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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, 2002

                                       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 000-29103

                          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.


992,115,275 ORDINARY SHARES (PAR VALUE S$0.25 PER ORDINARY SHARE) OF REGISTRANT
                      OUTSTANDING AS OF DECEMBER 31, 2002.

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]

                                       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......................................................17
Item 5.     Operating and Financial Review and Prospects....................................33
Item 6.     Directors, Senior Management and Employees......................................48
Item 7.     Major Shareholders and Related Party Transactions...............................60
Item 8.     Financial Information...........................................................62
Item 9.     The Offer and Listing...........................................................63
Item 10.    Additional Information..........................................................64
Item 11.    Quantitative and Qualitative Disclosures about Market Risk......................74
Item 12.    Description of Securities other than Equity Securities..........................76
Item 13.    Defaults, Dividend Arrearages and Delinquencies.................................76
Item 14.    Material Modifications to the Rights of Security Holders and Use of Proceeds....76
Item 15.    Controls and Procedures.........................................................77
Item 16.    [Reserved]......................................................................77
Item 17.    Financial Statements............................................................77
Item 18.    Financial Statements............................................................77
Item 19.    Exhibits........................................................................78

Signatures  ................................................................................80
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When we refer to "Singapore dollars" and "S$" in this Annual Report, we are
referring to Singapore dollars, the legal currency of Singapore. When we refer
to "New Taiwan dollars" and "NT$" in this Annual Report, we are referring to the
New Taiwan dollars, the legal currency of Taiwan. 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, 2002
was S$1.74 per $1.00 for cable transfers in Singapore dollars, and was NT$34.70
per $1.00 for cable transfers in New Taiwan dollars, as certified for customs
purposes by the Federal Reserve Bank of New York. When used in this annual
report, the terms "we," "our," and "us" refer to ST Assembly Test Services Ltd
and its consolidated subsidiaries, unless otherwise stated.

No representation is made that the Singapore dollar, New Taiwan dollars 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." We do not intend, and do not
assume any obligation, to update any industry information or forward-looking
statements set forth in this annual report to reflect subsequent events or
circumstances.


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, 2001 and 2002 and for the fiscal years ended December 31, 2000,
2001 and 2002, which have been audited by KPMG, independent auditors, are
included in "Item 18. Financial Statements." The selected consolidated financial
data as of December 31, 1998, 1999 and 2000 and for the fiscal years ended
December 31, 1998 and 1999 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
                                                      ------------------------------------------------------------------------
                                                       1998(1)          1999            2000            2001            2002
                                                      --------        --------        --------       ---------        --------
                                                             (in thousands, except per ordinary share and per ADS data)
<S>                                                   <C>             <C>             <C>            <C>              <C>
INCOME STATEMENT DATA:
Net revenues                                          $113,920        $201,098        $331,271       $ 145,866        $225,738
Cost of revenues                                        87,066         132,889         231,944         217,789         247,943
                                                      --------        --------        --------       ---------        --------
Gross profit (loss)                                     26,854          68,209          99,327         (71,923)        (22,205)
                                                      --------        --------        --------       ---------        --------
Operating expenses:
  Selling, general and administrative                   16,772          28,437          40,798          36,041          36,633
  Research and development                               3,482           7,283          14,636          15,160          18,856
  Asset impairments(2)                                      --              --              --          23,735          14,666
  Prepaid leases written off                                --              --              --           3,145             764
  Stock-based compensation                                 384          25,327             448           1,024              60
  Other general expenses (income), net                    (582)             37             (22)            101             548
                                                      --------        --------        --------       ---------        --------
     Total operating expenses                           20,056          61,084          55,860          79,206          71,527
                                                      --------        --------        --------       ---------        --------
Operating income (loss)                                  6,798           7,125          43,467        (151,129)        (93,732)
Other income (expense):
  Interest income (expense), net                        (8,244)         (5,534)          8,214           5,222          (5,143)
  Foreign currency exchange gain (loss)                    857           1,385           2,018             775            (512)
  Other non-operating income, net                        2,103           2,379           3,525           1,990           3,419
                                                      --------        --------        --------       ---------        --------
     Total other income (expense)                       (5,284)         (1,770)         13,757           7,987          (2,236)
                                                      --------        --------        --------       ---------        --------
Income (loss) before income taxes                        1,514           5,355          57,224        (143,142)        (95,968)
Income tax benefit (expense)                              (390)           (500)         (2,865)          8,810           7,163
                                                      --------        --------        --------       ---------        --------
Net income (loss) before minority interest            $  1,124        $  4,855        $ 54,359       $(134,332)       $(88,805)
Minority interest                                           --              --              --       $     313        $   (514)
                                                      --------        --------        --------       ---------        --------
Net income (loss)                                     $  1,124        $  4,855        $ 54,359       $(134,019)       $(89,319)
                                                      --------        --------        --------       ---------        --------
Other comprehensive income:
  Unrealized gain (loss) on available-for-sale
   marketable securities                                    --              --              --       $    (303)       $  1,012
  Realized gain on available-for-sale marketable
   securities included in net loss                          --              --              --              --        $   (125)
  Translation adjustment                              $ (1,636)             --              --       $      93        $   (212)
                                                      --------        --------        --------       ---------        --------
Comprehensive income (loss)                           $   (512)       $  4,855        $ 54,359       $(134,229)       $(88,644)
                                                      --------        --------        --------       ---------        --------
Net income (loss) per ordinary share:
  Basic                                               $     --        $   0.01        $   0.06       $   (0.14)       $  (0.09)
  Diluted                                             $     --        $   0.01        $   0.06       $   (0.14)       $  (0.09)
Net income (loss) per ADS:
  Basic                                               $   0.02        $   0.06        $   0.56       $   (1.36)       $  (0.90)
  Diluted                                             $   0.02        $   0.06        $   0.56       $   (1.36)       $  (0.90)
Ordinary shares (in thousands) used in per
 ordinary share calculation:
  Basic                                                669,671         770,259         962,828         989,083         991,549
  Diluted                                              670,976         786,725         970,631         989,083         991,549
ADSs (in thousands) used in per ADS
 calculation:
  Basic                                                 66,967          77,026          96,283          98,908          99,155
  Diluted                                               67,098          78,672          97,063          98,908          99,155
</TABLE>

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<CAPTION>
                                                                             YEAR ENDED DECEMBER 31
                                                       --------------------------------------------------------------------
                                                        1998(1)          1999            2000          2001          2002
                                                       --------        --------        --------      --------      --------
                                                                                (in thousands)
<S>                                                    <C>             <C>             <C>           <C>           <C>
BALANCE SHEET DATA:
Cash and cash equivalents                              $ 12,692        $ 16,568        $141,733      $115,214      $167,661
Working capital (deficit)                               (24,606)        (74,030)        188,521       109,447       165,851
Total assets                                            236,720         351,965         711,758       576,578       721,968
Current installments of obligations under capital
 leases                                                      --              --              --         2,564         6,558
Short-term debt and current installments
 of long-term debt                                       50,000          67,420          14,799        14,045        21,588
Obligation under capital leases, excluding
 current installments                                        --              --              --         7,689         5,520
Long-term debt, excluding current installments           54,282          46,360          29,599        14,045       218,370
Shareholders' equity                                    108,038         141,184         585,197       452,795       366,512
Share capital                                           129,042         129,827         159,461       159,961       160,295
Ordinary shares outstanding                             780,174         785,428         986,172       989,683       992,115
</TABLE>

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

(2)  The impairment charges were recognized in 2001 and 2002 in accordance with
     SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
     Long-Lived Assets to be Disposed Of" and SFAS No. 144, "Accounting for the
     Impairment or Disposal of Long-Lived Assets" respectively.


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 2002 AND MAY CONTINUE TO DO SO IN THE
FUTURE.

We suffered operating losses and net losses in 2002 amounting to $93.7 million
and $89.3 million, respectively. In 2002, our cost of revenues exceeded our net
revenues resulting in negative gross margins and a gross loss of $22.2 million.
Although these results of operations were an improvement over 2001, when we
suffered a gross loss of $71.9 million, operating losses of $151.1 million and
net losses of $134.0 million, we expect to continue to incur operating losses
and net losses in 2003.

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.


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:

                                       5
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     -    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 and only recovered slightly by 1.3% in 2002 based on data
released by the Semiconductor Industry Association or SIA. We cannot assure you
that the current recovery or uptrend will continue. 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. While capacity utilization rates increased in 2002, they
have not returned to their former levels and our operating losses and net losses
continued in 2002.

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;

     -    disruption in supply of raw materials;

     -    changes in product mix; and

     -    fire or other natural disasters.

                                       6
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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 2002, 84.6% 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 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;

     -    possible disruptions caused by the installation of new equipment;

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

                                       7
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     -    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.


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 88.3%, 85.6% and 79.8% of our
net revenues in 2000, 2001 and 2002 respectively. In the year ended December 31,
2002, our three largest customers, Analog Devices, Broadcom and Marvel, each
represented in excess of 10% of our net revenues and in the aggregate
represented 55.7% of our net revenues. In 2000, 2001 and 2002, 78.0%, 78.4% and
80.8% of our net revenues came from customers based in the United States. We
anticipate that for the foreseeable future our ten largest customers 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 Our
Company - Customers."


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.

                                       8
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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.


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.


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. We
periodically review our equipment for obsolescence and impairment. If we
determine that, due to technology advances, reduced demand in certain end
markets or otherwise, the anticipated future usage of any of our equipment has
been diminished, we will write-down such equipment. In 2002, we wrote-down $15.4
million of equipment.

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.


THE TESTING AND ASSEMBLY PROCESS IS COMPLEX AND OUR PRODUCTION YIELDS AND
CUSTOMER RELATIONSHIPS MAY SUFFER FROM DEFECTS OR MALFUNCTIONS IN OUR TESTING
EQUIPMENT OR DEFECTIVE PACKAGES AND THE INTRODUCTION OF NEW PACKAGES.

Semiconductor testing and assembly are complex processes that require
significant technological and process expertise. Semiconductor testing involves
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.

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

                                       9
<PAGE>
     -    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, Singapore,
Europe, Korea, 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.


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 increased from $62.4 million in 2001 to $134.7 million in
2002 primarily as a result of an increase 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.

                                       10
<PAGE>
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 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 MATERIALS 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 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;

                                       11
<PAGE>
     -    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.


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.


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 develop and to protect our intellectual
property and the intellectual property of our customers. We seek to protect
proprietary information and know-how through patents, the use of confidentiality
and non-disclosure agreements and limited access to and distribution of
proprietary information. As of December 31, 2002, we have 22 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

                                       12
<PAGE>
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.

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.
For example, in 2001, 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.

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 February 15, 2003, Singapore Technologies Pte Ltd beneficially owns
approximately 71.8% of our ordinary shares. As of February 15, 2003, Temasek
Holdings (Private) Limited directly owns 78.6% of the ordinary shares of
Singapore Technologies Pte Ltd. The remaining 21.4% of the ordinary shares of
Singapore Technologies Pte Ltd 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. Singapore Technologies Holdings Pte Ltd also
owns all of the 50,000 issued preference shares in Singapore Technologies Pte
Ltd. As a result,

                                       13
<PAGE>
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.

Our convertible notes due 2007 and MTN Program provide 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. Our loan
agreement with the Economic Development Board restricts us from, among others,
undertaking any form of reconstruction which would result in a change in control
of our company. 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 Manufacturing Ltd, or
Chartered, which is a major customer) and EDB Investments Pte Ltd or EDBI.
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 shareholders. In addition, both EDBI, Singapore Technologies Pte
Ltd and their affiliates 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 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."

                                       14
<PAGE>
OUR OUTSTANDING INDEBTEDNESS INCREASED SUBSTANTIALLY WITH THE ISSUANCE OF OUR
CONVERTIBLE NOTES DUE 2007 AND WE MAY REQUIRE FINANCING TO FULFILL OUR
OBLIGATIONS UNDER THE CONVERTIBLE NOTES.

As of December 31, 2002, we had $218.4 million of long-term debt outstanding,
excluding current installments, of which $205.0 million was comprised of our
convertible notes due 2007, compared to $14.0 million of long-term debt
outstanding as of December 31, 2001. As a result, our interest expense and
related debt service costs significantly increased in 2002 from a net interest
income of $5.2 million in 2001 to a net interest expense of $5.1 million in
2002. This increased indebtedness may impact us by making it more difficult for
us to obtain additional financing and limiting our financial flexibility as a
result of our higher debt-to-equity ratio and constraining our ability to react
quickly in an unfavorable economic climate.

In addition, in certain circumstances, including (i) a change in control or (ii)
on March 18, 2005, the holders of our convertible notes may require us to redeem
all or a portion of the holders' convertible notes. If such an event were to
occur, or at maturity of the convertible notes, we cannot assure you that we
will have sufficient funds or would be able to arrange financing to make the
required purchase or redemption. We may be required to refinance our debt in
order to make such payments. We may not be able to obtain such financing on
terms that are acceptable to us or at all. If we are unable to obtain adequate
financing to repurchase or redeem the convertible notes, we will be in default
under the terms of the convertible notes.


WE DEPEND ON CERTAIN KEY EMPLOYEES AND THE 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 Our 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 the countries in which we
have operations, 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.

                                       15
<PAGE>
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 $14.6 million in 2000, $15.2 million in
2001 and $18.9 million in 2002. 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.


WE MAY BE AFFECTED BY SIGNIFICANT FLUCTUATIONS IN EXCHANGE RATES.

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 2002, if
the Singapore dollar had strengthened against the U.S. dollar by 2.0%, our cost
of revenues would have increased by approximately 0.7%. Likewise, if the
Singapore dollar had weakened against the U.S. dollar by 2.0%, our cost of
revenues would have decreased by approximately 0.7%. 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.


OUR ABILITY TO MAKE FURTHER INVESTMENTS IN OUR SUBSIDIARIES MAY BE DEPENDENT ON
REGULATORY APPROVALS.

Our subsidiaries may be dependent on us for future equity-related financing, and
any capital contribution by us to our subsidiaries may require the approval of
the relevant authorities in the jurisdiction in which the subsidiary is
incorporated. We may not be able to obtain any such approval in the future in a
timely manner or at all.


BECAUSE A SIGNIFICANT PORTION OF WINSTEK'S BUSINESS AND OPERATIONS ARE LOCATED
IN TAIWAN, A SEVERE EARTHQUAKE COULD SEVERELY DISRUPT THE NORMAL OPERATION OF
WINSTEK'S BUSINESS AND ADVERSELY AFFECT OUR EARNINGS.

Taiwan is susceptible to earthquakes. Most recently, on March 31, 2002, Taiwan
experienced a severe earthquake that caused significant property damage and loss
of life, particularly in central Taiwan. This earthquake damaged production
facilities and adversely affected the operations of many companies involved in
the semiconductor and other industries. Our 51% owned subsidiary, Winstek,
experienced no structural damage to its facilities and no damage to its
machinery and equipment as a result of this earthquake. There were, however,
interruptions to our production schedule primarily as a result of power outage
caused by the earthquake. The production facilities of many of our suppliers and
customers and providers of complementary semiconductor manufacturing services,
including foundries, are located in Taiwan. If our customers are affected, it
could result in a decline in the demand for our testing and packaging services.
If our suppliers and providers of complementary semiconductor manufacturing
services are affected, our production schedule could be interrupted or delayed.
As a result, a major earthquake in Taiwan could severely disrupt the normal
operation of business, in particular Winstek's business, and may have a material
adverse effect on our financial condition and results of operations.


TERRORIST ATTACKS 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 or war may negatively affect our operations. These attacks or
armed conflicts may directly impact our physical facilities or those of our
suppliers or customers. Furthermore, these attacks or war may make travel and
the transportation of our supplies and products more difficult and expensive.
Political and economic instability in some regions of

                                       16
<PAGE>
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 THE 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 7888, Facsimile:
(65) 6822 7822, 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.

For information on our principal capital expenditures and divestitures, see
"Item 5. Operating and Financial Review and Prospects."


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

     -    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, 2002, 51.2% of our net revenues were
from test services and 48.8% 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 wholly-owned subsidiaries in
the United States, ST Assembly Test Services Inc., or 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


                                       17
<PAGE>
customers in the United States. We also have two assembly design centers in
Arizona and California, in the United States and a test development center in
California.


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.


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 defining 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 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 conducted to ensure that the packaged
semiconductor meets performance specifications. Final testing involves using
complex processes that require the use of 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.


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-


                                       18
<PAGE>
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 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 2002, 51.2% of
our net revenues were from test services and 48.8% of our net revenues were from
assembly services.


TEST SERVICES

We offer wafer probe and final testing on many different platforms, covering the
major test platforms in the industry. Final testing 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

                                       19
<PAGE>
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.

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 for wired telecoms products
such as network routers, switches and interface cards; broadband products such
as cable modem set-top boxes; and for wireless telecommunications products such
as cellular phones, base stations, WLAN and Bluetooth(TM) devices, personal
computer and consumer applications. 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 limited type of
memory devices including static and non-volatile memories.

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
                                      -------------------------------
                                      2000         2001          2002
                                      -----       -----         -----
<S>                                   <C>         <C>           <C>
Mixed-signal                           76.0%       84.3%         75.9%
Digital                                23.5        15.1          23.9
Memory                                  0.5         0.6           0.2
                                      -----       -----         -----
                                      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.

                                       20
<PAGE>
     -    "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 and advanced 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 is typically the preferred technology for most
advanced semiconductors.

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        Mobile phone, mass
Package or TSSOP                          with thickness below 1.0mm           storage, multimedia and
                                          designed for logic, analog and       PDA
                                          mixed signal devices

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

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

                                       21
<PAGE>
<TABLE>
<CAPTION>
                             NUMBER OF
PACKAGE FORMAT               LEADS        DESCRIPTION                          TYPICAL APPLICATIONS
--------------               ---------    ---------------------------------    -----------------------
<S>                          <C>          <C>                                  <C>
Metric Quad Flat             44-240       Traditional QFP designed for         Access/LAN equipment,
Package or MQFP                           ASICs, FPGAs and DSPs                multimedia and mass
                                                                               storage

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

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   8-64       Lead frame based near chip        Mobile phone, PDA, GPS
QLP                                   scale package                     and multimedia

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

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

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

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

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

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


                                       22
<PAGE>
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.

Our BGA packages (including CSPs) are described below:

<TABLE>
<CAPTION>
                             NUMBER OF
PACKAGE FORMAT               BALLS      DESCRIPTION                      TYPICAL APPLICATIONS
--------------               ---------  ------------------------------   --------------------------
<S>                          <C>        <C>                              <C>
Flip Chip Small Thin PBGA    49-144     CSP BGA with Flip Chip/bump      Mobile phone, WAN/LAN
FC - stPBGA                             interconnect, instead of wire    equipment
                                        bonding

Flip Chip BGA                225-516    BGA with Flip Chip/bump          DSP, ASIC, FPGA
FC - BGA                                interconnect instead of wire
                                        bonding

Tape Chip Scale Package      72-256     CSP BGA characterized by         Mobile phone, PDA and
Or TCSP                                 flex-tape substrate for high     multimedia
                                        density circuits

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

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

Enhanced BGA or EBGA         159-836    High pin count, thermally        WAN/LAN equipment and base
                                        enhanced BGA package             station
                                        suitable for high
                                        power applications which
                                        utilize heat sinks for thermal
                                        dissipation

Small Thin Plastic BGA       16-324     Smaller and thinner BGA          Mobile phone, PDA, GPS
Or stPBGA                               designed for applications        and multimedia
                                        which are space constrained
                                        and require electrical
                                        performance
</TABLE>

                                       23
<PAGE>
<TABLE>
<CAPTION>
                             NUMBER OF
PACKAGE FORMAT               BALLS      DESCRIPTION                      TYPICAL APPLICATIONS
--------------               ---------  -----------------------------    --------------------------
<S>                          <C>        <C>                              <C>
Plastic Ball Grid Array      208-720    Electrically enhanced BGA        Access/ LAN equipment,
Or PBGA                                 package designed for high I/O    PC/graphics and base
                                        replacement                      station

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

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

Exposed Drop-in Heat         208-720    Thermally Enhanced PBGA with     Access/LAN/PC/graphics
Spreader Plastic BGA or                 20% greater thermal              and base station equipment
XDPBGA                                  dissipation than PBGA

Multi Chip Module Plastic    80-720     BGA integrated with two or       Access/LAN/PC graphics
BGA or MCMBGA                           more multiple die within a       and base station equipment
                                        PBGA or stPBGA
</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
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 70/35 (mu)m staggered bond pitch in response to
industry trends toward fine line and space wafer fabrication technology. We
continue to build capabilities in handling narrower pad pitches. 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 2001, we 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.

                                       24
<PAGE>
Test Software 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
and California.

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. In December 2002, FastRamp acquired all of the
membership interests of San Diego Test Equipment LLC from Conexant Systems Inc.
for cash. FastRamp began operations immediately in the San Diego facility and
offers the same range of high-end pre-production test services that are offered
in its facilities in the Silicon Valley.

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.


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 $14.6 million in 2000, $15.2 million in
2001 and $18.9 million in 2002 on research and development. We currently employ
164 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 and California.

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.

                                       25
<PAGE>
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. Furthermore, we are
building capabilities to provide system-in-package solutions for the radio
frequency, wireless and cellular markets.

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 2002, we developed and introduced a number of new packages and capabilities,
including:

-    Exposed Drop-in PBGA (XDPBGA)

-    Low Profile, small, thin PBGA (stPBGA-L)

-    Flip Chip, small, thin PBGA (FC-stPBGA)

-    Flip Chip BGA (FC-BGA)

-    Enhanced BGA using Build Up Substrate (EBGA-B)

-    Multitier EBGA (EBGA-M)

-    Stack Die CSP (SDCSP)

-    Wafer Bumping (FOC)

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.

