<PAGE>

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                           ---------------------------

                                    Form 10-K
(Mark One)
x_|    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
       THE SECURITIES EXCHANGE ACT OF 1934.

                   For the fiscal year ended December 31, 1996

|_|   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 0-27712

                    INTEGRATED PACKAGING ASSEMBLY CORPORATION
             (Exact Name of Registrant as Specified in its Charter)

         California                                          77-0309372
(State or other jurisdiction of                           (I.R.S Employer
 incorporation or organization)                        Identification Number)




          2221 Oakland Road                                     95131
         San Jose, California                                 (Zip Code)
(Address of principal executive offices)




        Registrant's telephone number including area code: (408) 321-3600
      Securities registered pursuant to Section 12(g) of the Exchange Act:
                           Common Stock, no par value

     Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES  [X]   NO  [_]

     Indicate by check mark if disclosure of delinquent filers in response to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]

     The aggregate market value of the voting stock held by persons other than
those who may be deemed affiliates of the Company as of March 19, 1997, was
approximately $19,700,000. Shares of Common Stock held by each executive officer
and director and by each person who owns 5% or more of the outstanding Common
Stock have been excluded in that such persons may under certain circumstances be
deemed to be affiliates. This determination of executive officer or affiliate
status is not necessarily a conclusive determination for other purposes.

     The number of shares of the Registrant's Common Stock outstanding as of
March 19, 1997 was 13,923,403.

                       DOCUMENT INCORPORATED BY REFERENCE

     Portions of the Proxy Statement for the Registrant's 1996 Annual Meeting of
Stockholders to be held June 17, 1997 are incorporated by reference in Part III
of this Form 10-K.
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                                TABLE OF CONTENTS

                                                                                  Page
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PART I

     Item 1.  Business..........................................................    1
     Item 2.  Properties........................................................   10
     Item 3.  Legal Proceedings.................................................   10
     Item 4.  Submission of Matters to a Vote of Security Holders...............   10

PART II

     Item 5.  Market for Registrant's Common Equity and Related
               Stockholder Matters..............................................   11
     Item 6.  Selected Financial Data...........................................   12
     Item 7.  Management's Discussion and Analysis of Financial
               Condition and Results of Operations..............................   13
     Item 8.  Financial Statements and Supplementary Data.......................   20
     Item 9.  Changes in and Disagreement with Accountants on Accounting
               and Financial Disclosure ........................................   38

PART III

     Item 10.  Directors and Executive Officers of the Registrant...............   39
     Item 11.  Executive Compensation...........................................   39
     Item 12.  Security Ownership of Certain Beneficial Owners and Management...   39
     Item 13.  Certain Relationships and Related Transactions...................   39

PART IV

     Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K..   40

SIGNATURES......................................................................   42

</TABLE>

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                                     PART I

         This Report on Form 10-K contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Actual results could differ materially from
those projected in the forward-looking statements as a result of the risk
related factors set forth herein.

Item 1.  Business

         Integrated Packaging Assembly Corporation ("IPAC") is a leading
independent North American semiconductor packaging foundry. The Company receives
wafers from its customers and assembles each integrated circuit in a protective
plastic package. The Company's close proximity to its customers and the
end-users of its customers' products allows it to provide quick turnaround
design and prototype production and timely delivery of products in high volume.

Industry Background

Semiconductor Manufacturing Process

         The manufacture of semiconductors requires complex and precise steps
which can be broadly characterized as wafer fabrication, packaging and testing.
Wafer fabrication begins with raw silicon wafers and ends with devices in the
form of die on wafers. Since the die must be packaged to protect them and
facilitate their use in electronic systems, the fabricated wafers are
transferred to packaging facilities. The packaging facility dices the wafer into
individual die, and through a series of processes connects wire leads to the die
and encapsulates the die in a protective casing. The packaged semiconductor die
must then be tested to ensure functionality before shipment for use.

         Semiconductor companies in North America utilize various business
models for the design and manufacture of semiconductors. Certain vertically
integrated companies perform all stages of the manufacturing process. Other
companies outsource certain aspects of the manufacturing process, including
wafer fabrication and packaging. Wafers fabricated by or for North American
semiconductor companies are often tested in North America and then shipped for
packaging to captive or independent packaging foundries in Asia. The packaged
semiconductors are often returned to North America for final test and
distribution to customers. The shipment to and from Asia for packaging can
lengthen the semiconductor manufacturing process significantly.

Semiconductor Packaging Market

         The growth in the worldwide semiconductor market has created a
significant demand for semiconductor packaging capacity. Different types of
devices such as microprocessors, logic devices and memory devices require
different packaging solutions to accommodate different requirements for heat
dissipation and signal propagation. Semiconductor packages are categorized
largely by the technology employed to interconnect the packaged circuits to
printed circuit boards. Surface mount technology ("SMT"), in which the leads on
integrated circuits are soldered to the surface of the printed circuit board, is
a newer and more advanced technology than pin through hole ("PTH") technology,
in which the leads are inserted into holes in the printed circuit board. SMT
allows components to be placed on both sides of the board, which permits a
higher degree of system integration, increases system performance and reduces
system cost.

         The package types used to accommodate SMT include small outline ("SO")
packages, quad flat packages ("QFP"), thin quad flat packages ("TQFP") and ball
grid array ("BGA") packages. QFPs and TQFPs are primarily
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used for logic devices, such as field programmable gate arrays ("FPGAs") and
application specific integrated circuits ("ASICs"), which have lead counts of up
to 376 leads per device, while SO packages are primarily used for memory and
analog devices that have much lower lead counts. BGA is an emerging packaging
technology that can accommodate up to 1,000 leads per device.

         To meet their packaging requirements, semiconductor companies have
relied on captive or independent packaging foundries, principally located in
Asia. These packaging foundries were initially located in Asia in the 1970s to
take advantage of low labor costs. Competition among independent packaging
foundries during this period was based largely on price and the availability of
capacity because the large feature sizes of the semiconductors did not present
significant technological challenges or opportunities for differentiation among
packaging techniques. During the 1980s, semiconductor packaging commenced a
transition from a labor intensive operation to a capital intensive,
technologically advanced operation as packaging facilities were forced to
automate to accommodate significantly more complex devices while achieving
consistency, quality and reliability. These trends accelerated in the 1990s at
the same time that intense competition among semiconductor companies shortened
product life cycles for many devices. As a result, cycle time has become a
critical factor in the semiconductor packaging industry.

         The Company believes that the use of independent packaging foundries
enables semiconductor companies to reduce costs and shorten production cycles.
By packaging a greater volume of semiconductors than a given semiconductor
company is likely to do internally, an independent packaging foundry can reduce
costs by employing technically advanced equipment and by procuring raw materials
more cost-effectively. The use of independent packaging foundries also enables
semiconductor companies to avoid the high cost of capital equipment required for
advanced semiconductor packaging. In addition, semiconductor companies are
realizing that the expertise of independent packaging foundries can be a source
for advanced packaging technologies that can satisfy their requirements for
miniaturization, high lead counts and thermal and electrical performance.

Strategy

         The Company's objective is to be the leading independent semiconductor
packaging foundry in North America. The principal elements of the Company's
strategy are set forth below.

Locate Facilities in North America Near Customers and End-Users

         The Company's packaging facility is located in San Jose, California in
close proximity to its customers and the end-users of its customers' products.
Due to intense competitive pressures in the electronics industry, semiconductor
companies are faced with increasingly shorter product life cycles and therefore
have a need to reduce the time it takes to bring a product to market. The
Company believes that its close proximity to its customers promotes quicker
turnaround design, prototype production and final product delivery to its North
American customers, compared to its principal competitors which are all
currently located in Asia.

Provide High Quality Customer Service

         The Company believes that the principle components of quality customer
service are time to market, reliability and quality. Since the product life
cycles of integrated circuits continue to contract, IPAC offers short packaging
cycles as a principal benefit to its customers. In addition, the Company has
established a quality control system that is designed to enable it to maintain
reliable services, high product quality and high production yields. The Company
also maintains a flexible production capability which enables it to react
quickly to changes in customer requirements as well as industry developments.

                                      -2-
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Focus on Selected High Growth Markets

         The Company focuses on QFPs and TQFPs which are used for complex, high
pin-count products, such as FPGAs and ASICS. The Company is also developing
capacity for BGA packages. The Company expects QFPs, TQFPs and BGAs to be growth
areas of the packaging market, and generally command higher margins than most
other packages.

Manufacturing

Semiconductor Packaging Services

         The Company has focused on packages designed for assembly using the
newer and technologically advanced SMT. Within the SMT market, the Company
focuses on high pin-count packages, such as QFPs and TQFPS. The Company offers
nine different QFP and TQFP families with body sizes ranging from 10x10 mm to
32x32 mm, and with the number of leads available in certain package families
ranging from 44 to 376 leads. Integrated circuits packaged by the Company are
used in the following applications: personal computers, modems, disk drives and
telecommunications, among others. The Company also offers a limited number of
packages for emerging packaging technologies, such as BGA packages. Since
inception, QFPs and TQFPs have accounted for substantially all of the Company's
packaging revenues.

         Packaging involves several manufacturing operations which are highly
automated to facilitate high volume production. The assembly process begins with
the mounting of a finished, tested wafer onto a carrier. After a dicing saw cuts
the wafer into individual die, the cut wafer is moved to a die bonder which
picks each good die off the wafer and bonds it to a lead frame with epoxy resin.
A lead frame is a miniature sheet of metal, generally made of copper with
selective silver plating on which the pattern of input/output (I/0) leads has
been cut. Next, very fine (typically 0.001 inches in diameter) gold wires are
connected to the die and the leads through the use of automated machines known
as wire bonders. These wire leads provide the electrical path necessary for the
device to function. Each die is then encapsulated in a plastic casing and
marked. The leads protruding from the finished casing are then plated with a tin
and lead composition to permit the leads to be connected to the printed circuit
board. At the end of the packaging process, the leads are trimmed and formed
into requisite shapes. After this packaging process is complete, the devices
undergo final inspection and are prepared for shipment.

         The Company has expended substantial resources to significantly expand
its production capacity over the past three years. The Company shipped
approximately 1.6 million devices in 1994, approximately 10.5 million devices in
1995 and approximately 18.1 million devices in 1996. Since the fourth quarter of
1996, the Company has had available manufacturing capacity. The Company's
manufacturing capacity utilization is a function of the mix of different package
types produced by the Company at any one time and the proportion of standard
production runs compared to expedited production runs. Thus, as the Company
shifts its production among different package types or allocates a different
amount of available capacity to standard production runs, the rate of the
Company's capacity utilization changes, at times significantly.

         The Company believes that its competitive position depends on its
ability to have sufficient capacity to meet anticipated customer demand.
Accordingly, although the Company currently has available manufacturing
capacity, the Company is continuing to make significant investments to expand
such capacity, particularly through the acquisition of capital equipment and the
training of new personnel. There can be no assurance that the Company will be
able to utilize such capacity, to expand its manufacturing capacity in a timely
manner, that the cost of such expansion will not exceed management's current
estimates or that such capacity will not exceed the demand for the Company's
services. In addition, expansion of the Company's manufacturing capacity will
continue to significantly

                                      -3-
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increase its fixed costs, and the future profitability of the Company will
depend on its ability to utilize its manufacturing capacity in an effective
manner. The Company's inability to generate the additional production volume
necessary to fully utilize its capacity would have a material adverse effect on
the Company's business, financial condition and results of operations.

