##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 20-F/A
 (Amendment No. 1)
 
 (Mark One)
 o
    
    Registration statement pursuant to Section 12(b) or 12(g) of the Securities Exchange Act
of 1934.
 OR
 þ
    
    Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
 For the fiscal year ended December 31, 2007.
 OR
 o
    
    Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
 For the transition period from to.
 OR
 o
    
    Shell Company Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
 Date of event requiring this shell company report.
 Commission File Number 000-27811
 CHARTERED SEMICONDUCTOR MANUFACTURING LTD.
  
 
  Title of Each Class 
American Depositary Shares, 
Each represented by ten Ordinary Shares
    
    Name of Each Exchange on Which Registered
NASDAQ Global Select Market
 
 
   þ o
  o þ
  þ o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
  o þ
  o þ




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TABLE OF CONTENTS
  
 EXPLANATORY NOTEItem 18. Financial StatementsEXHIBITSSIGNATURESIndex to Financial statementsEx-12.1 Certification of the President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.Ex-12.2 Certification of the Senior Vice President and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act 2002.Ex-13.1 Certification of the President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.Ex-13.2 Certification of the Senior Vice President and Chief Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.Ex-15.2 Consent of KPMG relating to incorporation of audit report relating to Silicon Manufacturing Partners Pte Ltd.




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EXPLANATORY NOTE
   
 Item 18. Financial Statements
  1




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EXHIBITS
 1(1)
    
    Memorandum and Articles of Association of the company.2.1(2)
    
    Specimen certificate for ordinary shares issued prior to January 30, 2006.2.2(27)
    
    Specimen certificate for ordinary shares in respect of new issuances of
shares issued on and after January 30, 2006.2.3(27)
    
    Specimen certificate for ordinary shares transferred on and after January
30, 2006 in respect of shares issued before January 30, 2006.2.4 (23)
    
    Specimen certificate for convertible redeemable preference shares.2.5(3)
    
    Deposit Agreement dated November 4, 1999 by and among the company,
Citibank, N.A. and the holders and beneficial owners of American
Depositary Shares evidenced by American Depositary Receipts issued
thereunder (including as an exhibit, the form of American Depositary
Receipt).2.5.1(29)
    
    Letter Agreement dated September 26, 2007 by and between the company and
Citibank, N.A., supplementing the Deposit Agreement dated November 4,
1999 by and among the company, Citibank, N.A. and the holders and
beneficial owners of American Depositary Shares evidenced by American
Depositary Receipts issued thereunder.2.6(19)
    
    Conversion Price Certificate dated August 17, 2005 of the company.Loan Agreements and Indentures4.1.1(6)
    
    Indenture dated as of April 2, 2001 by and between the company and Wells
Fargo Bank Minnesota, National Association.4.1.2(20)
    
    Second Supplemental Indenture dated August 3, 2005 by and between the
company and The Bank of New York.4.1.3(20)
    
    Third Supplemental Indenture dated August 3, 2005 by and between the
company and The Bank of New York.4.1.4(21)
    
    Fourth Supplemental Indenture dated August 17, 2005 by and between the
company and The Bank of New York.4.1.5(24)
    
    Fifth Supplemental Indenture dated April 4, 2006 by and between the
company and The Bank of New York.4.2(21)
    
    Master Agency Agreement dated August 17, 2005 by and between the company
and The Bank of New York.4.3(18)(+)
    
    Facility Agreement dated December 23, 2004 by and among the company as
Borrower, JPMorgan Chase Bank, N.A. as Lender, Export-Import Bank of the
United States as guarantor and JPMorgan Chase Bank, N.A as Facility
Agent.4.3.1(28)
    
    Amendment No. 1 dated May 16, 2007 to Facility Agreement dated December
23, 2004 by and among the company as Borrower, JPMorgan Chase Bank, N.A.
as Lender, Export-Import Bank of the United States as guarantor and
JPMorgan Chase Bank, N.A as Facility Agent.4.3.2(28)(++)
    
    Facility Agreement dated May 16, 2007 by and among the company as
Borrower, JPMorgan Chase Bank, N.A. as Lender, Export-Import Bank of the
United States as guarantor and JPMorgan Chase Bank, N.A as Facility
Agent.4.4(25)(++)
    
    Letter of Confirmation from Goldman Sachs International to the company
dated March 29, 2006 supplementing the ISDA Master Agreement
(Multicurrency-Cross Border) dated August
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10, 2004 by and between the
company and Goldman Sachs International, as counter-party together with
the Schedule to the Master Agreement.4.5(25)(++)
    
    Facility Agreement dated March 3, 2006 by and between the company as
Borrower and Sumitomo Mitsui Banking Corporation as Arranger and Sumitomo
Mitsui Banking Corporation, Singapore Branch as Agent.4.5.1(26)
    
    Syndication Agreement dated June 30, 2006 relating to the Facility
Agreement dated March 3, 2006 by and between the company as Borrower and
Sumitomo Mitsui Banking Corporation as Arranger and Sumitomo Mitsui
Banking Corporation, Singapore Branch as Agent.4.6(29)(++)
    
    Facility Agreement dated October 5, 2007 by and among the company as
Borrower and Japan Bank for International Cooperation and Sumitomo Mitsui
Banking Corporation, as Lenders.4.7(30)(++)
    
    Credit Agreement dated January 28, 2008 by and among the company as
Borrower, Société Générale as Arranger, Lender and Facility Agent, and
The Bank of New York, as Security Trustee and Account Bank.Strategic AlliancesCSP4.8.1(7)
    
    Deed of Accession and Ratification dated October 22, 2001 by and among
the company, EDB Investments Pte Ltd, Agilent Technologies Europe B.V.
and Singapex Investments Pte Ltd relating to the Joint Venture Agreement
dated March 13, 1997, as amended and restated on October 23, 2001(the
Restated Joint Venture Agreement dated October 23, 2001).4.8.2(7)
    
    Amendment Agreement No. 1 dated January 31, 2002 to Restated Joint
Venture Agreement dated October 23, 2001.4.8.3(23)
    
    Deed of Accession and Ratification dated January 26, 2006 by and among
the company, EDB Investments Pte Ltd, Singapex Investments Pte Ltd,
Agilent Technologies Europe B.V. and Avago Technologies General IP
(Singapore) Pte. Ltd. relating to the Restated Joint Venture Agreement
dated October 23, 2001 and as further amended by an amendment (No. 1)
dated January 31, 2002.SMP4.9.1(2)(+)
    
    Joint Venture Agreement dated December 19, 1997 by and between the
company and Lucent Technologies Microelectronics Pte. Ltd.4.9.2(17)
    
    Supplemental Agreement dated September 17, 2004 to the Joint Venture
Agreement dated December 19, 1997 by and between the company and Agere
Systems Singapore Pte Ltd. (formerly known as Lucent Technologies
Microelectronics Pte. Ltd.).4.9.3(22)
    
    Second Supplemental Agreement dated January 1, 2005 to the Joint Venture
Agreement dated December 19, 1997 by and between the company and Agere
Systems Singapore Pte Ltd.4.9.4(2)(++)
    
    Assured Supply and Demand Agreement dated February 17, 1998 by and among
the company, Silicon Manufacturing Partners Pte Ltd and Lucent
Technologies Microelectronics Pte. Ltd.4.9.5(2)(+)
    
    Supplemental Assured Supply and Demand Agreement dated September 3, 1999
by and among the company, Silicon Manufacturing Partners Pte Ltd and
Lucent Technologies Microelectronics Pte. Ltd.4.9.6(2)(++)
    
    License and Technology Transfer Agreement dated February 17, 1998 by and
among the company, Lucent Technologies Microelectronics Pte. Ltd. and
Silicon Manufacturing Partners Pte Ltd.4.9.7(10)(++)
    Amendment Agreement (No. 1) to License and Technology Transfer Agreement
dated July 27,
 3




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2000 by and between the company, Lucent Technologies
Microelectronics Pte. Ltd. and Silicon Manufacturing Partners Pte Ltd.4.9.8(8)(++)
    
    Amendment Agreement (No. 2) dated March 22, 2001 to License and
Technology Transfer Agreement dated February 17, 1998 by and between the
company, Agere Systems Singapore Pte Ltd (formerly known as Lucent
Technologies Microelectronics Pte. Ltd.) and Silicon Manufacturing
Partners Pte Ltd.4.9.9(9)(++)
    
    Amendment Agreement (No. 3) dated March 28, 2002 to License and
Technology Transfer Agreement dated February 17, 1998 by and among the
company, Agere Systems Singapore Pte Ltd (formerly known as Lucent
Technologies Microelectronics Pte. Ltd.) and Silicon Manufacturing
Partners Pte Ltd.4.9.10(4)(++)
    Amendment Agreement (No. 4) dated July 1, 2003 to License and Technology Transfer
Agreement dated February 17, 1998 by and among the company, Agere Systems Singapore Pte
Ltd (formerly known as Lucent Technologies Microelectronics Pte. Ltd.) and Silicon
Manufacturing Partners Pte Ltd.Technology transfer, license, joint development and other related agreementsAgere/Lucent4.10.1(2)(++)
    Technology Transfer Agreement dated February 17, 1998 by and between the company and
Lucent Technologies Inc.4.10.2(8)(++)
    Amendment Agreement (No. 1) dated July 31, 2000 to Technology Transfer Agreement dated
February 17, 1998 between Lucent Technologies Inc. and the company.4.10.3(8)(++)
    Amendment Agreement (No. 2) dated March 20, 2001 to Technology Transfer Agreement dated
February 17, 1998 between Agere Systems Inc. (formerly known as the Microelectronics
Group of Lucent Technologies Inc.) and the company.4.10.4(8)(++)
    Amendment Agreement (No. 3) dated March 28, 2002 to Technology Transfer Agreement dated
February 17, 1998 between Agere Systems Inc. (formerly known as the Microelectronics
Group of Lucent Technologies Inc.) and the company.4.10.5(2)(+)
    
