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, 1999
                                       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  [          ]

                          ST Assembly Test Services Ltd
             (Exact Name of Registrant as Specified in Its Charter)

                              Republic of Singapore
                 (Jurisdiction of Incorporation or Organization)

                      5 Yishun Street 23, Singapore 768442
                    (Address of Principal Executive Offices)

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

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

     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.

785,427,695 Ordinary Shares (par value S$0.25 per Ordinary Share) of Registrant
outstanding as of December 31, 1999.

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       No  X
   -----    -----

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

                            Item 17      Item 18  X
                                   -----        -----

<PAGE>


                                TABLE OF CONTENTS

PART I.........................................................................1

   Item 1.     Description of Business.........................................1
   Item 2.     Description of Property........................................14
   Item 3.     Legal Proceedings..............................................16
   Item 4.     Control of Registrant..........................................16
   Item 5.     Nature of Trading Market.......................................17
   Item 6.     Exchange Controls and Other Limitations Affecting
               Security Holders...............................................17
   Item 7.     Taxation.......................................................18
   Item 8.     Selected Financial Data........................................20
   Item 9.     Management's Discussion and Analysis of Financial
               Condition and Results of Operations............................21
   Item 9A.    Quantitative and Qualitative Disclosures About Market Risk.....37
   Item 10.    Directors and Officers of Registrant...........................39
   Item 11.    Compensation of Directors and Officers.........................43
   Item 12.    Options to Purchase Securities From Registrant or
               Subsidiaries...................................................43
   Item 13.    Interest of Management in Certain Transactions.................45

PART II.......................................................................47
   Item 14.    Description of Securities to be Registered.....................47

PART III......................................................................47
   Item 15.    Defaults Upon Senior Securities................................47
   Item 16.    Changes in Securities, Changes in Security For
               Registered Securities and Use of Proceeds......................47
   Item 18.    Financial Statements...........................................48
   Item 19.    Financial Statements and Exhibits..............................48

SIGNATURES....................................................................49

    When we refer to "Singapore dollars" and "S$" in this Annual Report, we are
referring to Singapore dollars, the legal currency of Singapore. When we refer
to "U.S. dollars," "dollars," "$" and "US$" in this Annual Report, we are
referring to United States dollars, the legal currency of the United States. For
your convenience, the noon buying rate in the City of New York on December 31,
1999 for cable transfers in Singapore dollars as certified for customs purposes
by the Federal Reserve Bank of New York was S$1.67 per $1.00.

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


                                        i
<PAGE>


                                     PART I

    Certain of the statements in this Annual Report on Form 20-F 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; decisions by
customers to discontinue outsourcing of test and assembly services; changes in
customer order patterns; rescheduling or cancellation of customer orders;
changes in product mix; capacity utilization; level of competition; pricing
pressures; continued success in technological innovation; delays in acquiring or
installing new equipment; litigation and other risks described in "Item 9.
Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Risk Factors."

Item 1. Description of Business

Overview

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

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

o   assembly of leaded and laminate packages, as well as additional assembly
    related services such as package design and leadframe and substrate design;

o   pre-production services, such as package development, supply chain
    management and test software and related hardware development; and

o   drop shipment services.

    We provide these test and assembly services to semiconductor companies which
do not have their own manufacturing facilities (fabless companies), vertically
integrated semiconductor device manufacturers (IDMs), and independent
semiconductor wafer foundries (foundries). While we provide our customers with a
broad range of test and assembly services for most types of semiconductors,
including high performance digital semiconductors, we have developed a
particular expertise in testing mixed-signal semiconductors.

    We provide test and assembly services at our facility in Singapore, where we
operate 189 testers and 377 wire bonders as of March 15, 2000. Singapore is a
politically and economically stable nation with laws that protect our customers'
proprietary technology. We also have an assembly design center in Milpitas,
California and have recently established a test development center in San Jose,
California. Our U.S. facilities enable us to work more closely with many of our
customers.

    We were incorporated in Singapore on October 31, 1994 and began operations
in January 1995.

Industry Background

General

    Semiconductors are critical components used in an increasingly wide variety
of applications, such as computer systems, communications equipment and systems,
automobiles, consumer products and industrial automation and control systems. As
performance has increased and size and cost have decreased, the use of
semiconductors in these applications has grown significantly. According to the
Semiconductor Industry Association, or SIA, worldwide semiconductor device
market revenue increased from $77.3 billion in 1993


                                       1
<PAGE>

to $125.6 billion in 1998, a compound annual growth rate, or CAGR, of 10.2%.

    The SIA forecasts that one of the principal drivers of growth in the
semiconductor industry during the next several years will be increased sales of
communications semiconductors used in applications such as computer modems,
networks, cellular phones and internet and electronic commerce hardware and
appliances. The proliferation of digital technology, particularly in
communications applications, has increased demand for analog functionality,
which helps the digital electronics interact with the real world of sound,
light, heat and motion. Increasing cost pressures and size constraints are
prompting silicon providers to integrate high performance analog and digital
functionality into mixed-signal semiconductors. This functional integration of
analog and digital components onto single chips makes these mixed-signal
semiconductors more difficult to design and test than most other types of
semiconductors.

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:

    o    wafer fabrication, including wafer probe;

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

    o    final testing of assembled semiconductors.

    Wafer Fabrication. The wafer fabrication process begins with the generation
of a mask that defines the circuit patterns for the transistors and interconnect
layers that will be formed on the raw silicon wafer. The transistors and other
circuit elements are formed by repeating a series of process steps where
photosensitive material is deposited onto the wafer; the material is exposed to
light through the mask in a photolithography process; and finally 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 die that are then attached to a
substrate with an epoxy adhesive. Leads on the substrate typically are then
connected by extremely fine gold wires to the input/output, or I/O, terminals on
the die through the use of automated equipment known as "wire bonders." Each die
is then encapsulated in a molding compound, thus forming the package.

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

Trends Toward Outsourcing

    Historically, IDMs conducted the majority of the semiconductor manufacturing
process in their own facilities, outsourcing only the lower-technology aspects
of the process and keeping what was at the time regarded as advanced or
proprietary technology in-house. Fabless 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 semiconductor production process, allowing them to utilize the latest test
and assembly technology without committing significant amounts of capital and


                                       2
<PAGE>


other resources to manufacturing their products.

    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. Increasingly, IDMs have overcome
their reluctance to the outsourcing of advanced or proprietary technology and
have come to increasingly depend on independent test and assembly providers for
manufacturing support and advances in such technology. Given the IDMs'
significant market share in the semiconductor market, they present a significant
opportunity for independent test and assembly providers.

    There are several benefits that can be derived from the use of outsourced
test and assembly services which are driving the continued growth of 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 of these
    requirements, semiconductor testing and assembly is increasingly being seen
    as an enabling technology critical to the advancement of semiconductor
    designs.

         Independent providers of test and assembly services have developed
    sophisticated expertise in semiconductor testing and assembly and have
    dedicated substantial resources toward further technological innovation.
    Because independent providers are able to spread the cost of these
    development efforts over a broader range of customers and products, they are
    able to offer access to leading technologies at price points below the
    internal costs of IDMs. Because it is difficult to keep pace with
    technological developments in test and assembly technology while maintaining
    a leading position in the development of increasingly sophisticated
    semiconductors, IDMs are increasingly relying on independent test and
    assembly service providers for technological development and innovation in,
    and as a strategic source of, test and assembly services.

         Time to market. As the semiconductor market becomes increasingly
    competitive and product life cycles continue to decrease, semiconductor
    companies are seeking to shorten their time to market for new products. In
    particular, these companies seek to shorten the test and assembly stages of
    the production process to gain a competitive advantage in bringing products
    to market quickly. As testing and assembly needs are identified for a
    specific product, semiconductor companies frequently do not have the time to
    develop the necessary capabilities to meet these needs nor the expertise to
    implement these solutions in the necessary volumes for rapid product
    rollouts. As a result, semiconductor companies are increasingly leveraging
    the resources and capabilities of independent test and assembly service
    providers to quickly deliver new products to the market. In addition, in
    order to further accelerate their time to market, semiconductor companies
    are increasingly requiring the test and assembly functions to 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. Semiconductor companies, trying to maximize
    allocation of limited resources, reduce capital expenditures and control
    research and development costs, are increasingly turning to the outsourcing
    of test and assembly services.

    In addition, semiconductor companies are facing shorter product life cycles
and more frequent new product introductions that cause greater fluctuations in
product volumes, lower production runs and increased volatility in capacity
requirements. As a result, it is becoming more difficult for these companies to
sustain high levels of capacity utilization of their test and assembly
equipment. Independent test and assembly services 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 reach improved price points
through the realization of economies of scale in their purchasing activities.


                                       3
<PAGE>


Services

    We offer a comprehensive array of technologically advanced test, assembly
and pre-production services to address the needs of our customers and their end
customers. We also provide drop shipment services. In 1999, 46.1% of our net
revenues were from test services and 53.9% of our net revenues were from
assembly services.

Test Services

    We offer final testing and wafer probe on a diverse selection of test
platforms, as well as additional test related services such as burn-in process
support, reliability testing, thermal and electrical characterization, dry pack
and tape and reel.

Testing

    Testing includes both final testing and wafer probe. Final testing is the
last stage in semiconductor production which involves using sophisticated test
equipment and customized software programs to electronically test a number of
attributes of packaged semiconductors. Wafer probe is the step immediately prior
to the assembly of semiconductors and involves inspection of the processed wafer
for defects. Wafer probe services require similar expertise and testing
equipment to that used in final testing, and several of our testers (with the
substitution of different handlers or probers) are used for wafer probe
services. To date, substantially all wafer probe has been performed for
customers whose wafers are then assembled by us. In 1998 and 1999, 71.8% and
80.2%, respectively, of wafer probe revenues were from sales to our affiliate,
Chartered Semiconductor Manufacturing Ltd.

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

    Mixed-signal Testing. We test a variety of mixed-signal semiconductors,
including those used in communications applications such as network routers,
switches and interface cards; broadband products such as cable set-top boxes;
and mobile telecommunications products such as cellular phones and base
stations. In addition to communications semiconductors, we test mixed-signal
semiconductors for personal computer components, such as graphics, CD-ROM and
hard disk drive controllers. Mixed-signal semiconductors require a large number
of functions to be tested which can only be done using specialized testing
equipment.

    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 for a variety of memory
semiconductors, including Flash memory, SRAMs and ROMs.

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

                                            Year Ended
                                           December 31,
                                 -------------------------------
                                  1997         1998        1999
                                 ------       ------      ------
         Mixed-signal.....        56.8%        67.1%        72.4%
         Digital..........        39.6         30.6         26.8
         Memory...........         3.6          2.3          0.8
                                 -----        -----       -----
                                 100.0%       100.0%      100.0%
                                 -----        -----       -----


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<PAGE>


Additional Test-Related Services

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

    o    "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.

    o    "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.

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

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

    o    "Tape and reel". Tape and reel is the process of transferring
         semiconductors from tray or tube into a tape-like carrier for shipment
         to customers.

Assembly Services

    Our assembly services include assembly of a broad range of leaded and
laminate packages. Packaging serves to protect the die and facilitate electrical
connections and heat dissipation. As part of customer support on assembly
services, we also offer package design and design of leadframes and substrates.

Packaging

    We offer a broad range of advanced package formats designed to provide
customers with a full range of packaging solutions. We have focused our
packaging development primarily on high-pin count surface mount technology, or
SMT, packages. SMT packages typically incorporate leads or interconnects which
are soldered to the surface of the printed circuit board rather than inserted
into holes, as is the case in older pin-through-hole, or PTH, technology
packages. SMT packages accommodate a substantially higher number of leads than
PTH packages, enabling a reduction in the number of semiconductors used and a
reduction in the dimensions of the printed circuit board. Because SMT can enable
higher pin counts on a semiconductor device, SMT is typically the preferred
technology for most advanced semiconductors. Our SMT package formats include a
range of formats for leaded packages including quad flat packages, or QFPs, and
high pin-count plastic leaded chip carriers, or PLCCs, and for laminate packages
including ball grid array, or BGA, packages.

    Our SMT packages are divided into three families: standard leadframe,
enhanced leadframe and laminate. 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 know as wire bonding.

    We focus on higher pin count standard leadframe packages, including QFPs and
PLCCs. Our standard leadframe packages are used in a variety of applications,
including mobile phones, notebook computers and networking systems.


                                       5
<PAGE>

The following table summarizes our standard leadframe packages.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                             Number of
    Package Format             Leads                Description                              Applications
-------------------------------------------------------------------------------------------------------------------
<S>                           <C>           <C>                                 <C>
Metric Quad Flat              64-240        Traditional QFP designed            Networking systems (ADSL),
  Package -- MQFP.........                  for ASICs, FPGAs and DSPs           multimedia applications and hard
                                                                                disk drives
-------------------------------------------------------------------------------------------------------------------
Low Quad Flat                 32-208        Advanced QFP with                   Mobile phones, notebook computers
  Package -- LQFP.........                  thickness of 1.4 mm for             and hard disk drives
                                            use in low profile, space
                                            constrained applications
-------------------------------------------------------------------------------------------------------------------
Thin Quad Flat                32-100        Advanced QFP with                   Mobile phones, notebook computers
  Package -- TQFP.........                  thickness of 1.0 mm for             and hard disk drives
                                            use in low profile, space
                                            constrained applications
-------------------------------------------------------------------------------------------------------------------
Plastic Leaded Chip            44-84        Traditional leadframe               Personal computers and consumer
  Carrier -- PLCC.........                  package designed for                electronics
                                            applications that do not
                                            have space constraints and
                                            do not require a high
                                            number of interconnects
-------------------------------------------------------------------------------------------------------------------
Thin Shrink Small Outline         32        Traditional leadframe               Telecommunications products, hard
  Package -- TSSOP........                  package designed for logic          disk drives, recordable optical
                                            and analog devices and              disks, audio and video products
                                            memory devices, such as             and consumer electronics
                                            Flash, SRAM, EPROM, EEPROM
                                            and DRAM
-------------------------------------------------------------------------------------------------------------------
</TABLE>

    Enhanced Leadframe Packages. Our enhanced leadframe packages are similar in
design to our standard leadframe packages but are generally thinner and smaller,
have more leads 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                              Applications
-------------------------------------------------------------------------------------------------------------------
<S>                           <C>           <C>                                 <C>
Drop-in Heat Sink Quad         64-208       Thermally enhanced QFP              High speed networking
  Flat Package -- DQFP....                  with 30% greater thermal
                                            dissipation than MQFP
-------------------------------------------------------------------------------------------------------------------
Exposed Drop-in Heat           44-208       Thermally enhanced QFP              Networking systems, notebook
  Sink Quad Flat                            with 60% greater thermal            computers and multimedia systems
  Package -- EDQFO........                  dissipation than MQFP
-------------------------------------------------------------------------------------------------------------------
Die Pad Heat Sink Quad        100-208       Thermally enhanced QFP              Hard disk drives
  Flat Package -- DPHQFP..                  with 60% greater thermal
                                            dissipation than MQFP
-------------------------------------------------------------------------------------------------------------------
Heat Sink Quad Flat            44-84        Thermally enhanced QFP              Graphic chipsets
  Package -- HQFP.........                  with 80% greater thermal
                                            dissipation than MQFP
-------------------------------------------------------------------------------------------------------------------
</TABLE>

    Laminate Packages. Our laminate packages include 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 and utilize a plastic or
tape laminate 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 surrounding the package increased, packagers decreased the
pitch, or distance between leads, in order to minimize the size of the package.
The nearness of one lead to another resulted in electrical shorting problems and
required the development of increasingly sophisticated and expensive techniques
for producing circuit boards to accommodate the high number of leads.


                                       6
<PAGE>

    The BGA format solved this problem by employing leads 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 DSPs, microprocessors and microcontrollers, ASICs, FPGAs,
memory and PC chip sets. Our BGA packages typically have between 196 and 600
balls. Our BGA packages are described below:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
                             Number of
    Package Format             Balls                Description                              Applications
-------------------------------------------------------------------------------------------------------------------
<S>                           <C>        <C>                                    <C>
Enhanced                      256-432    High pin count, thermally enhanced     Telecommunications, networking systems
  BGA -- EBGA.............               BGA package suitable for high power    and set-top boxes
                                         applications which require heat sink
                                         attach for thermal dissipation
-------------------------------------------------------------------------------------------------------------------
Flexible Enhanced Plastic     256-600    BGA characterized by a flex-taped      Telecommunications, networking systems,
  BGA -- FEBGA............               substrate replacing the laminate       set-top boxes and digital cameras
                                         substrate
-------------------------------------------------------------------------------------------------------------------
Small Thin Plastic              6-176    Smaller and thinner BGA designed for   Mobile phones, notebook computers,
  BGA -- STPBGA...........               applications which are space           personal digital assistants, global
                                         constrained                            Positioning systems and digital cameras
-------------------------------------------------------------------------------------------------------------------
</TABLE>

Packages Under Development

    We are currently developing packages and related processes based on
flip-chip interconnect technology for use in various market sectors. Flip-chip
packages employ advanced interconnect technology and deliver improved thermal
and frequency characteristics to high performance semiconductors that require a
large number of interconnects in a small package.

    Flip-chip interconnect packaging allows even higher density for a given die
area than standard BGA packaging. Like BGA, flip-chip packages use balls to
connect to the printed circuit board. Within the flip-chip package, however, the
die is connected to these balls by the use of an array of solder bumps on the
bottom of the die as opposed to the traditional method used in BGA of wire
bonding the die to the balls. The use of solder bump interconnects to the balls
enables a higher density of interconnects resulting in the potential for smaller
packages and improved thermal and frequency characteristics.

    Flip-chip packages are designed to be used in smart card applications, high
performance networking and graphics and processor applications. We anticipate
our flip-chip packages typically will have between 6 and 1500 I/Os.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
                             Number of
    Package Format             I/Os                Description                              Applications
------------------------------------------------------------------------------------------------------------------
<S>                           <C>        <C>                                    <C>
Flip Chip BGA...........      200-800    Developed for mid-range applications   ASICs and high performance
                                         that require lower package cost        networking and processor solutions
                                         through reduced die size and
                                         elimination of lower yielding wire
                                         bond processes
------------------------------------------------------------------------------------------------------------------
High Performance Flip         800-1500   BGA packages developed for high-end    WAN/LAN servers, high-end PCs
  Chip BGA (Flip Chip                    applications that require high         and high-speed Internet
  FEBGA)................                 electrical and high thermal            communications applications
                                         performance requirements
------------------------------------------------------------------------------------------------------------------
Flip Chip Chip Size             6-200    Developed for low I/O applications     Portable and hand-held devices
  Package (CSP).........                 require small footprint, reduced
                                         thickness and reduced cost
------------------------------------------------------------------------------------------------------------------
Direct Chip Attach (DCA)        6-50     Semiconductor die that attaches        Proximity sensors, mobile phones,
  Flip Chip.............                 directly to theprinted circuit board   personal digital assistants and
                                         without a package. Developed for       pagers
                                         radio frequency applications
------------------------------------------------------------------------------------------------------------------
</TABLE>

    We are also developing new materials and processes to support our customers'
future flip-chip requirements. See "-- Research and Development -- Assembly
Services."

    In addition, we continue to increase our support functions for thermal,
electrical, stress and package and 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


                                       7
<PAGE>


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.

    We have begun working with customers to develop wafer backgrinding and die
saw of wafers for gallium arsenide (GaAs) devices. This is an important
development in support of our commitment to develop packages and services in
response to the specialized needs of our customers. In conjunction with a
specific customer, we have made investments in capital, technology and personnel
in support of this project.

Pre-production Services

    We have developed pre-production services to address the growing needs of
our customers. Our pre-production services for assembly include package
development and supply chain management, and for testing include software and
hardware development. We offer these services in both Singapore and our
facilities in California.

    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
our 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 development, 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.

    Supply Chain Management. We provide a full range of materials procurement
and management services and work in partnership with key raw material and
equipment suppliers to ensure reliable production readiness at reasonable cost.
We manage inventory with automated materials handling processes using integrated
Oracle software systems.

    Test Software and Hardware Development. We work closely with our customers
to provide sophisticated software engineering services, including test program
development, conversion and optimization. Generally, testing requires customized
software to be developed for each particular semiconductor. 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 perform trial tests to correlate the test software. Customer feedback on the
test results enables us to adjust the conversion test programs prior to actual
production testing. We 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
develop the test software program based on test specifications provided by the
customer.

Drop Shipment Services

    We provide drop shipment services including the delivery of final tested
semiconductors to our customers' end-customers in any part of the world. We
directly bill our customers for the cost of drop shipment. We believe that our
ability to offer drop shipment services is an important factor in maintaining
existing customers as well as attracting new customers.

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 $2.2 million, $3.5 million and
$7.3 million in 1997, 1998 and 1999 on research and development. As of March 15,
2000, we employed 57 engineers dedicated to our research and development
activities. In addition, our management and other operational personnel are also
involved in research and development activities. We expect to continue to invest
significant resources in research and development.


                                       8

<PAGE>


Test Services

    We focus on developing new equipment, software and processes to enhance
efficiency and reliability and to shorten test times. Our current projects
include creating multi-site 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.