                                       26
<PAGE>
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 88.3%, 85.6% and 79.8% of our net
revenues in 2000, 2001 and 2002. In 2002, our three largest customers, Analog
Devices, Broadcom and Marvell, each represented in excess of 10% of our net
revenues and in the aggregate represented 55.7% 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.

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
                           ---------------------------
                            2000      2001       2002
                           -----     -----       -----
<S>                        <C>       <C>         <C>
Communications              62.7%     61.3%       53.4%
Personal Computers          30.2      34.9        31.2
Others                       7.1       3.8        15.4
                           -----     -----       -----
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             2000       2001        2002
-----------------            -----      -----       -----
<S>                          <C>        <C>         <C>
United States                 78.0%      78.4%       80.8%
Europe                        14.1       13.0         6.2
Singapore                      7.3        5.6         4.9
Rest of Asia                   0.6        3.0         8.1
                             -----      -----       -----
Total                        100.0%     100.0%      100.0%
                             =====      =====       =====
</TABLE>

                                       27
<PAGE>
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. For
2002, we received the Assembly and Test Supplier of the Year award for the
second consecutive year from Analog Devices, Inc., the Number One Assembly and
Test Partner status from Centillium Communications Inc, the Outstanding Support
and Value-Added Services Recognition award from Chartered and the Test
Engineering Appreciation and Recognition Award from e-FM (Motorola Semiconductor
Product Sector).

To enable the customer to integrate seamlessly with us, we have implemented our
B2B strategy based on RosettaNet standards. Customers can also obtain real-time
manufacturing information on their products through our mySTATS portal. To
foster an even closer customer relationship, we are in the process of putting a
CRM (Customer Relationship Management) system and a PDM (Product Management
System) to allow for design e-collaboration with the customer's designers. This
will significantly improve the design collaboration process.


QUALITY CONTROL

We maintain a team of quality control staff comprising engineers, technicians,
inspection specialist and other employees whose responsibilities are to monitor
our test and assembly processes to ensure high quality. Our quality assurance
systems impose strict process controls, statistical in-line monitors, supplier
control, data review and management, quality controls and corrective action
systems. Our 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 1,000, 10,000 and 100,000 standards.

Our test and assembly operations in Singapore are ISO 9000, QS 9000, SAC level
1, ISO 14001 and ISO 18001 certified. ISO 9000 is an international standard on
the requirements for production of quality products and services. It also sets
forth quality management systems for product design, product development,
installation and servicing. We are also QS 9000 and SAC Level 1 certified. QS
9000 is a quality management system that addresses the specific production needs
of automotive customers. Semiconductor Assembly Council or SAC certification is
one of the most prestigious certifications in the semiconductor manufacturing
industry. In addition, we have also achieved certification for ISO 14001 as well
as ISO 18001. ISO 14001 is an international standard on environmental management
systems to ensure environmental protection and prevention of pollution in
balance with socio-economic needs while ISO 18001 is the standard for
implementation of an occupational health and safety management system (OHSMS)."

Customers require that our facilities and procedures undergo a stringent vendor
qualification process. The qualification process typically takes from two to
eight 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. These companies include Advanced Semiconductor

                                       28
<PAGE>
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:

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

     o    their unwillingness to disclose proprietary technology;

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

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

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. As of December 31, 2003, we have 22 issued
patents and 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 expired in December 2002 and
was extended to March 2003. We are currently negotiating the terms of the
renewal license. 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

                                       29
<PAGE>
royalties based on unit production. In addition, we have also reserved a portion
of our production capacity using MSIT Portfolio to SyChip. We will retain a
paid-up, perpetual and royalty-free license of the MSIT Portfolio technology at
the end of the license period.

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. We will retain a paid-up, perpetual and royalty-free license to
practice the FOC process at the end of the license period.

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.

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.


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."


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 local 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.

                                       30
<PAGE>
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, 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
February 15, 2003, 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.

Our 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. In December 2002, FastRamp acquired San Diego Test Equipment,
LLC, to provide test engineering and pre-production services in the San Diego
region. Our subsidiary, Winstek, is a Taiwanese test house in which we acquired
a 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.
In January 2003, we set up STATS Holdings Limited in the British Virgin Islands
as a special purpose investment company to hold shareholding interests in
companies which we may establish or acquire when the opportunity to invest
arises.


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:

     o    300,000 square feet of test space;

     o    120,000 square feet of assembly space;

     o    500 testers;

     o    720 wire bonders; and

     o    72 mold systems.

                                       31
<PAGE>
In addition to our headquarters in Singapore, we have several other facilities
as set forth below.

<TABLE>
<CAPTION>
                                                   AREA
                 LOCATION                      (SQUARE FEET)                         USE
                 --------                      -------------                         ---
<S>                                            <C>             <C>
Phoenix, Arizona, United States                    6,300       Assembly design and sales office
Milpitas, California, United States               34,000       Assembly design, test development center and sales office
San Diego, California, United States(1)           20,000       Test development center
Chiung Lin, Hsin-Chu Hsien, Taiwan                220,000      Test development, turnkey and drop shipment center
</TABLE>

(1)  Situated within the campus of Conexant Systems Inc

Each of the facilities above are held under various leases, except for the
Taiwan facility. The Taiwan facility is owned and operated by Winstek, subject
to mortgages and other security interests granted to secure indebtedness to
certain financial institutions. As of December 31, 2002, the total amount of
indebtedness secured by these facilities was not material to us.

We also have sales offices in Singapore, Taiwan, Japan, Germany, the United
Kingdom and the United States.


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 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 Agilent
Technologies, Advantest Corporation, Credence Systems Corporation, LTX
Corporation and Teradyne Inc.

As of December 31, 2002, we operate 297 testers, comprising 212 mixed-signal
testers, 79 digital testers and 6 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. Of the 297 testers, 21 are on consignment from
customers. In addition to testing equipment, we maintain a variety of other
types of equipment, such as 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. As of December 31, 2002, we own and operate 620 wire bonders
and 66 mold systems. Certain of our wire bonders allow for interchangeability
between lead frame and array packages. We purchase wire bonders from major
international

                                       32
<PAGE>
manufacturers, including Kulicke & Soffa Industries, Inc. and ESEC S.A. We
purchase mold systems from major international manufacturers, including Apic
Yamada Corporation, Asahi Engineering Co Ltd and Dai-Ichi Seiko Co Ltd.


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 to 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 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
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 various reports by
SIA, the semiconductor device market revenue grew 37.0% from 1999 to $204.4
billion in 2000, subsequently fell 32.0% to $138.9 billion in 2001 and grew by
1.3% to $140.7 billion in 2002. Our net revenues grew by 64.7% to $331.3 million
in 2000, primarily as a result of an upturn in the semiconductor industry that
continued through the last quarter of 2000, but decreased 56.0% to $145.9
million in 2001 due to a severe downturn in the semiconductor industry. In 2002,
our net revenues grew 54.8% over 2001 to $225.7 million. This improvement was
across each of the principal end user segments for the products which we
packaged and tested - communications, personal computers and consumer
electronics.

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 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, payroll 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 $80,000 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

                                       33
<PAGE>
results of operations. In the fourth quarters of 2001 and 2002, we recognized
asset impairment charges of $23.7 million for 2001 and $14.7 million for 2002
and prepaid leases write-downs of $3.1 million for 2001 and $0.8 million for
2002, 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. These charges and write-downs relate to equipment held for use and
equipment held for sale. The machinery and equipment held for sale is currently
not being used in operations and we intend to dispose them in 2003.

We continue to 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 testing operations, which may include sudden changes in
demand in the end markets, and due to the fact that certain equipment are
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.

Increases or decreases in capacity utilization rates can have a significant
effect on gross profit margins since the unit cost of test 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
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.
In 2002, we increased the number of our testers from 252 to 297 and the number
of wire bonders from 532 to 620 and consequently, our net revenues by 54.8% over
2001. Depreciation expense and cost of leasing production equipment as a
percentage of revenues were 25.5% in 2000, 80.7% in 2001 and 51.8% in 2002.

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:

     o    development of new software and processes to enhance efficiency and
          reliability and to shorten test time of semiconductors; and

     o    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 a
formula and service based management fee annually, for certain management
services, including corporate secretarial, internal audit, training, executive
resources and treasury services. The management fee amounted to $1.1 million in
2002.

We recognize stock-based compensation expense for options granted under the
Share Option Plan in accordance with fixed plan accounting in accordance with
Accounting Principle Board opinion No. 25, "Accounting for Stocks Issued to
Employees." 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

                                       34
<PAGE>
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."

Our functional currency is 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, the Japanese yen
and the New Taiwan dollar 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,
"Goodwill and Other Intangible Assets," we will not amortize the goodwill but
will test it for impairment at least annually.

In 2002, Winstek contributed $17.6 million or 7.8% of our net revenues of $225.7
million.

In December 2002, FastRamp acquired 100% of the membership interests in San
Diego Test Equipment LLC from Conexant Systems Inc. in exchange for cash. Under
a Test Services Agreement between Conexant Systems Inc. and FastRamp executed in
December 2002, Conexant Systems Inc. committed to provide FastRamp with orders
for test and sort services in specified minimum amounts for a limited period of
time. The cash paid and the anticipated sales for these services are not
significant in relation to our overall assets and revenue, respectively. We
accounted for this acquisition using the purchase method under U.S. GAAP. We
began to consolidate San Diego Test Equipment LLC 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 did not result in any goodwill.


CRITICAL ACCOUNTING POLICIES

We believe the following accounting policies are critical to our business
operations and the understanding of our results of operations. A summary of our
significant accounting policies used in the preparation of our consolidated
financial statements can be found in Note 2 of the notes to the consolidated
financial statements. Our preparation of this annual report on Form 20-F
requires us to make estimates and assumptions that affect the reported amount of
assets and liabilities, disclosure of contingent assets and liabilities at the
date of our financial statements and the reported amounts of revenues and
expenses during the reporting period. There can be no assurance that actual
results will not differ from those estimates.

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

Allowance for Doubtful Accounts. We record a provision for doubtful accounts
based on the aging of the accounts receivables. Additional allowances may be
required in the future if the financial condition of our customers or general
economic conditions deteriorate, and this allowance would reduce our net income.

                                       35
<PAGE>
Valuation of inventory. Our inventories are stated at the lower of cost,
determined on the weighted average basis, or net realizable value. Cost is
generally computed on a standard cost basis, based on normal capacity
utilization, with unrecovered costs arising from underutilization of capacity
expensed when incurred. Net realizable value is the estimated selling price in
the ordinary course of business less the estimated costs of completion and the
estimated costs necessary to make a sale.

We routinely review our inventories for their saleability and for indications of
obsolescence to determine if inventories should be written-down to net
realizable value. Judgments and estimates must be made and used in connection
with establishing such allowances in any accounting period. In estimating the
net realizable value of our inventories, we consider the likelihood of spoilage
or changes in market demand for our inventories.

Useful Lives and Valuation of Property, Plant and Equipment. Our operations are
capital intensive and we have significant investment in testing and packaging
equipment. We depreciate our property, plant and equipment based on our estimate
of their economic useful lives. Management estimates of economic useful lives
are set based on historical experience and future expectations. However,
business conditions, underlying technology and customers' requirements may
change in the future which could cause a change in the useful lives. Any change
in useful lives could have a significant effect on our future operating results.

We review property, plant and equipment for impairment whenever events or
changes in market conditions indicate that the 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 the future undiscounted net
cash flows expected to be generated from the asset. If the carrying amount of
the asset exceeds the future undiscounted net cash flows, such assets are
considered to be impaired and 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. In determining the fair value of machinery and equipment, we
consider offers to purchase such equipment and expected future discounted cash
flows. Due to the nature of our business, 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 and this could have a significant
negative impact on our future operating results. We recorded asset impairment
charges of $23.7 million and $14.7 million in 2001 and 2002, respectively.
Similar assessments were performed in respect of operating lease prepayments
resulting in the write-offs of prepaid leases of $3.1 million and $0.8 million
in 2001 and 2002, respectively.

Deferred Tax Asset. We record a deferred tax asset if we believe that it is more
likely than not that the deferred tax assets will be realized. The deferred tax
effects of the tax losses, unutilized capital allowances carry forward and
temporary differences arising primarily from property, plant and equipment are
recognized because they are expected to be carried forward to offset against
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. In the event that we are not able to realize the deferred tax
assets, an adjustment to the deferred tax asset would be charged to income in
the period such determination was made.

                                       36
<PAGE>
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
                                                                                -----------------------------------
                                                                                2000          2001            2002
                                                                                -----        ------           -----
<S>                                                                             <C>          <C>              <C>
Net revenues                                                                    100.0%        100.0%          100.0%
Cost of revenues                                                                 70.0         149.3           109.8
                                                                                -----        ------           -----
Gross profit (loss)                                                              30.0         (49.3)           (9.8)
                                                                                -----        ------           -----
Operating expenses:
  Selling, general and administrative                                            12.3          24.7            16.3
  Research and development                                                        4.4          10.4             8.4
  Asset impairments                                                                --          16.3             6.5
  Prepaid leases written off                                                       --           2.1             0.3
  Stock-based compensation                                                        0.1           0.7              --
  Others, net                                                                      --           0.1             0.2
                                                                                -----        ------           -----
     Total operating expenses                                                    16.8          54.3            31.7
                                                                                -----        ------           -----
Operating income (loss)                                                          13.2        (103.6)          (41.5)
Other income (expenses):
  Interest income (expenses), net                                                 2.4           3.6            (2.3)
  Foreign currency exchange gain (loss)                                           0.6           0.5            (0.2)
  Other non-operating income, net                                                 1.1           1.4             1.5
                                                                                -----        ------           -----
     Total other income (expenses)                                                4.1           5.5            (1.0)
                                                                                -----        ------           -----
Income (loss) before income taxes                                                17.3         (98.1)          (42.5)
Income tax benefit (expense)                                                     (0.9)          6.0             3.2
                                                                                -----        ------           -----
Net income (loss) before minority interest                                       16.4         (92.1)          (39.3)
Minority interest                                                                  --           0.2            (0.3)
                                                                                -----        ------           -----
Net income (loss)                                                                16.4%        (91.9)%         (39.6)%
                                                                                -----        ------           -----
Other comprehensive income (loss):
  Unrealized gain (loss) on available-for-sale marketable securities               --          (0.2)            0.4
  Realized gain on available-for-sale marketable securities
   included in net loss                                                            --            --              --
  Translation adjustment                                                           --           0.1            (0.1)
                                                                                -----        ------           -----
Comprehensive income (loss)                                                      16.4%        (92.0)%         (39.3)%
                                                                                -----        ------           -----
</TABLE>


YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2002

Net revenues. Net revenues increased 54.8% from $145.9 million in 2001 to $225.7
million in 2002. The increase in net revenues was due primarily to an increase
in unit shipments in both test and assembly, partially offset by the decrease in
average selling prices in the first half of 2002 for both test and assembly
businesses principally resulting from changes in product mix. In the second half
of 2002, average selling prices for both test and assembly business increased
marginally resulting principally from changes in product mix. Contribution from
Winstek also increased from $1.7 million in 2001 to $17.6 million in 2002.
FastRamp, which commenced operations in January 2002, contributed $3.4 million
to net revenues. Net revenues from test services increased 71.4% from $67.4
million in 2001 to $115.4 million in 2002. Net revenues from assembly services
increased 40.5% from $78.5 million in 2001 to $110.3 million in 2002.

                                       37
<PAGE>
Cost of revenues and gross profit margin. Cost of revenues increased 13.8% from
$217.8 million in 2001 to $247.9 million in 2002. However, depreciation expense
and cost of leasing testers (included in cost of revenues) decreased from $117.8
million, or 80.7% of net revenues in 2001 to $116.8 million, or 51.8% of net
revenues in 2002. Cost of revenues as a percentage of sales decreased from
149.3% in 2001 to 109.8% in 2002, resulting in a smaller gross loss in 2002.
Gross loss in 2002 was $22.2 million, or a gross margin of negative 9.8%, as
compared to gross loss of $71.9 million, or gross margin of negative 49.3%, in
2001. The improvement in gross margin was primarily due to the increase in net
revenues resulting in higher capacity utilization and lower payroll and
materials costs.

Selling, general and administrative expenses. Selling, general and
administrative expenses increased marginally by 1.6% from $36.0 million in 2001
to $36.6 million in 2002 but as a percentage of net revenues decreased from
24.7% of net revenues in 2001 to 16.3% of net revenues in 2002. This was a
result of our on-going efforts to control costs and manage discretionary
spending in a very difficult operating environment, partially offset by a
payment of $1.0 million in third quarter 2002 by our controlling shareholder,
Singapore Technologies Pte Ltd, to our former Chairman and Chief Executive
Officer, Tan Bock Seng. The payment did not involve any cash outlay from us and
was charged to our income statement as compensation expense and credited to
shareholders' equity as "Additional Paid-in Capital."

Research and development expenses. Research and development expenses increased
24.4% from $15.2 million in 2001, or 10.4% of net revenues in 2001, to $18.9
million in 2002, or 8.4% of net revenues in 2002. These expenses were for
additional equipment, supplies and research and development personnel to further
strengthen our testing and advanced packaging capabilities.

Stock-based compensation expense. Stock-based compensation expense was $1.0
million in 2001 and $0.1 million in 2002.

Asset impairment and prepaid leases written-down. We recognized asset impairment
charges of $23.7 million for 2001 and $14.7 million for 2002 and wrote-down
prepaid leases of tester equipment of $3.1 million for 2001 and $0.8 million for
2002. The impairments and write-downs were taken because 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 recognized impairment charges of $19.4 million in 2001 and $11.1 million in
2002 in respect of tester equipment held for use. The carrying values of these
assets were written down to the estimated fair market value and will continue to
be depreciated over their remaining useful lives. We recognized asset impairment
charges of $4.3 million in 2001 and $3.6 million in 2002 in respect of equipment
held for sale.

Net interest income (expense). Net interest income was $5.2 million in 2001
compared to net interest expense of $5.1 million in 2002. Net interest income
consisted of interest income of $6.5 million and interest expense of $1.3
million in 2001 and interest income of $5.3 million and interest expense of
$10.4 million in 2002. 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 2002 was due primarily to the general decline in
interest rates. The increased interest expense in 2002 was primarily due to our
fixed-interest convertible notes issued in March 2002.

Foreign currency exchange gain (loss). We recognized an exchange gain of $0.8
million in 2001 compared to an exchange loss of $0.5 million in 2002, due
primarily to currency fluctuations of the U.S. dollar against the Singapore
dollar, the Japanese yen and the New Taiwan dollar.

Other non-operating income. Other non-operating income was $2.0 million in 2001
and $3.4 million in 2002. The increase was due to a gain arising from an
interest-rate swap transaction in respect of a marketable debt security, gains
from sale or maturity of marketable securities and a lower amount of grants
recorded in 2001 for research and development activities from EDB under its
Research and Incentive Scheme for Companies.

Taxation. Income tax benefit was $8.8 million in 2001 and $7.2 million in 2002.
The income tax benefit of $8.8 million in 2001 comprised income tax expense of
$1.4 million and deferred tax benefit of $10.2 million. The income tax benefit
of $7.2

                                       38
<PAGE>
million in 2002 comprised income tax expense of $1.0 million and a deferred tax
benefit of $8.2 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 in 2001 and $8.2 million
in 2002 resulted principally from recognizing the deferred tax benefit
associated with tax losses, unutilized capital allowances carried forward and
temporary differences arising primarily from property, plant and equipment.


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 semiconductor industry. Net revenues from test services decreased 55.7%
from $151.9 million in 2000 to $67.4 million in 2001. Net revenues from assembly
services decreased 56.3% from $179.4 million in 2000 to $78.5 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. 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.

                                       39
<PAGE>
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 2001 was due primarily to the lower amount of excess cash available for
investment in marketable debt securities and fixed-term time deposits and the
general decline in interest rates. The lower interest expense in 2001 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.

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.

