and offer our customers continuous access to our development
capabilities. We currently have test development centers located in Singapore,
California and Surrey, United Kingdom.

     Assembly Services.  We have established a dedicated group of engineers
whose primary focus is the development and improvement of materials and process
technology as well as development of new and advanced packages. Because we
typically offer our assembly services to our existing test customers, we are in
a position to better understand their packaging needs. As a result, we focus our
assembly research and development efforts in part on developing packages
tailored to their individual requirements. These efforts take place at our
assembly development centers located in Singapore, California and Arizona.

     We have a number of advanced packages under development to support our
customers' need for high performance packages. Our development roadmap includes
flip chip technology and comprises build-up substrate, wafer bumping and passive
integration technology components. Flip chip technology can be used in both low
pin count as well as high pin count packages. It is a particularly ideal
solution for devices that require more than 1,000 interconnects in a relatively
small package. Build-up substrates deliver even higher interconnect density
without compromising thermal and electrical performance. We believe flip chip
packages will find increasing application in high-end communications equipment
such as switches and routers as well as high-end PCs.

     We also have next generation CSPs both under development and in
qualification which incorporate lead-frame, laminate and tape technologies. The
emphasis in the development of such packages is on low-profile, small footprint
and light weight characteristics. These packages are used particularly in
hand-held wireless communications equipment. These products are extremely useful
for all hand-held devices including mobile station modems, base-band circuits
and memories.

     In addition, we continue to increase our support functions for thermal,
electrical, stress and package to board level reliability characterization. We
offer a full range of thermal simulation and actual testing for all of our
existing packages and packages under development. We have a full service
reliability laboratory that can stress test assembled semiconductors. In
conjunction with local institutes and laboratories, we can also perform board
level reliability testing of surface mount assembled packages.

     In 2001, we developed and introduced a number of new packages, including:

     -    Quad Leadless Package or QLP

     -    Exposed Pad Thin Shrink Small Outline or EPTSSOP

     -    Exposed Pad Quad Flat Package or EPQFP

     -    Tape Ball Grid Array or TBGA

     -    Tape Chip Scale Package or TCSP

     -    Matrix Tape Chip Scale Package BGA or TCSP-M

     -    Stacked Die Quad Flat Package or SDQFP

                                       26
<PAGE>
     We will continue to develop and introduce advanced packaging that meets the
requirements of our customers.


SALES AND MARKETING

     We believe we are industry leaders in the testing of mixed-signal
semiconductors. The goal of our marketing strategy is to expand our customer
base by extending our mixed-signal expertise into new customer and product
segments. In particular, as mixed-signal devices become more prevalent, we
intend to increase our share of high-end digital consumer end-markets.

     We also aim to provide our customers with a total solution built around our
mixed-signal testing core competency. This involves a full backend turnkey
offering including wafer sort, assembly and test. We have been, and continue to
be, active in developing an advanced range of packages to match our advanced
testing capability.

     Our close working relationship with multiple foundries means we can also
provide full turnkey services from wafer fabrication to drop shipment. We
believe the Singapore government's long term plan of making Singapore a
foundries hub is an added advantage to our full turnkey strategy.

     We market our services through direct sales forces strategically located in
Singapore, Taiwan, Japan, Germany, the United Kingdom and the United States.

     Pricing Policy.  We price our test services principally on the length of
tester CPU time used, typically referred to as test time on per-second basis.
The price of test time is a function of tester platform and hardware
configuration, which are usually determined by our customers based on the
function and complexity of a particular semiconductor device. In general, the
test time for a complex semiconductor device will be longer than a less complex
semiconductor device. Wafer probe pricing is determined by similar factors. Any
reduction in test time by optimization of test program or optimum hardware
configuration will mean savings for our customer.

     Assembly services are priced competitively against the market and vary
depending on such factors as package complexity and material cost. Design costs
are not material but when incurred may be charged to a customer separately or
built into the unit price.


CUSTOMERS

     We provide test and assembly services to a growing number of customers
worldwide consisting primarily of fabless companies, IDMs and foundries.

     Our ten largest customers accounted for 89.5%, 88.3% and 85.6% of our net
revenues in 1999, 2000 and 2001. In 2001, our three largest customers, Analog
Devices, Broadcom and Marvell each represented in excess of 10% of our net
revenues and in the aggregate represented 51.9% of our net revenues. We
anticipate that our ten largest customers will continue to account for a high
percentage of our net revenues for the foreseeable future.

                                       27
<PAGE>
     The following table sets forth for the periods indicated the percentage of
our net revenues derived from testing and assembly of semiconductors used in
communications, personal computers and other applications.

<TABLE>
<CAPTION>
                                          YEAR ENDED DECEMBER 31
                                   -----------------------------------
                                    1999           2000           2001
                                   -----          -----          -----
<S>                                <C>            <C>            <C>
Communications                      60.9%          62.7%          61.3%
Personal Computers                  32.1           30.2           34.9
Other                                7.0            7.1            3.8
                                   -----          -----          -----
     Total                         100.0%         100.0%         100.0%
                                   =====          =====          =====
</TABLE>

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

<TABLE>
<CAPTION>
                                          YEAR ENDED DECEMBER 31
                                  ------------------------------------
GEOGRAPHICAL AREA                  1999            2000           2001
-----------------                 -----           -----          -----
<S>                               <C>             <C>            <C>
United States                      76.0%           78.0%          78.4%
Europe                              7.0            14.1           13.0
Singapore                          16.8             7.3            5.6
Rest of Asia                        0.2             0.6            3.0
                                  -----           -----          -----
     Total                        100.0%          100.0 %        100.0%
                                  =====           =====          =====
</TABLE>


CUSTOMER SERVICE

     We place strong emphasis on quality customer service. Our broad service
offerings, dedicated customer account teams and commitment to finding solutions
to our customers' needs and problems have enabled us to develop important
relationships with many of our customers. We have received high ratings and
recognition in the area of customer service from many of our customers. In 2001,
we received the Assembly and Test Supplier of the Year Award from Analog Devices
and we received the Certificate of Recognition 2000 for Subcontractors for our
excellent performance in Quality, Technology, Costs, Logistics and Management
Commitment from Infineon.

     We are in the process of implementing a comprehensive IT architecture that
includes Adexa, Inc.'s iCollaboration global planning suite to help manage our
global supply chain operations. We have also recently implemented our B2B
strategy using webMethods, enabling our customers to link seamlessly to our
systems. As part of our strategy to provide a virtual manufacturing extension to
our customers, we have developed our mySTATS portal which allows our customers
to obtain real-time manufacturing information on their products from us, and we
intend to roll this out to key customers by the second quarter of this year.

                                       28
<PAGE>
QUALITY CONTROL

     We maintain a team of quality control staff comprising engineers,
technicians and other employees whose responsibilities are to monitor our test
and assembly processes to ensure that they meet our quality standards. Our
in-house laboratory is equipped with advanced analytical tools and provides the
necessary equipment and resources for our research and development and
engineering staff to continuously enhance product quality and process
improvement.

     Our test and assembly 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 10,000 and 100,000 standards.

     Our test and assembly operations in Singapore are ISO 9001, 9002 and 14001
certified. ISO 14001 is an international standard on environmental management
system, to support environmental protection and prevention of pollution in
balance with socio-economic needs. ISO 9002 standards set forth what is required
to ensure production of quality products and services. ISO 9001 standards set
forth a quality management system and address design, development, production,
installation and servicing. We are also OHSMS 18001 certified. OHSMS is the
standard for the implementation of an occupational health and safety management
system (OHSMS), and was developed to be compatible with the ISO 9001 and ISO
14001 management system standards. In addition, we have both Level 1
Semiconductor Assembly Council, or SAC, and QS9000 certification. SAC
certification is one of the most prestigious certifications in the semiconductor
manufacturing industry and QS9000, based on ISO9001, is a comprehensive
certification of a company's total quality management system.

     Customers require that our facilities and procedures undergo a stringent
vendor qualification process. The qualification process typically takes from two
to six weeks but can take longer depending on the requirements of the customer.


COMPETITION

     The independent semiconductor test and assembly service industry is very
competitive and diverse. In order to compete, we must offer state-of-the-art
testing services and bring the most technologically advanced packages to market
as quickly as our competitors and at comparable prices. Test and assembly
services are provided by both large multi-national companies and small niche
market competitors. We face substantial competition from a number of
competitors, some of whom are much larger in size. These competitors' facilities
are primarily located in Asia. Some of these companies include Advanced
Semiconductor Engineering, Inc., Amkor Technology, Inc., ASE Test Limited, ASAT
Holdings Limited, ChipPAC Incorporated and Siliconware Precision Industries Co.,
Ltd.

     These companies have significant manufacturing capacity, financial
resources, research and development, operations, marketing and other
capabilities and have been in operation for some time. Such companies have also
established relationships with many of our current or potential customers.

     We also face competition from the internal capabilities and capacity of
many of our current and potential IDM customers. Many IDMs have greater
financial and other resources than we do and may rely on internal sources for
test and assembly services due to:

     -    their desire to realize higher utilization of their existing test or
          assembly capacity;

     -    their unwillingness to disclose proprietary technology;

     -    their possession of more advanced testing or assembly technologies;
          and

     -    the guaranteed availability of their own test or assembly capacity.

                                       29
<PAGE>
     The principal elements of competition in the independent semiconductor
assembly industry include variety of packages offered, price, location,
available capacity, cycle time, engineering capability, technical competence,
customer service and flexibility. If our competitors are able to bring their new
packages to market faster or at lower prices than we can, our net revenues may
be affected. In the area of test services, we compete on the basis of quality,
cycle time, pricing, location, available capacity, software development,
engineering capability, technical competence, customer service and flexibility.

     Our competitors in the independent testing market are both those listed
above as well as smaller niche companies, offering limited services, which
compete principally on the basis of engineering capability, location and
available capacity.

     While we believe that we compete favorably with our principal competitors,
we cannot assure you that we will be able to compete successfully in the future
against our existing or potential competitors or that our operating results will
not be adversely affected by increased price competition. See "Item 3. Key
Information - D. Risk Factors - We may not be able to compete successfully in
our industry."


INTELLECTUAL PROPERTY

     Our operational success will depend in part on the ability to develop and
protect our intellectual property. We currently have 13 issued patents and we
have 30 pending patents in the United States and other countries related to
various aspects of our semiconductor test and assembly. We have also applied for
patents in certain other countries where appropriate. If the patents are
granted, we may seek to cross-license or share our intellectual property
portfolio at a future time if it is advantageous for us to do so.

     We have licensed patent rights from Motorola, Inc. to use technology in
manufacturing BGA packages under an agreement which will expire in December 2002
and is subject to renewal. Under this agreement, we are required to pay Motorola
a royalty based upon the number of pads on each BGA package. We cannot assure
you that we will be able to renew this agreement when it expires on terms that
are favorable to us or at all.

     In February 2001, we entered into a seven-year license agreement with
SyChip, Inc. to license the patent rights to use technologies and know-how
relating to wafer redistribution and wafer bumping in the manufacture of flip
chip integrated circuits known as the MSIT Portfolio. Under this agreement we
are required to pay SyChip both a fixed fee, as well as royalties based on unit
production. In addition, we have also reserved a portion of our production
capacity using MSIT Portfolio to SyChip. At the end of the license period, we
will retain a paid-up, perpetual and royalty-free license of the MSIT Portfolio
technology.

     In August 2001, we entered into a 10-year technology license agreement with
Flip Chip Technologies LLC. to license the right to use their proprietary
Flex-On-Cap (FOC) wafer bumping process and Redistribution (RDL) technologies to
facilitate the manufacture of advanced flip chip integrated circuits. Under this
agreement, we are required to pay Flip Chip fixed fees and royalties based on
number of wafers produced. At the end of the license period, we will retain a
paid-up, perpetual and royalty-free license to practice the FOC process.

     When we are aware of intellectual property of others that may pertain to or
affect our business, we attempt to either avoid processes protected by existing
patents, cross-license or otherwise obtain certain process or package
technologies. In addition, we execute confidentiality and non-disclosure
agreements with our customers and consultants and limit access to and
distribution of our proprietary information.

     Our continued success will rely in part on the technological skills and
innovation of our personnel and our ability to develop and maintain proprietary
technologies. The departure of any of our management or technical personnel and
the breach of their confidentiality and non-disclosure obligations or our
failure to achieve our intellectual property objectives could have a material
adverse effect on our business, financial condition and results of operations.

                                       30
<PAGE>
     Our ability to compete successfully and achieve future growth will depend,
in part, on our ability to protect our proprietary technology and the
proprietary technology of our customers entrusted to us by our customers. We
cannot assure you that patents will be issued for pending or future applications
or that, if patents are issued, they will not be challenged, invalidated or
avoided, or that rights granted thereunder will provide adequate protection or
other commercial value to us. The laws of certain countries in which our
services are or may be sold may not protect our packages and our intellectual
property rights to the same extent as the laws of the United States or other
countries where our intellectual property may be filed or registered. In
addition, certain countries in which our services are or may be sold could have
rights or laws governing intellectual property about which we are unaware.


ENVIRONMENTAL MATTERS AND COMPLIANCE

     Our test and assembly operations do not generate significant pollutants.
Our operations are subject to regulatory requirements and potential liabilities
arising under Singapore laws and regulations governing among other things, air,
emissions, waste water discharge, waste storage, treatment and disposal, and
remediation of releases of hazardous materials. We have implemented an
environmental monitoring system. We send samples of our air emissions, treated
water and sludge to third party accredited laboratories for testing to ensure
our compliance with the environmental laws and regulations that apply to us. We
believe that we are in compliance with all applicable environmental laws and
regulations. Expenditures on environmental compliance currently represent an
insignificant portion of our operating expenses. We are certified ISO 14001 by
the Productivity and Standards Board (Singapore) and the Japan Audit Compliance
Organization.


INSURANCE

     We maintain insurance policies covering losses, including losses due to
business interruption and losses due to fire, which we consider to be adequate.
Our insurance policies cover buildings, machinery and equipment. Significant
damage to our production facilities, whether as a result of fire or other
causes, would have a material adverse effect on our business, financial
condition and results of operations. We are not insured against the loss of any
of our key personnel.


C.   ORGANIZATIONAL STRUCTURE

     We are part of the Singapore Technologies Group. The Singapore Technologies
Group is a leading technology-based multi-national conglomerate based in
Singapore. The Singapore Technologies Group provides a full array of
multi-disciplinary capabilities, ranging from research and development, design
and engineering, precision and high value-added manufacturing, major
infrastructure development to management services in the following five core
business groups: Engineering, Technology, Infrastructure & Logistics, Property
and Financial Services. Other companies in the Singapore Technologies Group
include Chartered Semiconductor, one of our major customers.

     Temasek Holdings (Private) Limited is the principal holding company through
which the corporate investments of the Government of Singapore are held. As of
January 31, 2002, Temasek Holdings (Private) Limited directly owns 78.6% of
Singapore Technologies Pte Ltd. The remaining 21.4% is owned by Singapore
Technologies Holdings Pte Ltd, which is in turn 100% owned by Temasek Holdings
(Private) Limited.

     We have three subsidiaries. Our two wholly-owned subsidiaries, STATS Inc.
and FastRamp, were both incorporated in the United States in the State of
Delaware. STATS Inc. undertakes sales and marketing, design support and research
and development through its various facilities in the United States. FastRamp
provides high-end engineering and pre-production test services and tester rental
services to customers in the United States. Our third subsidiary is Winstek, a
Taiwanese test house in which we acquired 51% shareholding in August 2001.
Winstek tests optical, mixed-signal, digital and radio frequency devices and
provides an integrated range of services, including wafer probe, final test,
turnkey and drop shipment services in Taiwan.

                                       31
<PAGE>
D.   PROPERTY, PLANTS AND EQUIPMENT

     We presently operate from a 580,000 square feet facility in Singapore which
opened in November 1997. In addition to our test and assembly operations, this
facility houses our corporate executive, administrative, sales and marketing and
finance offices. We constructed this facility on land leased from the Housing &
Development Board, a statutory board of the Government of Singapore, for a
30-year term expiring March 2026 with an option for renewal. The facility is
designed to accommodate:

     -    300,000 square feet of test space;

     -    120,000 square feet of assembly space;

     -    500 testers;

     -    720 wire bonders; and

     -    72 mold systems.

     In addition to our headquarters in Singapore, we also have two assembly
design centers (one in Arizona and one in California, in the United States) and
two test development centers (one in California and one in Surrey, in the United
Kingdom). FastRamp operates from a 34,000 square feet facility in California, in
which our sales office and test development center are also located.

     Our 51% owned subsidiary, Winstek, has a 220,000 square feet four-storey
facility at Chiung Lin, Hsin-Chu Hsien, Taiwan.


EQUIPMENT

     Our operations and expansion plans depend on us being able to obtain an
adequate supply of test and assembly equipment on a timely basis. We work
closely with our major equipment suppliers to ensure that equipment is delivered
on time and such equipment meets our stringent performance specifications.

     With the exception of a few key suppliers that provide reserved equipment
delivery slots and price discount structures, we have no binding supply
agreements with any of our suppliers. A reserved equipment delivery slot is one
which allows us to obtain an accelerated delivery of the equipment over and
above the delivery schedule previously committed to by the supplier. Typically,
price discounts are offered for volume purchases. We acquire our test and
assembly equipment on a purchase order basis, which exposes us to substantial
risks. The unavailability of new test or assembly equipment, the failure of such
equipment or other equipment acquired by us to operate in accordance with our
specifications or requirements or delays in the delivery of such equipment,
could delay implementation of our expansion plans and could materially and
adversely affect our results of operations or financial condition. See "Item 3.
Key Information - D. Risk Factors - We may be unable to obtain testing and
assembly equipment when we require it."

     Testing Equipment.  Testing equipment is one of the most critical
components of the testing process. We generally seek to maintain testers from
different vendors with similar functionality and the ability to test a variety
of different semiconductors. In general, certain semiconductors can only be
tested on a limited number of specially configured testers. We purchase testing
equipment from major international manufacturers, including Advantest
Corporation, Credence Systems Corporation, Agilent Technologies, LTX Corporation
and Teradyne Inc.

     We operate 252 testers, comprising 161 mixed-signal testers, 80 digital
testers and 11 memory testers. In certain cases where a customer has specified
testing equipment that is not widely applicable to other products that we test,
we have required that the customer provide the equipment on a consignment basis.
Presently 22 of the aggregate 252 testers we operate are on consignment from
customers. In addition to testing equipment, we maintain a variety of other
types of equipment, such as

                                       32
<PAGE>
automated handlers and probers (with special handlers for wafer probing),
scanners, reformers and PC workstations for use in software development.

     Assembly Equipment.  The primary equipment used in assembly includes wire
bonders and mold systems. We own and operate approximately 532 wire bonders and
approximately 66 mold systems. Certain of our wire bonders allow for
interchangeability between lead frame and array packages. We purchase wire
bonders from major international manufacturers, including Kulicke & Soffa
Industries, Inc. and ESEC S.A. We purchase mold systems from major international
manufacturers, including Apic Yamada Corporation, Dai-Ichi Seiko Co Ltd and
Han-Mi Co Ltd.


RAW MATERIALS

     Our assembly operations depend on obtaining an adequate supply of raw
materials on a timely basis. The principal raw materials used in assembly are
leadframe or laminate substrates, gold wire and molding compound. We generally
purchase raw materials based on the non-binding forecasts provided to us by our
customers. We work closely with our primary suppliers, providing them with a
six-month rolling forecast and weekly requirement schedules. Accordingly, our
suppliers are better able to supply us with raw materials. We also manage
inventory with automated materials management processes using integrated Oracle
software systems. The unavailability of an adequate supply of raw materials
could materially and adversely affect our business, financial condition and
results of operations. See "Item 3. Key Information - D. Risk Factors - We are
dependent on raw material suppliers and do not have any long-term supply
contracts with them."


ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

     The following discussion of our business, financial condition and results
of operations should be read in conjunction with our consolidated financial
statements and the related notes 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 certain factors, such as those set forth under "Item 3. Key
Information - D. Risk Factors" and elsewhere in this Annual Report. Our
consolidated financial statements are reported in U.S. dollars and have been
prepared in accordance with U.S. GAAP. Certain items in the comparative figures
have been reclassified to conform with the current year's presentation.


OVERVIEW

     We derive revenues from test services and assembly of array and leaded
packages. Net revenue represents the invoiced value of services rendered,
excluding goods and services tax, net of returns, trade discounts and
allowances. We principally recognize revenue upon shipment of goods on which we
have rendered services. For certain contractual arrangements, revenue is
realizable, and therefore recognized, upon completion of services.

     We provide a broad range of test and assembly services and we believe we
are a leader in testing mixed-signal and high performance digital
semiconductors. We attract new customers with these testing capabilities and
then expand our relationship with such customers to include assembly services
tailored to their needs. We intend to continue to expand our test and assembly
operations in order to position ourselves to meet the increased demand for
outsourced test and assembly services.

     Our results of operations are influenced by the state of the global
semiconductor industry which is highly cyclical. According to the November 2001
report by SIA, worldwide semiconductor device market revenue grew 37% from 1999
to $204.4 billion in 2000 (which represented a new industry record). However,
worldwide semiconductor market revenue subsequently fell 31.2% to $140.7 billion
in 2001 as a result of a cyclical downturn due to inventory overhang and an
overall decline in semiconductor demand. This adversely affected our company
from the fourth quarter of 2000, continuing through most of 2001. In particular,
we experienced weak demand throughout 2001 as our customers significantly
delayed or canceled orders.

                                       33
<PAGE>
     The semiconductor industry is characterized by price erosion which can have
a material adverse effect on our revenues and gross margins, particularly when
coupled with declining capacity utilization. Prices of our products at a given
level of technology decline over the product life cycle, commanding a premium in
the earlier stages and declining towards the end of the cycle. To maintain our
profitability, we have to offset decreases in average selling prices, or ASPs,
by improving our capacity utilization rates and production efficiency, or by
shifting to higher margin test and assembly services. In addition, we have to
continue to develop and offer test and assembly services which command higher
margins. In the past, we have been able to successfully develop and market new
higher margin products to meet the requirements of our customers. However, we
cannot assure you that we can continue to do this in future nor can we assure
you that we will be successful at offsetting any price declines in the future.

     Our results of operations are generally affected by the capital-intensive
nature of our business. A large portion of our cost of revenues is fixed in
nature, with variable costs limited to the costs of materials and operating
supplies. The major component of our fixed costs relates to test and assembly
equipment. Testers typically cost between $1.5 million and $3.0 million each,
compared with wire bonders which typically cost $100,000 each. Depreciation of
our equipment and machinery is provided on a straight-line basis over their
estimated useful lives of 5 years. The useful life estimate reflects our
estimate of the period that we expect to derive economic benefits from use of
the equipment and machinery. In estimating the useful lives and determining
whether subsequent revisions to the useful lives are necessary, we consider the
likelihood of technological obsolescence arising from changes in production
techniques or in market demand for the use of our equipment and machinery. The
effect of any future changes to the estimated useful lives of our equipment and
machinery could be significant to our results of operations.

     Increases or decreases in capacity utilization rates can have a significant
effect on gross profit margins since the unit cost of test and assembly services
generally decreases as fixed charges, such as depreciation expense and equipment
leasing costs, are allocated over a larger number of units. We expanded our test
and assembly capabilities between 1999 and 2000 and significantly increased the
number of testers and wire bonders. The expansion of our test and assembly
capabilities by the end of 2000 allowed a significant increase in our net
revenues. However, the capacity utilization of our facilities decreased
significantly in 2001 as a result of the downturn in the semiconductor industry.
As a result, we have not expanded as aggressively as we did during the two years
ended December 31, 2000 and consequently, we increased the number of our testers
only marginally from 230 to 252 and our number of wire bonders remained the same
at 532 as of December 31, 2001. As a result of the decrease in capacity
utilization, our operating results were adversely affected. Depreciation expense
and cost of leasing production equipment as a percentage of revenues were 24.5%
in 1999, 25.5% in 2000 and 80.7% in 2001.

     In addition, as a result of the industry downturn, we recognized an asset
impairment charge of $23.7 million and prepaid leases write-down of $3.1 million
in the fourth quarter of 2001 as the continued softness in demand in the
end-markets to which certain of our equipment was dedicated had reduced the
anticipated future usage of such equipment. We review our long-lived assets for
impairment whenever events or changes in circumstances indicate that their
carrying amounts may not be recoverable. Recoverability of assets to be held and
used is measured by a comparison of the carrying amount of the asset to future
undiscounted net cash flows expected to be generated from the asset. If such
assets are considered to be impaired, an impairment charge is recognized for the
amount that the carrying value of the asset exceeds its fair value. Assets to be
disposed of are reported at the lower of the carrying amount or fair value less
costs to sell. Due to the poor operating results and continued weakness in our
industry, we initiated a review in the fourth quarter of 2001 to identify assets
whose carrying amounts may not have been recoverable. As a result of the review,
we recorded impairment charges related to our equipment and machinery of $23.7
million. These charges include the write-down of tester and assembly machinery
held for sale of $4.3 million and a write-down of tester machinery held for use
of $19.4 million to reflect their estimated fair value. In determining the fair
value of machinery and equipment, we have considered recent offers to purchase
such equipment and expected future discounted cash flows. Machinery and
equipment held for sale is currently not being used in operations and is
expected to be sold or disposed of in the near future.

     We routinely review the remaining estimated useful lives of our equipment
and machinery to determine if such lives should be adjusted due to changes in
technology, production techniques and our customer base. However, due to the
nature of our

                                       34
<PAGE>
testing operations, which may include sudden changes in demand in the end
markets, and due to the fact that certain equipment is dedicated to specific
customers, we may not be able to anticipate declines in the utility of our
machinery and equipment. Consequently, additional impairment charges may be
necessary in the future.