         The semiconductor packaging business is capital intensive and requires
a substantial amount of highly automated, expensive capital equipment which is
manufactured by a limited number of suppliers, many of which are located in Asia
or Europe. The Company's operations are significantly dependent upon the
Company's ability to obtain capital equipment for its manufacturing operations
in a timely manner. In this regard, the Company currently expects to spend up to
$7.0 million to purchase capital equipment in 1997. The Company currently
purchases capital equipment from a limited group of suppliers including Dai-Ichi
Seiko Co., Ltd., ESEC SA and Kaijo Corporation. The Company has no long term
agreement with any such supplier and acquires such equipment on a purchase order
basis. The market for capital equipment used in semiconductor packaging has been
and is expected to continue to be characterized by intense demand, limited
supply and long delivery cycles. The Company's dependence on such equipment
suppliers poses substantial risks. Should any of the Company's major suppliers
be unable or unwilling to provide the Company with high quality capital
equipment in amounts necessary to meet the Company's requirements, the Company
would experience severe difficulty locating alternative suppliers in a timely
fashion and its operations could be materially adversely affected. In this
regard, in the second half of 1996, the Company experienced problems with the
performance of certain capital equipment which resulted in manufacturing
inefficiencies. These equipment problems had a material adverse effect on the
Company's financial results in the fourth quarter of 1996. Any further problems
with such capital equipment or any prolonged delay in equipment shipments by key
suppliers or an inability to locate alternative equipment suppliers could have a
material adverse effect on the Company's business, financial condition and
results of operations and could result in damage to customer relationships.
Moreover, increased levels of demand in the capital equipment market may cause
an increase in the price of equipment, further lengthen delivery cycles and
limit the ability of suppliers to adequately service equipment following
delivery, any of which could have an adverse effect on the Company's business,
financial condition or results of operations. In addition, adverse fluctuations
in foreign currency exchange rates, particularly the Japanese yen, could result
in increased prices for capital equipment purchased by the Company, which could
have a material adverse effect on the Company's business, financial condition
and results of operations.

         The Company currently outsources electroplating of the copper leads
protruding from the plastic moldings with a tin and lead composition from
International Lead Frame Corporation, a subsidiary of Mitsui High-Tec, Inc., and
Hytek Finishes, Inc. The Company has no long term agreement with either supplier
and such services are provided on a purchase order basis. From time to time, the
Company's plating subcontractors have experienced significant manufacturing
problems. In particular, such problems resulted in delayed customer shipments
by, and increased costs to, the Company during the second and third quarters of
1995. There can be no assurance that the Company's subcontractors will not
experience manufacturing problems in the future or that such problems will not
result in increased costs or production delays which could have a material
adverse effect on the Company's business, financial condition and results of
operations. The Company has placed orders for advanced electroplating systems
which it currently plans to install at a leased facility in San Jose, California
which will be operated by the Company. The Company currently expects its plating
facility to be in operation in the second quarter of 1997, although there can be
no assurance that equipment delivery delays or other factors will not adversely
impact such schedule.

Quality Control

         The Company believes that total quality management is a vital component
of customer satisfaction and internal productivity. The Company has established
quality control systems which are designed to maintain acceptable manufacturing
yields at high volume production. The Company has also developed a sophisticated

                                      -4-
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proprietary software program for material resource planning, shop floor control,
work in process tracking, statistical process control and product costing. The
Company obtained certification for its packaging operations pursuant to ISO 9002
in December 1996.

         As of December 31, 1996, the Company's quality control staff consisted
of 11 engineers, technicians and other employees who monitor the Company's
design and production processes in order to ensure high quality. These employees
include line inspectors who work with members of the production staff to conduct
examination, testing and fine-tuning of products during the production process.
Quality control personnel are involved from initial design to production. The
quality control staff also collects and analyzes data from various stages of the
production process which is used by the Company for statistical process control.

         The semiconductor packaging process is complex and product quality and
reliability is subject to a wide variety of factors. Defective packaging can
result from a number of factors, including the level of contaminants in the
manufacturing environment, human error, equipment malfunction, use of defective
raw materials, defective plating services and inadequate sample testing. From
time to time, the Company expects to experience lower than anticipated
production yields as a result of such factors. For example, in the second half
of 1996, the Company identified a problem with certain elements of the
manufacturing process for lead frames which resulted in reduced yields for the
affected products and substantially reduced orders from a major customer which
adversely impacted the Company's operating results. The Company's failure to
maintain high quality production standards or acceptable production yields would
likely result in loss of customers, delays in shipments, increased costs,
cancellation of orders and product returns for rework, any of which could have a
material adverse effect on the Company's business, financial condition and
results of operations.

Raw Materials and Suppliers

         The Company's packaging operations depend upon obtaining adequate
supplies of raw materials on a timely basis. The principal raw materials used in
the Company's packaging process are lead frames, gold wire and molding compound.
The semiconductors used by the Company are supplied by its customer or the
customer's wafer foundry; consequently, the Company incurs no inventory costs
relating to the silicon wafers used in its packaging process. The Company does
not maintain large inventories of lead frames, gold wire or molding compound,
and has from time to time experienced difficulty in obtaining acceptable
materials on a timely basis.

         The Company maintains a supplier quality program that includes
qualification, performance measurement and corrective action requirements. The
Company chooses its suppliers based on quality, delivery, service and price. The
Company sources most of its raw materials, including critical materials such as
lead frames and die attach compound, from a limited group of suppliers,
including Sumitomo Metal Mining Co., Ltd., Dai Nippon Printing, Acqutek
International and Tokyo Printing Ink Manufacturing Co., Ltd. Molding compound, a
critical raw material, is obtained from Sumitomo Bakelite Co., Ltd., a sole
source supplier. From time to time, vendors have extended lead times or limited
the supply of required materials to the Company because of vendor capacity
constraints and, consequently, the Company has experienced difficulty in
obtaining acceptable raw materials on a timely basis. In addition, from time to
time, the Company may reject materials from those vendors that do not meet its
specifications, resulting in declines in output or yield. Any interruption in
the availability or quality of materials from these suppliers would materially
adversely affect the Company's business, financial condition and results of
operations. The Company purchases all of its materials on a purchase order basis
and has no long term contracts with any of its suppliers. There can be no
assurance that the Company will be able to obtain sufficient quantities of raw
materials and other supplies. The Company's business financial condition and
results of operations would be materially adversely affected if it were unable
to obtain sufficient quantities of raw materials and other supplies in a timely

                                      -5-
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manner or if there were significant increases in the costs of raw
materials that the Company could not pass on to its customers.

                                      -6-
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Marketing and Sales

         The Company's marketing and sales efforts are focused on North American
semiconductor companies that design or manufacture logic devices which are used
in applications such as personal computers, modems, disk drives and
telecommunications. Within such markets, the Company emphasizes packaging
complex, high pin- count products. The Company sells its services directly
through its sales and customer support organization. The Company assists its
customers in evaluating designs with respect to manufacturability and when
appropriate recommends design changes to reduce manufacturing costs and lead
times. The Company also offers lead frame design services for a fee.

         To date, the Company has been substantially dependent on a relatively
small number of customers. Specifically, Cirrus Logic, Tseng Laboratories, and
Intel Corporation accounted for 32%, 17% and 14%, respectively, of the Company's
revenues in 1996, Cirrus Logic and Sierra Semiconductor accounted for 29% and
20%, respectively, of the Company's revenues in 1995, and Sierra Semiconductor,
Orbit Semiconductor and Standard Microsystems accounted for 27%, 18%, and 18%,
respectively, of the Company's revenues in 1994. The Company anticipates that
significant customer concentration will continue at least through 1997, although
the companies which constitute the Company's largest customers may change from
period to period.

         All of the Company's customers operate in the cyclical semiconductor
business and their order levels may vary significantly from period to period. In
addition, there can be no assurance that such customers or any other customers
will continue to place orders with the Company in the future at the same levels
as in prior periods. There can be no assurance that adverse developments in the
semiconductor industry will not adversely affect the Company's business,
financial condition and results of operations. The loss of one or more of the
Company's customers, or reduced orders by any of its key customers, could
adversely affect the Company's business, financial condition and results of
operations. The Company ships its products in accordance with customer purchase
orders and upon receipt of semiconductor wafers from its customers. The Company
generally ships products within one to seven days after receiving the customer's
wafers, and, accordingly, the Company has not to date had a material backlog of
orders. The Company expects that revenues in any quarter will be substantially
dependent upon orders received in that quarter. The Company's expense levels are
based in part on its expectations of future revenues and the Company may be
unable to adjust costs in a timely manner to compensate for any revenue
shortfall.

Competition

         The semiconductor packaging industry is highly competitive. The Company
currently faces substantial competition from established packaging foundries
located in Asia, such as Advanced Semiconductor Assembly Technology in Hong
Kong, Advanced Semiconductor Engineering, Inc. in Taiwan, ANAM in Korea, PT
Astra in Indonesia and Swire Technologies in Hong Kong. Each of these companies
has significantly greater manufacturing capacity, financial resources, research
and development operations, marketing and other capabilities than the Company
and has been operating for a significantly longer period of time than the
Company. Such companies have also established relationships with many large
semiconductor companies which are current or potential customers of the Company.
The Company could face substantial competition from Asian packaging foundries
should one or more of such companies decide to establish foundry operations in
North America. The Company could also face competition from emerging
independent, North American packaging foundries. The Company also competes
against companies which have in-house packaging capabilities as current and
prospective customers constantly evaluate the Company's capabilities against the
merits of in-house packaging. Many of the Company's customers are also customers
of one or more of the Company's principal competitors. The principal elements of
competition in the semiconductor packaging market include delivery cycle times,
price, product performance, quality, production yield, responsiveness and
flexibility, reliability and the ability to design and incorporate product
improvements. The Company believes it principally competes on the basis of
shorter delivery cycle times it can offer customers due to

                                      -7-
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the close proximity of its manufacturing facility to its customers' operations
and the end users of its customers' products.

Research and Development

         The Company's research and development efforts are focused on improving
the efficiency and capabilities of its production processes, and on developing
new packages by making improvements upon commercially available materials and
technology. The Company's research and development efforts are focused on
improving existing technology, such as developing thermally enhanced QFPs that
result in better heat dissipation, and emerging packaging technologies, such as
BGA packages that provide for an increased number of leads per device without
increasing the size of the functional integrated circuit. Although the Company
did not ship commercial quantities of BGA devices in 1996, it believes that the
increased pin count made available by BGA technology is an important technology
that will enable the Company to provide new packaging services to its customers.
The Company also works closely with the manufacturers of its packaging equipment
in designing and modifying the equipment used in the Company's production
process.

         As of December 31, 1996, the Company employed 8 persons in research and
development activities. In addition, other management and operational personnel
are involved in research and development activities. The Company supplements its
research and development efforts with alliances and technology licensing
agreements. For example, the Company is a member of an ARPA-TRP consortium
working to enhance cooperation and participation by United States companies in
assembly and packaging technology. In 1996, 1995 and 1994, the Company's
research and development expenses were approximately $1,053,000, $694,000 and
$170,000, respectively. The Company expects to continue to invest significant
resources in research and development.

         The Company has focused its manufacturing resources on plastic quad
flat packages ("QFPs") for use with surface mount technology ("SMT"), and the
Company has neither the capability nor the intent to provide services to other
substantial segments of the semiconductor packaging market. For example, the
Company has no capacity to manufacture packages for use with pin through hole
("PTH") technology, nor does the Company presently intend to manufacture
packages using materials other than plastic, such as ceramic. BGA packaging
currently represents a very small portion of the Company's overall revenues and
a relatively small portion of the overall semiconductor packaging market.
Technological change in the semiconductor packaging industry is continuous and
in the future semiconductor manufacturers are expected to require increased
technological and manufacturing expertise. The introduction of new packaging
technologies, a reduction or shift away from QFP's, or the failure of the market
for BGA packaging to develop could result in a material adverse effect on the
Company's business, financial condition and results of operations.

Intellectual Property

         The Company's success depends in part on its ability to obtain patents
and licenses and to preserve other intellectual property rights relating to its
manufacturing processes. As of December 31, 1996, the Company held four U.S.
patents which expire in 2012 and 2013, and six additional patent applications
have been filed and are pending. The Company expects to continue to file patent
applications when appropriate to protect its proprietary technologies; however,
the Company believes that its continued success depends primarily on factors
such as the technological skills and innovation of its personnel rather than on
its patents. The process of seeking patent protection can be expensive and time
consuming. There can be no assurance that patents will issue from pending or
future applications or that, if patents are issued, they will not be challenged,
invalidated or circumvented, or that rights granted thereunder will provide
meaningful protection or other commercial advantage to the Company. Moreover,
there can be no assurance

                                      -8-
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that any patent rights will be upheld in the future or that the Company will be
able to preserve any of its other intellectual property rights.