    In addition to the research and development work being done at our
facilities in Singapore, we have established a new test development center
located in San Jose, California. Our new test development center is designed to
help our existing and potential U.S. customers reduce the time to market.
Specifically, the new test development center is expected to:

    o    develop and debug test software prior to production;

    o    complete test software conversions for customers; and

    o    offer our U.S. and offshore customers, in conjunction with our
         Singapore facility, continuous access to our development capabilities.

Assembly Services

    We have established a dedicated group of engineers whose primary focus is
the development of new, 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 needs. In addition, we are a member of the Singapore Institute of
Microelectronics, or IME, that is dedicated to developing emerging technologies.
Working with IME gives us access to technical libraries, high technology
analytical laboratories and equipment, and design resources without extensive
capital investment by us. IME is a non-profit government sponsored development
center with the main goal of increasing the technical expertise, knowledge base
and capability of Singapore. Many multinational corporations, local companies,
and electronics industry suppliers are members, including companies such as
Hewlett-Packard, Lucent Technologies and National Semiconductor.

Marketing and Sales

    Our marketing strategy is to target potential customers who are industry
leaders in technology development; require mixed-signal or high performance
digital testing capabilities or require high-end assembly packages; and present
significant volume growth opportunities. In addition, we target new fabless
start-up companies participating in fast-growing market segments.

    We believe our customers place great value on our willingness to offer them
the test and assembly services they request without the obligation of purchasing
other services we offer. Our customers can also take advantage of our services
on a "back-end turnkey" basis which includes wafer probe, assembly, final test
and drop shipment services. In addition to the services we provide our customers
directly, in conjunction with Chartered Semiconductor Manufacturing Ltd or other
foundries, we can offer our customers services on a "full turnkey" basis which
includes wafer fabrication.

    We believe that we have benefited significantly from our relationship with
Chartered Semiconductor Manufacturing Ltd and that our proximity to and close
working relationship with Chartered Semiconductor Manufacturing Ltd has enabled
us to provide value added services to our customers. From time to time we engage
in joint marketing efforts with Chartered Semiconductor Manufacturing Ltd. We
intend to establish strategic relationships with other third party providers of
complementary semiconductor services, such as foundry services, if these
relationships benefit our business.

    We market our services through a direct sales force strategically located in
offices in Singapore; the United Kingdom; Japan; Milpitas and Irvine,
California; Boston, Massachusetts; Raleigh-Durham, North


                                       9
<PAGE>


Carolina; Dallas, Texas and Phoenix, Arizona. Our basic sales unit is the
account team which consists of a sales manager, account managers and customer
service representatives. Qualified technical product managers support each
account team.

    We price our test services principally on the basis of the amount of time,
measured in CPU seconds, taken by the testing equipment, including testers and
handlers, to execute the test programs that are specific to the customer's
semiconductors. The price per CPU second for each particular semiconductor is
determined based on a number of factors including the complexity of the
semiconductor; number of functions tested; time required to test the
semiconductor pursuant to the customer's specifications; labor cost; ability of
the equipment to parallel test (test multiple semiconductors simultaneously);
and cost of the equipment to perform the test services. For example, testing
complex, high-performance semiconductors is priced significantly higher per CPU
second than testing less complex or lower performance semiconductors. Wafer
probe pricing is determined based on similar factors, including the cost of the
equipment used to perform the testing services; labor cost; time required to
test the semiconductor pursuant to the customer's specifications and the number
of die tested per wafer. Assembly services are priced competitively against the
market and vary depending on such factors as material cost and depreciation
expense. Design costs are not material but when incurred are 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 almost all of our net revenues in
1997, 1998 and 1999. In 1998, our four largest customers, Analog Devices, Inc.,
Broadcom Corporation, Chartered Semiconductor Manufacturing Ltd (our affiliate)
and Cirrus Logic, Inc. each represented in excess of 10% of net revenues and in
the aggregate represented 63.9% of our net revenues. In 1999, our four largest
customers, Analog Devices, Broadcom, Chartered Semiconductor Manufacturing Ltd
and Level One each represented in excess of 8% of our net revenues and in the
aggregate represented 66.8% of our net revenues. Chartered Semiconductor
Manufacturing Ltd accounted for 20.9% and 16.4% of our net revenues in 1998 and
1999, respectively. We anticipate that our ten largest customers will continue
to account for a high percentage of our net revenues for the foreseable future.
In 1997, 1998 and 1999, 24.3%, 24.5% and 16.4% of our net revenues were derived
from sales of test or assembly services to our affiliates, principally Chartered
Semiconductor Manufacturing Ltd.

    The following table sets forth some of our customers:

<TABLE>
<CAPTION>

    <S>                                <C>                                      <C>
    Actel Corporation                  Dallas Semiconductor Corporation         PMC-Sierra, Inc.
    Advanced System Products, Inc.     Ericsson Components AB                   Philips Electronics Asia
    Alcatel Microelectronics N.V.      Fairchild Semiconductor                    Pacific Pte Ltd.
    Analog Devices, Inc.               International, Inc.                      Sigmatel, Inc.
    Broadcom Corporation               Infineon Technologies Asia               ST Microelectronics Pte Ltd.
    Centillium Technology              Pacific Pte Ltd.                         Standard Microsystems
      Corporation                      Level One Communications, Inc.             Corporation
    Chip Express Corporation           Marvell Technology Group Ltd.            Synaptics, Inc.
    Cirrus Logic, Inc.                 Motorola Inc.                            TDK Corporation
    Conexant Systems, Inc.             National Semiconductor Corporation       TeraLogic, Incorporated
    Chartered Semiconductor            Nortel Networks Corporation              Texas Instruments Incorporated
      Manufacturing Ltd.               Oak Technology, Inc.                     Wolfson Microelectronics Ltd.

</TABLE>


                                       10
<PAGE>


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

                                                 Year Ended
                                                December 31,
                                      -------------------------------
                                       1997         1998        1999
                                      ------       ------      ------
       Communications.......           19.6%        38.6%       60.9%
       Personal Computers...           67.6         49.7        32.1
       Other................           12.8         11.7         7.0
                                      ------       ------      ------
         Total..............          100.0%       100.0%      100.0%
                                      ======       ======      ======

    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.

                                                 Year Ended
                                                December 31,
                                      -------------------------------
         Geographical Area             1997         1998        1999
       ---------------------          ------       ------      ------
       United States........           67.8%        64.1%       70.2%
       Europe...............            0.0          0.0         3.8
       Singapore............           24.4         24.6        21.2
       Rest of Asia.........            7.8         11.3         4.8
                                      ------       ------      ------
         Total..............          100.0%       100.0%      100.0%
                                      ======       ======      ======

    Our customers generally do not place their purchase orders far in advance.
As a result, we do not typically operate with any significant backlog.

Customer Service

    We place a strong emphasis on quality customer service which we believe is a
significant factor in our customer's selection of us for their test and assembly
services. 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 numerous awards in the area of customer service from our
customers, including Broadcom, Cirrus Logic, Hewlett-Packard, Level One and TDK
Corporation.

    Our objective is to work very closely with our customers so that they
consider us an integral, strategic partner in their business. For example, we
work closely with our customers during the pre-production period by providing
technical input and guidance to assist in the development of test programs and
packages. Our computer software enables customers to obtain information
regarding work in process via the Internet. We have located our assembly design
center in Milpitas, California and have recently established a test development
center in San Jose, California to enable us to work more closely with a large
number of our customers who are located in the U.S.

Quality Control

    Customers require that our facilities and procedures undergo a stringent
vendor qualification process. The qualification process typically takes from two
to six weeks but can take longer depending on the requirements of the customer.
For test qualification, a process known as correlation is first undertaken.
During this correlation 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.

    We maintain a quality control staff comprised of engineers, technicians and
other employees whose responsibility is to monitor our test and assembly
processes to ensure they meet our quality standards. Our in-house laboratory is
equipped with advanced analytical tools and provides the necessary equipment and


                                       11
<PAGE>


resources for our research and development and engineering staff to continuously
enhance product quality and process improvement.

    Our test and assembly operations are undertaken in clean rooms where air
purity, temperature and humidity are controlled. To ensure stability and
integrity of our operations, we maintain clean rooms at our facilities that meet
U.S. federal 209E class 10,000 and 100,000 standards. We may in the future
experience production interruptions due to technical problems in the clean room
environment. Any interruption in our operations could have a material adverse
effect on our results of operations.

    Our test and assembly operations in Singapore are ISO 9001, 9002 and 14001
certified. All three standards are issued and certified by the International
Standards Organization. ISO 14001 is an international standard on environmental
management system, to support environmental protection and prevention of
pollution in balance with socio-economic needs. ISO 9002 standards set forth
what is required to ensure production of quality products and services. ISO 9001
standards set forth a quality management system and address design, development,
production, installation and servicing. The ISO certification process involves
periodically subjecting production processes and quality management systems to
stringent third party review and verification. ISO certification is required for
sales of products to certain customers that look to an ISO certification as a
threshold indication of our quality control standards. In addition, we attained
Level 1 Semiconductor Assembly Council, or SAC, certification in November 1999.
SAC certification is one of the most prestigious certifications in the
semiconductors manufacturing industry.

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
that are much larger in size. These competitors' facilities are primarily
located in Asia and include Advanced Semiconductor Engineering, Inc. (Taiwan),
Amkor Technology, Inc. (Korea and Philippines), ASE Test Limited (Taiwan and
Malaysia), ASAT, Ltd. (Hong Kong), ChipPAC Incorporated (Korea), Siliconware
Precision Industries Co., Ltd. (Taiwan), and Shinko Electric Industries Co. Ltd.
(Japan).

    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.

    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


                                       12

<PAGE>


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 9.
Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Risk Factors -- We may not be able to compete successfully in our
industry."

Intellectual Property

    Our operational success will depend in part on the ability to develop and
protect our intellectual property. We currently have one issued patent and we
have applied for 15 additional patents in the United States 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 expect to file patent
applications primarily in the United States, Singapore, Taiwan and the European
Union, but may also file in other countries to protect our proprietary
technologies, where appropriate.

    We have licensed patent rights from Motorola, Inc. to use technology in
manufacturing BGA packages under an agreement which will expire in 2002 and is
subject to renewal. Under this agreement, we are required to pay Motorola a
royalty based upon the number of pads on each BGA package.

    When we are aware of intellectual property of others that may pertain to or
affect our business, we will 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 during
the testing process and to avoid infringement of existing and future
intellectual property of others. 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.

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

    o    stop using certain processes;

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

    o    pay substantial damages;

    o    develop non-infringing technologies; or

    o    attempt to acquire licenses to use the infringed technology.


                                       13

<PAGE>

    As the number of patents, copyrights and other intellectual property rights
in our industry increases, and as the coverage of these rights and the
functionality of the packages in the market further overlap, we believe that
companies in our industry may face more frequent patent infringement claims.
Although there are no pending or threatened intellectual property lawsuits
against us, we may face litigation or patent infringement claims in the future.
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.

    A third party claiming infringement may also obtain an injunction or other
equitable relief, which could effectively block the distribution or sale of
allegedly infringing packages. Although we may seek licenses from 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.

Environmental Matters and Compliance

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

Item 2.  Description of Property

    We presently operate from a 560,000 square foot 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 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.

    In addition to our headquarters in Singapore, we also have an assembly
design center in Milpitas, California and a test development center in San Jose,
California.

Equipment

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

    Equipment commodity teams comprising employees from each of engineering,
maintenance and purchasing have been formed to manage and procure equipment that
meet our customers' current and future needs. The teams conduct a regular review
of future technology roadmaps, cost performance targets, which


                                       14

<PAGE>

include cost of spares, uptime and speed, as well as upgradability and
flexibility. The teams' activities also include regular benchmarking, setting
expectations and design requirements for future generations of equipment and
beta-site testing of equipment. These activities provide a basis for us to
determine our ongoing equipment needs.

    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 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 9.
Management's Discussion and Analysis of Financial Condition and Results of
Operations -- 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, particular semiconductors can be tested on only a
limited number of specially configured testers. As part of the qualification
process, customers will specify the equipment on which their semiconductors may
be tested, and we then develop test program conversion software that enable us
to test these semiconductors on multiple equipment platforms. This portability
between testers enables us to allocate semiconductors tested across our
available test capability and thereby improve capacity utilization rates. We
purchase testing equipment from major international manufacturers, including
Advantest Singapore Pte Ltd, Credence Systems Corporation, Agilent Technologies,
LTX Corporation, Schlumberger Measurement & Systems Pte Ltd and Teradyne Inc.

    We operate approximately 189 testers, including 135 for mixed-signal
testing, 40 for digital testing and 14 for memory testing and in certain cases
where a customer has specified testing equipment that is not widely applicable
to other products that we test, we have required the customer to provide the
equipment on a consignment basis. Presently 24 of the aggregate 189 testers we
operate are on consignment and 22 of the 24 are used for mixed-signal testing.

    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. We own and operate approximately 377 wire bonders and approximately 38
mold systems. Certain of our wire bonders allow for interchangeability between
lead frame and laminate packages. We purchase wire bonders from major
international manufacturers, including Kulicke & Soffa Industries, Inc. and ESEC
Asia Pacific Pte Ltd. We purchase mold systems from major international
manufacturers, including Apic Yamada Corporation and Dai-Ichi Seiko Co Ltd. We
have recently purchased gallium arsenide wafer saw and backgrind equipment.

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. However, our customers are generally not responsible for any unused
raw materials that result from a forecast exceeding actual orders. We work
closely with our primary suppliers, providing them with


                                       15
<PAGE>


a six-month rolling forecast and weekly requirement schedules. Accordingly, our
suppliers are better able to supply us with raw materials. We are not dependent
on any one supplier for a substantial portion of our raw material requirements.
The unavailability of an adequate supply of raw materials could materially and
adversely affect our business, financial condition and results of operations.
See " Item 9. Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Risk Factors -- We are dependent on raw material
suppliers and do not have any long-term supply contracts with them."

Item 3.  Legal Proceedings.

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

Item 4.  Control of Registrant.

    As of March 15, 2000, Singapore Technologies Pte Ltd beneficially owns
approximately 72.5% of our ordinary shares. Singapore Technologies Pte Ltd is
wholly-owned by Temasek Holdings (Private) Limited, the principal holding
company of the Government of Singapore. 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 March 15, 2000 (i) by each person known to us to
own beneficially more than 10% of our outstanding ordinary shares and (ii) by
all directors and executive officers as a group.

    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. 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.

                                                       Number of
                                                         Shares      Percentage
                                                      Beneficially  Beneficially
          Name of Beneficial Owner                       Owned         Owned
----------------------------------------------------  ------------  ------------
Singapore Technologies Pte Ltd(1)...................  511,532,398      52.1%
Singapore Technologies Semiconductors Pte Ltd(1)....  200,695,652      20.4%
EDB Investments Pte Ltd(2)..........................   48,021,950       4.9%
All directors and executive officers as a group(3)..   13,676,500       1.4%


----------

(1) Temasek Holdings (Private) Limited, the principal holding company of the
    Government of Singapore, owns 78.3% of Singapore Technologies Pte Ltd and
    owns 100% of Singapore Technologies Holdings Ltd which owns the remaining
    21.7% 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) EDB Investments Pte Ltd is a wholly owned investment holding arm of the
    Economic Development Board, a Singapore government agency. The Economic
    Development Board may therefore be deemed to beneficially own the shares
    directly owned by EDB Investments Pte Ltd.
(3) In addition, all directors and executive officers as a group own 10,383,500
    options under the Share Option Plan.


                                       16
<PAGE>

Item 5.  Nature of Trading Market.

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

     As of March 15, 2000, there were approximately 8,389 shareholders on record
of the ordinary shares, of which 7,987 holders were registered in Singapore and
40 were registered in the United States, and 134 ADR-holders on record of the
ADRs, of which approximately 129 were registered in the United States. Because
many of our ordinary shares and ADRs were held by brokers and other institutions
on behalf of shareholders in street name, we believe that the number of
beneficial holders of our ordinary shares and ADRs is substantially higher.

     On March 27, 2000, the closing price of our ordinary shares on the SGX was
S$9.30 and on NASDAQ was $53 9/16.

Item 6.  Exchange Controls and Other Limitations Affecting Security Holders.

     Currently, there are no exchange control restrictions in Singapore.

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

     The Companies Act and the Singapore Code on Take-Overs and Mergers regulate
the acquisition of ordinary shares of public companies and contain certain
provisions that may delay, deter or prevent a future takeover or change in
control of our company. Any person acquiring an interest, either on his own or
together with parties acting in concert with him, in 25% or more of our voting
shares must extend a takeover offer for the remaining voting shares in
accordance with the provisions of the Singapore Code on Take-Overs and Mergers.
"Parties acting in concert" include a company and its related and associated
companies, a company and its directors (including their relatives), a company
and its pension funds, a person and any investment company, unit trust or other
fund whose investment such person manages on a discretionary basis, and a
financial advisor and its client in respect of shares held by the financial
advisor and shares in the client held by funds managed by the financial advisor
on a discretionary basis. An offer for consideration other than cash must be
accompanied by a cash alternative at not less than the highest price paid by the
offeror or parties acting in concert with the offeror within the preceding 12
months. A mandatory takeover offer is also required to be made if a person
holding, either on his own or together with parties acting in concert with him,
between 25% and 50% of the voting shares acquires additional voting shares
representing more than 3% of the voting shares in any 12 month period.

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


                                       17
<PAGE>

Item 7.  Taxation

Singapore Tax Considerations

     In this section we discuss the material Singapore income tax, stamp duty
and estate duty consequences of the purchase, ownership and disposal of the
ordinary shares or ADSs, collectively, the "securities", to a holder of the
securities that is not resident in Singapore. This discussion 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 advisers 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

General

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

     Subject to the provisions of any applicable double taxation treaty 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 at a rate
of 25.5%, or generally 15% in the case of interest, royalty and rental of
movable equipment.

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

Taxation of Dividends

     If we pay dividends on the ordinary shares or ADSs out of the tax exempt
income received because of our pioneer status or out of our income subject to a
concessionary tax rate, if any, such dividends will be free of Singapore tax in
the hands of the holders of the ordinary shares and ADSs. See "Item 9.
Management's Discussion and Analysis of Financial Condition and Results of
Operation -- Overview" for a discussion of our pioneer status.

     Where the dividend is declared out of the above tax exempt income or income
subject to tax at a concessionary rate, we would have to obtain agreement from
the Inland Revenue Authority of Singapore confirming the amount of income
available for distribution of tax exempt dividends. Before this agreement has
been obtained, the Comptroller of Income Tax in Singapore may issue a
provisional assessment of our tax exempt income, and we will be able to
distribute tax exempt dividends based on this provisional assessment. Exempt
dividends paid by us in excess of our finalised tax exempt income will be deemed
distributed out of our ordinary income and will be subject to the treatment
outlined below.

     We pay tax on our non-tax exempt income at the prevailing corporate tax
rate, which is currently 25.5%. This tax paid by us is in effect imputed to, and
deemed paid on behalf of, our shareholders. Thus, if we pay dividends on our
ordinary shares out of our non-tax exempt income, our shareholders receive the
dividends net of the tax paid by us. Dividends received by either a resident or
non-resident of Singapore are


                                       18
<PAGE>


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

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

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

Gains on Disposal of the Ordinary Shares or ADSs

     Singapore does not impose tax on capital gains. However, gains or profits
may be construed to be of an income nature and subject to tax, especially if
they arise from activities which the Inland Revenue Authority of Singapore
regards as the carrying on of a trade in Singapore, or if they are short-term
gains from the sale of real property or shares in unlisted companies with
substantial real property or real property-related assets in Singapore. Thus,
any gains or profits from the disposal of the ordinary shares or ADSs are not
taxable in Singapore unless the seller is regarded as carrying on a trade in
securities in Singapore, in which case the disposal profits would be taxable as
trading profits rather than capital gains.

Stamp Duty

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

Estate Duty

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

     Prospective purchasers of ordinary shares or ADSs who are individuals,
whether or not domiciled in Singapore, should consult their own tax advisors
regarding the Singapore estate duty consequences of their investment.


                                       19
<PAGE>


Item 8.  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 9. Management's Discussion and Analysis of Financial Condition and Results
of Operations" included elsewhere in this Annual Report. The selected
consolidated financial data are derived from our consolidated financial
statements. The selected consolidated financial data as of December 31, 1995,
1996 and 1997 and for the fiscal years ended December 31, 1995 and 1996 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.