     Our operating expenses consist principally of selling, general and
administrative expenses which include payroll-related expenses for selling,
marketing and administrative staff, facilities-related expenses, marketing
expenses, management fees paid to our parent, Singapore Technologies Pte Ltd and
provisions for bad debts on accounts receivable. Our operating expenses also
include research and development expenditures which are focused in the following
two areas:

     -    development of new test equipment, software and processes to enhance
          efficiency and reliability and to shorten test time of semiconductors;
          and

     -    development of new, advanced packages to meet the customized needs of
          our customers.

     We are a part of the Singapore Technologies Group which provides us with
certain direct and indirect benefits. We pay Singapore Technologies Pte Ltd an
annual formula and service based management fee for certain management services,
including corporate secretarial, internal audit, training, executive resources
and treasury services. The management fee amounted to $1.1 million in 2001.

     We recognize stock-based compensation expense for options granted under the
Share Option Plan in accordance with fixed plan accounting. Reported stock-based
compensation expense represents the difference between the exercise price of
employee share option grants and the fair market value of our ordinary shares at
the date of the grant, amortized over the vesting period of the applicable
options. The fair market value of our ordinary shares prior to our initial
public offering was computed based on calculating the fair market value of our
total invested capital less interest-bearing debt, assuming the exercise of the
outstanding options at each valuation date and adding the expected cash proceeds
from the exercise of those options. The fair market value of our total invested
capital was estimated using the income approach and the market approach, on a
closely-held minority interest basis.

     We have been granted pioneer enterprise status under The Economic Expansion
Incentives (Relief from Income Tax) Act, Chapter 86 of Singapore, for
"Subcontract Assembly And Testing Of Integrated Circuits Including Wafer Probing
Services" from January 1, 1996 to December 31, 2003. During the pioneer
enterprise status period, only income from subcontract assembly and testing of
integrated circuits, including wafer probe services, is exempt from Singapore
income tax, subject to compliance with the conditions stated in the pioneer
certificate. See "- Special Tax Status."

     Until June 30, 1998, our functional currency was the Singapore dollar.
Effective July 1, 1998, we changed our functional currency to the United States
dollar. Assets and liabilities denominated in foreign currencies are converted
into the functional currency at the rates of exchange prevailing at the balance
sheet date. Income and expenses in foreign currencies are converted into the
functional currency at the rates of exchange at the transaction date.

     We experience foreign currency exchange gains and losses arising from
transactions in currencies other than our functional currency and translations
of assets and liabilities which are denominated in currencies other than our
functional currency. Our currency gains and losses arise principally from the
fluctuation of the U.S. dollar against the Singapore dollar and the Japanese yen
from transactions denominated in these currencies. See "- Foreign Currency
Risk."

     In August 2001, we acquired a 51% equity interest in Winstek by subscribing
for new shares for cash consideration of $28.0 million. We accounted for this
acquisition using the purchase method under U.S. GAAP. We began to consolidate
Winstek's financial and operating results into our financial and operating
results from the date of acquisition. The purchase price has been allocated to
the assets acquired and liabilities assumed according to estimated fair values
at the date of acquisition. The allocation resulted in the recognition of
goodwill of approximately $1.3 million. In accordance with Statement No. 142,

                                       35
<PAGE>
"Goodwill and Other Intangible Assets," we will not amortize the goodwill but
will test it for impairment at least annually. See "- Recent Accounting
Pronouncements."

     In 2001, Winstek contributed $1.7 million to our net revenues of $145.9
million.


RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
                                                                            YEAR ENDED DECEMBER 31
                                                                    ---------------------------------------
                                                                     1999             2000            2001
                                                                    -----            -----           ------
<S>                                                                 <C>              <C>             <C>
Net revenues                                                        100.0%           100.0%           100.0%
Cost of revenues                                                     66.1             70.0            149.3
                                                                    -----            -----           ------
Gross profit (loss)                                                  33.9             30.0            (49.3)
                                                                    -----            -----           ------
Operating expenses:
  Selling, general and administrative                                14.1             12.3             24.7
  Research and development                                            3.6              4.4             10.4
  Asset impairments                                                    --               --             16.3
  Prepaid leases written off                                           --               --              2.1
  Stock-based compensation                                           12.6              0.1              0.7
  Others, net                                                          --               --              0.1
                                                                    -----            -----           ------
     Total operating expenses                                        30.3             16.8             54.3
                                                                    -----            -----           ------
Operating income (loss)                                               3.6             13.2           (103.6)
Other income (expense):
  Interest income (expense), net                                     (2.8)             2.4              3.6
  Foreign currency exchange gain                                      0.7              0.6              0.5
  Other non-operating income, net                                     1.2              1.1              1.4
                                                                    -----            -----           ------
     Total other income (expense)                                    (0.9)             4.1              5.5
                                                                    -----            -----           ------
Income (loss) before income taxes                                     2.7             17.3            (98.1)
Income taxes                                                         (0.2)            (0.9)             6.0
                                                                    -----            -----           ------
Net income (loss) before minority interest                            2.5             16.4            (92.1)
Minority interest                                                      --               --              0.2
                                                                    -----            -----           ------
Net income (loss)                                                     2.5%            16.4%           (91.9)%
Other comprehensive income:
  Unrealized loss on available-for-sale marketable securities          --               --             (0.2)
  Translation adjustment                                               --               --              0.1
                                                                    -----            -----           ------
Comprehensive income (loss)                                           2.5%            16.4%           (92.0)%
                                                                    -----            -----           ------
</TABLE>


YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 2001

     Net revenues. Net revenues decreased 56.0% from $331.3 million in 2000 to
$145.9 million in 2001. The decrease in net revenues was due primarily to a
decrease in unit shipments in both assembly and test businesses and, to a lesser
extent, a decline in average selling prices, principally resulting from changes
in product mix and pricing pressures. These declines were the result of severe
weakness in the end markets served by our customers and the high level of excess
inventories in the

                                       36
<PAGE>
semiconductor industry. Net revenues from test services decreased 55.7% from
$151.9 million in 2000 to $67.3 million in 2001. Net revenues from assembly
services decreased 56.3% from $179.4 million in 2000 to $78.4 million in 2001.

     Cost of revenues and gross profit margin.  Cost of revenues decreased 6.1%
from $231.9 million in 2000 to $217.8 million in 2001. However, cost of revenues
as a percentage of sales increased from 70.0% in 2000 to 149.3% in 2001,
resulting in a gross loss. Gross loss in 2001 was $71.9 million, or a gross
margin of negative 49.3%, as compared to gross profit of $99.3 million, or gross
margin of 30.0%, in 2000. The gross loss in 2001 was mainly attributable to
substantially lower revenues, lower capacity utilization rates, the high level
of fixed costs, primarily depreciation expense and equipment leasing costs, the
charge of $1.8 million relating to the early termination of equipment leases and
the provision for inventory obsolescence of approximately $2.8 million.
Depreciation expense (included in cost of revenues) and cost of leasing testers
increased from $84.4 million in 2000 to $117.8 million in 2001 as a result of
placing into service additional test and assembly equipment in both years. The
inventory provision of $2.8 million was taken for substrates and leadframes
accumulated for loadings that did not materialize as a result of the downturn.
These "end-of-life" substrates and leadframes are not expected to be usable as
our customers no longer require those packages.

     Selling, general and administrative expenses.  Selling, general and
administrative expenses decreased 11.7% from $40.8 million in 2000 to $36.0
million in 2001 but as a percentage of net revenues increased from 12.3% of net
revenues in 2000 to 24.7% of net revenues in 2001. The decrease in the amount of
selling, general and administrative expenses was a result of on-going cost
reduction initiatives such as reducing compensation for certain management
staff, reducing headcount through attrition, enforcing mandatory vacation days
and reducing discretionary spending.

     Research and development expenses.  Research and development expenses
increased 3.6% from $14.6 million in 2000, or 4.4% of net revenues in 2000, to
$15.2 million in 2001, or 10.4% of net revenues in 2001. These expenses were for
additional equipment, supplies and research and development personnel to enhance
our testing and advanced packaging technologies.

     Stock-based compensation expense.  Stock-based compensation expense
increased by 128.6% from $0.4 million or 0.1% of net revenues in 2000, to $1.0
million or 0.7% of net revenues in 2001 as a result of share options granted
under our Employees' Share Ownership Scheme.

     Asset impairment and prepaid leases written-down.  In the fourth
quarter of 2001, we recognized an asset impairment charge of $23.7 million and
prepaid leases write-down of $3.1 million. The write-downs were taken because
the continued softness in demand in the end-markets to which certain of our
equipment was dedicated had reduced the anticipated future usage of such
equipment. Due to the poor operating results and continued weakness in the
semiconductor industry, we initiated a review in the fourth quarter of 2001 to
identify long-lived assets whose carrying amounts might not be recoverable. As a
result of the review, certain assets, principally testers, were identified to be
sold. We recognized asset impairment charges of $4.3 million in respect of
equipment held for sale and $19.4 million in respect of tester equipment held
for use. We plan to dispose of the equipment held for sale within the next year
and are actively seeking buyers for this equipment. At the same time as we
carried out our impairment review, we also reviewed the levels of expected
future usage for tester equipment leased by us under operating lease
arrangements. As a result of this review, we recognized an impairment charge of
$3.1 million to write-off prepaid leases for tester equipment which we do not
expect to use in the future.

     Net interest income.  Net interest income decreased by 36.4% from $8.2
million in 2000 to $5.2 million in 2001. Net interest income consisted of
interest income of $10.6 million and interest expense of $2.4 million in 2000
and interest income of $6.5 million and interest expense of $1.3 million in
2001. The interest income was earned on our marketable debt securities and
fixed-term time deposits with various financial institutions. The lower interest
income earned in the current year was due primarily to the lower amount of
excess cash available for investment in marketable debt securities and
fixed-term time deposits in 2001 and the general decline in the interest rate
environment. The lower interest expense in the current year resulted from the
full repayment of two loans amounting in total to $60 million in February 2000
and the progressive repayments of the EDB loan on its repayment due dates.

                                       37
<PAGE>
     Foreign currency exchange gain.  We recognized exchange gains of $2.0
million in 2000 and $0.8 million in 2001, due primarily to currency fluctuations
of the U.S. dollar against the Singapore dollar and the Japanese yen.

     Other non-operating income.  Other non-operating income was $3.5 million in
2000 and $2.0 million in 2001. The decrease was due to a reduction in grants for
research and development activities from EDB under its Research and Incentive
Scheme for Companies.

     Taxation. Income tax expense in 2000 was $2.9 million compared to an income
tax benefit of $8.8 million in 2001. The income tax benefit of $8.8 million in
2001 comprised income tax expense of $1.4 million and a deferred tax benefit of
$10.2 million. The income tax expense for both years was principally due to
Singapore tax on interest income generated principally from the investment of
excess cash in fixed-term time deposits and marketable debt securities. The
deferred tax benefit of $10.2 million resulted principally from recognizing the
deferred tax benefit associated with tax losses and unutilized capital
allowances carried forward. The deferred tax effects of the tax loss and
unutilized capital allowance carry forwards are recognized because they are
expected to be carried forward to offset taxable income after the expiration of
the pioneer period. In assessing the realizability of deferred tax assets, we
consider whether it is more likely than not that some portion or all of the
deferred tax assets will not be realized. The ultimate realization of deferred
tax assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible. We consider the
scheduled reversal of deferred tax liabilities, projected future taxable income,
and tax planning strategies in making this assessment. Based upon the level of
historical taxable income and projections for future taxable income over the
periods which the deferred tax assets are deductible, we believe it is more
likely than not that we will realize benefits of these deductible differences.
The amount of the deferred tax asset considered realizable could be reduced in
the near term if estimates of future taxable income during the carry forward
period differ materially from current estimates.


YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 2000

     Net revenues.  Net revenues increased 64.7% from $201.1 million in
1999 to $331.3 million in 2000. This increase was primarily due to the increase
in unit volumes for test and assembly services. Net revenues from test services
increased 64.0% from $92.6 million in 1999 to $151.9 million in 2000. The
increase in test services net revenues was attributable primarily to growth in
test volumes reflecting increased demand and expanded capacity. Revenues from
assembly increased 65.3% from $108.5 million in 1999 to $179.4 million in 2000.
This increase was primarily due to greater demand for leadframe and array
packages.

     Cost of revenues and gross profit margin.  Cost of revenues increased
74.5% from $132.9 million in 1999 to $231.9 million in 2000, primarily due to
higher depreciation expense and leasing costs as a result of placing into
service additional test and assembly equipment and costs associated with
increased test and assembly unit volumes. Depreciation expense (included in cost
of revenues) increased from $46.7 million in 1999 to $66.4 million in 2000 and
cost of leasing testers increased from $2.6 million in 1999 to $18.0 million in
2000. Gross profit margin decreased from 33.9% in 1999 to 30.0% in 2000. The
decrease in gross profit margin was due principally to a higher proportion of
array business in 2000 which has lower gross margin and also due to lower
capacity utilization.

     Selling, general and administrative expenses.  Selling, general and
administrative expenses increased by 43.5% from $28.4 million, or 14.1% of net
revenues, in 1999 to $40.8 million, or 12.3% of net revenues, in 2000. The
increase was due primarily to higher administrative headcount to support
increased operating activities in 2000 which resulted in higher payroll and
staff related expenses.

     Research and development expenses.  Research and development expenses
increased by 101.0% from $7.3 million, or 3.6% of net revenues, in 1999 to $14.6
million, or 4.4% of net revenues, in 2000. The increased expenses were for
additional investments (employees, equipment and operating supplies) primarily
in advanced packaging technologies.

                                       38
<PAGE>
     Stock-based compensation expense.  Stock-based compensation expense
decreased by 98.4% from $25.3 million, or 12.6% of net revenues, in 1999 to $0.4
million, or 0.1% of net revenues, in 2000. The high charge in 1999 arose as a
result of the termination of the Employees' Share Ownership Scheme.

     Net interest income (expense).  Net interest income (expense)
increased substantially from a net interest expense of $5.5 million in 1999 to a
net interest income of $8.2 million in 2000. The increase was due to interest
earned on cash proceeds from our initial public offering in February 2000, the
uninvested proceeds of which were invested generally in marketable debt
securities and fixed term-time deposits with financial institutions, and from
the repayment of our loans of $67.5 million.

     Foreign currency exchange gain.  Exchange gain of $1.4 million was
recognized in 1999 and of $2.0 million in 2000. The exchange gain was due
primarily to currency fluctuations of the U.S. dollar against Singapore dollar
and Japanese yen.

     Other non operating income.  Other non operating income increased by
48.2% from $2.4 million in 1999 to $3.5 million in 2000. The increased income
was mainly due to sale of scrap materials, increase in government grants for the
purchase of equipment, and training subsidies used for research and development
activities. The higher income in year 2000, however, was partially reduced by
$0.5 million rental income received in 1999 but ceased in 2000.

     Income tax expense.  Income tax expense in 1999 was $0.5 million
compared to $2.9 million in 2000. The higher tax expense was due to a
substantial increase in interest income earned in 2000.

                                       39
<PAGE>
QUARTERLY RESULTS

     The following table sets forth our unaudited results of operations,
including as a percentage of net revenue, for the eight fiscal quarters ended
December 31, 2001. We believe that all necessary adjustments, consisting only of
normal recurring adjustments, have been included in the amounts stated below to
present fairly the selected quarterly information when read in conjunction with
our consolidated financial statements and the related notes included elsewhere
in this Annual Report. Our results of operations have varied and may continue to
vary significantly from quarter to quarter and are not necessarily indicative of
the results of any future periods. In addition, we believe that the period to
period comparisons should not be relied upon as an indication of our future
performance.

<TABLE>
<CAPTION>
                                                                             QUARTER ENDED
                                          ---------------------------------------------------------------------------------
                                          MAR-00     JUN-00    SEP-00    DEC-00     MAR-01    JUN-01      SEP-01     DEC-01
                                          ------     ------    ------    ------    -------   -------     -------    -------
                                                                             (in thousands)
<S>                                       <C>        <C>       <C>       <C>       <C>       <C>         <C>        <C>
Net revenues                              72,176     75,759    90,538    92,798     48,628    35,266      28,049     33,923
Cost of revenues                          45,054     50,412    63,202    73,276     58,543    57,200      50,021     52,025
                                          ------     ------    ------    ------    -------   -------     -------    -------
Gross profit (loss)                       27,122     25,347    27,336    19,522     (9,915)  (21,934)    (21,972)   (18,102)
                                          ======     ======    ======    ======    =======   =======     =======    =======
Operating expenses:
  Selling, general and administrative      9,586      9,747    10,151    11,314     11,188     8,756       7,839      8,258
  Research and development                 2,618      4,276     4,078     3,664      3,523     3,500       3,816      4,321
  Asset impairments                           --         --        --        --         --        --          --     23,735
  Prepaid leases written off                  --         --        --        --         --        --          --      3,145
  Stock-based compensation                   247         99        17        85        660        90         100        174
  Others, net                                 (6)      (227)       41       170         82        --          28         (9)
                                          ------     ------    ------    ------    -------   -------     -------    -------
  Total operating expenses                12,445     13,895    14,287    15,233     15,453    12,346      11,783     39,624
                                          ======     ======    ======    ======    =======   =======     =======    =======

Operating income (loss)                   14,677     11,452    13,049     4,289    (25,368)  (34,280)    (33,755)   (57,726)

Other income (expense):
  Interest income, net                       152      2,920     2,684     2,458      1,890     1,619       1,161        552
  Foreign currency exchange gain             860       (398)      606       950        (58)      391        (562)     1,004
   (loss)
  Other non-operating income                 598      1,175       967       784      1,157       780         840       (787)
   (expense), net
                                          ------     ------    ------    ------    -------   -------     -------    -------
  Total other income                       1,610      3,697     4,257     4,192      2,989     2,790       1,439        769
                                          ======     ======    ======    ======    =======   =======     =======    =======

Income (loss) before income taxes         16,287     15,149    17,306     8,481    (22,379)  (31,490)    (32,316)   (56,957)
Income taxes                                (489)    (1,050)     (851)     (475)      (604)     (217)       (122)     9,753
                                          ------     ------    ------    ------    -------   -------     -------    -------
Net income (loss) before minority         15,798     14,099    16,455     8,006    (22,983)  (31,707)    (32,438)   (47,204)
interest
Minority interest                             --         --        --        --         --        --         139        173
                                          ------     ------    ------    ------    -------   -------     -------    -------
Net income (loss)                         15,798     14,099    16,455     8,006    (22,983)  (31,707)    (32,299)   (47,031)
                                          ======     ======    ======    ======    =======   =======     =======    =======
Other comprehensive income:
  Unrealized gain (loss) on available-
   for-sale marketable securities             --         --        --        --         10        59          40       (412)
  Translation adjustment                      --         --        --        --         --        --          --         93
                                          ------     ------    ------    ------    -------   -------     -------    -------
Comprehensive income (loss)               15,798     14,099    16,455     8,006    (22,973)  (31,648)    (32,259)   (47,350)
                                          ======     ======    ======    ======    =======   =======     =======    =======
</TABLE>

                                       40
<PAGE>

<TABLE>
<CAPTION>
                                                                  AS A PERCENTAGE OF NET REVENUES
                                          ------------------------------------------------------------------------------
                                          MAR-00     JUN-00    SEP-00    DEC-00    MAR-01    JUN-01    SEP-01     DEC-01
                                          ------     ------    ------    ------    ------    ------    ------     ------
<S>                                       <C>        <C>       <C>       <C>       <C>       <C>       <C>        <C>
Net revenues                               100.0%    100.0%    100.0%    100.0%    100.0%    100.0%     100.0%     100.0%
Cost of revenues                            62.4%     66.5%     69.8%     79.0%    120.4%    162.2%     178.3%     153.4%
                                           -----     -----     -----     -----     -----     -----     ------     ------
Gross profit (loss)                         37.6%     33.5%     30.2%     21.0%    (20.4)%   (62.2)%    (78.3)%    (53.4)%
                                           =====     =====     =====     =====     =====     =====     ======     ======
Operating expenses:
  Selling, general and
   administrative                           13.3%     12.9%     11.2%     12.2%     23.0%     24.8%      28.0%      24.3%
  Research and development                   3.6%      5.6%      4.5%      3.9%      7.2%      9.9%      13.6%      12.7%
  Asset impairments                          0.0%      0.0%      0.0%      0.0%      0.0%      0.0%       0.0%      70.0%
  Prepaid leases written off                 0.0%      0.0%      0.0%      0.0%      0.0%      0.0%       0.0%       9.2%
  Stock-based compensation                   0.3%      0.1%      0.0%      0.1%      1.4%      0.3%       0.3%       0.6%
  Others, net                               (0.0)%    (0.3)%     0.0%      0.2%      0.2%      0.0%       0.1%       0.0%
                                           -----     -----     -----     -----     -----     -----     ------     ------
  Total operating expenses                  17.2%     18.3%     15.7%     16.4%     31.8%     35.0%      42.0%     116.8%
                                           =====     =====     =====     =====     =====     =====     ======     ======

Operating income (loss)                     20.4%     15.2%     14.5%      4.6%    (52.2)%   (97.2)%   (120.3)%   (170.2)%

Other income (expense):
  Interest income, net                       0.2%      3.9%      3.0%      2.6%      3.9%      4.6%       4.1%       1.6%
  Foreign currency exchange
   gain (loss)                               1.2%     (0.5)%     0.7%      1.0%     (0.1)%     1.1%      (2.0)%      3.0%
  Other non-operating income
   (expense), net                            0.8%      1.6%      1.1%      0.8%      2.4%      2.2%       3.0%      (2.3)%
                                           -----     -----     -----     -----     -----     -----     ------     ------
  Total other income                         2.2%      5.0%      4.8%      4.4%      6.2%      7.9%       5.1%       2.3%
                                           =====     =====     =====     =====     =====     =====     ======     ======
Income (loss) before income taxes           22.6%     20.0%     19.1%      9.0%    (46.0)%   (89.3)%   (115.2)%   (167.9)%
Income taxes                                (0.7)%    (1.4)%    (0.9)%    (0.5)%    (1.2)%    (0.6)%     (0.4)%     28.7%
                                           -----     -----     -----     -----     -----     -----     ------     ------
Net income (loss) before minority
 interest                                   21.9%     18.6%     18.2%      8.5%    (47.2)%   (89.9)%   (115.6)%   (139.2)%
Minority interest                            0.0%      0.0%      0.0%      0.0%      0.0%      0.0%       0.5%       0.5%
                                           -----     -----     -----     -----     -----     -----     ------     ------
Net income (loss)                           21.9%     18.6%     18.2%      8.5%    (47.2)%   (89.9)%   (115.1)%   (138.7)%
                                           =====     =====     =====     =====     =====     =====     ======     ======
Other comprehensive income:
  Unrealized gain (loss) on
   available-for-sale marketable
    securities                               0.0%      0.0%      0.0%      0.0%      0.0%      0.2%       0.1%      (1.2)%
  Translation adjustment                     0.0%      0.0%      0.0%      0.0%      0.0%      0.0%       0.0%       0.3%
                                           -----     -----      -----    -----     -----     -----     ------     ------
Comprehensive income (loss)                 21.9%     18.6%     18.2%      8.5%    (47.2)%   (89.7)%   (115.0)%   (139.6)%
                                           =====     =====      =====    =====     =====     =====     ======     ======
</TABLE>

                                       41
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

LIQUIDITY

     As of December 31, 2001, our principal sources of liquidity included $115.2
million in cash and cash equivalents and $23.8 million in marketable securities.
In addition, we have $20.0 million of banking and credit facilities consisting
of short-term advances and bank guarantees of which we had utilized $1.6 million
in the form of bank guarantees as of December 31, 2001. Interest on any future
borrowings under the unutilized facilities will be charged at the bank's
prevailing rate. Our subsidiary, Winstek, has $16.0 million of unutilized
working capital facilities from various banks and financial institutions.

     Net cash provided by operating activities totaled $130.1 million in 2000
and $41.3 million in 2001. In 2000, the net cash generated from operating
activities was primarily due to operating income before the effects of
depreciation and amortization of $72.4 million. In 2001, the net cash generated
from operating activities was primarily due to positive working capital changes
resulting mainly from the collection of accounts receivable, offset by the
effect of the timing of payments to suppliers.

     Net cash used in investing activities totaled $326.1 million in 2000 and
$44.3 million in 2001. The net cash used in investing activities consisted of
capital expenditures of $300.0 million in 2000 and $56.0 million in 2001,
purchases of marketable debt securities of $21.9 million in 2000 and $22.5
million in 2001 and placement of surplus funds in short-term deposits of $10.0
million in 2000. The net cash used in investing activities in 2000 was reduced
by receipt of $5.4 million mainly from the sale and lease back of certain
equipment. The net cash used in investing activities in 2001 was reduced by
receipts of $20.2 million from the sale or maturity of marketable debt
securities, $10.0 million from the maturity of short-term deposits, $2.2 million
from the disposal of equipment and $1.8 million of cash in Winstek at
acquisition as a result of the consolidation of Winstek.

     Net cash provided by financing activities was $321.7 million in 2000 and
net cash used in financing activities was $22.7 million in 2001. In 2000, the
net cash generated from financing activities consisted mainly of proceeds from
our initial public offering in February 2000 and issuance of shares from the
exercise of share options of $389.2 million, reduced by the repayment of loans
totaling $67.5 million. In 2001, the cash used in financing activities of $22.7
million was mainly for the repayment of two installments due on the long-term
EDB loan of $14.7 million and the repayment of bank loans amounting to $8.8
million by Winstek.


