<PAGE>
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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549
--------------------------------------------------------------------------------
                                    FORM 20-F
(Mark One)

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

                                       OR

[X]  Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934. For the fiscal year ended December 31, 2002

                                       OR

[ ]  Transition Report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934

                        Commission File Number 000-27811

                    CHARTERED SEMICONDUCTOR MANUFACTURING LTD
             (Exact name of Registrant as specified in its charter)

                              Republic of Singapore
                 (Jurisdiction of incorporation or organization)

                         60 Woodlands Industrial Park D
                           Street 2, Singapore 738406
             +65-6362 2838 (Address of principal executive offices)

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

<TABLE>
<S>                              <C>

  Title of Each Class            Name of Each Exchange on Which Registered
        None                                   Not Applicable

</TABLE>

           Securities registered pursuant to Section 12(g)of the Act:
                           American Depositary Shares,
      each represented by ten Ordinary Shares, par value S$0.26 per share.
                                (Title of class)

                    Securities for which there is a reporting
                obligation pursuant to Section 15(d) of the Act:
                                 Not Applicable

Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report. 2,497,178,816 Ordinary Shares as of February 28, 2003.

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

         Yes [X]               No [ ]

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

         Item 17 [ ]          Item 18 [X]
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                                       1
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                             <C>

Certain Definitions and Conventions
Presentation of Certain Financial Information

PART I                                                                                            4
  Item 1.   Identity Of Directors, Senior Management And Advisers                                 4
  Item 2.   Offer Statistics And Expected Timetable                                               4
  Item 3.   Key Information                                                                       4
  Item 4.   Information On Our Company                                                           21
  Item 5.   Operating And Financial Review And Prospects                                         38
  Item 6.   Directors, Senior Management And Employees                                           51
  Item 7.   Major Shareholders And Related Party Transactions                                    63
  Item 8.   Financial Information                                                                66
  Item 9.   The Offer And Listing                                                                66
  Item 10.  Additional Information                                                               68
  Item 11.  Quantitive And Qualitative Disclosures About Market Risk                             82
  Item 12.  Description Of Securities Other Than Equity Securities                               85

PART II                                                                                          85
  Item 13.  Defaults, Dividend Arrearages And Delinquencies                                      85
  Item 14.  Material Modifications To The Rights Of Security Holders And Use Of Proceeds         85
  Item 15.  Controls and Procedures                                                              85
  Item 16   (not applicable)                                                                     85

PART IV                                                                                          85
  Item 17.  Financial Statements                                                                 85
  Item 18.  Financial Statements                                                                 86
  Item 19.  Exhibits                                                                             86

  SIGNATURES

  Financial Statements                                                                          F-1
</TABLE>

                                       2
<PAGE>
                       CERTAIN DEFINITIONS AND CONVENTIONS

     Unless otherwise specified, when we refer to "Singapore dollars" and "S$,"
we are referring to Singapore dollars, the legal currency of Singapore. When we
refer to "U.S. dollars," "dollars," "$" and "US$," we are referring to United
States dollars, the legal currency of the United States or U.S.


                  PRESENTATION OF CERTAIN FINANCIAL INFORMATION

     Our financial statements are reported in U.S. dollars and presented in
accordance with U.S. generally accepted accounting principles, or U.S. GAAP. Our
financial statements include the audited financial statements of our
equity-method joint venture company, Silicon Manufacturing Partners Pte. Ltd.,
or SMP. In this document, any discrepancies in any table between totals and the
sums of the amounts listed are due to rounding.

     Our shares are listed on both the Nasdaq National Market under the symbol
"CHRT" and the Singapore Exchange Securities Trading Limited under the symbol
"Chartered".

     For the convenience of the reader, this document contains translations of
certain Singapore dollar amounts into U.S. dollars as at December 31, 2002, at
an exchange rate of S$1.7429 = US$1.00. No representation is made that the
Singapore dollar or U.S. dollar amounts shown in this document could have been
or could be converted at such rate or at any other rate.

     The share and per share data and ADS and per ADS data in this document
reflect a retroactive adjustment to give effect to our 8-for-10 rights offering
which we completed in October 2002 (the "October 2002 Rights Offering"). Please
see "Item 10. Additional Information - Rights Offering" for additional
information.

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

                                       3
<PAGE>
                                     PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

     Not applicable.


ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

     Not applicable.