    Patent License Agreement dated January 1, 1998 by and between the company and Lucent
Technologies Inc.4.10.6(14)(+)
    Patent License Agreement Amendment dated August 3, 2000 by and between the company and
Lucent Technologies Inc.4.10.7(10)
    
    Letter Agreement dated September 26, 2002 by and between the company and Agere Systems
Inc. amending the Patent License Agreement between the parties dated January 1, 1998.Toshiba4.11(2)(+)
    
    Patent Cross License Agreement dated August 12, 1999 by and between the company and
Toshiba Corporation.IBM4.12.1(7)(+)
    
    Patent Cross-License Agreement dated January 1, 2001 by and between the company and
International Business Machines Corporation.4.12.2(11)(+)
    Amendment No. 1 dated November 26, 2002 to Patent License Agreement dated January 1,
2001 by and between the company and International Business Machines Corporation.4.12.3(11)(+)
    SF Process Development and Cost Sharing Agreement dated November 26, 2002 by and
between the company and International Business Machines Corporation.
 4




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4.12.4(11)(++)
    Copper / Related FEOL Technology License Agreement dated November 26, 2002 by and
between the company and International Business Machines Corporation.4.12.5(22)(++)
    Amendment No. 1 dated January 19, 2005 to the Copper / Related FEOL Technology License
Agreement dated November 26, 2002 by and between the company and International Business
Machines Corporation.4.12.6(12)(+)
    Amendment No. 1 dated June 26, 2003 to SF Process Development and Cost Sharing
Agreement dated November 26, 2002 by and between the company and International Business
Machines Corporation.4.12.7(16)(+)
    Amended and Restated Amendment No. 2 dated March 9, 2004 to the SF Process Development
and Cost Sharing Agreement dated November 26, 2002 by and between the company and
International Business Machines Corporation.4.12.8(27)(++)
    Third Amended and Restated Amendment No.3 dated November 17, 2006 to SF Process
Development and Cost Sharing Agreement dated November 26, 2002 by and between the
company and International Business Machines Corporation.4.12.9(18)(+)
    Amendment No. 4 dated December 15, 2004 to SF Process Development and Cost Sharing
Agreement dated November 26, 2002 by and between the company and International Business
Machines Corporation.4.12.10(11)(++)
    Refundable Cross Deposit Agreement dated November 26, 2002 by and between the company
and International Business Machines Corporation.4.12.11(15)(++)
    First Supplemental Agreement dated December 19, 2003 to the Refundable Cross Deposit
Agreement dated November 26, 2002 by and between the company and International Business
Machines Corporation.4.12.12(25)(++)
    Letter Agreement dated March 27, 2006 to vary the terms of the Refundable Cross Deposit
Agreement dated November 26, 2002, as amended and supplemented, by and between the
company and International Business Machines Corporation.4.12.13(27)(++)
    Master IBM Joint Development Terms and Conditions dated December 15, 2006 for joint
development projects with International Business Machines Corporation.4.12.14(27)(++)
    Participation Agreement dated January 1, 2007 by and between the company and
International Business Machines Corporation.4.12.15(27)(++)
    Joint Development Project Agreement dated December 15, 2006 for 45nm Bulk-Industry
Standard Semiconductor Process Technology by and between the company and International
Business Machines Corporation.4.12.16(27)(++)
    Joint Development Project Agreement dated December 15, 2006 for 32nm Bulk-Industry
Standard Semiconductor Process Technology by and between the company and International
Business Machines Corporation.Motorola4.13(4)(+)
    
    Patent License Agreement dated July 1, 2003 by and between the company and Motorola, Inc.Property AgreementsFab 24.14(18)
    
    Sub-Lease dated October 19, 2004 by and between Singapore Technologies Pte Ltd and
the company relating to Private Lots A12787 and A12787(a) Mukim No. 13 Sembawang.Fabs 3 and 5
 5




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4.15.1(5)
    
    Sub-Lease Agreement dated February 17, 1998 by and between the company and Silicon
Manufacturing Partners Pte Ltd.4.15.2(18)
    
    Sub-Lease dated October 19, 2004 by and between Singapore Technologies Pte Ltd and
the company relating to Private Lot A12787(b) Mukim No. 13.Fabs 2 and 3 Site Slurry Treatment Plant4.16.1(23)
    
    Agreement for Sub-License and Sub-Lease (Private Lot A12787(k)) dated July 8, 2005
by and between Singapore Technologies Pte Ltd and the company.4.16.2(23)
    
    Novation Agreement dated July 8, 2005 by and among Singapore Technologies Pte Ltd,
Terra Investments Pte. Ltd. and the company relating to the Agreement for
Sub-License and Sub-Lease (Private Lot A12787(k)) dated July 8, 2005.4.16.3(27)
    
    Supplemental Agreement dated January 3, 2007 by and between Terra Investments Pte.
Ltd. and the company relating to the Agreement for Sub-License and Sub-Lease
(Private Lot A12787(k) now known as A1964508) dated July 8, 2005.Fab 64.17.1(5)
    
    Building Agreement relating to Private Lot A12787(d) Mukim No. 13 Sembawang dated
September 24, 1999 by and between Jurong Town Corporation and Singapore
Technologies Pte Ltd.4.17.2(5)
    
    Agreement for Sub-License and Sub-Lease (Private Lot A12787(d)) dated September 24,
1999 by and between Singapore Technologies Pte Ltd and Chartered Silicon Partners
Pte Ltd.4.17.3(18)
    
    Novation Agreement dated December 31, 2004 by and among Singapore Technologies Pte
Ltd, Terra Investments Pte. Ltd. and Chartered Silicon Partners Pte Ltd relating to
the Agreement for Sub-License and Sub-Lease (Private Lot A12787(d)) dated September
24, 1999.Fab 74.18.1(13)
    
    Agreement for Sub-License and Sub-Lease (Private Lot A12787(e)) dated July 30, 2001
by and between Singapore Technologies Pte Ltd and the company.4.18.2(13)
    
    Building Agreement relating to Private Lot A12787(e) Woodlands Industrial Park D,
G.S. No. 3696K, Mukim No. 13 dated July 30, 2001 by and between Jurong Town
Corporation and Singapore Technologies Pte Ltd.4.18.3(18)
    
    Novation Agreement dated December 31, 2004 by and among Singapore Technologies Pte
Ltd, Terra Investments Pte. Ltd. and the company relating to the Agreement for
Sub-License and Sub-Lease (Private Lot A12787(e)) dated July 30, 2001.4.18.4(27)
    
    Supplemental Agreement dated January 3, 2007 by and between Terra Investments Pte.
Ltd. and the company relating to the Agreement for Sub-License and Sub-Lease
(Private Lot A12787(e) now known as A1964507) dated July 30, 2001.4.19.1(27)
    
    Offer Letter dated February 16, 2006 from Jurong Town Corporation to Terra
Investments Pte. Ltd. for the lease of land known as Private Lot A1964510 at Plot 6
Woodlands Industrial Park D in Woodlands Wafer Fab Park.4.19.2(27)
    
    Acceptance of Offer dated February 21, 2006 from the company to Terra Investments
Pte Ltd. relating to Private Lot A1964510 at Plot 6 Woodlands Industrial Park D in
Woodlands Wafer Fab Park.4.19.3(27)
    
    Acceptance of Offer dated February 24, 2006 from Terra Investments Pte. Ltd. to
Jurong Town Corporation relating to Private Lot A1964510 at Plot 6 Woodlands
Industrial Park D in
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Woodlands Wafer Fab Park.Acquisition of Hitachi Semiconductor Singapore Pte Ltd4.20(30)
    
    Stock Purchase Agreement dated February 15, 2008 by and amongst the company,
Hitachi, Ltd and Hitachi Asia, Ltd for the purchase of 100 percent of the shares in
Hitachi Semiconductor Singapore Pte Ltd.Related Party Agreements4.21(11)
    
    Amended and Restated Turnkey Subcontract Agreement for Sort, Assembly and/or Final
Test Services dated October 30, 2002 by and between the company and ST Assembly
Test Services Ltd.4.22(15)
    
    Mr. Chia Song Hwees, President and Chief Executive Officer, Contract of Employment.8(11)
    
    List of the companys subsidiaries.12.1(31)
    
    Certification of the President and Chief Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.12.2(31)
    
    Certification of the Senior Vice President and Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.13.1(31)
    
    Certification of the President and Chief Executive Officer pursuant to 18 U.S.C
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.13.2(31)
    
    Certification of the Senior Vice President and Chief Financial Officer pursuant to
18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.15.1(30)
    
    Consent of KPMG relating to incorporation of audit report relating to Chartered
Semiconductor Manufacturing Ltd.15.2(31)
    
    Consent of KPMG relating to incorporation of audit report relating to Silicon
Manufacturing Partners Pte Ltd.
 