<TABLE>
<CAPTION>
                                                                 Year Ended December 31,
                                                                 -----------------------
                                                 1995        1996        1997       1998(1)     1999
                                              ----------   --------    --------    --------   ---------
                                              (in thousands, except per ordinary share and per ADS data)
<S>                                              <C>       <C>         <C>         <C>        <C>
Income Statement Data:
Net revenues..................................   $ 8,058   $ 32,185    $ 88,373    $113,920   $201,098
Cost of revenues..............................     7,912     34,061      67,848      87,066    132,889
                                                 -------   --------    --------    --------   --------
Gross profit (loss)                                  146     (1,876)     20,525      26,854     68,209
                                                 -------   --------    --------    --------   --------
Operating expenses:
  Selling, general and administrative.........     3,473      6,062      13,858      16,772     28,437
  Research and development....................        --         --       2,157       3,482      7,283
  Stock-based compensation....................        --         --          --         384     25,327
  Other general expenses (income), net........        --       (139)         17        (582)        37
                                                 -------   --------    --------    --------   --------
    Total operating expenses..................     3,473      5,923      16,032      20,056     61,084
                                                 -------   --------    --------    --------   --------
Operating income (loss).......................    (3,327)    (7,799)      4,493       6,798      7,125
Other income (expense):
  Interest expense, net.......................        19       (401)     (3,307)     (8,244)    (5,534)
  Foreign currency exchange gain (loss).......       (35)       604      (1,258)        857      1,385
  Other non-operating income (expense), net...        --         41          62       2,103      2,379
                                                 -------   --------    --------    --------   --------
    Total other income (expense)..............       (16)       244      (4,503)     (5,284)    (1,770)
                                                 -------   --------    --------    --------   --------
Income (loss) before income taxes.............    (3,343)    (7,555)        (10)      1,514      5,355
Income tax expense............................        --         --        (159)       (390)      (500)
                                                 -------   --------    --------    --------   --------
Net income (loss).............................   $(3,343)  $ (7,555)   $   (169)   $  1,124      4,855
Net income (loss) per ordinary share(2):
  Basic.......................................   $ (0.15)  $  (0.02)   $     --    $     --   $   0.01
                                                 -------   --------    --------    --------   --------
  Diluted.....................................   $ (0.15)  $  (0.02)   $     --    $     --   $   0.01
                                                 -------   --------    --------    --------   --------
Net income (loss) per ADS(2):
  Basic.......................................   $ (1.49)  $  (0.21)   $     --    $   0.02   $   0.06
                                                 -------   --------    --------    --------   --------
  Diluted.....................................   $ (1.49)  $  (0.21)   $     --    $   0.02   $   0.06
                                                 -------   --------    --------    --------   --------
Ordinary shares (in thousands) used in per
  ordinary share calculation(2):
  Basic.......................................    22,500    352,032     368,000     669,671    770,259
  Diluted.....................................    22,500    352,032     368,000     670,976    786,725
ADSs (in thousands) used in per ADS
  calculation(2):
  Basic.......................................     2,250    35,203      36,800       66,967     77,026
  Diluted.....................................     2,250    35,203      36,800       67,098     78,672
</TABLE>

----------
(1) Effective July 1, 1998, we changed our functional currency from the
    Singapore dollar to the U.S. dollar. See Note 2(d) to our consolidated
    financial statements.


<TABLE>
<CAPTION>
                                                                 Year Ended December 31,
                                                                 -----------------------
                                                 1995        1996        1997       1998(1)     1999
                                              ----------   --------    --------    --------   ---------
                                                                    (in thousands)
<S>                                              <C>      <C>        <C>           <C>        <C>
Balance Sheet Data:
Cash and cash equivalents....................    $ 9,008  $  2,422   $   1,051     $ 12,692   $ 16,568
Working capital (deficit)....................     (4,709)  (43,726)   (140,474)     (24,606)   (74,030)
Total assets.................................     50,634    114,372    225,477      236,720    351,965
Short-term debt and current
installments of
  long-term debt.............................         --     37,071    130,165       50,000     67,420
Long-term debt...............................         --         --         --       54,282     46,360
Shareholders' equity.........................     28,417     54,714     45,706      108,038    141,184
</TABLE>

    We have never declared or paid any cash dividends on our ordinary shares.


                                       20
<PAGE>


Item 9.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations.

    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 "--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.

Overview

    We derive revenues from test services and assembly of leaded and laminate
packages. Net revenue represents the invoiced value of services rendered,
excluding goods and services tax, net of returns, trade discounts and
allowances. We recognize revenue upon shipment of semiconductors for which we
have provided services. Our net revenues from assembly services have grown at a
faster rate than our net revenues from testing services and we expect this trend
to continue as we provide more turnkey services to our customers. When we
provide full turnkey services, we perform both test and assembly services on the
same device. For that device, the unit price charged for assembly is generally
twice that of the unit price charged for testing. Therefore revenues per unit
from assembly services increase in absolute dollars more than for testing
services. While test services typically command lower unit prices than assembly
services, test services generate higher gross margins than assembly services.

    The semiconductor industry is characterized by price erosion which can
impact our revenue and gross margin, unless we improve our capacity utilization
and reduce costs. Prices of our products of 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. We have to continue to develop and offer
increasingly complex test and assembly services that meet the requirements of
our customers.

    From 1996 to 1999, our net revenues grew from $32.2 million to $201.1
million. From 1996 to 1998, almost all of our net revenues were derived from
test services and assembly of leaded packages. We derived revenues from assembly
of laminate packages for the first time in October 1998. We provide a full range
of test services and have developed substantial expertise in testing
mixed-signal and high performance digital semiconductors. We have been
successful in attracting new customers with these testing capabilities and then
expanding our relationship with such customers to include assembly services
tailored to their needs. We intend to continue to expand our test and assembly
operations in order to position ourselves to meet increased demand for
outsourced test and assembly services.

    Our results of operations are generally affected by the capital-intensive
nature of our business. Most of our costs are fixed as our variable costs are
limited to the costs of materials, payroll and supplies. Our primary fixed costs
are for test and assembly equipment. Testers typically cost between $2.0 million
and $4.0 million each, compared with wire bonders which typically cost $100,000
each. Increases or decreases in capacity utilization rates can have a
significant effect on gross profit margins since the unit cost of test and
assembly services generally decreases as fixed charges, such as depreciation
expense for the equipment, are allocated over a larger number of units.
Depreciation expense as a percentage of revenues was 27.3%, 34.4% and 23.3% for
1997, 1998 and 1999. Our results of operations are also affected by declines
over time in the average selling prices for packages. At times in the past, we
have been able to offset, at least in part, the effect of such declines on our
gross profit margins by successfully developing and marketing new higher margin
packages, such as advanced leadframe and laminate packages, and by taking
advantage of economies of scale and higher productivity resulting from higher
volumes. However, we cannot assure you that we will be successful at offsetting
any such declines in the future.

    Our operating expenses consist principally of selling, general and
administrative expenses which include payroll-related expenses for
administrative staff, facilities-related expenses, management fees to our parent
Singapore Technologies Pte Ltd, marketing expenses and provisions for bad debts
on accounts receivable. Our operating expenses also include research and
development expenditures which have been


                                       21
<PAGE>


focused in two areas:

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

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

    We are a part of the Singapore Technologies Group which provides us with
certain direct and indirect benefits. We have benefited from our close working
relationship with Chartered Semiconductor Manufacturing Ltd, which is also
majority-owned by Singapore Technologies Pte Ltd and one of our major customers.
In addition, from time to time, Singapore Technologies Pte Ltd and its
affiliates have provided us with debt and equity financing. Also, Singapore
Technologies Pte Ltd provides us with certain management services, including
corporate secretarial, internal audit, training, executive resources and
treasury services. We pay Singapore Technologies Pte Ltd an annual management
fee for these services. Prior to December 1999, this fee was based on certain
percentages of capital employed, sales, manpower and payroll. The new service
agreement into which we entered in December 1999 is a formula and service based
fee arrangement. Certain general and administrative expenses of Singapore
Technologies Assembly and Test Services, Inc., our subsidiary, are borne and
recharged to us by Chartered Semiconductor Manufacturing Inc., a United States
incorporated affiliate of Singapore Technologies Pte Ltd. These expenses
amounted to $2.2 million, $1.0 million and $1.3 million for 1997, 1998 and 1999,
respectively. We expect that this amount will decrease significantly in the
future.

    Prior to December 6, 1999, we had an Employees' Share Ownership Scheme which
was accounted for in accordance with variable plan accounting. As a consequence,
we recognized stock based compensation expense for options and shares granted to
employees under this scheme of $0.4 million and $25.3 million during the years
ended December 31, 1998 and 1999, respectively. The stock based compensation
expense for the year ended December 31, 1999 included a $15.7 million charge
recognised as a result of the termination of this scheme on December 6, 1999.
See Note 20 to our consolidated financial statements.

    We have recognized stock-based compensation expense for options granted
under the Share Option Plan in accordance with fixed plan accounting. Reported
stock-based compensation expense represents the difference between the exercise
price of employee share option grants and the deemed fair 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 Singapore Economic
Expansion Incentives (Relief from Income Tax) Act, Chapter 86 ("Relief from
Income Tax Act"), for approved subcontract assembly and testing of integrated
circuits, including wafer probe services, in Singapore for a five-year period
from January 1, 1996. During the pioneer enterprise status period income from
subcontract assembly and testing of integrated circuits, including wafer probe
services, is exempt from Singapore income tax, subject to compliance with the
conditions stated in the pioneer certificate and the Relief from Income Tax Act.
Income from any other sources is taxed at prevailing Singapore corporate tax
rates. Our pioneer status is renewable for an additional three years subject to
compliance with certain conditions. We expect that we will be in compliance with
such renewal conditions at the time of determining renewal eligibility.

    Until June 30, 1998, our functional currency was Singapore dollars.
Effective July 1, 1998, we changed our functional currency to the U.S. dollar.

    Historically, the Singapore dollar was our functional currency because the
Singapore dollar was the currency of the primary economic environment in which
our operations were conducted. However, significant changes in economic facts
necessitated a change in our functional currency from the Singapore


                                       22
<PAGE>


dollar to the U.S. dollar. Our business has changed in that a more significant
portion of our net revenues is derived from companies based outside of
Singapore, principally in the United States. The interdependencies among us and
our parent and other Singapore government controlled entities continue to
diminish. There are ongoing changes in sources of financing from Singapore
dollars to U.S. dollars. With more of our transactions and cash flows
denominated in U.S. dollars, we changed our functional currency effective July
1, 1998 from the Singapore dollar to the U.S. dollar. Please see Note 2(d) to
our consolidated financial statements.

    The change in functional currency was recognized through the translation of
Singapore dollar amounts of our assets and liabilities at June 30, 1998 to U.S.
dollars on July 1, 1998. In the case of our non-monetary assets such as
property, plant and equipment, those U.S. dollar amounts became the accounting
basis for those assets at July 1, 1998 and for subsequent periods. The $9.7
million cumulative translation adjustment at July 1, 1998 in shareholders'
equity prior to the change remains as a separate component of accumulated
comprehensive income (loss).

    Assets and liabilities denominated in other currencies are converted into
the functional currency at the rates prevailing at the balance sheet date.
Income and expenses in other 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. Prior to the
change in our functional currency, exchange gains and losses arose from
transactions denominated in currencies other than Singapore dollars, principally
in U.S. dollars. Following the change in our functional currency, exchange gains
and losses arose from transactions denominated in currencies other than U.S.
dollars, principally in Singapore dollars.

Risk Factors

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

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:

    o    general economic conditions in the semiconductor industry;

    o    a shift by IDMs between internal and outsourced test and assembly
         services;

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

    o    the seasonality of the semiconductor industry;

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

    o    the rescheduling or cancellation of large orders;

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

    o    changes in capacity utilization;

    o    the rapid erosion of the selling prices of packages;

    o    changes in our product mix;

    o    the timing of expenditures in anticipation of future orders;


                                       23
<PAGE>


    o    possible disruptions caused by the installation of new equipment;

    o    the inability to obtain adequate equipment on a timely basis; and

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

    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 ADSs.

    For example, during the second quarter of 1998, 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. 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 "-- Results of Operations -- Quarterly
Results."

Downturns in the semiconductor industry will adversely affect our operating
results.

    Our profits are affected significantly by conditions in the semiconductor
industry. The market for semiconductors is categorized by:

    o    rapid technological change;

    o    evolving industry standards;

    o    intense competition; and

    o    fluctuations in end-user demand.

    In addition, the semiconductor industry is cyclical and, at various times,
has experienced significant downturns because of production overcapacity and
reduced unit demand. Any future downturn in the semiconductor industry is likely
to adversely affect our business, financial condition and results of operations.
Our financial results for the second and third quarters of 1998 were adversely
affected by such a downturn.

Decisions by our 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 is likely to adversely affect our business, financial condition and
results of operations.

Our profitability is affected by capacity utilization rates.

    As a result of the capital intensive nature of our business, our operations
are characterized by high fixed costs. Consequently, insufficient utilization of
installed capacity can have a material adverse effect on our profitability.
Therefore, our ability to maintain or increase our profitability will continue
to be dependent, in large part, upon our ability to maintain high capacity
utilization rates. Capacity utilization rates may be affected by a number of
factors and circumstances, including:


                                       24
<PAGE>


    o    installation of new equipment in anticipation of future business;

    o    overall industry conditions;

    o    the level of customer orders;

    o    operating efficiencies;

    o    mechanical failure;

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

    o    disruption in supply of raw materials; or

    o    fire or other natural disasters.

    For example, in 1998, our capacity utilization rates were negatively
affected by a decrease in demand for our test and assembly services resulting
from a downturn in the overall semiconductor industry. We cannot assure you that
our capacity utilization rates will not be materially adversely affected by
future declines in the semiconductor industry, declines in industries that
purchase semiconductors or other factors. Any inability on our part to maintain
or increase capacity utilization rates could have a material adverse effect on
our business, financial condition and results of operations.

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 almost all of our net
revenues. Our ten largest customers accounted for almost all of our net revenues
in 1997, 1998 and 1999. In 1998, our four largest customers, Analog Devices,
Inc., Broadcom Corporation, Chartered Semiconductor Manufacturing Ltd (our
affiliate) and Cirrus Logic, Inc. each represented in excess of 10% of net
revenues and in the aggregate represented 63.9% of our net revenues. In the year
ended December 31, 1999, our four largest customers, Analog Devices, Broadcom,
Chartered Semiconductor Manufacturing Ltd and Level One Communications, Inc.
each represented in excess of 8% of our net revenues and in the aggregate
represented 66.8% of our net revenues. Chartered Semiconductor Manufacturing Ltd
accounted for 20.9% and 16.4% of our net revenues in 1998 and 1999,
respectively. Also, in 1997, 1998 and 1999, 67.8%, 64.1% and 70.2% of our net
revenues came from customers based in the United States. We anticipate that for
the forseeable 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 1. Description of Business -- Customers."

A decrease in demand for communications equipment and personal computers may
significantly decrease the demand for our services.

    A significant percentage of our net revenues is derived from customers who
use our test or assembly services for semiconductors used in communications
equipment and personal computers. Any significant decrease in the demand for
communications equipment or personal computers may decrease the demand for our
services and could seriously harm our company. In addition, the declining
average selling price of communications equipment and personal computers places
significant pressure on the prices of the components that are used in this
equipment. If the average selling prices of communications equipment and
personal computers continue to decrease, the pricing pressure on services
provided by us may reduce our net revenues and therefore significantly reduce
our gross profit margin.


                                       25

<PAGE>


Our customers are not contractually obligated to buy our services or products.
We do not have any significant backlog.

    None of our customers is obligated, pursuant to any contractual commitment
or otherwise, to purchase any minimum amount of our test or assembly services 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. However, 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 be unable to obtain testing or assembly equipment when we require it.

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

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

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 and adversely affected.

The testing process is complex and therefore more prone to "bugs" and operator
error.

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


                                       26

<PAGE>


We may not be able to develop or access leading technology which may affect our
ability to compete effectively.

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

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

The assembly process is complex and our production yields may suffer from
defective packages and the introduction of new packages.

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

    o    contaminants in the manufacturing environment;

    o    human error;

    o    equipment malfunction;

    o    defective raw materials; or

    o    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 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 1.
Description of Business -- 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.

We expect to incur significant capital expenditures in the future and therefore
may require additional financing in the future.

    To grow our business, we intend to increase our test and assembly capacity.
This will require


                                       27

<PAGE>


substantial capital expenditures for additional equipment. We will also be
required to recruit and train new employees. These expenditures will likely be
made in advance of increased sales. We cannot assure you that our net revenues
will increase after these expenditures. Our failure to increase our net revenues
after these expenditures could have a material adverse effect on our business,
financial condition and results of operations.

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

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

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

    o    limit our ability to pursue our growth plan;

    o    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

    o    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 limited operating history upon which you may evaluate us and have had a
history of losses.

    We have limited operating history upon which you may evaluate us. We began
operations in January 1995. In 1995, our net revenues were derived primarily
from wafer probe services performed for Chartered Semiconductor Manufacturing
Ltd, our affiliate. We experienced net losses in our first three years of
operations. Although we have grown rapidly and now provide a full range of test
and assembly services to a number of unaffiliated customers, we continue to face
substantial risks, expenses and difficulties as described elsewhere in this
Annual Report. If we are unable to successfully address these risks and
uncertainties, our business, financial condition and results of operations could
suffer.

We are dependent on raw material suppliers and do not have any long-term supply
contracts with them.

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

We may not be able to compete successfully in our industry.

    The independent semiconductor test and assembly service industry is very
competitive and diverse and requires us to be capable of testing increasingly
complex semiconductors as well as bringing the most technologically advanced
packages to market as quickly as our competitors. The industry is comprised of
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.
(Taiwan), Amkor Technology, Inc. (Korea and the Philippines), ASE Test Limited
(Taiwan and Malaysia), ASAT Ltd. (Hong Kong), ChipPAC Incorporated (Korea),
Siliconware Precision Industries Co., Ltd. (Taiwan) and Shinko Electric
Industries Co. Ltd. (Japan) and their facilities are primarily located in Asia.

    Each of these companies has significant manufacturing capacity, financial
resources, research and


                                       28
<PAGE>


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:

    o    their desire to realise higher utilization of their existing test and
         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 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 business,
financial condition and results of operations will not be adversely affected by
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 protect our proprietary
technology and the proprietary technology of our customers entrusted to us by
our customers during the testing process. We seek to protect proprietary
information and know-how through the use of confidentiality and non-disclosure
agreements and limited access to and distribution of proprietary information. We
also use trade secrets to protect our proprietary information. We currently have
one issued patent and we have applied for 15 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, such as Taiwan and China, will protect our intellectual
property rights to the same extent as the United States. Additionally, we cannot
assure you that our competitors will not develop, patent or gain access to
similar know-how and technology, or reverse engineer our assembly services, or
that any confidentiality and non-disclosure agreements upon which we rely to
protect our trade secrets and other proprietary information will be adequate to
protect our proprietary technology. 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. We have established
procedures designed to help prevent us from infringing the patented technology
of our competitors or other parties. When we are aware of intellectual property
of others that may pertain to or affect our business, we will attempt to either
avoid processes protected by existing patents, 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 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. Although there are no pending or threatened intellectual
property lawsuits against us, we may face litigation or patent infringement
claims in the future. In the event that any valid claim is made against us, we
could be required to:


                                       29
<PAGE>


    o    stop using certain processes;

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

    o    pay substantial damages;

    o    develop non-infringing technologies; or

    o    attempt to acquire licenses to use the infringed technology.

    Although 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 and adversely affected.

Singapore Technologies Pte Ltd controls us and thereby may delay, deter or
prevent acts that would result in a change of control.

    As of March 15, 2000, Singapore Technologies Pte Ltd beneficially owned
approximately 72.5% of our ordinary shares. Singapore Technologies Pte Ltd, is
wholly-owned by Temasek Holdings (Private) Limited, the principal holding
company of the Government of Singapore. 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.

    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.

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 engage in material
transactions with the Government of Singapore, Singapore Technologies Pte Ltd,
EDBI and Chartered Semiconductor Manufacturing Ltd, which is controlled by
Singapore Technologies Pte Ltd and is one of our key customers. Although any new
material related party transaction requires the approval of a majority of our
Board of Directors and separate approval by the Audit Committee, circumstances
may arise in which the interests of our affiliates may conflict with the
interests of our other shareholders. In addition, both EDBI and Singapore
Technologies Pte Ltd make investments in various companies. They have invested
in the past, and may invest in the future, in entities that compete with us.
Currently, Vertex Asia Ltd and Vertex Investment (II) Ltd, affiliates of
Singapore Technologies Pte Ltd, have investments in United Test Assembly Center
(S) Pte Ltd, a Singapore-based provider of semiconductor assembly and testing
services for semiconductor logic/ASIC and memory products. In the context of
negotiating commercial


                                       30
<PAGE>


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
conflicts of interest will be resolved in our favor. See "Item 13. Interest of
Management in Certain Transactions."

    Sales to affiliates, principally to Chartered Semiconductor Manufacturing
Ltd, in 1997, 1998 and 1999 were approximately 24.3%, 24.5% and 16.4%,
respectively, of our net revenues. We expect the proportion of our net revenues
that is dependent on Chartered Semiconductor Manufacturing Ltd will decrease as
we continue to diversify our customer base, although we expect that Chartered
Semiconductor Manufacturing Ltd will continue to be an important customer.

We depend on certain key employees. Loss of certain of them could adversely
affect our business.

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

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.