ITEM 3. KEY INFORMATION


SELECTED FINANCIAL DATA

     You should read the following selected financial data in conjunction with
our consolidated financial statements and related notes and "Item 5. Operating
and Financial Review and Prospects" included elsewhere in this document. The
selected consolidated financial data as of December 31, 1998, 1999 and 2000 and
for the years ended December 31, 1998 and 1999 are derived from our audited
consolidated financial statements. However, we have not included our audited
consolidated financial statements for those periods in this document. The
selected consolidated financial data as of December 31, 2001 and 2002 and for
each of the years in the three year period ended December 31, 2002 are derived
from our audited consolidated financial statements included elsewhere in this
document which have been audited by KPMG, independent accountants. Our
consolidated financial statements are prepared in accordance with U.S. GAAP.

<TABLE>
<CAPTION>
                                                                Year Ended December 31,
                                         ----------------------------------------------------------------------
                                          1998(1)        1999(2)        2000           2001             2002
                                         ---------     ----------     ----------     ----------      ----------
                                                   (in thousands, except per share data and ratios)
<S>                                      <C>           <C>            <C>            <C>              <C>

CONSOLIDATED STATEMENT OF
 OPERATIONS DATA:
Net revenue                              $ 422,622     $  694,258     $1,134,104     $  462,656      $  449,241
Cost of revenue                            439,668        527,023        749,582        665,261         628,726
                                         ---------     ----------     ----------     ----------      ----------
Gross profit (loss)                        (17,046)       167,235        384,522       (202,605)       (179,485)
                                         ---------     ----------     ----------     ----------      ----------
Operating expenses:
  Research and development                  48,531         63,172         74,876         82,897          95,285
  Fab start-up costs                         1,455          8,442         27,481         13,329           8,338
  Sales and marketing                       26,760         30,081         35,019         38,659          41,182
  General and administrative                37,389         44,619         78,788         41,908          43,356
  Stock-based compensation                  (2,780)        20,094          2,778            763            (253)
  Costs incurred on termination of
   development program                      31,776(3)       6,500(4)           -              -               -
  Other operating expenses                       -              -         11,570(5)           -          10,025(6)
                                         ---------     ----------     ----------     ----------      ----------
      Total operating expenses             143,131        172,908        230,512        177,556         197,933
                                         ---------     ----------     ----------     ----------      ----------
Operating income (loss)                   (160,177)        (5,673)       154,010       (380,161)       (377,418)

Other income (expense):
  Equity in loss of CSP                     (5,577)        (9,528)             -              -               -
  Equity in income (loss) of SMP           (14,857)       (23,282)         7,588        (92,683)        (84,846)
  Other income                               4,680          5,739         12,926         19,718          23,632
  Interest income                            1,690          6,733         54,546         46,225          16,637
  Interest expense                         (20,137)       (17,822)       (17,561)       (39,652)        (41,661)
  Exchange gain (loss)                       5,237          5,862          8,414          4,216          (1,966)
                                         ---------     ----------     ----------     ----------      ----------
Income (loss) before income taxes         (189,141)       (37,971)       219,923       (442,337)       (465,622)
Income tax expense                            (865)        (2,131)       (18,704)       (14,244)         (7,029)
                                         ---------     ----------     ----------     ----------      ----------
Income (loss) before minority interest    (190,006)       (40,102)       201,219       (456,581)       (472,651)
Minority interest in loss of CSP                 -          7,483         43,547         72,629          55,563
                                         ---------     ----------     ----------     ----------      ----------
Net income (loss)                        $(190,006)    $  (32,619)    $  244,766     $ (383,952)     $ (417,088)
                                         =========     ==========     ==========     ==========      ==========
</TABLE>

                                       4
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<TABLE>
<CAPTION>
                                                                Year Ended December 31,
                                          ---------------------------------------------------------------------
                                          1998(1)        1999(2)         2000           2001            2002
                                          --------     ----------     ----------     ----------      ----------
                                                   (in thousands, except per share data and ratios)
<S>                                       <C>          <C>            <C>            <C>              <C>
Net income (loss) per ordinary share:
  Basic                                   $  (0.21)    $    (0.03)    $     0.16     $    (0.24)     $    (0.23)
  Diluted                                 $  (0.21)    $    (0.03)    $     0.16     $    (0.24)     $    (0.23)
Shares used in per ordinary share
 calculation:
  Basic                                    902,222      1,190,458      1,543,893      1,588,969       1,799,106
  Diluted                                  902,222      1,190,458      1,568,971      1,588,969       1,799,106