         As is typical in the semiconductor industry, the Company may receive
communications from third parties asserting patents on certain of the Company's
technologies. Although the Company has not received any such letters or been a
party to any intellectual property litigation, in the event any third party were
to make a valid claim and a license were not available on commercially
reasonable terms, the Company's business, financial condition and results of
operations could be materially and adversely affected. Litigation, which could
result in substantial cost to and diversion of resources of the Company, may
also be necessary to enforce patents or other intellectual property rights of
the Company or to defend the Company against claimed infringement of the rights
of others. The failure to obtain necessary licenses or the occurrence of
litigation relating to patent infringement or other intellectual property
matters could have a material adverse effect on the Company's business,
financial condition and results of operations.

Environmental Matters

         The semiconductor packaging process involves a significant amount of
chemicals and gases which are subject to extensive governmental regulations. For
example, liquid waste is produced at the stage at which silicon wafers are diced
into chips with the aid of diamond saws and cooled with running water. In
addition, excess materials on leads and moldings are removed from packaged
semiconductors in the trim and form process. The Company has installed equipment
to collect certain solvents used in connection with its manufacturing process
and has contracted with independent waste disposal companies to remove such
hazardous material.

         The Company has placed orders for advanced electroplating systems which
it currently plans to install at a leased facility in San Jose, California which
will be operated by the Company. This plating operation will involve the use of
significant quantities of certain hazardous substances. Although the Company has
designed procedures to ensure such materials are handled in compliance with
applicable regulations, there can be no assurance that the operation of such
facility will not expose the Company to additional costs in complying with
environmental regulations or result in future liability to the Company.

         Federal, state and local regulations impose various controls on the
storage, handling, discharge and disposal of chemicals used in the Company's
manufacturing process and on the facility owned and occupied by the Company. The
Company believes that its activities conform to present environmental and land
use regulations applicable to its operations and its current facility.
Increasing public attention has, however, been focused on the environmental
impact of semiconductor manufacturing operations and the risk to neighbors of
chemical releases from such operations. There can be no assurance that
applicable land use and environmental regulations will not in the future impose
the need for additional capital equipment or other process requirements upon the
Company or restrict the Company's ability to expand its operations. The adoption
of new ordinances or similar measures or any failure by the Company to comply
with applicable environment and land use regulations or to restrict the
discharge of hazardous substances could subject the Company to future liability
or cause its manufacturing operations to be curtailed or suspended.

Employees

         As of December 31, 1996, the Company had 215 full-time employees, 180
of whom were engaged in manufacturing, 8 in research and development, 8 in sales
and customer service and 19 in finance and administration. The Company's
employees are not represented by any collective bargaining agreement, and the
Company has never experienced a work stoppage. The Company believes that its
employee relations are good. The success of the Company's future operations
depends in large part on the Company's ability to attract and retain highly
skilled

                                      -9-
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technical, manufacturing and management personnel. There can be no assurance
that the Company will be successful in attracting and retaining key personnel.

Executive Officers

     The executive officers of the Company are as follows:

            Name                    Age                Position(s)
---------------------------------   ---    ------------------------------------
Victor A. Batinovich............    47     President, Chief Executive Officer
                                             and Chairman of the Board
Joel J. Camarda.................    48     Vice President, Operations
Gerald K. Fehr..................    59     Vice President, Technology
Tony Lin........................    48     Vice President, Finance and Chief
                                             Financial Officer

         Victor Batinovich is a co-founder of the Company and has served as the
Company's President and Chief Executive Officer and a director since April 1992.
He has also served as Chairman of the Board since November 1995. Prior to 1992,
Mr. Batinovich founded Advanced Semiconductor Assembly Technology, a
semiconductor packaging firm, and served as President from October 1988 to
December 1991. Prior to 1988, Mr. Batinovich founded Swire Technologies, a
semiconductor packaging firm, serving as Executive Vice President and Chief
Operating Officer from April 1984 to August 1988.

         Joel Camarda has served as Vice President, Operations of the Company
since July 1994. From April 1988 to July 1994, Mr. Camarda served as Director of
Worldwide Assembly Operations for Cypress Semiconductor. From January 1985 to
April 1988, Mr. Camarda served as Manager of Advanced Package Engineering for
Rockwell Semiconductor Corporation.

         Gerald Fehr is a co-founder of the Company and has served as Vice
President, Technology of the Company since April 1992. From January 1991 to
April 1992, Dr. Fehr served as an independent consultant in the semiconductor
packaging industry. From March 1981 to January 1991, Dr. Fehr served as Director
of Packaging and Assembly for LSI Logic, Inc., a semiconductor company. From
June 1978 to March 1981, Dr. Fehr served as Manager of Packaging Operations of
Burroughs, a semiconductor company. From May 1975 to June 1978, Dr. Fehr served
as Manager of Packaging Operations of Fairchild, a semiconductor corporation.
From 1968 to 1975, Dr. Fehr served as Manager of Assembly and Packaging for
Intel Corporation.

         Tony Lin has served as Vice President, Finance and Chief Financial
Officer of the Company since June 1993. From July 1992 to June 1993, Mr. Lin
worked as an independent financial consultant for a number of technology
companies. From July 1990 to July 1992, Mr. Lin served as Vice President,
Finance for Acer America, Inc., a personal computer manufacturer. From August
1989 to June 1990, Mr. Lin served as Controller for Micronics Computers, Inc., a
personal computer board manufacturer. From January 1980 to August 1989, Mr. Lin
worked for Wang Laboratories and held several senior positions, including
Controller of Wang Australia, Area Controller for the Asia/Pacific region and
International Manufacturing Controller. Mr. Lin is a Certified Public
Accountant.

         The Company's success depends to a significant extent upon the
continued service of its key management and technical personnel, including
Victor Batinovich, the Company's President and Chief Executive Officer, as well
as other senior management, each of whom would be difficult to replace. The
competition for qualified employees is intense, and the loss of the services of
Mr. Batinovich or any other key personnel or the inability to attract, retain
and motivate qualified new personnel could have a material adverse effect on the
Company's business, financial condition and results of operations.

                                      -10-
<PAGE>

         Officers serve at the discretion of the Board and are appointed
annually. There are no family relationships between the directors or officers of
the Company.

Item 2.  Properties

         In December 1996, the Company purchased the 140,000 square feet
building complex in which it had operated since 1993. The Company currently
occupies 55,000 square feet in one of the two buildings in the complex, which it
uses for its manufacturing operations, executive offices and product
development. The Company believes its existing facility is adequate to meet its
needs for the foreseeable future. Since the Company does not currently operate
multiple facilities in different geographic areas, a disruption of the Company's
manufacturing operations resulting from various factors, including sustained
process abnormalities, human error, government intervention or a natural
disaster such as fire, earthquake or flood, could cause the Company to cease or
limit its manufacturing operations and consequently would have a material
adverse effect on the Company's business, financial condition and results of
operations.

Item 3.  Legal Proceedings

         None.

Item 4.  Submission of Matters to a Vote of Security Holders

         Not Applicable.

                                      -11-
<PAGE>

                                     PART II


Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

         The Company effected the initial public offering of its Common Stock on
February 27, 1996. As of March 19, 1997, there were approximately 300 holders of
record of the Company's Common Stock. The Company's Common Stock is listed for
quotation in the Nasdaq National Market under the Symbol "IPAC." The following
table sets forth for the periods indicated, the high and low prices of the
Company's Common Stock as quoted in the Nasdaq National Market.

   Fiscal Year Ended December 31, 1996           High             Low
-------------------------------------------    --------         -------
First Quarter (from February 27, 1996)....     $10 1/8           $7 1/2
Second Quarter............................      14 1/2            5 1/2
Third Quarter.............................      10 1/4            7
Fourth Quarter............................      10 1/4            7 1/2

         The trading price of the Company's Common Stock is expected to continue
to be subject to wide fluctuations in response to quarter-to-quarter variations
in operating results, announcements of technological innovations or new products
by the Company or its competitors, general conditions in the semiconductor
industry, changes in earnings estimates or recommendations by analysts, the
failure of the Company to meet or exceed published earnings estimates or other
events or factors. In addition, the public stock markets have experienced
extreme price and trading volume volatility in recent months. This volatility
has significantly affected the market prices of securities of many high
technology companies for reasons frequently unrelated to the operating
performance of the specific companies. These broad market fluctuations may
adversely affect the market price of the Company's Common Stock.

         The Company has not paid any cash dividends on its Common Stock and
currently intends to retain any future earnings for use in its business.
Accordingly, the Company does not anticipate that any cash dividends will be
declared or paid on the Common Stock in the foreseeable future.

                                      -12-
<PAGE>

Item 6.  Selected Financial Data

                                           Year Ended December 31,(1)
                                       -----------------------------------
                                         1996     1995     1994     1993
                                       -------- -------- -------- --------
Statement of Operations Data:
Revenues.............................   $36,402  $20,764  $ 3,451  $    --
Cost of Revenues.....................    28,840   15,627    3,438       --
                                         ------   ------   ------   ------
Gross profit.........................     7,562    5,137       13       --
Operating expenses:..................
 Selling, general and administrative.     3,488    2,229    1,309      777
 Research and development............     1,053      694      170       77
                                         ------   ------   ------   ------
    Total operating expenses.........     4,541    2,923    1,479      854
                                         ------   ------   ------   ------
 Operating income (loss).............     3,021    2,214   (1,466)    (854)
 Interest and other income...........     1,210      551       54       65
 Interest expense....................    (1,384)  (1,074)    (674)     (42)
                                         ------   ------   ------   ------
Income (loss) before income taxes....     2,847    1,691    2,086     (831)
Provision for income taxes...........      (530)    (141)      --       --
                                         ------   ------   ------   ------
Net income (loss)....................   $ 2,317  $ 1,550  $(2,086) $  (831)
                                         ======   ======   ======   ======
Net income (loss) per share(2).......   $  0.16  $  0.14  $ (0.22) $ (0.10)
                                         ======   ======   ======   ======
Weighted average common shares
and equivalents(2)...................    14,157   11,256    9,490    8,285


                                                  As of December 31,
                                       -----------------------------------
                                         1996     1995     1994     1993
                                       -------- -------- -------- --------
Balance Sheet Data:
 Working capital.....................   $15,614  $ 4,773  $ 2,075  $ 2,325
 Total assets........................    69,639   28,260   13,310    7,476
 Long-term obligation................    16,926    7,015    5,371    3,074
 Mandatorily redeemable
  convertible preferred stock........        --   15,981    8,020    4,360
 Total shareholders' equity (deficit)    40,761     (918)  (2,764)    (809)
--------------

(1)   The years ended December 31, 1996, 1995, 1994 and 1993 consisted of
      52 weeks, 52 weeks, 53 weeks and 52 weeks, respectively.
(2)   See Note 1 of Notes to Financial Statements for an explanation of the
      method used to determine shares used in computing per share amounts.

                                      -13-
<PAGE>

Item 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations

Overview

         From its inception in April 1992 through December 1993, IPAC focused on
developing manufacturing capacity at its facility in San Jose, California. The
Company commenced commercial production and recognized its initial revenues in
the quarter ended March 31, 1994. The Company has derived substantially all of
its revenues to date from QFPs. The Company has expanded its manufacturing
capacity every year since it began operations in early 1994. The Company
believes that its competitive position depends on its ability to have sufficient
capacity to meet anticipated customer demand. Accordingly, the Company made
significant investments in capital equipment and facilities improvements in 1995
and 1996 by acquiring equipment with a cost of $10 million and $19 million,
respectively. In 1996, the Company spent an additional $9.2 million to acquire
the building complex in which it has operated since 1993. The Company currently
occupies approximately 55,000 square feet of the 140,000 square feet in the
building complex. The Company believes that its current manufacturing base of
installed equipment, plus additional spending for capital equipment and
facilities improvements in 1997 of up to $7 million should be sufficient to meet
anticipated 1997 capacity requirements.

         The Company's operating results are affected by a wide variety of
factors that could materially and adversely affect revenues, gross profit and
operating income. These factors include the short-term nature of its customers'
commitments, timing and volume of orders relative to the Company's production
capacity, long lead times for the manufacturing equipment required by the
Company, evolutions in the life cycles of customers' products, timing of
expenditures in anticipation of future orders, lack of a meaningful backlog,
effectiveness in managing production processes, changes in costs and
availability of labor, raw materials and components, costs to obtain materials
on an expedited basis, mix of orders filled, the impact of price competition on
the Company's average selling prices and changes in economic conditions.
Unfavorable changes in any of the above factors may adversely affect the
Company's business, financial condition and results of operations.