Results of Operations

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

                                                     Year Ended December 31,
                                                   --------------------------
                                                    1997      1998      1999
                                                   ------    ------    ------
Net revenues.................................      100.0%    100.0%    100.0%
Cost of revenues.............................       76.7      76.4      66.1
                                                   ------    ------    ------
Gross profit (loss)..........................       23.1      23.6      33.9
                                                   ------    ------    ------
Operating expenses:
  Selling, general and administrative........       15.7      14.7      14.1
  Research and development...................        2.4       3.1       3.6
  Stock-based compensation...................         --       0.4      12.6
  Other general expenses (income), net.......         --      (0.5)       --
                                                   ------    ------    ------
    Total operating expenses.................       18.1      17.7      30.3
                                                   ------    ------    ------
Operating income (loss)......................        5.0       5.9       3.6
Other income (expense):
  Interest expense, net......................       (3.7)     (7.2)     (2.8)
  Foreign currency exchange gain (loss)             (1.4)      0.7       0.7
  Other non-operating income (expense), net..        0.1       1.9       1.2
                                                   ------    ------    ------
        Total other income (expense).........       (5.0)     (4.6)     (0.9)
                                                   ------    ------    ------
    Income (loss) before income taxes........       (0.0)      1.3       2.7
    Income tax expense.......................       (0.2)     (0.3)     (0.2)
                                                   ------    ------    ------
    Net income (loss)........................       (0.2)%     1.0%      2.5%
                                                   ------    ------    ------

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

    Net revenues. Net revenues increased 76.5% from $113.9 million in 1998 to
$201.1 million in 1999. This increase was primarily due to the increase in unit
volumes for test and assembly services. Net revenues from test services
increased 63.2% from $56.8 million in 1998 to $92.7 million in 1999. The
increase in test services net revenues was attributable primarily to growth in
test volumes reflecting


                                       31

<PAGE>


increased demand and expanded capacity. Revenues from assembly increased 89.8%
from $57.1 million in 1998 to $108.4 million in 1999. This increase was
primarily due to greater demand for leadframe packages and to a lesser extent
the introduction of laminate packages in October 1998.

    Cost of revenues and Gross profit margin. Cost of revenues increased 52.6%
from $87.1 million in 1998 to $132.9 million in 1999, primarily due to higher
depreciation expense as a result of placing into service additional test and
assembly equipment and costs associated with increased test and assembly unit
volumes. Depreciation expense increased from $39.5 million in 1998 to $46.7
million in 1999. Gross profit margin increased from 23.6% in 1998 to 33.9% in
1999. The increase in gross profit margin was attributable primarily to improved
utilization of test and assembly equipment.

    Selling, general and administrative expenses. Selling, general and
administrative expenses increased 69.0% from $16.8 million, or 14.7% of net
revenues, in 1998 to $28.4 million, or 14.1% of net revenues, in 1999. The
increase was mainly due to the addition of personnel, particularly in the United
States, including the addition of 12 employees in sales and marketing positions
to Singapore Technologies Assembly and Test Services, Inc.

    Research and development expenses. Research and development expenses
increased 108.6% from $3.5 million, or 3.1% of net revenues, in 1998 to $7.5
million, or 3.6% of net revenues, in 1999. The increase was attributable to
higher hardware and software depreciation ($1.5 million), supplies ($2.3
million) and salaries and benefits ($3.5 million), in part relating to the
establishment of the test development center in San Jose, California.

    Other income (expense). Other expense decreased 66.0% from $5.3 million in
1998 to $1.8 million in 1999 primarily due to a decrease in interest expense.
Interest expense, net for 1999 was $5.5 million compared to $8.2 million in
1998, as borrowings were reduced by $62.5 million from the proceeds of the
issuance of new shares to Singapore Technologies Pte Ltd and EDBI in March 1998
and the replacement of borrowings with a lower interest rate loan of S$90.0
million.

    Income tax expense. Income tax expense remains about the same at $0.4
million in 1998 and $0.5 million in 1999. The current income tax expense for
both periods is due to Singapore tax on rental and interest income and U.S. tax
on income generated by Singapore Technologies Assembly and Test Services, Inc in
the United States.

Year Ended December 31, 1997 Compared to Year Ended December 31, 1998

    Net revenues. Net revenues increased 28.8% from $88.4 million in 1997 to
$113.9 million in 1998. This increase was primarily due to the increase in unit
volumes for test and assembly services. Net revenues from test services
increased 19.8% from $47.4 million in 1997 to $56.8 million in 1998. The
increase in test services net revenues was attributable primarily to growth in
test volumes reflecting expanded capacity. Revenues from assembly increased
39.3% from $41.0 million in 1997 to $57.1 million in 1998. This increase was
primarily due to greater demand for leadframe packages and, to a lesser extent,
the introduction of laminate packages in October 1998.

    Cost of revenues and Gross profit margin. Cost of revenues increased 28.5%
from $67.8 million in 1997 to $87.1 million in 1998, primarily due to higher
depreciation as a result of placing into service additional test and assembly
equipment and costs associated with increased test and assembly unit volumes.
Depreciation expense increased from $24.1 million, or 27.3% of net revenues, in
1997 to $39.2 million, or 34.4% of net revenues, in 1998. Gross profit margin
increased from 23.1% in 1997 to 23.6% in 1998. The increase in gross profit
margin was attributable primarily to improved utilization of test and assembly
equipment.


                                       32
<PAGE>


    Selling, general and administrative expenses. Selling, general and
administrative expenses increased 20.9% from $13.9 million, or 15.7% of net
revenues, in 1997 to $16.8 million, or 14.7% of net revenues, in 1998. The
increase was mainly due to an increase in payroll-related expenses ($1.1
million), management fees to Singapore Technologies Pte Ltd ($0.1 million) and
other overhead expenses ($1.8 million), the major components of which are
facility related costs and sales and marketing expenses.

    Research and development expenses. Research and development expenses
increased 59.1% from $2.2 million, or 2.4% of net revenues, in 1997 to $3.5
million, or 3.1% of net revenues, in 1998. The increase was due mainly to higher
salaries and benefits ($0.6 million), depreciation of hardware and software
($0.5 million) and supplies ($0.2 million).

    Other income (expense). Other expense increased 17.8% from $4.5 million in
1997 to $5.3 million in 1998 primarily as a result of increased borrowings to
fund our capacity expansion program. Interest expense, net for 1998 was $8.2
million compared to $3.3 million in 1997. These expenses were offset in part by
a foreign currency exchange gain of $0.9 million compared to a foreign currency
exchange loss of $1.3 million in 1997. This loss was mainly attributable to the
strengthening of the U.S. dollar in 1997, which resulted in transaction losses
relating to our U.S. dollar denominated loan. Other non-operating income
(expense), net consist of government grant income, rental income and a provision
for relocation costs. In 1997, government grant income was $0.2 million compared
to $1.2 million in 1998 and rental income in 1997 was $0.3 million compared to
$0.8 million in 1998. We made a provision of $0.6 million in 1997 for relocation
costs associated with our move to our present facility.

    Income tax expense. Income tax expense increased 145.2% from $0.2 million in
1997 to $0.4 million in 1998. This was primarily due to the increase in rental
income from the lease of a portion of our facilities to TriTech Microelectronics
Ltd, our affiliate, and an increase in U.S. tax on income generated by Singapore
Technologies Assembly and Test Services, Inc. in the United States.


                                       33
<PAGE>


Quarterly Results

    The following table sets forth our unaudited results of operations for the
quarterly periods indicated. You should read the following table in conjunction
with our consolidated financial statements and related notes included elsewhere
in this Annual Report. The results of operations in any quarter are not
necessarily indicative of the results of any future period. We expect that our
quarterly revenues may fluctuate significantly.

<TABLE>
<CAPTION>
                                                                       Quarter ended
                                                                       -------------
                                             Mar. 31,  Jun. 30,  Sep. 30,   Dec. 31,  Mar. 31,   Jun. 30,  Sep. 30,   Dec. 31,
                                               1998      1998      1998       1998      1999       1999      1999       1999
                                             --------  --------  --------   --------  --------   --------  --------   --------
                                                                               (in thousands)
<S>                                          <C>      <C>        <C>        <C>       <C>        <C>       <C>        <C>
Net revenues.............................    $34,895  $ 22,322   $22,016    $34,687   $36,677    $45,616   $53,688    $65,117
Cost of revenues.........................     22,756    19,338    18,745     26,227    28,435     30,455    34,692     39,307
                                             -------  --------   -------    -------   -------    -------   -------    -------
Gross profit (loss)......................     12,139     2,984     3,271      8,460     8,242     15,161    18,996     25,810
                                             -------  --------   -------    -------   -------    -------   -------    -------
Operating expenses:
  Selling, general and administrative....      4,401     3,790     3,760      4,821     5,456      6,515     7,223      9,243
  Research and development...............      1,033       981       652        816     1,230      1,536     2,359      2,158
  Stock-based compensation...............         --        17       162        205       899        858     6,699     16,871
  Other general expenses (income), net...       (515)       --        --        (67)       (2)        --        25         14
                                             -------  --------   -------    -------   -------    -------   -------    -------
    Total operating expenses.............      4,919     4,788     4,574      5,775     7,583      8,909    16,306     28,286
                                             -------  --------   -------    -------   -------    -------   -------    -------
Operating income (loss)..................      7,220    (1,804)   (1,303)     2,685       659      6,252     2,690     (2,476)
Other income (expense):
  Interest expense, net..................     (2,935)   (2,068)   (1,853)    (1,388)   (1,398)    (1,458)   (1,262)    (1,416)
  Foreign currency exchange gain (loss)..     (1,397)    1,204     2,998     (1,948)    2,157        222      (506)      (488)
  Other non-operating income (expense),
    net..................................        267       319        42      1,475       193        941       656        589
                                             -------  --------   -------    -------   -------    -------   -------    -------
    Total other income (expense).........     (4,065)     (545)    1,187     (1,861)      952       (295)   (1,112)    (1,315)
                                             -------  --------   -------    -------   -------    -------   -------    -------
Income (loss) before income taxes........      3,155    (2,349)     (116)       824     1,611      5,957     1,578     (3,791)
Income tax (expense) benefit.............        (85)     (107)     (101)       (97)     (239)      (273)     (148)       160
                                             -------  --------   -------    -------   -------    -------   -------    -------
Net income (loss)........................    $ 3,070  $ (2,456)  $  (217)   $   727   $ 1,372    $ 5,684   $ 1,430    $(3,631)
                                             =======  ========   =======    =======   =======    =======   =======    ========
</TABLE>


<TABLE>
<CAPTION>
                                                                       As a percentage of net revenues
                                                                       -------------------------------
                                             Mar. 31,  Jun. 30,  Sep. 30,   Dec. 31,  Mar. 31,   Jun. 30,  Sep. 30,   Dec. 31,
                                               1998      1998      1998       1998      1999       1999      1999       1999
                                             --------  --------  --------   --------  --------   --------  --------   --------
<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.........................     65.2      86.6      85.1        75.6      77.5       66.8      64.6       60.4
                                             -------  --------   -------    -------   -------    -------   -------    -------
Gross profit (loss)......................     34.8      13.4      14.9        24.4      22.5       33.2      35.4       39.6
                                             -------  --------   -------    -------   -------    -------   -------    -------
Operating expenses:
  Selling, general and administrative....     12.6      17.0      17.1        13.9      14.9       14.3      13.5       14.2
  Research and development...............      3.0       4.4       3.0         2.4       3.4        3.4       4.4        3.3
  Stock-based compensation...............       --        --       0.7         0.6       2.5        1.9      12.5       25.9
  Other general expenses (income), net...     (1.5)       --        --        (0.2)       --         --        --         --
                                             -------  --------   -------    -------   -------    -------   -------    -------
    Total operating expenses.............     14.1      21.4      20.8        16.7      20.8       19.6      30.4       43.4
                                             -------  --------   -------    -------   -------    -------   -------    -------
Operating income (loss)..................     20.7      (8.0)     (5.9)        7.7       1.7       13.6       5.0       (3.8)
Other income (expense):
  Interest expense, net..................     (8.4)     (9.3)     (8.4)       (4.0)     (3.8)      (3.2)     (2.4)      (2.2)
  Foreign currency exchange gain (loss)..     (4.0)      5.4      13.6        (5.6)      5.9        0.5      (0.9)      (0.7)
  Other non-operating income (expense),
    Net..................................      0.7       1.4       0.2         4.2       0.5        2.1       1.2        0.9
                                             -------  --------   -------    -------   -------    -------   -------    -------
    Total other income (expense).........    (11.7)     (2.5)      5.4        (5.4)      2.6       (0.6)     (2.1)      (2.0)
                                             -------  --------   -------    -------   -------    -------   -------    -------
Income (loss) before income taxes........      9.0     (10.5)     (0.5)        2.3       4.3       13.0       2.9       (5.8)
Income tax (expense) benefit.............     (0.2)     (0.5)     (0.4)       (0.3)     (0.6)      (0.6)     (0.3)       0.2
                                             -------  --------   -------    -------   -------    -------   -------    -------
Net income (loss)........................      8.8%    (11.0)%    (0.9)%       2.0%      3.7%      12.4%      2.6%      (5.6)%
                                             =======  ========   =======    =======   =======    =======   =======    ========
</TABLE>


    Beginning in the second quarter of 1998, our net revenues decreased as we
experienced reduced demand from our major customers for our test and assembly
services. This was due, in part, to a general decline in demand in the
semiconductor industry. Gross profit was also negatively impacted by the market
environment. The reduced demand from our customers resulted in lower utilization
rates of our capital equipment as new wire bonders and testers were placed into
service and not fully utilized. Also, our customers were under significant price
pressure from their customers and as a result put pressure on us to lower prices
for both test services and traditional leadframe packages. These price decreases
were partially offset by increases in sales of advanced leadframe and laminate
packages, which carry higher prices and gross profit margins. Starting in the
fourth quarter of 1998, conditions in the semiconductor industry began


                                       34
<PAGE>

to improve. Gross profit as a percentage of net revenues increased from a low of
13.4% in the second quarter of 1998 to 39.6% in the fourth quarter of 1999. As a
result, we experienced increased demand from our major customers, thus improving
our utilization rates and financial performance.

    A significant component of our cost of revenues is depreciation expense,
which is largely related to our test and assembly equipment. We begin
depreciating our equipment when it is placed into service. Often, there is a gap
between when our equipment is placed into service and when it achieves high
levels of utilization. As a result, placing into service new equipment can cause
our gross profit margins to vary significantly from quarter to quarter.

    Selling, general and administrative expenses increased every quarter since
the second quarter of 1998, primarily due to increased staffing levels due to
our planned expansion of our business and operations. Research and development
expenses were generally between 3.0% and 4.4% of net revenues from the first
quarter of 1998 to the fourth quarter of 1999 and were expended primarily to
support the development of our BGA package technology.

    Our quarterly operating results may vary significantly. Unfavorable changes
may adversely affect our business, financial condition and results of
operations. In addition, we intend to increase the level of operating expenses
and investments in manufacturing capacity in anticipation of future growth in
net revenues. To the extent our net revenues do not grow as anticipated, our
financial condition and operating results may be materially and adversely
affected due to the fixed nature of most of these expenses.

Liquidity and Capital Resources

    We have financed our operations primarily through the issuance of new shares
to our shareholders and loans from our shareholders, related parties and
third-party financial institutions. Since 1997, Singapore Technologies Pte Ltd
has provided to us $109.9 million in debt financing and $42.0 million in equity
financing. Since 1997, the Economic Development Board has provided to us $54.3
million in debt financing and EDBI has provided to us $20.3 million in equity
financing. As of December 31, 1999, we had loans outstanding from our
shareholders and related parties of $53.8 million, and cash and cash equivalents
of $16.6 million. We completed our initial public offering on February 8, 2000.
Our net proceeds from the initial public offering were approximately $388.0
million.

Liquidity

    Net cash generated by operating activities was $47.9 million and $73.2
million in 1998 and 1999, respectively. The $47.9 million of cash generated in
1998 was primarily attributable to net operating cash generated, before changes
in operating working capital, of $42.3 million and a decrease in accounts
receivable of $8.5 million. The $73.2 million of cash generated in 1999 was
primarily attributable to net operating cash generated, before changes in
operating working capital, of $76.2 million, an increase in accounts receivable
of $16.6 million, and an increase of $17.0 million in accrued operating expenses
and other payables, excluding liabilities for the purchase of fixed assets. The
increase in accrued operating expenses and other payables included in the
operating working capital largely arises from an increase in payroll-related
provisions of approximately $9.5 million and an increase in accrued purchase of
inventory of approximately $3.1 million.

    Our net cash used in investing activities primarily represents amounts paid
for property, plant and equipment and other capital expenditures. Over the past
three years, a significant amount of our capital expenditures has been spent on
test and assembly equipment. We have budgeted capital expenditures and
investments of approximately $200.0 million for 2000. We expect to incur these
capital expenditures primarily for the acquisition of test and assembly
equipment. 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 business.
Some of these acquisitions or investments could be material. However, we have no
specific agreements or understandings with respect to any material acquisition
or investment at this time.


                                       35
<PAGE>


    Net cash provided by financing activities was $13.0 million in 1999. In
1999, our net cash provided by financing activities was primarily due to
borrowings of $10.0 million under a short-term loan entered into in December
1999 and proceeds of $3.1 million from the issuance of new shares and from the
full payment on previously partly-paid shares.

Capital Resources

    In 1997, our borrowings came primarily from Singapore dollar-denominated
short-term loans from Singapore Technologies Pte Ltd. The aggregate amount of
short term loans provided by Singapore Technologies Pte Ltd for 1997 was $109.9
million, with no loans provided in 1998 and 1999. The average weighted interest
rate for these loans was 5.1%, and 7.8% in 1997 and 1998, respectively. These
loans were repaid or refinanced in full in 1998.

    In 1997, we obtained a grant of S$23.2 million for the funding of certain
research and development projects from the Singapore National Science &
Technology Board under its Research Incentive Scheme for Companies. The grant is
being disbursed to us over a maximum of five years ending December 31, 2001, in
the form of reimbursement of a specified percentage of amounts actually spent by
us on manpower, research and development equipment, materials, training and
technology licensing fees. The grant does not require repayment. Recognition of
this grant income is included in our statement of operations under "Other
non-operating expense (income), net." The grant is disbursed based on the amount
of expenditures incurred. There are no conditions attached to the grant other
than completing the project to which the grant relates and the certification of
the costs incurred.

    In 1998, we entered into an unsecured $25.0 million demand loan agreement
with ST Treasury Services Ltd, a wholly-owned subsidiary of Singapore
Technologies Pte Ltd, denominated in U.S. dollars. Subsequent to December 31,
1999, this loan was repaid in full out of the proceeds from our initial public
offering.

    On June 5, 1998, we entered into a S$90.0 million ($54.3 million) long-term
loan agreement with the Economic Development Board. The long-term loan is
denominated in Singapore dollars and bears interest at 1% over the prevailing
rate per annum declared by the Central Provident Fund Board, a statutory board
of the Singapore Government. The prevailing rate at December 31, 1999 was 2.5%.
Interest is payable semi-annually commencing September 1, 1998. Principal is
payable in seven semi-annual, equal installments commencing September 1, 2000.
The loan agreement specifies that the proceeds are to be used solely for the
financing of fixed productive assets in the semiconductor business. This loan
matures on September 1, 2003 and is guaranteed by Singapore Technologies Pte
Ltd. The loan agreement restricts us 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, in each case without prior lender consent. To reduce our
Singapore dollar exposure on this loan, in the first quarter of 1999 we hedged
the principal amount due under such loan and incurred an additional annual
financing charge of 1.7% of the principal amount of such loan with respect to
such hedging transaction. Subsequent to our initial public offering, we
terminated this arrangement and currently hold Singapore dollar cash balances,
proceeds from our initial public offering, as a hedge of the principal amount
due under the loan.

    On July 13, 1998 we obtained an unsecured $25.0 million short-term loan from
Den Danske Bank which was denominated in U.S. dollars. Subsequent to December
31, 1999, this loan was repaid in full out of the proceeds of our initial public
offering.

    On December 16, 1999 we obtained an unsecured $10.0 million short-term loan
from Den Danske Bank which was denominated in U.S. dollars. Subsequent to
December 31, 1999, this loan was repaid in full out of the proceeds of our
initial public offering.

    We have entered into an agreement with Citibank, N.A. for a working capital
facility of $20.0 million which we have drawn down and repaid in full in
February 2000 out of the proceeds of our initial public offering. Interest on
borrowings under this facility will be charged at the bank's prevailing rate.


                                       36
<PAGE>


Foreign Currency Exchange Exposure

    We have adopted a hedging policy that we believe adequately covers any
material exposure to our non-U.S. dollar assets and liabilities. To minimize
foreign currency exchange risk, we selectively hedge our foreign currency
exposure through forward foreign currency swap contracts and options. We entered
into a forward foreign currency swap contract with respect to the principal
amount of the Singapore dollar-denominated long-term loan entered into with the
Economic Development Board. To date, our hedging activities have been
immaterial. However we cannot assure you that sudden or rapid movement in
exchange or interest rates will not have a material adverse effect on our
business, financial condition or results of operations.