 Notes:(1)
    
    Filed as an exhibit to our companys Registration Statement on Form F-1
(Registration No. 333-88397), as filed with the Securities and Exchange Commission
on October 4, 1999. The Memorandum and Articles of Association were amended by
special resolutions of our shareholders passed on May 30, 2001, May 15, 2002,
August 17, 2005 and April 24, 2007, and by an ordinary resolution of our
shareholders passed on April 28, 2005. A copy of the reprinted version of the
Memorandum and Articles of Association of our company, incorporating all the
amendments made thereto up to April 24, 2007, was filed as an exhibit to our
companys Current Report on Form 6-K (File No. 000-27811), as submitted with the
Securities and Exchange Commission on August 2, 2007, which exhibit is incorporated
herein by reference.(2)
    
    Filed as an exhibit to our companys Amended Registration Statement on Form F-1/A,
as filed with the Securities and Exchange Commission on October 25, 1999, which
exhibit is incorporated herein by reference.(3)
    
    Submitted as an exhibit to our companys Current Report on Form 6-K (File No.
000-27811), as submitted with the Securities and Exchange Commission on November
23, 1999, which exhibit is incorporated herein by reference.(4)
    
    Submitted as an exhibit to our companys Third Quarterly Report 2003 on Form 6-K
(File No. 000-27811), as submitted with the Securities and Exchange Commission on
November 13, 2003, which exhibit is incorporated herein by reference.(5)
    
    Filed as an exhibit to our companys Registration Statement on Form F-1
(Registration No. 333-88397), as filed with the Securities and Exchange Commission
on October 4, 1999.(6)
    
    Submitted as an exhibit to our companys Current Report on Form 6-K (File No.
000-27811), as submitted 7




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with the Securities and Exchange Commission on April 4,
2001, which exhibit is incorporated herein by reference.(7)
    
    Filed as an exhibit to our companys Annual Report on Form 20-F (File No.
000-27811), as filed with the Securities and Exchange Commission on March 11, 2002,
which exhibit is incorporated herein by reference.(8)
    
    Submitted as an exhibit to our companys First Quarterly Report 2001 on Form 6-K
(File No. 000-27811), as submitted with the Securities and Exchange Commission on
May 15, 2001, which exhibit is incorporated herein by reference.(9)
    
    Submitted as an exhibit to our companys First Quarterly Report 2002 on Form 6-K
(File No. 000-27811), as submitted with the Securities and Exchange Commission on
May 14, 2002, which exhibit is incorporated herein by reference.(10)
    
    Submitted as an exhibit to our companys Third Quarterly Report 2002 on Form 6-K
(File No. 000-27811), as submitted with the Securities and Exchange Commission on
November 14, 2002, which exhibit is incorporated herein by reference.(11)
    
    Filed as an exhibit to our companys Annual Report on Form 20-F (File No.
000-27811), as filed with the Securities and Exchange Commission on March 13, 2003,
which exhibit is incorporated herein by reference.(12)
    
    Submitted as an exhibit to our companys Second Quarterly Report 2003 on Form 6-K
(File No. 000-27811), as submitted with the Securities and Exchange Commission on
August 13, 2003, which exhibit is incorporated herein by reference.(13)
    
    Submitted as an exhibit to our companys Third Quarterly Report 2001 on Form 6-K
(File No. 000-27811), as submitted with the Securities and Exchange Commission on
November 14, 2001, which exhibit is incorporated herein by reference.(14)
    
    Submitted as an exhibit to our companys Current Report on Form 6-K (File No.
000-27811), as submitted with the Securities and Exchange Commission on November
14, 2000, which exhibit is incorporated herein by reference.(15)
    
    Filed as an exhibit to our companys Annual Report on Form 20-F (File No.
000-27811), as filed with the Securities and Exchange Commission on March 3, 2004,
which exhibit is incorporated herein by reference.(16)
    
    Submitted as an exhibit to our companys First Quarterly Report 2004 on Form 6-K
(File No. 000-27811), as submitted with the Securities and Exchange Commission on
May 10, 2004, which exhibit is incorporated herein by reference.(17)
    
    Submitted as an exhibit to our companys Third Quarterly Report 2004 on Form 6-K
(File No. 000-27811), as submitted with the Securities and Exchange Commission on
November 8, 2004, which exhibit is incorporated herein by reference.(18)
    
    Filed as an exhibit to our companys Annual Report on Form 20-F (File No.
000-27811), as filed with the Securities and Exchange Commission on March 7, 2005,
which exhibit is incorporated herein by reference.(19)
    
    Submitted as an exhibit to our companys Current Report 2005 on Form 6-K (File No.
000-27811), as submitted with the Securities and Exchange Commission on August 17,
2005, which exhibit is incorporated herein by reference.(20)
    
    Submitted as an exhibit to our companys Current Report on Form 6-K (File No.
000-27811), as submitted with the Securities and Exchange Commission on August 4,
2005, which exhibit is incorporated herein by reference.(21)
    
    Submitted as an exhibit to our companys Current Report on Form 6-K (File No.
000-27811), as submitted with the Securities and Exchange Commission on August 18,
2005, which exhibit is incorporated herein by reference.(22)
    
    Submitted as an exhibit to our companys First Quarterly Report on Form 6-K (File
No. 000-27811), as submitted with the Securities and Exchange Commission on May 6,
2005, which exhibit is incorporated herein by reference.(23)
    
    Filed as an exhibit to our companys Annual Report on Form 20-F (File No.
000-27811), as filed with the 8




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Securities and Exchange Commission on March 1, 2006,
which exhibit is incorporated herein by reference.(24)
    
    Submitted as an exhibit to our companys Current Report on Form 6-K (File No.
000-27811), as submitted with the Securities and Exchange Commission on April 5,
2006, which exhibit is incorporated herein by reference.(25)
    
    Submitted as an exhibit to our companys First Quarterly Report on Form 6-K (File
No. 000-27811), as submitted with the Securities and Exchange Commission on May 10,
2006, which exhibit is incorporated herein by reference.(26)
    
    Submitted as an exhibit to our companys Current Report on Form 6-K (File No.
000-27811), as submitted with the Securities and Exchange Commission on August 9,
2006, which exhibit is incorporated herein by reference.(27)
    
    Filed as an exhibit to our companys Annual Report on Form 20-F (File No.
000-27811), as filed with the Securities and Exchange Commission on March 15, 2007,
which exhibit is incorporated herein by reference.(28)
    
    Submitted as an exhibit to our companys Second Quarterly Report on Form 6-K (File
No. 000-27811), as submitted with the Securities and Exchange Commission on August
7, 2007, which exhibit is incorporated herein by reference.(29)
    
    Submitted as an exhibit to our companys Third Quarterly Report 2007 on Form 6-K
(File No. 000-27811), as submitted with the Securities and Exchange Commission on
November 7, 2007, which exhibit is incorporated herein by reference.(30)
    
    Previously filed as an exhibit to our companys
Annual Report on Form 20-F for the year ended December 31, 2007 on March 10, 2008.(31)
    
    Filed herewith.(+)
    
    Certain portions of this exhibit have been omitted pursuant to a confidential
treatment order of the Securities and Exchange Commission. The omitted portions
have been separately filed with the Commission.(++)
    
    Certain portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omitted portions have been separately filed with the Commission. 9




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SIGNATURES
  CHARTERED SEMICONDUCTOR MANUFACTURING LTDBy:
    /s/ George ThomasName:
    George ThomasTitle:
    Senior Vice President and Chief Financial Officer  SIGNATURE
    
    TITLE
    
    DATE/s/ James A. Norling

James A. Norling
    
    Chairman of the Board
    
    April 8, 2008/s/ Chia Song Hwee

Chia Song Hwee
    
    President and Chief Executive Officer (principal executive officer)
    
    April 8, 2008/s/ George Thomas

George Thomas
    
    Senior Vice President and Chief Financial Officer (principal financial and accounting officer)
    
    April 8, 2008/s/ Andre Borrel

Andre Borrel
    
    Director
    
    April 8, 2008/s/ Charles E. Thompson

Charles E. Thompson
    
    Director
    
    April 8, 2008/s/ Tsugio Makimoto

Tsugio Makimoto
    
    Director
    
    April 8, 2008/s/ Tay Siew Choon

Tay Siew Choon
    
    Director
    
    April 8, 2008
 10




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SIGNATURE
    
    TITLE
    
    DATE/s/ Peter Seah Lim Huat

Peter Seah Lim Huat
    
    Director
    
    April 8, 2008/s/ Philip Tan Yuen Fah

Philip tan yuen fah
    
    Director
    
    April 8, 2008/s/ Pasquale Pistorio

Pasquale Pistorio
    
    Director
    
    April 8, 2008/s/ Steven H. Hamblin

Steven H. Hamblin
    
    Director
    
    April 8, 2008/s/ Maurizio Ghirga

Maurizio Ghirga
    
    Director
    
    April 8, 2008
 11




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SILICON MANUFACTURING PARTNERS PTE LTD
 FINANCIAL STATEMENTS INDEX
  
 Page NumberReport of Independent Registered Public Accounting Firm
    
    FS1Balance Sheets
    
    FS2Statements of Operations
    
    FS3Statements of Comprehensive Income
    
    FS4Statements of Shareholders Equity
    
    FS5Statements of Cash Flows
    
    FS6Notes to the Financial Statements
    
    FS7




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    
 FS1




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SILICON MANUFACTURING PARTNERS PTE LTD
 
 BALANCE SHEETS  in US Dollars
 As of December 31
In thousands
 2006
    
    2007ASSETSCash and cash equivalents
    
    $
    26,726
    
    
    $
    24,697Receivables, net
    
    
    6,268
    
    
    
    11,238Receivables from related parties
    
    
    19,598
    
    
    
    11,218Inventories
    
    
    17,346
    
    
    
    16,041Prepaid expenses
    
    
    2,125
    
    
    
    1,900Other current assets
    
    
    
    
    
    
    249Total current assets
    
    
    72,063
    
    
    