         The Company's business is substantially affected by market conditions
in the semiconductor industry, which is highly cyclical and, at various times,
has been subject to significant economic downturns and characterized by reduced
product demand, rapid erosion of average selling prices and production
overcapacity. In addition, the markets for integrated circuits are characterized
by rapid technological change, evolving industry standards, intense competition
and fluctuations in end-user demand. Since the Company' s business is entirely
dependent on the requirements of semiconductor companies for independent
packaging foundries, any future downturn in the semiconductor industry is
expected to have an adverse effect on the Company's business, financial
condition and results of operations.

         The Company has recently experienced a decline in the average selling
prices for its services and expects that average selling prices for its services
may decline in the future, principally due to intense competitive conditions. A
decline in average selling prices of the Company's services, if not offset by
reductions in the cost of performing those services, would decrease the
Company's gross margins and could materially and adversely affect the Company's
business, financial condition and results of operations. There can be no
assurance that the Company will be able to reduce its cost per unit.

         The Company has experienced substantial growth in the number of its
employees and the scope of its operations. This growth is expected to continue
to strain the Company's managerial, financial, manufacturing and other
resources. In addition, although the Company believes its current controls are
adequate, in order to manage its growth, the Company must continue to implement
additional operating and financial controls and hire and train additional
personnel. In particular, the Company must hire and train significant numbers of
additional personnel to

                                      -14-
<PAGE>

operate the highly complex capital equipment required by its manufacturing
operations. There can be no assurance that the Company will be able to hire and
properly train sufficient numbers of qualified personnel or to effectively
manage such growth and its failure to do so could have a material adverse effect
on the Company's business, financial condition and results of operations. In
addition, any failure to improve the Company's operational, financial and
management systems could have a material adverse effect on the Company's
business, financial condition and results of operations. Furthermore, since the
Company's expense levels are based in part on anticipated future revenue levels,
if revenue were to fall below anticipated levels, the Company's operating
results would be materially adversely affected.

Anticipated First Quarter Results

         On March 18, 1997, the Company announced that based on orders received
to date, it expected revenues for the first quarter of 1997 to be from $5
million to $6 million. At such revenue levels, the Company announced that it
expected to post a loss between $2 million to $2.5 million. The Company's
operating results were adversely impacted in the first quarter of 1997 due to
lower orders from major customers. This reduced level of orders coupled with
problems in the quality of certain capital equipment and raw materials
contributed to lower than anticipated sales. These expected results are forward
looking statements and are subject to a number of risks and uncertainties which
could cause actual results to differ materially from those projected. Such risks
and uncertainties include, in particular, fluctuations in orders during the
remainder of the quarter, the level of capacity utilization, the pricing of the
Company's services, market conditions in the semiconductor industry and
financial adjustments in connection with the closing of the results for the
quarter. Accordingly, there can be no assurance that the Company's actual
results for the first quarter will be within the above ranges expected by the
Company.

                                      -15-
<PAGE>

Results of Operations

         The following table sets forth, for the periods indicated, certain
items in the Company's statement of operations as a percentage of revenues:

                                                  Year Ended December 31,
                                             -------------------------------
                                             1996          1995         1994
                                             ----          ----         ----

Revenues.................................   100.0%        100.0%       100.0%
Cost of revenues.........................    79.2          75.3         99.6
                                            -----         -----        -----
Gross profit.............................    20.8          24.7          0.4
Operating expenses:
 Selling, general and administrative.....     9.6          10.7         38.0
 Research and development................     2.9           3.3          4.9
                                            -----         -----        -----
   Total operating expenses..............    12.5          14.0         42.9
                                            -----         -----        -----
Operating income (loss)..................     8.3          10.7        (42.5)
Interest and other income................     3.3           2.7          1.6
Interest expense.........................    (3.8)         (5.2)       (19.5)
                                            -----         -----        -----
Income (loss) before income taxes........     7.8           8.2        (60.4)
Provision for income taxes...............    (1.4)         (0.7)          --
                                            -----         -----         -----
Net income...............................     6.4%          7.5%        60.4%
                                            =====         =====         =====
Revenues

         The Company recognizes revenues upon shipment of products to its
customers. Revenues increased 75% to $36.4 million in 1996, from $20.8 million
in 1995. In 1995, revenues increased 502% from $3.5 million in 1994. The growth
in 1996 revenues reflected increased order levels from the Company's three
largest customers and revenues earned from the Company's thermally enhanced
packages. The largest portions of the 1996 revenue growth occurred during the
first three quarters. In the fourth quarter of 1996, revenues declined to $9.5
million from $10.4 million for the third quarter. This decline resulted from
reduced orders from one of the Company's largest customers, and from quality
problems with respect to certain raw materials and capital equipment. The growth
in 1995 reflected the Company's emergence from its initial start up phase and
its qualification by, and orders received from, a number of customers.

Gross Profit

         Cost of revenues includes materials, labor, depreciation and overhead
costs associated with semiconductor packaging. Gross profit increased to $7.6
million in 1996, from $5.1 million in 1995, and from $13,000 in 1994. Gross
profit as a percentage of revenues, or gross margin, was 20.8% in 1996 compared
with 24.7% in 1995, and 0.4% in 1994.

         In 1996, the Company incurred higher labor and manufacturing overhead
expenses from adding manufacturing manpower and infrastructure, which reduced
its gross margin. In the fourth quarter of 1996, gross margins were also
adversely affected by a drop in average selling prices, caused by industry
competition. The Company's 1996 revenue growth was largely from the growth of
high volume production orders, as low volume prototype orders constituted only a
small percentage of overall volume. Gross margin in 1995 reflected a higher
proportion of low volume prototype orders which carry significantly higher gross
margins compared to high volume production orders. The Company believes that any
further decline in such prototype orders as a percentage of overall revenues
would not have a material adverse impact on future financial results. The low
gross margin in 1994 reflected the low volumes and start up costs incurred in
the Company's first year of production.

                                      -16-
<PAGE>

         Depreciation for machinery and equipment is calculated using the units
of production method, in which depreciation is calculated based upon the units
produced in a given period divided by the estimate of total units to be produced
over its life following commencement of use. Such estimate is reassessed when
facts and circumstances suggest a revision may be necessary. Based upon reduced
utilization of machinery and equipment in relation to plan, the estimate for
total throughput was reduced in late 1996 causing the depreciation rate per unit
to increase in late 1996. Such higher depreciation rate will continue into 1997.
In all cases, the asset will be fully depreciated by the end of its estimated
six year life. Compared with straight line depreciation, the units of production
method generally results in lower depreciation expense during the early life of
the equipment and relatively higher depreciation expense once the equipment is
in full production. Had the Company utilized straight line depreciation, its
depreciation expense for 1996, 1995, and 1994 would have been approximately $4.3
million, $2.0 million, and $900,000, respectively, compared to approximately
$3.2 million, $1.5 million, and $330,000, respectively, utilizing the units of
production method of production for production machinery and equipment.

Selling, General and Administrative

         Selling, general and administrative expenses consist primarily of costs
associated with sales, customer service, finance, administration and management
personnel, as well as advertising, public relations, legal and facilities costs.
Selling, general and administrative expenses increased 56% to $3.5 million in
1996, from $2.2 million in 1995. In 1995, selling, general and administrative
expenses increased 70% from $1.3 million in 1994. The increases in both years
were due primarily to increases in staff, marketing efforts, and facilities to
support the Company's expansion.

         As a percentage of revenues, selling, general and administrative
expenses decreased to 9.6% in 1996, compared with 10.7% in 1995, and 38% in
1994. The decrease in such expenses as a percentage of revenues in both years
reflects the spreading of relatively fixed costs over a larger revenue base. The
Company anticipates that its selling, general and administrative expenses will
continue to increase in absolute dollars in future periods, although such
expenses may fluctuate as a percentage of revenues.

Research and Development

         Research and development expenses consist primarily of the costs
associated with research and development personnel, the cost of related
materials and services, and the depreciation of development equipment. Research
and development expenses increased 52% to $1.1 million in 1996, from $0.7
million in 1995. In 1995, research and development expenses increased 308%
percent from $170,000 in 1994. The increase in 1996 was due primarily to the
Company's expanded efforts in developing BGA, chip scale, and thermally enhanced
packages. The increase in 1995 was due primarily to the Company's expanded
efforts in refining production of thin QFP's ("TQFP's"), thermally enhanced
QFP's, and improving capabilities in various production processes.

         As a percentage of revenues, research and development expenses
decreased to 2.9% in 1996, compared with 3.3% in 1995, and 4.9% in 1994. The
decrease in such expenses as a percentage of revenues reflected higher revenue
levels in 1995 and 1996.

Interest and Other Income

         Interest income in 1996, 1995, and 1994 was $982,000, $209,000 and
$54,000, respectively. The increase in interest income for 1996, was the result
of interest earned on proceeds from the Company's initial public offering which
was completed in March 1996 and which raised $23.1 million, net of expenses. In
1996, other income was $228,000, all of which was earned for development work
with the semiconductor industry consortium. In 1995, other

                                      -17-
<PAGE>

income consisted of $342,000 earned for development work, of which $318,000 was
earned from participation in a semiconductor industry consortium. Interest and
other income consisted solely of interest income in 1994.

Interest Expense

         Interest expense consists primarily of interest payable on capital
leases and term loans secured by equipment. In 1993 and 1994, the Company
financed its manufacturing equipment primarily through capital leases with terms
ranging from four to five years, and carrying imputed interest rates ranging
from 9.5% to 15.5% per annum. The Company financed its acquisition of equipment
in 1996 and 1995 through term loans secured by equipment. The interest rates on
the loans range from 7.75% to 8.75% per annum. Interest expense in 1996, 1995,
and 1994 was $1.4 million, $1.1 million, and $674,000, respectively.

Provision for Income Taxes

         The Company's provision for taxes in 1996 was $530,000, representing an
effective tax rate of approximately 19%. The effective tax rate represents
alternative minimum tax ("AMT") resulting from limits on the use of net
operating loss carryforwards for AMT purposes and tax accelerated depreciation
on all machinery and equipment. The Company's provision for taxes in 1995 was
$141,000, representing an effective tax rate of approximately 8%. There was no
tax provision prior to 1995 as the Company operated at a loss.

Liquidity and Capital Resources

         Prior to its initial public offering in March 1996, the Company
satisfied its liquidity needs principally from the sale of its Preferred Stock,
equipment financing through leases and equipment secured term loans, and to a
lesser extent, cash flow from operations. Prior to its initial public offering,
the Company raised approximately $16 million from issuance of its Preferred
Stock, $7.8 million from equipment financing, and $4.9 million from term loans.
The Company completed its initial public offering in March 1996. Proceeds from
this offering, net of underwriters' commissions and offering expenses, was $23.1
million.

         Prior to 1995, the Company's production equipment had been funded
through capital leases. The Company acquired $3.7 and $4.0 million of production
equipment through capital leases in 1993 and 1994, respectively, which leases
expire between December 1997 to January 1999.

         In 1996 and 1995, the Company entered into borrowing facilities with a
number of lenders, allowing the Company to finance 70% to 80% of the cost of
collateralized machinery and equipment. Borrowings under these facilities
accrued interest at rates ranging from 7.75% to 8.75% with terms ranging from 36
to 48 months. The Company borrowed an aggregate of $9.8 million and $4.9 million
through these facilities in 1996 and 1995, respectively. At December 31, 1996,
the aggregate principal amount outstanding under all equipment loans was $12.5
million. Certain of the credit facilities require the Company to maintain
certain financial covenants including minimum tangible net worth, a ratio of
total liabilities to tangible net worth, and quarterly profits. At December 31,
1996 and 1995, the Company was in compliance with such covenants.