CAPITAL REQUIREMENTS

     Our capital expenditures are primarily driven by the demand for our
services. In 2001, we incurred $62.4 million of capital expenditures for test
and assembly equipment, peripherals, equipment upgrades and IT systems
enhancements. Our capital expenditures in 2001 were lower than our capital
expenditures of $276.9 million in 2000 as we cancelled or delayed our capital
expenditures in response to the difficult business environment in 2001. Our
budgeted capital expenditure for 2002 is $100.0 million including capital
expenditures of about $22.0 million at our subsidiary, Winstek. A significant
amount of the budgeted capital expenditures for 2002 is allocated for wafer
bumping and 300mm capabilities, technology development, IT system enhancements
and new generation testers. In addition, from time to time, we may acquire or
make investments in additional businesses, products and technologies or
establish joint ventures or strategic partnerships that we believe will
complement our current and future businesses. Some of these acquisitions or
investments could be material. However, we have no specific agreements or
understandings with respect to any material acquisition or investment at this
time.

                                       42
<PAGE>
     The following table sets forth our contractual obligations and commitments
to make future payments as of December 31, 2001. The following excludes our
accounts payable, accrued operating expenses and other current liabilities which
are payable in the normal course of operations and which are included in current
liabilities at December 31, 2001.

<TABLE>
<CAPTION>
                                                               YEAR ENDED DECEMBER 31, 2001, PAYMENTS DUE
                                                  -----------------------------------------------------------------------
                                                                                                                  TOTAL
                                                  WITHIN 1 YEAR     1-3 YEARS     4-5 YEARS     AFTER 5 YEARS    PAYMENTS
                                                  -------------     ---------     ---------     -------------    --------
                                                                                (in thousands)
<S>                                               <C>               <C>           <C>           <C>              <C>
Long term debt                                       $14,045         $14,045             --             --        $28,090
Capital lease obligations                              2,564           7,219            470             --         10,253
Operating leases                                       2,825           4,155          3,274         13,913         24,167
Unconditional purchase obligations:
  - Capital commitments                               35,538              --             --             --         35,538
  - Bank guarantees                                    1,601              --             --             --          1,601
     Total contractual cash obligations              $56,573         $25,419        $ 3,744        $13,913        $99,649
</TABLE>


CAPITAL RESOURCES

     As of December 31, 2001, we had borrowings totaling $38.4 million
comprising of the balance of $28.1 million outstanding on a loan from the
Economic Development Board (EDB), a related party, and obligations under capital
leases amounting to $10.3 million.

     The long-term loan agreement was entered into with EDB on June 5, 1998 for
a sum of S$90.0 million. The loan is denominated in Singapore dollars and bears
interest at 1% over the prevailing annual interest rate declared by the Central
Provident Fund Board, a statutory board of the Government of Singapore. The
prevailing interest rate declared by the Central Provident Fund Board was 2.5%
at December 31, 2001. The principal amount is repayable over seven equal
semi-annual installments commencing from September 2000 and ending on September
1, 2003. The loan is guaranteed by Singapore Technologies Pte Ltd. The loan
agreement restricts us, without prior consent from EDB, from paying dividends,
from incurring further indebtedness and from undertaking any form of
reconstruction, including amalgamation with another company, which would result
in a change in the control of our company, in each case without prior lender
consent. The capital leases were taken up in 2001 to finance the purchase of new
testers.

     We completed our initial public offering in February 2000. Our net proceeds
from the initial public offering were approximately $387.0 million. The IPO
proceeds have been used to repay loans of $25.0 million from ST Treasury
Services Ltd, a related party, $35.0 million from Den Danske Bank and $22.2
million due on the EDB loan described above, and for general corporate purposes,
including for capital expenditures and for general working capital.

     In 1997, we obtained a grant of S$23.2 million for the funding of certain
research and development projects from the Economic Development Board under its
Research Incentive Scheme for Companies. The grant was disbursed over a five
year period, in the form of reimbursement of a specified percentage of amounts
actually spent by us on manpower, research and development equipment, materials,
training and technology licensing fees. The grant did not require repayment.
Asset-related grants are presented in the consolidated balance sheet as deferred
grants and are credited to other income on the straight-line basis over the
estimated useful lives of the relevant assets. Income-related grants are
credited to other income concurrent with the related qualifying expenditures.
There were no conditions attached to the grant other than completing the project
to which the grant related and the certification of the costs incurred. The
grant ended December 31, 2001 and is not subject to renewal.

     We have an existing agreement with Citibank, N.A. for a working capital
facility of $20.0 million. As of December 31, 2001, we had utilized $1.6 million
in the form of bank guarantees under this facility.

                                       43
<PAGE>
     In January 2002, we established a S$500 million MTN Program. Under the MTN
Program, we may, from time to time, issue notes in series or tranches in
Singapore dollars or any other currencies as may be agreed upon between us and
the dealers of the MTN Program. Each series of notes may be issued in various
amounts and terms, and may bear fixed or floating rates of interest. The notes
constitute unsecured obligations. The MTN Program limits our ability to pay
dividends while the interest on the notes is unpaid, to create security
interests to secure our indebtedness and to undertake any form of
reconstruction, amalgamation, merger or consolidation with another company if
such arrangement would affect our ability to make payments on the notes, among
other things. We intend to use the proceeds from the MTN Program for our general
corporate purposes including capital expenditure, working capital and
investments. We have not issued any notes under the MTN Program. Our ability to
issue notes under the MTN Program will depend on market and other conditions
(including our financial condition) prevailing at the time we intend to issue
notes. As a result, we may not be able to issue notes under the MTN Program.

     Our subsidiary, Winstek, has $16.0 million of unutilized working capital
facilities from various banks and financial institutions. Interest on borrowings
under the facilities are charged at the particular bank's prevailing rate.

     We believe that our cash on hand, existing credit facilities and
anticipated cash flows from operations will be sufficient to meet our currently
anticipated capital requirements and debt service obligations for 2002. We
consider opportunities to obtain additional debt or equity financing from time
to time depending on prevailing market conditions. The nature of our industry is
such that, in the short-term, we may reduce our capital expenditures by delaying
planned capital expenditures in response to a difficult business environment,
such as the one that existed in 2001. However, the semiconductor test and
assembly market is characterized by rapid technological change which we expect
to result in significant capital expenditure requirements within our longer-term
horizon. Factors which may affect our level of future capital expenditures
include the degree and the timing of technological changes within our industry,
changes in demand for the use of our equipment and machinery as a result of
changes to our customer base, the level of growth within our industry, and the
amount and cost of capital available to us for capital expenditures. If our
capital requirements exceed our expectations as a result of higher than
anticipated growth in the semiconductor industry, acquisition or investment
opportunities, the expansion of our business or otherwise, or if our cash flows
from operations are lower than anticipated, including as a result of an
unexpected decrease in demand for our services due to a prolonged downturn in
the semiconductor industry or otherwise, we may be required to obtain additional
debt or equity financing. We may not be able to obtain financing on terms that
are favorable to us or at all.


SPECIAL TAX STATUS

     We have been granted pioneer status under The Economic Expansion Incentives
(Relief from Income Tax) Act, Chapter 86 of Singapore, for "Subcontract Assembly
And Testing Of Integrated Circuits Including Wafer Probing Services" from
January 1, 1996 to December 31, 2003.

     During the period for which our pioneer status is effective, income from
our pioneer trade (test and assembly services including wafer probing) is exempt
from Singapore income tax. The income from tax exempt profits arising from the
pioneer trade may be distributed as tax-exempt dividends and holders of ordinary
shares are not subject to Singapore income tax on such dividends. Losses and
unutilized capital allowances arising in the pioneer status period are available
to be carried forward and offset against profits arising in subsequent periods,
including profits from the same pioneer trade arising after the expiration of
the pioneer status period. Pioneer loss and unutilized capital allowance carried
forward are available indefinitely if more than 50% of the shareholders remain
unchanged from the incurrence of the tax loss or allowance to its utilization.
Without this exemption from income tax, our profits would be subject to income
tax at the applicable corporate income tax rate of 25.5% and 24.5% for income
earned in 2000 and 2001, respectively. The pioneer status exemption does not
apply to interest income earned during the pioneer status period and such
interest income is subject to tax at the applicable corporate income tax rate.
At the expiration of the pioneer status period, we expect to apply for
Development and Expansion incentive which provides for a concessionary tax rate
of not less than 10% on income from our pioneer trade.

                                       44
<PAGE>
DERIVATIVE FINANCIAL INSTRUMENTS

     From time to time, we have entered into foreign forward contracts to
mitigate the effect of foreign currency movements on the payroll, cost of
materials and equipment. The contracts entered into require the purchase of
Singapore dollars or Japanese yen, and the delivery of U.S. dollars. Because the
contracts entered into to date do not qualify as hedges under generally accepted
accounting principles in the United States, the gains and losses from these
contracts have been recorded as foreign currency gains and losses. We had no net
gain or loss in 2001 and a net gain of $1.3 million in 2000 arising from forward
foreign currency contracts. As of December 31, 2001, we had no foreign currency
forward contracts outstanding or any other derivative financial instruments.


FOREIGN CURRENCY RISK

     A portion of our costs is denominated in foreign currencies, like the
Singapore dollar and the Japanese yen. As a result, changes in the exchange
rates of these currencies or any other applicable currencies to the U.S. dollar
will affect our cost of goods sold and operating margins and could result in
exchange losses. We cannot fully predict the impact of future exchange rate
fluctuations on our profitability.

     From time to time, we may have engaged in, and may continue to engage in,
exchange rate hedging activities in an effort to mitigate the impact of exchange
rate fluctuations. However, we cannot assure that any hedging technique we
implement will be effective. If it is not effective, we may experience reduced
operating margins.


RESEARCH AND DEVELOPMENT

     See "Item 4. Information on our Company - B. Business Overview - Research &
Development."


RECENT ACCOUNTING PRONOUNCEMENTS

     In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statement No. 141, "Business Combinations," and Statement No. 142, "Goodwill and
Other Intangible Assets." Statement No. 141 requires that the purchase method of
accounting be used for all business combinations initiated after June 30, 2001
as well as all purchase method business combinations completed after June 30,
2001. Statement No. 141 also specifies the criteria which intangible assets
acquired in a purchase method business combination must meet to be recognized
and reported apart from goodwill. Statement No. 142 will require that goodwill
and intangible assets with indefinite useful lives no longer be amortized, but
instead tested for impairment at least annually in accordance with the
provisions of Statement No. 142. Statement No. 142 will also require that
intangible assets with estimable useful lives be amortized over their respective
estimated useful lives to their estimated residual values, and reviewed for
impairment in accordance with Statement No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets," which was issued in August 2001. We were
required to adopt the provisions of Statement No. 141 immediately and Statement
No. 142 effective January 1, 2002. Accordingly, we are accounting for the
acquisition of our interest in Winstek under SFAS No. 141. The adoption of
Statements No's. 141 and 142 did not have a material effect on our financial
position or results of operations.

     In June 2001, the FASB also issued Statement No. 143, "Accounting for Asset
Retirement Obligations," in June 2001 which addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and associated asset retirement costs. This statement applies to legal
obligations associated with the retirement of long-lived assets that result from
the acquisition, construction, development and/or normal use of the asset.
Statement No. 143 requires that the fair value of a liability for an asset
retirement obligation be recognized in the period in which it is incurred if a
reasonable estimate of fair value can be made. The fair value of the liability
is added to the carrying amount of the associated asset and this additional
carrying amount is depreciated over the life of the asset. The liability is
accreted at the end of each period through charges to operating expense. If the
obligation is settled for other than the carrying amount of the liability, we
will

                                       45
<PAGE>
recognize a gain or loss on settlement. We are required to adopt the provisions
of Statement No. 143 on January 1, 2003. We are currently unable to estimate the
impact of adopting this Statement at this time.

     In August 2001, the FASB issued Statement No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," which supersedes Statement No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of." Statement No. 144 retains the fundamental provisions
of Statement No. 121 for recognition and measurement of the impairment of
long-lived assets to be held and used and measurement of long-lived assets to be
disposed of by sale. Statement No. 144 addresses certain implementation issues
related to Statement No. 121. This Statement also supersedes the accounting and
reporting provisions of APB opinion No. 30, "Reporting the Results Of
Operations-Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions," for
segments of a business to be disposed of. Statement No. 144 retains the basic
provisions of Opinion No. 30 for the presentation of discontinued operations in
the income statement but broadens that presentation to include a component of an
entity, rather than a segment of a business. We adopted Statement No. 144 on
January 1, 2002. The adoption of Statement No. 144 did not have a material
effect on our financial position or results of operations.

                                       46
<PAGE>
ITEM 6.   DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.   DIRECTORS AND SENIOR MANAGEMENT

     The following table sets forth the name, age (as at January 31, 2002) and
position of each director and member of senior management:

<TABLE>
<CAPTION>
NAME                                        AGE              POSITION
----                                        ---              ---------------------------------------------
<S>                                         <C>              <C>
BOARD OF DIRECTORS
Tan Bock Seng(1)                             58              Chairman of the Board of Directors
Lim Ming Seong(2)(3)                         54              Deputy Chairman of the Board of Directors
Harry Hooshang Davoody(4)                    47              Director, President & Chief Executive Officer
Steven Hugh Hamblin(5)                       53              Director
Koh Beng Seng(6)                             51              Director
Liow Voon Kheong                             51              Director
Premod Paul Thomas(1)                        44              Director
Charles Richard Wofford(6)(7)                68              Director
Teng Cheong Kwee(6)                          48              Director
William J. Meder(1)(8)                       61              Director
Richard John Agnich(6)(9)                    58              Director
Gan Chee Yen(10)                             42              Alternate Director to Premod Paul Thomas
Lai Yeow Hin(10)                             37              Alternate Director to Liow Voon Kheong

SENIOR MANAGEMENT
Tan Lay Koon                                 43              Chief Financial Officer
Han Byung Joon                               42              Chief Technology Officer
June Chia Lihan                              48              Executive Vice President
Chan Kok Yong                                49              Executive Vice President
Ng Tiong Gee                                 39              Chief Information Officer
</TABLE>
----------
(1)  Member of the Budget Committee.
(2)  Chairman of the Budget Committee.
(3)  Member of the Executive Resource & Compensation Committee.
(4)  Appointed on January 8, 2002 to succeed Tan Bock Seng as the Chief
     Executive Officer.
(5)  Chairman of the Audit Committee.
(6)  Member of the Audit Committee.
(7)  Chairman of the Executive Resource & Compensation Committee.
(8)  Appointed on June 1, 2001.
(9)  Appointed on October 23, 2001.
(10) Under Singapore companies law, a director appointed by a company may, if
     permitted by the Articles of Association of such company, appoint an
     alternate director to act in place of such director should the director be
     unable to perform his or her duties as director of such company for a
     period of time.

     The Board of Directors held four meetings in person and one meeting by
teleconference in 2001. The average attendance by Directors at Board meetings
they were scheduled to attend was over 91%.

     None of our Directors, Senior Management or substantial shareholders are
related to each other. Lim Ming Seong is Corporate Advisor, Premod Paul Thomas
is Director, Corporate Business & Treasury and Gan Chee Yen is Director, Finance
of our parent, Singapore Technologies Pte Ltd.

                                       47
<PAGE>
TAN BOCK SENG

     Tan Bock Seng served as a Director since January 1995 and was our Chairman
and Chief Executive Officer since May 1998. On January 8, 2002, he retired as
the Chief Executive Officer and remains our non-executive Chairman of the Board
of Directors. Mr. Tan has more than 30 years of experience in the semiconductor
industry and has held key positions in several multinational corporations,
including Fairchild Singapore Pte Ltd and Texas Instruments Singapore Pte Ltd.
He was President of Chartered Semiconductor Manufacturing Ltd from 1993 to 1998
and Managing Director of National Semiconductor, Singapore, from 1988 to 1993.
Mr. Tan received his Bachelor of Science in Mathematics from the then University
of Singapore.


LIM MING SEONG

     Lim Ming Seong became our Deputy Chairman in June 1998. Mr. Lim is the
Corporate Advisor of Singapore Technologies Pte Ltd, Deputy Chairman of the
Board of Directors of Chartered Semiconductor Manufacturing Ltd and Chairman of
CSE Systems & Engineering Ltd. Since joining Singapore Technologies Pte Ltd in
December 1986, Mr. Lim has held various senior positions in the Singapore
Technologies Group. Prior to joining Singapore Technologies Pte Ltd, Mr. Lim was
with the Ministry of Defence of Singapore. Mr. Lim received his Bachelor of
Applied Science (Honors) in Mechanical Engineering from the University of
Toronto and his Diploma in Business Administration from the University of
Singapore. Mr. Lim also participated in the Advanced Management Programs at
INSEAD and Harvard University, respectively.


HARRY HOOSHANG DAVOODY

     Harry Davoody was appointed our President & Chief Executive Officer on
January 8, 2002. He was appointed to the Board of Directors on the same date.
Mr. Davoody has 20 years of experience in the semiconductor industry. He joined
Texas Instruments, Inc. as an IC Design Engineer in 1980 and rose through the
ranks with various assignments in applications/systems engineering, strategic
marketing, worldwide business management and full profit/loss responsibility.
Prior to joining our company, Mr Davoody was the Vice-President/General Manager
of Mixed-Signal DSP Solutions Division, a major element of Texas Instruments'
overall mixed-signal business, and later became the Vice-President/General
Manager of Digital Audio Video Products Group, a start-up division of Texas
Instruments responsible for digital consumer and multimedia mixed-signal
audio/video/imaging products. Mr. Davoody graduated with a Bachelor's Degree in
Electrical Engineering from the University of Texas at Arlington, Texas in 1979.
Mr. Davoody obtained a Master Degree in Electrical Engineering from Southern
Methodist University in 1982 and a Master of Business Administration from the
University of Dallas in 1987.


STEVEN HUGH HAMBLIN

     Steven Hugh Hamblin was appointed to our Board of Directors in June 1998.
Mr. Hamblin was with Compaq Computer Corporation from 1984 to 1996 and held
various positions including, Managing Director of Compaq Asia Manufacturing,
Vice President Asia/Pacific Division, Vice President and Financial Controller
for Corporate Operations and Vice President of Systems Division Operations. He
was with Texas Instruments for ten years before leaving as its Division
Controller, Semiconductor Group, to join General Instrument, Microelectronics
Division, New York in 1983 as its Group Financial Executive. Mr. Hamblin
received his Bachelor of Science in Civil Engineering from the University of
Missouri, Columbia and his Master of Science in Industrial Administration from
Carnegie-Mellon University.


KOH BENG SENG

     Koh Beng Seng was appointed to our Board of Directors in February 1999. He
is currently Deputy President, United Overseas Bank Limited. Mr. Koh is on the
Board of Directors of Chartered Semiconductor Manufacturing Ltd. Mr. Koh is
active in the financial services sector and was with the Monetary Authority of
Singapore from 1973 to 1998, where he served as Deputy Managing Director from
1988 to 1998. Mr. Koh received his Bachelor of Commerce (First Class Honors)
from Nanyang University and his Master of Business Administration from Columbia
University. Mr. Koh was awarded an Overseas Postgraduate Scholarship by the
Monetary Authority of Singapore in 1978. In 1987, the President of the Republic
of Singapore awarded him a Meritorious Service Medal.

                                       48
<PAGE>
LIOW VOON KHEONG

     Liow Voon Kheong was appointed to our Board of Directors in October 1997.
Mr. Liow is presently the General Manager of EDB Investments Pte Ltd,
Director/General Manager of EDB Ventures Pte Ltd and EDB Ventures 2 Pte Ltd and
General Manager of PLE Investments Pte Ltd. Mr. Liow started his career with the
Economic Development Board in 1976. He received his Bachelor of Engineering
(Electrical & Electronics) and his Diploma in Business Administration from the
University of Singapore.


PREMOD PAUL THOMAS

     Premod Paul Thomas was appointed to our Board of Directors in March 1998.
Mr. Thomas is Director, Corporate Business & Treasury of Singapore Technologies
Pte Ltd and is an Alternate Director on the Board of Directors of Chartered
Semiconductor Manufacturing Ltd. Before joining Singapore Technologies Pte Ltd
in February 1998, he was with Tirtamas Group, Jakarta, as Group Executive
Advisor from 1995 to 1998 and with Bank of America from 1983 to 1995. Mr. Thomas
received his Bachelor of Commerce (First Class Honors) from Loyola College,
India in 1977. He is a Certified Associate of the Indian Institute of Bankers,
Bombay, and has a Master of Business Administration from the Indian Institute of
Management, Ahmedabad.


CHARLES RICHARD WOFFORD

     Charles Richard Wofford was appointed to our Board of Directors in February
1998. Mr. Wofford is presently a Director of FSI International. Mr. Wofford was
with Texas Instruments for 33 years before leaving as Senior Vice-President to
join Farr Company in 1991. He was the Chairman, CEO and President of Farr
Company from 1992 to 1995. He received his Bachelor of Arts in Mathematics and
Psychology from Texas Western College.


TENG CHEONG KWEE

     Teng Cheong Kwee was appointed to our Board of Directors in January 2001.
Prior to this appointment, he was the Head of Risk Management & Regulatory
Division of the Singapore Exchange Limited. Mr. Teng has more than 20 years of
experience in the finance industry. He is a member of the Committee on Corporate
Governance, a private sector led committee established by the Government of
Singapore to study and recommend measures to raise the standard of corporate
governance in Singapore. Mr. Teng received his Bachelor of Engineering
(Industrial), First Class Honours and Bachelor of Commerce from the University
of Newcastle, Australia.


WILLIAM J. MEDER

     William J. Meder was appointed to our Board of Directors in June 2001. He
has 38 years of experience in electronics manufacturing, technology and business
management, 33 of which were with Motorola. He runs a consulting firm and
currently consults for Motorola Inc., on semiconductor issues and several other
multinational companies in the area of business and manufacturing management.
Mr. Meder is Chairman of the Board for Leshan Phoenix, a China-U.S. joint
venture, and acts as an advisor to the Board for Operations and Investments for
PSI Technologies. He is also teaching Business and Manufacturing Strategy for
the Chinese Government. He received his Bachelor of Science (Metallurgical
Engineering) from Oklahoma University and Master (Materials Science) from
Washington University in St. Louis.


RICHARD JOHN AGNICH

     Richard John Agnich was appointed to our Board of Directors in October
2001. He has 27 years of experience in the semiconductor industry. Mr. Agnich
joined Texas Instruments in 1973 and held various positions, including that of
Senior Vice President, Secretary and General Counsel. He is a past president of
the Association of General Counsel, has written on corporate governance and has
been a seminar leader and speaker at programs of the Stanford Law School and the
SMU Law School. He is also a co-founder and is currently the Chair of
Entrepreneurs Foundation of North Texas, and serves on the Board of Trustees of
Austin College. Mr. Agnich received his BA in Economics from Stanford University
and a Juris Doctor from the University of Texas School of Law.


GAN CHEE YEN

     Gan Chee Yen was appointed Alternate Director to Premod Paul Thomas in July
1999. Mr. Gan has been in the finance accounting field for more than 17 years
and is currently the Director, Finance of Singapore Technologies Pte Ltd. He was
the

                                       49
<PAGE>
Senior Manager of Singapore Technologies Marine Ltd before joining Singapore
Technologies Pte Ltd in September 1996 as the Group Financial Controller. Mr.
Gan received his Bachelor of Accountancy from the National University of
Singapore.


LAI YEOW HIN

     Lai Yeow Hin was appointed Alternate Director to Liow Voon Kheong in
October 1997. Mr. Lai started his career with the Singapore Economic Development
Board in 1990. He is currently the Senior Manager, Investments of EDB
Investments Pte. Ltd. From December 1992 to January 1996, Mr. Lai was the
Director of the Economic Development Board's office in Los Angeles. He was a
Founding Director of the Singapore American Business Association of Southern
California from 1994 to 1996. Mr. Lai received his Master of Science (Electrical
Engineering) from the University of Illinois (Urbana-Champaign).


TAN LAY KOON

     Tan Lay Koon joined us in May 2000 as our Chief Financial Officer. Prior to
joining our company, Mr. Tan was an investment banker with Salomon Smith Barney,
the global investment banking unit of Citigroup Inc. Before that, he held
various positions with the Government of Singapore, Times Publishing Limited and
United Overseas Bank Limited in Singapore. Mr. Tan graduated with a Bachelor of
Engineering (First Class Honors) from the University of Adelaide, Australia as a
Colombo Plan scholar. He also has a Master of Business Administration
(Distinction) from the Wharton School, University of Pennsylvania where he was
elected a Palmer scholar.


HAN BYUNG JOON

     Han Byung Joon joined us as our Chief Technology Officer in December 1999.
Prior to joining our company, Dr. Han was Director of Product Development at
Anam Semiconductor, Inc. and, before that, held various engineering positions
with IBM and AT&T Bell Labs in Murray Hill, New Jersey. Dr. Han is credited with
the invention of several wafer and chip scale semiconductor packaging
technologies patented today. Dr. Han received his Doctorate in Chemical
Engineering from Columbia University, New York, in 1988.


JUNE CHIA LIHAN

     June Chia Lihan joined us in 1994. She is currently our Executive Vice
President, Worldwide Sales & Marketing. Prior to that, Ms. Chia held various
positions including Executive Vice President for Information
Technology/Planning/Industrial Engineering/Purchasing. From 1991 to 1994, Ms.
Chia was with Nortel Australia and served as its Director of Manufacturing
Operations from early 1993 to July 1994. Prior to joining Nortel, Ms. Chia
worked in numerous assignments in Planning, Industrial Engineering and
Purchasing in National Semiconductor, Fairchild Singapore and Texas Instruments.
Ms. Chia received her Bachelor of Engineering (First Class Honors) and her
Master of Business Administration from the National University of Singapore.


CHAN KOK YONG

     Chan Kok Yong joined us in February 2001 as our Executive Vice President,
Operations. Prior to joining our company, he was with Unitrode Electronics, a
semiconductor test and assembly subsidiary of Texas Instruments where he was
Managing Director. As Managing Director, Mr. Chan had overall responsibility for
the company's Asian operations. Before joining Unitrode Electronics, Mr. Chan
spent nine years with Fairchild Singapore in various operational capacities
including the Operations Manager of Fairchild Logic Division. Mr. Chan graduated
with a Bachelor of Engineering with honors from the National University of
Singapore in 1977. He also has a Master of Business Administration from the
National University of Singapore.