                                       40
<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,
2002. 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-01     JUN-01     SEP-01    DEC-01    MAR- 02     JUN-02    SEP-02     DEC-02
                                          -------    -------    -------   -------    -------    -------   -------    -------
                                                                          (in thousands)
<S>                                       <C>        <C>        <C>       <C>        <C>        <C>       <C>        <C>
Net revenues                               48,628     35,266     28,049    33,923     39,404     51,259    63,143     71,932
Cost of revenues                           58,543     57,200     50,021    52,025     53,228     60,031    65,102     69,582
                                          -------    -------    -------   -------    -------    -------   -------    -------
Gross profit (loss)                        (9,915)   (21,934)   (21,972)  (18,102)   (13,824)    (8,772)   (1,959)     2,350
                                          =======    =======    =======   =======    =======    =======   =======    =======
Operating expenses:
  Selling, general and
   administrative                          11,188      8,756      7,839     8,258      8,794      9,023     9,227      9,589
  Research and development                  3,523      3,500      3,816     4,321      4,158      4,530     4,983      5,185
  Asset impairments                            --         --         --    23,735         --         --        --     14,666
  Prepaid leases written off                   --         --         --     3,145         --         --        --        764
  Stock-based compensation                    660         90        100       174        230       (197)        9         18
  Others, net                                  82         --         28        (9)       130         19       402        (3)
                                          -------    -------    -------   -------    -------    -------   -------    -------
  Total operating expenses                 15,453     12,346     11,783    39,624     13,312     13,375    14,621     30,219
                                          =======    =======    =======   =======    =======    =======   =======    =======
Operating loss                            (25,368)   (34,280)   (33,755)  (57,726)   (27,136)   (22,147)  (16,580)   (27,869)

Other income (expenses):
  Interest income (expenses), net           1,890      1,619      1,161       552         (9)    (1,775)   (1,842)    (1,517)
  Foreign currency exchange
   gain (loss)                                (58)       391       (562)    1,004        199        423    (1,260)       126
  Other non-operating income
   (expenses), net                          1,157        780        840      (787)       461      1,771       525        662
                                          -------    -------    -------   -------    -------    -------   -------    -------
  Total other income (loss)                 2,989      2,790      1,439       769        651        419    (2,577)      (729)
                                          =======    =======    =======   =======    =======    =======   =======    =======
Loss before income taxes                  (22,379)   (31,490)   (32,316)  (56,957)   (26,485)   (21,728)  (19,157)   (28,598)
Income tax benefit (expense)                 (604)      (217)      (122)    9,753       (141)       441     1,619      5,244
                                          -------    -------    -------   -------    -------    -------   -------    -------
Net loss before minority interest         (22,983)   (31,707)   (32,438)  (47,204)   (26,626)   (21,287)  (17,538)   (23,354)
Minority interest                              --         --        139       173         73       (278)      (90)      (219)
                                          -------    -------    -------   -------    -------    -------   -------    -------
Net loss                                  (22,983)   (31,707)   (32,299)  (47,031)   (26,553)   (21,565)  (17,628)   (23,573)
                                          =======    =======    =======   =======    =======    =======   =======    =======
Other comprehensive income (loss):
  Unrealized gain (loss) on available-
   for-sale marketable securities              10         59         40      (412)       326        160       210        316
  Realized (gain) loss on available-
   for-sale marketable securities
   included in net loss                        --         --         --        --          2         --       (78)       (49)
  Translation adjustment                       --         --         --        93       (391)     1,152    (1,102)       129
                                          -------    -------    -------   -------    -------    -------   -------    -------
Comprehensive loss                        (22,973)   (31,648)   (32,259)  (47,350)   (26,616)   (20,253)  (18,598)   (23,177)
                                          =======    =======    =======   =======    =======    =======   =======    =======
</TABLE>

                                       41
<PAGE>


<TABLE>
<CAPTION>
                                                                   AS A PERCENTAGE OF NET REVENUES
                                          ----------------------------------------------------------------------------------
                                          MAR-01     JUN-01    SEP-01    DEC-01      MAR-02     JUN-02    SEP-02     DEC-02
                                          ------     ------    ------    ------      ------     ------    ------     ------
<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                          120.4%     162.2%     178.3%    153.4%     135.1%     117.1%    103.1%      96.7%
                                          -----      -----     ------    ------      -----      -----     -----      -----
Gross profit (loss)                       (20.4)%    (62.2)%    (78.3)%   (53.4)%    (35.1)%    (17.1)%    (3.1)%      3.3%
                                          =====      =====     ======    ======      =====      =====     =====      =====
Operating expenses:
  Selling, general and administrative      23.0%      24.8%      28.0%     24.3%      22.3%      17.6%     14.6%      13.3%
  Research and development                  7.2%       9.9%      13.6%     12.7%      10.6%       8.8%      7.9%       7.2%
  Asset impairments                         0.0%       0.0%       0.0%     70.0%       0.0%       0.0%      0.0%      20.4%
  Prepaid leases written off                0.0%       0.0%       0.0%      9.2%       0.0%       0.0%      0.0%       1.1%
  Stock-based compensation                  1.4%       0.3%       0.3%      0.6%       0.6%      (0.3)%     0.0%       0.0%
  Others, net                               0.2%       0.0%       0.1%      0.0%       0.3%       0.0%      0.7%       0.0%
                                          -----      -----     ------    ------      -----      -----     -----      -----
  Total operating expenses                 31.8%      35.0%      42.0%    116.8%      33.8%      26.1%     23.2%      42.0%
                                          =====      =====     ======    ======      =====      =====     =====      =====
Operating loss                            (52.2)%    (97.2)%   (120.3)%  (170.2)%    (68.9)%    (43.2)%   (26.3)%    (38.7)%

Other income (expenses):
  Interest income (expenses), net           3.9%       4.6%       4.1%      1.6%       0.0%      (3.5)%    (2.9)%     (2.1)%
  Foreign currency exchange gain (loss)    (0.1)%      1.1%      (2.0)%     3.0%       0.5%       0.8%     (2.0)%      0.2%
  Other non-operating income
   (expenses), net                          2.4%       2.2%       3.0%     (2.3)%      1.2%       3.5%      0.9%       0.8%
                                          -----      -----     ------    ------      -----      -----     -----      -----
  Total other income (expenses)             6.2%       7.9%       5.1%      2.3%       1.7%       0.8%     (4.0)%     (1.1)%
                                          =====      =====     ======    ======      =====      =====     =====      =====
Loss before income taxes                  (46.0)%    (89.3)%   (115.2)%  (167.9)%    (67.2)%    (42.4)%   (30.3)%    (39.8)%
Income tax benefit (expense)               (1.2)%     (0.6)%     (0.4)%    28.7%      (0.4)%      0.9%      2.5%       7.3%
                                          -----      -----     ------    ------      -----      -----     -----      -----
Net loss before minority interest         (47.2)%    (89.9)%   (115.6)%  (139.2)%    (67.6)%    (41.5)%   (27.8)%    (32.5)%
Minority interest                           0.0%       0.0%       0.5%      0.5%       0.2%      (0.5)%    (0.1)%     (0.3)%
                                          -----      -----     ------    ------      -----      -----     -----      -----
Net loss                                  (47.2)%    (89.9)%   (115.1)%  (138.7)%    (67.4)%    (42.0)%   (27.9)%    (32.8)%
                                          =====      =====     ======    ======      =====      =====     =====      =====
Other comprehensive income (loss):
  Unrealized gain (loss) on
   available-for-sale marketable
   securities                               0.0%       0.2%       0.1%     (1.2)%      0.8%       0.3%      0.3        0.4%
  Realized (gain) loss on
   available-on-sale marketable
   securities included in net loss          0.0%       0.0%       0.0%      0.0%       0.0%       0.0%     (0.1)%      0.0%
  Translation adjustment                    0.0%       0.0%       0.0%      0.3%      (1.0)%      2.2%     (1.8)%      0.2%
                                          -----      -----     ------    ------      -----      -----     -----      -----
Comprehensive loss                        (47.2)%    (89.7)%   (115.0)%  (139.6)%    (67.6)%    (39.5)%   (29.5)%    (32.2)%
                                          =====      =====     ======    ======      =====      =====     =====      =====
</TABLE>

                                       42
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

LIQUIDITY

As of December 31, 2002, our principal sources of liquidity included $167.7
million in cash and cash equivalents and $69.8 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 $0.8 million
in the form of bank guarantees as of December 31, 2002. Interest on any future
borrowings under the unutilized facilities will be charged at the bank's
prevailing rate. Our subsidiary, Winstek, has NT$ 653.7 million (or
approximately $18.8 million) of unutilized bank and credit facilities from
various banks and financial institutions.

Net cash provided by operating activities totaled $41.3 million in 2001 and
$28.5 million in 2002. 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. In 2002, the net cash generated from operating activities
was primarily due to net loss before the effects of depreciation and
amortization, partially offset by negative working capital changes arising
principally from an increase in accounts receivables as a result of higher
revenues.

Net cash used in investing activities totaled $44.3 million in 2001 and $156.7
million in 2002. The net cash used in investing activities consisted of capital
expenditures of $56.0 million in 2001 and $113.2 million in 2002, and purchases
of marketable debt securities of $22.5 million in 2001 and $158.0 million in
2002. 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. The net cash used in investing activities in 2002
was reduced by receipts of $113.8 million from the sale or maturity of
marketable debt securities and $0.8 million from the disposal of equipment.

Net cash used in financing activities was $22.7 million in 2001 and net cash
provided by financing activities was $180.6 million in 2002. 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. In 2002, net cash
provided by financing activities of $180.6 million consisted of net proceeds
from the issuance of convertible notes in March 2002 of $195.0 million, bank
borrowings of $20.6 million, receipt of government grants of $1.2 million and
proceeds from issuance of shares of $1.3 million. These were reduced by the
repayment of installments due on the long-term EDB loan of $14.3 million, cash
pledged against borrowings of $13.0 million and payment for capital leases of
$10.1 million.


CAPITAL EXPENDITURES

Our capital expenditures are primarily driven by the demand for our services. We
spent $134.7 million on capital expenditures during 2002 compared to $62.4
million in 2001 and $276.9 million in 2000. We have budgeted capital
expenditures for 2003 in the range of $120 million to $150 million, primarily to
purchase machinery and equipment in connection with the expansion of our
packaging and test operations.

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 changes 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. 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.

                                       43
<PAGE>
However, we have no specific agreements or understandings with respect to any
material acquisition or investment at this time.

The following table sets forth our contractual obligations and commitments to
make future payments as of December 31, 2002. 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, 2002.

<TABLE>
<CAPTION>
                                                   YEAR ENDED DECEMBER 31, 2002, PAYMENTS DUE
                                           ------------------------------------------------------------
                                           WITHIN 1                                AFTER 5      TOTAL
                                             YEAR       1-3 YEARS    4-5 YEARS      YEARS      PAYMENTS
                                             ----       ---------    ---------    --------     --------
                                                                 (in thousands)
<S>                                        <C>          <C>          <C>           <C>         <C>
Long term debt............................. $16,414      $ 7,299     $  4,909      $ 1,149     $ 29,771
Convertible notes..........................       -            -(1)   205,013            -      205,013
Capital lease obligations..................   6,558        5,520            -            -       12,078
Operating leases...........................   4,566        4,685        2,709       13,852       25,812
Unconditional purchase obligations:
  - Capital commitments....................  42,478            -            -            -       42,478
  - Inventory purchase commitments.........  10,800            -            -            -       10,800
                                            -------      -------     --------      -------     --------
Total contractual cash obligations          $80,816      $17,504     $212,631      $15,001     $325,952
                                            -------      -------     --------      -------     --------
</TABLE>

(1)  Holders of the convertible notes have the right to require us to purchase
     all or some of their notes on March 18, 2005.


CAPITAL RESOURCES

As of December 31, 2002, we had borrowings totaling $252.0 million comprising
primarily $205.0 million due to our convertible note holders, $14.8 million
outstanding on a loan from EDB, a related party, obligations under capital
leases amounting to $12.1 million and bank borrowings of $20.2 million taken up
by our subsidiary, Winstek.

In March 2002, we issued $200.0 million of senior unsecured and unsubordinated
convertible notes due March 18, 2007. The convertible notes bear interest at the
rate of 1.75% per annum and have a yield to maturity of 4.91%. At the maturity
date, we will pay to the note holders 117.665% of the principal amount. The
notes can be converted into our ordinary shares or, subject to certain
limitations, ADSs, each of which currently represents ten ordinary shares, at a
conversion price of S$3.408 per ordinary share (at a fixed exchange rate of
US$1.00 = S$1.8215). The conversion price may be subject to adjustments for
certain events. We may elect to satisfy our obligations to deliver ordinary
shares or ADSs through delivery of cash in accordance with the terms of the
notes. We may redeem all or a portion of the convertible notes at any time on or
after March 18, 2004 at a price to yield of 4.91% per year to the redemption
date if our shares or ADSs trade at or above 125% of the conversion price for a
period of 20 trading days in any 30 consecutive trading day period. The note
holders may require us to repurchase all or a portion of the notes on March 18,
2005 at a price equal to 110.081% of the principal amount of the notes being
redeemed, plus any accrued and unpaid interest accrued to the date of
redemption. In addition, upon the occurrence of certain repayment events,
including a change in control, on or prior to March 18, 2007, each note holder
may require us to repurchase all or a portion of such holder's notes at a price
to yield of 4.91% per year to the redemption date.

We have recorded the convertible notes due 2007 as a debt instrument pursuant to
U.S. GAAP. Our convertible notes are classified as a long-term liability and,
accordingly, the accrued yield on the convertible notes during any period (at
4.91% per year) is classified as interest expense for that period.

We entered into a long-term loan agreement with EDB on June 5, 1998 for a sum of
S$90.0 million of which $14.8 million was outstanding as of December 31, 2002.
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

                                       44
<PAGE>
Singapore. The prevailing interest rate declared by the Central Provident Fund
Board was 2.5% at December 31, 2002. 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.

In connection with a working capital loan facility of US$19.0 million granted by
United Overseas Bank Ltd Taipei Branch ("UOB Taipei") to our subsidiary,
Winstek, in November 2002, we executed a letter of charge and set-off in favor
of UOB Taipei. The agreement provides for interest at the rate of 7.93% per
annum payable every quarter. The principal is repayable in 13 equal installments
commencing November 6, 2004. US$3.5 million has been drawn down under this
facility. Under the terms of the letter of charge and set-off, we are required
to make deposits as cash collateral for the loan to Winstek in an amount equal
to the amount drawn down with UOB Taipei and its branches. We may not withdraw
or otherwise transfer or encumber these deposits without the consent of UOB
Taipei as long as the loan is outstanding. As at December 31, 2002, the amount
deposited is US$3.5 million under this agreement.

In 2002, Winstek entered into three floating rate Taiwan dollar loans of $1.7
million, $2.6 million and $7.2 million with Chiaotung Bank. The interest rates
on the loans are based on the basic loan rate or fixed deposit rate quoted by
and may be revised from time to time by Chiaotung Bank. As of December 31, 2002,
the interest rate on the first two loans was 6.57% per annum and the interest
rate on the third loan was 4.50% per annum. Interest on all three loans is
payable on a monthly basis in Taiwan dollars. The principals on the $1.7 million
loan and the $2.6 million loan are repayable in 21 equal monthly installments
commencing March 29, 2004 and May 15, 2004, respectively, and the principal on
the $7.2 million loan is repayable in 13 equal monthly installments commencing
June 27, 2003. The loans are secured by fixed deposits amounting to $2.9 million
and property pledged to the bank, comprising land and building and plant and
machinery, of $21.7 million.

We also have United States dollar and Taiwan dollar short-term loan facilities
with a number of Taiwan banks. As of December 31, 2002, $5.2 million was
outstanding under these facilities which bear fixed interest rates of between
3.9% and 4.1% per annum. Certain of the loans are secured by fixed deposits with
the particular bank amounting to an aggregate of $3.0 million as of December 31,
2002. The loans have all been repaid as of March 22, 2003.

As of December 31, 2002, Winstek has deposits of $3.2 million pledged as
security for bank credit and facility lines available to Winstek. As of December
31, 2001, no such deposits were pledged as security.

The capital leases and bank borrowings by Winstek were taken up to finance the
purchase of new testers.

We have an existing agreement with Citibank, N.A. for a working capital facility
of $20.0 million. As of December 31, 2002, we had utilized $0.8 million in the
form of bank guarantees under this facility. Interest on any future borrowings
under the unutilized facilities will be charged at the bank's prevailing rate.
Our subsidiary, Winstek, has NT$ 653.7 million (or approximately $18.8 million)
of unutilized working capital facilities from various banks and financial
institutions.

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.

                                       45
<PAGE>
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 2003. 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 consider opportunities to obtain additional debt or equity
financing from time to time depending on prevailing market conditions. 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. See "Item 10 -
Additional Information - E. Taxation - Taxation of Dividends" for information
regarding taxation of dividends. Losses and unutilized capital allowances
arising in the pioneer status period are available to be carried forward and
offset against profits arising from the same pioneer trade 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. In addition, in respect of the utilization of the unutilized
capital allowances, we must continue to carry on the same trade which gave rise
to the allowances. Without this exemption from income tax, our profits would be
subject to income tax at the applicable corporate income tax rate of 24.5% and
22% for income earned in 2001 and 2002, respectively. The pioneer status
exemption does not apply to interest and rental income earned during the pioneer
status period and such 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.


DERIVATIVE FINANCIAL INSTRUMENTS

From time to time, we have used derivative instruments such as forward foreign
currency swaps, foreign forward contracts and options and interest rate swaps to
mitigate the financial risks associated with certain assets and liabilities. We
do not use such instruments for trading or speculative purposes.

We entered into foreign currency contracts to mitigate financial risks
associated with payroll costs, materials costs and other costs denominated in
Singapore dollars and New Taiwan dollars. Hedge accounting has not been applied
as the contracts entered into to date do not qualify as hedges under generally
accepted accounting principles in the United States. Gains and losses on these
contracts have been recorded as foreign currency gains or losses. As of December
31, 2002, 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, the New Taiwan 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.

                                       46
<PAGE>
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
net margins.


RESEARCH AND DEVELOPMENT

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


RECENT ACCOUNTING PRONOUNCEMENTS

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, we will recognize a
gain or loss on settlement. We are required to adopt the provisions of SFAS No.
143 on January 1, 2003. The adoption of SFAS No. 143 did not have a material
effect on our financial position or results of operations.

In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities," which addresses financial accounting and
reporting for costs associated with exit and disposal activities. SFAS No. 146
requires cost associated with exit or disposal activities to be recorded at
their fair values when a liability has been incurred. Under previous guidance,
certain exit costs were accrued upon management's commitment to an exit plan,
which is generally before an actual liability has been incurred. SFAS No. 146
will be effective for exit or disposal activities that are initiated after
December 31, 2002. We do not expect the adoption of SFAS No. 146 to have a
material impact on our financial position or results of operations.

                                       47
<PAGE>
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.   DIRECTORS AND SENIOR MANAGEMENT

The following table sets forth the name, age (as at February 15, 2003) and
position of each director and member of senior management:

<TABLE>
<CAPTION>
NAME                                         AGE     POSITION
----                                         ---     --------
<S>                                          <C>     <C>
BOARD OF DIRECTORS
Charles Richard Wofford(1)(2)(3)              69     Chairman of the Board of Directors
Lim Ming Seong(3)(4)                          55     Deputy Chairman of the Board of Directors
Tan Lay Koon(5)                               44     Director, President & Chief Executive Officer
Peter Seah Lim Huat(6)(7)                     56     Director
Tay Siew Choon(7)(8)(9)                       55     Director
Tan Choon Shian(7)                            36     Director
Koh Beng Seng(10)                             52     Director
Steven Hugh Hamblin(9)(10)                    54     Director
Teng Cheong Kwee(11)                          49     Director
William J. Meder(8)                           62     Director
Richard John Agnich(10)                       59     Director
Gan Chee Yen(7)(12)                           43     Alternate Director to Tay Siew Choon
Lai Yeow Hin(7)(12)                           38     Alternate Director to Tan Choon Shian

SENIOR MANAGEMENT
Suh Tae Suk                                   55     Chief Operating Officer
Pearlyne Wang                                 48     Acting Chief Financial Officer
Han Byung Joon                                43     Chief Technology Officer
Jeff Osmun                                    39     Vice President, Worldwide Sales
Ng Tiong Gee                                  40     Chief Information Officer
</TABLE>

(1)  Appointed on August 1, 2002 as Chairman of the Board.
(2)  Chairman of the Executive Committee.
(3)  Member of the Executive Resource & Compensation Committee.
(4)  Chairman of the Budget Committee.
(5)  Appointed on June 26, 2002.
(6)  Chairman of the Executive Resource & Compensation Committee.
(7)  Appointed on July 15, 2002.
(8)  Member of the Budget Committee.
(9)  Member of the Executive Committee.
(10) Member of the Audit Committee.
(11) Chairman of the Audit Committee.
(12) 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 2002. The average attendance by directors at Board meetings
they were scheduled to attend was 86%.

                                       48
<PAGE>
There are no family relationships among any of our directors, senior management
or substantial shareholders, and there are no arrangements or understandings
with any person pursuant to which any of our directors or members of senior
management were selected. Lim Ming Seong is Corporate Advisor, Peter Seah Lim
Huat is President & Chief Executive Officer, Tay Siew Choon is Managing
Director/Chief Operating Officer and Gan Chee Yen is Director, Finance of our
parent, Singapore Technologies Pte Ltd.


BOARD OF DIRECTORS

CHARLES RICHARD WOFFORD
Charles Richard Wofford was appointed to our Board of Directors in February
1998. Mr. Wofford was re-elected to our Board of Directors in 2000 and was
subsequently appointed Chairman of the Board of Directors in August 2002. He 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.

LIM MING SEONG
Lim Ming Seong became our Deputy Chairman in June 1998 and was re-elected to our
Board of Directors in 2001. 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, he has held
various senior positions in the Singapore Technologies Group. Prior to joining
Singapore Technologies Pte Ltd, he 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. He also participated
in the Advanced Management Programs at INSEAD and Harvard University,
respectively.

TAN LAY KOON
Tan Lay Koon was appointed our President and Chief Executive Officer on June 26,
2002. He was appointed to the Board of Directors on the same date. Mr. Tan
joined us in May 2000 as our Chief Financial Officer. Prior to joining our
company, he 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.

PETER SEAH LIM HUAT
Peter Seah Lim Huat was appointed to our Board of Directors in July 2002. Mr.
Seah was appointed as a Director of Singapore Technologies Pte Ltd in May 1997
and is currently the President and Chief Executive Officer of Singapore
Technologies Pte Ltd, a position he has held since December 1, 2001. He was with
Overseas Union Bank Limited from 1977 to 2001. He held several senior positions
during that time, becoming its President and Chief Executive Officer in 1991. He
retired as Vice Chairman and Chief Executive Officer of Overseas Union Bank
Limited on September 30, 2001. Mr. Seah received his Bachelor of Business
Administration (Honors) from the former University of Singapore in 1968.