Recent Accounting Pronouncements

    In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (SFAS 133). SFAS 133, as recently amended, is effective
for fiscal years beginning after June 15, 2000. This statement establishes
accounting and reporting standards requiring that every derivative instrument be
recorded in the balance sheet as either an asset or liability measured at its
fair value. We believe the adoption of SFAS 133 will not have a material effect
on our financial position or results of operations.

Item 9A.  Quantitative and Qualitative Disclosures About Market Risk

    We may employ off-balance sheet derivative instruments such as interest rate
swaps and currency swaps, forward foreign currency contracts and foreign
currency option contracts to manage our interest rate and foreign exchange
exposure. 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
relates primarily to our debt obligations. Our policy is to manage interest rate
risk by borrowing a combination of fixed and floating rate obligations depending
upon market conditions.

    We have established a foreign currency hedging program and may utilize
foreign currency swaps as well as foreign exchange forward contracts and
options. The goal of the hedging program 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 relative to our
short-term and long-term debt and derivative financial instruments are disclosed
in Notes 9, 13 and 23 to the consolidated financial statements, respectively.

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

<TABLE>
<CAPTION>
                                                  December 31, 1998          December 31, 1999
                                             -------------------------   -------------------------
                                                Total                        Total
                                              Recorded         Fair        Recorded        Fair
                                               Amount          Value        Amount         Value
                                               ------          -----        ------         -----
                                                       (U.S.$ equivalent in thousands)
<S>                                          <C>            <C>           <C>             <C>
     Debt:
     Fixed rate short-term debt: (US$)...    $ 25,000       $  25,000     $ 35,000        $35,000
     Average interest rate...............         6.1%                         6.6%
     Variable rate short-term debt: (US$)    $ 25,000       $  25,000     $ 25,000        $25,000
     Average interest rate...............         5.8%                         6.8%
     Variable rate long-term debt (S$)...    $ 54,282       $  54,282     $ 53,780        $54,265
     Average interest rate...............         5.3%                         3.5%
     Foreign Currency Contract:
</TABLE>


                                       37
<PAGE>

<TABLE>
<CAPTION>
<S>                                          <C>            <C>           <C>             <C>
       Notional amount of $53,780 (S$)...         --            --        $  1,835       $ 2,320
       Settlement rate (vs US$)..........                                     1.73
</TABLE>

    The variable rate long-term debt is repayable in seven equal semi-annual
installments commencing September 1, 2000. The payment terms of the foreign
currency contract match the principal repayments of the variable rate long-term
debt.

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.


                                       38
<PAGE>


Item 10.  Directors and Officers of Registrant.
    Our directors and executive officers are as follows:

                   Name                            Position
    -----------------------------------   -------------------------------------
    Board of Directors and Certain
    Executive Officers
    Tan Bock Seng(1)...................   Chairman of the Board of Directors
                                          & Chief Executive Officer
    Lim Ming Seong(2)(3)...............   Deputy Chairman of the Board of
                                          Directors
    Lee Joon Chung.....................   Director and President
    Sum Soon Lim(1)....................   Director
    Steven Hugh Hamblin(2).............   Director
    Koh Beng Seng(1)...................   Director
    Liow Voon Kheong...................   Director
    Premod Paul Thomas(2)..............   Director
    Charles Richard Wofford(1)(3)......   Director
    June Chia Lihan....................   Alternate Director to Mr. Lee(4)
                                          Executive Vice President, Sales and
                                          Marketing
    Gan Chee Yen.......................   Alternate Director to Mr. Thomas(4)
    Lai Yeow Hin.......................   Alternate Director to Mr. Liow(4)
    Other Executive Officers
    Wong Kok Kit.......................   Chief Financial Officer
    Byung Joon Han.....................   Chief Technology Officer
    Lee Hoong Leong....................   Vice President, Leaded Business
    Tan Chee Keong.....................   Vice President, Test Business
    John Briar.........................   Vice President, Packages Technology
                                          Development
    Steve Liew.........................   Vice President, Array Business
    Choong Chan Yong...................   Vice President, Sales and Marketing
    John McCarvel......................   President, Singapore Technologies
                                          Assembly and Test Services, Inc.

----------
(1) Member of the Audit Committee.
(2) Member of the Budget Committee.
(3) Member of the Executive Resource and Compensation Committee.
(4) 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.

    None of our Directors, Executive Officers or substantial shareholders is
related to another.

Tan Bock Seng

    Tan Bock Seng has served as a director since January 1995 and has been our
Chairman and Chief Executive Officer since May 1998. He became a member of our
Audit Committee in April 1999. Mr. Tan has 29 years of experience in the
semiconductor industry and has held key positions in several multinational
corporations, including Fairchild Singapore Pte Ltd and Texas Instruments
Singapore Pte Ltd. He was President of Chartered Semiconductor Manufacturing Ltd
from 1993 to 1998 and Managing Director of National Semiconductor, Singapore,
from 1988 to 1993. Mr. Tan received his Bachelor of Science in Mathematics from
the University of Singapore.

Lim Ming Seong

    Lim Ming Seong became our Deputy Chairman in June 1998 and was appointed
Chairman of the Budget Committee in April 1999. He was also a member of the
Employees' Share Ownership Scheme Committee, which has subsequently been
replaced by the Executive Resource and Compensation Committee of which he is a
member. Mr. Lim is the Group Director of Singapore Technologies Pte Ltd, Deputy
Chairman of the Board of Directors of Chartered Semiconductor Manufacturing Ltd
and Chairman of CSE Systems & Engineering Ltd. After joining Singapore
Technologies Pte Ltd in December 1986, Mr. Lim has held various senior positions
in the Singapore Technologies Group. Prior to joining Singapore Technologies Pte
Ltd,


                                       39
<PAGE>


Mr. Lim was with the Ministry of Defence of Singapore. Mr. Lim received his
Bachelor of Applied Science (Honors) in Mechanical Engineering from the
University of Toronto and his Diploma in Business Administration from the
University of Singapore. Mr. Lim also participated in the Advanced Management
Programs at INSEAD and Harvard University.

Lee Joon Chung

    Lee Joon Chung has been our President since February 1997 and was appointed
to our board of directors in October 1998. Prior to serving as President, Mr.
Lee was our General Manager from January 1995 to February 1997. From 1990 to
1994, Mr. Lee was with Microchip Technology and served as its Vice President of
Far East Operations from July 1993 until February 1994. Mr. Lee received his
Bachelor of Science in Mechanical Engineering from the University of Alberta,
Canada.

Sum Soon Lim

    Sum Soon Lim was appointed to our Board of Directors in January 1998 and
became Chairman of the Audit Committee in April 1999. Mr. Sum is currently a
part-time corporate advisor to Singapore Technologies Pte Ltd and is on the
Board of Directors of Chartered Semiconductor Manufacturing Ltd. Prior to
accepting his position with Singapore Technologies Pte Ltd, Mr. Sum worked for
the Singapore Economic Development Board, DBS Bank, J.P. Morgan Inc., Overseas
Union Bank and Nuri Holdings (S) Pte Ltd, a private investment holding company.
Mr. Sum is also a member of the Securities Industry Council. Mr. Sum received
his Bachelor of Science (Honors) in Production Engineering from the University
of Nottingham, England.

Steven Hugh Hamblin

    Steven Hugh Hamblin was appointed to our Board of Directors in June 1998 and
became a member of the Budget Committee in April 1999. Mr. Hamblin was with
Compaq Computer Corporation from 1984 to 1996 and held various positions
including, Managing Director of Compaq Asia Manufacturing, Vice President
Asia/Pacific Division, Vice President and Financial Controller for Corporate
Operations, and Vice President of Systems Division Operations. He was with Texas
Instruments for ten years before leaving as its Division Controller,
Semiconductor Group, to join General Instrument, Microelectronics Division, New
York in 1983 as its Group Financial Executive. Mr. Hamblin received his Bachelor
of Science in Civil Engineering from the University of Missouri, Columbia and
his Master of Science in Industrial Administration from Carnegie-Mellon
University.

Koh Beng Seng

    Koh Beng Seng was appointed to our Board of Directors in February 1999 and
became a member of the Audit Committee in April 1999. He is currently Senior
Advisor to Asia Pulp & Paper Co. Ltd and an advisor to the International
Monetary Fund. He is on the Board of Directors of Chartered Semiconductor
Manufacturing Ltd. Mr. Koh is active in the financial services sector and was
with the Monetary Authority of Singapore from 1973 to 1998, where he served as
Deputy Managing Director from 1988 to 1998. Mr. Koh received his Bachelor of
Commerce (First Class Honors) from Nanyang University and his MBA from Columbia
University. Mr. Koh was awarded an Overseas Postgraduate Scholarship by the
Monetary Authority of Singapore in 1978. In 1987, the President of the Republic
of Singapore awarded him a Meritorious Service Medal.

Liow Voon Kheong

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


                                       40
<PAGE>


Premod Paul Thomas

    Premod Paul Thomas was appointed to our Board of Directors in March 1998 and
became a member of the Budget Committee in April 1999. Mr. Thomas is Director
(Finance) of Singapore Technologies Pte Ltd and is an Alternate Director on the
Board of Directors of Chartered Semiconductor Manufacturing Ltd. Before joining
Singapore Technologies Pte Ltd in February 1998 he was with Tirtamas Group,
Jakarta, as Group Executive Advisor from 1995 to 1998 and with Bank of America
from 1983 to 1995. Mr. Thomas received his Bachelor of Commerce (First Class
Honors) from Loyola College, India in 1977. He is a Certified Associate of the
Indian Institute of Bankers, Bombay, and has an MBA from the Indian Institute of
Management, Ahmedabad.

Charles Richard Wofford

    Charles Richard Wofford was appointed to our Board of Directors in February
1998 and became a member of the Audit Committee and the Executive Resource and
Compensation Committee in April and August 1999, respectively. Mr. Wofford is
presently the Vice-Chairman 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.

June Chia Lihan

    June Chia Lihan was appointed Alternate Director to Lee Joon Chung in
October 1998. Ms Chia joined us in 1994 and became our Executive Vice-President,
Worldwide Sales & Marketing in April 1998. From 1991 to 1994, Ms. Chia was with
Nortel Australis and served as its Director of Manufacturing Operations from
early 1993 to July 1994. Ms. Chia received her Bachelor of Engineering (First
Class Honors) from the University of Singapore and her MBA from the National
University of Singapore.

Gan Chee Yen

    Gan Chee Yen was appointed alternate Director to Premod Paul Thomas in July
1999. Mr. Gan has been in the finance accounting field for more than 15 years
and is currently the Group Financial Controller 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.

Lai Yeow Hin

    Lai Yeow Hin was appointed Alternate Director to Liow Voon Kheong in October
1997. Mr. Lai started his career with the Singapore Economic Development Board
in the electronics industry in 1990. He is presently holding concurrent
positions as Chief Information Officer and Deputy Director, Electronics
(Industry Development Division), Economic Development Board. 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. Currently, Mr.
Lai is a member of the management board of the Centre for Wireless
Communications at the National University of Singapore and a member of the
management board of the Centre for Signal Processing at the Nanyang
Technological University. Mr. Lai received his Master of Science (Electrical
Engineering) from the University of Illinois (Urbana-Champaign).

Wong Kok Kit

    Wong Kok Kit joined us in February 1998 and became our Chief Financial
Officer in May 1999. Mr. Wong has more than 14 years of professional experience
in finance and accounting. From 1990 to 1998, he worked for Seagate Technology
in various financial capacities, serving as its Finance Director for seven
years. Mr. Wong received his Bachelor of Business Administration from the
National University of Singapore in 1985.


                                       41
<PAGE>


Byung Joon Han

    Byung Joon Han joined us and became our Chief Technology Officer in December
1999. Prior to joining us, Dr. Han was Director of Product Development at Anam
Semiconductor, Inc. and, before that, held various engineering positions with
IBM and AT&T Bell Labs in Murray Hill, New Jersey. Dr. Han is credited with the
invention of several wafer and chip scale semiconductor packaging technologies
patented today. Dr. Han received his Doctorate in Chemical Engineering from
Columbia University in 1998.

Lee Hoong Leong

    Lee Hoong Leong joined us in April 1996 and became our Vice President of
Leaded Business in May 1998. Mr. Lee has held a number of management positions
at Texas Instruments and National Semiconductor Singapore in operations
management, logistics, quality assurance and equipment engineering. Mr. Lee
received his Bachelor of Engineering (Mechanical) from the University of
Singapore in 1980.

Tan Chee Keong

    Tan Chee Keong joined us in June 1996 and became our Vice President of Test
Business in April 1998. Prior to joining us, Mr. Tan was Operations Manager with
Cyrix Asia Pacific from 1993 to 1996 and Supervising Engineer with Advanced
Micro Devices Singapore Pte Ltd from 1987 to 1993. Mr. Tan received his Bachelor
of Science from University of London in 1984.

John Briar

    John Briar joined us in September 1997 and became our Vice President of
Packages Technology Development in April 1999. Prior to joining us, Mr. Briar
had more than ten years of package development and managerial experience with
Northern Telecom, Compaq, Amkor and Alphatec Electronics. Mr. Briar received his
Bachelor of Science from the University of Central Florida in 1989.

Steve Liew

    Steve Liew joined us in September 1998 and became our Vice President of
Array Business in May 1999. Prior to joining us, he was Director, CABGA
Operations with Amkor/Anam Advanced Packaging Inc in the Philippines. Mr. Liew
held various managerial positions in Amkor/Anam from 1994 to 1998. Before
joining Amkor, he had over 16 years of experience working in semiconductor
assembly and packaging with Advanced Micro Devices, Western Digital, Silicon
System and General Electric. Mr. Liew received his Bachelor of Science from
California State University in 1984 and his MBA from University of La Verne, CA
in 1991.

Choong Chan Yong

    Choong Chan Yong has been our Vice President of Sales and Marketing since
February 1999. From 1991 to 1999, Mr. Choong worked for Chartered Semiconductor
Manufacturing Ltd in various management capacities, most recently as President
-- Asia/Japan. Mr. Choong began his career as an engineer for Texas Instruments
and later moved to National Semiconductor where he worked as Manufacturing
Section Manager and then as Planning Manager. Mr. Choong received his Bachelor
of Science from Ohio State University in 1983.

John McCarvel

    John McCarvel joined us in January 1999 and became President of Singapore
Technologies Assembly and Test Services, Inc. in July 1999. From 1996 to 1998,
Mr. McCarvel served as Vice President of Strategic Business Development at
Micron Custom Manufacturing Services, Inc. He was with Dovatron


                                       42
<PAGE>


International from 1990 to 1996, in various key positions including President of
Western Operations (USA); Vice President of Worldwide Sales (based in France);
and Vice President of Pacific Rim Operations (based in Singapore). From 1985 to
1990, he served as Corporate Controller (San Jose) and Director of Operations
(based in Singapore) for Adaptec. Mr. McCarvel received his Bachelor of Science
from Carroll College in 1985 and his MBA from the University of California in
1990.

Item 11.  Compensation of Directors and Officers.

    In 1999, the aggregate amount of compensation paid by us to all our
directors and executive officers listed above was approximately $2.6 million. In
1999, our directors received remuneration broken down as follows.

                                              Executive   Non-Executive
                                              Directors     Directors     Total
                                              ---------     ---------     -----
              US$250,000 and above........        1            --          1
              US$150,000 to 249,999.......        2            --          2
              US$0 to US$149,999..........       --             9          9

    The Company does not have any pension, retirement or other similar
post-retirement benefits.

    Non-executive directors receive annual directors' fees except that
directors' fees for those employed by Singapore Technologies Pte Ltd are paid to
Singapore Technologies Pte Ltd and for those employed by EDBI are paid to EDBI.
Those who are not employed by Singapore Technologies Pte Ltd or EDBI also
receive compensation for attending meetings of the board of directors. Directors
are reimbursed for reasonable expenses they incur in attending meetings of the
board and its committees. They may also receive compensation for performing
additional or special duties at the request of the Board. Alternate Directors do
not receive any compensation for serving or attending meetings of the Board. Mr.
Tan Bock Seng and Mr. Lee Joon Chung, who are executive directors of the
Company, do not receive directors' fees.

Item 12.  Options to Purchase Securities From Registrant or Subsidiaries

Employees' Share Ownership Scheme

    Prior to December 6, 1999, we had an Employees' Share Ownership Scheme for
employees and directors of STATS and its subsidiary, and of related companies
within the Singapore Technologies Group. Under the scheme, options were granted
based on rank, performance, years of service, contributions and potential for
future development of the individual. The subscription price was payable in
installments, with a first installment of 5% payable upon exercise of the option
and the remaining amount due over a period of ten years following exercise. The
exercise period was 30 days. Because shares were allotted and share certificates
registered in the name of the holder following exercise (but prior to full
payment), the scheme provided for the creation of partly paid shares. When we
terminated the scheme, we replaced the unpaid portion of some partly paid shares
with stock options under our Share Option Plan as described below.

    In May 1998, options to subscribe for 12,916,000 shares at a purchase price
of S$0.42 per share were granted under the scheme, of which 12,174,000 were
exercised. In November 1998, options to subscribe for an additional 8,961,000
shares at a purchase price of S$0.25 per share were granted, of which 8,600,000
were exercised. In May 1999, options to subscribe for 8,397,200 shares at a
purchase price of S$0.25 per share were granted, of which 7,371,600 were
exercised. The shares were partly paid and issued under the exercised options.
All unexercised options have lapsed.

    We recognized share compensation expense for options granted to employees
under the scheme. For each reporting period, compensation cost for shares
granted under the scheme to employees was recorded over the requisite vesting
period based on the current market value of our ordinary shares at the end of
the relevant period.

    In connection with the global offering, we terminated the scheme effective
December 6, 1999. Of the


                                       43
<PAGE>

28,125,600 partly paid shares then outstanding, 17,407,695 became fully paid
shares upon payment of the second installment of the subscription price,
1,112,400 partly paid shares held by a subsidiary of Singapore Technologies Pte
Ltd were cancelled without replacement and the remaining 9,605,505 partly paid
shares were cancelled and replaced with share options under our Share Option
Plan. These new options have the same exercise price as the original partly paid
shares.

Share Option Plan

    Effective as of May 28, 1999, we adopted our Share Option Plan. The purpose
of the plan is to offer selected individuals an opportunity to acquire or
increase a proprietary interest in our company by purchasing our ordinary
shares. Options granted under the Share Option Plan may be nonstatutory 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 85 million shares (subject to anti-dilution adjustment
pursuant to the Share Option Plan). If an outstanding option expires for any
reason or is cancelled or otherwise terminated, the shares allocable to the
unexercised portion of such option will again be available for the purposes of
the Share Option Plan and all other share incentive and option schemes approved
by our Board of Directors.

    The Share Option Plan is administered by the Executive Resource and
Compensation Committee. Our employees, outside directors and consultants are
eligible to receive option grants except as follows:

    o    employees of our affiliates and our outside directors and consultants
         are not eligible for the grant of incentive stock options; and

    o    employees, outside directors and consultants of our affiliates who are
         residents of the United States are not eligible for the grant of
         options.

    An individual who owns more than 10% of the total combined voting power of
all classes of our outstanding shares or of the shares of our parent or
subsidiary is not eligible for the grant of options unless:

    o    the exercise price of the option is at least 110% of the fair market
         value of a share on the date of grant; and

    o    in the case of an incentive stock option, such option by its terms is
         not exercisable after the expiration of five years from the date of
         grant.

    The exercise price of an incentive stock option shall not be less than 100%
of the fair market value of a share on the date of grant. The exercise price of
a nonstatutory option shall not be less than 85% of the fair market value of a
share on the date of grant. In no event will the exercise price for a share be
below the par value of that share.

    Options granted to persons other than officers, outside directors and
consultants shall become exercisable at least as rapidly as 20% per year over
the five-year period commencing on the date of grant.

    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. In addition,
pursuant to the terms of the Share Option Plan, after our initial public
offering, outstanding options were accelerated by 12 months if the optionee's
service had not been terminated and if his or her option agreement did not
provide otherwise.

    Each grant under the Share Option Plan is evidenced by a share option
agreement and the term of options granted may not exceed ten years from the date
of grant. If the optionee's service with us is terminated, the optionee's
outstanding options, to the extent then exercisable, remain exercisable for a


                                       44
<PAGE>


specified period (which is based on the reason for the termination) following
the date of termination. All options which are not exercisable at the date of
termination lapse when the optionee's service terminates.

    The Executive Resource and Compensation Committee may modify, extend or
assume outstanding options or may accept the cancellation of outstanding options
in return for the grant of new options for the same or a different number of
shares and at the same or a different exercise price. No modification of an
option shall, without the consent of the optionee, impair the optionee's rights
or increase the optionee's obligations under such option.

    Options are generally not transferable under the plan.