    65,343Property, plant and equipment, net
    
    
    21,972
    
    
    
    18,436Other non-current assets
    
    
    55
    
    
    
    669Total assets
    
    $
    94,090
    
    
    $
    84,448LIABILITIES AND SHAREHOLDERS EQUITYTrade payables and accrued purchases
    
    $
    11,066
    
    
    $
    11,914Payables to related parties
    
    
    24,236
    
    
    
    13,432Other current liabilities
    
    
    5,314
    
    
    
    5,044Total current liabilities
    
    
    40,616
    
    
    
    30,390Other non-current liabilities
    
    
    19
    
    
    
    6Total liabilities
    
    
    40,635
    
    
    
    30,396Ordinary share capitalIssued and outstanding: 323,965 shares in 2006 and 2007
    
    
    152,389
    
    
    
    152,389Accumulated deficit
    
    
    (98,933
    )
    
    
    (98,337
    )Accumulated other comprehensive loss
    
    
    (1
    )
    
    
    Total shareholders equity
    
    $
    53,455
    
    
    $
    54,052Commitments and contingenciesTotal liabilities and shareholders equity
    
    $
    94,090
    
    
    $
    84,448
 See accompanying notes to financial statements
 FS2




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SILICON MANUFACTURING PARTNERS PTE LTD
 
 STATEMENTS OF OPERATIONS  in US Dollars
 For the Twelve-Month Periods Ended December 31
In thousands
 2005
    
    
    2006
    
    
    2007(Unaudited)Net revenue
    
    $
    201,345
    
    
    $
    197,932
    
    
    $
    175,174Cost of revenue
    
    
    (196,470
    )
    
    
    (159,922
    )
    
    
    (140,667
    )Gross profit
    
    
    4,875
    
    
    
    38,010
    
    
    
    34,507OPERATING EXPENSESGeneral and administrative
    
    
    4,426
    
    
    
    3,175
    
    
    
    3,089Other operating expenses, net
    
    
    5
    
    
    
    126
    
    
    
    112Total operating expenses, net
    
    
    4,431
    
    
    
    3,301
    
    
    
    3,201Other income, net
    
    
    8
    
    
    
    13
    
    
    
    13Interest income
    
    
    1,386
    
    
    
    1,535
    
    
    
    1,247Income before income tax
    
    
    1,838
    
    
    
    36,257
    
    
    
    32,566Income tax expense (benefit)
    
    
    352
    
    
    
    216
    
    
    
    (1,632
    )Net income
    
    $
    1,486
    
    
    $
    36,041
    
    
    $
    34,198
 See accompanying notes to financial statements
 FS3




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SILICON MANUFACTURING PARTNERS PTE LTD
 
 STATEMENTS OF COMPREHENSIVE INCOME  in US Dollars
 For the Twelve-Month Periods Ended December 31
In thousands
 2005
    
    
    2006
    
    
    2007(Unaudited)Net income
    
    $
    1,486
    
    
    $
    36,041
    
    
    $
    34,198Reclassification of cash flow hedging losses into earnings
    
    
    37
    
    
    
    17
    
    
    
    1Other comprehensive income
    
    
    37
    
    
    
    17
    
    
    
    1Comprehensive income
    
    $
    1,523
    
    
    $
    36,058
    
    
    $
    34,199
 See accompanying notes to financial statements
 FS4




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##### Table of Contents



SILICON MANUFACTURING PARTNERS PTE LTD
 
 STATEMENTS OF SHAREHOLDERS EQUITY  in US Dollars
 In thousands
 AccumulatedOtherCompre-
    
    Total Share-Ordinary Share
    
    Accumulated
    
    hensive
    
    holders'Capital
    
    Deficit
    
    Income (Loss)
    
    EquityNo.
    
    $
    
    $
    
    $
    
    $Balance at December 31, 2004
    
    
    425,000
    
    
    
    252,389
    
    
    
    (57,475
    )
    
    
    (55
    )
    
    
    194,859Net income (unaudited)
    
    
    
    
    
    
    
    
    
    
    1,486
    
    
    
    
    
    
    
    1,486Other comprehensive income
(unaudited)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37
    
    
    
    37Return of capital (unaudited)
    
    
    (101,035
    )
    
    
    (60,000
    )
    
    
    
    
    
    
    
    
    
    
    (60,000
    )Dividend paid (unaudited)
    
    
    
    
    
    
    
    
    
    
    (40,808
    )
    
    
    
    
    
    
    (40,808
    )Balance at December 31, 2005
(unaudited)
    
    
    323,965
    
    
    
    192,389
    
    
    
    (96,797
    )
    
    
    (18
    )
    
    
    95,574Net income
    
    
    
    
    
    
    
    
    
    
    36,041
    
    
    
    
    
    
    
    36,041Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17
    
    
    
    17Return of capital
    
    
    
    
    
    
    (40,000
    )
    
    
    
    
    
    
    
    
    
    
    (40,000
    )Dividend paid
    
    
    
    
    
    
    
    
    
    
    (38,177
    )
    
    
    
    
    
    
    (38,177
    )Balance at December 31, 2006
    
    
    323,965
    
    
    
    152,389
    
    
    
    (98,933
    )
    
    
    (1
    )
    
    
    53,455Net income
    
    
    
    
    
    
    
    
    
    
    34,198
    
    
    
    
    
    
    
    34,198Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1Dividend paid
    
    
    
    
    
    
    
    
    
    
    (33,602
    )
    
    
    
    
    
    
    (33,602
    )Balance at December 31, 2007
    
    
    323,965
    
    
    
    152,389
    
    
    
    (98,337
    )
    
    
    
    
    
    
    54,052
 See accompanying notes to financial statements
 FS5




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SILICON MANUFACTURING PARTNERS PTE LTD
 
 STATEMENTS OF CASH FLOWS  in US Dollars
 For the Twelve-Month
Periods Ended December 31In thousands
 2005
    
    
    2006
    
    
    2007(Unaudited)CASH FLOWS FROM OPERATING ACTIVITIESNet income
    
    $
    1,486
    
    
    $
    36,041
    
    
    $
    34,198Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation
    
    
    84,105
    
    
    
    36,702
    
    
    
    13,961Gain on disposal of property, plant and equipment
    
    
    
    
    
    
    (50
    )
    
    
    Others, net
    
    
    183
    
    
    
    (4
    )
    
    
    (851
    )Change in assets and liabilities:Receivables
    
    
    (1,843
    )
    
    
    190
    
    
    
    (4,981
    )Receivables with related parties
    
    
    (2,305
    )
    
    
    3,035
    
    
    
    8,380Inventories
    
    
    1,910
    
    
    
    1,657
    
    
    
    1,305Prepaid expenses and other current assets
    
    
    85
    
    
    
    105
    
    
    
    225Payables and other current liabilities
    
    
    1,380
    
    
    
    2,542
    
    
    
    (1,338
    )Payables with related parties
    
    
    (1,165
    )
    
    
    1,045
    
    
    
    4,196Income tax payable
    
    
    (1,276
    )
    
    
    (162
    )
    
    
    208Net cash provided by operating activities
    
    
    82,560
    
    
    
    81,101
    
    
    
    55,303CASH FLOWS FROM INVESTING ACTIVITIESPayments for property, plant and equipment
    
    
    (6,902
    )
    
    
    (3,536
    )
    
    
    (8,730
    )Proceeds from sale of property, plant and equipment
    
    
    11
    
    
    
    50
    
    
    
    Net cash used in investing activities
    
    
    (6,891
    )
    
    
    (3,486
    )
    
    
    (8,730
    )CASH FLOWS FROM FINANCING ACTIVITIESDividends paid
    
    
    (40,808
    )
    
    
    (38,177
    )
    
    
    (33,602
    )Return of capital
    
    
    (51,500
    )
    
    
    (33,500
    )
    
    
    (15,000
    )Net cash used in financing activities
    
    
    (92,308
    )
    
    
    (71,677
    )
    
    
    (48,602
    )Net increase (decrease) in cash and cash equivalents
    
    
    (16,639
    )
    
    
    5,938
    
    
    
    (2,029
    )Cash and cash equivalents at the beginning of the period
    
    
    37,427
    
    
    
    20,788
    
    
    
    26,726Cash and cash equivalents at the end of the period
    
    $
    20,788
    
    
    $
    26,726
    
    
    $
    24,697Supplemental
Cash Flow InformationIncome tax paid (refunded)
    
    
    1,579
    
    
    
    183
    
    
    
    (1,389
    )Non-cash
investing and financing activitiesProperty, plant and equipment acquired on credit
    
    
    967
    
    
    
    347
    
    
    
    2,042
 See accompanying notes to financial statements
 FS6




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SILICON MANUFACTURING PARTNERS PTE LTD
 