NG TIONG GEE

     Ng Tiong Gee was appointed Chief Information Officer in May 2001. Mr. Ng
was previously the Chief Information Officer of Gateway Singapore, heading the
technology multinational's IT activities in Asia Pacific. Prior to that, he
spent over six years with Siemens Components (now known as Infineon Technologies
Asia Pacific) where he last served as Director of Information Systems and
Services. Between 1988 and 1992, Mr. Ng held various key engineering positions
at Digital Equipment Singapore, now part of Compaq. Mr. Ng graduated with a
Bachelor of Mechanical Engineering with honors from the National University of
Singapore in 1987. He also holds a Master's Degree in Science (computer
integrated manufacturing) and Business Administration from the Nanyang
Technological University in Singapore.

                                       50
<PAGE>
B.   COMPENSATION OF DIRECTORS AND SENIOR MANAGEMENT

     In 2001, the aggregate amount of compensation and bonus paid by our company
to all our directors and senior management was approximately $2,656,460 broken
down as follows:

<TABLE>
<CAPTION>
                                                                    EXECUTIVE     NON EXECUTIVE
                                                                     DIRECTOR       DIRECTORS             TOTAL
                                                                    ---------     -------------        -----------
<S>                                                                 <C>           <C>                  <C>
Tan Bock Seng                                                        $737,901                           $  737,901
Lim Ming Seong                                                                        45,000                45,000
Steven Hugh Hamblin                                                                   45,000                45,000
Koh Beng Seng                                                                         31,000                31,000
Premod Paul Thomas                                                                    25,000                25,000
Charles Richard Wofford                                                               50,000                50,000
Liow Voon Kheong                                                                       5,462                 5,462
Teng Cheong Kwee                                                                      29,000                29,000
William J. Meder                                                                      22,920                22,920
Richard John Agnich                                                                   11,250                11,250

Senior Management (excluding Executive Director) as a group                                              1,653,927
                                                                                                        ----------
                                                                                                        $2,656,460
                                                                                                        ==========
</TABLE>

     Our company does not have any pension, retirement or other similar
post-retirement benefits. We have provided to our directors and officers
customary director or officer insurance, as appropriate.

     Non-executive directors receive annual directors' fees except that the
directors' fees for those employed by Singapore Technologies Pte Ltd are paid to
Singapore Technologies Pte Ltd and for those employed by EDB Investments Pte Ltd
("EDBI") are paid to EDBI. Those who are not employed by Singapore Technologies
Pte Ltd or EDBI also receive compensation for attending meetings of the Board of
Directors. Directors are reimbursed for reasonable expenses they incur in
attending meetings of the Board and its committees. They may also receive
compensation for performing additional or special duties at the request of the
Board. Alternate Directors do not receive any compensation for serving or
attending meetings of the Board. In 2001, Tan Bock Seng who was an executive
director of our company, did not receive directors' fees.

     As at December 31, 2001, we had twelve directors (including two alternate
directors) on the Board. In Singapore it is customary that directors are paid a
fee for their contributions to the company. For the financial year ended
December 31, 2000, we paid directors' fees totaling $233,000. We will seek
approval at our annual general meeting in 2002 for the payment of directors'
fees of approximately $275,000 for the financial year ended December 31, 2001
for their contributions to our company.

     Directors' fees for the financial year ended December 31, 2001 represent an
increase of 18.0% over directors' fees for the financial year ended December 31,
2000. Directors' fees in 2001 were higher owing to the appointment of two
additional directors to the Board, William J. Meder and Richard John Agnich.


C.   BOARD PRACTICES WITH RESPECT TO DIRECTORS AND OFFICERS' TERM OF SERVICE

BOARD OF DIRECTORS

     Our Articles of Association set the minimum number of directors at two. We
currently have thirteen directors including two alternate directors. A portion
of our directors are re-elected at each annual general meeting of shareholders.
The number of directors retiring and eligible to stand for re-election each year
varies, but generally it is equal to one-third of the board, with

                                       51
<PAGE>
the directors who have been in office longest since their re-election or
appointment standing for re-election. Our Chief Executive Officer and President
will not be required to stand for re-election as a director while he or she is
in office. As Singapore Technologies Pte Ltd and its affiliates own 71.9% of our
outstanding ordinary shares, it is able to control actions over many matters
requiring approval by our shareholders, including the election of directors.

     Our Articles of Association permit a director to appoint an alternate
director to act in place of such director should the director be unable to
perform his or her duties as director for a period of time. Under Singapore law,
the alternate director is not merely an agent of the director but is also held
accountable to the company for his or her actions as director during the period
for which he or she acts as alternate director. See "- Compensation" for details
on the directors' service contracts with us.


COMMITTEES OF THE BOARD OF DIRECTORS

(i)  Audit Committee

     The Audit Committee of our Board of Directors currently consists of five
members of which a majority may not be executive directors of our company. The
Audit Committee members are Steven Hugh Hamblin (Chairman), Koh Beng Seng,
Charles Richard Wofford, Teng Cheong Kwee and Richard John Agnich. The Audit
Committee reviews the scope and results of the audits provided by our internal
and independent auditors, reviews and evaluates our administrative, operating
and internal accounting controls, reviews material related party transactions,
and reviews the integrity of the financial information presented to our
shareholders. Under Singapore law, only board members of a company may serve on
its Audit Committee.

     The Audit Committee held four meetings in 2001.


(ii) Executive Resource & Compensation Committee

     The Executive Resource & Compensation Committee currently consists of
Charles Richard Wofford (Chairman), Lim Ming Seong and Peter Seah Lim Huat.
Peter Seah is neither a director nor a member of senior management of our
company. He is the President and Chief Executive Officer of Singapore
Technologies Pte Ltd and was nominated by Singapore Technologies Pte Ltd to the
committee. Peter Seah serves on the boards of a number of companies within the
Singapore Technologies Group. Our Articles of Association allow non-board
members to serve on board committees, other than the Audit Committee which must
be comprised of only board members as required under Singapore law.

     The Executive Resource & Compensation Committee oversees executive
compensation and development in our company with the goal of building capable
and committed management teams through competitive compensation, focused
management and progressive policies that attract, motivate and retain talented
executives to meet our current and future growth plans. Specifically, the
Executive Resource & Compensation Committee establishes compensation policies
and incentive programs for key executives, approves salary reviews, bonuses and
incentives for key executives, approves share incentives, including share
options and share ownership for executives, approves key appointments and
reviews succession plans for key positions, and oversees the development of key
executives and younger talented executives.

     The Executive Resource & Compensation Committee held four meetings in 2001.


(iii) Budget Committee

     The Budget Committee currently consists of Lim Ming Seong (Chairman), Tan
Bock Seng, Premod Paul Thomas and William J. Meder. The Budget Committee meets
with our senior management to review our annual budget and to review our
quarterly financial performance in relation to our budget.

     The Budget Committee held four meetings in 2001.

                                       52
<PAGE>
D.   EMPLOYEES

     We had 2,559 full time employees as of December 31, 2001. Our employees are
not members of any labor union or organization in Singapore or any other country
in which we operate. Our employees are equity owners of our company and we
believe in providing opportunities for our employees to build careers with us.
To that end we have in place extensive training and development programs for our
employees. We believe that we have a good relationship with our employees.

     The following table sets forth the total number of employees as of December
31, 2001, broken down by functional responsibility and by geographical
locations.

<TABLE>
<CAPTION>
                                                     NO. OF EMPLOYEES AS OF DECEMBER 31, 2001
                             ---------------------------------------------------------------------------------------
                                                 RESEARCH &           SALES &
                             OPERATIONS         DEVELOPMENT          MARKETING          OPERATING SUPPORT      TOTAL
                             ----------         -----------          ---------          -----------------      -----
<S>                          <C>                <C>                  <C>                <C>                    <C>
Singapore                       1,704                118                 22                     526            2,370
USA                                 6                 25                 41                      11               83
Taiwan                             68                  8                  3                      15               94
Others                              0                  3                  8                       1               12
                                -----                ---                 --                     ---            -----
TOTAL                           1,778                154                 74                     553            2,559
                                =====                ===                 ==                     ===            =====
</TABLE>


E.   SHARE OWNERSHIP FOR DIRECTORS AND SENIOR MANAGEMENT

     The following table provides certain information with respect to beneficial
ownership of our ordinary shares, including ordinary shares held directly or in
the form of American Depositary Shares and share options granted as of January
31, 2002, based on an aggregate of 990,607,105 ordinary shares outstanding as of
such date, by our directors and senior management.

     Beneficial ownership is determined in accordance with rules of the U.S.
Securities and Exchange Commission and includes shares over which the indicated
beneficial owner exercises voting and/or investment power or receives the
economic benefit of ownership of such securities. Ordinary shares subject to
options currently exercisable or exercisable within 60 days are deemed
outstanding for computing the percentage ownership of the person holding the
options but are not deemed outstanding for computing the percentage ownership of
any other person.

<TABLE>
<CAPTION>
                                                                   ORDINARY SHARES(1)
                                                                   BENEFICIALLY OWNED
                                                                -----------------------
DIRECTORS                                                         NUMBER        PERCENT
---------                                                       ----------      -------
<S>                                                             <C>             <C>
Tan Bock Seng                                                    9,400,000           *
Steven Hugh Hamblin                                                123,333           *
Koh Beng Seng                                                      118,333           *
Premod Paul Thomas                                                 110,000           *
Liow Voon Kheong                                                    12,000           *
Charles Richard Wofford                                            138,333           *
William J. Meder                                                     2,000           *
Gan Chee Yen                                                        49,000           *
All directors and senior management(2) as a group               12,824,999        1.29%
</TABLE>
----------
*    Beneficial ownership of less than 1% of our outstanding ordinary shares.
(1)  All our ordinary shares have identical rights in all respects and rank
     equally with one another.
(2)  Each of our senior management owns less than 1% of our outstanding shares.

                                       53
<PAGE>
SHARE OPTIONS FOR DIRECTORS

     The following table contains information pertaining to share options held
by directors as of January 31, 2002:

<TABLE>
<CAPTION>
                                NUMBER OF ORDINARY
                                SHARES ISSUABLE ON    PER SHARE EXERCISE PRICE            EXERCISEABLE
                                EXERCISE OF OPTION               S$                          PERIOD
                                ------------------    ------------------------     ------------------------
<S>                             <C>                   <C>                          <C>
Tan Bock Seng                        1,600,000                 3.554               11/22/2000 to 11/21/2009
                                     1,000,000                  6.93               04/20/2001 to 04/19/2010
                                     1,972,000                 1.592               04/24/2002 to 04/23/2011
                                     5,000,000                 2.294               12/20/2002 to 12/19/2011

Lim Ming Seong                         200,000                 1.592               04/24/2002 to 04/23/2011

Harry Hooshang Davoody               4,000,000(1)              2.422               01/08/2003 to 01/07/2012(1)

Steven Hugh Hamblin                     10,000                  0.25               02/09/2000 to 12/09/2004
                                        20,000                  0.25               02/09/2000 to 06/11/2004
                                        30,000                 3.554               02/09/2000 to 11/21/2004
                                        40,000                  6.93               04/20/2001 to 04/19/2005
                                        50,000                 1.592               04/24/2002 to 04/23/2006

Koh Beng Seng                           10,000                  0.25               02/09/2000 to 12/09/2004
                                        50,000                 3.554               02/09/2000 to 11/21/2004
                                        40,000                  6.93               04/20/2001 to 04/19/2005
                                        50,000                 1.592               04/24/2002 to 04/23/2006

Premod Paul Thomas                      12,500                  0.42               12/10/2000 to 12/09/2009
                                         7,500                  0.25               12/10/2000 to 12/09/2009
                                        16,000                 3.554               11/22/2000 to 11/21/2009
                                        40,000                  6.93               04/20/2001 to 04/19/2010
                                        50,000                 1.592               04/24/2002 to 04/23/2011

Charles Richard Wofford                 25,000                  0.42               02/09/2000 to 12/09/2004
                                        20,000                  0.25               02/09/2000 to 06/11/2004
                                        20,000                 3.554               02/09/2000 to 11/21/2004
                                        40,000                  6.93               04/20/2001 to 04/19/2005
                                        50,000                 1.592               04/24/2002 to 04/23/2006

Teng Cheong Kwee                        50,000                 1.592               04/24/2002 to 04/23/2006

William J Meder                         20,000                 1.624               07/23/2002 to 07/22/2006

Richard John Agnich                     20,000                 1.298               10/23/2002 to 10/22/2006
</TABLE>
                                       54
<PAGE>
<TABLE>
<CAPTION>
                                NUMBER OF ORDINARY
                                SHARES ISSUABLE ON    PER SHARE EXERCISE PRICE            EXERCISEABLE
                                EXERCISE OF OPTION               S$                          PERIOD
                                ------------------    ------------------------     ------------------------
<S>                             <C>                   <C>                          <C>
Gan Chee Yen                            20,000                 3.554               02/09/2000 to 11/21/2009
                                        40,000                  6.93               04/20/2001 to 04/19/2010
                                        20,000                 1.592               04/24/2002 to 04/23/2011
</TABLE>
----------
(1)  Of the 4,000,000 options, 20% of 1,500,000 options will vest and may
     be exercised at the exercise price indicated above at the end of each 12
     month period of continuous service, commencing January 8, 2003. The
     remaining 2,500,000 options will vest and can be exercised after January 8,
     2003 if our ordinary shares achieve and maintain certain specified price
     levels.


EMPLOYEES' SHARE OWNERSHIP SCHEME

     We had an Employees' Share Ownership Scheme for employees and directors of
our company, our subsidiary and the related companies within the Singapore
Technologies Group which was terminated prior to the initial public offering of
our shares on the Nasdaq National Market and Singapore Exchange in February,
2000.


SHARE OPTION PLAN

     Effective as of May 28, 1999, our company adopted the ST Assembly Test
Services Ltd Share Option Plan 1999, or the Share Option Plan. The purpose of
the plan is to offer selected individuals an opportunity to acquire or increase
a proprietary interest in our company. Options granted under the Share Option
Plan may be non-statutory options or incentive stock options intended to qualify
under Section 422 of the United States Internal Revenue Code.

     The aggregate number of shares that may be issued under the Share Option
Plan and under all of our other share incentive and options schemes or
agreements may not exceed 150 million shares (subject to anti-dilution
adjustment pursuant to the Share Option Plan). If an outstanding option expires
for any reason or is cancelled or otherwise terminated, the shares allocable to
the unexercised portion of such option will again be available for the purposes
of the Share Option Plan and all other share incentive and option schemes
approved by our Board of Directors.

     The Share Option Plan is administered by the Executive Resource &
Compensation Committee. Our employees, outside directors and consultants are
eligible to receive grants of option except that: (i) employees of our
affiliates, our outside directors and consultants are not eligible for the grant
of incentive stock options; and (ii) employees, outside directors and
consultants of our affiliates who are residents of the United States are not
eligible for the grant of options.

     An individual who owns more than 10% of the total combined voting power of
all classes of our outstanding shares or of the shares of our parent or
subsidiary is not eligible for the grant of options unless the exercise price of
the option is at least 110% of the fair market value of a share on the date of
grant, and in the case of an incentive stock option, such option by its terms is
not exercisable after the expiration of five years from the date of grant.

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

     Options granted to persons other than officers, outside directors and
consultants shall become exercisable at least as rapidly as 20% per year over
the five-year period commencing on the date of grant. No option that has an
exercise price that is equal to or greater than the fair market value of a share
on the date of grant shall be exercisable prior to the first anniversary of the
date of grant. No option that has an exercise price that is less than the fair
market value of a share on the date of grant shall be exercisable prior to the
second anniversary of the date of grant.

                                       55
<PAGE>
     The exercisability of options outstanding under the Share Option Plan may
be fully or partially accelerated under certain circumstances such as a change
in control of our company, as defined in the Share Option Plan.

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

     The Executive Resource & Compensation Committee may modify, extend or
assume outstanding options or may accept the cancellation of outstanding options
in return for the grant of new options for the same or a different number of
shares and at the same or a different exercise price. No modification of an
option shall, without the consent of the optionee, impair the optionee's rights
or increase the optionee's obligations under such option. Options are generally
not transferable under the Share Option Plan.

     In the event of certain changes in our capitalization, the Executive
Resource & Compensation Committee will make appropriate adjustments in one or
more of the number of shares available for future grants under the Share Option
Plan, the number of shares covered by each outstanding option or the exercise
price of each outstanding option. If we are a party to a merger or
consolidation, outstanding options will be subject to the agreement of merger or
consolidation.

     The Share Option Plan will terminate automatically on May 28, 2009. The
Executive Resource & Compensation Committee may amend, suspend or terminate the
Share Option Plan at any time and for any reason, provided that any amendment
which increases the number of shares available for issuance under the Share
Option Plan, or which materially changes the class of persons who are eligible
for the grant of incentive stock options, will be subject to the approval of our
shareholders.

     As of January 31, 2002, options to purchase an aggregate of 52,919,545
ordinary shares were accepted and outstanding, out of which 21,507,000 were held
by all directors and senior management as a group. The exercise prices of these
options range from S$0.25 to S$6.93. The expiration dates of the options range
from June 2004 to January 2012.

     We expect to grant to our directors, officers and employees further options
under the Share Option Plan in 2002. The exercise price of such options will be
the fair market value of ordinary shares at the date of the grant.


ITEM 7.   MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.   MAJOR SHAREHOLDERS

     As of January 31, 2002, Singapore Technologies Pte Ltd beneficially owns
approximately 71.9% of our ordinary shares. As of January 31, 2002, Temasek
Holdings (Private) Limited directly owns 78.6% of Singapore Technologies Pte
Ltd. The remaining 21.4% is owned by Singapore Technologies Holdings Pte Ltd,
which is in turn 100% owned by Temasek Holdings (Private) Limited, the principal
holding company through which the corporate investments of the Government of
Singapore are held. As a result, Singapore Technologies Pte Ltd is able to
exercise direct or indirect control over matters requiring shareholder approval,
including the election of directors and approval of significant corporate
transactions. Matters that typically require shareholder approval include, among
other things:

     -    the election of directors;

     -    our merger or consolidation with any other entity;

     -    any sale of all or substantially all of our assets; and

                                       56
<PAGE>
     -    the timing and payment of dividends.

     The following table sets forth certain information regarding the ownership
of our ordinary shares as of January 31, 2002 by each person who is known by us
to own beneficially more than 5% of our outstanding ordinary shares. Beneficial
ownership is determined in accordance with rules of the U.S. Securities and
Exchange Commission and includes shares over which the indicated beneficial
owner exercises voting and/or investment power or receives the economic benefit
of ownership of such securities. Ordinary shares subject to options currently
exercisable or exercisable within 60 days are deemed outstanding for computing
the percentage ownership of the person holding the options but are not deemed
outstanding for computing the percentage ownership of any other person.

<TABLE>
<CAPTION>
                                                          NUMBER OF SHARES                   PERCENTAGE(2)
NAME OF BENEFICIAL OWNER                                 BENEFICIALLY OWNED               BENEFICIALLY OWNED
------------------------                                 ------------------               ------------------
<S>                                                      <C>                              <C>
Singapore Technologies Pte Ltd(1)                             511,532,398                       51.64%
Singapore Technologies Semiconductors Pte Ltd(1)              200,695,652                       20.26%
</TABLE>
----------
(1)  Temasek Holdings (Private) Limited, the principal holding company through
     which the corporate investments of the Government of Singapore are held,
     owns 78.6% of Singapore Technologies Pte Ltd, and owns 100% of Singapore
     Technologies Holdings Pte Ltd, which owns the remaining 21.4% of Singapore
     Technologies Pte Ltd which, in turn, owns 100% of Singapore Technologies
     Semiconductors Pte Ltd. Temasek Holdings (Private) Limited may therefore be
     deemed to beneficially own the shares directly owned by Singapore
     Technologies Pte Ltd and Singapore Technologies Semiconductors Pte Ltd.

(2)  Based on an aggregate 990,607,105 ordinary shares outstanding as of January
     31, 2002.

     All our ordinary shares have identical rights in all respects and rank
equally with one another.

     Our ordinary shares have been traded on the Singapore Exchange Securities
Trading Limited or SGX-ST since January 31, 2000 and our ADSs have been traded
on the Nasdaq National Market or Nasdaq since January 28, 2000.

     As of January 31, 2002, 117,000 of our ordinary shares, representing 0.01%
of our outstanding shares, were held by a total of 27 holders of record with
addresses in the United States. As of the same date 725,495 of our ADSs
(representing 7,254,950 ordinary shares), representing 0.73% of our outstanding
shares, were held by a total of 5 registered holders of record with addresses in
the United States. Because many of our ordinary shares and ADRs were held by
brokers and other institutions on behalf of shareholders in street name, we
believe that the number of beneficial holders of our ordinary shares and ADRs is
substantially higher.

     On January 31, 2002, the closing price of our ordinary shares on the SGX-ST
was S$2.41 per ordinary share and the closing price of our ADSs on Nasdaq was
$13.00 per ADS.


B.   RELATED PARTY TRANSACTIONS

     We engage in transactions with companies in the Singapore Technologies
Group in the normal course of business. Such transactions are generally entered
into on normal commercial terms. We entered into a turnkey contract with
Chartered Semiconductor for its wafer, sort assembly and test services in March
2000. This agreement governs the conduct of business between the parties,
relating, among other things, to the sort, assembly and test services which were
previously governed solely by purchase orders executed by Chartered
Semiconductor. The agreement does not contain any firm commitment for Chartered
Semiconductor to purchase or for us to supply services covered thereunder. The
agreement is for a period of three years and will be automatically renewed
thereafter unless certain events occur.

                                       57
<PAGE>
     In October 2001, we gave a guarantee on behalf of our subsidiary, STATS,
Inc., for the lease by STATS Inc. of its office in California in the United
States. The guarantee covers the full performance of each term, covenant and
condition of the lease, including payment of all rent and other sums required to
be paid under the lease.

     We lease the land on which our Singapore facility is situated pursuant to a
long-term operating lease from the Housing and Development Board, a statutory
board of the Government of Singapore. The lease is for a 30-year period
commencing March 1, 1996, and is renewable for a further 30 years subject to the
fulfillment of certain conditions. The rent is S$110,745 ($60,490) per month
subject to revision to market rate in March of each year, with the increase
capped at 4% per annum.

     In the year ended December 31, 2001, we paid a management fee of $1.1
million to Singapore Technologies Pte Ltd for various management and corporate
services provided pursuant to the Singapore Technologies Management and Support
Services Agreement entered into on December 1999. Prior to this agreement, these
services were subject to a management fee computed based on certain percentages
of capital employed, sales, manpower and payroll. We believe that our
arrangement with Singapore Technologies Pte Ltd approximates the cost of
providing these services.

     From time to time, we deposit excess funds with ST Treasury Services Ltd, a
wholly-owned subsidiary of Singapore Technologies. Our insurance coverage is
held under various insurance policies which are negotiated and maintained by
Singapore Technologies but billed directly to us. This enables us to benefit
from the group rates negotiated by Singapore Technologies.

     Generally, all new material related party transactions among us and our
officers, directors, principal shareholders and their affiliates require
approval by the Audit Committee of our Board of Directors. In addition, more
significant related party transactions must be separately approved by a majority
of the Board of Directors.


C.   INTEREST OF EXPERTS AND COUNSEL

     Not applicable


ITEM 8.   FINANCIAL INFORMATION

A.   CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

     Please see Item 18 for a list of the financial statements filed as part of
this Annual Report.


DIVIDEND POLICY

     We have never declared or paid any cash dividends on our ordinary shares.
We currently expect to retain future earnings, if any, for use in the operation
and expansion of our business and do not anticipate paying any cash dividends in
the foreseeable future. In addition, our loan agreement with EDB and our MTN
Program may restrict the payment of dividends without the consent of the lender.


LEGAL PROCEEDINGS

     On February 20, 2001, a lawsuit was filed by Amkor Technology, Inc. against
us and our subsidiary, STATS Inc., alleging patent infringement in respect of
certain integrated circuit packages. On September 7, 2001, we announced that we
had settled the lawsuit. Amkor granted us a non-exclusive license to practise
the Amkor MicroLead FrameTM (MLFTM) patents. We in turn agreed to provide Amkor
with a perpetual worldwide immunity from suits based on our Quad Leadless
Package (QLPTM) patents.

                                       58
<PAGE>
     We are not a party to any legal proceedings which we believe would,
individually or in the aggregate, have a material adverse effect on our
financial condition or results of operations.


B.   SIGNIFICANT CHANGES

     There has been no significant subsequent events following the close of the
last financial year up to the date of this Annual Report that are known to us
and require disclosure in this Annual Report for which disclosure was not made
in this Annual Report.


ITEM 9.   THE OFFER AND LISTING

PRICE RANGE OF OUR ORDINARY SHARES AND ADSS

     The historical 'high' and 'low' prices of stock over the past year and the
six monthly periods from August 2001 to January 2002 are as shown below.