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

    The Share Option Plan will terminate automatically on May 28, 2009. The
Executive Resource and 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 June 12, 1999, options to purchase an aggregate of 1,570,400 shares at
S$0.25 per share were granted to eligible holders under the Share Option Plan.
At the close of the option offer period, on July 11, 1999, 1,563,400 options
were accepted. As of November 22, 1999, options to purchase an aggregate of
7,663,800 shares at the higher of S$2.00 or the initial public offering price
were granted to eligible holders under the Share Option Plan of which 140,000
and 4,150,000 were granted to non-executive directors and executive officers,
respectively. At the close of the option offer period on December 7, 1999,
7,601,000 options were accepted. The options vest over five years and expire ten
years from the date of grant which is June 12, 2009 and November 22, 2009,
respectively (except in the case of options held by non-executive directors
which expire five years from the date of grant). A total of 17,396,365 options
are outstanding, including 361,000 and 10,022,500 options held by non-executive
directors and executive officers, respectively.

    Total compensation cost is measured based on the difference between the fair
value of the shares and the price at which the shares are offered under the plan
at the time the shares are granted. Compensation expense is provided generally
over the vesting period on a systematic basis. See Note 20 to our consolidated
financial statements.

Item 13.  Interest of Management in Certain Transactions

    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 and management in the following five core business
groups: Engineering, Technology, Infrastructure, Financial Services and
Property. Other companies in the Singapore Technologies Group include Chartered
Semiconductor Manufacturing Ltd.

    The Singapore Technologies Group is 100%-owned by Temasek Holdings (Private)
Limited, the principal holding company through which the corporate investments
of the Government of Singapore are held. As of March 15, 2000, Temasek Holdings
(Private) Limited owns 78.3% of Singapore Technologies Pte Ltd. The remaining
21.7% is owned by Singapore Technologies Holdings Ltd, which is in turn
100%-owned by Temasek Holdings (Private) Limited.


                                       45
<PAGE>


    We engage in transactions with companies in the Singapore Technologies Group
in the normal course of our business. Such transactions are generally entered
into on normal commercial terms. We recently entered into a turnkey contract
with Chartered Semiconductor Manufacturing Ltd for our wafer sort, assembly and
test services. This agreement governs the conduct of business between the
parties relating, among other things, to the sort, assembly and test services
which were previously solely governed by purchase orders executed by Chartered
Semiconductor Manufacturing Ltd. This agreement does not contain any firm
commitment from Chartered Semiconductor Manufacturing Ltd to purchase or STATS
to supply services covered thereunder. The agreement is for a period of three
years and will be automatically renewed thereafter unless certain events occur.
In 1996, we hired ST Architects & Engineers Pte Ltd, a Singapore Technologies
Group company, to provide us with professional services in relation to the
construction of our Singapore facility. We paid ST Architects an aggregate of
approximately $2.1 million under the contract. In addition, the construction
contract of $38.0 million was awarded to a Singapore Technologies Group company,
Singapore Technologies Construction Pte Ltd (now called Sembcorp Construction
Pte Ltd). The construction of our facility was completed in August 1998.

    We lease the land on which our Singapore facility is situated pursuant to a
long-term operating lease from the Housing 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$84,333 ($49,500) per month
subject to revision to market rate in March of each year, with the increase
capped at 4% per annum.

    On April 14, 1998, we entered into an agreement with TriTech, an entity in
the Singapore Technologies Group, to sublease the 5th floor of our Singapore
facility for a term of 36 months. This agreement terminated on October 15, 1999.
The monthly rental is S$81,000 ($49,000) per month subject to revision in March
of each year, with any increases capped at the percentage by which our rent for
the entire facility increases. TriTech has been in liquidation since October 15,
1999. Although the judicial manager has paid us the rent from May 1999 until
now, TriTech still owes us half a months' rental for the period April 1999.

    In the year ended December 31, 1999, we paid a management fee of $1.9
million to Singapore Technologies Pte Ltd for various management and corporate
services provided pursuant to the Singapore Technologies Management and Support
Services Agreement dated March 3, 1997. This fee was $0.5 million, $0.9 million
and $1.1 million in 1996, 1997 and 1998. The services rendered by Singapore
Technologies Pte Ltd include internal auditing, training, executive resources,
treasury, and corporate secretarial services. These services are provided by
Singapore Technologies Pte Ltd to all members of the Singapore Technologies
Group, including us. We currently pay Singapore Technologies Pte Ltd an annual
management fee which prior to December 1999 was based on certain percentages of
capital employed, sales, manpower and payroll. The new service agreement into
which we entered in December 1999 is a formula and service based fee
arrangement. In addition, we reimburse Singapore Technologies Pte Ltd for the
third-party costs and expenses it incurs on our behalf. The service agreement
expires in the event we cease to be a subsidiary of Singapore Technologies Pte
Ltd. It can be terminated by Singapore Technologies Pte Ltd upon our prolonged
failure to pay the management fees due to Singapore Technologies Pte Ltd (but
cannot be terminated by us).

    Our insurance coverage is held under various insurance policies which are
negotiated and maintained by Singapore Technologies Pte Ltd but billed directly
to us. This enables us to benefit from the group rates negotiated by Singapore
Technologies Pte Ltd.

    Singapore Technologies Pte Ltd provided us with short-term financing
(generally on a 3 to 6 month renewable basis) which loans were repaid in full in
1998. The aggregate amount of short term loans provided by Singapore
Technologies Pte Ltd for 1997 was $109.9 million. The average weighted interest
rate for these loans was 5.1% and 7.8% in 1997 and 1998, respectively. We also
participated with certain affiliated companies in a Singapore Technologies Group
cash management program in which daily cash surpluses or shortfalls are lent to
or borrowed among affiliated companies at a rate determined on an arms-length
basis. We no longer participate in this program.

    In 1998, we obtained a demand loan from ST Treasury Services Ltd, a
wholly-owned subsidiary of


                                       46
<PAGE>


Singapore Technologies Pte Ltd, and a long-term loan with the Economic
Development Board. The loan agreement restricts us 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, in each case without prior lender consent. The loan
is unsecured, but is supported by a corporate guarantee given by Singapore
Technologies Pte Ltd. See "Item 9. Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."

    In 1997, we established Singapore Technologies Assembly and Test Services,
Inc., a wholly-owned subsidiary incorporated in the State of Delaware which
provides our United States sales and marketing, research and development, design
and support services. Singapore Technologies Assembly and Test Services, Inc.
obtains human resources, finance and information technology services from
Chartered Semiconductor Manufacturing Inc., the U.S. subsidiary of Chartered
Semiconductor Manufacturing Ltd. These general and administrative expenses are
borne and recharged to us by Chartered Semiconductor Manufacturing Inc. These
expenses amounted to $2.2 million, $1.0 million and $1.3 million for 1997, 1998
and 1999, respectively. The service fee is determined at the end of each year
for the upcoming year. We expect the amount of such expenses to decrease
significantly in the future as we hire our own employees.

    All new material related party transactions among our company and its
officers, directors, principal shareholders and their affiliates require
approval of a majority of the board of directors and must be on terms such
directors believe are no less favorable to our company than could be obtained
from unaffiliated parties. In addition, since our initial public offering all
material related party transactions must be separately approved by the Audit
Committee of our Board of Directors.

                                     PART II

Item 14.   Description of Securities to be Registered

     Not applicable for Annual Reports on Form 20-F.

                                    PART III

Item 15.  Defaults Upon Senior Securities.

     Not applicable.

Item 16.  Changes in Securities, Changes in Security For Registered Securities
          and Use of Proceeds.

     We completed our initial public offering of 153,000,000 ordinary shares,
directly or in the form of American Depositary Shares or ADSs, at S$3.554 per
ordinary share or US$21.00 per ADS on February 8, 2000, after our ordinary
shares and American Depositary Receipts were registered under the Securities
Act. The aggregate price of the offering amount registered and sold was
$321,300,000. We also completed a separate offering of 17,000,000 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.

     Of the net proceeds from our initial public offering, approximately $25.0
million was used to repay a demand loan from ST Treasury Services Ltd,
approximately $35.0 million was used to repay two short-term loans from Den
Danske Bank and approximately $20.0 million was used to repay a working capital
facility from Citibank, N.A. We also used approximately $31.0 million to fund
capital expenditures, including the purchase of test and assembly equipment, and
$13.7 million as working capital. The remaining proceeds are invested in various
time deposits with various financial institutions. 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.


                                       47
<PAGE>


Item 18.  Financial Statements

     See "Item 19. Financial Statements and Exhibits" for a list of financial
statements filed under this Item.

Item 19.  Financial Statements and Exhibits.

(a)      Financial Statements.

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

     Report of Independent Auditors

     Consolidated Balance Sheets as at December 31, 1998 and 1999

     Consolidated Statements of Operations and Comprehensive Income (Loss) for
the years ended December 31, 1997, 1998 and 1999

    Consolidated Statements of Shareholders' Equity for the years ended December
31, 1997, 1998 and 1999

    Consolidated Statements of Cash Flows for the years ended December 31, 1997,
1998 and 1999

     Notes to the Consolidated Financial Statements


                                       48
<PAGE>




                                   SIGNATURES

    Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant certifies that it meets all of the requirements for filing
on Form 20-F and has duly caused this annual report to be signed on its behalf
by the undersigned, thereunto duly authorized.

                                  ST ASSEMBLY TEST SERVICES LTD

                                  By : /s/ TAN BOCK SENG
                                  -------------------------------------------
                                  Name:  Tan Bock Seng
                                  Title: Chairman and Chief Executive Officer
                                  Date:  March 30, 2000

<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 Subsidiary as of December 31, 1998 and 1999, and the related
consolidated statements of operations and comprehensive income (loss),
shareholders' equity and cash flows for the years ended December 31, 1997, 1998
and 1999. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of ST
Assembly Test Services Ltd and Subsidiary as of December 31, 1998 and 1999, and
the consolidated results of their operations and their cash flows for the years
ended December 31, 1997, 1998 and 1999, in conformity with generally accepted
accounting principles in the United States of America.




KPMG
Singapore

February 29, 2000



                                      F-1
<PAGE>


                  ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
                        As of December 31, 1998 and 1999
                           In thousands of US Dollars

<TABLE>
<CAPTION>
                                                                                   December 31,
                                                                            ----------------------------
                                                             Note             1998              1999
<S>                                                           <C>           <C>              <C>
ASSETS
Current assets:...........................................
    Cash and cash equivalents.............................     3            $   12,692       $   16,568
    Accounts receivable, net..............................     4                20,653           37,404
    Amounts due from ST affiliates........................    21                 6,293            6,532
    Other receivables ....................................     5                 2,312            9,572
    Inventories...........................................     6                 6,594           11,313
    Prepaid expenses....................................       7                   119            7,079
                                                                            ----------       ----------
       Total current assets...............................                      48,663           88,468
Property, plant and equipment, net........................     8               188,057          251,298
Other receivables.........................................                           -            1,835
Prepaid expenses..........................................     7                     -           10,364
                                                                            ----------       ----------
       Total Assets.......................................                  $  236,720       $  351,965
                                                                            ==========       ==========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:......................................
    Short-term debt.......................................     9            $   50,000       $   60,000
    Current installments of long-term debt................    13                     -            7,420
    Accounts payable......................................                       8,824           13,070
    Amounts due to ST and ST affiliates...................    21                 4,311            5,533
    Accrued operating expenses............................    10                 5,093           20,559
    Other payables........................................    11                 4,720           55,238
    Income taxes payable..................................                         321              678
                                                                            ----------       ----------
       Total current liabilities..........................                      73,269          162,498
Deferred grant............................................    12                 1,131            1,923
Long-term debt, excluding current installments............    13                54,282           46,360
                                                                            ----------       ----------
       Total Liabilities..................................                     128,682          210,781
                                                                            ----------       ----------

Shareholders' Equity

Share capital:
    Ordinary shares - par value S$0.25
    Authorized ordinary shares- 1,200,000,000
    Issued ordinary shares -
       780,174,000 as of December 31, 1998
       and 785,427,695 as of December 31, 1999 ...........    14               129,042          129,827
Additional paid-in capital................................    15                 5,389           26,305
Unearned compensation.....................................                      (3,756)               -
Subscriptions receivable..................................                      (2,931)               -
Accumulated other comprehensive income (loss).............                      (9,731)          (9,731)
Retained deficit..........................................    16                (9,975)          (5,217)
                                                                            ----------       ----------
    Total Shareholders' Equity............................                     108,038          141,184
                                                                            ----------       ----------
    Total Liabilities and Shareholders' Equity............                  $  236,720       $  351,965
                                                                            ==========       ==========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F-2
<PAGE>


                  ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARY
      CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
              For the Years Ended December 31, 1997, 1998 and 1999
          In thousands of US Dollars (except share and per share data)

<TABLE>
<CAPTION>
                                                                 For the year ended December 31,
                                                                ---------------------------------
                                                      Note          1997        1998        1999
<S>                                                    <C>      <C>         <C>         <C>
Net revenues...................................                 $  88,373   $ 113,920   $ 201,098
Cost of revenues..............................                    (67,848)    (87,066)   (132,889)
                                                                ---------   ---------   ---------
Gross profit..................................                     20,525      26,854      68,209
                                                                ---------   ---------   ---------
Operating expenses:
    Selling, general and administrative........                    13,858      16,772      28,437
    Research and development...................                     2,157       3,482       7,283
    Stock-based compensation...................                         -         384      25,327
    Other general expenses (net)...............                        17        (582)         37
                                                                ---------   ---------   ---------
       Total operating expenses................                    16,032      20,056      61,084
                                                                ---------   ---------   ---------

Operating income...............................                     4,493       6,798       7,125
                                                                ---------   ---------   ---------

Other income (expense):
    Interest income............................                         5         147         524
    Interest expense...........................                    (3,312)     (8,391)     (6,058)
    Foreign currency exchange gain (loss) .....                    (1,258)        857       1,385
    Other non-operating income (expense) net...       17               62       2,103       2,379
                                                                ---------   ---------   ---------
       Total other income (expense)............                    (4,503)     (5,284)     (1,770)
                                                                ---------   ---------   ---------

Income (loss) before income taxes..............                       (10)      1,514       5,355
Income tax expense.............................       18             (159)       (390)       (500)
                                                                ---------   ---------   ---------
Net income (loss)..............................                 $    (169)  $   1,124   $   4,855
                                                                =========   =========   =========

Other comprehensive income (loss)..............
    - foreign currency translation.............                 $  (8,839)  $  (1,636)          -
                                                                ---------   ---------   ---------
Comprehensive income (loss)....................                 $  (9,008)  $    (512)  $   4,855
                                                                =========   =========   =========

Basic and diluted net income (loss) per
    ordinary share.............................                 $      -    $       -   $    0.01
                                                                =========   =========   =========

Basic and diluted net income (loss) per ADS....                 $      -    $    0.02   $   0.06
                                                                =========   =========   =========

Ordinary shares (in thousands) used in per
ordinary share calculation:
-   basic  ....................................                   368,000     669,671     770,259
-   effect of dilutive options.................                         -       1,305      16,466
                                                                ---------   ---------   ---------
-   diluted....................................                   368,000     670,976     786,725
                                                                =========   =========   =========

ADS (in thousands) used in per ADS calculation:
-   basic  ....................................                    36,800      66,967      77,026
-   effect of dilutive options.................                         -         131       1,646
                                                                ---------   ---------   ---------
-   diluted....................................                    36,800      67,098      78,672
                                                                =========   =========   =========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-3
<PAGE>


                  ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
              For the Years Ended December 31, 1997, 1998 and 1999
                 In thousands of US Dollars (except share data)

<TABLE>
<CAPTION>
                                                                                          Accumulated
                                                                                             other
                                                                                             compre-                 Total
                                                      Additional   Unearned    Subscrip-     hensive                share-
                                 Ordinary shares        paid-in     compen-      tions       income    Retained     holders'
                                     No.                capital     sation    receivable     (loss)     deficit     equity
                           -----------------------      -------     ------    ----------     ------     -------     ------
<S>                        <C>            <C>         <C>         <C>         <C>         <C>         <C>         <C>
Balances at
  January 1, 1997            92,000,000   $  64,900   $      --   $      --   $      --   $     744   $ (10,930)  $  54,714

Foreign currency
  translation                        --          --          --          --          --      (8,839)         --      (8,839)
Net loss                             --          --          --          --          --          --        (169)       (169)
                           ------------   ---------   ---------   ---------   ---------   ---------   ---------   ---------
Balances at
  December 31, 1997          92,000,000      64,900          --          --          --      (8,095)    (11,099)     45,706

Foreign currency
  translation                        --          --          --          --          --      (1,636)         --      (1,636)
Share issuance              100,000,000      62,305          --          --          --          --          --      62,305
Effect of
  stock split               576,000,000          --          --          --          --          --          --          --
Share issuance               12,174,000       1,837       1,979        (730)     (2,931)         --          --         155
Other changes in
  unearned
  compensation                       --          --       3,410      (3,410)         --          --          --          --
Amortization of
  stock compensation                 --          --          --         384          --          --          --         384
Net income                           --          --          --          --          --          --       1,124       1,124
                           ------------   ---------   ---------   ---------   ---------   ---------   ---------   ---------
Balances at
  December 31, 1998         780,174,000     129,042       5,389      (3,756)     (2,931)     (9,731)     (9,975)    108,038

Share issuance               15,971,600       2,381          --          --      (2,262)         --          --         119
Other changes in
  unearned
  compensation                       --          --      21,339     (21,339)         --          --          --          --
Amortization of
  stock compensation                 --          --          61       9,352          --          --          --       9,413
Termination of
  Ownership
  Scheme                    (10,717,905)     (1,596)       (655)     15,743       5,193          --         (97)     18,588
Amortization of
  stock compensation                 --          --         171          --          --          --          --         171
Net income                           --          --          --          --          --          --       4,855       4,855
                           ------------   ---------   ---------   ---------   ---------   ---------   ---------   ---------
Balances at
  December 31, 1999         785,427,695   $ 129,827   $  26,305   $      --   $      --   $  (9,731)  $  (5,217)  $ 141,184
                           ============   =========   =========   =========   =========   =========   =========   =========
</TABLE>


          See accompanying notes to consolidated financial statements.

                                      F-4
<PAGE>


                  ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              For the Years Ended December 31, 1997, 1998 and 1999
                           In thousands of US Dollars

<TABLE>
<CAPTION>

                                                                For the year ended December 31,
                                                            -------------------------------------
                                                                1997         1998          1999
Cash Flows From Operating Activities
<S>                                                         <C>           <C>           <C>
Net income (loss) ......................................    $    (169)    $   1,124     $   4,855
Adjustments to reconcile net income (loss)
    to net cash provided by operating activities:
    Depreciation and amortization ......................       25,477        42,156        74,166
    Loss (gain) on sale of property, plant and equipment           17          (582)           37
    Loss on write-off of property, plant and equipment .           --           248           101
    Provision for doubtful accounts receivable .........          383          (241)         (119)
    Provision for stock obsolescence ...................          441            (1)         (520)
    Exchange loss (gain) arising on loans ..............        2,905          (423)       (2,337)
 Changes in operating working capital:
    Accounts receivable ................................      (28,604)        8,485       (16,632)
    Amounts due from ST affiliates .....................          178        (1,970)         (239)
    Inventories ........................................       (2,518)       (2,536)       (4,199)
    Other receivables and prepaid expenses .............         (444)          554        (4,337)
    Accounts payable ...................................        4,354         1,961         4,246
    Amounts due to ST and ST affiliates ................          497           826         1,222
    Accrued operating expenses and other payables ......        7,216        (1,671)       16,998
                                                            ---------     ---------     ---------
Net cash provided by operating activities ..............        9,733        47,930        73,242
                                                            ---------     ---------     ---------

Cash Flows From Investing Activities

Purchases of property, plant and equipment .............     (120,595)      (68,727)      (84,301)
Sale of property, plant and equipment ..................           91         1,254         1,971
                                                            ---------     ---------     ---------
Net cash used by investing activities ..................     (120,504)      (67,473)      (82,330)
                                                            ---------     ---------     ---------

Cash Flows From Financing Activities

Bank overdrafts ........................................         (197)       (3,012)           --
Proceeds from issuance of long-term debt ...............           --        54,299            --
Proceeds from issuance of short-term debt ..............      109,855        25,000        10,000
Repayment of short-term debt ...........................           --      (107,550)           --
Proceeds from issuance of shares and full
   payment on previously partly paid shares ............           --        62,460         3,080
Purchase consideration for share buy-back ..............           --            --          (116)
                                                            ---------     ---------     ---------
Net cash provided by financing activities ..............      109,658        31,197        12,964
                                                            ---------     ---------     ---------

Net increase (decrease) in cash and
    cash equivalents for the year ......................       (1,113)       11,654         3,876
Effect of exchange rate changes on cash ................         (258)          (13)           --
Cash and cash equivalents at beginning of the year .....        2,422         1,051        12,692
                                                            ---------     ---------     ---------
Cash and cash equivalents at end of the year ...........    $   1,051     $  12,692     $  16,568
                                                            =========     =========     =========

Supplementary Cash Flow Information

Interest paid (net of amount capitalized) ..............    $   3,467     $   7,126     $   6,001
Income taxes paid ......................................    $      54     $     162     $     143
Non-cash item
    Share issue (cancellation) subscriptions receivable     $      --     $   2,931     $  (1,000)
    Sale-leaseback transactions ........................    $      --     $      --     $  20,246
                                                            =========     =========     =========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-5
<PAGE>


                  ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1998 and 1999
               In thousands of US Dollars (except per share data)


1.     Business and Organization

       Background

       ST Assembly Test Services Ltd (the "Company") is a leading independent
       provider of a full range of semiconductor test and assembly services. The
       Company has operations in Singapore and in the United States of America,
       its principal market. As of December 31, 1999, the Company was
       90.6%-owned by Singapore Technologies Pte Ltd ("ST"). (See Note 25)

       Significant Customers and Concentration of Credit Risks

       The Company has a number of major customers in North America and Asia.
       During the years ended December 31, 1997, 1998 and 1999, the Company's
       largest customer accounted for 34%, 21%, and 25% of revenues,
       respectively. The Company's five largest customers collectively accounted
       for approximately 80%, 70% and 73% of revenues for the years ended
       December 31, 1997, 1998 and 1999, respectively (see Note 19). The Company
       anticipates that significant customer concentration will continue for the
       foreseeable future, although the companies which constitute the Company's
       largest customers may change. The Company believes that the concentration
       of its credit risk in trade receivables is mitigated substantially by its
       credit evaluation process, credit policies and credit control and
       collection procedures.