Net income (loss) per ADS:
  Basic                                   $  (2.11)    $    (0.27)    $     1.59     $    (2.42)     $    (2.32)
  Diluted                                 $  (2.11)    $    (0.27)    $     1.56     $    (2.42)     $    (2.32)
ADSs used in per ADS calculation:
  Basic                                     90,222        119,046        154,389        158,897         179,911
  Diluted                                   90,222        119,046        156,897        158,897         179,911

OTHER DATA(7)
Ratio of earnings to fixed charges               -          0.88X          7.09X              -               -
Deficiency of earnings available
 to cover fixed charges                    169,382          2,900              -        354,919         381,225
</TABLE>

<TABLE>
<CAPTION>
                                                                  As of December 31,
                                         ----------------------------------------------------------------------
                                            1998           1999           2000           2001           2002
                                         ----------     ----------     ----------     ----------     ----------
                                                                    (in thousands)
<S>                                      <C>            <C>            <C>            <C>            <C>
CONSOLIDATED BALANCE SHEET DATA
Cash and cash equivalents                $   99,619     $  544,996     $  924,116     $1,041,616     $1,210,925
Working capital                              13,099        294,562        548,721        642,487        942,059
Total assets                              1,321,510      2,137,485      3,217,122      3,144,342      3,337,900
Short-term borrowings and current
 portion of long-term debt                   52,128        119,991        156,343        198,160         64,001
Current installments of obligations
 under capital leases                         4,329          5,767          7,822              -              -
Obligations under capital leases,
 excluding current installments              13,414          7,822              -              -              -
Other long-term debt                        419,545        423,668        426,120        914,070      1,115,930
Net assets                                  601,246      1,141,750      1,969,283      1,582,632      1,785,459
Share capital                               221,433        264,529        279,893        280,480        443,713
Shareholders' equity                        601,246      1,141,750      1,969,283      1,582,632      1,785,459

</TABLE>

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

(2)  Prior to October 1, 1999, CSP was accounted for under the equity method in
     our financial statements as a result of certain provisions that were
     contained in our strategic alliance agreement with respect to CSP. As a
     result of an amendment to the strategic alliance agreement, CSP was treated
     as a consolidated subsidiary from October 1, 1999.

(3)  In 1998, we recorded a charge of $31.8 million relating to the write-down
     of equipment in connection with the termination of a development program.

(4)  In 1999, we recorded a charge of $6.5 million in connection with the
     termination of a development program.

(5)  In 2000, we accrued a liability of $11.6 million to reflect the estimated
     loss on a licensing agreement. As of December 31, 2002, we have paid $8.0
     million of this liability and we believe that the accrued balance covers
     the specified issue and do not anticipate the need for additional accruals
     for this matter.

(6)  In 2002, we recorded a charge of $10.0 million associated with a workforce
     re-sizing and a fixed asset impairment charge.

(7)  For purposes of calculating the ratio of earnings to fixed charges and the
     deficiency of earnings available to cover fixed charges, if any, earnings
     consists of income (loss) before income taxes, minority interest, and
     equity in income (loss) of equity affiliates, plus fixed charges and
     amortization of capitalized interest, less interest capitalized. Fixed
     charges consist of interest expensed and capitalized, plus amortization of
     capitalized expenses related to indebtedness, plus one-third of rental
     expenses on operating leases (such amounts representing the interest
     portion of rental expense). No preference dividends were made during the
     period indicated.


RISK FACTORS

     Chartered Semiconductor Manufacturing Ltd., or Chartered, wishes to caution
readers that the following important factors, and those important factors
described in other reports and documents submitted to, or filed with, the
Securities and

                                       5
<PAGE>

Exchange Commission, among other factors, could affect the company's results. If
any of the following risks actually occur, our business, results of operations
and financial condition would likely suffer and actual results could differ
materially from those expressed in any forward-looking statements made by, or on
behalf of, the company.


RISKS RELATED TO OUR FINANCIAL CONDITION

WE HAVE A HISTORY OF LOSSES AND NEGATIVE OPERATING CASH FLOWS AND THIS MAY
CONTINUE.

     Since our inception in 1987, we have incurred significant net losses and
negative operating cash flows. This was true even in years in which our revenues
increased. For example, in 1998, 1999 and 2001, we incurred net losses of $190.0
million, $32.6 million and $384.0 million, respectively. More recently, for the
year ended December 31, 2002, we incurred a net loss of $417.1 million due
primarily to a reduction in revenues and under-utilization of capacity at our
fabrication facilities.