TAY SIEW CHOON
Tay Siew Choon was appointed to our Board of Directors in July 2002. He is
currently the Managing Director and Chief Operating Officer of Singapore
Technologies Pte Ltd and Deputy Chairman and CEO of Green Dot Capital Pte Ltd, a
wholly owned subsidiary of Singapore Technologies Pte Ltd. He is also the
Chairman of Singapore Computer Systems Ltd, SNP Corporation Ltd and Co-Chairman
of NexGen Financial Holdings Ltd. He is also a board member of Singapore
Technologies Pte Ltd, SembCorp Industries Ltd, Chartered Semiconductor
Manufacturing and ST Telemedia Pte Ltd. Mr. Tay graduated from Auckland
University in 1970 with a Bachelor of Engineering in Electrical Engineering
under the Colombo Plan Scholarship and a Master of Science in System Engineering
from the former University of Singapore in 1974.

                                       49
<PAGE>
TAN CHOON SHIAN
Tan Choon Shian was appointed to our Board of Directors in July 2002. Mr. Tan is
currently the Director, Electronics and Precision Engineering Cluster and
Director, International Operations (Japan) of the Economic Development Board, a
position he has held since January 2002. He joined the Economic Development
Board in 1992 and has held several other senior positions. In 1995, he became
the Director of the Economic Development Board's centre in Tokyo, where he was
concurrently the First Secretary (Industry) of the Singapore Embassy in Japan.
In December 1998, he completed his Tokyo assignment as the Economic Development
Board's Regional Director, Japan (East). Mr. Tan received his Bachelor of
Science (Information Science) from the University of Tokyo in 1992 and his
Master of Science (Management) from Stanford University in 2000.

KOH BENG SENG
Koh Beng Seng was appointed to our Board of Directors in February 1999 and was
re-elected to our Board of Directors in 2002. He is currently the Deputy
President and a Director of United Overseas Bank Limited. Mr. Koh is on the
Board of Directors of Chartered Semiconductor Manufacturing Ltd. He 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. He received his Bachelor of Commerce (First Class Honors) from the former
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.

STEVEN HUGH HAMBLIN
Steven Hugh Hamblin was appointed to our Board of Directors in June 1998 and was
re-elected to our Board of Directors in 2002. 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.

TENG CHEONG KWEE
Teng Cheong Kwee was appointed to our Board of Directors in January 2001 and was
re-elected to our Board of Directors in May of that year. 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 an Executive Director of Pheim Asset Management (Asia)
Private Limited, a licensed fund management company in Singapore. Mr. Teng
received his Bachelor of Engineering (Industrial), First Class Honors 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 and was
re-elected to our Board of Directors in 2002. 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 a member of the Board
for PSI Technologies. He also teaches 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.

                                       50
<PAGE>
RICHARD JOHN AGNICH
Richard John Agnich was appointed to our Board of Directors in October 2001 and
was re-elected to our Board of Directors in 2002. 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 Tay Siew Choon upon
relinquishing his appointment as Alternate Director to Premod Paul Thomas in
July 2002. Mr. Gan has been in the finance and accounting field for more than 18
years and is currently the Director, Finance of Singapore Technologies Pte Ltd.
He was the 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. He also participated in the Program for Management
Development at the Harvard Business School in September 2001.

LAI YEOW HIN
Lai Yeow Hin was appointed Alternate Director to Tan Choon Shian upon
relinquishing his appointment as Alternate Director to Liow Voon Kheong in July
2002. 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).


SENIOR MANAGEMENT

SUH TAE SUK
Suh Tae Suk joined us in September 2002 as our Chief Operating Officer. Mr. Suh
has amassed 29 years of experience in the semiconductor industry. Prior to
joining us, he served as Managing Director of Philips Semiconductor Thailand
from 1996 to September 2002 and as General Manager of Philips Semiconductor
Philippines from 1995 to 1996. From 1973 to 1992, Mr. Suh was with Philips Korea
where he last served as Staffing Director of Assembly Operations. He received
his Bachelor of Business Administration from Kyung Hee University in 1974.

PEARLYNE WANG
Pearlyne Wang joined us in April 2000. In June 2002, Ms. Wang was appointed
acting Chief Financial Officer. Before assuming her current post, she had held
the position of Vice President, Finance and, prior to that, was our Financial
Controller. From 1980 to 2000, she was with McDermott South East Asia Pte. Ltd
and served as its Regional Head of Finance (Far East Operations) from 1996 to
early 2000. From 1973 to 1980, Ms. Wang held various accounting positions at
Esso Singapore Pte. Ltd. She received her CPA from the Association of Certified
Chartered Accountants, UK and is a member of the Institute of Certified Public
Accountants, Singapore (ICPAS).

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. He 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.

                                       51
<PAGE>
JEFFREY R. OSMUN
Jeffrey R. Osmun was appointed Vice President, Worldwide Sales & Marketing and
President, U.S. Operations in September 2002. Mr. Osmun joined us in September
1999 as Director of Sales, U.S. Central Region and was later appointed Vice
President, North American Sales. Prior to that, he served as National Sales
Manager of Kyocera America Inc. and, before that, held the post of Director of
Development - College of Engineering and Applied Sciences for Lehigh University.
Mr. Osmun received his Bachelor of Science in Mechanical Engineering from Lehigh
University in 1985.

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, he 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.


B.   COMPENSATION OF DIRECTORS AND SENIOR MANAGEMENT

In 2002, the aggregate amount of compensation and bonus paid by our company to
all our directors and senior management was approximately $2.9 million broken
down as follows:

<TABLE>
<CAPTION>
                                                                        EXECUTIVE     NON EXECUTIVE
                                                                        DIRECTORS      DIRECTORS(1)        TOTAL(2)
                                                                        ---------     -------------      ----------
<S>                                                                     <C>           <C>                <C>
Charles Richard Wofford                                                                     $75,000      $   75,000
Lim Ming Seong                                                                               48,000          48,000
Tan Lay Koon                                                             $287,226                           287,226
Harry Hooshang Davoody(3)                                                 686,612                           686,612
Tan Bock Seng(4)                                                           49,147                           305,015
Peter Seah Lim Huat                                                                          15,840          15,840
Tay Siew Choon                                                                               11,250          11,250
Tan Choon Shian                                                                               2,628           2,628
Koh Beng Seng                                                                                28,410          28,410
Steven Hugh Hamblin                                                                          57,590          57,590
Teng Cheong Kwee                                                                             29,000          29,000
William J. Meder                                                                             45,000          45,000
Richard John Agnich                                                                          45,000          45,000
Premod Paul Thomas(5)                                                                        13,540          13,540
Liow Voon Kheong(5)                                                                           3,110           3,110
Senior Management (excluding Executive Directors) as a group                                              1,197,202
                                                                                                         ----------
                                                                                                         $2,850,423
                                                                                                         ==========
</TABLE>

(1)  We will seek approval at our annual general meeting in 2003 for the payment
     of directors' fees of approximately $380,000 for the financial year ended
     December 31, 2002.

(2)  No compensation was given in the form of stock options. For more
     information on share options granted to our directors and senior
     management, see "--E. Share Ownership for Directors and Senior Management."

(3)  Includes a sum of $337,270 in recognition of Mr. Davoody's past services to
     our company. In addition, the Company approved his retention of 300,000 of
     the share options granted to him during the term of his employment. Mr.
     Davoody resigned on June 26, 2002.

(4)  Includes payment of approximately $256,000 for services as advisor to our
     Board of Directors from January 8 to July 31, 2002 . Does not include the
     payment of $1.0 million by our controlling shareholder, Singapore
     Technologies Pte

                                       52
<PAGE>
     Ltd, to Mr. Tan Bock Seng. This amount was charged to our income statement
     as compensation expense and added to our shareholders' equity as
     "Additional Paid-in Capital" and did not involve any cash outlay from us.
     Mr. Tan resigned on August 1, 2002.

(5)  Resigned on July 15, 2002.

We have provided to our directors and officers customary director or officer
insurance, as appropriate.

As of December 31, 2002, we had thirteen 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, 2001, we paid directors' fees totaling $275,000. We will seek
approval at our annual general meeting in 2003 for the payment of directors'
fees of approximately $380,000 for the financial year ended December 31, 2002.
The increase was due partly to the increase in compensation for Mr. Charles
Richard Wofford commensurate with his added responsibilities as Chairman of the
Board to which he was appointed in August 2002, additional attendance fees paid
to two Board members for attending meetings to review specific business
interests of our Company and the provision of directors' fees for a full year in
2002 for two directors, namely, Mr. William J. Meder and Mr. Richard John
Agnich, who, being appointed to the Board in the latter half of 2001, were each
paid pro-rated directors' fees for the financial year ended December 31, 2001.

Non-executive directors receive 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. Non-executive directors are also 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. Executive directors do not receive
any directors' fees.

Our company does not have any pension, retirement or other similar
post-retirement benefits, other than the defined contribution plans required by
local regulations and described below.

Under Singapore law, we make monthly contributions based on the statutory
funding requirement into a Central Provident Fund for substantially all of our
Singapore employees who are Singapore citizens and Singapore permanent
residents. Our total expenses under this plan were $2.4 million for 2000, $2.7
million for 2001 and $3.0 million for 2002.

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.
Our total pension plan expenses for the period from August 21, 2001 (the date we
acquired Winstek) to December 31, 2001 and for the year ended December 31, 2002
were approximately $39,000 and $24,000, respectively.

STATS Inc and FastRamp also have a 401(k) savings plan covering substantially
all of our U.S. employees. We contribute up to 6% of eligible employee
compensation at the rate of 50% of employee contributions deferred to the 401
(k) plan. Our Company's matching contributions under the 401 (k) plan were
$140,000 in 2000, $131,000 in 2001 and $186,000 in 2002.


C.   BOARD PRACTICES

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 is 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 the directors
who have been in office longest since their re-election or appointment standing
for re-election. Our Articles of

                                       53
<PAGE>
Association also provide that the Board of Directors has the power to appoint
any person to be a director to fill a casual vacancy or as an additional
director. These persons may only be directors until the next annual general
meeting of shareholders but are eligible for re-election. Accordingly, the
appointments of Tan Lay Koon, Peter Seah Lim Huat, Tay Siew Choon and Tan Choon
Shian will expire and we will seek shareholders' approval for their
re-appointments at the next annual general meeting of shareholders in 2003.
Under the Companies Act, the term of any director shall expire on the date of
the annual general meeting of shareholders immediately following the date that
director turns 70 years of age, although he or she will be eligible for
re-election. Directors who are aged 70 or older are eligible for re-election
upon the approval of not less than three-fourths of the shareholders of the
company entitled to vote at a general meeting of the company and will hold
office until the next annual general meeting of the shareholders. Pursuant to
this regulation, the term of our Chairman of the Board, Charles Richard Wofford,
will expire and we will seek shareholders' approval for his re-appointment at
our next annual general meeting of shareholders in 2003.

As of February 15, 2003, Singapore Technologies Pte Ltd and its affiliates own
71.8% of our outstanding ordinary shares and 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. Our directors do not have service contracts with
us.

We do not have any service contracts with any of our non-executive directors.
The service contracts of our executive directors do not provide for benefits
upon termination of employment.


COMMITTEES OF THE BOARD OF DIRECTORS

(i)  Audit Committee

The Audit Committee currently consists of four members, all of whom are
non-executive directors. They are Teng Cheong Kwee (Chairman), Steven Hugh
Hamblin, Koh Beng Seng and Richard John Agnich. Mr. Hamblin stepped down as
Chairman of the Audit Committee on January 28, 2003 but remains a member, when
he was appointed to the Executive Committee, which was established on the same
date. Mr. Wofford was a member of the Audit Committee until January 28, 2003
when he was appointed Chairman of the Executive Committee on the same date. 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 2002.

(ii) Executive Resource & Compensation Committee

The Executive Resource & Compensation Committee currently consists of Peter Seah
Lim Huat (Chairman), Charles Richard Wofford and Lim Ming Seong.

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.

                                       54
<PAGE>
The Executive Resource & Compensation Committee held four meetings in 2002.

(iii) Budget Committee

The Budget Committee currently consists of Lim Ming Seong (Chairman), Tay Siew
Choon 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 six meetings in 2002.

(iv)  Executive Committee

The Executive Committee, which was formed on January 28, 2003, currently
consists of Charles Richard Wofford (Chairman), Tay Siew Choon and Steven Hugh
Hamblin.

The main objective of the Executive Committee is to enable the Board to delegate
some of its powers and functions regarding the governing of the affairs of our
company and our subsidiaries to the Executive Committee in order to facilitate
timely decision-making processes within the limits of authority as determined by
the Board.


D.   EMPLOYEES

We had 2,767 full time employees as of December 31, 2002. Our employees are not
members of any labor union. 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 certain information concerning our employees for
the dates indicated.

<TABLE>
<CAPTION>
                                                                                         AS OF DECEMBER 31,
                                                                             ---------------------------------------
                                                                              2000              2001            2002
                                                                             -----             -----           -----
<S>                                                                          <C>               <C>             <C>
TOTAL                                                                        2,693             2,559           2,767

FUNCTION
Direct and Indirect Labor (Manufacturing)                                    1,982             1,778           1,950
Indirect Labor (Administration)                                                590               627             653
Research and Development                                                       121               154             164

LOCATION
Singapore                                                                    2,613             2,370           2,419
USA                                                                             72                83             112
Taiwan                                                                           -                94             224
Others                                                                           8                12              12
</TABLE>

                                       55
<PAGE>
E.   SHARE OWNERSHIP FOR DIRECTORS AND SENIOR MANAGEMENT

The following table provides certain information with respect to our directors
and senior management's beneficial ownership of our ordinary shares, including
ordinary shares held directly or in the form of ADSs and share options granted
as of February 15, 2003, based on an aggregate of 992,279,775 ordinary shares
outstanding as of such date.

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>
Charles Richard Wofford                               168,332      *
Lim Ming Seong                                         40,000      *
Tan Lay Koon                                          632,800      *
Harry Hooshang Davoody                                300,000      *
Tan Bock Seng                                       4,766,218
Peter Seah Lim Huat                                         -
Tay Siew Choon                                          4,000      *
Tan Choon Shian                                             -
Koh Beng Seng                                         148,332      *
Steven Hugh Hamblin                                   158,332      *
Teng Cheong Kwee                                       16,666      *
William J Meder                                         8,666      *
Richard John Agnich                                     6,666      *
Premod Paul Thomas                                    132,000
Liow Voon Kheong                                            -
Gan Chee Yen                                           65,000      *
Lai Yeow Hin                                                -
All directors and senior management(2) as a group   7,974,712   0.8%
</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.

                                       56
<PAGE>
SHARE OPTIONS FOR DIRECTORS

The following table contains information pertaining to share options held by
directors as of February 15, 2003:

<TABLE>
<CAPTION>
                                 NUMBER OF ORDINARY SHARES    PER SHARE EXERCISE PRICE
                                   ISSUABLE ON EXERCISE OF                          S$                   EXERCISABLE
                                                    OPTION                                                    PERIOD
                                 -------------------------    ------------------------      ------------------------
<S>                              <C>                          <C>                           <C>
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
                                                    70,000                       2.885      04/29/2003 to 04/28/2007

Lim Ming Seong                                     200,000                       1.592      04/24/2002 to 04/23/2011
                                                    70,000                       2.885      04/29/2003 to 04/28/2007

Tan Lay Koon                                       500,000                        6.93      04/20/2001 to 04/19/2010
                                                   700,000                       2.826      10/19/2001 to 10/18/2010
                                                   449,000                       1.592      04/24/2002 to 04/23/2011
                                                   325,000                       2.885      04/29/2003 to 04/28/2012
                                                 2,000,000                         2.2      06/26/2003 to 06/25/2012

Tan Bock Seng                                    1,600,000                       3.554      02/09/2000 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

Harry Hooshang Davoody                             300,000                       2.422      01/09/2003 to 01/07/2007

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
                                                    50,000                       2.885      04/29/2003 to 04/28/2007

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
                                                    70,000                       2.885      04/29/2003 to 04/28/2007

Teng Cheong Kwee                                    50,000                       1.592      04/24/2002 to 04/23/2006
                                                    50,000                       2.885      04/29/2003 to 04/28/2007

William J Meder                                     20,000                       1.624      07/23/2002 to 07/22/2006
                                                    50,000                       2.885      04/29/2003 to 04/28/2007
</TABLE>

                                       57
<PAGE>
<TABLE>
<CAPTION>
                                 NUMBER OF ORDINARY SHARES    PER SHARE EXERCISE PRICE
                                   ISSUABLE ON EXERCISE OF                          S$                   EXERCISABLE
                                                    OPTION                                                    PERIOD
                                 -------------------------    ------------------------      ------------------------
<S>                              <C>                          <C>                           <C>
Richard John Agnich                                 20,000                       1.298      10/23/2002 to 10/22/2006
                                                    50,000                       2.885      04/29/2003 to 04/28/2007

Premod Paul Thomas                                  12,500                        0.42      12/10/1999 to 12/09/2009
                                                     7,500                        0.25      12/10/1999 to 12/09/2009
                                                    16,000                       3.554      02/09/2000 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
                                                    50,000                       2.885      04/29/2003 to 04/28/2012

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
                                                    20,000                       2.885      04/29/2003 to 04/28/2012
</TABLE>


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 through the grant of options to purchase
ordinary shares of 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 future grants of options
under 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. Employees, outside directors and consultants of our company and any
of our affiliates (including our parent and any of our subsidiaries) are
eligible to be granted options except that: (i) employees of our affiliates, and
any participant who is an outside director or consultant is not eligible to be
granted incentive stock options; and (ii) employees, outside directors and
consultants of our affiliates other than our parent or any of our subsidiaries
who are residents of the United States are not eligible to participate in our
Share Option Plan.

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 to be granted incentive stock options unless the exercise price
of the option is at least 110% of the fair market value of the underlying shares
on the date of grant and the option by its terms is not exercisable after five
years from the date of grant.

                                       58
<PAGE>
The exercise price of an incentive stock option may not be less than 100% of the
fair market value of the underlying shares on the date of grant. In no event may
the exercise price of an option be less than the par value of the underlying
shares.

Options granted to persons other than officers, outside directors and
consultants 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 equal to or greater than the fair market value of the underlying shares on
the date of grant may 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 the underlying shares on the date of grant may be exercisable prior to
the second anniversary of the date of grant.

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 option granted under the Share Option Plan is evidenced by a share option
agreement and the term of options may not exceed ten years from the date of
grant. If the optionee's service with us is terminated, the optionee may
exercise all or part of the optionee's options at any time before expiration of
such options but only to the extent that such options had become exercisable
before the termination of service (or become exercisable as a result of the
termination), unless otherwise determined by the Board of Directors in its sole
discretion. The balance of such options shall 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 outstanding
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 is required to make appropriate adjustments in one or
more of the number of the following: (i) shares available for future grants
under the Share Option Plan, (ii) the number of shares covered by each
outstanding option and (iii) 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.

Unless terminated earlier by the Executive Resource & Compensation Committee,
the Share Option Plan will terminate automatically in accordance with its terms
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 February 15, 2003, options to purchase an aggregate of 53,975,695 ordinary
shares were accepted and outstanding, out of which 11,848,000 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 December 2012.

In 2003 we expect to grant to our directors, officers and employees additional
options under the Share Option Plan. The exercise price of such options will be
equal to the fair market value of the underlying ordinary shares on the date of
the grant.

                                       59
<PAGE>
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.   MAJOR SHAREHOLDERS

As of February 15, 2003, Singapore Technologies Pte Ltd beneficially owns
approximately 71.8% of our ordinary shares. As of February 15, 2003, Temasek
Holdings (Private) Limited directly owns 78.6% of the ordinary shares of
Singapore Technologies Pte Ltd. The remaining 21.4% of the ordinary shares of
Singapore Technologies Pte Ltd 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. Singapore Technologies Holdings Pte Ltd also
owns all of the 50,000 issued preference shares in Singapore Technologies Pte
Ltd. 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:

     o    the election of directors;

     o    our merger or consolidation with any other entity;

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

     o    the timing and payment of dividends.

The following table sets forth certain information regarding the ownership of
our ordinary shares as of February 15, 2003 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                                  51.55%
Singapore Technologies Semiconductors Pte Ltd(1)              200,695,652                                  20.23%
</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 the ordinary shares of Singapore Technologies Pte Ltd, and
     owns 100% of Singapore Technologies Holdings Pte Ltd, which owns the
     remaining 21.4% of the ordinary shares of Singapore Technologies Pte Ltd
     and all of the 50,000 issued preference shares 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 992,279,775 ordinary shares outstanding as of
     February 15, 2003.

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.

                                       60
<PAGE>
As of February 15, 2003, 219,240 of our ordinary shares, representing 0.02% of
our outstanding shares, were held by a total of 35 holders of record with
addresses in the United States. As of the same date 442,924 of our ADSs
(representing 4,429,240 ordinary shares), representing 0.45% 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 ADSs 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 ADSs is
substantially higher.

On February 15, 2003, the closing price of our ordinary shares on the SGX-ST was
S$1.18 per ordinary share and the closing price of our ADSs on Nasdaq was $6.54
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 for
its wafer, sort assembly and test services in March 2000. The term of this
agreement, which expires in March 2003, was extended to March 2005 by an
amendment agreement dated October 30, 2002. 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. The agreement does not contain any firm commitment
for Chartered to purchase or for us to supply services covered thereunder.

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 that may be required
to be paid under the lease. The largest amount that we guaranteed in 2002 under
this agreement was $4.6 million. As of December 31, 2002, the amount outstanding
under this guarantee was $3.7 million.

We entered into a long-term loan agreement with EDB on June 5, 1998 for a sum of
S$90.0 million. The largest amount outstanding in 2002 was $28.1 million and
$14.8 million was outstanding as of December 31, 2002. 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, 2002. 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.

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 ($63,647) 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, 2002, 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, revenue, manpower and payroll. We believe that our arrangement
with Singapore Technologies Pte Ltd approximates the cost of providing these
services.