         In March 1997, the Company secured a mortgage loan with an insurance
company, which provided the Company with a $6.7 million five year term loan. The
loan is secured by the real estate and buildings purchased by the Company in
December 1996. The loan accrues interest at 8.5%, and is payable in equal
monthly installments of $58,000, with a balloon payment of $5.9 million due
after five years. The proceeds of this mortgage loan were used to pay off and
retire the $6.5 million real estate loan which was entered into in December 1996
to provide temporary

                                      -18-
<PAGE>

financing for the acquisition of the Company's building complex. The loan
accrued interest at 2.25% over the rate for 30 day certificates of deposit and
was collateralized by a certificate of deposit of equivalent value.

         In May 1996, the Company renewed its line of credit agreement with a
bank which provides, through July 15, 1997, for borrowings up to the lesser of
$2,000,000 or 80% of eligible accounts receivable. At December 31, 1996 and
1995, no amounts were outstanding under this line of credit. However, the
Company has issued $775,000 and $1,300,000 of standby commercial letters of
credit for purchases of equipment against this line of credit at December 31,
1996 and 1995, respectively. Borrowings under the line of credit accrue interest
at the bank's prime rate (8.25% at December 31, 1996) and are collateralized by
the assets of the Company. The agreement requires the Company to maintain
certain financial covenants, including a minimum quick ratio, minimum tangible
net worth, maximum debt to tangible net worth, quarterly profitability and
prohibits the Company from the payment of dividends without prior approval by
the bank. At December 31, 1996, the Company was in compliance with such
covenants.

         Capital additions totaled approximately $27.9 million, $10.2 million,
and $4.4 million in 1996, 1995, and 1994, respectively. The $27.9 million of
capital additions in 1996 was comprised of $9.2 million for the acquisition of
the building complex the Company acquired in December 1996, and $18.7 million
for equipment and facilities improvements. The Company is planning to spend up
to $7 million for production equipment and facilities improvements in 1997. The
Company expects to borrow approximately $3 to $4 million through equipment
secured borrowings in 1997. At December 31, 1996, the Company had approximately
$6 million of unused borrowing facilities from its equipment lenders. At
present, the Company does not have any agreement regarding the extension of
these facilities beyond the expiration dates.

         On March 18, 1997, the Company announced that it expected to report a
loss for the first quarter of 1997. In the event such a loss is incurred, it is
likely that the Company would be out of compliance with certain financial
covenants under its borrowing faciliites as of the end of the first quarter of
1997. In this event, the Company anticipates receipt of a waiver of the
covenants in default from the respective financial institutions. If the waiver
were not received, certain debt would become currently due and payable and the
line of credit would no longer be available for use.

         The Company believes that its existing cash balances, expected cash
flow from operations and available equipment lease financing and bank
borrowings, will be sufficient to meet its projected working capital and other
cash requirements through 1997. There can be no assurance, however, that lower
than expected revenues, increased expenses, increased costs associated with the
purchase or maintenance of capital equipment, or other events will not cause the
Company to seek more capital, or capital sooner than currently expected. The
timing and amount of the Company's actual capital requirements will depend on a
number of factors, including demand for the Company's services, the level of
cash flow from operations, availability of capital equipment, adverse
fluctuations in foreign currency exchange rates, changes in semiconductor
industry conditions and competitive factors. There can be no assurance that such
additional financing will be available when needed or, if available, will be
available on satisfactory terms.

                                      -19-
<PAGE>

Item 8.  Financial Statements and Supplementary Data

INDEX TO FINANCIAL STATEMENTS

Financial Statement:

     Report of Independent Accoutants...........................        21
     Balance Sheet as of December 31, 1996 and 1995.............        22
     Statement of Operations for the Years Ended December 31,
      1996, 1995 and 1994.......................................        23
     Statement of Shareholders' Equity (Deficit) for the
      Years Ended December 31, 1996, 1995 and 1994..............        24
     Statement of Cash Flows for the Years Ended December 31,
      1996, 1995 and 1994.......................................        25
     Notes to Financial Statements..............................        26


Financial Statement Schedules:

All schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.

                                      -20-
<PAGE>

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of
Integrated Packaging Assembly Corporation

In our opinion, the financial statements listed in the accompanying index
present fairly, in all material respects, the financial position of Integrated
Packaging Assembly Corporation at December 31, 1996 and 1995, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.



PRICE WATERHOUSE LLP
  San Jose, California
  January 13, 1997 except as to Note 5,
  which is as of March 25, 1997

                                      21
<PAGE>

                   INTEGRATED PACKAGING ASSEMBLY CORPORATION
                                 BALANCE SHEET
                       (IN THOUSANDS, EXCEPT SHARE DATA)

                                                         December 31,
                                                      -----------------
                                                        1996     1995
                                                      -------  --------
ASSETS
        Current assets:
          Cash and cash equivalents..................   $15,817  $ 5,424
          Short term investments.....................     3,025       --
          Accounts receivable, net of allowance
            for doubtful accounts of $145 and $50....     6,141    2,903
          Inventory..................................     1,977    2,141
          Prepaid expenses and other current assets..       606      487
            Total current assets.....................    27,566   10,955
                                                        -------  -------
        Property and equipment, net..................    41,776   17,050
        Other assets.................................       297      255
                                                        -------  -------

          Total assets...............................   $69,639  $28,260
                                                        =======  =======

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
        Current liabilities:
          Current portion of notes payable...........   $ 3,893  $ 1,390
          Current portion of capital lease
           obligations...............................     2,225    1,558
          Accounts payable...........................     2,534    1,855
          Accrued expenses and other liabilities.....     3,300    1,379
                                                        -------  -------
            Total current liabilities................    11,952    6,182
                                                        -------  -------
        Long term portion of notes payable...........    15,155    3,130
                                                        -------  -------
        Long term of capital lease obligations.......     1,771    3,885

        Commitments and contingencies
         (notes 4, 5, and 10)

        Mandatorily Redeemable Convertible
          Preferred Stock.............................       --   15,981
                                                        -------  -------
        Shareholders' equity (deficit)
          Common Stock, no par value, 75,000,000 and
           14,000,000 shares authorized; 13,862,342
           and 2,530,774 shares issued and
           outstanding.................................  39,811      449
        Accumulated earnings (deficit).................     950   (1,367)
                                                        -------  -------
        Total shareholders' equity (deficit)...........  40,761     (918)
                                                        -------  -------
        Total liabilities and shareholders'
           equity (deficit)............................ $69,639  $28,260
                                                        =======  =======

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

                                       22
<PAGE>

                   INTEGRATED PACKAGING ASSEMBLY CORPORATION
                            STATEMENT OF OPERATIONS
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)


                                                   Year Ended December 31,
                                                 --------------------------
                                                   1996    1995     1994
                                                 ------- -------- ---------
Revenues......................................    $36,402  $20,764  $ 3,451
Cost of revenues..............................     28,840   15,627    3,438
                                                   ------  -------  -------
Gross profit..................................      7,562    5,137       13
                                                   ------  -------  -------
Operating expenses:
        Selling, general and administrative...      3,448    2,229    1,309
        Research & development................      1,053      694      170
          Total operating expenses............      4,541    2,923    1,479

Operating income (loss).......................      3,021    2,214   (1,466)

Interest & other income.......................      1,210      551       54
Interest expense..............................     (1,384)  (1,074)    (674)
                                                   ------  -------  -------
Income (loss) before income taxes.............      2,847    1,691   (2,086)

Provision for income taxes....................       (530)    (141)      --
                                                   ------  -------  -------
Net income (loss).............................     $2,317  $ 1,550  ($2,086)
                                                   ======  =======  =======

Net income (loss) per share...................     $ 0.16  $  0.14   ($0.22)
                                                   ======  =======  =======
Weighted average common
  shares and equivalents......................     14,157   11,256    9,490
                                                   ======  =======  =======

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


                                       23
<PAGE>

                   INTEGRATED PACKAGING ASSEMBLY CORPORATION
                  STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
                                (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                 Common Stock    Accumulated
                                               ----------------   Earnings
                                                Shares   Amount  (Deficit)   Totals
                                               -------- ------- ---------- ---------
<S>                                            <C>     <C>       <C>       <C>
BALANCE AT DECEMBER 31, 1993..................  2,495    $  22     ($831)     ($809)
Repurchase of common stock....................   (562)       -         -          -
Issuance of warrants..........................      -       131        -        131
Net loss......................................      -        -    (2,086)    (2,086)
                                               ------  -------    ------    -------
BALANCE AT DECEMBER 31, 1994..................  1,933      153    (2,917)    (2,764)
Common stock issued under stock plans.........    597      125         -        125
Issuance of warrants..........................      -      144         -        144
Amortization of deferred compensation.........      -       27         -         27
Net income....................................      -        -     1,550      1,550
                                               ------  -------    ------    -------
BALANCE AT DECEMBER 31, 1995..................  2,530      449    (1,367)      (918)
Sale of common stock, net of issuance
  costs of $935...............................  3,450   23,111         -     23,111
Conversion of mandatorily Redeemable
  Convertible Preferred Stock into
  common stock................................  7,862   15,981         -     15,981
Common stock issued under stock plans.........     93      182         -        182
Common stock repurchased under stock plan.....    (73)     (17)        -        (17)
Issuance of warrants..........................      -       57         -         57
Amortization of deferred compensation.........      -       48         -         48
Net income....................................      -        -     2,317      2,317
                                               ------  -------    ------    -------
BALANCE AT DECEMBER 31, 1996.................. 13,862  $39,811    $  950    $40,761
                                               ======  =======    ======    =======
</TABLE>
 The accompanying notes are an integral part of these financial statements.


                                       24
<PAGE>

                   INTEGRATED PACKAGING ASSEMBLY CORPORATION
                            STATEMENT OF CASH FLOWS
                           INCREASE (DECREASE) CASH
                                 ($ THOUSANDS)
<TABLE>
<CAPTION>
                                                                 Year Ended December 31,
                                                             -----------------------------
                                                               1996       1995     1994
                                                             -------  ---------- ---------
<S>                                                           <C>     <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES

Net income (loss).......................................     $ 2,317  $  1,550    ($2,086)

ADJUSTMENTS:

Depreciation and amortization...........................       3,316     1,541        331
Changes in assets and liabilities:
  Accounts receivable...................................      (3,238)   (2,061)      (842)
  Inventory.............................................         164    (1,382)      (488)
  Prepaid expenses and other assets.....................        (161)     (415)      (235)
  Accounts payable......................................         679       953        826
  Accrued expenses and other liabilities................       1,921       950        275
                                                             -------   -------    -------
Net cash provided by (used in) operating activities.....       4,998     1,136     (2,219)
                                                             -------   -------    -------
CASH FLOWS USED IN INVESTING ACTIVITIES:

Acquisition of property and equipment...................     (27,744)  (10,126)      (404)
Purchase of short-term investments......................     (25,025)       --         --
Sale & redemption of short-term investments.............      22,000        --         --
                                                             -------   -------    -------
Net cash used in investing activities...................     (30,769)  (10,126)      (404)
                                                             -------   -------    -------
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:

Payments under capital lease obligations................      (1,593)   (1,358)      (820)
Principal payments on note payable......................      (1,819)     (234)        --
Proceeds from note payable..............................      16,300     4,890         --
Proceeds from issuance of Mandatorily Redeemable
  Convertible Preferred Stock...........................          --     7,961      3,660
Proceeds from issuance of common stock, net.............      23,276       125         --
                                                             -------   -------    -------
Net cash provided by financing activities...............      36,164    11,384      2,840
                                                             -------   -------    -------
NET INCREASE IN CASH....................................      10,393     2,394        217

Cash and cash equivalents at beginning of period........       5,424     3,030      2,813
                                                             -------   -------    -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD..............     $15,817  $  5,424    $ 3,030
                                                             =======   =======    =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid for interest..................................     $ 1,240  $  1,008    $   671

SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES

Acquisition of equipment under capital leases...........     $   147  $     40    $ 3,979
Issuance of warrants....................................     $    57  $    144    $   131

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

                                       25
<PAGE>

                   INTEGRATED PACKAGING ASSEMBLY CORPORATION

                         NOTES TO FINANCIAL STATEMENTS



NOTE 1--THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Integrated Packaging Assembly Corporation (the ''Company''), an independent
semiconductor packaging foundry, was incorporated in California on April 28,
1992.  The Company assembles and packages integrated circuits from wafers
consigned by its customers.  The Company's focus is on quad flat packages
("QFP's"), thin quad flat packages ("TQFP's"), and ball grid array packages
("BGA's"), which are used in complex integrated circuits with high pin-counts in
the personal computer and telecommunications industries.