<TABLE>
<CAPTION>
                                                     PRICE PER ORDINARY SHARE       PRICE PER ADS
                                                              ON THE                     ON
                                                            SGX (IN S$)            NASDAQ (IN US$)
                                                     ------------------------     -----------------
                                                    HIGH                  LOW     HIGH         LOW
                                                    -----                ----     -----       -----
<S>                                                 <C>                  <C>      <C>         <C>
Annual for 2000                                     10.90                2.22     63.63       13.13
Annual for 2001                                      2.84                0.99     16.00        5.60

Quarterly highs and lows:
- quarter ending March 31, 2000                     10.60                6.20     63.63       21.00
- quarter ending June 30, 2000                       8.30                4.44     49.38       20.31
- quarter ending September 30, 2000                  4.68                3.26     26.50       18.00
- quarter ending December 31, 2000                   3.44                2.28     20.38       13.13
- quarter ending March 31, 2001                      2.84                1.63     16.00        9.25
- quarter ending June 30, 2001                       1.97                1.36     10.56        7.55
- quarter ending September 30, 2001                  1.82                0.99      9.99        5.80
- quarter ending December 31, 2001                   2.38                1.06     12.96        5.60

Monthly highs and lows:
August 2001                                          1.82                1.57      9.99        8.95
September 2001                                       1.66                0.99      9.29        5.80
October 2001                                         1.40                1.06      7.45        5.60
November 2001                                        1.82                1.26      9.80        7.01
December 2001                                        2.38                1.64     12.96        8.90
January 2002                                         2.65                2.17     14.25       11.95
</TABLE>


EXCHANGE RATES

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

                                       59
<PAGE>
     The following table sets forth, for the fiscal years indicated, information
concerning the exchange rates between Singapore dollars and U.S. dollars based
on the average of the noon buying rate in the city of New York on the last
business day of each month during the period for cable transfers in Singapore
dollars as certified for customs purposes by the Federal Reserve Bank of New
York. The table illustrates how many Singapore dollars it would take to buy one
U.S. dollar. These transactions should not be construed as a representation that
those Singapore dollar or U.S. dollar amounts could have been, or could be,
converted into U.S. dollars or Singapore dollars, as the case may be, at any
particular rate, the rate stated below, or at all.

<TABLE>
<CAPTION>
                                                         SINGAPORE DOLLARS PER US $1.00
                                                                NOON BUYING RATE
                                            ---------------------------------------------------------
                                            AVERAGE(1)           LOW             HIGH      PERIOD END
                                            ----------           ----            ----      ----------
<S>                                         <C>                  <C>             <C>       <C>
Year Ended December 31,
1997                                           1.49              1.40            1.71         1.61
1998                                           1.67              1.58            1.80         1.65
1999                                           1.70              1.66            1.74         1.67
2000                                           1.72              1.65            1.76         1.73
2001                                           1.80              1.74            1.85         1.85

Month
August 2001                                                      1.74            1.81         1.74
September 2001                                                   1.73            1.77         1.77
October 2001                                                     1.77            1.83         1.82
November 2001                                                    1.81            1.84         1.83
December 2001                                                    1.83            1.85         1.85
January 2002                                                     1.83            1.85         1.84
</TABLE>
----------
(1)  The average of the daily Noon Buying Rates on the last business day of each
     month during the year.


ITEM 10.  ADDITIONAL INFORMATION

A.   SHARE CAPITAL

     Not applicable


B.   MEMORANDUM AND ARTICLES OF ASSOCIATION

     We are a company limited by shares organized under the laws of the Republic
of Singapore. The company registration number with the Registry of Companies and
Businesses in Singapore is 199407932D.


OBJECTS

     We were established mainly to manufacture, assemble, test and provide
services relating to electrical and electronic components. We also carry out
research and development work in relation to the electrical and electronic
industry.

     A detailed list of all the other objects and purposes can be found in
Article 3 of our Memorandum of Association which was filed as an Exhibit to our
registration statement on Form F-1 (Registration Number: 333-93661) in
connection with our initial public offering in 2000 and is available for
examination at our principal and registered office at No. 5, Yishun Street 23,
Singapore 768442, Republic of Singapore.

                                       60
<PAGE>
BOARD OF DIRECTORS

     Our Articles of Association state that a director must declare at a meeting
of the Board of Directors if there are matters which may conflict with his
duties or interests as a director. He is not allowed to vote in respect of any
contract or arrangement or other proposal whatsoever in which he has any
interest, directly or indirectly and shall not be counted in the quorum in
relation to any resolution which he is not entitled to vote. If an independent
quorum is not achieved, the remaining directors may convene a general meeting.

     Our directors may exercise all the borrowing powers of our company to
mortgage or charge its undertaking, property and uncalled capital, and to issue
debentures and other securities.

     No shares are required to be held by a director for director's
qualification.

     Under Singapore law, no person of or over the age of 70 years shall be
appointed to act as a director unless the shareholders at a general meeting vote
by at least three-fourths majority in favor of his appointment to hold office
until the next annual general meeting of the company.

     Our Articles of Association set the minimum number of directors at two. The
number of directors retiring and eligible to stand for re-election each year
varies, but generally it is equal to at least one-third of the board, with the
directors who have been in office longest since their re-election or appointment
standing for re-election. Our Chief Executive Officer and President will not be
subject to retirement by rotation as described above while he or she is in
office.

     Our Articles of Association permit a director to appoint an alternate
director to act in place of such director should the director be unable to
perform his or her duties as director for a period of time. There are currently
two alternate directors. Under Singapore law, the alternate director is not
merely an agent of the director but is accountable to the company for his or her
actions as director during the period for which he or she acts as alternate
director.


ORDINARY SHARES

     Our authorized capital is S$800,000,000 consisting of 3,200,000,000
ordinary shares of par value S$0.25 each. We have only one class of shares,
namely, ordinary shares, which have identical rights in all respects and rank
equally with one another. Our Articles of Association provide that we may issue
shares of a different class with preferential, deferred, qualified or other
special rights, privileges or conditions as our Board of Directors may determine
and may issue preference shares which are, at the option of the company,
redeemable, subject to certain limitations. Our directors may issue shares at a
premium. If shares are issued at a premium, a sum equal to the aggregate amount
or value of the premium will, subject to certain exceptions, be transferred to a
share premium account. All of our ordinary shares are in registered form. All
issued ordinary shares are entitled to voting rights. We may, subject to and in
accordance with the Companies Act, Chapter 50 of Singapore (the "Companies
Act"), purchase our own ordinary shares. We may not, except as provided in the
Companies Act, grant any financial assistance for the acquisition or proposed
acquisition of our ordinary shares.


NEW ORDINARY SHARES

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

                                       61
<PAGE>
SHAREHOLDERS

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


TRANSFER OF ORDINARY SHARES

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


GENERAL MEETINGS OF SHAREHOLDERS

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


VOTING RIGHTS

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

                                       62
<PAGE>
DIVIDENDS

     We may, by ordinary resolution of the shareholders, declare dividends at a
general meeting, but we may not pay dividends in excess of the amount
recommended by our Board of Directors. We must pay all dividends out of our
profits. However, we may capitalize our share premium account and apply it to
pay dividends, if such dividends are satisfied by the issue of shares to the
shareholders. Our Board of Directors may also declare an interim dividend
without the approval of the shareholders. All dividends are paid pro rata among
the shareholders in proportion to the amount paid up on each shareholder's
ordinary shares, unless the rights attaching to an issue of any ordinary share
provide otherwise. Unless otherwise directed, dividends are paid by check or
warrant sent through the post to each shareholder at his or her registered
address. Notwithstanding the foregoing, the payment to the CDP of any dividend
payable to a shareholder whose name is entered in the depository register shall,
to the extent of payment made to the CDP, discharge us from any liability to
that shareholder in respect of that payment.


BONUS AND RIGHTS ISSUE

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


TAKE-OVERS

     The Securities and Futures Act 2001 and the Singapore Code on Takeovers and
Mergers (the "Take-Over Code") regulates the acquisition of, among others,
ordinary shares of public companies and contain certain provisions that may
delay, deter or prevent a future takeover or change in control of our company.
Any person acquiring an interest, either on his or her own or together with
parties acting in concert with him or her, in 30% or more of our voting shares
must extend a takeover offer for the remaining voting shares in accordance with
the provisions of the Take-Over Code.

     "Parties acting in concert" include a company and its related and
associated companies, a company and its directors (including their close
relatives, related trusts and companies controlled by any of the directors,
their close relatives and related trusts), a company and its pension funds and
employee share schemes, a person and any investment company, unit trust or other
fund whose investment such person manages on a discretionary basis, a financial
or other professional adviser and its client in respect of shares held by the
financial adviser and persons controlling, controlled by or under the same
control as the adviser and all the funds managed by the adviser on a
discretionary basis, where the shareholding of the adviser and any of those
funds in the client total 10% or more of the client's equity share capital,
directors of a company (including their close relatives, related trusts and
companies controlled by any of such directors, their close relatives and related
trusts) that is subject to an offer or where the directors have reason to
believe a bona fide offer for the company may be imminent, partners, and an
individual and his or her close relatives, related trusts, any person who is
accustomed to act in accordance with his instructions and companies controlled
by the individual, his or her close relatives, his or her related trusts or any
person who is accustomed to act in accordance with his or her instructions.

     A mandatory takeover offer is also required to be made if a person holding,
either on his or her own or together with parties acting in concert with him or
her, between 30% and 50% (both inclusive) of the voting shares acquires
additional voting shares representing more than 1% of the voting shares in any
six-month period. An offer for consideration other than cash must, subject to
certain exceptions, be accompanied by a cash alternative at not less than the
highest price paid by the offeror or parties acting in concert within the
preceding six months.

                                       63
<PAGE>
LIQUIDATION OR OTHER RETURN OF CAPITAL

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


INDEMNITY

     As permitted by Singapore law, the Articles of Association provide that,
subject to the Companies Act, we will indemnify our Board of Directors and
officers against any liability incurred in defending any proceedings, whether
civil or criminal, which relate to anything done or omitted to have been done as
an officer, director or employee and in which judgment is given in their favor
or in which they are acquitted or in connection with any application under any
statute for relief from liability in respect thereof in which relief is granted
by the court. We may not indemnify directors and officers against any liability
which by law would otherwise attach to them in respect of any negligence,
default, breach or duty or breach of trust of which they may be guilty in
relation to our company.


LIMITATIONS ON RIGHTS TO HOLD OR VOTE SHARES

     Except as described herein, there are no limitations imposed by Singapore
law or by the Articles of Association on the rights of non-resident shareholders
to hold or vote ordinary shares.


SUBSTANTIAL SHAREHOLDINGS

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


MINORITY RIGHTS

     The rights of minority shareholders of Singapore-incorporated companies are
protected under section 216 of the Companies Act, which gives the Singapore
courts a general power to make any order, upon application by any shareholder of
the company, as they think fit to remedy situations where: (1) the affairs of
the company are being conducted or the powers of the board of directors are
being exercised in a manner oppressive to, or in disregard of the interests of,
one or more of the shareholders; or (2) the company takes an action, or threaten
to take an action, or the shareholders pass a resolution, or threaten to pass a
resolution, which unfairly discriminates against, or is otherwise prejudicial
to, one or more of the shareholders, including the applicant.

     Singapore courts have wide discretion as to the reliefs they may grant and
those reliefs are in no way limited to those listed in the Companies Act itself.
Without prejudice to the foregoing, Singapore courts may direct or prohibit any
act or cancel or vary any transaction or resolution, regulate the affairs in the
future, authorize civil proceedings to be brought in the name of, or on behalf
of, our company by a person or persons and on such terms as the court may
direct, provide for the purchase of a minority shareholder's shares by the other
shareholders or by us and, in the case of a purchase of shares by us, a
corresponding reduction of the share capital, provide that the Memorandum or
Articles of Association be amended or provide that our company be wound up.


C.   MATERIAL CONTRACTS

     Not Applicable

                                       64
<PAGE>
D.   EXCHANGE CONTROL

     Currently, there are no exchange control restrictions in Singapore.


E.   TAXATION

     In this section we summarize certain Singapore income tax, stamp duty and
estate duty consequences of the purchase, ownership and disposal of the ordinary
shares or ADSs, collectively, the "securities," to a holder of the securities
who is not a resident in Singapore. This discussion does not purport to be a
comprehensive description of all the tax considerations that may be relevant to
a decision to purchase, own or dispose of the securities and does not purport to
deal with the tax consequences applicable to all categories of investors. You
should consult your own tax advisors as to the Singapore tax consequences of the
purchase, ownership and dispositions of the securities.

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


INCOME TAX

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

     Subject to the provisions of any applicable treaty for the avoidance of
double taxation and subject as discussed below, non-resident taxpayers who
derive certain types of income from Singapore are subject to a withholding tax
on that income which is at a rate of 24.5% for the year of assessment 2002, or
generally 15% in the case of interest, royalty and rental of movable equipment.
We are obligated by law to withhold tax at the source.

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


TAXATION OF DIVIDENDS

     If we pay dividends on the ordinary shares or ADSs out of tax exempt income
received because of our pioneer status or out of our income subject to a
concessionary tax rate, if any, such dividends will be free of Singapore tax in
the hands of the holders of the ordinary shares and ADSs. See "Item 5. Operating
and Financial Review and Prospects - Special Tax Status" for a discussion of
our pioneer status.

     Where the dividend is declared out of the above tax exempt income or income
subject to tax at a concessionary rate, we will have to obtain agreement from
the Inland Revenue Authority of Singapore, or IRAS, upon their issue of a
finalized tax statement confirming the amount of income available for
distribution of tax exempt dividends. Before such finalized tax statement is
issued and such agreement has been obtained, we may apply for, and the
Comptroller of Income Tax in Singapore may issue to us an approval for
distribution of tax exempt dividends based on our estimate of chargeable income
furnished to IRAS. Exempt dividends paid by us in excess of our finalized tax
exempt income will be deemed distributed out of our ordinary income and will be
subject to the treatment outlined below.

     We pay tax on our non-tax exempt income at the prevailing corporate tax
rate, which is currently 24.5% for the Year of Assessment 2001 onwards. This tax
paid by us is in effect imputed to, and deemed paid on behalf of, our
shareholders. Thus, if we pay dividends on our ordinary shares out of our
non-tax exempt income, our shareholders receive the dividends net of

                                       65
<PAGE>
the tax paid by us. Dividends received by either a resident or non-resident of
Singapore are not subject to withholding tax. Shareholders are taxed in
Singapore on the gross amount of dividends, which is the cash amount of the
dividend plus an amount normally equivalent to the corporate income tax rate
paid by us on the dividend. The tax paid by us effectively becomes available to
shareholders as a tax credit to offset the Singapore income tax liability on
their overall income, including the gross amount of dividends.

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

     As a temporary measure to cushion the impact of the current economic
slow-down, Singapore has also granted certain tax rebates for the Years of
Assessment 2001 and 2002. For the Year of Assessment 2002, the tax rebate
(excluding tax on Singapore dividends and tax on income subject to final
withholding tax) is 5%. In relation to dividends paid out of such non-tax exempt
income, the tax imputed to, and deemed paid on behalf of, our shareholders would
continue to be at the rate of 24.5%. However, we would also be allowed to
distribute, as exempt dividends, an amount of income that is effectively not
subject to tax as a result of the tax rebate.

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


GAINS ON DISPOSAL OF THE ORDINARY SHARES OR ADSS

     Singapore does not impose tax on capital gains. However, gains or profits
may be construed to be of an income nature and subject to tax, especially if
they arise from activities which the IRAS regards as the carrying on of a trade
in Singapore. Thus, any gains or profits from the disposal of the ordinary
shares or ADSs are not taxable in Singapore unless the seller is regarded as
carrying on a trade in securities in Singapore, in which case the disposal
profits would be taxable as trading profits rather than capital gains.


STAMP DUTY

     There is no stamp duty payable in respect of the issuance and holding of
new ordinary shares or ADSs. Where existing ordinary shares or ADSs evidenced in
certificated form are acquired in Singapore, stamp duty is payable on the
instrument of transfer of the ordinary shares or ADSs at the rate of S$2.00, or
S$1.40 in respect of instruments executed between October 13, 2001 and December
31, 2002, for every S$1,000 or part thereof of the consideration for, or market
value of, the ordinary shares or ADSs, whichever is higher. The stamp duty is
borne by the purchaser unless there is an agreement to the contrary. Where an
instrument of transfer is executed outside Singapore or no instrument of
transfer is executed, no stamp duty is payable on the acquisition of existing
ordinary shares or ADSs. Stamp duty may be payable if the instrument of transfer
is executed outside Singapore and is received in Singapore.


ESTATE DUTY

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

                                       66
<PAGE>
or her death would not be subject to Singapore estate tax duty on such ADSs
because such ADSs are registered outside Singapore and hence would not be
considered as movable properties in Singapore.


F.   DIVIDENDS AND PAYING AGENTS

     Not applicable


G.   STATEMENTS BY EXPERTS

     Not applicable


H.   DOCUMENTS ON DISPLAY

     All documents relating to our company which are referred to in this Annual
Report are available at our principal executive and registered office at No. 5,
Yishun Street 23, Singapore 768442, Republic of Singapore.


ITEM 11.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We may employ derivative instruments such as interest rate swaps and
currency swaps, forward foreign currency contracts and foreign currency option
contracts to manage our interest rate and foreign exchange exposures. These
instruments are used solely to reduce or eliminate the financial risks
associated with our assets and liabilities and not for trading or speculation
purposes.

     Our exposure to market risk associated with changes in interest rates would
primarily relate to our debt obligations. However, as of December 31, 2001, our
exposure to interest rate risk was relatively non-existent in view of the
absence of outstanding debt obligations except for the long-term loan from the
Economic Development Board. The applicable interest rate under the terms of the
loan is the interest rate declared by the Central Provident Fund Board, a
statutory board of the Singapore government. Our policy is to manage interest
rate risk by borrowing a combination of fixed and floating rate obligations
depending upon market conditions.

     We have adopted a foreign currency hedging policy and may utilize foreign
currency swaps as well as foreign exchange forward contracts and options. The
goal of the hedging policy is to effectively manage risk associated with
fluctuations in the value of the foreign currency, thereby making financial
results more stable and predictable.

     Our currency, maturity and interest rate information relating to our
short-term and long-term debt and marketable securities are disclosed in Notes
7, 10, and 14 to the consolidated financial statements, respectively.

                                       67
<PAGE>
     The tables below provide information about our financial instruments that
are sensitive to changes in interest rates and foreign currencies as of the
dates shown. Weighted average variable rates were based on average interest
rates applicable to the loans. The information is presented in U.S. dollar
equivalents, which is our reporting currency. Actual cash flows are denominated
in Singapore dollars.

<TABLE>
<CAPTION>
                                                   EXPECTED MATURITY DATE AS OF DECEMBER 31, 2001           AS OF DECEMBER 31, 2000
                                               -------------------------------------------------------     ------------------------
                                                                         2004 AND                FAIR                         FAIR
                                                2002         2003         BEYOND     TOTAL      VALUE      TOTAL             VALUE
                                               ------       ------       --------    ------     ------     ------            ------
                                                               (in thousands, except interest and settlement rate)
<S>                                            <C>          <C>          <C>         <C>        <C>        <C>               <C>
Debt:
Variable rate Singapore dollar
 long-term debt:                               14,045       14,045            --     28,090     27,959     44,398            42,802
Average interest rate                                                                   3.5%                  3.5%

Assets:
Singapore dollar marketable debt
 securities                                     3,680        9,405        10,716     23,801     23,801     21,906            21,906
Average interest rate                                                                  4.17%                  3.5%
</TABLE>

     The variable rate long-term debt is repayable in seven equal semi-annual
installments commencing September 1, 2000. The interest rate for the marketable
debt securities represents the contractual interest rate.


LIMITATIONS

     Fair value estimates are made at a specific point in time and are based on
relevant market information about the financial instrument. These estimates are
subjective in nature and involve uncertainties and matters of significant
judgment and therefore cannot be determined with precision. Changes in
assumptions could significantly affect the estimates.


ITEM 12.  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

     Not applicable


ITEM 13.  DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

     Not applicable


ITEM 14.  MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
          PROCEEDS

     See "Item 10. Additional Information" for a description of the rights of
securities holders, which remain unchanged.

     We completed our initial public offering of 175,950,000 ordinary shares,
directly or in the form of American Depositary Shares or ADSs, at S$3.554 per
ordinary share or $21.00 per ADS in February 2000, after our ordinary shares and
American Depositary Receipts were registered under the Securities Act. The
aggregate price of the offering amount registered and sold was $369,495,000. We
also completed a separate offering of 19,550,000 ordinary shares at S$3.554 per
ordinary share in Singapore on the same date. The effective date of our
registration statement on Form F-1 (File number: 333-93661) was January 27,
2000. Salomon Smith Barney Inc. was the global coordinator and sole book running
manager for the global offering of our ordinary shares and ADSs.

                                       68
<PAGE>
     The net proceeds from our initial public offering was used to repay loans
of $25.0 million from ST Treasury Services Ltd, a related party, $35.0 million
from Den Danske Bank and $22.2 million due on the EDB loan on the respective
repayment due dates, and for general corporate purposes, including for capital
expenditure and general working capital. Except as set forth in the previous
sentence, none of the proceeds were paid, directly or indirectly to our
directors, officers or their associates or to any person owning ten percent or
more of our ordinary shares or to our affiliates. As of December 31, 2001, our
cash resources amounted to $139.0 million, comprising $115.2 million in cash and
cash equivalents and $23.8 million in marketable securities.


ITEM 15.

     Not applicable


ITEM 16.

     Not applicable


ITEM 17.  FINANCIAL STATEMENTS

     See Item 18 for a list of the Financial Statements filed as part of this
Annual Report.


ITEM 18.  FINANCIAL STATEMENTS

     The following financial statements are filed as part of this Annual Report,
together with the report of the independent auditors:

     Independent Auditors' Report

     Consolidated Balance Sheets as at December 31, 2000 and 2001

     Consolidated Statements of Operations and Comprehensive Income (Loss) for
     the years ended December 31, 1999, 2000 and 2001

     Consolidated Statements of Shareholders' Equity for the years ended
     December 31, 1999, 2000 and 2001

     Consolidated Statements of Cash Flows for the years ended December 31,
     1999, 2000 and 2001

     Notes to the Consolidated Financial Statements

                                       69
<PAGE>
ITEM 19.  EXHIBITS

     The following exhibits are filed as part of this Annual Report.

<TABLE>
<S>       <C>
1.1       Memorandum and Articles of Association of ST Assembly Test Services
          Ltd.

2.1       Form of specimen certificate representing ST Assembly Test Services
          Ltd's ordinary shares - incorporated by reference to Exhibit 4.1 of
          Amendment No. 1 to Form F-1 of ST Assembly Test Services Ltd filed
          with the Securities and Exchange Commission on January 3, 2000.

2.2       Deposit Agreement among ST Assembly Test Services Ltd, Citibank, N.A.,
          as depositary, and the holders from time to time of ADRs issued
          thereunder (including the form of ADR) - incorporated by reference to
          Exhibit 2.2 of Form 20-F of ST Assembly Test Services Ltd filed with
          the Securities and Exchange Commission on March 30, 2001.

4.1       ST Group Management & Support Services Agreement dated December 27,
          1999 by and between Singapore Technologies Pte Ltd and ST Assembly
          Test Services Ltd - incorporated by reference to Exhibit 10.1 of
          Amendment No. 1 to Form F-1 of ST Assembly Test Services Ltd filed
          with the Securities and Exchange Commission on January 3, 2000.

4.2       Loan Agreement dated June 5, 1998 by and between the Economic
          Development Board and ST Assembly Test Services Ltd - incorporated by
          reference to Exhibit 10.2 of Amendment No. 1 to Form F-1 of ST
          Assembly Test Services Ltd filed with the Securities and Exchange
          Commission on January 3, 2000.

4.4       Lease Agreement dated November 18, 1996 by and between the Housing and
          Development Board and ST Assembly Test Services Ltd - incorporated by
          reference to Exhibit 10.4 of Amendment No. 1 to Form F-1 of ST
          Assembly Test Services Ltd filed with the Securities and Exchange
          Commission on January 3, 2000.

4.5       Immunity Agreement dated October 18, 1996 by and between Motorola Inc.
          and ST Assembly Test Services Ltd - incorporated by reference to
          Exhibit 10.5 of Amendment No. 1 to Form F-1 of ST Assembly Test
          Services Ltd filed with the Securities and Exchange Commission on
          January 3, 2000.

4.6       Programme Agreement dated January 10, 2002 by and between Citicorp
          Investment Bank (Singapore) Limited and ST Assembly Test Services Ltd
          establishing a S$500,000,000 Multicurrency Medium Term Note Program.

4.7       Trust Deed dated January 10, 2002 by and between British and Malayan
          Trustees Limited and ST Assembly Test Services Ltd establishing a
          S$500,000,000 Multicurrency Medium Term Note Program.

4.8       Agency Agreement dated January 10, 2002 by and between British and
          Malayan Trustees Limited, Citicorp Investment Bank (Singapore) Limited
          and ST Assembly Test Services Ltd establishing a S$500,000,000
          Multicurrency Medium Term Note Program.

8.1       List of subsidiaries.
</TABLE>

                                       70
<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.



                                    ST ASSEMBLY TEST SERVICES LTD



                                    By: /s/ Harry Hooshang Davoody
                                        ----------------------------------------
                                    Name: Harry Hooshang Davoody
                                    Title: President and Chief Executive Officer
                                    Date: February 28, 2002

                                       71
<PAGE>
                           FINANCIAL STATEMENTS INDEX



<TABLE>
<CAPTION>
                                                                         PAGE
                                                                         ----
<S>                                                                      <C>
Independent Auditors' Report                                              F-1

Consolidated Balance Sheets                                               F-2

Consolidated Statements of Operations and Comprehensive Income (Loss)     F-4

Consolidated Statements of Shareholders' Equity                           F-6

Consolidated Statements of Cash Flows                                     F-7

Notes to the Consolidated Financial Statements                            F-9
</TABLE>
<PAGE>
                          INDEPENDENT AUDITORS' REPORT



The Board of Directors and Shareholders
ST Assembly Test Services Ltd:


We have audited the accompanying consolidated balance sheets of ST Assembly Test
Services Ltd and subsidiaries as of December 31, 2000 and 2001, and the related
consolidated statements of operations and comprehensive income (loss),
shareholders' equity and cash flows for the years ended December 31, 1999, 2000
and 2001. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by the management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of ST
Assembly Test Services Ltd and subsidiaries as of December 31, 2000 and 2001,
and the consolidated results of their operations and their cash flows for the
years ended December 31, 1999, 2000 and 2001, in conformity with accounting
principles generally accepted in the United States of America.