       In addition, certain of the Company's treasury management activities are
       undertaken by ST or its affiliates. The Company participates in a pooled
       cash management program and places short-term advances with other
       companies in the ST group.

       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 highly cyclical nature
       of both the semiconductor and the communications and personal computer
       industries, competitive pricing and declines in average selling prices,
       dependence on the Company's relations with ST and the government of
       Singapore, reliance on a small group of principal customers, timing and
       volume of orders relative to the Company's production capacity,
       availability of manufacturing capacity and fluctuations in manufacturing
       yields, availability of financing, competition, dependence on raw
       material and equipment suppliers, exchange rate fluctuations, dependence
       on key personnel, enforcement of intellectual property rights,
       environmental regulations and fluctuations in quarterly operating
       results.


2.     Summary of Significant Accounting Policies

(a)    Accounting Principles

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


                                      F-6
<PAGE>

                  ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1998 and 1999
               In thousands of US Dollars (except per share data)


(b)    Basis of Accounting

       The consolidated financial statements have been prepared on the
       historical cost basis. The consolidated financial statements included the
       financial statements of ST Assembly Test Services Ltd and its subsidiary.
       All significant intercompany balances and transactions have been
       eliminated in consolidation.

(c)    Use of Estimates in the Financial Statements

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

(d)    Functional Currency

       Through June 30, 1998, the Company's functional currency was the
       Singapore dollar. Effective July 1, 1998, the Company changed its
       functional currency to the US dollar.

       The Singapore dollar was the functional currency of the Company because,
       historically, the Singapore dollar was the currency of primary economic
       environment in which the operations of the Company were conducted.
       However, significant changes in economic facts necessitated a change in
       the Company's functional currency from the Singapore dollar to the US
       dollar. The Company's business has changed in that a more significant
       portion of its revenues is derived from companies based outside of
       Singapore, principally the United States. Interdependencies amongst the
       Company and its parent and other Singapore government controlled entities
       continue to diminish. There are ongoing changes in sources of financing
       from Singapore dollars to US dollars. With more of the Company's
       transactions and cash flows denominated in US dollars, the functional
       currency changed effective July 1, 1998 from the Singapore dollar to the
       US dollar.

       The change in functional currency was recognized through the translation
       of Singapore dollar amounts of the Company's non-monetary assets,
       principally property, plant and equipment at June 30, 1998, to US dollars
       on July 1, 1998 with those US dollar amounts becoming the accounting
       basis for those assets at July 1, 1998 and for subsequent periods. The
       $9,731 cumulative translation adjustment at July 1, 1998 in shareholders'
       equity prior to the change remains as a separate component of accumulated
       other comprehensive income (loss).

(e)    Foreign Currency Transactions

       Assets and liabilities which are denominated in foreign currencies are
       converted into the functional currency at the rates of exchange
       prevailing at the balance sheet date. Income and expenses are converted
       at the rates of exchange at transaction dates prevailing during the year.
       Foreign currency transaction gains or losses are included in results of
       operations, except as described below with respect to forward foreign
       exchange contracts utilized as a hedge against debt obligations.


                                      F-7
<PAGE>
                  ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1998 and 1999
               In thousands of US Dollars (except per share data)


(f)    Derivatives

       Gains and losses on hedges of existing assets or liabilities are included
       in the carrying amounts of those assets or liabilities and are ultimately
       recognized in income as part of those carrying amounts. Gains and losses
       related to qualifying hedges of firm commitments or anticipated
       transactions are also deferred and are recognized in income or as
       adjustments of carrying amounts when the hedged transaction occurs.

(g)    Cash and Cash Equivalents

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

(h)    Inventories

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

(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:

       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

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

(j)    Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of

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

(k)    Operating Leases

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


                                      F-8
<PAGE>
                  ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1998 and 1999
               In thousands of US Dollars (except per share data)


(l)    Grants

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

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

(m)    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 recognized upon shipment of goods on which services have been
       rendered.

(n)    Research and Development

       Research and development expenses are expensed as incurred. Research and
       development expenses amounted to $2,157, $3,482 and $7,283 during the
       years ended December 31, 1997, 1998 and 1999, respectively.

(o)    Stock-Based Employee Compensation

       The Company measures stock-based employee compensation cost for financial
       statement purposes in accordance with Accounting Principles Board Opinion
       No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), and its
       related interpretations and includes pro forma information in Note 20 in
       accordance with Statement of Financial Accounting Standards ("SFAS") No.
       123, "Accounting for Stock-Based Compensation". Compensation cost for
       stock options granted to employees in connection with the Company's fixed
       option plan is measured as the excess of fair market value of the stock
       subject to the option at the grant date over the exercise price of the
       option and is recorded over the requisite vesting periods. Compensation
       cost for options granted to employees under the Company's variable option
       plan is recorded over the requisite vesting periods based upon the
       current market value of the Company's stock at the end of each period.

(p)    Income Taxes

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


                                      F-9
<PAGE>
                  ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1998 and 1999
               In thousands of US Dollars (except per share data)


(q)    Net Income (Loss) Per Share

       The computation of basic net income (loss) per share is calculated as the
       net income or loss for the year divided by the weighted number of shares
       outstanding during the year, as adjusted on a retroactive basis for stock
       splits. Diluted net income (loss) per share includes the effect of all
       dilutive potential ordinary shares.

(r)    Comprehensive Income

       On January 1, 1998, the Company applied SFAS No. 130, "Reporting
       Comprehensive Income" with respect to reporting and presentation of
       comprehensive income and its components in a full set of financial
       statements. Comprehensive income (loss) consists of net income (loss) and
       foreign currency translation adjustments and is presented in the
       consolidated statements of operations and comprehensive income (loss).

(s)    Segment Disclosures

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


3.     Cash and Cash Equivalents

       Cash and cash equivalents at December 31, 1998 and 1999 consist of:

                                                                 December 31,
                                                            --------------------
                                                               1998        1999

       Cash at banks and in hand..........................  $  1,453    $  5,142
       Cash equivalents - ST pooled cash management.......    11,239      11,426
                                                            --------    --------
                                                            $ 12,692    $ 16,568
                                                            ========    ========

       Certain of the Company's treasury management activities are undertaken by
       ST or its affiliates. The Company participates in a pooled cash
       management program which requires the Company to place surplus cash with
       ST as short-term advances of less than three months.


                                      F-10
<PAGE>
                  ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1998 and 1999
               In thousands of US Dollars (except per share data)


4.     Accounts Receivable

       Accounts receivable at December 31, 1998 and 1999 consist of:

                                                               December 31,
                                                         ----------------------
                                                          1998            1999

       Accounts receivable - third parties...........    $ 20,864      $ 37,496
       Allowance for doubtful accounts...............        (211)          (92)
                                                         --------      --------
                                                         $ 20,653      $ 37,404
                                                         ========      ========

       Movements in the allowance for doubtful accounts are as follows:

                                                   1997        1998        1999

Beginning ..................................      $  77       $ 448       $ 211
Charge (credit) for the year ...............        383        (241)       (119)
Translation adjustment .....................        (12)          4          --
                                                  -----       -----       -----
Ending .....................................      $ 448       $ 211       $  92
                                                  =====       =====       =====


5.     Other Receivables

       Other receivables at December 31, 1998 and 1999 consist of:

                                                               December 31,
                                                         -----------------------
                                                          1998            1999

       Deposits and staff advances ...............       $    182      $     225
       Grant receivable (Note 12) ................          1,797          4,202
       Other receivables .........................            333          5,145
                                                         --------      ---------

                                                         $  2,312      $   9,572
                                                         ========      =========

6.     Inventories

       Inventories at December 31, 1998 and 1999 consist of:

                                                            December 31,
                                                      --------------------------
                                                        1998             1999

Raw materials ................................        $  5,047         $  8,440
Factory supplies .............................           1,079            1,268
Work-in-progress .............................           1,003            2,360
Finished goods ...............................              48              348
                                                      --------         --------
                                                         7,177           12,416
Allowance for inventory obsolescence .........            (583)          (1,103)
                                                      --------         --------
                                                      $  6,594         $ 11,313
                                                      ========         ========

                                      F-11
<PAGE>
                  ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1998 and 1999
               In thousands of US Dollars (except per share data)


6.     Inventories (Cont'd)

       Movements in the allowance for inventory obsolescence are as follows:

                                                  1997        1998        1999

       Beginning .........................     $   166      $   580     $   583
       Utilized in year ..................        (225)        (208)       (893)
       Charge for the year ...............         666          207       1,413
       Translation adjustment ............         (27)           4          --
                                               -------      -------     -------
       Ending ............................     $   580      $   583     $ 1,103
                                               =======      =======     =======


7.     Prepaid Expenses

       Prepaid expenses at December 31, 1998 and 1999 consist of:

                                                               December 31,
                                                          ---------------------
                                                           1998          1999

       Leasing prepayments ........................       $    --       $16,044
       Other prepayments ..........................           119         1,399
                                                          -------       -------
                                                          $   119       $17,443
                                                          =======       =======

       Current assets .............................       $   119       $ 7,079
       Non-current assets .........................            --        10,364
                                                          -------       -------
                                                          $   119       $17,443
                                                          =======       =======

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


8.     Property, Plant and Equipment

       Property, plant and equipment at December 31, 1998 and 1999 consist of:

<TABLE>
<CAPTION>
                                                                        December 31,
                                                                  -----------------------
                                                                     1998         1999
<S>                                                               <C>          <C>
       Cost:
           Building, mechanical and electrical installation       $  47,569    $  47,549
           Plant and machinery............................          187,874      216,621
           Toolings.......................................           13,360       16,168
           Office furniture and equipment.................            1,570        3,255
           Computer equipment.............................            3,305        7,563
           Assets under installation and construction
             in progress..................................            6,890       73,252
                                                                  ---------    ---------
                Total cost................................          260,568      364,408
                                                                  ---------    ---------
</TABLE>

                                      F-12
<PAGE>
                  ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1998 and 1999
               In thousands of US Dollars (except per share data)


8.     Property, Plant and Equipment (Cont'd)
<TABLE>
<CAPTION>
                                                                        December 31,
                                                                  -----------------------
                                                                     1998         1999
<S>                                                               <C>          <C>
       Accumulated depreciation:
           Building, mechanical and electrical installation       $    4,809   $    8,317
           Plant and machinery............................            59,293       92,121
           Toolings.......................................             5,530        8,243
           Office furniture and equipment.................               708        1,213
           Computer equipment.............................             2,171        3,216
                                                                  ----------   ----------
                Total accumulated depreciation............            72,511      113,110
                                                                  ----------   ----------

       Property, plant and equipment (net)................        $  188,057   $  251,298
                                                                  ==========   ==========
</TABLE>

       Depreciation charged to results of operations amounted to $25,477,
       $41,772 and $48,839 for the years ended December 31, 1997, 1998 and 1999.

       The building 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.


9.     Short-term Debt

       Loans at December 31, 1998 and 1999 consist of:

                                                            December 31,
                                                      -----------------------
                                                         1998         1999
       Loans from ST affiliate
       -    US Dollar .............................   $  25,000    $  25,000
       Bank loans
       -    US Dollar .............................      25,000       35,000
                                                      ---------    ---------

                                                      $  50,000    $  60,000
                                                      =========    =========
       Weighted average interest rate:

       Loans from ST affiliate
       -    US Dollar .............................       6.1%           6.6%
       Bank loans
       -    US Dollar .............................       5.8            6.8

       The US Dollar loans payable to an ST affiliate at December 31, 1998 and
       1999 bore interest at rates quoted by specified banks to the lender of
       6.1% per annum and 6.6% per annum, respectively. The loans were
       unsecured.


                                      F-13
<PAGE>
                  ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1998 and 1999
               In thousands of US Dollars (except per share data)


9.     Short-term Debt (Cont'd)

       The US Dollar bank loans comprised two loans of $25,000 and $10,000
       respectively. The $25,000 loan payable at December 31, 1998 and 1999 bore
       interest at a rate of 0.5% above London Inter-Bank Rate for US dollars.
       The loan agreement requires ST to maintain at least 51.0% equity in the
       Company and the Company to maintain a debt-to-equity ratio of less than
       1.5 to 1. The $10,000 loan payable at December 31, 1999 bore interest at
       6.8% per annum. The loan agreement requires ST to maintain at least 51.0%
       equity in the Company; the Company to maintain a debt-to-equity ratio of
       less than 2 to 1; and minimum net assets of S$125,000 are maintained at
       any one time. The loans are unsecured and repayable on August 26, 2000
       and February 16, 2000, respectively.


10.    Accrued Operating Expenses

       Accrued operating expenses at December 31, 1998 and 1999 consist of:

                                                               December 31,
                                                           ---------------------
                                                              1998       1999

       Staff costs ..................................      $ 1,812      $11,341
       Maintenance fees, license fees and royalties..          669        1,068
       Interest expense .............................        1,061        1,118
       Others .......................................        1,551        7,032
                                                           -------      -------
                                                           $ 5,093      $20,559
                                                           =======      =======


11.    Other Payables

       Other payables at December 31, 1998 and 1999 consist of:

                                                                December 31,
                                                           ---------------------
                                                              1998       1999

       Liabilities for purchase of fixed assets......      $ 4,273      $54,408
       Provision for vacation liability .............          447          830
                                                           -------      -------
                                                           $ 4,720      $55,238
                                                           =======      =======


12.    Deferred Grant

       In 1997, the Company obtained a 5-year grant of $13,878 for funding of
       certain research and development projects from the National Science &
       Technology Board ("NSTB"). The grant, which is a reimbursement of
       specified costs, has no requirement for repayment.


                                      F-14
<PAGE>
                  ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1998 and 1999
               In thousands of US Dollars (except per share data)


13.    Long-term Debt

       Long-term debt at December 31, 1998 and 1999 consists of:

                                                               December 31,
                                                          ----------------------
                                                              1998       1999

       Singapore dollar loan.........................     $ 54,282     $ 53,780
       Less current installments.....................            -       (7,420)
                                                          --------     --------
                                                          $ 54,282     $ 46,360
                                                          ========     ========

       The term loan bears interest at 1% over the prevailing rate declared by
       the Central Provident Fund ("CPF") Board, a statutory board of Singapore,
       for contributions made to the CPF under the CPF Act. Interest is payable
       semi-annually. Principal is denominated in Singapore dollars and is
       repayable in 7 equal semi-annual installments commencing September 1,
       2000. The loan agreement restricts the Company from paying dividends,
       from incurring further indebtedness and from undertaking any form of
       reconstruction, including amalgamation with another company, which would
       result in a change in the control of the Company. The loan is unsecured,
       but is supported by a corporate guarantee given by ST. The term loan at
       December 31, 1998 and 1999 bore interest at 5.3% and 3.5% per annum,
       respectively (See Note 21).

       The Company has an undrawn line of credit of US$20 million with a bank.


14.    Share Capital

                                                               December 31,
                                                          ----------------------
                                                              1998       1999

       Ordinary shares - par value...................      S$  0.25     S$ 0.25
                                                           ========     =======

       The Company's authorized share capital at December 31, 1999 was comprised
       of 1,200,000,000 ordinary shares of Singapore dollars S$0.25 par value
       each.

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

       The Company was incorporated with an initial paid-in share capital of 2
       ordinary shares with a par value of Singapore dollars S$1 each. In 1995,
       the paid-in capital was increased to Singapore dollars S$45,000
       (US$31,802) through the issue of 44,999,998 ordinary shares at Singapore
       dollars S$1 per share. In 1996, the paid-in capital was further raised by
       Singapore dollars S$47,000 (US$33,098) to Singapore dollars S$92,000 with
       the issue of 47,000,000 ordinary shares at Singapore dollars S$1 per
       share. In March 1998, the paid-in capital was further increased by
       Singapore dollars S$100,000 (US$62,305) to Singapore dollars S$192,000
       with the issue of 100,000,000 ordinary shares at Singapore dollars S$1
       per share.

       At an extraordinary general meeting held on April 30, 1998, the
       shareholders of the Company approved the sub-division of the authorized
       share capital of 300,000,000 ordinary shares of Singapore dollars S$1
       each into 1,200,000,000 ordinary shares of Singapore dollars S$0.25 each.
       The 192,000,000 ordinary shares of Singapore dollars S$1 each in issue at
       that time were sub-divided into 768,000,000 ordinary shares of Singapore
       dollars S$0.25 each.


                                      F-15
<PAGE>
                  ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1998 and 1999
               In thousands of US Dollars (except per share data)


14.    Share Capital (Cont'd)

       In June 1998, the paid-in capital, net of subscriptions receivable, was
       increased by Singapore dollars S$256 (US$155) to Singapore dollars
       S$192,256 with the issue of 12,174,000 ordinary shares of Singapore
       dollars S$0.25 each, partly paid to Singapore dollars S$0.0125, at a
       subscription price of Singapore dollars S$0.42 to employees of the
       Company, its subsidiary, ST and related corporations of ST under the
       Ownership Scheme. (See Note 20)

       In January 1999, the paid-in capital, net of subscriptions receivable,
       was increased by Singapore dollars S$108 (US$65) to Singapore dollars
       S$192,363 with the issue of 8,600,000 ordinary shares of Singapore
       dollars S$0.25 each at par, partly paid to Singapore dollars S$0.0125 to
       employees of the Company, its subsidiary, ST and related corporations of
       ST under the Ownership Scheme. (See Note 20)

       In July 1999, the paid-in capital, net of subscriptions receivable, was
       increased by Singapore dollars S$92 (US$54) to Singapore dollars
       S$192,455 with the issue of 7,371,600 ordinary shares of Singapore
       dollars S$0.25 each at par, partly paid to Singapore dollars S$0.0125 to
       employees of the Company, its subsidiary, ST and related corporations of
       ST under the Ownership Scheme. (See Note 20)

       In November 1999, the Company terminated the ST Assembly Test Services
       Ltd Employees' Share Ownership Scheme (" the Ownership Scheme"). Under
       the terms of the termination, the Company received proceeds from
       participants amounting to approximately $2,961 to fully pay up the
       remaining second installment of 95% of the subscription price for
       17,407,695 ordinary shares issued under the Ownership Scheme. The
       remaining 9,605,505 partly paid ordinary shares in issue under the
       Ownership Scheme were bought back from the employees by the Company at a
       total cash consideration of approximately $104. Also, as part of the
       consideration for the buy back, under the terms of the termination, such
       employees were granted new options to subscribe for 6,385,450 ordinary
       shares, at an exercise price of Singapore dollars S$0.42 each, and
       3,220,055 ordinary shares, at an exercise price of Singapore dollars
       S$0.25 each, under the ST Assembly Test Services Ltd Share Option Plan
       1999 (See Note 20). All the shares purchased by the Company were
       cancelled on acquisition.

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


15.    Additional Paid-in Capital

       Additional paid-in capital includes the excess of proceeds received from
       issues of share capital (net of the costs of issue) over the par value of
       shares issued, which under Singapore law must be credited to the share
       premium account. The share premium may only be applied in paying up
       unissued shares to be issued to shareholders, paying up in whole or in
       part the balance unpaid on shares in issue, in payment of dividends, if
       such dividends are satisfied by the issue of shares to members of the
       Company, in writing off preliminary expenses and share and debenture
       issue expenses and by provision for premiums payable on the redemption of
       redeemable preferred shares. The Company has not utilized any amounts in
       the share premium account for the above mentioned purposes. As of
       December 31, 1999, the Company's share premium account amounted to $497.
       During the year, as part of the termination of the Ownership Scheme, the
       Company purchased 10,717,905 of its own ordinary shares of S$0.25 each,
       partly paid up to S$0.0125 per share. All the shares purchased by the
       Company were cancelled on acquisition. Upon cancellation, an amount of
       $97, representing the amount by which the Company's issued share capital
       was diminished on cancellation, was transferred to the capital redemption
       reserve within additional paid-in capital, as required by Singapore law
       (See Note 20).