Effective January 8, 2002, we appointed Tan Bock Seng as advisor to our Board of
Directors. Under the terms of the appointment, we agreed to pay him a monthly
fee of S$60,000 (approximately $32,000), which we believed to be a commercially
reasonable amount, and to continue to extend to him certain benefits that were
extended to him as our Chief Executive Officer at the time of his retirement on
January 8, 2002. The appointment was for a period of one year subject to

                                       61
<PAGE>
renewal on an annual basis and could have been terminated by either party by
giving one month's notice. In the event we terminated the appointment within two
years from January 8, 2002 or if we did not renew the appointment during that
period, we agreed to pay him a fixed sum of S$1.5 million (approximately
$811,000). In addition, in the event the company successfully completed a major
acquisition or investment during the term of his service, Mr. Tan would have
been entitled to S$500,000 (approximately $270,000) for the first successful
transaction and S$250,000 (approximately $135,000) for the second successful
transaction, as well as a bonus amounting to a 1% share of a formula-based
attributable economic value added amount in the event the transaction
contributes positively to our economic value added results. Effective August 1,
2002, the above-mentioned arrangement was terminated by Mr. Tan in accordance
with the terms of the appointment. His termination notice, including a
confirmation that he had no further claims against the company in respect of
compensation, was accepted by us. During the course of the appointment, Mr. Tan
received a total of S$465,423 (approximately $256,000) from us as compensation
for his services. In recognition of his services, our controlling shareholder,
Singapore Technologies Pte Ltd, made a payment of S$1.8 million (approximately
$1.0 million) to Mr. Tan in August 2002. This amount is charged to our income
statement as compensation expense and added to our shareholder's equity as
"Additional Paid-in Capital" as it does not involve any cash outlay by us.

Upon Mr. Davoody's resignation as our President and Chief Executive Officer on
June 26, 2002, we paid him $337,270 for his past services to our company. We
also approved his retention of 300,000 of the share options granted to him
during his employment.

In November 2002, we executed a letter of charge and set-off in favor of United
Overseas Bank Ltd Taipei Branch, ("UOB Taipei"), in connection with a working
capital loan facility of US$19.0 million granted by UOB Taipei to our
subsidiary, Winstek, of which US$3.5 million has been drawn down. The loan
facility provides for interest at the rate of 7.93% per annum payable every
quarter. Under the terms of the letter of charge and set-off, we are required to
make deposits as cash collateral for the loan to Winstek in an amount equal to
the amount drawn down with UOB Taipei and its branches. We may not withdraw or
otherwise transfer or encumber these deposits without the consent of UOB Taipei
as long as the loan is outstanding. As at December 31, 2002, the amount
deposited was US$3.5 million under this agreement.

We participate in a ST cash management program managed by a bank. Under this
program, cash balances are pooled with other companies in the Singapore
Technologies Group. The daily cash surpluses or shortfalls of the companies
within the pool earn or bear interest at prevailing interest rates. 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.

                                       62
<PAGE>
LEGAL PROCEEDINGS

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. There are no material proceedings in which any of our
directors, members of senior management or affiliates, is a party adverse to us
or any of our subsidiaries or has a material interest adverse to us or our
subsidiaries.


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
restrict the payment of dividends without the consent of the lender.


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

A.   OFFER AND LISTING DETAILS

PRICE RANGE OF OUR ORDINARY SHARES AND ADSS

The historical 'high' and 'low' prices of our ordinary shares and ADSs for the
periods stated are as shown below.

<TABLE>
<CAPTION>
                                                   PRICE PER ORDINARY SHARE ON THE            PRICE PER ADS ON NASDAQ
                                                             SGX (IN S$)                             (IN US$)
                                                   -------------------------------            -----------------------
                                                    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
Annual for 2002                                    3.160                      0.87            17.25             4.89

Quarterly highs and lows:
- 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
- quarter ending March 31, 2002                     3.12                      2.17            17.25            11.95
- quarter ending June 30, 2002                      3.16                      2.13            17.09            11.67
- quarter ending September 30, 2002                 2.54                      0.90            13.87             4.95
- quarter ending December 31, 2002                  1.61                      0.87             9.10             4.89

Monthly highs and lows:
September 2002                                      1.55                      0.90             8.95             4.95
October 2002                                        1.34                      0.87             7.55             4.89
November 2002                                       1.61                      1.18             9.10             6.74
</TABLE>

                                       63
<PAGE>
<TABLE>
<CAPTION>
                                                   PRICE PER ORDINARY SHARE ON THE            PRICE PER ADS ON NASDAQ
                                                             SGX (IN S$)                             (IN US$)
                                                   -------------------------------            -----------------------
                                                    HIGH                       LOW             HIGH             LOW
                                                   -----                      ----            -----            -----
<S>                                                <C>                        <C>             <C>              <C>

December 2002                                       1.57                      1.15             9.10             6.15
January 2003                                        1.44                      1.16             8.00             6.60
February 2003                                       1.31                      1.17             7.43             6.31
</TABLE>


B.   PLAN OF DISTRIBUTION

Not applicable


C.   MARKETS

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).


D.   SELLING SHAREHOLDERS

Not applicable


E.   DILUTION

Not applicable


F.   EXPENSES OF THE ISSUE

Not applicable


ITEM 10. ADDITIONAL INFORMATION

A.   SHARE CAPITAL

Not applicable


B.   MEMORANDUM AND ARTICLES OF ASSOCIATION

We are a company limited by shares incorporated 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 of our company 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.

                                       64
<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 borrow
money 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 of a public company or of a subsidiary of a public company
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 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 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, provided that new ordinary shares may not be
issued to transfer a controlling interest in our company without the prior
approval in general meeting of our shareholders. Our shareholders are not
entitled to pre-emptive rights under our Articles of Association or Singapore
law.

                                       65
<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 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 total
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, by not less
than five shareholders present in person or by proxy and entitled to vote or by
a shareholder present in person or by proxy and representing not less than
one-tenth of the total voting rights of all the shareholders having the right to
vote at the meeting.

                                       66
<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 CDP of any dividend
payable to a shareholder whose name is entered in the depository register shall,
to the extent of payment made to 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 (Chapter 289) of Singapore (the "Securities and
Futures Act") 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.

                                       67
<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 of duty or breach of trust of which they may be guilty in
relation to our company.


LIMITATIONS ON RIGHTS TO HOLD OR VOTE SHARES

Except as described 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 and the Securities and Futures 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
threatens to take an action, or the shareholders pass a resolution, or proposes
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 conduct of our
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.

                                       68
<PAGE>
C.   MATERIAL CONTRACTS

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.

In March, 2002, we issued $200.0 million of senior unsecured and unsubordinated
convertible notes due March 18, 2007. The convertible notes bear interest at the
rate of 1.75% per annum and have a yield to maturity of 4.91%. At the maturity
date, we will pay to the note holders 117.665% of the principal amount. The
notes can be converted into our ordinary shares or, subject to certain
limitations, ADSs, each of which currently represents ten ordinary shares, at a
conversion price of S$3.408 per ordinary share (at a fixed exchange rate of
US$1.00 = S$1.8215). The conversion price may be subject to adjustments for
certain events. We may elect to satisfy our obligations to deliver ordinary
shares or ADSs through delivery of cash in accordance with the terms of the
notes. We may redeem all or a portion of the convertible notes at any time on or
after March 18, 2004 at a price to yield of 4.91% per year to the redemption
date if our shares or ADSs trade at or above 125% of the conversion price for a
period of 20 trading days in any 30 consecutive trading day period. The note
holders may require us to repurchase all or a portion of the notes on March 18,
2005 at a price equal to 110.081% of the principal amount of the notes being
redeemed, plus any accrued and unpaid interest accrued to the date of
redemption. In addition, upon the occurrence of certain repayment events,
including a change in control, on or prior to March 18, 2007, each note holder
may require us to repurchase all or a portion of such holder's notes at a price
to yield of 4.91% per year to the redemption date.

We have licensed patent rights from Motorola, Inc. to use technology in
manufacturing BGA packages under an agreement which expired in December 2002 and
was extended to March 2003. We are currently negotiating the terms of the
renewal license. 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.


D.   EXCHANGE CONTROLS

Currently, there are no exchange control restrictions in Singapore.


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.

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

                                       69
<PAGE>
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 U.S. $1.00
                                                                                  NOON BUYING RATE
                                                             ---------------------------------------------------------
                                                             AVERAGE(1)           LOW           HIGH        PERIOD END
                                                             ----------          ----           ----        ----------
<S>                                                          <C>                 <C>            <C>         <C>
Year Ended December 31,
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
2002                                                               1.79          1.74           1.84              1.74

Month
September 2002                                                                   1.75           1.78              1.78
October 2002                                                                     1.77           1.80              1.77
November 2002                                                                    1.76           1.77              1.77
December 2002                                                                    1.74           1.78              1.74
January 2003                                                                     1.73           1.74              1.74
February 2003                                                                    1.73           1.75              1.74
</TABLE>

(1)  The average of the daily Noon Buying Rates on the last business day of each
     month during the year.


E.   TAXATION

SINGAPORE 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 subject to certain exceptions. A non-resident individual
is subject to income tax on the income accrued in or derived from Singapore.

Subject to the provisions of any applicable 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 22% for the year of assessment 2003, or 15% in the
case of interest, royalty and rental of movable equipment, subject to certain
exceptions. 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

                                       70
<PAGE>
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, if any we would have to obtain agreement
from the Inland Revenue Authority of Singapore, or IRAS, upon their issue of a
finalized tax assessment confirming the amount of income available for
distribution of tax exempt dividends. Before such finalized tax assessment 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 the IRAS. Exempt dividends paid by us in excess of our finalized
tax exempt income or income subject to tax at a concessionary rate, if any will
be deemed distributed out of our ordinary income and will be subject to the
treatment outlined below.

Before January 1, 2003 (and to a certain extent between January 1, 2003 and
December 31, 2007, pursuant to the transitional rules for the new one-tier
corporate tax system, the imputation system of corporate taxation applied in
Singapore. Under this system, the tax we paid on income subject to tax at the
prevailing corporate income tax rate (currently 22% for the year of assessment
2003) would be imputed to, and deemed to be paid on behalf of, our shareholders
upon distribution of such income as dividends. Our shareholders would have
received dividends ("Franked Dividends") net of such tax and would be taxed on
the gross amount of dividends (that is, on the amount of net dividends plus an
amount equal to the amount of gross dividends multiplied by the prevailing
corporate tax rate). In this way, the tax we paid would have been available to
our shareholders as a tax credit to offset their tax liability on their overall
income subject to Singapore income tax (including the gross amount of
dividends).

A non-resident shareholder is effectively taxed on Franked 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 net dividends 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.

A new one-tier corporate tax system became effective from 1 January 2003
(subject to certain transitional rules). Under this new system, the tax on
corporate profits is final and dividends paid by a Singapore resident company
will be tax exempt in the hands of a shareholder, regardless of whether the
shareholder is a company or an individual and whether or not the shareholder is
a Singapore tax resident. Accordingly, under the one-tier corporate tax system,
no further Singapore income tax will be imposed on the net dividends received by
a non-resident holder of ordinary shares or ADSs.

However, to enable companies to make use of their unutilized dividend franking
credits as at December 31, 2002, there will be a five-year transition period
from January 1, 2003 to December 31, 2007, during which a company may remain on
the imputation system for the purposes of paying franked dividends out of its
unutilized dividend franking credits as at December 31, 2002.

Accordingly, for so long as we have not moved to the one-tier corporate tax
system, shareholders may continue to receive dividends with credits attached as
described above.

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

                                       71
<PAGE>
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 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 immovable properties of the individual situated
in Singapore. Estate duty is not imposed on the movable properties in Singapore
owned by a non-domiciled person. Thus, an individual holder of the ordinary
shares or ADSs who is not domiciled in Singapore at the time of his or her death
will not be subject to Singapore estate duty on the value of any ordinary shares
or ADSs held by the individual upon the individual's death.


UNITED STATES FEDERAL INCOME TAXATION

The following is a general summary of the material United States federal income
tax consequences of the ownership, disposition and conversion of the convertible
notes and the ownership and disposition of ordinary shares (including ordinary
shares represented by ADSs) into which the convertible notes may be converted.
This summary applies only to U.S. Holders that are beneficial owners of
convertible notes, ordinary shares or ADSs and that will hold convertible notes,
ordinary shares or ADSs as "capital assets." This discussion does not address
tax considerations applicable to a U.S. Holder's special circumstances or to
U.S. Holders that may be subject to special tax rules. U.S. Holders are urged to
consult their own tax advisors with respect to the United States federal income
tax consequences of the ownership, disposition and conversion of the convertible
notes and the ownership and disposition of ordinary shares and ADSs in light of
their own particular circumstances, as well as the effect of any state, local or
non-United States tax laws.


TAXATION OF STATED INTEREST AND ORIGINAL ISSUE DISCOUNT

Stated interest paid on the convertible notes will be included in the income of
a U.S. Holder as ordinary income at the time it is treated as received or
accrued, in accordance with such holder's regular method of accounting for
United States federal income tax purposes. The convertible notes were issued
with original issue discount ("OID"). A U.S. Holder of a convertible note is
generally required to accrue such OID on a constant yield basis, regardless of
its method of accounting, in advance of the receipt of cash attributable to such
income. Stated interest and OID paid on the convertible notes will be treated as
income from outside the United States, but generally will be treated as "passive
income" or "financial services income" for United States foreign tax credit
purposes. In the event of withholding or other payment of any Singapore tax on
interest, a U.S. Holder may be entitled to either (i) a United States foreign
tax credit that, subject to certain limitations, can be applied against United
States federal income tax, or (ii) a deduction for such foreign income taxes.

                                       72
<PAGE>
CONVERSION OF THE CONVERTIBLE NOTES

A U.S. Holder generally will not recognize any income, gain or loss upon
conversion of a convertible note into ordinary shares or ADSs except with
respect to (i) cash received in lieu of a fractional share of an ordinary share
or ADS and (ii) any additional payments made in respect of accrued but unpaid
interest.


DISTRIBUTIONS ON ORDINARY SHARES OR ADSS

Subject to the passive foreign investment company, or PFIC, rules discussed
below, distributions, if any, made with respect to the ordinary shares or ADSs
after a conversion will be included in the income of a U.S. Holder as ordinary
dividend income to the extent of our current and accumulated earnings and
profits, calculated pursuant to United States federal income tax principles. A
corporate U.S. Holder will not be entitled to a dividends received deduction
generally available upon the receipt of dividends distributed by United States
corporations. Distributions in excess of our current and accumulated earnings
and profits will be treated as a return of capital to the extent of the U.S.
Holder's basis in the ordinary shares or ADSs and thereafter as capital gain.
Such capital gain or loss will be long-term capital gain or loss if the U.S.
Holder's holding period of the ordinary shares or ADSs is more than one year at
the time of sale or exchange.

If a taxable dividend is paid in a currency other than the U.S. dollar, the
amount includible in gross income will be the U.S. dollar value of such
dividend, calculated by reference to the exchange rate in effect on the date of
receipt of the dividend, regardless of whether the payment is actually converted
into U.S. dollars. U.S. Holders should consult their own tax advisors concerning
the possibility of foreign currency gain or loss if any such currency is not
converted into U.S. dollars on the date of receipt.

The Singapore taxes are paid by our company and deemed to have been distributed
to and paid by our shareholders. A U.S. Holder will not be subject to United
States federal income tax on such amounts, and the holder will not be eligible
for foreign tax credits for such amounts against its United States federal
income tax liability. Dividends received with respect to the ordinary shares or
ADSs will be treated as income from outside the United States, but generally
will be treated as "passive income" or "financial services income" for United
States foreign tax credit purposes.


SALE, EXCHANGE OR REDEMPTION OF THE CONVERTIBLE NOTES OR ORDINARY SHARES OR ADSS

Subject to the PFIC rules discussed below, upon the sale, exchange (other than a
conversion) or redemption of a convertible note or the sale or exchange of an
ordinary share or an ADS, a U.S. Holder will generally recognize capital gain or
loss equal to the difference between (i) the amount of cash proceeds and the
fair market value of any property received on the sale, exchange or redemption
(except, with respect to a convertible note, to the extent such amount is
attributable to accrued interest income not previously included in income, which
will be taxable as ordinary income) and (ii) such holder's adjusted tax basis in
the convertible note, ordinary share, or ADS. Such capital gain or loss will be
long-term capital gain or loss if the U.S. Holder's holding period in the
convertible note, ordinary share or ADS is more than one year at the time of
sale, exchange or redemption. Long-term capital gains recognized by certain
non-corporate U.S. Holders, including individuals, will generally be subject to
a maximum rate of tax of 20%. The deductibility of capital losses is subject to
limitations. Such gain or loss generally will be treated as income or loss from
within the United States for United States foreign tax credit purposes.


PASSIVE FOREIGN INVESTMENT COMPANY

Special United States federal income tax rules apply to U.S. persons owning
shares of a PFIC. We do not believe that we are currently a PFIC, nor do we
anticipate becoming a PFIC in the foreseeable future. However, there can be no
assurance that we will not become a PFIC at some future time as a result of
changes in our assets, income or business operations.

If we were classified as a PFIC for any taxable year during which a U.S. Holder
held ordinary shares, ADSs or convertible notes, such U.S. Holder generally
would be taxed at ordinary income tax rates on any gain realized on the sale or
exchange of

                                       73
<PAGE>
the ordinary shares, ADSs or convertible notes and on any "excess distribution"
received. Such U.S. Holder would also be subject to a special interest charge
with respect to any such gain or "excess distribution." Rather than being
subject to this tax regime, a U.S. Holder of ordinary shares or ADSs may make a
"qualified electing fund" or "mark-to-market" election. A "qualified electing
fund" election generally should be made for the first taxable year in which a
company is a PFIC. A U.S. Holder of convertible notes will not be eligible to
make a "qualified electing fund" election while the U.S. Holder holds
convertible notes and therefore will be unable to make a timely election. U.S.
Holders of convertible notes should consult their own tax advisors regarding the
United States federal income tax consequences that would arise if we were
treated as a PFIC while a U.S. Holder held convertible notes.


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.


I.   SUBSIDIARY INFORMATION

Not applicable


ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We may employ derivative instruments such as forward foreign currency swaps,
foreign currency contracts and options and interest rate swaps to manage our
foreign exchange and interest rate 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, 2002, our
exposure to interest rate risk was relatively non-existent in view of the
absence of outstanding debt obligations except for the $200 million senior
unsecured and subordinated convertible notes due March 18, 2007 and the
long-term loan from the Economic Development Board. The convertible notes bear
interest at a rate of 1.75% per annum and have a yield to maturity of 4.91%. The
applicable interest rate under the terms of the EDB loan is 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 Board was 2.5% at December 31, 2002. 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
15 to the consolidated financial statements, respectively.

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.

                                       74
<PAGE>
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, 2002              AS OF DECEMBER 31, 2001
                                      --------------------------------------------------------        ------------------------
                                                              2005 AND
                                       2003       2004         BEYOND      TOTAL    FAIR VALUE         TOTAL        FAIR VALUE
                                      ------      -----       --------    -------   ----------         ------       ----------
                                                       (in thousands, except interest and settlement rate)
<S>                                   <C>         <C>         <C>         <C>       <C>                <C>          <C>
Debt:
Variable rate Singapore dollar
 long-term debt:                      14,754          -              -     14,754      14,754          28,090           27,959
Average interest rate                                                         3.5%                        3.5%
Variable rate NT dollar
 long-term debt:                       1,660      2,914          6,937     11,511      ?1,511               -                -
Average interest rate                                                         5.3%
Fixed rate NT dollar
 short-term debt:                      2,992          -              -      2,992       2,992               -                -
Average interest rate                                                         4.0%
Fixed rate U.S. dollar
 long-term debt:                           -        270          3,236      3,506       4,013               -                -
Average interest rate                                                         7.9%
Fixed rate U.S. dollar
 short-term debt:                      2,182          -              -      2,182       2,182               -                -
Average interest rate                                                         3.9%
Fixed rate U.S. dollar
 convertible notes:                        -          -        205,013    205,013     194,250               -                -
Average interest rate                                                        4.9%

Assets:
Singapore dollar marketable debt
 securities                            9,822          -          5,747     15,569      15,569          23,801           23,801
Average interest rate                                                         4.2%                        4.2%
US dollar marketable
 debt securities                           -          -         51,995     51,995      51,995               -                -
Average interest rate                                                         7.3%
US dollar long-term
 fixed deposits pledged                    -        270          3,230      3,500       3,776               -                -
Average interest rate                                                         7.0%
US dollar short-term
 fixed deposits pledged                3,761          -              -      3,761       3,761               -                -
Average interest rate                                                         1.1%
NT dollar marketable
 debt securities                       2,138          -            141      2,279       2,279               -                -
Average interest rate                                                         2.7%
NT dollar long-term
 fixed deposits pledged                4,049          -              -      4,049       4,049               -                -
Average interest rate                                                         2.4%
NT dollar short-term
 fixed deposits pledged                1,267          -              -      1,267       1,267               -                -
Average interest rate                                                         2.0%
</TABLE>

                                       75
<PAGE>
The variable rate Singapore dollar long-term debt is repayable in seven equal
semi-annual installments commencing September 1, 2000. The variable rate New
Taiwan dollar loans and the fixed rate United States dollar loan have quarterly
repayment terms commencing 1 to 2 years from the date of draw-down of the loans.