/s/ KPMG
Singapore

January 30, 2002

                                      F-1
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        AS OF DECEMBER 31, 2000 AND 2001
                 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                                                              DECEMBER 31,
                                                                                                     -----------------------------
                                                                                      NOTE             2000                 2001
                                                                                     -----           --------             --------
<S>                                                                                  <C>             <C>                  <C>
ASSETS
Current assets:
  Cash and cash equivalents                                                              3           $141,733             $115,214
  Accounts receivable, net                                                               4             52,315               25,584
  Amounts due from ST and ST affiliates                                                 23              8,727                1,793
  Short-term deposits with ST affiliates                                                23             10,000                   --
  Other receivables                                                                      5             18,989                6,047
  Inventories                                                                            6             14,793                7,262
  Marketable securities                                                                  7             11,486                3,680
  Prepaid expenses                                                                       8             24,809               20,737
  Other current asset                                                                                      --                1,067
                                                                                                     --------             --------
     Total current assets                                                                             282,852              181,384
Property, plant and equipment, net                                                   9, 18            380,934              347,262
Marketable securities                                                                    7             10,420               20,121
Prepaid expenses                                                                         8             37,552               14,486
Goodwill                                                                                                   --                1,321
Other assets                                                                                               --               12,004
                                                                                                     --------             --------
     Total Assets                                                                                    $711,758             $576,578
                                                                                                     --------             --------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Current installments of long-term debt                                                14           $ 14,799             $ 14,045
  Current installments of obligations under capital leases                              10                 --                2,564
  Accounts payable                                                                                     13,956               13,692
  Amounts due to ST and ST affiliates                                                   23              2,062                2,473
  Accrued operating expenses                                                            11             32,963               14,684
  Other payables                                                                        12             27,705               23,051
  Income taxes payable                                                                                  2,846                1,428
                                                                                                     --------             --------
     Total current liabilities                                                                         94,331               71,937
Obligation under capital leases, excluding current
 installments                                                                           10                 --                7,689
Long-term debt, excluding current installments                                          14             29,599               14,045
Other non-current liabilities                                                           13              2,631                4,605
                                                                                                     --------             --------
     Total liabilities                                                                                126,561               98,276
Minority interest                                                                                          --               25,507
</TABLE>

                                      F-2
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        AS OF DECEMBER 31, 2000 AND 2001
                 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                                                              DECEMBER 31,
                                                                                                     -----------------------------
                                                                                      NOTE            2000                  2001
                                                                                     -----           --------             --------
<S>                                                                                  <C>             <C>                  <C>
Share capital:
  Ordinary shares -- par value S$0.25
  Authorized ordinary shares -- 3,200,000,000
   (2000: 1,200,000,000)

  Issued ordinary shares --
   986,171,915 as of December 31, 2000
   and 989,683,485 as of December 31, 2001                                              15            159,461              159,961
Additional paid-in capital                                                              16            386,325              387,652
Accumulated other comprehensive loss                                                    27             (9,731)              (9,941)
Retained earnings (deficit)                                                             17             49,142              (84,877)
                                                                                                     --------             --------
     Total shareholders' equity                                                                       585,197              452,795
                                                                                                     --------             --------
     Total Liabilities and Shareholders' Equity                                                      $711,758             $576,578
                                                                                                     --------             --------
</TABLE>

                                      F-3
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
      CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
                  IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND
                                 PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                              FOR THE YEAR ENDED DECEMBER 31,
                                                                     -----------------------------------------------
                                                        NOTE            1999               2000              2001
                                                                     ---------          ---------          ---------
<S>                                                     <C>          <C>                <C>                <C>
Net revenues                                                         $ 201,098          $ 331,271          $ 145,866
Cost of revenues                                                      (132,889)          (231,944)          (217,789)
                                                                     ---------          ---------          ---------
Gross profit (loss)                                                     68,209             99,327            (71,923)
                                                                     ---------          ---------          ---------
Operating expenses:
  Selling, general and administrative                                   28,437             40,798             36,041
  Research and development                                               7,283             14,636             15,160
  Asset impairments                                      18                 --                 --             23,735
  Prepaid leases written off                              8                 --                 --              3,145
  Stock-based compensation                                              25,327                448              1,024
  Other general expenses (net)                                              37                (22)               101
                                                                     ---------          ---------          ---------
     Total operating expenses                                           61,084             55,860             79,206
                                                                     ---------          ---------          ---------

Operating income (loss)                                                  7,125             43,467           (151,129)
                                                                     ---------          ---------          ---------

Other income (expense):
  Interest income                                                          524             10,638              6,497
  Interest expense                                                      (6,058)            (2,424)            (1,275)
  Foreign currency exchange gain                                         1,385              2,018                775
  Other non-operating income, net                        19              2,379              3,525              1,990
                                                                     ---------          ---------          ---------
     Total other income (expense)                                       (1,770)            13,757              7,987
                                                                     ---------          ---------          ---------

Income (loss) before income taxes                                        5,355             57,224           (143,142)
Income taxes                                             20               (500)            (2,865)             8,810
                                                                     ---------          ---------          ---------
Income (loss) before minority interest                                   4,855             54,359           (134,332)
Minority interest                                                           --                 --                313
                                                                     ---------          ---------          ---------
Net income (loss)                                                    $   4,855          $  54,359          $(134,019)
                                                                     =========          =========          =========

Other comprehensive income (loss):
  Unrealized loss on available-for-sale
   marketable securities                                                    --                 --               (303)
  Foreign currency translation                                              --                 --                 93
                                                                     ---------          ---------          ---------
Comprehensive income (loss)                                          $   4,855          $  54,359          $(134,229)
                                                                     =========          =========          =========

Basic net income (loss) per ordinary share                           $    0.01          $    0.06          $   (0.14)
Diluted net income (loss) per ordinary share                         $    0.01          $    0.06          $   (0.14)


Basic net income (loss) per ADS                                      $    0.06          $    0.56          $   (1.36)
Diluted net income (loss) per ADS                                    $    0.06          $    0.56          $   (1.36)
                                                                     =========          =========          =========
</TABLE>

                                      F-4
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
      CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
                  IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND
                                 PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                              FOR THE YEAR ENDED DECEMBER 31,
                                                                     -----------------------------------------------
                                                        NOTE            1999               2000              2001
                                                                     ---------          ---------          ---------
<S>                                                     <C>          <C>                <C>                <C>
Ordinary shares (in thousands) used in per
 ordinary share calculation:
  -- basic                                                             770,259            962,828            989,083
  -- effect of dilutive options                                         16,466              7,803                 --
                                                                     ---------          ---------          ---------
  -- diluted                                                           786,725            970,631            989,083
                                                                     =========          =========          =========

ADS (in thousands) used in per ADS calculation:
  -- basic                                                              77,026             96,283             98,908
  -- effect of dilutive options                                          1,646                780                 --
                                                                     ---------          ---------          ---------
  -- diluted                                                            78,672             97,063             98,908
                                                                     =========          =========          =========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-5

<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
                 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)

<TABLE>
<CAPTION>

                                                                                             ACCUMULATED                  TOTAL
                                                     ADDITIONAL   UNEARNED   SUBSCRIP-          OTHER       RETAINED      SHARE-
                                                      PAID IN     COMPEN-       TIONS       COMPREHENSIVE   EARNINGS      HOLDER'
                             ORDINARY SHARES          CAPITAL     SATION     RECEIVABLE     INCOME (LOSS)   (DEFICIT)     EQUITY
                        --------------------------   ----------   --------  ------------  ---------------   ---------    ---------
                              NO.           $             $           $            $              $               $           $
                        (IN THOUSANDS)
<S>                     <C>               <C>        <C>          <C>        <C>          <C>               <C>           <C>
Balances at
 December 31, 1998          780,174       129,042       5,389     (3,756)        (2,931)         (9,731)       (9,975)     108,038

Share issuance               15,972         2,381          --         --         (2,262)             --            --          119
Other changes in
 unearned
 compensation                    --            --      21,339    (21,339)            --              --            --           --
Amortization of
 stock compensation              --            --          61      9,352             --              --            --        9,413
Termination of
 Ownership
 Scheme                     (10,718)       (1,596)       (655)    15,743          5,193                           (97)      18,588
Amortization of
 stock compensation              --            --         171         --             --              --            --          171
Net income                       --            --          --         --             --              --         4,855        4,855
                            -------       -------     -------    -------         ------          ------      --------     --------
Balances at
 December 31, 1999          785,428       129,827      26,305         --             --          (9,731)       (5,217)     141,184

Share issuances             200,744        29,634     359,572         --             --              --            --      389,206
Stock compensation               --            --         448         --             --              --            --          448
Net income                       --            --          --         --             --              --        54,359       54,359
                            -------       -------     -------    -------         ------          ------      --------     --------
Balances at
 December 31, 2000          986,172       159,461     386,325         --             --          (9,731)       49,142      585,197

Share issuances               3,511           500         303         --             --              --            --          803
Stock compensation               --            --       1,024         --             --              --            --        1,024
Unrealized loss on
 available-for-sale
 marketable  securities          --            --          --         --             --            (303)           --         (303)
Foreign currency
 translation                     --            --          --         --             --              93            --           93
Net loss                         --            --          --         --             --              --      (134,019)    (134,019)
                            -------       -------     -------    -------         ------          ------      --------     --------
Balances at
 December 31, 2001          989,683       159,961     387,652         --             --          (9,941)      (84,877)     452,795
                            =======       =======     =======    =======         ======          ======      ========     ========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-6

<PAGE>



                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
                           IN THOUSANDS OF US DOLLARS

<TABLE>
<CAPTION>

                                                              FOR THE YEAR ENDED DECEMBER 31,
                                                            ----------------------------------
                                                              1999         2000         2001
                                                            --------     ---------   ---------
<S>                                                         <C>          <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)                                           $  4,855     $  54,359   $(134,019)
Adjustments to reconcile net income (loss)
 to net cash provided by operating activities:
  Depreciation and amortization                               74,166        72,419     100,342
  Asset impairments                                               --            --      23,735
  Amortization of leasing prepayments                          1,005        14,829      24,618
  Prepaid leases written off                                      --            --       3,145
  Loss (gain) on sale of property, plant and equipment            37           (22)        120
  Exchange gain                                               (2,337)       (2,104)       (775)
  Deferred income taxes                                           --            --     (10,161)
  Minority interest in loss in subsidiary                         --            --        (313)
  Others                                                         101            --          78
Changes in operating working capital:
  Accounts receivable                                        (16,751)      (14,430)     27,222
  Amounts due from ST and ST affiliates                         (239)       (2,195)      6,935
  Inventories                                                 (4,719)       (3,480)      7,530
  Other receivables and prepaid expenses                      (5,342)          139      13,693
  Accounts payable                                              4,246        1,621          19
  Amounts due to ST and ST affiliates                          1,222        (3,471)        407
  Accrued operating expenses and other payables               16,998        12,435     (21,244)
                                                            --------     ---------   ---------
Net cash provided by operating activities                     73,242       130,100      41,332
                                                            --------     ---------   ---------
CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from sales or maturity of marketable securities          --            --      20,181
Purchases of marketable securities                                --       (21,930)    (22,499)
Proceeds from maturity of short-term deposits                     --            --      10,000
Short-term deposits with ST affiliates                            --       (10,000)         --
Acquisition of subsidiary, net of cash acquired                   --            --       1,835
Purchases of property, plant and equipment                   (84,301)     (299,554)    (55,980)
Proceeds from the sale of property, plant and equipment        1,971         5,423       2,195
                                                            --------     ---------   ---------
Net cash used in investing activities                        (82,330)     (326,061)    (44,268)
                                                            --------     ---------   ---------
CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issuance of short-term debt                     10,000             -          --
Repayment of short-term debt                                      --       (60,000)     (8,824)
Repayment of long-term debt                                       --        (7,468)    (14,711)
Proceeds from issuance of shares                               3,080       389,206         803
Purchase consideration for share buy-back                       (116)           --          --
                                                            --------      --------   ---------
Net cash provided by (used in) financing activities           12,964       321,738     (22,732)
                                                            --------      --------   ---------
</TABLE>

                                      F-7

<PAGE>


                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
                           IN THOUSANDS OF US DOLLARS

<TABLE>
<CAPTION>

                                                                      FOR THE YEAR ENDED DECEMBER 31,
                                                                 ------------------------------------------
                                                                   1999             2000            2001
                                                                 -------          --------        --------
<S>                                                              <C>              <C>             <C>
Net increase (decrease) in cash and cash equivalents
 for the year                                                      3,876           125,777         (25,668)
Effect of exchange rate changes on cash and cash equivalents          --              (612)           (851)
Cash and cash equivalents at beginning of the year                12,692            16,568         141,733
                                                                 -------          --------        --------
Cash and cash equivalents at end of the year                     $16,568          $141,733        $115,214
                                                                 =======          ========        ========
SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid (net of amount capitalized)                        $ 6,001          $  3,045        $  1,472
Income taxes paid                                                $   143          $    616        $  2,995
Non-cash items
  Equipment acquired under capital leases                        $    --          $     --        $ 10,253
  Share issue (cancellation) subscriptions receivable            $(1,000)         $     --        $     --
  Sale-leaseback transactions:
    Sales consideration applied to leasing prepayments           $20,246          $ 59,536        $     --
    Sales consideration included in other receivables            $    --          $  7,722        $     --
                                                                 =======          ========        ========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-8
<PAGE>


                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)


1.   BUSINESS AND ORGANIZATION

     BACKGROUND

     ST Assembly Test Services Ltd (the "Company") is an independent provider of
     a full range of semiconductor test and assembly services. The Company has
     operations in Singapore and in the United States of America, its principal
     market. As of December 31, 2001, the Company was 71.97% owned by Singapore
     Technologies Pte Ltd ("ST").

     In August 2001, the Company acquired a 51% equity interest in Winstek
     Semiconductor Corporation ("Winstek"), a company incorporated in Taiwan, to
     enhance the Company's position in the Taiwanese market. The Company
     purchased new shares issued by Winstek for a total consideration of $27,986
     in cash. Winstek's principal activity is the provision of semiconductor
     test services including wafer probe, final testing and drop shipment
     services. The Winstek acquisition was accounted for as a purchase business
     combination, and accordingly, the results of operations of Winstek have
     been included in the consolidated statements of operations of the Company
     from August 2001. The purchase price has been allocated to the assets
     acquired and liabilities assumed according to estimated fair values at the
     date of acquisition. The allocation resulted in the recognition of goodwill
     of $1,321.

     The following table summarizes the estimated fair value of the assets
     acquired and liabilities assumed at the date of acquisition:

     <TABLE>

     <S>                                       <C>
     Current assets                            $32,109
     Property, plant and equipment              31,138
     Goodwill                                    1,321
     Other assets                                2,088
                                               -------
         Total assets acquired                  66,656
                                               =======

     Current liabilities                       (11,983)
     Other liabilities                          (1,069)
                                               -------
         Total liabilities assumed             (13,052)
                                               =======

     Minority interest                         (25,618)

                                               -------
         Net assets acquired                   $27,986
                                               =======
     </TABLE>


     Disclosures of results of operations on a proforma basis giving effect to
     the acquisition are not included as management does not consider this to be
     a material business combination.

                                      F-9
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)


     SIGNIFICANT CUSTOMERS AND CONCENTRATION OF CREDIT RISKS

     The Company has a number of major customers in North America, Europe and
     Asia. During the years ended December 31, 1999, 2000 and 2001, the
     Company's largest customer accounted for 25%, 32% and 29% of revenues,
     respectively. The Company's five largest customers collectively accounted
     for approximately 73%, 70% and 67% of revenues for the years ended December
     31, 1999, 2000 and 2001, respectively (See Note 21). The Company
     anticipates that significant customer concentration will continue for the
     foreseeable future, although the companies which constitute the Company's
     largest customers may change. The Company believes that the concentration
     of its credit risk in trade receivables is mitigated substantially by its
     credit evaluation process, credit policies and credit control and
     collection procedures.

     In addition, the Company participates in a pooled cash management program
     and places short-term advances with ST or its affiliates.


     RISKS AND UNCERTAINTIES

     The Company's future results of operations include a number of risks and
     uncertainties. Factors that could affect the Company's future operating
     results and cause actual results to vary materially from expectations
     include, but are not limited to, dependence on the state of the
     semiconductor industry and the demand for end-use applications products
     such as communications equipment and personal computers, pricing pressures
     and declines in average selling prices, reliance on a small group of
     principal customers, decisions by customers to discontinue outsourcing of
     test and assembly services, changes in customer order patterns,
     rescheduling or cancelling of customer orders, changes in product mix,
     capacity utilization, availability of financing, level of competition,
     continued success in technological innovations, delays in acquiring or
     installing new equipment, shortages in supply of key components, exchange
     rate fluctuations and litigation.

                                      F-10
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)  ACCOUNTING PRINCIPLES

     The consolidated financial statements of the Company have been prepared in
     conformity with accounting principles generally accepted in the United
     States of America ("US GAAP").


(b)  PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements include the financial statements of
     ST Assembly Test Services Ltd and its subsidiaries. All significant
     intercompany balances and transactions have been eliminated in
     consolidation.


(c)  USE OF ESTIMATES IN THE FINANCIAL STATEMENTS

     The preparation of the consolidated financial statements in accordance with
     US GAAP requires management to make estimates and assumptions that affect
     the reported amounts of assets and liabilities and disclosure of contingent
     assets and liabilities at the date of the financial statements and the
     reported revenues and expenses during the reporting period. Actual results
     could differ from these estimates.


(d)  FOREIGN CURRENCY TRANSACTIONS

     The Company's functional currency is the US dollar. Assets and liabilities
     which are denominated in foreign currencies are converted into the
     functional currency at the rates of exchange prevailing at the balance
     sheet date. Income and expenses are converted at the rates of exchange at
     transaction dates prevailing during the year. Foreign currency transaction
     gains or losses are included in results of operations.


(e)  FINANCIAL INSTRUMENTS

     In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
     No. 133, "Accounting for Derivative Instruments and Hedging Activities,"
     which was amended in June 2000 by SFAS No. 138, "Accounting for Certain
     Derivative Instruments and Certain Hedging Activities, an Amendment of SFAS
     No. 133." SFAS No. 133, as amended, establishes accounting and reporting
     standards for derivative instruments and hedging activities. They require
     that an entity recognize all derivatives as either assets or liabilities in
     the statement of financial position and measure those instruments at fair
     value. Changes in the fair value of those instruments will be reported in
     earnings or other comprehensive income depending on the use of the
     derivatives and whether it qualifies for hedge accounting. The accounting
     for gains and losses associated with changes in the fair value of the
     derivatives and the effect on the consolidated financial statements will
     depend on its hedge designation and whether the hedge is highly effective
     in achieving offsetting changes in the fair values of cash flows of the
     asset or liability hedged. The Company adopted SFAS 133, as amended, on
     January 1, 2001. The adoption of SFAS 133, as amended, did not have a
     material effect on the Company's financial position or results of
     operations and the Company had no outstanding derivative instruments at
     December 31, 2000 and 2001.


(f)  CASH AND CASH EQUIVALENTS

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

                                      F-11
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)


(g)  INVENTORIES

     Inventories are valued at the lower of cost and net realizable value. Cost
     is determined principally on a standard cost basis which approximates the
     actual cost on the weighted average basis.


(h)  GOODWILL

     Goodwill is not amortized, but is tested for impairment. In addition, the
     Company adopted SFAS No. 142, "Goodwill and Other Intangible Assets,"
     effective January 1, 2002. Under SFAS No. 142, the Company will test
     goodwill for impairment on at least an annual basis by first comparing the
     fair value of the applicable reporting unit to its carrying value. If the
     carrying value of the reporting unit exceeds its fair value, the second
     step of the impairment test is performed to determine the amount of
     impairment loss, if any. The second step of the test involves the
     comparison of the implied fair value of the goodwill to its carrying value.
     If the carrying value of reporting unit goodwill exceeds its implied fair
     value, an impairment loss is recognized for an amount equal to the excess.
     The implied fair value of reporting unit goodwill is determined in the same
     manner as the amount of goodwill recognized in a purchase business
     combination is determined. The Company has a single reporting unit. Refer
     to note 2 (v) for further discussion of SFAS No.'s 141 and 142.


(i)  PROPERTY, PLANT AND EQUIPMENT

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

<TABLE>

     <S>                                                    <C>
     Building, mechanical and electrical installation       -  3 to 20 years
     Plant and machinery                                    -  5 years
     Toolings                                               -  5 years
     Office furniture and equipment                         -  5 years
     Computer equipment                                     -  2 to 3 years
     Motor vehicle                                          -  5 years
</TABLE>

     No depreciation is provided on property, plant and equipment under
     installation or construction and freehold land. Repairs and replacements of
     a routine nature are expensed, while those that extend the life of an asset
     are capitalized.

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


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

     The Company accounts for impairments of long-lived assets in accordance
     with the provisions of SFAS No. 121, "Accounting for the Impairment of
     Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." This
     Statement requires that long-lived assets and certain identifiable
     intangibles be reviewed for impairment whenever events or changes in
     circumstances indicate that the carrying amount of an asset may not be
     recoverable. Recoverability of assets to be held and used is measured by a
     comparison of the carrying amount of an asset to future net cash flows
     expected to be generated by the asset. If such assets are considered to be
     impaired, the impairment to be recognized is measured by the amount by
     which the carrying amount of the assets exceeds the fair value of the
     assets. Assets to be disposed of are reported at the lower of the carrying
     amount or fair value less costs to sell.

                                      F-12
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)


(k)  MARKETABLE SECURITIES

     Marketable securities at December 31, 2001 consist of corporate debt
     securities denominated principally in Singapore dollars. The Company
     classifies its securities in one of three categories: trading,
     available-for-sale, or held-to-maturity. Trading securities are bought and
     held principally for the purpose of selling them in the near term.
     Held-to-maturity securities are those securities in which the Company has
     the ability and intent to hold the security until maturity. All securities
     not included in trading or held-to-maturity are classified as
     available-for-sale.

     Trading and available-for-sale securities are recorded at fair value.
     Held-to-maturity securities are recorded at amortized cost, adjusted for
     the amortization or accretion of premiums or discounts. Unrealized holding
     gains and losses on trading securities are included in earnings. Unrealized
     holding gains and losses, net of the related tax effect, on
     available-for-sale securities are excluded from earnings and are reported
     as a separate component of other comprehensive income until realized.
     Realized gains and losses from the sale of available-for-sale securities
     are determined on a specific identification basis.

     A decline in the market value of any available-for-sale or held-to-maturity
     security below cost that is deemed to be other than temporary results in a
     reduction in its carrying amount to fair value. The impairment is charged
     to earnings and a new cost basis for the security is established. Premiums
     and discounts are amortized or accreted over the life of the related
     held-to-maturity or available-for-sale security as an adjustment to yield
     using the effective interest method. Dividend and interest income are
     recognized when earned.

     At December 31, 2001, the securities held were classified as
     available-for-sale.


(l)  OPERATING LEASES

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


(m)  GRANTS

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

     Income-related government grants are subsidies of training and research and
     development expenses. Income-related grants are credited to other income
     concurrent with the related qualifying expenditures.


(n)  REVENUE RECOGNITION

     Net revenue represents the invoiced value of services rendered, excluding
     goods and services tax, net of returns, trade discounts and allowances.
     Revenue is principally recognized upon shipment of goods on which services
     have been rendered. For certain contractual arrangements, revenue is
     realizable, and therefore recognized, upon completion of services.

                                      F-13
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)


(o)  RESEARCH AND DEVELOPMENT

     Research and development expenses are expensed as incurred. Research and
     development expenses amounted to $7,283, $14,636 and $15,160 during the
     years ended December 31, 1999, 2000 and 2001, respectively.


(p)  STOCK-BASED EMPLOYEE COMPENSATION

     The Company measures stock-based employee compensation cost for financial
     statement purposes in accordance with Accounting Principles Board Opinion
     No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), and its
     related interpretations and includes pro forma information in Note 22 in
     accordance with SFAS No. 123, "Accounting for Stock-Based Compensation."
     Compensation cost for stock options granted to employees in connection with
     the Company's fixed option plan is measured as the excess of fair market
     value of the stock subject to the option at the grant date over the
     exercise price of the option and is recorded over the requisite vesting
     periods. Compensation cost for options granted to employees under the
     Company's prior variable option plan was recorded over the requisite
     vesting periods based upon the current market value of the Company's stock
     at the end of each period.


(q)  PENSION PLANS

     The Company has a defined contribution plan, required by local regulation,
     which covers substantially all of its domestic employees who are Singapore
     citizens and Singapore permanent residents. Under the defined contribution
     plan, the Company made monthly contributions based on the statutory funding
     requirement into a Central Provident Fund. Total plan expenses for the
     years ended December 31, 1999, 2000 and 2001 were $1,220, $2,367 and
     $2,737, respectively.

     Winstek operates a defined benefit retirement plan for a substantial
     portion of its employees in Taiwan in accordance with the Labor Standards
     Law in Taiwan. Pension benefits are generally based on years of service and
     average salary for the six months prior to approved retirement date.
     Winstek contributes its pension obligations to Central Trust of China, as
     required by the Labor Standards Law. The funding of the pension plan is
     determined in accordance with statutory funding requirements. Winstek is
     obligated to make up any shortfall in the plan's assets in meeting the
     benefits accrued to the participating staff. Total pension plan expenses
     for the period from August 21, 2001 (acquisition date) to December 31, 2001
     were approximately $39. Additional disclosures regarding this pension plan
     pursuant to SFAS No. 132, "Employees Disclosures about Pensions and Other
     Postretirement Benefits, an amendment of FASB Statements No. 87, 88 and
     106" are not considered necessary due to the immateriality of the amounts
     involved.


(r)  INCOME TAXES

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

                                      F-14
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)


(s)  NET INCOME (LOSS) PER SHARE

     The computation of basic net income (loss) per share is calculated as the
     net income or loss for the year divided by the weighted average number of
     shares outstanding during the year, as adjusted on a retroactive basis for
     stock splits. Diluted net income (loss) per share reflects the potential
     dilution that would occur if share options or other contracts to issue
     ordinary shares were exercised and converted into ordinary shares.