     As of December 31, 2002, we had an accumulated deficit of approximately
$834.0 million. We cannot assure you that our net losses or negative operating
cash flows will not continue or increase in the future or that we will become
profitable. Please see "Item 3. Key Information -- Selected Financial Data" and
"Item 5. Operating and Financial Review and Prospects" for information regarding
our financial condition.


WE NEED TO CONTINUOUSLY IMPROVE OUR DEVICE YIELDS, MAINTAIN HIGH CAPACITY
UTILIZATION AND OPTIMIZE THE TECHNOLOGY MIX OF OUR SEMICONDUCTOR WAFER
PRODUCTION TO ACHIEVE OUR PROFIT TARGETS.

     The key factors that affect our profit margin are our ability to:

     -    continuously improve our device yields;

     -    maintain high capacity utilization; and

     -    optimize the technology mix of our semiconductor wafer production.

     The term "device yields" means the actual number of usable semiconductor
devices on a semiconductor wafer in relation to the total number of devices on
the wafer. Our device yields directly affect our ability to attract and retain
customers, as well as the price of our products.

     The term "capacity utilization" means the actual number of semiconductor
wafers we are processing at a fabrication facility, or fab, in relation to the
total number of wafers we have the capacity to process. Where we refer to
capacity utilization in this document, such capacity utilization includes the
utilization of our allocated capacity with Silicon Manufacturing Partners Pte.
Ltd. or SMP. Our capacity utilization affects our operating results because a
large percentage of our operating costs are fixed. For example, from 1996 to
1998 and in 2001, a worldwide over-capacity of semiconductor wafer supply
resulted in lower utilization rates at our fabs. More recently, in 2002, we
experienced under-utilization of capacity at our fabs and our average capacity
utilization in 2002 was 37% due to lower demand across all of our market
segments. We estimate that our capacity utilization in the first quarter of 2003
will be in the low 40s percentage range, compared to 39% in the fourth quarter
of 2002, as market demand remains weak and the over-capacity in market supply
continues. The weak market demand and over-capacity have had and may continue to
have a negative effect on our company. Other factors potentially affecting
capacity utilization rates are the complexity and mix of the wafers produced,
overall industry conditions, operating efficiencies, the level of customer
orders, mechanical failure, disruption of operations due to expansion of
operations or relocation of equipment and fire or natural disaster.

     Because the price of wafers varies significantly, the mix of wafers
produced affects revenue and profitability. The value of a wafer is determined
by the complexity of the device on the wafer. Production of devices with higher
level functionality and greater system-level integration requires more
manufacturing steps than the production of less complex devices and commands
higher wafer prices. However, increasing the complexity of devices that we
manufacture does not necessarily lead to increased profitability because the
higher wafer prices for such devices may be offset by higher depreciation and
amortization due to an increase in capital expenditures needed to manufacture
such devices.

     If we are unable to continuously improve our device yields, maintain high
capacity utilization or optimize the technology mix of our wafer production, we
may not be able to achieve our profit targets in which case the market price of
our securities could fall.

                                       6
<PAGE>

OUR OPERATING RESULTS FLUCTUATE FROM QUARTER-TO-QUARTER WHICH MAKES IT DIFFICULT
TO PREDICT OUR FUTURE PERFORMANCE.

     Our revenues, expenses and operating results have varied significantly in
the past and may fluctuate significantly from quarter-to-quarter in the future
due to a number of factors, many of which are outside our control. These factors
include, among others:

     -    the cyclical nature of both the semiconductor industry and the markets
          served by our customers;

     -    changes in the economic conditions of geographical regions where our
          customers and their markets are located;

     -    shifts by integrated device manufacturers, or IDMs, between internal
          and outsourced production;

     -    inventory and supply chain management of our customers;

     -    the loss of a key customer or the postponement of an order from a key
          customer or the failure of a key customer to pay accounts receivables
          in a timely manner;

     -    the occurrence of accounts receivables write-offs;

     -    the rescheduling or cancellation of large orders;

     -    the rescheduling or cancellation of planned capital expenditures;

     -    our inability to qualify new processes or customer products in a
          timely manner;

     -    the return of wafers due to quality or reliability issues;

     -    malfunction of our wafer production equipment;

     -    unforseen delays or interruptions in our plans for new fabrication
          facilities;

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

     -    our ability to obtain raw materials and equipment on a timely and cost
          effective basis;

     -    environmental events or industrial accidents such as fires or
          explosions;

     -    our susceptibility to intellectual property rights disputes;

     -    impairment charges on assets held and used;

     -    our ability to continue with existing and entering into new
          partnerships, technology and supply alliances on mutually beneficial
          terms;

     -    currency and interest rate fluctuations that may not be adequately
          hedged; and

     -    technological changes.