The convertible notes bear interest at the rate of 1.75% per annum and have a
yield to maturity of 4.91%. At the maturity date, we will pay to the note
holders 117.665% of the principal amount. The notes can be converted into our
ordinary shares or, subject to certain limitations, ADSs, each of which
currently represents ten ordinary shares, at a conversion price of S$3.408 per
ordinary share (at a fixed exchange rate of US$1.00 = S$1.8215). The conversion
price may be subject to adjustments for certain events. We may elect to satisfy
its obligations to deliver ordinary shares or ADSs through delivery of cash in
accordance with the terms of the notes. We may redeem all or a portion of the
convertible notes at any time on or after March 18, 2004 at a price to yield of
4.91% per year to the redemption date if our shares or ADSs trade at or above
125% of the conversion price for a period of 20 trading days in any 30
consecutive trading day period. The note holders may require us to repurchase
all or a portion of their notes on March 18, 2005 at a price equal to 110.081%
of the principal amount of the notes being redeemed, plus any accrued and unpaid
interest accrued to the date of redemption. In addition, upon the occurrence of
certain repayment events, including a change in control, on or prior to March
18, 2007, each note holder may require us to repurchase all or a portion of such
holder's notes at a price to yield of 4.91% per year to the redemption date.

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

None


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, or ADRs, 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.

                                       76
<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, 2002, our
cash resources amounted to $237.5 million, comprising $167.7 million in cash and
cash equivalents and $69.8 million in marketable securities.


ITEM 15. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Based on our chief executive officer's and chief financial officer's evaluation
of our company's disclosure controls and procedures (as defined in Rules 13a-14
(c) and 15d -14 (c) under the Securities Exchange Act of 1934, as amended) as of
a date within 90 days of the filing date of this annual report on Form 20-F,
they have concluded that our disclosure controls and procedures are designed to
ensure that information required to be disclosed by us in the reports that we
file or submit under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and forms and are
operating in an effective manner.


CHANGES TO INTERNAL CONTROLS

There were no significant changes in our internal controls or in other factors
that could significantly affect these controls subsequent to the date of their
most recent evaluation.


ITEM 16. [RESERVED]

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, 2001 and 2002

     Consolidated Statements of Operations and Comprehensive Income (Loss) for
     the years ended December 31, 2000, 2001 and 2002

     Consolidated Statements of Shareholders' Equity for the years ended
     December 31, 2000, 2001 and 2002

     Consolidated Statements of Cash Flows for the years ended December 31,
     2000, 2001 and 2002

                                       77
<PAGE>
     Notes to the Consolidated Financial Statements


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          Agreement for the period January 1, 2003 to March 31, 2003, for the extension of the BGA Immunity Agreement entered
             into on October 18, 1996 between Motorola Inc and ST Assembly Test Services Ltd

4.7          Program 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 - incorporated by reference to
             Exhibit 4.6 of Form 20-F of ST Assembly Test Services Ltd filed with the Securities and Exchange commission on February
             28, 2002

4.8          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- incorporated by reference to Exhibit 4.7 of Form
             20-F of ST Assembly Test Services Ltd filed with the Securities and Exchange commission on February 28, 2002
</TABLE>

                                       78
<PAGE>
<TABLE>
<S>          <C>
4.9          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- incorporated by reference to Exhibit 4.8 of Form 20-F of ST Assembly Test Services Ltd filed with the
             Securities and Exchange commission on February 28, 2002

4.10         Indenture dated March 18, 2002 by and between ST Assembly Test Services Ltd and the Bank of New York relating to the
             1.75% Convertible Notes Due 2007

4.11         US$168 Million Reg S Global Note issued by ST Assembly Test Services Ltd under the Indenture relating to the 1.75%
             Convertible Notes Due 2007

4.12         US$25 Million Reg S Global Note issued by ST Assembly Test Services Ltd under the Indenture relating to the 1.75%
             Convertible Notes Due 2007

4.13         US$7 Million Restricted Global Note issued by ST Assembly Test Services Ltd under the Indenture relating to the 1.75%
             Convertible Notes Due 2007

4.14         Letter of Appointment dated January 7, 2002 by and between Tan Bock Seng and ST Assembly Test Services Ltd appointing
             Tan Bock Seng as advisor to the Board of Directors of ST Assembly Test Services Ltd - incorporated by reference to
             Exhibit 4.9 of Form 20-F/A of ST Assembly Test Services Ltd filed with the Securities and Exchange Commission on
             September 23, 2002

4.15         Letter of Appointment dated November 30, 2001 by and between Harry Hooshang Davoody and ST Assembly Test Services Ltd
             appointing Harry Hooshang Davoody as President and Chief Executive Officer of ST Assembly Test Services Ltd

4.16         Terms and Conditions of Appointment of Tan Lay Koon as President and Chief Executive Officer of ST Assembly Test
             Services Ltd dated March 24, 2003 by and between Tan Lay Koon and ST Assembly Test Services Ltd.

8.1          List of subsidiaries

10.1         Certification by the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
             pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
</TABLE>

                                       79
<PAGE>



                                   SIGNATURES

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

                                  ST ASSEMBLY TEST SERVICES LTD


                                  By      /s/ Tan Lay Koon
                                     -------------------------------------
                                     Tan Lay Koon
                                     President and Chief Executive Officer
                                     March 31, 2003



                                       80
<PAGE>

                                 CERTIFICATIONS


I, Tan Lay Koon, certify that:

1. I have reviewed this annual report on Form 20-F of ST Assembly Test Services
Ltd;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) Designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;

b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

c) Presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a) All significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.


Date: March 31, 2003

/s/ Tan Lay Koon
-------------------------------------
Tan Lay Koon
President and Chief Executive Officer

                                       81
<PAGE>


I, Pearlyne Wang, certify that:

1. I have reviewed this annual report on Form 20-F of ST Assembly Test Services
Ltd;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) Designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;

b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

c) Presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a) All significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.


Date: March 31, 2003

/s/ Pearlyne Wang
------------------------------
Pearlyne Wang
Acting Chief Financial Officer

                                       82
<PAGE>

                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES

                             INDEX TO ANNUAL REPORT

<TABLE>
<CAPTION>

FINANCIAL STATEMENTS                                                                                         PAGE NUMBER
--------------------                                                                                         -----------
<S>                                                                                                          <C>
  Independent Auditors' Report.............................................................................      F-2
  Consolidated Balance Sheets..............................................................................      F-3
  Consolidated Statements of Operations and Comprehensive Income (Loss)....................................      F-5
  Consolidated Statements of Shareholders' Equity..........................................................      F-7
  Consolidated Statements of Cash Flows....................................................................      F-8
  Notes to the Consolidated Financial Statements...........................................................     F-10
</TABLE>


                                      F-1
<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, 2001 and 2002, and the related
consolidated statements of operations and comprehensive income (loss),
shareholders' equity and cash flows for the years ended December 31, 2000, 2001
and 2002. 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, 2001 and 2002,
and the consolidated results of their operations and their cash flows for the
years ended December 31, 2000, 2001 and 2002, in conformity with accounting
principles generally accepted in the United States of America.








KPMG






Singapore
March 25, 2003

                                      F-2
<PAGE>


                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                AS OF DECEMBER 31
                IN THOUSANDS OF U.S. DOLLARS (EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                    NOTE           2001            2002
                                                                    -----        --------        --------
<S>                                                                 <C>          <C>             <C>
ASSETS
Current assets:
  Cash and cash equivalents.......................................    3          $115,214        $167,661
  Accounts receivable, net........................................    4            25,584          49,461
  Amounts due from ST and ST affiliates...........................   26             1,793           3,727
  Other receivables ..............................................    5             6,047           8,913
  Inventories.....................................................    6             7,262           9,744
  Marketable securities...........................................    7             3,680          11,960
  Prepaid expenses................................................    8            20,737          10,565
  Other current assets............................................                  1,067           5,066
                                                                                 --------        --------
    Total current assets .........................................                181,384         267,097
Property, plant and equipment, net ...............................  9, 21         347,262         357,456
Marketable securities ............................................    7            20,121          57,883
Prepaid expenses .................................................    8            14,486           4,351
Goodwill .........................................................                  1,321           1,321
Other assets .....................................................                 12,004          33,860
                                                                                 --------        --------
    Total Assets .................................................               $576,578        $721,968
                                                                                 --------        --------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Short term borrowings ..........................................   10          $      -        $  5,174
  Current installments of long-term debt .........................   15            14,045          16,414
  Current obligations under capital leases .......................   11             2,564           6,558
  Accounts payable ...............................................                 13,692          15,336
  Amounts due to ST and ST affiliates ............................   26             2,473           1,858
  Accrued operating expenses .....................................   12            14,684          22,578
  Other payables .................................................   13            23,051          32,065
  Income taxes payable ...........................................                  1,428           1,263
                                                                                 --------        --------
    Total current liabilities ....................................                 71,937         101,246
Obligation under capital leases ..................................   11             7,689           5,520
Long-term debt, excluding current installments ...................   15            14,045         218,370
Other non-current liabilities ....................................   14             4,605           4,494
                                                                                 --------        --------
    Total liabilities ............................................                 98,276         329,630
Minority interest ................................................                 25,507          25,826
</TABLE>

                                      F-3
<PAGE>

                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                AS OF DECEMBER 31
                IN THOUSANDS OF U.S. DOLLARS (EXCEPT SHARE DATA)

<TABLE>
<S>                                                                 <C>          <C>             <C>
Share capital:
Ordinary shares - par value S$0.25
Authorized ordinary shares - 3,200,000,000
(2001: 3,200,000,000)
Issued ordinary shares - 989,683,485 in 2001
and 992,115,275 in 2002...........................................   17           159,961         160,295
Additional paid-in capital........................................   18           387,652         389,679
Accumulated other comprehensive loss..............................   20            (9,941)         (9,266)
Retained deficit..................................................   19           (84,877)       (174,196)
                                                                                 --------        --------
    Total shareholders' equity....................................                452,795         366,512
                                                                                 --------        --------
    Total Liabilities and Shareholders' Equity ...................               $576,578        $721,968
                                                                                 --------        --------
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-4
<PAGE>

                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
      CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
                         FOR THE YEARS ENDED DECEMBER 31
         IN THOUSANDS OF U.S. DOLLARS (EXCEPT SHARE AND PER SHARE DATA)


<TABLE>
<CAPTION>
                                                                     NOTE       2000              2001              2002
                                                                     ----    ---------         ---------         ---------
<S>                                                                  <C>     <C>               <C>               <C>
Net revenues ...................................................             $ 331,271         $ 145,866         $ 225,738
Cost of revenues ...............................................              (231,944)         (217,789)         (247,943)
                                                                             ---------         ---------         ---------
Gross profit (loss) ............................................                99,327           (71,923)          (22,205)
                                                                             ---------         ---------         ---------
Operating expenses:
  Selling, general and administrative ..........................                40,798            36,041            36,633
  Research and development .....................................                14,636            15,160            18,856
  Asset impairments ............................................      21             -            23,735            14,666
  Prepaid leases written off ...................................       8             -             3,145               764
  Stock-based compensation .....................................                   448             1,024                60
  Other general expenses (income), net .........................                   (22)              101               548
                                                                             ---------         ---------         ---------
    Total operating expenses ...................................                55,860            79,206            71,527
                                                                             ---------         ---------         ---------
Operating income (loss) ........................................                43,467          (151,129)          (93,732)
                                                                             ---------         ---------         ---------
Other income (expense):
  Interest income ..............................................                10,638             6,497             5,271
  Interest expense .............................................                (2,424)           (1,275)          (10,414)
  Foreign currency exchange gain (loss) ........................                 2,018               775              (512)
  Other non-operating income, net ..............................      22         3,525             1,990             3,419
                                                                             ---------         ---------         ---------
    Total other income (expense) ...............................                13,757             7,987            (2,236)
                                                                             ---------         ---------         ---------

Income (loss) before income taxes ..............................                57,224          (143,142)          (95,968)
Income tax benefit (expense) ...................................      23        (2,865)            8,810             7,163
                                                                             ---------         ---------         ---------
Income (loss) before minority interest .........................                54,359          (134,332)          (88,805)
Minority interest ..............................................                     -               313              (514)
                                                                             ---------         ---------         ---------
Net income (loss) ..............................................             $  54,359         $(134,019)        $ (89,319)
                                                                             =========         =========         =========
Other comprehensive income (loss):
  Unrealized gain (loss) on available-for-sale
   marketable securities .......................................                     -              (303)            1,012
  Realized gain on available-for-sale marketable
   securities included in net loss .............................                     -                 -              (125)
  Foreign currency translation adjustment ......................                     -                93              (212)
                                                                             ---------         ---------         ---------
Comprehensive income (loss) ....................................             $  54,359         $(134,229)        $ (88,644)
                                                                             =========         =========         =========

Basic net income (loss) per ordinary share .....................             $    0.06         $   (0.14)        $   (0.09)
Diluted net income (loss) per ordinary share ...................             $    0.06         $   (0.14)        $   (0.09)


Basic net income (loss) per ADS ................................             $    0.56         $   (1.36)        $   (0.90)
Diluted net income (loss) per ADS ..............................             $    0.56         $   (1.36)        $   (0.90)
                                                                             =========         =========         =========

</TABLE>

                                      F-5
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
      CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
                         FOR THE YEARS ENDED DECEMBER 31
         IN THOUSANDS OF U.S. DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<S>                                                                  <C>     <C>               <C>               <C>
Number of ordinary shares (in thousands) used in
computing:
  -  basic net income (loss) per share..........................               962,828           989,083           991,549
  -  effect of dilutive options.................................                 7,803                 -                 -
                                                                             ---------         ---------         ---------
  -  diluted net income (loss) per share........................               970,631           989,083           991,549
                                                                             =========         =========         =========
Number of ADS (in thousands) used in computing:
  -  basic net income (loss) per ADS............................                96,283            98,908            99,155
  -  effect of dilutive options.................................                   780                 -                 -
                                                                             ---------         ---------         ---------
  -  diluted net income (loss) per ADS..........................                97,063            98,908            99,155
                                                                             =========         =========         =========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-6
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                IN THOUSANDS OF U.S. DOLLARS (EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                                                                         TOTAL
                                                                      ADDITIONAL    ACCUMULATED OTHER      RETAINED      SHARE-
                                                                        PAID-IN      COMPREHENSIVE         EARNINGS     HOLDERS'
                                             ORDINARY SHARES            CAPITAL       INCOME (LOSS)       (DEFICIT)      EQUITY
                                        --------------------------    ----------    -----------------     ---------    ---------
                                              NO.             $           $                $                  $            $
                                        (IN THOUSANDS)
<S>                                     <C>                <C>        <C>           <C>                   <C>          <C>
Balances at January 1, 2000                 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
Net loss                                          -              -             -              -            (134,019)    (134,019)
Other comprehensive loss                          -              -             -           (210)                  -         (210)
                                            -------        -------       -------         ------              ------      -------
Balances at December 31, 2001               989,683        159,961       387,652         (9,941)            (84,877)     452,795

Share issuances                               2,432            334           944              -                   -        1,278
Non-cash compensation                             -              -         1,023              -                   -        1,023
Stock compensation                                -              -            60              -                   -           60
Net loss                                          -              -             -              -             (89,319)     (89,319)
Other comprehensive income                        -              -             -            675                   -          675
                                            -------        -------       -------         ------            --------      -------
Balances at December 31, 2002               992,115        160,295       389,679         (9,266)           (174,196)     366,512
                                            =======        =======       =======         ======            ========      =======

</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-7
<PAGE>

                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                         FOR THE YEARS ENDED DECEMBER 31
                          IN THOUSANDS OF U.S. DOLLARS

<TABLE>
<CAPTION>
                                                                                   2000               2001              2002
                                                                                ---------          ---------          ---------
<S>                                                                             <C>                <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) .........................................................     $  54,359          $(134,019)         $ (89,319)

Adjustments to reconcile net income (loss)
 to net cash provided by operating activities:
  Depreciation and amortization ...........................................        72,419            100,342            106,348
  Asset impairments .......................................................             -             23,735             14,666
  Amortization of leasing prepayments .....................................        14,829             24,618             19,222
  Prepaid leases written off ..............................................             -              3,145                764
  Loss (gain) on sale of property, plant and equipment ....................           (22)               120                702
  Accretion of discount on convertible notes ..............................             -                  -              5,013
  Exchange loss (gain) ....................................................        (2,104)              (775)               367
  Deferred income taxes ...................................................             -            (10,161)            (8,189)
  Non-cash compensation ...................................................             -                  -              1,023
  Minority interest in income (loss) of subsidiary ........................             -               (313)               514
  Others ..................................................................             -                 78               (128)
Changes in operating working capital:
  Accounts receivable .....................................................       (14,430)            27,222            (23,633)
  Amounts due from ST and ST affiliates ...................................        (2,195)             6,935             (2,030)
  Inventories .............................................................        (3,480)             7,530             (2,482)
  Other receivables, prepaid expenses and other assets ....................           139             13,693               (893)
  Accounts payable, accrued operating expenses and other payables .........        14,056            (21,225)             7,163
  Amounts due to ST and ST affiliates .....................................        (3,471)               407               (611)
                                                                                ---------          ---------          ---------
Net cash provided by operating activities .................................       130,100             41,332             28,497
                                                                                ---------          ---------          ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales or maturity of marketable securities ..................             -             20,181            113,806
Purchases of marketable securities ........................................       (21,930)           (22,499)          (157,976)
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 ................................      (299,554)           (55,980)          (113,234)
Proceeds from the sale of property, plant and equipment ...................         5,423              2,195                751
                                                                                ---------          ---------          ---------
Net cash used in investing activities .....................................      (326,061)           (44,268)          (156,653)
                                                                                ---------          ---------          ---------
</TABLE>

                                      F-8
<PAGE>

                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                         FOR THE YEARS ENDED DECEMBER 31
                          IN THOUSANDS OF U.S. DOLLARS


<TABLE>
<S>                                                                               <C>               <C>               <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of short-term debt .................................................     (60,000)           (8,824)                -
Repayment of long-term debt ..................................................      (7,468)          (14,711)          (14,321)
Proceeds from issuance of shares .............................................     389,206               803             1,278
Proceeds from issuance of convertible notes ..................................           -                 -           195,032
Proceeds from bank borrowings ................................................           -                 -            20,592
Increase in restricted cash ..................................................           -                 -           (13,026)
Grants received ..............................................................           -                 -             1,150
Capital lease payments .......................................................           -                 -           (10,082)
                                                                                  --------          --------          --------
Net cash provided by (used in) financing activities ..........................     321,738           (22,732)          180,623
                                                                                  --------          --------          --------
Net increase (decrease) in cash and cash equivalents for the year ............     125,777           (25,668)           52,467
Effect of exchange rate changes on cash and cash equivalents .................        (612)             (851)              (20)
Cash and cash equivalents at beginning of the year ...........................      16,568           141,733           115,214
                                                                                  --------          --------          --------
Cash and cash equivalents at end of the year .................................    $141,733          $115,214          $167,661
                                                                                  ========          ========          ========


SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid (net of amount capitalized) ....................................    $  3,045          $  1,472          $  3,312
Income taxes paid ............................................................    $    616          $  2,995          $  1,333
Non-cash items
  Equipment acquired under capital leases ....................................    $      -          $ 10,253          $ 11,576
  Sale-leaseback transactions:
    Sales consideration applied to leasing prepayments .......................    $ 59,536          $      -          $      -
    Sales consideration included in other receivables ........................    $  7,722          $      -          $      -
  Compensation paid by Singapore Technologies Pte Ltd. .......................    $      -          $      -          $  1,023
                                                                                  ========          ========          ========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-9










<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
         IN THOUSANDS OF U.S. 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, Taiwan and in the United States of America, its
     principal market. As of December 31, 2002, the Company was 71.79% owned by
     Singapore Technologies Pte Ltd ("ST").


     CONCENTRATION OF RISKS

     The Company has a number of major customers in North America, Europe and
     Asia. During the years ended December 31, 2000, 2001 and 2002, the
     Company's largest customer accounted for 32%, 29% and 30% of revenues,
     respectively. The Company's five largest customers collectively accounted
     for approximately 70%, 67% and 64% of revenues for the years ended December
     31, 2000, 2001 and 2002, respectively (See Note 24). 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, credit control and collection
     procedures.

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


     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 canceling 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.


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)  ACCOUNTING PRINCIPLES

     The consolidated financial statements have been prepared in accordance with
     accounting principles generally accepted in the United States of America
     ("U.S. GAAP") consistently applied for all periods.


(b)  PRINCIPLES OF CONSOLIDATION

        The consolidated financial statements include the consolidated accounts
        of ST Assembly Test Services Ltd and its majority-owned subsidiaries.
        Significant intercompany accounts and transactions have been eliminated
        in consolidation.

                                      F-10
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
         IN THOUSANDS OF U.S. DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

(c)  USE OF ESTIMATES

     The preparation of the consolidated financial statements in accordance with
     U.S. 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 utilizes the U.S. dollar as its functional currency. 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 average rates of
     exchange prevailing during the period. Foreign currency transaction gains
     or losses are included in results of operations.


(e)  FINANCIAL INSTRUMENTS

     On January 1, 2001, the Company adopted Statement of Financial Accounting
     Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and
     Hedging Activities." This statement was amended in June 2001 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 derivative and whether it
     qualifies for hedge accounting. The accounting for gains and losses
     associated with changes in the fair value of the derivative 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. Foreign currency contracts are used to protect the
     Company from fluctuations in exchange rates. The Company enters into
     foreign currency contracts, which are not designated as hedges, and the
     change in fair value is included in income currently. The Company did not
     have any foreign currency contracts as of December 31, 2001 and 2002.


(f)  CASH AND CASH EQUIVALENTS

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


(g)  INVENTORIES

     Inventories are stated at the lower of cost, determined principally on a
     standard cost basis which approximates the actual cost on the weighted
     average basis, or market (net realizable value).