(t)  COMPREHENSIVE INCOME (LOSS)

     Comprehensive income (loss) consists of net income (loss), foreign currency
     translation adjustments and unrealized gain (loss) on available-for-sale
     marketable securities, and is presented in the consolidated statements of
     operations and comprehensive income (loss).


(u)  SEGMENT DISCLOSURES

     SFAS No. 131, "Disclosures About Segments of an Enterprise and Related
     Information" ("SFAS 131"), requires that a public company report
     descriptive information about its reportable operating segments. Operating
     segments, as defined, are components of an enterprise about which separate
     financial information is available that is evaluated regularly by the chief
     operating decision maker in deciding how to allocate resources and in
     assessing performance. The Company has one operating segment.


(v)  RECENTLY ISSUED ACCOUNTING STANDARDS

     In June 2001, the FASB issued SFAS No. 141, "Business Combinations," and
     SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires
     that the purchase method of accounting be used for all business
     combinations initiated after June 30, 2001 as well as all purchase method
     business combinations completed after June 30, 2001. SFAS No. 141 also
     specifies criteria which intangible assets acquired in a purchase method
     business combination must meet to be recognized and reported apart from
     goodwill. SFAS No. 142 will require that goodwill and intangible assets
     with indefinite useful lives no longer be amortized, but instead tested for
     impairment at least annually in accordance with the provisions of SFAS No.
     142. SFAS No. 142 will also require that intangible assets with estimable
     useful lives be amortized over their respective estimated useful lives to
     their estimated residual values, and reviewed for impairment in accordance
     with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
     Assets," which was issued in August 2001. The Company is required to adopt
     the provisions of SFAS No. 141 immediately and SFAS No. 142 effective
     January 1, 2002. Accordingly, the Company accounted for the acquisition of
     its interest in Winstek under SFAS No. 141. The adoption of SFAS No's. 141
     and 142 did not have a material effect on the Company's financial position
     or results of operations.

                                      F-15
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)


     In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
     Retirement Obligations," which addresses financial accounting and reporting
     for obligations associated with the retirement of tangible long-lived
     assets and associated asset retirement costs. This statement applies to
     legal obligations associated with the retirement of long-lived assets that
     result from the acquisition, construction, development and (or) normal use
     of the asset. SFAS No. 143 requires that the fair value of a liability for
     an asset retirement obligation be recognized in the period in which it is
     incurred if a reasonable estimate of fair value can be made. The fair value
     of the liability is added to the carrying amount of the associated asset
     and this additional carrying amount is depreciated over the life of the
     asset. The liability is accreted at the end of each period through charges
     to operating expense. If the obligation is settled for other than the
     carrying amount of the liability, the Company will recognize a gain or loss
     on settlement. The Company is required to adopt the provisions of SFAS No.
     143 on January 1, 2003. The Company is currently unable to estimate the
     impact of adopting SFAS No. 143.

     In August 2001, the FASB issued SFAS No. 144, "Accounting for the
     Impairment or Disposal of Long-Lived Assets," which supersedes SFAS No.
     121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
     Assets to be Disposed Of." SFAS No. 144 retains the fundamental provisions
     of SFAS No. 121 for recognition and measurement of the impairment of
     long-lived assets to be held and used and measurement of long-lived assets
     to be disposed of by sale. SFAS No. 144 addresses certain implementation
     issues related to SFAS No. 121. This Statement also supersedes the
     accounting and reporting provisions of APB Opinion No. 30, "Reporting the
     Results of Operations - Reporting the Effects of Disposal of a Segment of a
     Business, and Extraordinary, Unusual and Infrequently Occurring Events and
     Transactions," for segments of a business to be disposed of. SFAS No. 144
     retains the basic provisions of Opinion No. 30 for the presentation of
     discontinued operations in the income statement but broadens that
     presentation to include a component of an entity, rather than a segment of
     a business. The Company is required to adopt SFAS No. 144 on January 1,
     2002. The adoption of SFAS No. 144 did not have a material effect on the
     Company's financial position or results of operations.


(w)  RECLASSIFICATIONS

     Certain reclassifications have been made in prior years' financial
     statements to conform to classifications used in the current year.


3.   CASH AND CASH EQUIVALENTS

     Cash and cash equivalents at December 31, 2000 and 2001 consist of:

     <TABLE>
     <CAPTION>
                                                                             DECEMBER 31,
                                                                   ---------------------------------
                                                                     2000                     2001
                                                                   --------                 --------
     <S>                                                           <C>                      <C>
     Cash at banks and in hand                                     $  1,828                 $    400
     Cash equivalents - bank fixed deposits                          38,132                   36,109
     Cash equivalents - ST pooled cash management                     5,409                    1,599
     Cash equivalents - ST treasury deposits                         96,364                   77,106
                                                                   --------                 --------
                                                                   $141,733                 $115,214
                                                                   ========                 ========
     </TABLE>

                                      F-16
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)


     The Company participates in a pooled cash management program which requires
     the Company to place surplus cash with ST as overnight advances. These
     deposits, as well as short-term deposits with the ST treasury unit with
     original maturities of three months or less, are classified as cash
     equivalents.


4.   ACCOUNTS RECEIVABLE

     Accounts receivable at December 31, 2000 and 2001 consist of:

     <TABLE>
     <CAPTION>
                                                                        DECEMBER 31,
                                                              --------------------------------
                                                                2000                    2001
                                                              -------                  -------
     <S>                                                      <C>                      <C>
     Accounts receivable - third parties                      $53,408                  $26,368
     Allowance for doubtful accounts                           (1,093)                    (784)
                                                              -------                  -------
                                                              $52,315                  $25,584
                                                              =======                  =======
     </TABLE>

     Movements in the allowance for doubtful accounts are as follows:


     <TABLE>
     <CAPTION>
                                                        FOR THE YEAR ENDED DECEMBER 31,
                                                      ----------------------------------
                                                       1999         2000           2001
                                                      -----        ------         ------
     <S>                                              <C>          <C>            <C>
     Beginning                                        $ 211        $   92         $1,093
     Charge (credit) for the year                      (119)        1,384           (309)
     Utilized for the year                               --          (383)            --
                                                      -----        ------         ------
     Ending                                           $  92        $1,093         $  784
                                                      =====        ======         ======
     </TABLE>


5.   OTHER RECEIVABLES

     Other receivables at December 31, 2000 and 2001 consist of:

     <TABLE>
     <CAPTION>
                                                                        DECEMBER 31,
                                                             ----------------------------------
                                                               2000                       2001
                                                             -------                     ------
     <S>                                                     <C>                         <C>
     Deposits and staff advances                             $   410                     $  103
     Grant receivable (Note 13)                                7,467                      5,606
     Other receivables                                        11,112                        338
                                                             -------                     ------
                                                             $18,989                     $6,047
                                                             =======                     ======
     </TABLE>
                                      F-17
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)


6.   INVENTORIES

     Inventories at December 31, 2000 and 2001 consist of:

     <TABLE>
     <CAPTION>
                                                                                     DECEMBER 31,
                                                                          --------------------------------
                                                                            2000                    2001
                                                                          -------                  -------
     <S>                                                                  <C>                      <C>
     Raw materials                                                        $12,047                  $ 8,687
     Factory supplies                                                       1,849                    1,352
     Work-in-progress                                                       2,501                    1,580
     Finished goods                                                            40                      736
                                                                          --------                 -------
                                                                           16,437                   12,355
     Allowance for inventory obsolescence                                  (1,644)                  (5,093)
                                                                          --------                 -------
                                                                          $14,793                  $ 7,262
                                                                          ========                 =======
     </TABLE>

     Movements in the allowance for inventory obsolescence are as follows:


     <TABLE>
     <CAPTION>
                                                                               FOR THE YEAR ENDED DECEMBER 31,
                                                                             ----------------------------------
                                                                               1999         2000          2001
                                                                             ------        ------       -------
     <S>                                                                     <C>           <C>          <C>
     Beginning                                                               $  583        $1,103       $ 1,644
     Charge for the year                                                      1,413           541         5,124
     Utilized in year                                                          (893)           --        (1,675)
     Translation adjustment                                                      --            --            --
                                                                             ------        ------       -------
     Ending                                                                  $1,103        $1,644       $ 5,093
                                                                             ======        ======       =======
     </TABLE>


7.   MARKETABLE SECURITIES

     Available-for-sale debt securities at December 31, 2000 and 2001 consist of
     the following (at fair value):

     <TABLE>
     <CAPTION>

                                                                                            DECEMBER 31,
                                                                                       ---------------------
                                                                                        2000          2001
                                                                                       -------       -------
     <S>                                                                               <C>           <C>
     Corporate debt securities:
        Due in one year or less                                                        $11,486       $ 3,680
        Due after one year through five years                                           10,420        20,121
                                                                                       -------       -------
                                                                                       $21,906       $23,801
                                                                                       =======       =======
     </TABLE>

     Realized gains and losses were immaterial in the years ended December 31,
     2000 and 2001.

                                      F-18
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)


8.   PREPAID EXPENSES

     Prepaid expenses at December 31, 2000 and 2001 consist of:

     <TABLE>
     <CAPTION>
                                                                              DECEMBER 31,
                                                                       ------------------------
                                                                        2000             2001
                                                                       -------          -------
     <S>                                                               <C>              <C>
     Leasing prepayments                                               $61,940          $34,090
     Other prepayments                                                     421            1,133
                                                                       -------          -------
                                                                       $62,361          $35,223
                                                                       =======          =======

     Current assets                                                    $24,809          $20,737
     Non-current assets                                                 37,552           14,486
                                                                       -------          -------
                                                                       $62,361          $35,223
                                                                       =======          =======
     </TABLE>

     Leasing prepayments represent prepayments of lease rental obligations for
     certain plant and machinery leased under sale and lease-back arrangements.

     In the year ended December 31, 2001, the Company recorded an impairment
     charge of $3,145 to write off prepaid leases for testers which the Company
     does not expect to use in the future.


9.   PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment at December 31, 2000 and 2001 consist of:

     <TABLE>
     <CAPTION>
                                                                                         DECEMBER 31,
                                                                                     ---------------------
                                                                                       2000         2001
                                                                                     --------     --------
     <S>                                                                             <C>          <C>
     Cost:
        Freehold land                                                                $     --     $  5,652
        Buildings, mechanical and electrical installation                              52,154       64,688
        Plant and machinery                                                           348,071      464,603
        Toolings                                                                       26,861       31,141
        Office furniture and equipment                                                  8,386       11,069
        Computer equipment                                                             10,357       16,225
        Motor vehicle                                                                      --          127
        Assets under installation and construction in progress                         81,006       20,637
                                                                                     --------     --------
          Total cost                                                                 $526,835     $614,142
                                                                                     ========     ========
     </TABLE>

                                      F-19
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)


     <TABLE>
     <CAPTION>
                                                                                         DECEMBER 31,
                                                                                      -------------------
                                                                                        2000       2001
                                                                                      --------   --------
     <S>                                                                              <C>        <C>
     Accumulated depreciation:
        Buildings, mechanical and electrical installation                             $ 12,065   $ 16,557
        Plant and machinery                                                            113,561    218,854
        Toolings                                                                        12,540     17,969
        Office furniture and equipment                                                   2,249      4,013
        Computer equipment                                                               5,486      9,481
        Motor vehicle                                                                       --          6
                                                                                      --------   --------
          Total accumulated depreciation                                               145,901    266,880
                                                                                      --------   --------
     Property, plant and equipment (net)                                              $380,934   $347,262
                                                                                      ========   ========
     </TABLE>

     Depreciation charged to results of operations amounted to $48,839, $71,971
     and $99,318 (excluding asset impairment charges of $23,735) for the years
     ended December 31, 1999, 2000 and 2001, respectively.

     Included in assets under installation and construction are assets acquired
     under capital lease obligations with a cost of $10,253 at December 31,
     2001.

     One of the buildings is built on land held on a 30-year operating lease,
     renewable for a further 30-year period subject to the fulfillment of
     certain conditions. The other building is on freehold land.


10.  CAPITAL LEASES

     Future minimum lease payments under US dollar denominated capital leases
     for equipment and machinery as of December 31, 2001 are as follows:


     <TABLE>
     <CAPTION>
                                                                                     2001
                                                                                   -------
     <S>                                                                           <C>
     Payable in year ending December 31,
        2002                                                                       $ 3,168
        2003                                                                         4,210
        2004                                                                         3,620
        2005                                                                           470
                                                                                   -------
     Total minimum obligations                                                      11,468
     Less amounts representing interest at rates ranging from 6.6% to
      7.2% per annum                                                                (1,215)
                                                                                   -------
     Present value of minimum obligations                                           10,253
     Current installments of obligations under capital leases                       (2,564)
                                                                                   -------
     Obligations under capital leases, excluding current installments              $ 7,689
                                                                                   =======
     </TABLE>
                                      F-20
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)


11.  ACCRUED OPERATING EXPENSES

     Accrued operating expenses at December 31, 2000 and 2001 consist of:

     <TABLE>
     <CAPTION>
                                                                                   DECEMBER 31,
                                                                            -----------------------
                                                                              2000            2001
                                                                            -------         -------
     <S>                                                                    <C>             <C>
     Staff costs                                                            $ 7,646         $ 1,841
     Purchase of raw materials                                               11,163           5,179
     Maintenance fees, license fees and royalties                             1,778           1,193
     Interest expense                                                           535             329
     Provision for vacation liability                                         1,688             170
     Others                                                                  10,153           5,972
                                                                            -------         -------
                                                                            $32,963         $14,684
                                                                            =======         =======
     </TABLE>


12.  OTHER PAYABLES

     Other payables at December 31, 2000 and 2001 consist of:

     <TABLE>
     <CAPTION>
                                                                                 DECEMBER 31,
                                                                        ------------------------------
                                                                          2000                   2001
                                                                        -------                -------
     <S>                                                                <C>
     Liabilities for purchase of property, plant and
      equipment                                                         $27,705                $23,051
                                                                        =======                =======
     </TABLE>


13.  OTHER NON-CURRENT LIABILITIES

     Other non-current liabilities at December 31, 2000 and 2001 consist of:

     <TABLE>
     <CAPTION>
                                                                  DECEMBER 31,
                                                             ---------------------
                                                              2000           2001
                                                             ------         ------
     <S>                                                     <C>            <C>
     Deferred grant                                          $2,631         $2,573
     Others                                                      --          2,032
                                                             ------         ------
                                                             $2,631         $4,605
                                                             ======         ======
     </TABLE>

     The deferred grant refers to a 5-year grant of $13,878 obtained by the
     Company in 1997 for funding of certain research and development projects
     from the Economic Development Board ("EDB") under its Research Incentive
     Scheme for Companies. The grant, which is a reimbursement of specified
     costs, has no requirement for repayment.

                                      F-21
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)


14.  LONG-TERM DEBT

     Long-term debt at December 31, 2000 and 2001 consists of:


     <TABLE>
     <CAPTION>
                                                                      DECEMBER 31,
                                                                ------------------------
                                                                  2000            2001
                                                                --------        --------
     <S>                                                        <C>             <C>
     Singapore dollar loan                                      $ 44,398        $ 28,090
     Less current installments                                   (14,799)        (14,045)
                                                                --------        --------
                                                                $ 29,599        $ 14,045
                                                                ========        ========
     </TABLE>

     The term loan bears interest at 1% over the prevailing rate declared by the
     Central Provident Fund ("CPF") Board, a statutory board of Singapore, for
     contributions made to the CPF under the CPF Act. Interest is payable
     semi-annually. Principal is denominated in Singapore dollars and is
     repayable in 7 equal semi-annual installments commencing September 1, 2000.
     The loan agreement restricts the Company without prior approval from paying
     dividends, from incurring further indebtedness and from undertaking any
     form of reconstruction, including amalgamation with another company, which
     would result in a change in the control of the Company. The loan is
     unsecured, but is supported by a corporate guarantee given by ST. The term
     loan at December 31, 2000 and 2001 bore interest at 3.5% per annum.

     At December 31, 2001, the Company has undrawn banking and credit facilities
     consisting of short-term loans and bank guarantees of $34,400 with
     financial institutions.


15.  SHARE CAPITAL

     By an ordinary resolution passed on May 31, 2001, the Company's authorized
     share capital was increased by the creation of an additional 2,000,000,000
     ordinary shares of S$0.25 each. Accordingly, the Company's authorized share
     capital at December 31, 2001 is S$800,000,000 comprising 3,200,000,000
     ordinary shares of S$0.25 par value each.

     Under Singapore law, all increases in share capital (including rights
     issues) require prior shareholders' approval. Singapore law does not
     provide for the issue of shares of no par value and prohibits the issue of
     shares at a discount to par value.

     In January 1999, the paid-in capital, net of subscriptions receivable, was
     increased by S$108 (US$65) from S$192,255 to S$192,363 with the issue of
     8,600,000 ordinary shares of S$0.25 each at par, partly paid to S$0.0125 to
     employees of the Company, its subsidiary ST Assembly Test Services, Inc.,
     ST and related corporations of ST under the Ownership Scheme. (See Note 22)

     In July 1999, the paid-in capital, net of subscriptions receivable, was
     increased by S$92 (US$54) to S$192,455 with the issue of 7,371,600 ordinary
     shares of S$0.25 each at par, partly paid to S$0.0125 to employees of the
     Company, its subsidiary ST Assembly Test Services, Inc., ST and related
     corporations of ST under the Ownership Scheme. (See Note 22)

                                      F-22
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)


     In November 1999, the Company terminated the Ownership Scheme. Under the
     terms of the termination, the Company received proceeds from participants
     amounting to approximately $2,961 to fully pay up the remaining second
     installment of 95% of the subscription price for 17,407,695 ordinary shares
     issued under the Ownership Scheme. The remaining 9,605,505 partly paid
     ordinary shares in issue under the Ownership Scheme were bought back from
     the employees by the Company at a total cash consideration of approximately
     $104. Also, as part of the consideration for the buy back, under the terms
     of the termination, such employees were granted new options to subscribe
     for 6,385,450 ordinary shares, at an exercise price of $0.25 each (S$0.42),
     and 3,220,055 ordinary shares, at an exercise price of $0.15 each (S$0.25),
     under the ST Assembly Test Services Ltd Share Option Plan 1999 (See Note
     22). All the shares purchased by the Company were cancelled on acquisition.

     Also at this time, the Company purchased 1,112,400 partly paid shares held
     by a subsidiary of ST for a cash consideration of $12. All the shares
     purchased by the Company were cancelled on acquisition.

     In February 2000, the Company issued 175,950,000 ordinary shares at $2.10
     per share and 19,550,000 ordinary shares at S$3.554 (US$2.10) per share in
     the initial public offering of the Company's shares on the Nasdaq National
     Market and Singapore Exchange. Offering proceeds, net of expenses, amounted
     to approximately $387,025.

     5,244,220 and 3,511,570 ordinary shares were issued as a result of the
     employees exercising their share options during the years 2000 and 2001,
     respectively.


16.  ADDITIONAL PAID-IN CAPITAL

     Additional paid-in capital includes the excess of proceeds received from
     issues of share capital (net of the costs of issue) over the par value of
     shares issued, which under Singapore law must be credited to the share
     premium account. The share premium may only be applied in paying up
     unissued shares to be issued to shareholders, paying up in whole or in part
     the balance unpaid on shares in issue, in payment of dividends, if such
     dividends are satisfied by the issue of shares to members of the Company,
     in writing off preliminary expenses and share and debenture issue expenses
     and by provision for premiums payable on the redemption of redeemable
     preferred shares. The Company has not utilized any amounts in the share
     premium account for the above mentioned purposes.

     In 1999, as part of the termination of the Ownership Scheme, the Company
     purchased 10,717,905 of its own ordinary shares of S$0.25 each, partly paid
     up to S$0.0125 per share. All the shares purchased by the Company were
     cancelled on acquisition. Upon cancellation, an amount of $97, representing
     the amount by which the Company's issued share capital was diminished on
     cancellation, was transferred to the capital redemption reserve within
     additional paid-in capital, as required by Singapore law (See Note 22).

     In 2000, the share premium arising from the initial public offering and
     exercise of employees' share options amounted to $359,572, net of share
     issue expenses of $23,500. As of December 31, 2000 and 2001, the Company's
     share premium account amounted to $360,069 and $360,372, respectively.


17.  RETAINED EARNINGS

     Singapore law allows dividends to be paid only out of profits of the
     Company, determined in accordance with accounting principles generally
     accepted in Singapore. Shareholders of ordinary shares are not liable for
     Singapore income tax on dividends paid by the Company out of its tax exempt
     profits from pioneer activities.

                                      F-23
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)


18.  ASSET IMPAIRMENTS

     Due to the poor operating results and continued weakness in the
     semiconductor industry, the Company initiated a review in the fourth
     quarter of 2001 to identify long-lived assets whose carrying amounts might
     not be recoverable. As a result of the review, the Company recorded asset
     impairment charges totaling $23,735. These charges include a write down of
     machinery and equipment held for sale of $4,367 and a write down of
     machinery and equipment held for use of $19,368 to reflect their estimated
     fair value. In determining the fair value of machinery and equipment held
     for sale and held for use, the Company has considered recent offers and
     expected future discounted cash flows. The machinery and equipment held for
     sale is currently not being used in operations. The carrying amount of
     machinery and equipment held for sale was reduced to $2,771. Management
     expects machinery and equipment held for sale to be disposed in the near
     future.

     The Company routinely reviews the remaining estimated useful lives of their
     equipment and machinery to determine if such lives should be adjusted due
     to the likelihood of technological obsolescence arising from changes in
     production techniques or in market demand for the use of its equipment and
     machinery. However, due to the nature of the testing operations, which may
     include sudden changes in demand in the end markets, and due to the fact
     that certain equipment is dedicated to specific customers, the Company may
     not be able to anticipate declines in the utility of its machinery and
     equipment. Consequently, additional impairment charges may be necessary in
     the future.


19.  OTHER NON-OPERATING INCOME

     <TABLE>
     <CAPTION>
                                                     FOR THE YEAR ENDED DECEMBER 31,
                                                ----------------------------------------
                                                 1999             2000             2001
                                                ------           ------           ------
     <S>                                        <C>              <C>              <C>
     Government grant income                    $1,612           $2,792           $1,293
     Other income, net                             767              733              697
                                                ------           ------           ------
                                                $2,379           $3,525           $1,990
                                                ======           ======           ======
     </TABLE>


20.  INCOME TAXES

     Income (loss) before income taxes consists of the following:

     <TABLE>
     <CAPTION>
                                                     FOR THE YEAR ENDED DECEMBER 31,
                                                ----------------------------------------
                                                 1999            2000             2001
                                                ------         -------         ---------
     <S>                                        <C>            <C>             <C>
     Singapore                                  $4,747         $56,505         $(142,493)
     Foreign                                       608             719              (649)
                                                ------         -------         ---------
                                                $5,355         $57,224         $(143,142)
                                                ======         =======         =========
     </TABLE>

                                      F-24
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)


     Income tax benefit (expense) consists of the following:

     <TABLE>
     <CAPTION>
                                                        FOR THE YEAR ENDED DECEMBER 31,
                                                    --------------------------------------
                                                     1999           2000             2001
                                                    -----         -------          -------
     <S>                                            <C>           <C>              <C>
     Current tax provision:

     Singapore                                      $(279)        $(2,568)         $(1,107)
     Foreign                                         (221)           (297)            (244)
                                                    -----         --------         -------
                                                    $(500)        $(2,865)         $(1,351)
                                                    =====         ========         =======
     Deferred tax benefit:

     Singapore                                      $  --          $    --          $ 9,661
     Foreign                                           --               --              500
                                                    -----          -------          -------
                                                    $  --          $    --          $10,161
                                                    =====          =======          =======
                                                    $(500)         $(2,865)         $ 8,810
                                                    =====          =======          =======
     </TABLE>

     The Company has been granted pioneer status under the Singapore Economic
     Expansion Incentives (Relief from Income Tax) Act, Chapter 86 (the "Act"),
     for "Subcontract Assembly And Testing Of Integrated Circuits Including
     Wafer Probing Services" from January 1, 1996 to December 31, 2003, subject
     to compliance with certain conditions.

     During the pioneer status period, Singapore-resident income from pioneer
     trade is exempt from income tax, subject to compliance with the conditions
     stated in the pioneer certificate and the Act. Income derived from
     non-pioneer activities during the pioneer period, however, is subject to
     income tax at the prevailing enacted rate of tax.

     Current tax expense for the years ended December 31, 1999, 2000 and 2001 in
     relation to the Singapore operation represents income tax payable on
     non-pioneer trade income, principally rental and interest income.

     The tax-exempt profits arising from the pioneer trade can be distributed as
     tax-exempt dividends that are not subject to Singapore income tax in the
     hands of the shareholders. Losses and unutilized capital allowances arising
     in the pioneer status period are available for carryforward to be offset
     against profits arising in subsequent periods, including profits arising
     after the pioneer status period. Pioneer loss and unutilized capital
     allowance carryforwards are available indefinitely, subject to more than
     50% of the shareholders staying the same from the incurrence of the tax
     loss or allowance to its utilization. As of December 31, 2000, the Company
     has no pioneer loss and unutilized capital allowance carryforwards. As of
     December 31, 2001, the Company had pioneer loss and unutilized capital
     allowance carryforwards of $21,941 and $77,296, respectively.

     As of December 31, 2001, the Company has available a foreign net operating
     loss carryforward of approximately $702 which can be use to offset profits
     of its Taiwan subsidiary arising in the next four years. The foreign net
     operating loss carryforward will expire on December 31, 2006.

                                      F-25
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)


     The Company also has foreign investment tax credits carryforwards of
     approximately $1,211 and $1,151, which expire on December 31, 2004 and
     2005, respectively. The foreign investment tax credit carryforwards can be
     used to offset income tax payable in future years. The offsetting amount is
     limited to 50% of the offsetting year's income tax payable. The last year
     of expiry for the tax credit carryforwards is, however, not subject to the
     50% limitation.