 NOTES TO THE FINANCIAL STATEMENTS  in US Dollars
 In thousands
 1
    
    Background and Summary of Significant Accounting Policies(a) Business and OrganizationSilicon Manufacturing Partners Pte Ltd (the Company) was incorporated in Singapore in 1998.
The immediate holding company is LSI Technology (Singapore) Pte Ltd (LSI), previously known as
Agere Systems Singapore Pte Ltd. The ultimate holding company is LSI Corporation. LSI Corporation
was formed in April 2007 upon the completion of the merger between Agere Systems Inc. and LSI Logic
Corporation. LSI and Chartered Semiconductor Manufacturing Ltd (Chartered), incorporated in
Singapore, own a 51% and 49% equity interest in the Company, respectively.The principal activities of the Company are those of an independent foundry that fabricates
semiconductor integrated circuits on silicon wafers using its production facilities and the
proprietary integrated circuit designs of its customers in the semiconductor industry. The Company
operates in Singapore and its principal markets are the United States of America, Taiwan and
Europe.In August 2005, the Companys board of directors approved a change to the Companys fiscal year end
from December 31 to September 30 so as to coincide with the fiscal year end of Agere Systems
Singapore Pte Ltd as required by Singapore law. In 2007, due to the merger between Agere Systems
Inc. and LSI Logic Corporation, LSI changed its fiscal year end to December 31 to coincide with the
fiscal year end of the newly merged ultimate holding company, LSI Corporation. In August 2007, the
Companys board of directors approved a change to the Companys fiscal year end from September 30
to December 31 so as to coincide with the fiscal year end of LSI as required by Singapore law.(b) Basis of PresentationThe financial statements have been prepared in accordance with United States of America (US)
generally accepted accounting principles (US GAAP).These financial statements are prepared for the twelve-month periods ending December 31 for filing
together with the Annual Report of Chartered on Form 20-F with the U.S. Securities and Exchange
Commission (SEC) as required by SEC Rule S-X 3-09. Under the requirements of Rule S-X 3-09,
insofar as practicable, the financial statements of the Company filed together with Chartereds
Form 20-F should be as of the same dates and for the same periods as the audited consolidated
financial statements of Chartered.(c) Recent Accounting Pronouncement Not Yet AdoptedIn July 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, or FIN 48, Accounting for Uncertainty in Income Taxes. This Interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprises financial statements in accordance with Statement of Financial Accounting Standards (SFAS) No. 109, Accounting for Income Taxes. This Interpretation prescribes
a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This Interpretation also provides guidance on derecognition, classification, interest and penalties, accounting
in interim periods, disclosure, and transition. FIN 48 is effective for the Company on January 1, 2008. The adoption of FIN 48 is not expected to have a material impact on the Companys financial position or statements of operations.
 FS7




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SILICON MANUFACTURING PARTNERS PTE LTD
NOTES TO THE FINANCIAL STATEMENTS  in US Dollars
In thousands
 (d) Use of EstimatesThe preparation of the financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported revenues and
expenses during the reporting period. Estimates are based on historical experience, current
conditions and on various other assumptions that are believed to be reasonable under the
circumstances. Significant items subject to judgment and estimates include the amount of income
tax expense, the estimated useful lives and salvage values of long-lived assets, the recoverability
of the carrying value of long-lived assets, the realization of deferred income tax assets, the
valuation of accounts receivable and inventories, the determination of normal capacity of the
Companys production facilities, the recognition and measurement of revenue and sales credits and
returns allowance, and the fair value of share-based employee compensation awards and financial
instruments. Actual results could differ from these estimates.(e) Foreign CurrencyThe functional currency of the Company is the US dollar. Assets and liabilities which are
denominated in foreign currencies are translated into the functional currency at the rates of
exchange prevailing at the balance sheet date. Foreign currency transactions are translated using
the exchange rates prevailing at the date of transactions. Foreign exchange gains or losses,
resulting from the settlement of foreign currency transactions and from the translation of assets
and liabilities denominated in foreign currencies at financial period-end exchange rates, are
included in the line item Other operating expenses, net in the statements of operations.(f) Business and Credit ConcentrationsThe semiconductor industry has historically been highly cyclical and, at various times, has
experienced significant economic downturns characterized by production overcapacity, reduced
product demand and rapid erosion of selling prices. The market for semiconductors is characterized
by rapid technological change, intense competition and fluctuations in end-user demand. The Company
depends, and will continue to depend, for a significant portion of its revenue on a relatively
limited number of customers who from time to time may be concentrated in particular end markets.
The three largest customers of the Company, other than related parties, accounted for 77%
(unaudited), 60% and 73% of the Companys net revenue in the twelve-month periods ended December
31, 2005, 2006 and 2007, respectively. Total accounts receivable from these customers was $4,543
and $5,196 at December 31, 2006 and 2007, respectively. The Companys top customer profile may
change from period to period depending on the strength of various market sectors.Financial instruments that potentially subject the Company to concentrations of credit risk consist
principally of cash and cash equivalents, derivative financial instruments and receivables. The
Company mitigates the concentration of its credit risk in trade receivables through its credit
evaluation process, credit policies and credit control and collection procedures.The Company mitigates the concentration of credit risk regarding cash and cash equivalents by
placing these amounts with major international banks and financial institutions. Cash and cash
equivalents are generally available upon demand. Cash and cash equivalents deposited with a single
counterparty bank accounted for 52% and 59% of total balances at December 31, 2006 and 2007,
respectively.The amounts related to derivative instruments which are subject to credit risk are generally
limited to the amounts, if any, by which a counterpartys obligations exceed the obligations of the
Company with that counterparty. The Companys hedging practices are further described in Note 13.The Company obtains most of its raw materials and supplies, including critical raw materials such
as raw semiconductor wafers, from a limited number of vendors. Some of these raw materials and
supplies are available from a limited number of vendors in limited quantities and their procurement
may require a long lead time. In certain instances, the Company only has one qualified supplier
for raw materials and supplies.
 FS8




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SILICON MANUFACTURING PARTNERS PTE LTD
NOTES TO THE FINANCIAL STATEMENTS  in US Dollars
In thousands
 The Company also depends on a limited number of original equipment manufacturers and vendors that
make and sell certain complex equipment and equipment spare parts that the Company uses in its
manufacturing processes. In the event of shortage of supply of equipment spare parts, the Company
would need to qualify alternative sources and/or equipment spare parts.(g) Cash EquivalentsCash equivalents consist of short-term deposits with banks that are readily convertible into
cash and have original maturities of three months or less.(h) Trade ReceivablesThe Company reviews its trade receivables on a periodic basis and makes specific allowances
when there is doubt as to the collectibility of individual receivable balances. In evaluating the
collectibility of individual receivable balances, the Company considers the age of the balance, the
customers payment history, their current credit-worthiness and current economic trends.(i) InventoriesInventories consist of work-in-progress, raw materials and consumable supplies and spares and
are stated at the lower of cost or market. Cost is determined using standard cost and an
allocation of the cost variances arising in the period of production, which approximates actual
costs determined on the weighted average basis. Standard cost is based on estimates of materials,
labor and other costs incurred in each process step associated with the manufacture of the
Companys products. Labor and overhead costs are allocated to each step in the wafer production
process based on normal fab capacity utilization, with costs arising from abnormal
under-utilization of capacity expensed when incurred. The Company routinely reviews its
inventories for their saleability and for indications of obsolescence to determine if inventory
carrying values are higher than market value. Some of the significant factors the Company
considers in estimating the market value of its inventories include the likelihood of changes in
market and customer demand and expected changes in market prices for its inventories.(j) Derivative Instruments and Hedging ActivitiesIn accordance with SFAS No. 133, Accounting
for Derivative Instruments and Certain Hedging Activities, and related amendments and
interpretations, the Company records derivatives on the balance sheet as assets or liabilities
measured at fair value.On the date a derivative contract is entered into, the Company will consider if the derivative
instrument is part of a hedging relationship. Once a hedging relationship is established, the
Company designates the derivative as either a hedge of the fair value of a recognized asset or
liability or of an unrecognized firm commitment (fair-value hedge), a hedge of a forecasted
transaction or of the variability of cash flows to be received or paid related to a recognized
asset or liability (cash-flow hedge), or a foreign-currency fair-value or cash-flow hedge
(foreign-currency hedge). The Company formally documents all relationships between hedging
instruments and hedged items, as well as its risk-management objective and strategy for undertaking
various hedge transactions, at the hedges inception. This process includes linking all
derivatives that are designated as fair-value, cash-flow, or foreign-currency hedges to specific
assets and liabilities on the balance sheet or to specific firm commitments or forecasted
transactions. The Company also formally assesses, both at the hedges inception and on an ongoing
basis, whether the derivatives that are used in hedging transactions are highly effective in
offsetting changes in fair values or cash flows of hedged items.
 FS9




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SILICON MANUFACTURING PARTNERS PTE LTD
NOTES TO THE FINANCIAL STATEMENTS  in US Dollars
In thousands
 Changes in the fair value of derivatives that are highly effective and that are designated and
qualify as fair-value hedges are recorded in earnings, along with the loss or gain on the hedged
assets or liabilities or unrecognized firm commitment of the hedged item that are attributable to
the hedged risks. Changes in the fair value of derivatives that are highly effective and that are
designated and qualify as cash-flow hedges are recorded in other comprehensive income until
earnings are affected by the variability in cash flows of the designated hedged items. Changes in
the fair value of derivatives that are highly effective as hedges and that are designated and
qualify as foreign-currency hedges are recorded in either earnings or other comprehensive income,
depending on whether the hedge transaction is a fair-value hedge or a cash-flow hedge. Changes in
the fair value of derivative instruments that are not designated as part of a hedging relationship
are reported in current period earnings.The Company discontinues hedge accounting prospectively when it determines that a derivative is no
longer effective in offsetting changes in the fair value or cash flows of the hedged item, the
derivative expires or is sold, terminated, or exercised, the derivative is de-designated as a
hedging instrument because it is unlikely that a forecasted transaction will occur, a hedged firm
commitment no longer meets the definition of a firm commitment, or management determines that
designation of the derivative as a hedging instrument is no longer appropriate. When hedge
accounting is discontinued because it is determined that the derivative no longer qualifies as an
effective fair-value hedge, the Company no longer adjusts the hedged asset or liability for changes
in fair value. The adjustment of the carrying amount of the hedged asset or liability is accounted
for in the same manner as other components of the carrying amount of that asset or liability. When
hedge accounting is discontinued because the hedged item no longer meets the definition of a firm
commitment, the Company removes any asset or liability that was recorded pursuant to recognition of
the firm commitment from the balance sheet and recognizes any gain or loss in earnings. When hedge
accounting is discontinued because it is probable that a forecasted transaction will not occur,
gains and losses that were accumulated in other comprehensive income (loss) are recognized
immediately in earnings. In all situations in which hedge accounting is discontinued, the Company
continues to carry the derivative at its fair value on the balance sheet, and recognizes any
changes in its fair value in earnings.(k) Property, Plant and EquipmentProperty, plant and equipment are recorded at cost and depreciated to their estimated salvage
values using the straight-line method over their estimated useful lives as follows:
 Mechanical and electrical installations
    