                                      F-11
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
         IN THOUSANDS OF U.S. DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

(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.


(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 vehicles......................................  - 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 stated at the present value of
     minimum lease payments and are amortized straight-line over the estimated
     useful life of the assets.


(j)  IMPAIRMENT OF LONG-LIVED ASSETS

     The Company reviews long-lived assets for impairment whenever events or
     changes in circumstances indicate that its carrying amount may not be
     recoverable. Recoverability of a long-lived asset is measured by a
     comparison of the carrying amount to the sum of the undiscounted cash flows
     expected to result from the use and eventual disposition of the asset. If
     such asset is considered to be impaired, the impairment loss shall be
     measured as the amount by which the carrying amount of a long-lived asset
     exceeds its fair value.

     For long-lived assets to be disposed of by sale, the carrying value is
     measured at the lower of its carrying amount or fair value less cost to
     sell and to cease depreciation. Long-lived assets to be abandoned will be
     considered held and used until it is disposed of.

                                      F-12
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
         IN THOUSANDS OF U.S. DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

(k)  MARKETABLE SECURITIES

     Marketable securities at December 31, 2002 consist of corporate debt
     securities denominated principally in United States 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, 2002, the securities held were classified as
     available-for-sale.


(l)  PRODUCT WARRANTIES

     The Company guarantees that work performed will be free from any defects in
     workmanship, materials and manufacture for a period ranging from three to
     twelve months to meet the stated functionality as agreed to in each sales
     arrangement. Products are tested against specified functionality
     requirements prior to delivery, but the Company nevertheless from time to
     time experiences claims under its warranty guarantees. The Company accrues
     for estimated amount of sales returns that are probable to occur. Warranty
     costs incurred in 2002 were insignificant.


(m)  OPERATING LEASES

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


(n)  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 (See Note 14).

     Income-related government grants are subsidies of training and research and
     development expenses. Income-related grants are credited to other income
     when it becomes probable that expenditures already incurred will constitute
     qualifying expenditures for purposes of reimbursement under the grants,
     which is typically substantially concurrent with the expenditures.

                                      F-13
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
         IN THOUSANDS OF U.S. DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

(o)  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 provided title and risk of loss has passed to the
     customer, there is evidence of an arrangement, fees are fixed or
     determinable and collectibility is reasonably assured. For certain
     contractual arrangements, revenue is realizable, and therefore recognized,
     upon completion of services. Included in accounts receivable are allowances
     for doubtful accounts. Bad debts expense for the years ended December 31,
     2000, 2001 and 2002 was $1,384, ($309), and $841, respectively.


(p)  RESEARCH AND DEVELOPMENT

     Research and development expenses are expensed as incurred. Research and
     development expenses amounted to $14,636, $15,160 and $18,856 during the
     years ended December 31, 2000, 2001 and 2002, respectively.


(q)  STOCK-BASED EMPLOYEE COMPENSATION

     The Company measures stock-based employee compensation cost for financial
     statement purposes in accordance with the intrinsic method of 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 25 in accordance with SFAS No. 123, "Accounting for
     Stock-Based Compensation." Compensation cost 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.


(r)  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, 2000, 2001 and 2002 were $2,367, $2,737 and
     $3,009, 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
     and for the year ended December 31, 2002 were approximately $39 and $24,
     respectively. Additional disclosures regarding this pension plan pursuant
     to SFAS No. 132, "Employers' Disclosures about Pensions and Other
     Postretirement Benefits" are not considered necessary due to the
     immateriality of the amounts involved.

     STATS Inc and FastRamp also have a 401(k) savings plan covering
     substantially all of our U.S. employees. The Company contributes up to 6%
     of eligible employee compensation at the rate of 50% of employee
     contributions deferred to the 401 (k) plan. The Company's matching
     contributions under the 401 (k) plan were $140 in 2000, $131 in 2001 and
     $186 in 2002.

                                      F-14
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
         IN THOUSANDS OF U.S. DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

(s)  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.


(t)  NET INCOME (LOSS) PER SHARE

     Basic net income (loss) per share is computed using the weighted average
     number of common shares outstanding. Diluted net income (loss) per share is
     computed using the weighted average number of common shares outstanding and
     dilutive potential common shares from the assumed exercise of options
     outstanding during the period, if any, using the treasury stock method plus
     other potentially dilutive securities outstanding, such as convertible
     notes. The following table sets forth the computation of basic and diluted
     net income (loss) per common share:

<TABLE>
<CAPTION>
                                                                  YEAR ENDED DECEMBER 31,
                        -----------------------------------------------------------------------------------------------------------
                                      2000                               2001                                 2002
                        -------------------------------   ----------------------------------    -----------------------------------
                         NET                  PER SHARE                            PER SHARE                              PER SHARE
                        INCOME     SHARES      AMOUNT      NET LOSS     SHARES      AMOUNT      NET LOSS      SHARES       AMOUNT
                       -------   -----------  ---------   ---------  -----------   ---------    --------    -----------   ---------
                                 (THOUSANDS)                         (THOUSANDS)                            (THOUSANDS)
<S>                    <C>       <C>          <C>         <C>        <C>           <C>          <C>         <C>           <C>
Basic net income
 (loss) per share      $54,359    962,828     $  0.06     $(134,019)   989,083     $ (0.14)     $(89,319)     991,549     $ (0.09)

Effect of dilutive
 securities                         7,803                                    -                                      -
                                  -------                              -------                                -------
Diluted net income
 (loss) per share      $54,359    970,631     $  0.06     $(134,019)   989,083     $ (0.14)     $(89,319)     991,549     $ (0.09)
                       =======    =======     =======     =========    =======     =======      ========      =======     =======
</TABLE>

<TABLE>
<CAPTION>
                         NET                  PER ADS                             PER ADS                             PER ADS
                        INCOME      ADS       AMOUNT     NET LOSS        ADS       AMOUNT    NET LOSS       ADS       AMOUNT
                       -------  -----------   -------   ---------    -----------  -------    --------   -----------   -------
                                (THOUSANDS)                          (THOUSANDS)                        (THOUSANDS)
<S>                    <C>      <C>           <C>       <C>          <C>          <C>        <C>        <C>           <C>
Basic net income
 (loss) per ADS        $54,359     96,283      $0.56    $(134,019)     98,908     $(1.36)    $(89,319)     99,155     $(0.90)
Effect of dilutive
 securities                           780                                   -                                   -
                                   ------                              ------                              ------
Diluted net income
 (loss) per ADS        $54,359     97,063      $0.56    $(134,019)     98,908     $(1.36)    $(89,319)     99,155     $(0.90)
                       =======     ======      =====    =========      ======     ======     ========      ======     ======
</TABLE>

The Company excluded potentially dilutive securities for each period presented
from its diluted net income (loss) per share computation because either the
exercise price of the securities exceeded the average fair value of the
Company's common stock or the Company had net losses, and therefore these
securities were anti-dilutive. A summary of the excluded potentially dilutive
securities and the range of related exercise prices follows:

<TABLE>
<CAPTION>
                             YEAR ENDED DECEMBER 31,
                           ----------------------------
                            2000       2001       2002
                           ------     ------     ------
<S>                        <C>        <C>        <C>
Convertible debt.........       -          -     106,895
Stock options............  18,159     51,770      54,275
</TABLE>

                                      F-15
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
         IN THOUSANDS OF U.S. DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

(t)  NET INCOME (LOSS) PER SHARE (CONT'D)

     The conversion price of convertible debt outstanding was S$3.4080 per share
     (equivalent to approximately US$18.7099 per ADS) as of December 31, 2002.
     The weighted average exercise prices of options outstanding were $2.21,
     $1.70, and $1.65 as of December 31, 2000, 2001 and 2002, respectively. The
     excluded stock options have per share exercise prices ranging from $1.63 to
     $3.99, $0.14 to $3.99 and $0.14 to $3.99 for the years ended December 31,
     2000, 2001 and 2002, respectively.


(u)  COMPREHENSIVE INCOME (LOSS)

     The Company applies SFAS No. 130, "Reporting Comprehensive Income" with
     respect to reporting and presentation of comprehensive income and its
     components in a full set of financial statements. Comprehensive income
     (loss) consists of net income (loss), 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).


(v)  RECENTLY ADOPTED ACCOUNTING STANDARDS

     In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
     Assets." SFAS No. 142 requires 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 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 adopted the
     provisions of SFAS No. 142 as of January 1, 2002. The adoption of SFAS No.
     142 did not have a material effect on the Company's financial position or
     results of operations.

     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 adopted 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.

                                      F-16
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
         IN THOUSANDS OF U.S. DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

(w)  RECENTLY ISSUED ACCOUNTING STANDARDS

     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 adoption of SFAS No. 143 did not have a material
     effect on the Company's financial position or results of operations.

     In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs
     Associated with Exit or Disposal Activities," which addresses financial
     accounting and reporting for costs associated with exit and disposal
     activities. SFAS No. 146 requires cost associated with exit or disposal
     activities to be recorded at their fair values when a liability has been
     incurred. Under previous guidance, certain exit costs were accrued upon
     management's commitment to an exit plan, which is generally before an
     actual liability has been incurred. SFAS No. 146 will be effective for exit
     or disposal activities that are initiated after December 31, 2002. The
     Company does not expect the adoption of SFAS No. 146 to have a material
     impact on the Company's financial position or results of operations.


(x)  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 consist of the following:

<TABLE>
<CAPTION>
                                          DECEMBER 31,
                                     --------------------
                                       2001         2002
                                     --------    --------
<S>                                  <C>         <C>
Cash at banks and on hand .........  $    400    $  1,896
Cash equivalents
  Bank fixed deposits .............    36,109      39,125
  ST pooled cash ..................     1,599       2,141
  ST treasury deposits ............    77,106     124,499
                                     --------    --------
                                     $115,214    $167,661
                                     ========    ========
</TABLE>


     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 surplus cash as
     short-term deposits with the ST treasury unit.

                                      F-17
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
         IN THOUSANDS OF U.S. DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

4.   ACCOUNTS RECEIVABLE

     Accounts receivable consists of the following:

<TABLE>
<CAPTION>
                                                  DECEMBER 31,
                                              -------------------
                                                2001        2002
                                              -------     -------
<S>                                           <C>         <C>
Accounts receivable - third parties .......   $26,368     $51,086
Allowance for doubtful accounts ...........      (784)     (1,625)
                                              -------     -------
                                              $25,584     $49,461
                                              =======     =======
</TABLE>

     Movements in the allowance for doubtful accounts are as follows:

<TABLE>
<CAPTION>
                                       2000      2001       2002
                                      ------    ------     ------
<S>                                   <C>       <C>        <C>
Beginning...........................  $   92    $1,093     $  784
Charge (credit) for the year........   1,384      (309)       841
Utilized in the year................    (383)        -          -
                                      ------    ------     ------
Ending..............................  $1,093    $  784     $1,625
                                      ======    ======     ======
</TABLE>


5.   OTHER RECEIVABLES

     Other receivables consist of the following:

<TABLE>
<CAPTION>
                                           DECEMBER 31,
                                        ------------------
                                         2001        2002
                                        ------      ------
<S>                                     <C>         <C>
Deposits and staff advances..........   $  103      $  386
Grant receivable (Note 14)...........    5,606       5,896
Other receivables....................      338       2,631
                                        ------      ------
                                        $6,047      $8,913
                                        ======      ======
</TABLE>

6.   INVENTORIES

     Inventories consist of the following:

<TABLE>
<CAPTION>
                                   DECEMBER 31,
                                -----------------
                                 2001       2002
                                ------     ------
<S>                             <C>        <C>
Raw materials ...............   $3,594     $6,135
Factory supplies ............    1,352      1,071
Work-in-progress ............    1,580      2,271
Finished goods ..............      736        267
                                ------     ------
                                $7,262     $9,744
                                ======     ======
</TABLE>

                                      F-18
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
         IN THOUSANDS OF U.S. DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

7.   MARKETABLE SECURITIES

     Marketable securities consist of the following:

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                       -----------------------------------------------------------------------------------------------------
                                            2001                                               2002
                       -----------------------------------------------   ---------------------------------------------------
                                    GROSS        GROSS                                 GROSS          GROSS
                       AMORTIZED  UNREALIZED  UNREALIZED                 AMORTIZED   UNREALIZED     UNREALIZED
                         COST       GAINS         LOSS      FAIR VALUE      COST        GAINS          LOSS       FAIR VALUE
                       ---------  ----------  ----------    ----------   ---------   ----------     ----------    ----------
<S>                    <C>        <C>         <C>           <C>          <C>         <C>            <C>           <C>
Available-for-sale
 corporate debt
 securities           $24,428      $120        $(747)       $23,801     $69,566        $597          $(320)       $69,843
                      =======      ====        =====        =======     =======        ====          =====        ======
</TABLE>

     Maturities of available-for-sale debt securities are as follows (at fair
     value):

<TABLE>
<CAPTION>
                                                    DECEMBER 31,
                                                 -----------------
                                                  2001       2002
                                                 -------   -------
<S>                                              <C>       <C>
Corporate debt securities:
  Due in one year or less ...................... $ 3,680   $11,960
  Due after one year through five years ........  20,121    57,883
                                                 -------   -------
                                                 $23,801   $69,843
                                                 =======   =======
</TABLE>

     Proceeds from the sales or maturities of available-for-sale marketable
     securities during 2001 and 2002 were $20,181 and $113,806, respectively.
     Gross realized gains and losses in 2002 were $149 and $24, respectively.
     Gross realized gains and losses were immaterial in 2001.


8.      PREPAID EXPENSES

        Prepaid expenses consist of the following:

<TABLE>
<CAPTION>
                                    DECEMBER 31,
                              -----------------------
                                2001            2002
                              -------         -------
<S>                           <C>             <C>
Leasing prepayments.......... $34,090         $14,103
Other prepayments............   1,133             813
                              -------         -------
                              $35,223         $14,916
                              =======         =======
Current assets............... $20,737         $10,565
Non-current assets...........  14,486           4,351
                              -------         -------
                              $35,223         $14,916
                              =======         =======
</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 and 2002, the Company recorded
     impairment charges of $3,145 and $764, respectively, to write off prepaid
     leases for testers which the Company does not expect to use in the future.

                                      F-19
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
         IN THOUSANDS OF U.S. DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

9.   PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment consist of the following:

<TABLE>
<CAPTION>
                                                                    DECEMBER 31,
                                                              ------------------------
                                                                2001           2002
                                                              --------       --------
<S>                                                           <C>            <C>
Cost:
  Freehold land.........................................      $  5,652       $  5,631
  Buildings, mechanical and electrical installation.....        64,688         68,044
  Plant and machinery...................................       440,690        461,580
  Toolings..............................................        31,141         32,512
  Office furniture and equipment........................        11,039         13,054
  Computer equipment....................................        16,099         22,047
  Motor vehicles........................................           127            146
  Assets under installation and construction in
   progress .............................................       20,637         10,280
                                                              --------       --------
     Total cost.........................................      $590,073       $613,294
                                                              ========       ========
Accumulated depreciation:
  Buildings, mechanical and electrical installation.....      $ 16,557       $ 21,672
  Plant and machinery...................................       194,941        195,245
  Toolings..............................................        17,969         19,797
  Office furniture and equipment........................         3,983          6,069
  Computer equipment....................................         9,355         13,036
  Motor vehicles........................................             6             19
                                                              --------       --------
    Total accumulated depreciation......................      $242,811       $255,838
                                                              ========       ========
  Property, plant and equipment (net)...................      $347,262       $357,456
                                                              ========       ========
</TABLE>

     Depreciation charged to results of operations amounted to $71,971, $99,318
     (excluding asset impairment charges of $23,735) and $105,712 (excluding
     asset impairment charges of $14,666) for the years ended December 31, 2000,
     2001 and 2002, respectively.

     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 significant building is on freehold land.

     Included in property, plant and equipment are assets acquired under capital
     lease as follows:

<TABLE>
<CAPTION>
                                                    DECEMBER 31,
                                                -------------------
                                                 2001        2002
                                                -------     -------
<S>                                             <C>         <C>
Plant and machinery ..........................  $     -     $14,852
Computer equipment ...........................        -         333
Assets under installation and construction ...   10,253           -
                                                -------     -------
                                                 10,253      15,185
Accumulated depreciation .....................        -      (2,545)
                                                -------     -------
                                                $10,253     $12,640
                                                =======     =======
</TABLE>

                                      F-20
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
         IN THOUSANDS OF U.S. DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

10.  SHORT TERM BORROWINGS

     The loan facility is for an amount of $7,616 of which $5,174 was
     outstanding as of December 31, 2002. The United States and Taiwan dollar
     short-term bank loans bore fixed interest at rates ranging from 3.9% to
     4.1%. The loans are secured by a fixed deposit pledged to the bank
     amounting to $2,997 and are repayable between January and March 2003.


11.  CAPITAL LEASES

     Future minimum lease payments under capital leases for equipment and
     machinery are as follows:

<TABLE>
<CAPTION>
                                                                          2002
                                                                        -------
<S>                                                                     <C>
Payable in year ending December 31,
  2003................................................................. $ 7,238
  2004.................................................................   4,938
  2005.................................................................     835
  2006.................................................................       -
                                                                        -------
Total minimum obligations..............................................  13,011
Less amounts representing interest at rates ranging from 6.6% to 7.1%
 per annum.............................................................    (933)
                                                                        -------
Present value of minimum obligations...................................  12,078
Current installments of obligations under capital leases...............  (6,558)
                                                                        -------
Obligations under capital leases, excluding current installments....... $ 5,520
                                                                        =======
</TABLE>


12.  ACCRUED OPERATING EXPENSES

     Accrued operating expenses consist of the following:

<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                                            ------------------
                                                              2001       2002
                                                            -------    -------
<S>                                                         <C>        <C>
Staff costs...............................................  $ 1,841    $ 3,736
Purchase of raw materials.................................    5,179      6,032
Maintenance fees, license fees and royalties..............    1,193      2,407
Interest expense..........................................      329      1,173
Provision for vacation liability..........................      170      1,559
Others....................................................    5,972      7,671
                                                            -------    -------
                                                            $14,684    $22,578
                                                            =======    =======
</TABLE>


13.  OTHER PAYABLES

     Other payables consist of the following:

<TABLE>
<CAPTION>
                                                              DECEMBER 31,
                                                        -----------------------
                                                          2001            2002
                                                        -------         -------
<S>                                                     <C>             <C>
Liabilities for purchase of property, plant and
 equipment...........................................   $23,051         $32,065
                                                        =======         =======
</TABLE>

                                      F-21
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
         IN THOUSANDS OF U.S. DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

14.  OTHER NON-CURRENT LIABILITIES

     Other non-current liabilities consist of the following:

<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                                             ----------------
                                                              2001      2002
                                                             ------    ------
<S>                                                          <C>       <C>
Deferred grant............................................   $2,573    $1,890
Others....................................................    2,032     2,604
                                                             ------    ------
                                                             $4,605    $4,494
                                                             ======    ======
</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. Amounts received for asset-related
     grant are deferred and recognized in other income over the life of the
     related asset.

15.  LONG-TERM DEBT

     Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                                         -----------------------
                                                           2001           2002
                                                         --------       --------
<S>                                                      <C>            <C>
Singapore dollar loan at floating rate ................  $ 28,090       $ 14,754
United States dollar loan at fixed rate of 7.93% ......         -          3,506
Taiwan dollar loans at floating rates .................         -         11,511
1.75% Senior convertible notes ........................         -        205,013
                                                         --------       --------
                                                           28,090        234,784
Less current installments .............................   (14,045)       (16,414)
                                                         --------       --------
                                                         $ 14,045       $218,370
                                                         ========       ========
</TABLE>


     The Singapore dollar 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 loan
     at December 31, 2001 and 2002 bore interest at 3.5% per annum.

     The United States dollar loan was put in place on November 6, 2002 and
     bears interest at the rate of 7.93% per annum. Interest is payable on a
     quarterly basis. Principal is denominated in United States dollars and is
     repayable in 13 equal quarterly installments commencing November 6, 2004.
     The loan is secured by a fixed deposit pledged to the bank amounting to
     $3,500 as of December 31, 2002.

                                      F-22
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
         IN THOUSANDS OF U.S. DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

15.  LONG-TERM DEBT (CONT'D)

     The floating rate Taiwan dollar loans comprised three loans of $1,727,
     $2,590 and $7,194, respectively. The loans were put in place on March 29,
     2002, May 15, 2002 and June 27, 2002, respectively. Both the $1,727 and
     $2,590 loans bear interest at 1.8% below the basic loan rate quoted by the
     specified bank. As of December 31, 2002, the loans bear an interest at
     6.57% per annum. Interest is payable on a monthly basis in Taiwan dollars
     and the principal is repayable in 21 equal quarterly installments
     commencing March 29, 2004 and May 15, 2004, respectively. The loans are
     secured by a fixed deposit and land and building pledged to the bank
     amounting to $1,079 and $11,032 as of December 31, 2002, respectively.

     The $7,194 loan bears interest at 2.45% above the 2-year rate for Taiwan
     dollar fixed deposits quoted by the specified bank. As of December 31,
     2002, the loan bears an interest at 4.50% per annum. Interest is payable on
     a monthly basis in Taiwan dollars and the principal is repayable in 13
     equal quarterly installments commencing June 27, 2003. The loan is secured
     by a fixed deposit and plant and machinery pledged to the bank amounting to
     $1,799 and $10,636 as of December 31, 2002, respectively.

     In addition to amounts disclosed above and in note 10, the Company has
     deposits of $3,202 pledged as security for bank credit and facility lines
     available to the Company as of December 31, 2002. As of December 31, 2001,
     no such deposits were pledged as security.