FISCAL YEAR

The Company's fiscal quarters and year end on the Sunday nearest the calendar
quarter end and December 31, respectively. For purposes of financial statement
presentation, each fiscal year is presented as having ended on December 31 and
each fiscal quarter is presented as having ended on the calendar quarter end.
Fiscal year 1994 consisted of 53 weeks; 1995 and 1996 each consisted of 52
weeks.


CASH EQUIVALENTS AND SHORT TERM INVESTMENTS

The Company considers all highly liquid investments purchased with an initial
maturity of 90 days or less to be cash equivalents, and investments with
original maturities of greater than 90 days to be short term investments.  As of
December 31, 1996, the Company had short term investments primarily comprised of
fixed maturity securities of $3.0 million, all of which have been classified as
available for sale and have contractual maturities of less than one year.  These
securities are stated at fair market value.  Unrealized gains and losses were
immaterial at December 31, 1996.


INVENTORY

Inventory, which primarily consists of raw material supplies such as gold wire,
lead frames and plastics, is stated at the lower of cost, determined by the
first-in, first-out basis, or market. The Company holds product on consignment
from its customers while services are being performed.


PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Depreciation for production
machinery and equipment is calculated using the units of production method, in
which depreciation is calculated based upon the units produced in a given period
divided by the estimate of total units to be produced over its life following
commencement of use. Such estimate is reassessed when facts and circumstances
suggest a revision may be necessary.  In all cases the asset will be fully
depreciated by the end of its estimated six-year life. In late 1996, in light of
lower than expected utilization, the Company reduced its estimates of the number
of units to be produced over the useful equipment life. Accordingly, the
depreciation rate per unit was increased and was not material to 1996 results.
The higher rate will continue into 1997. Depreciation for all other property and
equipment is computed using the straight-line method over the estimated useful
lives of the assets, generally 3 to 6 years.

In December 1996, the Company acquired the real estate parcel and facilities on
which it had operated since 1993 for $9.2 million.   The Company has allocated
its purchase cost between land, buildings and improvements in proportion to fair
market value.  The building is depreciated over 30 years, with building
improvements depreciated over 5 to 15 years.

                                       26
<PAGE>

                   INTEGRATED PACKAGING ASSEMBLY CORPORATION

                  NOTES TO FINANCIAL STATEMENTS --(CONTINUED)


REVENUE RECOGNITION

Revenue is generally recognized upon shipment. A provision for estimated future
returns is recorded at the time revenue is recognized.


INCOME TAXES

The Company accounts for income taxes using the asset and liability approach
which requires the recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been recognized in the
Company's financial statements or income tax returns. In estimating future tax
consequences, the Company generally considers all expected future events other
than enactments of changes in the tax law or rates.


STOCK OPTIONS

The Company accounts for stock-based compensation in accordance with Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees".
Accordingly, compensation for stock options is generally measured as the excess,
if any, of the quoted market price of the Company's stock at the date of the
grant over the amount an employee must pay to acquire the stock.  In January
1996, the Company adopted the disclosure only requirements of SFAS 123.


NET INCOME (LOSS) PER SHARE

Net income (loss) per share is computed using the weighted average number of
common and common equivalent shares outstanding during the period. Common
equivalent shares consist of stock options and warrants using the treasury stock
method, except when antidilutive. Pursuant to the requirements of the Securities
and Exchange Commission, common stock equivalent shares relating to stock
options and warrants, using the treasury stock method, and the Mandatorily
Redeemable Convertible Preferred Stock, using the as if-converted method, issued
subsequent to December 31, 1994, through the date of its initial public
offering, are included in the computation of net income (loss) per share whether
anti-dilutive or not.  The Company completed its initial public offering on
February 28, 1996 and the shares issued are included in the weighted average
computation only from the date of issuance.  Accordingly, these shares resulted
in a greater amount of average shares outstanding in 1996 compared to 1995.

USE OF ESTIMATES

The preparation of these financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period.  Actual results could vary from these
estimates.

                                       27
<PAGE>

                   INTEGRATED PACKAGING ASSEMBLY CORPORATION

                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

NOTE 2--BALANCE SHEET COMPONENTS:
        (In thousands)
                                               December 31
                                           ---------------------
                                             1996        1995
                                           ---------  ----------
Inventory
        Raw materials..................     $ 1,839    $ 1,906
        Work in progress...............         138        235
                                            -------    -------
                                            $ 1,977    $ 2,141
                                            =======    =======

Property and equipment
        Land..........................      $ 3,827    $    --
        Buildings and improvements...       $ 7,175        405
        Machinery and equipment.......       34,624     17,583
        Office and computer equipment           613        348
        Furniture and fixtures........          268        208
        Deposits on machinery and
          equipment...................          250        322
                                            -------    -------
                                             46,757     18,866

        Less accumulated depreciation        (4,981)    (1,816)
                                            -------    -------
                                            $41,776    $17,050
                                            =======    =======

Property and equipment acquired under
  capital leases included above
        Machinery and equipment......         7,819      7,672
        Office and computer equipment            36         36
        Furniture and fixtures.......            57         57
                                            -------    -------
                                              7,912      7,765

        Less accumulated depreciation        (2,699)    (1,240)
                                            -------    -------
                                            $ 5,213    $ 6,525
                                            =======    =======
Accrued expenses and other liabilities
        Accrued payroll and related
          expenses...................       $   642    $   488
        Accrued income tax...........           621        140
        Other accrued liabilities....         2,037        751
                                            -------    -------
                                            $ 3,300    $ 1,379
                                            =======    =======

NOTE 3--RESEARCH AND DEVELOPMENT ARRANGEMENT:

In February 1995, the Company joined a consortium (the ''Consortium'') of
semiconductor companies which entered into a research and development contract
with the Advance Research Projects Agency (ARPA), a United States Government
agency. Under this agreement, ARPA will provide funds based on the completion of
milestones approved by ARPA and the Consortium. The agreement extends into 1997
and could provide future payments of up to $185,000. Income generated from the
research and development contract is recognized upon the completion of
milestones, which approximates the

                                       28
<PAGE>

                   INTEGRATED PACKAGING ASSEMBLY CORPORATION

                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

NOTE 3--RESEARCH AND DEVELOPMENT ARRANGEMENT (CONTINUED):

percentage of completion method.  Accordingly, amounts totaling $228,000 and
$318,000 were recognized under this agreement during 1996 and 1995,
respectively, and included in interest and other income. Additionally during
1996, the Company received $289,000 from ARPA which it used to reduce the cost
of equipment acquired.  The Company is not obligated to repay funding regardless
of the outcome of its development efforts; however, the agreement requires the
Company to use its best efforts to achieve specified results as per the
agreement. The Company retains ownership of the intellectual property developed
under the contract.


NOTE 4--LEASING ARRANGEMENTS AND COMMITMENTS:

The Company leases certain machinery and equipment, office and computer
equipment, and furniture and fixtures under long-term lease agreements which are
reported as capital leases. The terms of the leases range from three to five
years, with purchase options at the end of the respective lease terms. The
Company intends to exercise such purchase options, which will require payments
estimated at approximately $400,000 and $800,000 in 1997 and 1998, respectively.

The Company incurred rent expense under a noncancelable operating lease until
December 1996 when the Company purchased the facility it had been leasing.  Rent
expense was $216,000, $180,000, and $166,000  in 1996, 1995, and 1994,
respectively.   At December 31, 1996, the Company has future minimum lease
commitments under operating leases of  $49,000 payable in 1997.

The Company leases part of its facility to a third party.  The lease, through
August 1997, provides annual rental income ranging from $320,000 to $350,000,
which the Company records as other income, net of Company expenses related to
the leased portion of the facility.   In 1996, rental income related to this
lease was minimal.

Future minimum lease payments under capital leases, including capitalized
purchase options at December 31, 1996 are as follows (in thousands):


                                                          CAPITAL
                                                          LEASES
                                                         ---------
    Year ending December 31:
    1997..........................................       $   2,617
    1998..........................................           1,962
    1999..........................................               9
                                                         ---------
    Total minimum payments........................       $   4,588
    Less imputed interest and unamortized charges.            (592)
                                                         ---------
    Present value of payments under capital leases           3,996
    Less current portion..........................          (2,225)
                                                         ---------
    Long-term lease obligations...................       $   1,771
                                                         =========


                                       29
<PAGE>

                   INTEGRATED PACKAGING ASSEMBLY CORPORATION

                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

NOTE 4--LEASING ARRANGEMENTS AND COMMITMENTS (CONTINUED):

In 1996, 1994 and 1993, in connection with arranging capital leases, the Company
issued to the lessors warrants to purchase an aggregate of 457,550 shares of
Series A Mandatorily Redeemable Convertible Preferred Stock at exercise prices
ranging from $1.50 to $8.00.  As a result of the Company's initial public
offering, the warrants are now exercisable to purchase the same number of shares
of Common Stock at the same exercise price.   The estimated value of these
warrants at the time of issuance, as determined by the Company, is being
amortized as interest expense over the period the lease is outstanding. The
warrants are exercisable at any time prior to 2003 (200,000 shares) and 2004
(257,550 shares).  None of the warrants had been exercised at December 31, 1996.


NOTE 5--NOTES PAYABLE:
                                           DECEMBER 31,
                                       -------------------
                                         1996       1995
                                       --------  ---------
     Notes payable (in thousands):
     Bank term note payable.......      $ 3,375   $ 1,853
     Equipment notes payable......        9,173     2,667
     Real estate loan.............        6,500        --
                                        -------  --------
     Total notes payable..........       19,048     4,520
     Less current portion.........       (3,893)   (1,390)
                                        -------   -------
                                        $15,155   $ 3,130
                                        =======   =======
BANK TERM NOTE PAYABLE

The Company fully utilized a borrowing facility by borrowing $2.0 million in
1995 and an additional $2.0 million in 1996.  The facility provides financing
for up to the lesser of $4.0 million or 80% of the cost of collaterized
machinery and equipment.    The loans accrue interest at the London Interbank
Bank Rate (LIBOR) plus 2.5% and requires 48 equal monthly principal payments.
The agreement requires the Company to maintain certain financial covenants,
including a minimum liquidity ratio and a debt service coverage ratio, and
prohibits the payment of dividends without prior approval by the bank. At
December 31, 1996 and 1995, the Company was in compliance with such covenants.

In conjunction with the Company's utilization of this borrowing facility in
1995, the Company issued a warrant to purchase 21,740 shares of the Company's
Series A Mandatorily Redeemable Convertible Preferred Stock at an exercise price
of $4.60 per share.   As a result of the Company's initial public offering, this
warrant can be exercised to purchase the same number of shares of Common Stock
at the same exercise price.   The $26,000 value of this warrant at the time of
issuance, as determined by the Company and supported by an independent
appraisal, is being amortized as interest expense over the period the note is
outstanding. The warrant is exercisable at any time prior to July 2000.  The
warrant had not been exercised at December 31, 1996.


EQUIPMENT NOTES PAYABLE

In 1995 and 1996, the Company entered into borrowing facilities with a number of
lenders, allowing the Company to finance 70% to 80% of the cost of collaterized
machinery and equipment.  Borrowings under these facilities accrued interest at
rates ranging from 7.75% to 8.75% per annum with terms ranging from

                                       30
<PAGE>

                   INTEGRATED PACKAGING ASSEMBLY CORPORATION

                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

36 to 48 months.  At December 31, 1996, the Company had approximately $6 million
of unused borrowing facilities.   The borrowing facilities expire between March
and June 1997.  Certain of the credit facilities require the Company to maintain
certain financial covenants including minimum tangible net worth, a ratio of
total liabilities to tangible net worth, and quarterly profitability.   At
December 31, 1996 and 1995, the Company was in compliance with such covenants.
In accordance with the borrowing facility agreement entered in 1995, the Company
issued a warrant to purchase 97,826 shares of the Company's Series A Mandatorily
Redeemable Convertible Preferred Stock at an exercise price of $4.60 per share.
As a result of the Company's initial public offering, this warrant can be
exercised to purchase the same number of shares of Common Stock at the same
exercise price.   The $118,000 value of this warrant at the time of issuance, as
determined by the Company and supported by an independent appraisal, is being
amortized as interest expense over the period the notes are outstanding. The
warrant is exercisable at any time prior to 2005. The warrant had not been
exercised at December 31, 1996.