     Due to the factors noted above and other risks discussed in this section,
many of which are beyond our control, you should not rely on quarter-to-quarter
comparisons to predict our future performance. Unfavorable changes in any of the
above factors may seriously harm our company. In addition, it is possible that
in some future periods our operating results may be below the expectations of
public market analysts and investors. In this event, the price of our securities
may underperform or fall.

                                       7
<PAGE>

WE EXPECT TO INCUR SUBSTANTIAL CAPITAL AND RESEARCH AND DEVELOPMENT EXPENDITURES
IN CONNECTION WITH OUR GROWTH PLANS AND WILL REQUIRE ADDITIONAL FINANCING THAT
MAY NOT BE AVAILABLE.

     Our business and the nature of our industry require us to make substantial
capital expenditures leading to a high level of fixed costs. We expect to incur
significant capital expenditures in connection with our growth plans and
technology upgrades or migrations. For example, in 2000 and 2001, we incurred
$964 million and $490 million in capital expenditures, respectively. Even in the
midst of challenging economic conditions in 2002 we invested approximately $420
million in capital expenditures, primarily in equipping Fab 6 and for the
purchase of equipment for research and development use, as part of our
continuing strategy of positioning ourselves to serve market needs. We expect to
incur approximately $275 million in capital expenditures in 2003, focused
primarily on leading-edge technologies. In addition, we expect to incur
substantial capital expenditures beyond 2003 to fully equip Fab 7. We also
expect to incur an amount of $120 million for 2003 for research and development.

     We also anticipate that from time to time we will expand and add equipment
to increase the capacity of our existing fabs, two of which are jointly-owned
with third parties. We will require additional financing to complete such
equipping. The foregoing expenditures will be made in advance of sales. Given
the fixed cost nature of our business, we may incur losses if our revenue does
not adequately offset the level of depreciation resulting from our capital
expenditures, as occurred in 1998, 1999 and in 2001 and 2002. Additionally, our
actual expenditures may exceed our planned expenditures for a variety of
reasons, including changes in our growth plan, our process technology, market
conditions, customer requirements, interest rates and other factors.

     We will require additional financing to fund our future growth plans and
technology upgrades and migrations. There can be no assurance that additional
financing will be available at all or, if available, that such financing will be
obtained on terms favorable to us or that any additional financing will not be
dilutive to our shareholders or creditors. In addition, a portion of our
borrowings is guaranteed by our controlling shareholder, Singapore Technologies
Pte. Ltd., or ST, and its affiliates. We may not be able to obtain similar
credit guarantees from ST or its affiliates in the future.


WE HAVE A HIGH LEVEL OF DEBT. IF WE ARE UNABLE TO MAKE INTEREST AND PRINCIPAL
PAYMENTS ON OUR DEBT, IT COULD SERIOUSLY HARM OUR COMPANY.

     We have now and will continue to have a significant amount of debt. Our
high level of debt and the covenants contained in our financing documents could
have important consequences to you. For example, they could:

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

     -    limit our ability to pursue our growth plan and technology upgrades or
          migrations;

     -    require us to seek the lender's consent prior to paying dividends on
          our ordinary shares;

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

     -    limit our flexibility in planning for, or reacting to, changes in our
          business and the semiconductor industry; and

     -    limit our ability to incur additional borrowings or raise additional
          financing through equity or debt instruments.

     We cannot assure you that we will be able to make interest and principal
payments on debt incurred in connection with our growth if the average selling
prices or demand for our semiconductor wafers are lower than expected.


RISKS RELATED TO OUR OPERATIONS

THE CYCLICAL NATURE OF THE SEMICONDUCTOR INDUSTRY AND THE PERIODIC OVER-CAPACITY
THAT RESULTS FROM THIS MAY SERIOUSLY HARM OUR COMPANY.