     In March, 2002, the Company issued $200,000 of senior unsecured and
     unsubordinated convertible notes due March 18, 2007. The convertible notes
     bear interest at the rate of 1.75% per annum and have a yield to maturity
     of 4.91%. At the maturity date, the Company will pay to the note holders
     117.665% of the principal amount. The notes can be converted into the
     Company's ordinary shares or, subject to certain limitations,ADSs, each of
     which currently represents ten ordinary shares, at a conversion price of
     S$3.408 per ordinary share (at a fixed exchange rate of US$1.00 =
     S$1.8215). The conversion price may be subject to adjustments for certain
     events. The Company may elect to satisfy its obligations to deliver
     ordinary shares or ADSs through delivery of cash in accordance with the
     terms of the notes. The Company may redeem all or a portion of the
     convertible notes at any time on or after March 18, 2004 at a price to
     yield of 4.91% per annum to the redemption date if the Company's shares or
     ADSs trade at or above 125% of the conversion price for a period of 20
     trading days in any 30 consecutive trading day period. The note holders may
     require the Company to repurchase all or a portion of their notes on March
     18, 2005 at a price equal to 110.081% of the principal amount of the notes
     being redeemed, plus any accrued and unpaid interest accrued to the date of
     redemption. In addition, upon the occurrence of certain repayment events,
     including a change in control, on or prior to March 18, 2007, each note
     holder may require us to repurchase all or a portion of such holder's notes
     at a price to yield 4.91% per year to the redemption date.

                                      F-23
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
         IN THOUSANDS OF U.S. DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

15.  LONG-TERM DEBT (CONT'D)

     Annual maturities of long-term debts as of December 31, 2002 are as
     follows:

<TABLE>
<S>                                                              <C>
     Payable in year ending December 31,
       2003....................................................  $ 16,414
       2004....................................................     3,184
       2005....................................................     4,115
       2006....................................................     3,008
       2007....................................................   206,914
     Thereafter................................................     1,149
                                                                 --------
                                                                 $234,784
                                                                 ========
</TABLE>


16.  UNUTILIZED CREDIT FACILITIES

     In January 2002, the Company established a S$500,000,000 Multicurrency
     Medium Term Note Program ("MTN Program"). Under the MTN Program, 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 Program 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 Program will be used for general corporate purposes,
     including capital expenditure and working capital.

     The Company has not issued any Notes under the MTN Program as of December
     31, 2002.

     At December 31, 2002, the Company has undrawn banking and credit facilities
     consisting of short-term loans and bank guarantees (excluding the MTN
     Program) of $37,990 with financial institutions.


17.  SHARE CAPITAL

     The Company's authorized share capital at December 31, 2002 is
     S$800,000,000 comprising 3,200,000,000 ordinary shares of S$0.25 par value
     each.

     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, 3,511,570 and 2,431,790 ordinary shares were issued as a result
     of the employees exercising their share options during the years 2000, 2001
     and 2002, respectively.

                                      F-24
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
         IN THOUSANDS OF U.S. DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

17.  SHARE CAPITAL (CONT'D)

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


18.  ADDITIONAL PAID-IN CAPITAL

     Additional paid-in capital represents principally the excess of proceeds
     received from issues of share capital (net of the costs of issue) over the
     par value of shares issued, which under Singapore law must be credited to
     the share premium account. The share premium may only be applied in paying
     up unissued shares to be issued to shareholders, paying up in whole or in
     part the balance unpaid on shares in issue, in 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.

     As of December 31, 2001 and 2002, the Company's share premium account
     amounted to $360,372 and $361,316, respectively.


19.  RETAINED EARNINGS (DEFICITS)

     Under the new one-tier system with effect from January 1, 2003, tax payable
     by the Company on its non-pioneer chargeable income would constitute a
     final tax. Companies that have moved to the one-tier system can henceforth
     pay dividends that are exempt from tax in the hands of its shareholders.

     During the transitional period, the Company has up to December 31, 2007 to
     utilize any available balance under the old imputation system to pay a
     franked dividend to its shareholders.


20.  ACCUMULATED OTHER COMPREHENSIVE LOSS

     The components of accumulated other comprehensive loss are as follows:

<TABLE>
<CAPTION>
                                                                DECEMBER 31,
                                                            ------------------
                                                             2001        2002
                                                            ------      ------
<S>                                                         <C>         <C>
Currency translation loss.................................  $9,638      $9,850
Unrealized loss (gain) on available-for-sale
 marketable securities....................................     303        (584)
                                                            ------      ------
                                                            $9,941      $9,266
                                                            ======      ======
</TABLE>

                                      F-25
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
         IN THOUSANDS OF U.S. DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

21.  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 2002 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 $14,666. These charges include a write down of
     machinery and equipment held for sale of $3,568 and a write down of
     machinery and equipment held for use of $11,098 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 the
     machinery and equipment held for sale is $nil. Management expects machinery
     and equipment held for sale to be disposed in 2003.

     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.


22.  OTHER NON-OPERATING INCOME

<TABLE>
<CAPTION>
                                       FOR THE YEAR ENDED DECEMBER 31,
                                       -------------------------------
                                        2000        2001         2002
                                       ------      ------       ------
<S>                                    <C>         <C>          <C>
Government grant income .............. $2,792      $1,293       $1,830
Other income, net ....................    733         697        1,589
                                       ------      ------       ------
                                       $3,525      $1,990       $3,419
                                       ======      ======       ======
</TABLE>


23.  INCOME TAXES

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

<TABLE>
<CAPTION>
                      FOR THE YEAR ENDED DECEMBER 31,
                  --------------------------------------
                   2000              2001          2002
                  -------        ---------      --------
<S>               <C>            <C>            <C>
Singapore.......  $56,505        $(142,493)     $(91,852)
Foreign.........      719             (649)       (4,116)
                  -------        ---------      --------
                  $57,224        $(143,142)     $(95,968)
                  =======        =========      ========
</TABLE>

                                      F-26
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
         IN THOUSANDS OF U.S. DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

23.  INCOME TAXES (CONT'D)

     Income tax benefit (expense) consists of the following:

<TABLE>
<CAPTION>
                                         FOR THE YEAR ENDED DECEMBER 31,
                                       ----------------------------------
                                         2000          2001         2002
                                       -------       -------      -------
<S>                                    <C>           <C>          <C>
Current tax provision:
  Singapore ......................     $(2,568)      $(1,107)     $  (850)
  Foreign ........................        (297)         (244)        (176)
                                       -------       -------      -------
                                       $(2,865)      $(1,351)     $(1,026)
                                       =======       =======      =======
Deferred tax benefit:
  Singapore ......................     $     -       $ 9,661      $ 8,661
  Foreign ........................           -           500         (472)
                                       -------       -------      -------
                                       $     -       $10,161      $ 8,189
                                       =======       =======      =======
                                       $(2,865)      $ 8,810      $ 7,163
                                       =======       =======      =======
</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.

     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 Company's equity staying with the same shareholders from the
     incurrence of the tax loss or allowance to its utilization. As of December
     31, 2002, the Company had pioneer loss and unutilized capital allowance
     carryforwards of $21,940 and $186,324, respectively.

     Current tax expense for the years ended December 31, 2000, 2001 and 2002 in
     relation to the Singapore operation represents income tax payable on
     non-pioneer trade income, principally interest and rental income.

     The Company also has foreign investment tax credits carryforwards of
     approximately $1,458, $803 and $1,249, which expire on December 31, 2004,
     2005 and 2006, 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.

                                      F-27
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
         IN THOUSANDS OF U.S. DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

23.  INCOME TAXES (CONT'D)

     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 and 2002 are as
     follows:

<TABLE>
<CAPTION>
                                                     DECEMBER 31,
                                                 --------------------
                                                   2001         2002
                                                 -------      -------
<S>                                              <C>          <C>
Deferred income tax assets:
  Operating loss carryforwards ...............   $ 2,896      $ 4,100
  Unutilized capital allowance carryforwards       7,730       18,632
  Investment tax credits .....................     2,362        3,510
  Property, plant and equipment ..............         -       (2,120)
  Other ......................................       (24)         (78)
                                                 -------      -------
                                                  12,964       24,044
Valuation allowance:                                   -       (2,292)
                                                 -------      -------
                                                 $12,964      $21,752
                                                 =======      =======
</TABLE>

     The deferred tax assets were generated in 2001 and 2002, principally as a
     result of the deferred tax benefit associated with tax losses and
     unutilized capital allowances. The Company recorded a valuation allowance
     of $2,292 as of December 31, 2002 relating to a subsidiary's operating loss
     carryforwards and temporary differences arising from property, plant and
     equipment where it is more likely than not that the deferred tax asset will
     not be realized. There was no valuation allowance for deferred tax assets
     as of December 31, 2001. The deferred tax effects of the remaining
     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 Company's 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-28
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
         IN THOUSANDS OF U.S. DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

23.  INCOME TAXES (CONT'D)

     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,
                                                              ------------------------------------
                                                                2000          2001          2002
                                                              --------      --------      --------
<S>                                                           <C>           <C>           <C>
Income tax expense (benefit) computed
 at Singapore statutory rate of 22.0%
 (2001: 24.5%, 2000: 25.5%) .............................     $ 14,592      $(35,069)     $(21,113)
Non-deductible expenses .................................          143           243           318
Effect of pioneer status ................................      (11,772)        6,972             -
Effect of recognizing deferred tax assets at post-pioneer
 concessionary tax rate .................................            -        19,433        10,393
Change in valuation allowance ...........................                                    2,292
All other items, net ....................................          (98)         (389)          947
                                                              --------      --------      --------
Income tax expense (benefit) ............................     $  2,865      $ (8,810)     $ (7,163)
                                                              ========      ========      ========
</TABLE>

     The pioneer status relief had the effect of increasing diluted net income
     per ordinary share by $0.01 and diluted net income per ADS by $0.12 for the
     year ended December 31, 2000. The pioneer status relief had the effect of
     increasing diluted net loss per ordinary share by $0.03 and $0.01 and
     diluted net loss per ADS by $0.27 and $0.10 for the years ended December
     31, 2001 and 2002, respectively.

24.  REVENUE DATA AND MAJOR CUSTOMERS

     Operating segments, as defined under SFAS No. 131 "Disclosures About
     Segments of an Enterprise and Related Information," are components of an
     enterprise about which separate financial information is available that is
     evaluated regularly by the chief operating decision maker in deciding how
     to allocate resources and in assessing performance. The Company operates in
     a single reportable segment.

                                      F-29
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
         IN THOUSANDS OF U.S. DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

24.  REVENUE DATA AND MAJOR CUSTOMERS (CONT'D)

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

<TABLE>
<CAPTION>
                                                          FOR THE YEAR ENDED DECEMBER 31,
                                                   -------------------------------------------
                                                     2000              2001             2002
                                                   --------          --------         --------
<S>                                                <C>               <C>              <C>
United States
- assembly .....................................   $155,892          $ 71,025         $104,043
- test .........................................    102,629            43,287           78,272
                                                   --------          --------         --------
                                                    258,521           114,312          182,315
                                                   --------          --------         --------
Singapore
- assembly .....................................      5,919             2,090              822
- test .........................................     18,215             6,097           10,160
                                                   --------          --------         --------
                                                     24,134             8,187           10,982
                                                   --------          --------         --------
Rest of Asia
- assembly .....................................      1,112             2,318            1,988
- test .........................................        731             2,066           16,569
                                                   --------          --------         --------
                                                      1,843             4,384           18,557
                                                   --------          --------         --------
Europe
- assembly .....................................     16,440             3,050            3,412
- test .........................................     30,333            15,933           10,472
                                                   --------          --------         --------
                                                     46,773            18,983           13,884
                                                   --------          --------         --------
Total ..........................................   $331,271          $145,866         $225,738
                                                   ========          ========         ========
</TABLE>


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

<TABLE>
<CAPTION>
                                FOR THE YEAR ENDED DECEMBER 31,
                                -------------------------------
                                 2000          2001        2002
                                -----         -----       -----
                                  %             %           %
<S>                             <C>           <C>         <C>
Customer A ..................    32.1          29.2        29.8
Customer B ..................    18.1          12.3        13.3
Customer C ..................     5.6          10.4        12.6
Others ......................    44.2          48.1        44.3
                                -----         -----       -----
                                100.0         100.0       100.0
                                =====         =====       =====
</TABLE>

                                      F-30
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
         IN THOUSANDS OF U.S. DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

25.  SHARE OPTIONS AND INCENTIVE PLANS

(a)  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.

     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, 2000, 2001 and 2002:

<TABLE>
<CAPTION>
                                                                                    WEIGHTED
                                                                                    AVERAGE
                                                              OPTIONS            EXERCISE PRICE
                                                           --------------        --------------
                                                           (IN THOUSANDS)
<S>                                                        <C>                   <C>
Options outstanding at January 1, 2000 .................       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
Granted during the year ................................       19,653                  1.36
Lapsed during the year .................................      (14,716)                 1.64
Exercised during the year ..............................       (2,432)                 0.53
                                                              -------                 -----
Options outstanding at December 31, 2002 ...............       54,275                 $1.65
                                                              =======                 =====
Exercisable at end of year .............................       13,636                 $2.01
                                                              =======                 =====
</TABLE>

                                      F-31
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
         IN THOUSANDS OF U.S. DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

25.  SHARE OPTIONS AND INCENTIVE PLANS (CONT'D)

     Weighted average fair value of options granted in 2000, 2001 and 2002 were
     $2.44, $0.74 and $0.81, respectively.

     The following table summarizes information about fixed stock options
     outstanding at December 31, 2002:

<TABLE>
<CAPTION>
                                     OPTIONS OUTSTANDING                         OPTIONS EXERCISABLE
                   ----------------------------------------------------   --------------------------------
                                         WEIGHTED
                       NUMBER            AVERAGE            WEIGHTED          NUMBER           WEIGHTED
   RANGE OF         OUTSTANDING         REMAINING           AVERAGE       EXERCISABLE AT       AVERAGE
EXERCISE PRICES    AT 12/31/2002     CONTRACTUAL LIFE    EXERCISE PRICE     12/31/2002      EXERCISE PRICE
---------------    -------------     ----------------    --------------   --------------    --------------
                   (IN THOUSANDS)                                         (IN THOUSANDS)
<S>                <C>               <C>                 <C>              <C>               <C>
$0.14                   653             6.6 years            $0.14               544           $0.14
$0.24                   102             7.0 years            $0.24               102           $0.24
$0.63 to $0.89       18,474             8.7 years            $0.83             2,594           $0.87
$1.25 to $1.64       23,404             8.7 years            $1.52             4,246           $1.54
$2.00 to $2.61        4,157             7.0 years            $2.05             3,124           $2.05
$3.99                 7,485             7.3 years            $3.99             3,026           $3.99
                     ------                                                   ------
                     54,275                                                   13,636
                     ======                                                   ======
</TABLE>

     Total compensation expense recognized for stock-based compensation under
     the Share Option Plan for the years ended December 31, 2000, 2001 and 2002
     were $448, $1,024 and $60, respectively.

(b)  IMPACT OF APPLYING FAIR VALUE BASED METHOD

     The fair value of options granted under the Share Option Plan for the years
     ended December 31, 2000, 2001 and 2002 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,
                              ----------------------------------------------
                                  2000            2001             2002
                              -------------   -------------    -------------
<S>                           <C>             <C>              <C>
Expected lives.............        10 years    5 - 10 years          5 years
Dividend yield.............            0.0%            0.0%             0.0%
Risk free interest rate....     4.2% - 4.7%     2.7% - 3.9%      1.8% - 3.0%
Expected volatility........   67.4% - 82.9%   57.6% - 64.2%    52.1% - 59.1%
</TABLE>

                                      F-32
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
         IN THOUSANDS OF U.S. DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

25.  SHARE OPTIONS AND INCENTIVE PLANS (CONT'D)

     Had the Company determined compensation cost based on the fair value at the
     grant date for its stock options under SFAS 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,
                                              ---------------------------------------
                                               2000            2001            2002
                                              -------       ---------        --------
<S>                                           <C>           <C>              <C>
Net income (loss):
  As reported............................     $54,359       $(134,019)       $(89,319)
  Pro forma..............................     $36,011       $(151,586)       $(98,649)

Basic net income (loss) per share:
  As reported............................     $  0.06       $   (0.14)       $  (0.09)
  Pro forma..............................     $  0.04       $   (0.15)       $  (0.10)

Diluted net income (loss) per share:
  As reported............................     $  0.06       $   (0.14)       $  (0.09)
  Pro forma..............................     $  0.04       $   (0.15)       $  (0.10)
</TABLE>


26.  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 and Logistics, Property and Financial Services.

     As of December 31, 2002, 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 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 semiconductors. Companies within the ST Group, including
     Chartered, 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.

                                      F-33
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
         IN THOUSANDS OF U.S. DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

26.  RELATED PARTY TRANSACTIONS (CONT'D)

     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.

     Mr Tan Bock Seng served as Chief Executive Officer of the Company from May
     18, 1998 to January 7, 2002. Effective January 8, 2002, the Company
     appointed Mr Tan Bock Seng as advisor to their Board of Directors. In
     August 2002, Mr Tan Bock Seng terminated the advisory agreement between him
     and the Company. In recognition of his past services, ST made a payment of
     $1,023 to Mr Tan Bock Seng. The Company has accounted the payment as
     compensation expense in the income statement and as additional paid-in
     capital within shareholders' equity as the payment does not involve any
     cash outlay by the Company.

     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.

     Certain general and administrative expenses of ST Assembly Test Services,
     Inc., a 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 $556, $513 and $124 for 2000, 2001 and 2002,
     respectively.

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

<TABLE>
<CAPTION>
                                             FOR THE YEAR ENDED DECEMBER 31,
                                            --------------------------------
                                              2000        2001         2002
                                            -------      ------      -------
<S>                                         <C>          <C>         <C>
ST -
  Management fees expense ................  $ 1,676      $1,019      $ 1,084

ST affiliates -
  Net revenues ...........................   24,091       8,188       10,982
  Interest income ........................    4,621       4,596        2,170
  Interest expense .......................      211           -            -
  General and administrative expenses ....  $   556      $  513      $   124
                                            =======      ======      =======
</TABLE>

                                      F-34
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
         IN THOUSANDS OF U.S. DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

26.  RELATED PARTY TRANSACTIONS (CONT'D)

     As of December 31, 2001 and 2002, there were the following amounts owing by
     (to) affiliates:-

<TABLE>
<CAPTION>
                                                                                   DECEMBER 31,
                                                                              ----------------------
                                                                               2001            2002
                                                                              -------        -------
<S>                                                                           <C>            <C>
Amounts due from ST and ST affiliates
  Accounts receivable, net of allowance for doubtful accounts ............    $ 1,793        $ 3,727
                                                                              =======        =======
Amounts due to ST
  Other payables .........................................................    $(1,520)       $(1,320)
Amounts due to ST affiliates
  Accounts payable .......................................................       (953)          (538)
                                                                              -------        -------
                                                                              $(2,473)       $(1,858)
                                                                              =======        =======
</TABLE>


27.  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 $762.
     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,
     2000, 2001 and 2002 was $583, $544 and $474, 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, 2000, 2001 and 2002 were $17,971, $24,516 and
     $20,965, respectively.

     Future minimum lease payments under non-cancelable operating leases of
     factory land and plant and equipment as of December 31, 2002 were:

<TABLE>
<S>                                                         <C>
Payable in year ending December 31,
  2003....................................................  $ 4,566
  2004....................................................    2,438
  2005....................................................    2,247
  2006....................................................    1,947
  2007....................................................      762
Thereafter................................................   13,852
                                                            -------
                                                            $25,812
                                                            =======
</TABLE>

                                      F-35
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
         IN THOUSANDS OF U.S. DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

27.  COMMITMENTS (CONT'D)

(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, 2002, unamortized costs for technology licences amounted to
     $1,739.

     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, 2001 and 2002, there were the following capital
     commitments:-

<TABLE>
<CAPTION>
                                                                  DECEMBER 31,
                                                            -----------------------
                                                              2001            2002
                                                            -------         -------
<S>                                                         <C>             <C>
Building, mechanical and electrical installation..........  $   614         $    20
Plant and machinery.......................................   34,924          42,458
                                                            =======         =======
</TABLE>


28.  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.

                                      F-36
<PAGE>
                 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
         IN THOUSANDS OF U.S. DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

28.  FAIR VALUE OF FINANCIAL INSTRUMENTS (CONT'D)

     MARKETABLE SECURITIES

     The fair value is estimated based upon the quoted market price on the last
     business day of the fiscal year. For securities where there are no quoted
     market prices, the carrying amount is assumed to be its fair value. As of
     December 31, 2001 and 2002, such securities amounted to $22.


     FIXED DEPOSITS

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


     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.


     1.75% SENIOR CONVERTIBLE NOTES

     The fair value is estimated by obtaining quotes from brokers.


     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>
                                                                         DECEMBER 31,
                                                       ---------------------------------------------
                                                                2001                   2002
                                                       ---------------------    --------------------
                                                       CARRYING    ESTIMATED    CARRYING  ESTIMATED
                                                        AMOUNT    FAIR VALUE     AMOUNT   FAIR VALUE
                                                       --------   ----------    --------  ----------
                                                           $           $           $          $
<S>                                                    <C>        <C>           <C>       <C>
FINANCIAL ASSETS:
  Cash and cash equivalents ........................    115,214     115,214     167,661    167,661
  Marketable securities ............................     23,801      23,801      69,843     69,843
  Fixed deposits pledged ...........................          -           -      12,577     12,853

FINANCIAL LIABILITIES:
  Long-term debt, excluding
    1.75% senior convertible notes .................     28,090      27,959      29,771     30,278
  1.75% senior convertible notes ...................          -           -     205,013    194,250
</TABLE>

                                      F-37