    
    
    
    
    10 yearsEquipment and machinery
    
    
    
    
    
    5 yearsOffice and computer equipment
    
    
    
    
    
    2 to 5 years
 The Company capitalizes interest with respect to major assets under installation and construction
until such assets are ready for use. Interest capitalized is based on the average cost of the
Companys pooled borrowings related to purchases of property, plant and equipment. Repairs and
replacements of a routine nature are expensed, while those that extend the life of an asset are
capitalized. Upon retirement or disposal of assets, the cost and related accumulated depreciation
are removed from the balance sheets and any gain or loss is included in the statements of
operations.(l) Impairment of Long-Lived AssetsThe Company reviews long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. Recoverability of
long-lived asset groups to be held and used are measured by a comparison of the carrying amount to
the sum of the undiscounted cash flows expected to result from the use and eventual disposition of
the asset group. If an asset group is considered to be impaired, the impairment loss is measured
as the amount by which the carrying amounts of the long-lived assets exceed their fair value.Long-lived assets to be disposed of by sale are measured at the lower of their carrying amounts or
fair value less cost to sell. Depreciation ceases when such long-lived assets are classified as
held-for-sale. Long-lived assets to be abandoned are considered held and used until they are
disposed of, which is the point at which they cease to be used.
 FS10




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SILICON MANUFACTURING PARTNERS PTE LTD
NOTES TO THE FINANCIAL STATEMENTS  in US Dollars
In thousands
 (m) Revenue RecognitionThe Company derives revenue primarily from fabricating semiconductor wafers and, to a lesser
extent, from providing associated subcontracted assembly and test services as well as
pre-fabricating services such as masks generation and engineering services. The Company enters
into arrangements with customers which typically include some or all of the above deliverables.When arrangements include multiple deliverables, the Company first determines whether each
deliverable meets the separation criteria in FASB Emerging
Issues Task Force (EITF) Issue 00-21, Accounting for Revenue Arrangements with Multiple
Deliverables. In general, a deliverable (or a group of deliverables) meets the separation
criteria if the deliverable has standalone value to the customer and if there is objective and
reliable evidence of the fair value of the remaining deliverables in the arrangement. Each
deliverable that meets the separation criteria is considered a separate unit of accounting. The
total arrangement consideration is then allocated to each unit of accounting based on their
relative fair values. Substantially all of the Companys arrangements for the sale of
semiconductor wafers and related services consist of a single unit of accounting.Revenue for each unit of accounting is recognized when the contractual obligations have been
performed and title and risk of loss has passed to the customer, there is evidence of a final
arrangement as to the specific terms of the agreed upon sales, selling prices to the customers are
fixed or determinable, collection of the revenue is reasonably assured and, where applicable,
delivery has occurred. Generally this results in revenue recognition upon shipment of wafers.
Revenue represents the invoiced value of goods and services supplied excluding goods and services
tax, less allowances for estimated sales credits and returns. The Company estimates allowances for
sales credits and returns based on historical experience and managements estimate of the level of
future claims. Additionally, the Company accrues for specific items at the time their existence is
known and amounts are estimable.Goods and services taxes collected from customers and remitted to Governmental authorities are
accounted for on a net basis and therefore excluded from revenues in the statements of operations.(n) Share-Based CompensationThe minority shareholder of the Company extends its share-based incentive plans to the
employees of the Company and recharges the share-based compensation cost related to these awards to
the Company. The Company accounts for the awards in accordance with
EITF Issue 00-12, Accounting by an Investor for Stock-Based
Compensation Granted to Employees of an Equity Method Investee,
unless the share-based compensation cost is reimbursed. Share-based compensation cost related to these awards, is determined utilizing the
measurement guidance of EITF 96-18 Accounting for Equity Instruments that are Issued to Other Than
Employees for Acquiring, or in Conjunction with Selling, Goods or Services.(o) Product WarrantiesThe Company guarantees that products will meet the stated functionality as agreed to in each
sales arrangement. The Company provides for the estimated warranty costs under these guarantees
based upon historical experience and managements estimate of the level of future claims, and
accrues for specific items at the time their existence is known and the amounts are estimable.
Expenses for warranty costs were not significant in any of the twelve-month periods presented.(p) Operating LeasesThe Company leases its fab from its minority shareholder under a non-cancellable operating
lease, with an option to renew upon expiry of the lease term (the Operating Lease). Rentals
under the Operating Lease and other operating leases, including the effects of scheduled rent
increases, lease incentives and rent holidays, are charged to expense on a straight-line basis over
the term of the leases. Contingent rentals are charged to expense when they are incurred.
 FS11




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SILICON MANUFACTURING PARTNERS PTE LTD
NOTES TO THE FINANCIAL STATEMENTS  in US Dollars
In thousands
 (q) Income TaxesIncome taxes are accounted for under the asset and liability method. Deferred tax assets and
liabilities are recognized for the future tax consequences attributable to differences between the
carrying amounts of existing assets and liabilities in the financial statements and their
respective tax bases, and operating loss and tax credit carry forwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable income in the years
in which those temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in income in the period
that includes the enactment date. A valuation allowance is recorded for deferred tax assets when
it is more likely than not that they will not be realized.The Company submits tax returns and claims with Government
tax authorities which are subject to agreement and audit by those tax
authorities. Actual taxes to be paid could vary due to the outcome of
audits completed by the tax authorities. The Company records tax
contingencies as tax payable for certain positions which may be
challenged by the tax authorities and which the Company may not
ultimately prevail in defending. The amounts recorded are determined
based upon the Companys best estimate of possible assessments by the
tax authorities and are adjusted, from time to time, based upon
changing facts and circumstances.2
    
    Related PartiesUnder the strategic alliance agreement of the Company with its two shareholders, the
shareholders do not share the Companys net results in the same ratio as their equity holdings.
Instead, each shareholder is entitled to the gross profits from sales to the customers that it
directs to the Company after deducting its share of the overhead costs of the Company.Under the assured supply and demand agreement that both shareholders signed with the Company, with
effect from January 1, 2001, each shareholder is billed for unutilized allocated wafer capacity if
the quantity of wafers started for production (wafer starts) based on their respective orders is
less than its allocated capacity. Such billed amounts represent the Companys unrecovered overhead
costs as a result of the allocated capacity not being taken up by one, or both, of the shareholders
and are determined on a quarterly basis. During the twelve-month periods ended December 31, 2005,
2006 and 2007, the shareholders jointly agreed with the Company to waive the requirement for such
billings even though their wafer starts fell below their allocated capacities.In 2004, the two shareholders entered into an agreement pursuant to which the shareholders agreed
to annually reimburse any losses suffered by the Company that are attributable to the respective
parties. The Company did not suffer any loss that was attributable to the respective shareholders
in the twelve-month periods ended December 31, 2005, 2006 and 2007 and accordingly no
reimbursements were payable by the shareholders under this agreement for these periods.In September 2004, the two shareholders of the Company entered into a supplementary agreement to
the strategic alliance agreement. Among other things, the supplementary agreement provides that
the Company will pay dividends out of the profits determined on a year-to-year basis rather than on
a cumulative basis, as previously was the case.Significant related party transactionsFor purposes of these financial statements, parties are considered to be related to the Company if
the Company has the ability, directly or indirectly, to control the party or exercise significant
influence over the party in making financial and operating decisions, or vice versa, or where the
Company and the party are subject to common control or common significant influence. Related
parties may be individuals or other entities.An affiliated company is defined as one that, directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with the Company.
 FS12




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SILICON MANUFACTURING PARTNERS PTE LTD
NOTES TO THE FINANCIAL STATEMENTS  in US Dollars
In thousands
 Other than those disclosed elsewhere in these financial statements, the following were
significant transactions with related parties and affiliated companies on terms agreed between the
parties:
 2005
    
    2006
    
    2007(Unaudited)Immediate Holding CompanyRecharge of employee-related and
other expenses to the Company
    
    $
    640
    
    
    $
    1,065
    
    
    $
    980Sale of processed wafers
    
    
    96,800
    
    
    
    64,477
    
    
    
    32,225Affiliates of Immediate Holding CompanyRecharge of employee-related and other
expenses to the Company
    
    
    3,083
    
    
    
    2,190
    
    
    
    466Sale of processed wafers
    
    
    31,561
    
    
    
    51,025
    
    
    
    59,012Purchase of processed wafers
    
    
    856
    
    
    
    
    
    
    
    Purchase of property, plant and equipment
    
    
    976
    
    
    
    
    
    
    
    Minority ShareholderRental expense
    
    
    15,662
    
    
    
    15,958
    
    
    
    16,810Recharge of employee-related and other
expenses to the Company
    
    
    36,435
    
    
    
    36,490
    
    
    
    36,432Sale of processed wafers
    
    
    149
    
    
    