                                      F-16
<PAGE>
                  ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1998 and 1999
               In thousands of US Dollars (except per share data)


16.    Retained Deficit

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


17.    Other Non-operating Income (Expense)

                                                 For the year ended December 31,
                                                 -------------------------------
                                                   1997       1998        1999

       Government grant income.................  $  190     $  1,151    $  1,612
       Provision for relocation costs..........    (554)           -           -
       Other income............................     426          952         767
                                                 ------     --------    --------
                                                 $   62     $  2,103    $  2,379
                                                 ======     ========    ========


18.    Income Taxes

       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 for a five-year period from January 1,
       1996, renewable for a further three years 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. Profits arising during the
       pioneer status period offset any accumulated pioneer loss and unutilized
       capital allowance carryforward balances. Pioneer loss and unutilized
       capital allowance carryforwards are available indefinitely, subject to
       more than 50% of the shareholders staying the same from the incurrence of
       the tax loss or allowance to its utilization. As of December 31, 1999,
       the Company had unutilized capital allowance carryforwards of $25,756.

       The income tax expense for the years ended December 31, 1997, 1998 and
       1999 represents income tax payable on non-pioneer trade income,
       principally rental and interest income.


                                      F-17
<PAGE>
                  ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1998 and 1999
               In thousands of US Dollars (except per share data)


18.    Income Taxes (Cont'd)

       A reconciliation of the expected tax expense (benefit) at the statutory
       rate of tax to the tax expense is as follows:
                                                 For the year ended December 31,
                                                 -------------------------------
                                                   1997       1998        1999
       Income tax expense (benefit) computed at
           Singapore statutory rate of 26%.....   $  (3)     $  394    $  1,392
       Non-deductible expenses.................      81         174       6,635
       Pioneer status relief...................       -        (476)     (7,862)
       All other items, net....................      81         298         335
                                                  -----      ------    --------
       Income tax expense......................   $ 159      $  390    $    500
                                                  =====      ======    ========

       Income tax payable at December 31, 1998 and 1999 was $321 and $678,
       respectively.

       The pioneer status relief has the effect of increasing net income per
       share by $0, $0 and $0.01 and net income per ADS by $0, $0.01 and $0.10
       for the years ended December 31, 1997, 1998 and 1999, respectively.

       Due to the uncertainty surrounding the timing and extent of the
       realization of its deferred tax assets, substantially unutilized capital
       allowances, the Company has provided a valuation allowance sufficient to
       reduce their carrying amounts to zero.



                                      F-18
<PAGE>
                  ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1998 and 1999
               In thousands of US Dollars (except per share data)


19.    Business Segment Data and Major Customers

       The Company is a leading independent provider of a full range of
       semiconductor test and assembly services.

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

                                                 For the year ended December 31,
                                               ---------------------------------
                                                   1997       1998        1999
       United States.........................
       -   assembly .........................  $  28,831   $  45,120   $  93,255
       -   test..............................     31,077      27,943      47,921
                                               ---------   ---------   ---------
                                                  59,908      73,063     141,176
                                               ---------   ---------   ---------
       Singapore.............................
       -   assembly..........................     10,709      10,219      11,230
       -   test..............................     10,826      17,829      22,547
                                               ---------   ---------   ---------
                                                  21,535      28,048      33,777
                                               ---------   ---------   ---------
       Rest of Asia..........................
       -   assembly .........................      1,454       1,778         611
       -   test..............................      5,474      10,980      18,000
                                               ---------   ---------   ---------
                                                   6,928      12,758      18,611
                                               ---------   ---------   ---------
       Europe................................
       -   assembly..........................          2           9       3,392
       -   test..............................          -          42       4,142
                                               ---------   ---------   ---------
                                                       2          51       7,534
                                               ---------   ---------   ---------
       Total.................................  $  88,373   $ 113,920   $ 201,098
                                               =========   =========   =========

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

                                               For the year ended December 31,
                                               ---------------------------------
                                                  1997        1998        1999
                                                    %           %           %

       Customer A............................       5.8        11.5        16.8
       Customer B............................         -        12.1        25.2
       Customer C............................      33.9        19.4         6.4
       Customer D *..........................      13.7        20.9        16.4
       Customer E............................      12.5         5.9         1.2
       Customer F*...........................      10.6         3.6         0.4
       Others................................      23.5        26.6        33.6
                                               --------    --------    --------
                                                  100.0       100.0       100.0
                                               ========    ========    ========

       * -    ST affiliate

                                      F-19
<PAGE>
                  ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1998 and 1999
               In thousands of US Dollars (except per share data)


20.    Share Options and Incentive Plans

(a)    Employees' Share Ownership Scheme

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

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

       In May 1998, options to subscribe for 12,196,000 ordinary shares of
       Singapore dollars S$0.25 each at a subscription price of Singapore
       dollars S$0.42 were granted to employees of the Company, its subsidiary,
       ST and related corporations of ST under the Ownership Scheme. The fair
       value of each option at the date of grant was estimated to be $0.31.
       Options in respect of 12,174,000 ordinary shares were exercised. The
       shares were issued in June 1998.

       In November 1998, options to subscribe for 8,961,000 ordinary shares of
       Singapore dollars S$0.25 each at a subscription price of Singapore
       dollars S$0.25 were granted to employees of the Company, its subsidiary,
       ST and related corporations of ST under the Ownership Scheme. The fair
       value of each option at the date of grant was estimated to be $0.41.
       Options in respect of 8,600,000 ordinary shares were exercised. The
       shares were issued in January 1999.

       In May 1999, options to subscribe for 8,397,200 ordinary shares of
       Singapore dollars S$0.25 each at a subscription price of Singapore
       dollars S$0.25 each were granted to employees of the Company, its
       subsidiary, ST and related corporations of ST under the Ownership Scheme.
       The fair value of each option at the date of grant was estimated to be
       $0.51. Options in respect of 7,371,600 were exercised. The shares were
       issued in July 1999.

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



                                      F-20
<PAGE>
                  ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1998 and 1999
               In thousands of US Dollars (except per share data)


20.    Share Options and Incentive Plans (Cont'd)

(a)    Employees' Share Ownership Scheme

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

       Total compensation expense recognized for stock-based compensation under
       the Ownership Scheme for the years ended December 31, 1998 and 1999 were
       $384 and $25,095, respectively.

       Information for the year ended December 31, 1998 and 1999 is as follows:-

                                                                December 31,
                                                            -------------------
                                                              1998        1999
       Shares outstanding at beginning of year
           (in thousands).................................         -     20,774
       Shares granted during the year (in thousands)......    20,774      7,372
                                                            --------   --------
                                                              20,774     28,146

       Termination of Ownership Scheme:
       -   shares converted into fully paid shares........
              (in thousands)..............................         -    (17,408)
       -   shares repurchased and cancelled ..............
              (in thousands)..............................         -    (10,718)
       Other shares converted into fully paid shares......
           (in thousands).................................         -        (20)
                                                            --------   --------

       Shares outstanding at year end (in thousands)......    20,774          -
                                                            ========   ========

       Weighted average grant date fair value of options..     $0.30      $0.51




                                      F-21
<PAGE>
                  ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1998 and 1999
               In thousands of US Dollars (except per share data)


20.    Share Options and Incentive Plans (Cont'd)

(b)    Share Option Plan

       Effective May 1999, the Company adopted the ST Assembly Test Services Ltd
       Share Option Plan 1999 (the "Option Plan") which provides for a maximum
       of 85 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. The exercise price of
       non-statutory options cannot be less than 85% of 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.

       In June 1999, the Company granted options to subscribe for 1,570,400
       shares at an exercise price of Singapore dollars S$0.25. The options vest
       over five years and expire on dates ranging from June 12, 1999 to June
       11, 2009. The fair value of each option at the date of grant was
       estimated to be $0.49.

       In November 1999, the Company granted options to subscribe for 7,663,800
       shares at an exercise price based on the higher of Singapore dollars
       S$2.00 or the offer price per share under the prospective initial public
       offering. The options vest over five years and expire on dates up to
       November 22, 2009. The fair value of each option at the date of grant was
       estimated to be $0.81.

       In December 1999, as part of the consideration for termination of the
       Ownership Scheme, the Company granted options to subscribe for 6,385,450
       ordinary shares, at an exercise price of Singapore dollars S$0.42 each,
       and 3,220,055 ordinary shares, at an exercise price of Singapore dollars
       S$0.25 each. Of such options, 7,214,305 vested at the grant date, with
       the remaining 2,391,200 options vesting over a period of two years. The
       options expire on dates up to December 10, 2009.


                                      F-22
<PAGE>
                  ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1998 and 1999
               In thousands of US Dollars (except per share data)


20.    Share Options and Incentive Plans (Cont'd)

(b)    Share Option Plan


       The following table summarizes information about fixed stock options
       outstanding at December 31, 1999:
<TABLE>
<CAPTION>

                                 Options Outstanding                  Options Exercisable
                    ------------------------------------------    ---------------------------
                                       Weighted
                        Number          average       Weighted                       Weighted
       Range of     outstanding        remaining       average         Number         average
       exercise           at          contractual     exercise      exercisable      exercise
       prices        2/31/1999            life          price        12/31/1999        price
                    (in thousands)                                (in thousands)
<S>                    <C>             <C>             <C>              <C>           <C>
       S$0.25 to       11,112          9.9 years       S$0.35           283           S$0.30
       S$0.42

       S$2.00           7,601          9.9 years       S$2.00             -               -
                       ------                                         -----
                       18,713                                           283
                       ======                                         =====
</TABLE>


       Total compensation expense recognized for stock-based compensation under
       the Option Plan for the year ended December 31, 1999 was $232.


(c)    Impact of Applying Fair Value Based Method

       The fair value of option grants under the Ownership Scheme was estimated
       on the date of the grant using the Black-Scholes option-pricing model
       with the following assumptions used: dividend yield; 0.0% for all years;
       risk-free interest rate of 5.71% for May 1998 option grant, 4.84% for
       November 1998 option grant and 5.57% for May 1999 option grant; expected
       volatility of 61.1% for May 1998 option grant, 92.3% for November 1998
       option grant and 78.6% for May 1999 option grant; and an expected life of
       ten years respectively.

       The fair value of option grants under the Option Plan is estimated on
       the date of grant using the Black-Scholes option-pricing model with the
       following assumptions: dividend yield of 0.0% for all years; risk-free
       interest rate of 5.9% for June 1999 option grant, 6.4% for November 1999
       option grant and 6.3% for December 1999 option grant; expected volatility
       of 77.3% for June option grant, 61.5% for November 1999 option grant and
       59.4% for December 1999 option grant; and an expected life of ten years
       respectively.

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


                                      F-23
<PAGE>
                  ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1998 and 1999
               In thousands of US Dollars (except per share data)


20.    Share Options and Incentive Plans (Cont'd)

(c)    Impact of Applying Fair Value Based Method


                                                           For the year ended
                                                              December 31,
                                                        ------------------------
                                                           1998          1999

       Net income (loss):
           As reported...............................   $   1,124     $   4,855
           Pro forma.................................         999        18,952

       Basic net income..............................
           (loss) per share:
           As reported...............................           -          0.01
           Pro forma.................................           -          0.02

       Diluted net income (loss).....................
           (loss) per share:
           As reported...............................           -          0.01
           Pro forma.................................           -          0.02


21.    Related Party Transactions

       ST is a multi-national conglomerate headquartered in Singapore which has
       five principal business groups: engineering, technology, infrastructure,
       property and financial services. ST is in turn 100%-owned by Temasek
       Holdings (Private) Limited ("Temasek"). Temasek is a holding company
       through which the corporate investments of the government of Singapore
       are held. The Company is in the semiconductor division of the ST Group
       which specializes in design, manufacture, assembly and testing of
       semiconductors. ST Companies, including Chartered Semiconductor
       Manufacturing Ltd engage in transactions with the Company in the normal
       course of their respective businesses.

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

       In 1997, the Company subleased office premises to TriTech
       Microelectronics Ltd ("TriTech"), an ST affiliate and a fabless designer
       of semiconductor products, at a monthly receivable of $49 subject to
       annual revision. On July 2, 1999, TriTech was placed under judicial
       management. Rental income for the years ended December 31, 1997, 1998 and
       1999 was $332, $810 and $482, respectively. The Company repossessed the
       office premises in October 1999.

       TriTech was previously a major customer of the Company. The sales to
       TriTech were made on substantially the same terms as those available to
       third parties for similar products and volumes committed. The Company has
       not made sales to TriTech since it was placed under judicial management.

       The building contract of $38,000 was awarded to an ST affiliate. The
       construction of the building was completed in August 1997.


                                      F-24
<PAGE>
                  ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1998 and 1999
               In thousands of US Dollars (except per share data)


21.    Related Party Transactions (Cont'd)

       ST provides management and corporate services to the Company. Under a new
       service agreement dated December 27, 1999, effective January 1, 2000,
       annual management fees are payable for the provision of specified
       services on mutually agreed terms which the Company believes approximates
       the cost of providing those services. The fees are subject to review by
       the parties every three years. Prior to this agreement these services
       were subject to a management fee computed based on certain percentages of
       capital employed, revenue, manpower and payroll.

       ST provides short-term financing for the Company (generally on a 3 to 6
       months renewable basis) using its cost competitive corporate banking
       advantage in the banking community.

       Advances to and from ST bear interest at rates comparable to rates
       offered by commercial banks in Singapore. The Company also participates
       with ST in a cash management program managed by a bank. Under the
       program, cash balances are pooled and daily cash surpluses or shortfalls
       may, on a short-term basis, be lent to or borrowed from other ST
       affiliates participating in the arrangement at prevailing inter-bank
       rates.

       Certain general and administrative expenses of Singapore Technologies
       Assembly and Test Services, Inc., our subsidiary, are borne and recharged
       to the Company by Chartered Semiconductor Manufacturing Inc., a United
       States incorporated affiliate of ST. These expenses amounted to $2,229,
       $1,020 and $1,252 for 1997, 1998 and 1999 respectively.

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

<TABLE>
<CAPTION>

                                                                For the year ended December 31,
                                                              ---------------------------------
                                                                 1997        1998        1999
<S>                                                           <C>         <C>         <C>
       ST -
           Management fees expense......................      $    897    $  1,066    $  1,223
           Interest expense.............................         4,254       4,747           -
       ST affiliates -
           Net revenues.................................        21,535      28,048      33,777
           Property, plant and equipment sold...........             -         190           -
           Purchase of property, plant and equipment....        38,438       1,207         160
           Interest income..............................             5           -           -
           Interest expense.............................             5       1,867       1,458
           Rental income................................           332         810         482
           General and administrative expenses..........         2,229       1,020       1,252
                                                              ========    ========    ========
</TABLE>

       As of December 31, 1998 and 1999, there were the following amounts owing
       by (to) affiliates:-

                                                                 December 31,
                                                             -------------------
                                                              1998         1999
       Amounts due from ST affiliates
           Accounts receivable, net of .................
              allowance for doubtful accounts...........     $ 5,957     $ 6,271
           Others.......................................         336         261
                                                             -------     -------
                                                             $ 6,293     $ 6,532
                                                             =======     =======


                                      F-25
<PAGE>
                  ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1998 and 1999
               In thousands of US Dollars (except per share data)


21.    Related Party Transactions (Cont'd)

                                                                 December 31,
                                                             -------------------
                                                              1998         1999

       Amounts due to ST
           Other payables.................................   $  2,625   $  3,994
       Amounts due to ST affiliates
           Accounts payable...............................         33        260
           Other payables.................................      1,653      1,279
                                                             --------   --------
                                                             $  4,311   $  5,533
                                                             ========   ========
       Loans from ST affiliate
           Short-term debt................................   $ 25,000   $ 25,000
                                                             ========   ========


22.    Commitments and Contingencies

(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 is currently fixed at $594. 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, 1997,
       1998 and 1999 was $962, $771 and $594, respectively.

       The Company has leased certain plant and equipment under operating
       leases. These leases expire in 2001. Operating lease rental expenses in
       respect of these leases for the year ended December 31, 1998 and 1999
       were $270 and $1,673, respectively.

       Future minimum lease payments under non-cancelable operating leases of
       factory land and plant and equipment as of December 31, 1998 and 1999
       were:

                                                              December 31,
                                                         ----------------------
                                                           1998         1999

       Payable in year ending December 31,
           1999......................................    $   2,159     $      -
           2000......................................        2,159        3,151
           2001......................................        1,614        2,489
           2002......................................          610          605
           2003......................................          610          605
           2004......................................          610          605
           Thereafter................................       12,962       12,705
                                                         ---------     --------
                                                         $  20,724     $ 20,160
                                                         =========     ========

                                      F-26
<PAGE>
                  ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1998 and 1999
               In thousands of US Dollars (except per share data)


22.    Commitments and Contingencies (Cont'd)

(b)    Technology Arrangements

       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.

       On October 18, 1996, the Company acquired patent rights from Motorola
       Inc. ("Motorola") to use technology in making ball grid array packages
       ("BGA"). Under the agreement, the Company is required to pay Motorola a
       royalty based on the number of pads used on each BGA package. The
       agreement expires on December 31, 2002 and the Company has the option to
       renew the agreement subject to possible amendment of the provisions
       thereof. Total expense recorded under the agreement for the years ended
       December 31,1998 and 1999, was $134 and $596, respectively. No expense
       was recorded under the agreement for the year ended December 31, 1997.

       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.


 (c)   Capital Commitments

       As of December 31, 1998 and 1999, there were the following capital
       commitments:-

                                                                December 31,
                                                           ---------------------
                                                             1998         1999

       Building, mechanical and electrical installation...  $  1,293   $  3,543
       Purchase of plant and machinery....................  $ 12,964   $ 35,282
                                                            ========   ========


(d)    Foreign Currency Contracts

       The Company had the following notional amounts of forward foreign
       currency contracts as of December 31, 1998 and 1999:

                                                                December 31,
                                                           ---------------------
                                                             1998         1999

       Forward foreign currency contracts.................  $   -     $  53,780
                                                            =====     =========

       The Company has only limited involvement with derivative financial
       instruments and does not use them for trading. The Company has used a
       forward foreign currency swap contract to hedge a Singapore dollar
       dominated long-term debt to US dollars. The payment terms of the foreign
       currency swap contract match the principal repayments of the long-term
       debt, as described in Note 13. The Company incurs an annual financing
       charge of 1.7% of the principal amount of the loan outstanding under this
       hedging transaction. The Company has not used any other derivative
       financial instrument. The Company is exposed to credit loss in the event
       of non-performance by the forward foreign currency swap contract
       counterparty. The Company anticipates, however, that the counterparty
       will be able to fully satisfy its obligations under the contract. The
       Company has not obtained collateral or other security to support the
       financial instrument but monitors the credit standing of the
       counterparty.


                                      F-27
<PAGE>
                  ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1998 and 1999
               In thousands of US Dollars (except per share data)


23.    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.

       Bank overdrafts

       Bank overdrafts are due on demand and have interest rates that reflect
       currently available terms and conditions for similar borrowings. The
       carrying amount of this debt is a reasonable estimate of fair value.

       Short-term debt

       Short-term debt has variable rates that reflect currently available terms
       and conditions for similar borrowings. The carrying amount of this debt
       is a reasonable estimate of fair value.

       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.

       Foreign Currency Contracts

       The fair value is estimated by reference to market quotations for foreign
       currency contracts with similar terms adjusted where necessary for
       maturity differences.

       Limitations

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


                                      F-28
<PAGE>
                  ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1998 and 1999
               In thousands of US Dollars (except per share data)


23.    Fair Value of Financial Instruments (Cont'd)

<TABLE>
<CAPTION>
                                                   As of                         As of
                                                December 31,                 December 31,
                                                   1998                          1999
                                                        Estimated                   Estimated
                                           Carrying       Fair           Carrying      Fair
                                           Amount         Value           Amount       Value

       ---------------------------------------------------------------------------------------
<S>                                       <C>            <C>             <C>         <C>
       Financial Assets:
           Cash and cash
             equivalents                  $ 12,692       $ 12,692        $ 16,568    $ 16,568
       Financial Liabilities:
           Bank overdrafts                       -              -               -           -
           Short-term debt                  50,000         50,000          60,000      60,000
           Long-term debt                   54,282         54,282          53,780      54,265
       Derivatives:
           Gain on foreign
             currency contracts                  -              -           1,835       2,320

       ---------------------------------------------------------------------------------------
</TABLE>


24.    Recent Changes in US GAAP

       In June 1998, the Financial Accounting Standards Board issued SFAS No.
       133, "Accounting for Derivative Instruments and Hedging Activities". SFAS
       No. 133 established accounting and reporting standards requiring that
       every derivative instrument be recorded in the balance sheet as either an
       asset or liability measured at its fair value. SFAS No. 133, as recently
       amended, is effective for fiscal years beginning after June 15, 2000.
       Management believes the adoption of SFAS No. 133 will not have a material
       effect on the Company's financial position or results of operations.


25.    Subsequent Events

       Subsequent to the end of the financial year the Company issued
       175,950,000 ordinary shares at $2.10 per share and 19,550,000 ordinary
       shares at S$3.554 ($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 $388
       million.


26.    Comparative Figures

       Certain items in the comparative figures have been reclassified to
       conform with the current year's presentation.


                                      F-29