REAL ESTATE LOANS

In December, 1996, the Company borrowed $6.5 million from a bank to provide
temporary financing for the acquisition of its facilities.   The loan accrues
interest at 2.25% over the rate for 30 day certificates of deposit and was
collateralized by a certificate of deposit of equivalent value.  The Company has
classified this loan as long-term at December 31, 1996 based on the refinancing
disclosed below.

On March 25, 1997, the Company closed a mortgage loan with an insurance company,
which provided the Company with a $6.7 million five year term loan.  The loan is
secured by the land, buildings and improvements purchased in December 1996.  The
loan accrues interest at 8.5%, and is payable in equal monthly installments of
$58,000, with a balloon payment of  $5.9 million due after five years.  The
proceeds of this mortgage loan was used to pay off and retire the $6.5 million
real estate loan.


MATURITIES OF LOANS AND NOTES PAYABLE

The aggregate maturities of notes payable at December 31, 1996 are as follows
(in thousands):

      1997......................  $ 3,893
      1998......................    3,963
      1999......................    3,055
      2000......................    2,325
      2001......................    5,902
                                  -------
      Total.....................   19,138
      Less unamortized charges..      (90)
      Less current portion......   (3,893)
                                  -------
      Long-term borrowings......  $15,155
                                  =======

                                       31
<PAGE>

                   INTEGRATED PACKAGING ASSEMBLY CORPORATION

                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

LINE OF CREDIT

In May, 1996, the Company renewed its line of credit agreement with a bank which
provides, through July 15, 1997, for borrowings up to the lesser of $2,000,000
or 80% of eligible accounts receivable. At December 31, 1996 and 1995, no
amounts were outstanding under this line of credit.  However, the Company has
issued $775,000 and $1,300,000 of standby commercial letters of credit for
purchases of equipment against this line of credit at December 31, 1996 and
1995, respectively. Borrowings under the line of credit accrue interest at the
bank's prime rate (8.25% at December 31, 1996) and are collateralized by the
assets of the Company. The agreement requires the Company to maintain certain
financial covenants, including a minimum quick ratio, minimum tangible net
worth, maximum debt to tangible net worth, quarterly profitability and prohibits
the Company from the payment of dividends without prior approval by the bank.
At December 31, 1996, the Company was in compliance with such covenants.


NOTE 6--COMMON STOCK AND MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK:

On February 28, 1996, the Company issued 3,000,000 shares of Common Stock at
$7.50 per share in the Company's initial public offering ("IPO").  In addition,
the underwriters exercised their overallotment option to purchase 450,000 shares
of Common Stock.  Proceeds net of discounts, commissions and offering expenses,
total approximately $23.1 million.

Mandatorily Redeemable Convertible Preferred Stock, no par value, which was
converted into the same number of common shares at the Company's IPO consisted
of the following at December 31, 1995, (in thousands, except share data):

                                                                    DEC. 31
                                                                     1995
                                                                  ----------
Series A, 5,100,000 shares authorized. 4,373,000 shares
  issued and outstanding at Dec. 31, 1995....................      $  4,360
Series B, 500,000 shares authorized. 500,000 shares
  issued and outstanding at Dec. 31, 1995....................           988
Series C, 1,250,000 shares authorized. 1,250,000 shares
  issued and outstanding at Dec. 31, 1995....................         2,672
                                                                   --------
Series D, 1,739,130 shares authorized. 1,739,130 shares
  issued and outstanding at Dec. 31, 1995....................      $ 15,981
                                                                   ========

NOTE 7--STOCK OPTIONS:

1993 STOCK OPTION PLAN

In April 1993, the Board of Directors and shareholders adopted the 1993 Stock
Option Plan (the "Plan") which as amended, provides for the grant of incentive
stock options (ISOs) and nonqualified stock options (NSOs) to purchase up to
2,014,921 shares of Common Stock.  ISOs may be granted to employees and NSOs may
be granted to either employees or consultants.  In accordance with the Plan, the
stated exercise price shall not be less than 100% and 85% of the estimated fair
market value of Common Stock on the date of grant for ISOs and NSOs,
respectively, as determined by the Board of Directors. The Plan provides that

                                       32
<PAGE>

                   INTEGRATED PACKAGING ASSEMBLY CORPORATION

                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)


the options shall be exercisable over a period not to exceed ten years and shall
vest as determined by the Board of Directors. Substantially all of the options
vest 25% one year after the date of grant and 1/48th each month thereafter.
Compensation expense of approximately $200,000 was recognized on stock options
granted between June and November, 1995, and is being amortized over the four-
year vesting period.

DIRECTOR STOCK OPTION PLAN

In connection with the initial public offering, the Company adopted a Director
Stock Option Plan (the "Director Plan"). A total of 100,000 shares of Common
Stock have been authorized for issuance under the Director Plan. The Director
Plan provides for the grant of NSOs to non-employee directors of the Company.
The Director Plan provides that each non-employee director who joins the Board
will automatically be granted an NSO to purchase 20,000 shares of Common Stock
on the date upon which such person first becomes a non-employee director (the
"Initial Grant"). In addition, each non-employee director will automatically
receive an NSO to purchase 5,000 shares of Common Stock upon such director's
annual re-election to the Board, provided the director has been a member of the
Board for at least six months upon the date of such re-election (the
"Subsequent Grant"). The Initial Grant vests and becomes exercisable as to 25%
of the shares one year after the date of grant and as to 1/48th of the shares
each month thereafter, and each Subsequent Grant shall become exercisable as to
1/12th of the shares each month following the date of grant, both subject to
the director's continuous service.  The exercise price of all stock options
granted under the Director Plan is equal to the fair market value of the
Company's Common Stock on the date of grant. Options granted under the Director
Plan have a term of ten years. Unless terminated sooner, the Director Plan will
terminate in 2006.    No options were issued in 1996 under the Director Plan.


RESTRICTED COMMON STOCK

In September 1995, 398,333 shares of restricted Common Stock were sold to
employees upon exercise of stock options then outstanding.  Each unvested share
of this restricted Common Stock is subject to repurchase by the Company at the
employees' exercise price if an employee terminates before such shares vest;
vesting occurs over the same period as the former options. At December 31, 1995,
50,209 shares of such restricted Common Stock were vested.   At December 31,
1996, 170,312 vested shares had been converted into unrestricted shares, 73,750
shares were repurchased by the Company from terminated employees, and of the
remaining 154,271 restricted shares outstanding, 29,272 were vested.


1996 EMPLOYEE STOCK PURCHASE PLAN

The Company's 1996 Stock Purchase Plan (the "Purchase Plan") was adopted by
the Company's Board of Directors and shareholders in December 1995, and became
effective upon the closing of the Company's initial public offering on February
28, 1996.  Under the Purchase Plan, a total of 400,000 shares of Common Stock
has been reserved for issuance to eligible employees.  The Purchase Plan allows
employees to purchase shares through payroll deductions at 85% of the fair
market value of the Common Stock at the beginning or the end of the applicable
twelve-month purchase period. The Purchase Plan is intended to qualify as an
"employee stock purchase plan" under Section 423 of the U.S. Internal Revenue
Code. Unless terminated sooner, the Purchase Plan will terminate ten years from
its effective date.   During 1996, 25,062 shares were issued under the Plan.

                                       33
<PAGE>

                   INTEGRATED PACKAGING ASSEMBLY CORPORATION

                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

SUMMARY OF OPTION ACTIVITY

The following table summarizes the Company's stock option activity and related
weighted average exercise price within each category for each of the years ended
December 31, 1994, 1995, and 1996.
<TABLE>
<CAPTION>
                                        1996                1995               1994
                                -------------------  ------------------  -----------------
                                            AVERAGE             AVERAGE            AVERAGE
                                   SHARES    PRICE    SHARES     PRICE    SHARES    PRICE
                                ---------  --------  --------  --------  --------  -------
<S>                               <C>       <C>      <C>        <C>      <C>       <C>
Options outstanding at Jan. 1...  550,633     $1.04   612,500     $0.18  138,500     $0.10
Options granted.................  484,848     $8.74   615,000     $0.98  491,000     $0.20
Options canceled................  (68,126)    $0.33  (547,294)    $0.21  (17,000)    $0.11
Options exercised...............  (77,155)    $6.04  (129,573)    $0.20       --        --
                                ---------     -----   -------     -----  -------     -----
Options outstanding at Dec. 31    890,200     $4.85   550,633     $1.04  612,500     $0.18
                                =========     =====   =======     =====  =======     =====
Options exercisable at Dec. 31    147,944     $0.88    17,043     $0.24   42,125     $0.10
                                =========     =====   =======     =====  =======     =====
</TABLE>

Significant option groups outstanding at December 31, 1996, and the related
weighted average exercise price and remaining contractual life information are
as follows:

<TABLE>
<CAPTION>

                                   OUTSTANDING     EXERCISABLE
OPTIONS WITH EXERCISE           --------------------------------   REMAINING
PRICES RANGING FROM:              SHARES   PRICE  SHARES   PRICE  LIFE (YEARS)
-------------------------       ---------------------------------------------
<S>                               <C>      <C>    <C>      <C>     <C>
  $0.10     -    $0.46..........  357,289  $0.25  122,297  $0.24            8
  $1.50     -    $3.50..........   45,500  $2.17   12,439  $2.08            9
  $5.50     -    $7.50..........   94,563  $6.59   13,208  $5.66            9
  $7.63     -    $9.50..........  392,848  $8.94        0     --            9
                                  -------  -----  -------  -----    ---------
Options outstanding at Dec. 31    890,200  $4.85  147,944  $0.88            9
                                  ======   =====  =======  =====    =========
</TABLE>

FAIR VALUE OF STOCK OPTIONS AND EMPLOYEE PURCHASE RIGHTS

The Company has two stock option plans which reserve shares of Common Stock for
issuance to employees, officers and directors. The Company applies APB Opinion
25 and related interpretations in accounting for its plans. Accordingly, no
compensation cost has been recognized in the accompanying statement of
operations for the stock option plans, except for $200,000 which was recognized
on stock options granted between June and November 1995, and which is being
amortized over a four year vesting period. In January 1996, The Company adopted
the disclosure only provisions of Statement of Financial Accounting Standards
No. 123, "Accounting for Stock Based Compensation".

For the Stock Option Plan, the fair value of each option grant is estimated on
the date of grant using the Black-Scholes option pricing model with the
following weighted average assumptions used for grants in 1996 and 1995
respectively: dividend yield of 0% in both years; expected life of 3 years for
each year; expected volatility of 57% and 56%; and risk-free interest rates of
6.2% and 6.4%. The weighted-average fair value of those stock options granted in
1996 and 1995 was $4.33 and $0.54 per option respectively.

                                       34
<PAGE>

                   INTEGRATED PACKAGING ASSEMBLY CORPORATION

                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)


The fair value of the employees' purchase rights for the Purchase Plan, which
was initiated on February 28, 1996,  was estimated at the beginning of the
offering period using the Black-Scholes option pricing model with the following
assumptions used for 1996:  dividend yield of 0%;  an expected life of six
months;  expected volatility of 56%;  and risk-free interest rate of 5.3%.  The
weighted-average fair value of these purchase rights granted in 1996 was $2.20
per right.


FAIR VALUE OF STOCK OPTIONS AND EMPLOYEE PURCHASE RIGHTS (CONTINUED)

Had the Company recorded compensation costs based on the estimated grant date
fair value, as defined by SFAS 123, for awards granted under its stock option
plans and stock purchase plan, the Company's net income and income per share
would have been reduced to the pro forma amounts below for the years ended
December 31, 1996 and 1995:

                                           1996    1995
                                          ------  ------
      Net income as reported (in          $2,317  $1,550
       thousands).......................
      Net income, pro forma.............  $1,923  $1,521
      Net income per share as reported..  $ 0.16  $ 0.14
      Net income per share, pro forma...  $ 0.14  $ 0.14

The pro forma amounts reflect compensation expense related to 1996 and 1995
stock option grants and purchase rights only.  In future years, the annual pro
forma compensation expense will increase relative to the fair value of stock
options granted in those future years.