    52
    
    
    
    47Sale of property, plant and equipment
    
    
    11
    
    
    
    
    
    
    
    Recharge of other expenses from the Company
    
    
    302
    
    
    
    1,071
    
    
    
    2,735Affiliates of Minority ShareholderPurchase of property, plant and equipment
    
    
    53
    
    
    
    
    
    
    
    Purchase of processed wafers
    
    
    155
    
    
    
    151
    
    
    
    59Recharge of other expenses to the Company
    
    
    161
    
    
    
    190
    
    
    
    327Sale of processed wafers
    
    
    69
    
    
    
    23
    
    
    
    Recharge of other expenses from the Company
    
    
    24
    
    
    
    58
    
    
    
    28
 Share-based compensation cost recharged by the minority shareholder to the Company was $220
(unaudited), $117 and $25 for the twelve-month periods ended December 31, 2005, 2006 and 2007,
respectively.The amounts due from related parties are:
 December 312006
    
    
    2007Amount due from immediate holding company
    
    $
    5,270
    
    
    $
    Amount due from affiliates of immediate holding company
    
    
    13,509
    
    
    
    9,877Amount due from minority shareholder
    
    
    815
    
    
    
    1,289Amount due from affiliates of minority shareholder
    
    
    4
    
    
    
    52$
    19,598
    
    
    $
    11,218
 FS13




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##### Table of Contents



SILICON MANUFACTURING PARTNERS PTE LTD
NOTES TO THE FINANCIAL STATEMENTS  in US Dollars
In thousands
 The amounts due to related parties are:
 December 312006
    
    
    2007Amount due to immediate holding company
    
    $
    7,892
    
    
    $
    2,989Amount due to affiliates of immediate holding company
    
    
    270
    
    
    
    250Amount due to minority shareholder
    
    
    16,009
    
    
    
    9,987Amount due to affiliates of minority shareholder
    
    
    65
    
    
    
    206$
    24,236
    
    
    $
    13,432
 The amounts due to related parties above include an unpaid obligation relating to the return of
capital that is further described in Note 9.The balances with related parties are unsecured, interest free and repayable within 12 months.
 3
    
    Cash and Cash Equivalents
 December 312006
    
    
    2007Cash at banks and cash on hand
    
    $
    18,572
    
    
    $
    12,259Short-term deposits with banks
    
    
    8,154
    
    
    
    12,438$
    26,726
    
    
    $
    24,697
 4
    
    Receivables, net
 December 312006
    
    
    2007Trade receivables
    
    $
    6,781
    
    
    $
    11,529Allowance for sales credits and returns
    
    
    (568
    )
    
    
    (323
    )Trade receivables, net of allowances
    
    
    6,213
    
    
    
    11,206Other receivables
    
    
    55
    
    
    
    32$
    6,268
    
    
    $
    11,238
 Movement in the allowance for sales credits and returns is as follows:
 December 312006
    
    
    2007Beginning
    
    $
    1,537
    
    
    $
    568Charge for the period
    
    
    783
    
    
    
    421Utilized during the period
    
    
    (1,752
    )
    
    
    (666
    )Ending
    
    $
    568
    
    
    $
    323
 FS14




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##### Table of Contents



SILICON MANUFACTURING PARTNERS PTE LTD
NOTES TO THE FINANCIAL STATEMENTS  in US Dollars
In thousands
 5
    
    Inventories
 December 312006
    
    
    2007Raw materials
    
    $
    2,706
    
    
    $
    3,128Work-in-progress
    
    
    14,609
    
    
    
    12,871Consumable supplies and spares
    
    
    31
    
    
    
    42$
    17,346
    
    
    $
    16,041
 6
    
    Property, Plant and Equipment, net
 December 312006
    
    
    2007CostMechanical and electrical installations
    
    $
    4,846
    
    
    $
    5,062Equipment and machinery
    
    
    805,043
    
    
    
    810,411Office and computer equipment
    
    
    10,125
    
    
    
    9,830Assets under installation and construction
    
    
    621
    
    
    
    5,462Total cost
    
    $
    820,635
    
    
    $
    830,765Accumulated depreciation
    
    $
    798,663
    
    
    $
    812,329Property, plant and equipment, net
    
    $
    21,972
    
    
    $
    18,436
 Depreciation amounted to $84,105 (unaudited), $36,702 and $13,961 for the twelve-month periods
ended December 31, 2005, 2006 and 2007, respectively.
 7
    
    Other Current Liabilities
 December 312006
    
    
    2007Accrued employee related expenses and bonuses
    
    $
    3,927
    
    
    $
    3,203Other accrued expenses
    
    
    1,051
    
    
    
    1,169Other current liabilities
    
    
    226
    
    
    
    354Income tax payable
    
    
    110
    
    
    
    318$
    5,314
    
    
    
    5,044
 FS15




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##### Table of Contents



SILICON MANUFACTURING PARTNERS PTE LTD
NOTES TO THE FINANCIAL STATEMENTS  in US Dollars
In thousands
 8
    
    Income Taxes
 Substantially all of the Companys pre-tax income and income tax expense are derived from
Singapore. The Company has been granted pioneer status under the Economic Expansion Incentives
(Relief from Income Tax) Act (Chapter 86) of Singapore for the wafer fabrication of integrated
circuits for a ten-year period beginning May 1, 2000. During the period in which pioneer status is
effective, subject to compliance with certain conditions, income arising from the pioneer trade is
exempt from Singapore income tax. Income arising from activities not covered under the pioneer
incentive (hereinafter referred to as non-qualifying income) is taxed at the prevailing Singapore
corporate tax rate, which was 20% for the years of assessment 2006 and 2007 and 18% for the year of
assessment 2008. The reduction in corporate tax rate from 20% to 18% for the year of assessment
2008 and onwards was announced by the Singapore Second Minister for Finance on February 15, 2007
and was enacted by the Government of Singapore on December 7, 2007. The effects of the change in
corporate tax rate have been recognized in the Companys statement of operations for the
twelve-month period ended December 31, 2007.The income tax expense for the twelve-month periods ended December 31, 2005, 2006 and 2007 is
primarily related to non-qualifying income, such as interest income.Under Singapore tax law, loss carry forwards and wear and tear allowances are deductible to the
extent of income before loss carry forwards and wear and tear allowances. Unabsorbed tax losses
and wear and tear allowances can be carried forward indefinitely to set off against income in
future tax years, subject to compliance with certain conditions. The Company estimates that it
does not have any wear and tear allowance carry forwards and tax loss carry forwards as of December
31, 2006 and 2007.Income tax expense (benefit) consists of the following:
 2005
    
    
    2006
    
    
    2007(Unaudited)Current tax expense (benefit)
    
    $
    304
    
    
    $
    237
    
    
    $
    (1,411
    )Deferred tax expense (benefit)
    
    
    48
    
    
    
    (21
    )
    
    
    (221
    )$
    352
    
    
    $
    216
    
    
    $
    (1,632
    )
 A reconciliation of the expected tax expense (benefit) computed by applying the Singapore statutory
tax rate of 20% for 2005 and 2006 and 18% for 2007 to income before income tax to income tax
expense (benefit) is as follows:
 2005
    
    
    2006
    
    
    2007(Unaudited)Income tax expense computed at the
Singapore statutory tax rate
    
    $
    367
    
    
    $
    7,251
    
    
    $
    5,862Non-deductible expenses
    
    
    53
    
    
    
    25
    
    
    
    19Effect of pioneer status, including
wear and tear allowances not
recognized as deferred tax benefit
    
    
    (118
    )
    
    
    (7,054
    )
    
    
    (5,831
    )Impact of change in enacted tax rates
    
    
    
    
    
    
    
    
    
    
    31Tax refunds
    
    
    
    
    
    
    
    
    
    
    (1,660
    )Other, net
    
    
    50
    
    
    
    (6
    )
    
    
    (53
    )Income tax expense (benefit)
    
    $
    352
    
    
    $
    216
    
    
    $
    (1,632
    )
 In March and May 2007, the Singapore tax authorities completed the examination of the Companys prior years income tax returns and allowed certain deduction claims. As a result, the Company received total tax refunds of $1,660 pertaining to tax contingencies which had already been paid
to the tax authorities prior to December 31, 2006. The Company has not recorded any income tax contingencies as of December 31, 2007.
 FS16




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##### Table of Contents



SILICON MANUFACTURING PARTNERS PTE LTD
NOTES TO THE FINANCIAL STATEMENTS  in US Dollars
In thousands
 Deferred tax assets are non-current and relate to Singapore. Deferred tax assets are classified as
Other non-current assets and related to the following:
 December 312006
    
    
    2007Property, plant and equipment
    
    $
    55
    
    
    $
    176Other accrued expenses
    
    
    
    
    
    
    100$
    55
    
    
    $
    276
 In assessing the realizability of deferred tax assets, management considers whether it is more
likely than not that some portion or all of the deferred tax assets will not be realized. The
ultimate realization of deferred tax assets is dependent on the availability of future taxable
income during the periods in which those assets will be reversed. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable income, taxable income in
prior years and tax planning strategies in making this assessment. The valuation allowance is
established for deferred tax assets that cannot be objectively supported as more likely than not to
be realized by the Company.Based on the historical level of taxable income, management believes that it is more likely than
not that the Company will generate sufficient future taxable income from the wafer fabrication
activities subsequent to the pioneer status period to realize the benefits of these deductible
differences.
 9
    
    Ordinary Share Capital
 December 312006
    
    2007No of shares
    
    $
    
    No of shares
    
    $Issued and fully-paid:A ordinary shares
    
    
    172,158
    
    
    