     Deferred income taxes reflect the net tax effects of (a) temporary
     differences between the carrying amounts of assets and liabilities for
     financial reporting purposes and the amounts used for income tax purposes,
     and (b) operating loss, unutilized capital allowance and investment tax
     credit carryforwards. The tax effect of significant items comprising the
     Company's deferred income tax assets at December 31, 2001 are as follows:

     <TABLE>
     <CAPTION>

                                                                  DECEMBER 31,
                                                                  ------------
                                                                      2001
                                                                    -------
     <S>                                                          <C>
     Deferred income tax assets
       Operating loss carryforwards                                 $ 2,896
       Unutilized capital allowance carryforwards                     7,730
       Investment tax credits                                         2,362
       Other                                                            (24)
                                                                    -------
                                                                    $12,964
                                                                    =======

     </TABLE>

     There were no material deferred tax assets or liabilities at December 31,
     2000.

     There was no valuation allowance for deferred tax assets as of January 1,
     2000 or 2001. The deferred tax assets were generated in 2001, principally
     as a result of the deferred tax benefits associated with tax losses and
     unutilized capital allowances. The deferred tax effects of the operating
     loss and unutilized capital allowance carryforwards are recognized because
     they are expected to be carried forward to offset taxable income arising
     after the expiration of the pioneer period. Such carryforwards are expected
     to be utilized during the post-pioneer period. The post-pioneer period tax
     rate is expected to be 10%.

     In assessing the realizability of deferred tax assets, management considers
     whether it is more likely than not that some portion or all of the deferred
     tax assets will not be realized. The ultimate realization of deferred tax
     assets is dependent upon the generation of future taxable income during the
     periods in which those temporary differences become deductible. Management
     considers the scheduled reversal of deferred tax liabilities, projected
     future taxable income, and tax planning strategies in making this
     assessment. Based upon the level of historical taxable income and
     projections for future taxable income over the periods which the deferred
     tax assets are deductible, management believes it is more likely than not
     the Company will realize the benefits of these deductible differences. The
     amount of the deferred tax asset considered realizable, however, could be
     reduced in the near term if estimates of future taxable income during the
     carryforward period differ materially from current estimates.

                                      F-26
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)


     A reconciliation of the expected tax expense (benefit) at the statutory
     rate of tax to actual tax expense (benefit) is as follows:
<TABLE>
<CAPTION>

                                                                              FOR THE YEAR ENDED DECEMBER 31,
                                                                        ---------------------------------------------
                                                                          1999              2000               2001
                                                                        -------           --------           --------
     <S>                                                                <C>               <C>                <C>
     Income tax expense (benefit) computed at
      Singapore statutory rate of 24.5% (2000: 25.5%, 1999: 26%)        $ 1,392           $ 14,592           $(35,069)
     Non-deductible expenses                                              6,635                143                243
     Effect of pioneer status                                            (7,862)           (11,772)             6,972
     Effect of recognizing deferred tax assets at post-pioneer
      concessionary tax rate                                                 --                 --             19,433
     All other items, net                                                   335                (98)              (389)
                                                                        -------           --------           --------
     Income tax expense (benefit)                                       $   500           $  2,865           $ (8,810)
                                                                        =======           ========           ========
</TABLE>

     The pioneer status relief had the effect of increasing diluted net income
     per ordinary share by $0.01 and $0.01 and diluted net income per ADS by
     $0.10 and $0.12 for the years ended December 31, 1999 and 2000,
     respectively.


21.  REVENUE DATA AND MAJOR CUSTOMERS

     Revenues by major service line and by geographical areas (identified by
     location of customer headquarter) were:

<TABLE>
<CAPTION>
                               FOR THE YEAR ENDED DECEMBER 31,
                           ---------------------------------------
                            1999            2000            2001
                           --------       --------        --------
     <S>                   <C>            <C>             <C>
     United States
     -- assembly           $ 93,989       $155,892        $ 71,025
     -- test                 58,896        102,629          43,287
                           --------       --------        --------
                            152,885        258,521         114,312
                           --------       --------        --------
     Singapore
     -- assembly             11,230          5,919           2,090
     -- test                 22,547         18,215           6,097
                           --------       --------        --------
                             33,777         24,134           8,187
                           --------       --------        --------
     Rest of Asia
     -- assembly                259          1,112           2,318
     -- test                    106            731           2,066
                           --------       --------        --------
                                365          1,843           4,384
                           --------       --------        --------
     Europe
     -- assembly              3,010         16,440           3,050
     -- test                 11,061         30,333          15,933
                           --------       --------        --------
                             14,071         46,773          18,983
                           --------       --------        --------
         Total             $201,098       $331,271        $145,866
                           ========       ========        ========
</TABLE>

                                      F-27
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)


     Revenues from major customers, as a percentage of net revenues, were as
     follows:

<TABLE>
<CAPTION>
                         FOR THE YEAR ENDED DECEMBER 31,
                         -------------------------------
                          1999         2000         2001
                         -----        -----        -----
                           %            %            %
     <S>                 <C>          <C>          <C>
     Customer A           16.8         32.1         29.2
     Customer B           25.2         18.1         12.3
     Customer C            4.6          5.6         10.4
     Customer D*          16.4          7.3          5.6
     Others               37.0         36.9         42.5
                         -----        -----        -----
                         100.0        100.0        100.0
                         -----        -----        -----
</TABLE>
------------
*    ST affiliate


22.  SHARE OPTIONS AND INCENTIVE PLANS

(a)  EMPLOYEES' SHARE OWNERSHIP SCHEME

     Effective April 1998, the Company adopted the ST Assembly Test Services
     Employees' Share Ownership Scheme. The Ownership Scheme was administered by
     a committee nominated by the directors and provided for the grant of
     options to employees and directors of the Company and certain of its
     affiliates. The exercise period of the options was 30 days and the
     subscription price for each share which may be purchased upon exercise of
     the options was determined by the committee but could not be less than the
     par value. The subscription price was payable in installments, the first
     installment of 5% of the subscription price being payable upon exercise of
     the option, the second installment of 95% of the subscription price being
     payable over a period between the second and fifth years following the date
     the option was granted, however, such cumulative second installment due
     could be deferred and payable at each successive anniversary date but was
     not due until ten years after the date of grant of the option.

     Where employees failed to pay the second installment within ten years of
     the date of grant of the option, the employees were required to sell their
     shares to an ST affiliate at the greater of 5% of the market value of the
     shares, as determined by the committee, or 5% of the net asset value of the
     shares. Employees leaving the employment of the Company were entitled to
     retain those shares which had been fully paid for, while shares not fully
     paid for were either required to be sold to the ST affiliate or, in certain
     circumstances, were allowed to be fully paid.

     The Ownership Scheme was accounted for in accordance with variable plan
     accounting under Accounting Principles Board ("APB") Opinion No. 25.
     Compensation cost for shares granted under the Ownership Scheme was
     recorded as compensation expense over the requisite vesting period, with
     the unvested shares reflected as unearned compensation in a separate
     component of shareholders' equity based on the current market price of the
     shares at the end of the relevant period. The Company determined the fair
     market values of ordinary shares underlying each option grant based on the
     income approach and the market approach. The income approach indicates the
     fair market value of the common stock of a business based on the value of
     the cash flows that the business can be expected to generate in the future.
     The market approach indicates the fair market value of the ordinary shares
     based on a comparison of the Company to comparable publicly traded
     companies, comparable transactions in its industry, and prior transactions.

                                      F-28
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)


     In November 1999, the Company terminated the Ownership Scheme. Under the
     terms of the termination, the Company received proceeds from participants
     amounting to approximately $2,961 to fully pay up the remaining second
     installment of 95% of the subscription price for 17,407,695 ordinary shares
     issued under the Ownership Scheme. The remaining 9,605,505 partly paid
     ordinary shares in issue under the Ownership Scheme were bought back from
     the employees by the Company at a total cash consideration of approximately
     $104. Also, as part of the consideration for the buy back, under the terms
     of the termination, such employees were granted new options to subscribe
     for 6,385,450 ordinary shares, at an exercise price of $0.25 each (S$0.42),
     and 3,220,055 ordinary shares, at an exercise price of $0.15 each (S$0.25),
     under the ST Assembly Test Services Ltd Share Option Plan 1999 (the "Share
     Option Plan").

     Total compensation expense recognized for stock-based compensation under
     the Ownership Scheme for the year ended December 31, 1999 was $25,095.

     Information for the year ended December 31, 1999 was as follows:-
<TABLE>
<CAPTION>

                                                                          DECEMBER 31,
                                                                         -------------
                                                                             1999
                                                                           --------
     <S>                                                                 <C>
     Shares outstanding at beginning of year
      (in thousands)                                                         20,774
     Shares granted during the year (in thousands)                            7,372
                                                                           --------
                                                                             28,146
     Termination of Ownership Scheme:
     -- shares converted into fully paid shares
        (in thousands)                                                      (17,408)
     -- shares repurchased and cancelled
        (in thousands)                                                      (10,718)
     Other shares converted into fully paid shares
        (in thousands)                                                          (20)
                                                                           --------
     Shares outstanding at year end (in thousands)                               --
                                                                           ========
     Weighted average grant date fair value of options                     $   0.51
                                                                           ========
</TABLE>

(b)  SHARE OPTION PLAN

     Effective May 1999, the Company adopted the Share Option Plan which
     provides for a maximum of 150 million shares (subject to adjustment under
     the plan) to be reserved for option plans. Options granted under the plan
     may include non-statutory options as well as incentive stock options
     intended to qualify under Section 422 of the United States Internal Revenue
     Code.

     The plan is administered by a committee appointed by the directors.
     Employees, outside directors and consultants are eligible for the grant of
     options except for (i) employees of affiliates, and outside directors and
     consultants, who are not eligible for the grant of incentive stock options;
     and (ii) employees, outside directors and consultants of affiliates
     resident in the United States, who are not eligible for the grant of
     options.

                                      F-29
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)


     The exercise price of an incentive stock option is the fair market value of
     the shares at the date of the grant. In certain circumstances, the exercise
     price may be higher than the fair market value but in no event will the
     exercise price be below the par value of the share.

     Option periods may not exceed 10 years from the date of grant. Upon leaving
     the employment of the Company, outstanding options remain exercisable for a
     specified period.

     The following table summarizes stock option activity under the Share Option
     Plan for the years ended December 31, 1999, 2000 and 2001:
<TABLE>
<CAPTION>

                                                                           WEIGHTED
                                                                           AVERAGE
                                                        OPTIONS         EXERCISE PRICE
                                                        -------         --------------
                                                    (IN THOUSANDS)
     <S>                                            <C>                 <C>
     Options outstanding at January 1, 1999                 --                  --
     Granted during the year                            18,840               $0.97
     Lapsed during the year                               (126)              $1.12
                                                        ------               -----
     Options outstanding at December 31, 1999           18,714               $0.99
     Granted during the year                            27,568               $2.85
     Lapsed during the year                             (4,999)              $2.77
     Exercised during the year                          (5,244)              $0.42
                                                        ------               -----
     Options outstanding at December 31, 2000           36,039               $2.21
     Granted during the year                            26,823               $0.94
     Lapsed during the year                             (7,581)              $2.13
     Exercised during the year                          (3,511)              $0.21
                                                        ------               -----
     Options outstanding at December 31, 2001           51,770               $1.70
                                                        ======               =====
     Exercisable at end of year (in thousands)           8,122               $1.98
                                                        ======               =====
</TABLE>

     Weighted average fair value of options granted in 1999, 2000 and 2001
     were $0.55, $2.44, and $0.74 respectively.

                                      F-30
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)


     The following table summarizes information about fixed stock options
     outstanding at December 31, 2001:

<TABLE>
<CAPTION>
                                              OPTIONS OUTSTANDING                     OPTIONS EXERCISABLE
                                        -------------------------------     -----------------------------------------
                                                              WEIGHTED
                                                              AVERAGE       WEIGHTED                         WEIGHTED
                                            NUMBER           REMAINING      AVERAGE          NUMBER          AVERAGE
                                        OUTSTANDING AT      CONTRACTUAL     EXERCISE     EXERCISABLE AT      EXERCISE
     RANGE OF EXERCISE PRICES             12/31/2001            LIFE         PRICE         12/31/2001         PRICE
     ------------------------           --------------      -----------     --------     --------------      --------
                                        (IN THOUSANDS)                                   (IN THOUSANDS)
     <S>                                <C>                 <C>             <C>          <C>                 <C>
     $0.14                                  1,002            7.6 years        $0.14             583            $0.14

     $0.24                                  1,281            8.0 years        $0.24           1,281            $0.24

     $0.63 to $0.89                        19,829            9.4 years        $0.87              --               --

     $1.25 to $1.63                        15,345            9.2 years        $1.51           1,740            $1.63

     $2.00 to $2.61                         5,121            8.0 years        $2.08           2,663            $2.06

     $3.99                                  9,192            8.3 years        $3.99           1,855            $3.99
                                           ------                                             -----
                                           51,770                                             8,122
                                           ======                                             =====

</TABLE>


     Total compensation expense recognized for stock-based compensation under
     the Share Option Plan for the years ended December 31, 1999, 2000 and 2001
     were $232, $448 and $1,024, respectively.

(c)  IMPACT OF APPLYING FAIR VALUE BASED METHOD

     The fair value of shares granted under the Ownership Scheme for the years
     ended December 31, 1999 was estimated on the date of grant using the
     Black-Scholes option-pricing model with the following assumptions:
<TABLE>
<CAPTION>

                                                                 DECEMBER 31,
                                                                 -----------
                                                                    1999
                                                                  --------
     <S>                                                         <C>
     Expected term                                                10 years
     Dividend yield                                                   0.0%
     Risk-free interest rate                                          5.6%
     Expected volatility                                             78.6%
</TABLE>

                                      F-31
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)


     The fair value of options granted under the Share Option Plan for the years
     ended December 31, 1999, 2000 and 2001 is estimated on the date of grant
     using the Black-Scholes option-pricing model with the following
     assumptions:

<TABLE>
<CAPTION>
                                                     FOR THE YEAR ENDED DECEMBER 31,
                                        -------------------------------------------------------------
                                            1999                    2000                    2001
                                        -------------           -------------           -------------
     <S>                                <C>                     <C>                     <C>
     Expected term                           10 years                10 years              5-10 years
     Dividend yield                              0.0%                    0.0%                    0.0%
     Risk-free interest rate                5.9%-6.4%               4.2%-4.7%               2.7%-3.9%
     Expected volatility                  59.4%-77.3%             67.4%-82.9%             57.6%-64.2%
</TABLE>

     Had the Company determined compensation for the Ownership Scheme and the
     Share Option Plan under Statement of Financial Accounting Standards No.
     123, the Company's net income (loss) would have been reduced to the pro
     forma amounts indicated below:

<TABLE>
<CAPTION>
                                                            FOR THE YEAR ENDED DECEMBER 31,
                                                    -------------------------------------------
                                                      1999             2000             2001
                                                    -------          -------          ---------
                                                        %                %                %
     <S>                                            <C>              <C>              <C>

     Net income (loss):
       As reported                                  $ 4,855          $54,359          $(134,019)
       Pro forma                                     18,952           36,011           (151,586)

     Basic net income (loss) per share:
       As reported                                  $  0.01          $  0.06          $   (0.14)
       Pro forma                                    $  0.02          $  0.04          $   (0.15)

     Diluted net income (loss) per share:
       As reported                                  $  0.01          $  0.06          $   (0.14)
       Pro forma                                    $  0.02          $  0.04          $   (0.15)
</TABLE>


23.  RELATED PARTY TRANSACTIONS

     The Singapore Technologies Group is a leading technology-based
     multi-national conglomerate based in Singapore. The Singapore Technologies
     Group provides a full array of multi-disciplinary capabilities, ranging
     from research and development, design and engineering, precision and high
     value-added manufacturing, major infrastructure development to management
     services in the following five core business groups: Engineering,
     Technology, Infrastructure & Logistics, Property and Financial Services. As
     of December 31, 2001, Temasek Holdings (Private) Limited ("Temasek")
     directly owns 78.6% of Singapore Technologies Pte Ltd. The remaining 21.4%
     is owned by Singapore Technologies Holdings Pte Ltd, which is in turn 100%
     owned by Temasek. Temasek is a holding company through which the corporate
     investments of the government of Singapore are held. The Company is in the
     semiconductor division of the ST Group which specializes in design,
     manufacture, assembly and testing of

                                      F-32
<PAGE>

                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)


     semiconductors. Companies within the ST Group, including Chartered
     Semiconductor Manufacturing Ltd engage in transactions with the Company
     in the normal course of their respective businesses.

     The building of the Company is built on land held on a long-term operating
     lease from a statutory board of the government of Singapore. The lease is
     for a 30-year period commencing March 1, 1996 and renewable for a further
     30 years subject to the fulfillment of certain conditions. The rent is
     subject to annual revision, with the increase capped at 4% per annum.

     ST provides management and corporate services to the Company. Under a
     service agreement effective January 1, 2000, annual management fees are
     payable for the provision of specified services on mutually agreed terms
     which the Company believes approximates the cost of providing those
     services. The fees are subject to review by the parties every three years.
     Prior to this agreement these services were subject to a management fee
     computed based on certain percentages of capital employed, revenue,
     manpower and payroll.

     ST provides short-term financing for the Company (generally on a 3 to 6
     months renewable basis) using its cost competitive corporate banking
     advantage in the banking community. In February 2000, the Company repaid
     the short-term loan and has since not utilized the financing facility.

     The Company participates in a ST cash management program managed by a bank.
     Under the program, cash balances are pooled and daily cash surpluses or
     shortfalls of the Company within the pool earn or bear interest at
     prevailing interest rates. The Company also places short-term deposits with
     ST or its affiliates at competitive interest rates comparable to rates
     offered by commercial banks in Singapore. Short-term deposits with the ST
     Treasury unit with original maturities in excess of three months are
     included in short-term deposits with ST affiliates.

     Certain general and administrative expenses of ST Assembly Test Services,
     Inc., our subsidiary, are borne by and recharged to the Company by
     Chartered Semiconductor Manufacturing Inc., a United States incorporated
     affiliate of ST. These expenses amounted to $1,252, $556 and $513 for 1999,
     2000 and 2001, respectively.

     The Company had the following significant transactions with ST and ST
     affiliates:

<TABLE>
<CAPTION>
                                                          FOR THE YEAR ENDED DECEMBER 31,
                                                      -------------------------------------
                                                        1999           2000           2001
                                                      -------        -------         ------
     <S>                                              <C>            <C>             <C>
     ST -
       Management fees expense                        $ 1,223        $ 1,676         $1,019
     ST affiliates -
       Net revenues                                    33,777         24,091          8,188
       Purchase of property, plant and equipment          160             --             --
       Interest income                                     --          4,621          4,596
       Interest expense                                 1,458            211             --
       Rental income                                      482             --             --
       General and administrative expenses              1,252            556            513
                                                      =======        =======         ======
</TABLE>

                                      F-33
<PAGE>

                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)


     As of December 31, 2000 and 2001, there were the following amounts owing by
     (to) affiliates:-

<TABLE>
<CAPTION>
                                                                                     DECEMBER 31,
                                                                              -----------------------
                                                                               2000             2001
                                                                              -------          ------
     <S>                                                                      <C>              <C>
     Amounts due from ST and ST affiliates
       Accounts receivable, net of allowance for doubtful accounts            $ 8,727          $1,793
                                                                              =======          ======
     Short-term deposits with ST affiliates                                   $10,000          $   --
                                                                              =======          ======

     Amounts due to ST
       Other payables                                                         $   927          $1,520
     Amounts due to ST affiliates
       Accounts payable                                                         1,135             953
                                                                              -------          ------
                                                                              $ 2,062          $2,473
                                                                              =======          ======
</TABLE>


24.  COMMITMENTS

(a)  LEASES

     The Company has leased land for a 30-year period commencing March 1, 1996
     and renewable for a further 30 years subject to the fulfillment of certain
     conditions. The annual rent (excluding rebates) is currently fixed at $726.
     The rent is subject to annual revision with the increase capped at 4% per
     annum. Operating lease rental expense for the years ended December 31,
     1999, 2000 and 2001 was $594, $583 and $544, respectively.

     The Company has leased certain plant and equipment under operating leases
     and under sale and lease-back arrangements. These leases extend through
     2004. Operating lease rental expenses in respect of these leases for the
     years ended December 31, 1999, 2000 and 2001 were $1,673, $17,971 and
     $24,516, respectively.

     Future minimum lease payments under non-cancelable operating leases of
     factory land and plant and equipment as of December 31, 2001 were:

<TABLE>
<CAPTION>
                                                                              DECEMBER 31
                                                                              -----------
                                                                                  2001
                                                                                -------
     <S>                                                                      <C>
     Payable in year ending December 31,
       2001                                                                     $    --
       2002                                                                       2,825
       2003                                                                       2,299
       2004                                                                       1,856
       2005                                                                       1,654
       2006                                                                       1,620
       Thereafter                                                                13,913
                                                                                -------
                                                                                $24,167
                                                                                =======
       </TABLE>
                                      F-34
<PAGE>

                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)


(b)  TECHNOLOGY ARRANGEMENTS

     The Company acquires patent rights and licence technologies from other
     companies for use in its processes. Cost of the technology licences is
     amortized over the shorter of the useful life or licence period. At
     December 31, 2001, unamortized costs for technology licences amounted to
     $1,348. The Company may obtain other suitable patent rights in the future
     relating to current or future technologies. There can be no assurance that
     the Company will always be able to obtain such future patents on favorable
     commercial terms.

     As is typical of the semiconductor industry, the Company may in the future
     receive notices from third parties asserting patent rights, copyrights or
     other rights covering the Company's designs or processes.


(c)  CAPITAL COMMITMENTS

     As of December 31, 2000 and 2001, there were the following capital
     commitments:-

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                           ---------------------
                                                             2000          2001
                                                           -------       -------
     <S>                                                   <C>           <C>
     Building, mechanical and electrical installation      $   103       $   614
     Plant and machinery                                    25,084        34,924
                                                           =======       =======
</TABLE>


25.  FAIR VALUE OF FINANCIAL INSTRUMENTS

     The estimated fair value of financial instruments has been determined by
     the Company using available market information and appropriate
     methodologies. However, considerable judgment is required in interpreting
     market data to develop the estimates for fair value. Accordingly, these
     estimates are not necessarily indicative of the amounts that the Company
     could realize in a current market exchange. Certain of these financial
     instruments are with major financial institutions and expose the Company to
     market and credit risks and may at times be concentrated with certain
     counterparties or groups of counterparties. The creditworthiness of
     counterparties is continually reviewed, and full performance is
     anticipated.

     The methods and assumptions used to estimate the fair value of significant
     classes of financial instruments is set forth below:


     CASH AND CASH EQUIVALENTS

     Cash and cash equivalents are due on demand or carry a maturity date of
     less than three months when purchased. The carrying amount of these
     financial instruments is a reasonable estimate of fair value.


     MARKETABLE SECURITIES

     The fair value is estimated based upon the quoted market price on the last
     business day of the fiscal year. The fair value of securities, for which
     there are no quoted market prices, is estimated based upon similar types of
     securities that are traded in the market.

                                      F-35
<PAGE>

                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)


     LONG-TERM DEBT

     The fair value is based on current interest rates available to the Company
     for issuance of debts of similar terms and remaining maturities.


     LIMITATIONS

     Fair value estimates are made at a specific point in time, and are based on
     relevant market information and information about the financial instrument.
     These estimates are subjective in nature and involve uncertainties and
     matters of significant judgment and therefore cannot be determined with
     precision. Changes in assumptions could significantly affect the estimates.

<TABLE>
<CAPTION>
                                            AS OF DECEMBER 31, 2000             AS OF DECEMBER 31, 2001
                                          ---------------------------          --------------------------
                                          CARRYING          ESTIMATED          CARRYING         ESTIMATED
                                           AMOUNT          FAIR VALUE           AMOUNT         FAIR VALUE
                                          --------         ----------          --------        ----------
     <S>                                  <C>              <C>                 <C>             <C>
     FINANCIAL ASSETS:
       Cash and cash equivalents          $141,733          $141,733           $115,214         $115,214
       Marketable securities                21,906            21,906             23,801           23,801

     FINANCIAL LIABILITIES:
       Long-term debt                       44,398            42,802             28,090           27,959
</TABLE>


26.  SUBSEQUENT EVENT

     In January 2002, the Company established a S$500 million Multicurrency
     Medium Term Note Programme ("MTN Programme"). Under the MTN Programme, the
     Company may from time to time issue notes in series or tranches ("Notes")
     in Singapore dollars or any other currencies as may be agreed between the
     dealers of the MTN Programme and the Company.

     Each series or tranche of the Notes may be issued in various amounts and
     terms, and may bear fixed or floating rates of interest.

     The Notes will constitute direct, unconditional, unsecured and
     unsubordinated obligations of the Company, ranking pari passu, without any
     preference or priority among themselves, and pari passu, with all other
     unsecured obligations (other than subordinated obligations and priorities
     created by law) of the Company.

     Proceeds from the MTN Programme will be used for general corporate
     purposes, including capital expenditure and working capital.

     The Company has not issued any Notes under the MTN Programme.

                                      F-36
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)


27.  ACCUMULATED OTHER COMPREHENSIVE LOSS

     The components of accumulated other comprehensive loss at December 31, 2000
     and 2001 are as follows:

<TABLE>
<CAPTION>
                                                                           2000              2001
                                                                          ------            ------
     <S>                                                                  <C>               <C>
     Currency translation loss                                            $9,731            $9,638
     Unrealized loss on available-for-sale marketable securities              --               303
                                                                          ------            ------
                                                                          $9,731            $9,941
                                                                          ======            ======
</TABLE>
                                      F-37