NOTE 8--INCOME TAXES:

Through December 31, 1994, the Company incurred net operating losses and
recorded no provision for income taxes. The tax provision for 1996 and 1995
current taxes consists of the following (in thousands):

                          DECEMBER 31,
                        ---------------
                         1996     1995
                        ------  -------
      Current:
           Federal..      $  13   $  48
           State....        169      93
                          -----   -----
                            182     141
                          -----   -----
      Deferred:
           Federal..        489      --
           State....       (141)     --
                          -----   -----
                            348      --
                          -----   -----
                          $ 530   $ 141
                          =====   =====

                                      35
<PAGE>

                   INTEGRATED PACKAGING ASSEMBLY CORPORATION

                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)


The tax provision reconciles to the amount computed by multiplying income before
tax by the U.S. statutory rate (34%) as follows (in thousands):

                                              DECEMBER 31,
                                             -------------
                                              1996    1995
                                             -----   -----
     Provision at statutory rate........     $ 968   $ 575
     Benefits of carryforwards..........       (68)   (527)
     State taxes, net of federal benefit       175      93
     Use of valuation allowance Stat          (475)     --
     Other..............................       (70)     --
                                             -----   -----
                                             $ 530   $ 141
                                             =====   =====

Deferred income tax assets comprise the following (in thousands):

                                                DECEMBER 31,
                                             -----------------
                                               1996      1995
                                             -------   -------
     Federal and state credit                $   397   $    --
      carryforwards.....................
     Federal and state net operating           1,575       988
      loss carryforwards................
     Organization costs.................         102       156
     Leases, treated as operating for         (3,072)   (1,185)
      tax...............................
     Inventory capitalization...........         144       200
     Reserves and accruals..............         476       316
                                              ------   -------
     Deferred tax assets (liability)....        (378)      475
     Less valuation allowance...........          --      (475)
                                              ------   -------
        Net deferred tax asset
        (liability)....................       ($ 378)  $    --
                                              ======   =======

The Tax Reform Act of 1996 limits the use of net operating loss and tax credit
carryforwards ("NOL's") in certain situations where changes occur in the stock
ownership of a company.  The Company experienced such an ownership change as a
result of the Company's IPO.  Accordingly, as of December 31, 1996, the Company
had federal and state NOL's (reflecting limitations resulting from change in
ownership) of approximately $4,600,000 and $31,000, respectively, which can be
used to reduce future taxable income.  These NOL's expire through 2011, if not
utilized.

                                       36
<PAGE>

                   INTEGRATED PACKAGING ASSEMBLY CORPORATION

                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)


NOTE 9--CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS:

CONCENTRATION OF CREDIT RISK

Financial instruments which potentially subject the Company to concentrations of
credit risk consist principally of cash in money market accounts, certificates
of deposit, investments in financial instruments with a maturity of less than
one year, and accounts receivable. At December 31, 1996 and 1995, the Company
had $7.4 million and $5.2 million invested in money market accounts with a bank.
At December 31, 1996, the Company had a certificate of deposit of $6.5 million
invested with a bank, and other investments in short term financial instruments
of $3.0 million invested with a securities firm.

The Company performs ongoing credit evaluations of its customers, which are
semiconductor companies, and maintains reserves for estimated credit losses.
Write-offs of accounts receivable were insignificant in all periods presented.
At December 31, 1995, five customers accounted for 19%, 17%, 14%, 13% and 12%,
respectively, of accounts receivable.  At December 31, 1996, two customers
accounted for 51% and 16%, respectively, of accounts receivable.

SIGNIFICANT CUSTOMERS

                                                    YEAR ENDED DECEMBER 31,
                                                    -----------------------
                                                       1996   1995   1994
                                                    -----------------------
Customers comprising 10% or more of the
Company's revenues for the periods indicated:
        A.........................                      32%    29%     5%
        B.........................                      17%     8%     -
        C.........................                      14%     3%     -
        D.........................                       4%    20%    27%
        E.........................                       3%     8%    18%
        F.........................                       1%     7%    18%


NOTE 10--LITIGATION:

The Company is involved in various litigation and potential claims which
management believes, based on facts presently known, will not have a material
adverse effect on the results of operations or the financial position of the
Company.

                                       37
<PAGE>

Item 9.  Changes in and Disagreement with Accountants on Accounting
         and Financial Disclosure

         Not applicable.

                                      -38-
<PAGE>

                                    PART III


         Certain information required by Part III is omitted from this Report on
Form 10-K in that the Registrant will file its definitive Proxy Statement for
its Annual Meeting of Stockholders to be held on June 17, 1997, pursuant to
Regulation 14A of the Securities Exchange Act of 1934, as amended (the "Proxy
Statement"), not later than 120 days after the end of the fiscal year covered by
this Report, and certain information included in the Proxy Statement is
incorporated herein by reference.

Item 10.  Directors and Executive Officers of the Registrant

          (a)   Executive Officers -- See the section entitled "Executive
                Officers" in Part I, Item 1 hereof.

          (b)   Directors -- The information required by this Item is
                incorporated by reference to the section entitled "Election of
                Directors" in the Proxy Statement.

          The disclosure required by Item 405 of Regulation S-K is incorporated
by reference to the section entitled "Section 16(a) Beneficial Ownership
Reporting Compliance" in the Proxy Statement.

Item 11.  Executive Compensation

          The information required by this Item is incorporated by reference to
the sections entitled "Compensation of Executive Officers" and "Compensation of
Directors" in the Proxy Statement.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

          The information required by this Item is incorporated by reference to
the sections entitled "Principal Share Ownership" and "Security Ownership of
Management" in the Proxy Statement.

Item 13.  Certain Relationships and Related Transactions

          The information required by this Item is incorporated by reference to
the section entitled "Certain Transactions" in the Proxy Statement.

                                      -39-
<PAGE>

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

14(a)     Exhibits

Exhibit
Number                     Description of Document
--------   -----------------------------------------------------------------
3.1+       Restated Articles of Incorporation.
3.4+       Bylaws, as amended.
10.1+      Form of Indemnification Agreement.
10.2+*     1993 Stock Option Plan and form of Stock Option Agreement.
10.3+*     1996 Employee Stock Purchase Plan and form of Subscription Agreement.
10.4+*     1996 Director Stock Option Plan and form of Stock Option Agreement.
10.5+      Registration Rights Agreement dated March 24, 1993, as amended.
10.6+      Lease Agreement dated June 16, 1993 between the Company
            and WVP Income Plus VI.
10.7+      Sublease Agreement dated July 15, 1995 between the Company
            and Peripheral Computer Support, Inc.
10.8+      Loan and Security Agreement dated June 21, 1995 between the
            Company and Silicon Valley Bank, as amended.
10.9+      Loan and Security Agreement dated September 15, 1995 between
            the Company and The CIT Group/Equipment Financing, Inc.
10.10+     Warrant to Purchase Series A Preferred Stock, issued to
            MMC/GATX Partnership No. 1 as of October 7, 1993, as amended.
10.11+     Warrant to Purchase Series A Preferred Stock, issued to
            Phoenix Leasing Incorporated as of October 7, 1993.
10.12+     Warrant to Purchase Series A Preferred Stock, issued to Comdisco,
            Inc. as of March 10, 1994.
10.13+     Warrant to Purchase Series A Preferred Stock, issued to
            Silicon Valley Bank as of July 10, 1995.
10.14+     Warrant to Purchase Series A Preferred Stock, issued to
            Silicon Valley Bank as of July 10, 1995.
10.15+     Warrant to Purchase Series A Preferred Stock, issued to
            The CIT Group/Equipment Financing, Inc. as of September 15, 1995.
10.16+     Warrant to Purchase Series A Preferred Stock, issued to Comdisco,
            Inc. as of January 3, 1996.
10.17++    Sublease Agreement between the Company and Peripheral Computer
            Support dated March 8, 1996.
10.18      Deed of Trust, Financing Statement, Security Agreement and Fixture
            Filing by IPAC Properties, as Trustor, to Chicago Title Company, as
            Trustee, for the Benefit of Sun Life Assurance Company of
            Canada (U.S.) dated March 24, 1997.
10.19      Promissory Note dated March 24, 1997 payable by IPAC Properties to
            Sun Life Assurance Company of Canada (U.S.).
10.20      Agreement of Guaranty dated March 24, 1997 by the Company to
            Sun Life Assurance Company of Canada (U.S.).
10.21      Environmental Agreement and Indemnity dated March 24, 1997 by IPAC
            Properties to Sun Life Assurance Company of Canada (U.S.).
11.1       Statement Regarding Computation of Earnings Per Share.
23.1       Consent of Price Waterhouse LLP, Independent Accountants.
24.1       Power of Attorney (see page 41)
27.1       Financial Data Schedule

                                      -40-
<PAGE>

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


+          Incorporated by reference from the Registrant's Registration
           Statement on Form SB-2 (file no. 333-326-LA), as amended, filed on
           January 17, 1996.
++         Incorporated by reference from the Registrant's Quarterly Report on
           Form 10-Q for the period ended June 30, 1996.

*          Management contract or compensatory plan or arrangement required to
           be filed as an exhibit to this form.

(b)   Reports on Form 8-K.

      None.

(c)   Exhibits.

      See Item 14(a) hereof.

(d)   Financial Statement Schedules.

      All financial statement schedules have been omitted because they are not
applicable or the required information is shown in the financial statements or
the notes thereto.

                                      -41-
<PAGE>

                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934 (the "Exchange Act"), the Registrant caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of San
Jose, State of California, on March 27, 1997.

                                   INTEGRATED PACKAGING, ASSEMBLY
                                   CORPORATION

                                    By: /s/ TONY LIN
                                        -----------------------------------
                                        Tony Lin
                                        Chief Financial Officer

                                POWER OF ATTORNEY

         KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and points Victor A. Batinovich and Tony Lin,
and each of them acting individually, as his attorney-in-fact, each with full
power of substitution, for him in any and all capacities, to sign any and all
amendments to this Report on Form 10-K, and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming our signatures as they may
be signed by our said attorney to any and all amendments to said Report.

    In accordance with the Exchange Act, this report has been signed below on
March 27, 1997 by the following persons on behalf of the Registrant and in the
capacities indicated.

            Signature                               Title
------------------------------       -----------------------------------------

/s/ VICTOR A. BATINOVICH
---------------------------------    Chairman, Chief Executive Officer
Victor A. Batinovich                  and President (Principal Executive
                                      Officer)


/s/ TONY LIN
---------------------------------
Tony Lin                             Chief Financial Officer (Principal
                                      Financial and Accounting Officer)


/s/ PAUL R. LOW
---------------------------------    Director
Paul R. Low


/s/ GILL COGAN
---------------------------------    Director
Gill Cogan


/s/ PHILIP R. CHAPMAN
---------------------------------    Director
Philip R. Chapman


/s/ ERIC A. YOUNG
---------------------------------    Director
Eric A. Young

                                      -42-
<PAGE>

                    INTEGRATED PACKAGING ASSEMBLY CORPORATION

                                Index to Exhibits

                                                                 Sequentially
Exhibit                                                            Numbered
Number               Description of Document                         Page
---------     ---------------------------------------------     ---------------
10.18         Deed of Trust, Financing Statement, Security
              Agreement and Fixture Filing by IPAC Properties,
              as Trustor, to Chicago Title Company, as Trustee,
              for the Benefit of Sun Life Assurance Company of
              Canada (U.S.) dated March 24, 1997.

10.19         Promissory Note dated March 24, 1997 payable by
              IPAC Properties to Sun Life Assurance Company
              of Canada (U.S.).

10.20         Agreement of Guaranty dated March 24, 1997 by
              the Company to Sun Life Assurance Company of
              Canada (U.S.).

10.21         Environmental Agreement and Indemnity dated
              March 24, 1997 by IPAC Properties to
              Sun Life Assurance Company of Canada (U.S.).

11.1          Statement Regarding Computation of Earnings Per Share.

23.1          Consent of Price Waterhouse LLP, Independent Accountants.

24.1          Power of Attorney (see page 41)

27.1          Financial Data Schedule