    82,637
    
    
    
    172,158
    
    
    
    82,637B ordinary shares
    
    
    151,807
    
    
    
    69,752
    
    
    
    151,807
    
    
    
    69,752323,965
    
    
    
    152,389
    
    
    
    323,965
    
    
    
    152,389Issued and fully-paid:Balance at January 1
    
    
    323,965
    
    
    
    192,389
    
    
    
    323,965
    
    
    
    152,389Capital reduction
    
    
    
    
    
    
    (40,000
    )
    
    
    
    
    
    
    Balance at December 31
    
    
    323,965
    
    
    
    152,389
    
    
    
    323,965
    
    
    
    152,389
 The A and B ordinary shares rank pari passu in all respects, except that the rates of dividend
may differ.In October 2005, the Company reorganized its paid-up share capital by the extinguishment of
accumulated losses of $108,349 against paid-up share capital and the return of a portion to its
shareholders in the form of cash amounting to $60,000 in a return of capital sanctioned by the High
Court of Singapore (unaudited). During the twelve-month period ended December 31, 2005, the
Company paid cash of $51,500 (unaudited) to its shareholders and the balance of $8,500 was paid in
January 2006. The return of capital through the extinguishment of accumulated losses does not
qualify as a quasi-reorganization under US GAAP and accordingly no adjustments for this
reorganization to the carrying values of the assets and liabilities of the Company and its
accumulated losses have been reflected in these financial statements.Until January 30, 2006, ordinary shares of the Company had a par value of S$1.00. The Singapore
Companies (Amendment) Act 2005, which came into effect on January 30, 2006, abolished the concept
of par value and authorized capital.
 FS17




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##### Table of Contents



SILICON MANUFACTURING PARTNERS PTE LTD
NOTES TO THE FINANCIAL STATEMENTS  in US Dollars
In thousands
 In October 2006, the board of directors of the Company approved a second return of capital
which was subsequently approved by the High Court of Singapore and filed with the Accounting and
Corporate Regulatory Authority of Singapore in November 2006. Upon approval of the return of
capital by the board of directors of the Company, the equity has been reduced and an accrual was
made for $40,000. The Company subsequently paid cash of $25,000 in 2006 and the remaining $15,000
was paid in cash in 2007.
 10
    
    Accumulated Deficit
 Singapore law allows dividends to be paid only out of the Companys net profits for the year
or retained earnings. Shareholders of ordinary shares are not liable for Singapore income tax on
dividends paid by the Company out of its tax exempt profits from pioneer activities. As the Company
is under the one-tier corporate tax system, tax payable by the Company on its non-pioneer
chargeable income constitutes a final tax, and dividends are exempt from tax in the hands of its
shareholders.
 11
    
    Accumulated Other Comprehensive Income (Loss)
 Accumulated other comprehensive income (loss) consists of the following:
 December 312006
    
    
    2007Net unrealized cash flow hedging gain (losses)
    
    $
    (1
    )
    
    $
    
 The net unrealized cash flow hedging losses are not adjusted for income taxes because such losses
are generally not tax deductible.
 12
    
    Commitments and Contingencies
 The Company has the following commitments:
 December 312006
    
    
    2007Contracts for capital expenditures
    
    $
    157
    
    
    $
    1,139
 Operating lease commitments
 The Company leases its fab from its minority shareholder under a lease agreement, which expires in
2008. In September 2007, the Company exercised the renewal option under the agreement for another
ten years until 2018. Minimum future rental payments on non-cancellable operating leases from the
minority shareholder and lessors as of December 31, 2007 are as follows:
 Payable
in the year ending December 31,2008
    
    $
    7,7482009
    
    
    4,8402010
    
    
    4,8582011
    
    
    4,8902012
    
    
    4,933Thereafter
    
    
    26,644$
    53,913
 FS18




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##### Table of Contents



SILICON MANUFACTURING PARTNERS PTE LTD
NOTES TO THE FINANCIAL STATEMENTS  in US Dollars
In thousands
 Rental expense on operating leases, excluding amounts payable to related parties disclosed in Note
2, for the twelve-month periods ended December 31, 2005, 2006 and 2007 was $115 (unaudited), $97
and $109 respectively. There was no contingent rental included in the above rental expense for any
of the periods presented.
 ContingenciesThe Company may from time to time be a party to claims that arise in the normal course of business.
These claims include allegations of infringement of intellectual property rights of others as well
as other claims of liability. The Company accrues costs associated with these matters when they
become probable and reasonably estimable. The Company does not have any outstanding litigation or
claims as at December 31, 2007.
 13
    
    Derivative Instruments
 To protect against volatility of future cash flows caused by changes in exchange rates, the
Company may use forward exchange contracts, currency options and currency swap instruments for
forecasted transactions such as operating expenses and capital purchases. To manage interest rate
risk, the Company may utilize interest rate derivative instruments to modify the interest
characteristics of its outstanding debts.Most of the Companys derivatives are formally designated as foreign currency cash flow or
fair value hedges except for certain foreign currency forward contracts and embedded foreign
currency derivatives in purchase contracts. These certain foreign currency forward contracts
relate to groups of forecasted foreign currency denominated payments. While the Company expects
the forward contracts which have not been formally designated as hedges to be effective in hedging
the variability in cash flows resulting from changes in foreign exchange rates, it does not believe
it is practicable to formally document the hedging relationship and link the derivatives to
specific forecasted transactions. The embedded foreign currency derivatives are in purchase
contracts for which payments are denominated in currencies other than the functional currency or
the local currency of the parties to the contracts or, in some cases, their parent company where
the parent company provides the majority of resources required under the contract on behalf of the
subsidiary who is a party to the contract. Gains and losses on these certain foreign currency
forward contracts and embedded foreign currency derivatives in purchase contracts are included in
Other operating expenses, net.The Company uses derivative instruments to manage identified foreign currency risks resulting
from its foreign currency denominated purchase commitments which are denominated principally in
Japanese yen and Euro. The maximum tenure for these transactions is 18 months. The Company uses
foreign currency forward contracts to manage these risks and designates them as foreign currency
cash-flow hedges. The Company uses foreign currency forward contracts, which match the terms of the
individual foreign currency exposures, and as a result, any ineffectiveness of the Companys hedges
is negligible. For the twelve-month period ended December 31, 2007, no ineffective amount was
reclassified from other comprehensive income into earnings. Amounts included in other
comprehensive income (loss) related to hedges of foreign currency purchase commitments are
reclassified into earnings (Other operating expenses, net) upon the commencement of depreciation
of the asset related to the purchase commitment over the remaining useful life of the asset.The estimated net amount of existing losses from cash flow hedges expected to be reclassified into
earnings within the next 12 months is $nil. Net realized losses recognized from cash flow hedges
were $17 and $1 for the twelve-month periods ended December 31, 2006 and 2007, respectively.
 FS19




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##### Table of Contents



SILICON MANUFACTURING PARTNERS PTE LTD
NOTES TO THE FINANCIAL STATEMENTS  in US Dollars
In thousands
 The components of other comprehensive loss related to derivative and hedging activities consist of
the following:
 December 31,2006
    
    
    2007Beginning
    
    $
    (18
    )
    
    $
    (1
    )Reclassification of cash flow hedging losses into earnings
    
    
    17
    
    
    
    1Ending
    
    $
    (1
    )
    
    $
    
 The Company is exposed to credit risk and market risk by using derivative instruments to hedge
exposures of changes in foreign currency rates and interest rates. Credit risk is the failure of
the counterparty to perform under the terms of the derivative contract. When the fair value of a
derivative contract is positive, the counterparty owes the Company, which creates credit risk for
the Company. When the fair value of a derivative contract is negative, the Company owes the
counterparty and, therefore, it is not exposed to credit risk. The Company anticipates, however,
that counterparties will be able to fully satisfy their obligations under the contracts. The
Company does not obtain collateral or other security to support financial instruments subject to
credit risk but monitors the credit standing of counterparties.Market risk is the adverse effect on the value of a financial instrument that results from a change
in interest rates or currency exchange rates. The Company assesses interest rate cash flow risk
and currency exchange cash flow risk by identifying and monitoring changes in interest rate or
currency exchange rate exposures that may adversely impact expected future cash flows and by
evaluating hedging opportunities.
 14
    
    Fair Values of Financial Instruments
 December 31,2006
    
    2007Carrying
    
    Estimated
    
    Carrying
    
    Estimatedamount
    
    fair value
    
    amount
    
    fair valueEmbedded foreign
currency
derivatives in
purchase contracts
    
    $
    11
    
    
    $
    11
    
    
    $
    
    
    
    $
    
 Cash and cash equivalents, related party receivables and payables, accounts receivable and accounts
payable.The carrying amounts approximate fair value in view of the short-term nature of these
balances.Embedded foreign currency derivatives in purchase contracts.The fair value is estimated by
reference to movements in exchange rates between contract date and balance sheet date.Limitations.Fair value estimates are made at a specific point in time, and are based on relevant
market information and information about the financial instruments. These estimates are subjective
in nature and involve uncertainties and matters of significant judgment and therefore cannot be
determined with precision. Changes in assumptions could significantly affect the estimates.
 15
    
    Defined Contribution Plan
 Under Singapore law, the Company makes monthly contributions based on the statutory funding
requirement into a Central Provident Fund (CPF) for substantially all of our Singapore employees
who are Singapore citizens and Singapore permanent residents. The aggregate expenses under this
plan were $1,135 (unaudited), $1,328 and $1,506 for 2005, 2006 and 2007, respectively.
 FS20