     The semiconductor industry has historically been highly cyclical and, at
various times, has experienced significant economic downturns characterized by
production over-capacity, reduced product demand, and rapid erosion of average

                                       8
<PAGE>
selling prices. For example, after experiencing average utilization rates around
100% and wafer shipments in excess of 920,000 eight-inch equivalent wafers in
2000, our average utilization rates in 2002 fell to 37% and our wafer shipments
of eight-inch equivalent wafers fell to 417,000.

     Historically, companies in the semiconductor industry have expanded
aggressively during periods of increased demand, as we and our competitors have
done. As a result, periods of over-capacity in the semiconductor industry have
frequently followed periods of increased demand. We expect this pattern to be
repeated in the future. In addition, the markets for semiconductors are
characterized by rapid technological change, intense competition and
fluctuations in end-user demand. Our operating results for 1998 were seriously
harmed by a downturn in the semiconductor market. In 2001 and 2002, the
combination of a very sharp downturn in the worldwide semiconductor industry and
prolonged weakness in global economies has harmed, and will continue to harm,
our company. Future downturns in the semiconductor industry may also be severe
and could seriously harm our company.


A DECREASE IN DEMAND FOR COMMUNICATIONS EQUIPMENT, PERSONAL COMPUTERS, COMPUTER
PERIPHERALS AND CONSUMER PRODUCTS MAY SIGNIFICANTLY DECREASE THE DEMAND FOR OUR
SERVICES.

     A significant percentage of our sales revenue is derived from customers who
use our manufacturing services to make semiconductors for communications
equipment, personal computers, computer peripherals and consumer products. Any
significant decrease in the demand for communications equipment, personal
computers, computer peripherals or consumer products may decrease the demand for
our services and could seriously harm our company. In addition, the declining
average selling prices in these end markets could place significant downward
pressure on the prices of the components that are used in such equipment. If the
average selling prices of such equipment continue to decrease, the downward
pricing pressure on components produced by our company may reduce our revenue
and therefore reduce our gross profit margin significantly.

     In 2001 and 2002, the weakening global economy, declining end markets and
protracted correction of abnormally high inventories have caused a severe
decline in demand for semiconductor wafers by our customers. This has resulted
in and may continue to result in downward pricing pressure and a reduction of
our revenue and our gross profit margins which could seriously harm our company.


WE DEPEND ON A SMALL NUMBER OF CUSTOMERS FOR A SIGNIFICANT PORTION OF OUR
REVENUES.

     We have been largely dependent on a small number of customers for a
substantial portion of our business. Our top ten customers accounted for 61.6%
and 66.8% of our total net revenue in 2001 and 2002, respectively. In 2001, our
two largest customers accounted for 21.0% and 6.4% of our total net revenue,
respectively, and in 2002, our two largest customers accounted for 19.2% and
11.0% of our total net revenue, respectively. We expect that we will continue to
be dependent upon a relatively limited number of customers for a significant
portion of our revenue. We cannot assure you that revenue generated from these
customers, individually or in the aggregate, will reach or exceed historical
levels in any future period. Loss or cancellation of business from, significant
changes in scheduled deliveries to, the return of wafers due to quality or
reliability issues by, or decreases in the prices of services sold to, any of
these customers could seriously harm our company. Please see "Item 4.
Information on Our Company -- Customers and Markets" for additional information
regarding our customers.


WE MAY LOSE CUSTOMERS AS A RESULT OF OUR FAB RATIONALIZATION PLANS.

     In February 2003, we announced our plans to phase out Fab 1, our only
150-mm fab, and consolidate its business into Fab 2 over an estimated 13 month
transition period, with the aim of significantly reducing our fixed cost base as
well as consolidating all Singapore fab operations onto our main campus in
Woodlands. While we are working towards a smooth transfer of customers from Fab
1 to Fab 2, we cannot assure you that we will be successful in transferring our
customers from Fab 1 to Fab 2, and as a result, we may lose these customers
which could seriously harm our company. For more information on this, please see
"Item 4. Information on Our Company - Optimize Our Capacity Base".


WE MAY NOT BE ABLE TO IMPLEMENT NEW TECHNOLOGY AS IT BECOMES AVAILABLE WHICH MAY
AFFECT OUR ABILITY TO PRODUCE ADVANCED PRODUCTS AT COMPETITIVE PRICES.

     The semiconductor industry is rapidly developing and the technology used is
constantly evolving. If we do not anticipate the technology evolution and
rapidly adopt new and innovative technology, we may not be able to produce
sufficiently advanced products at competitive prices. There is a risk that our
competitors may adopt new technology before

                                       9
<PAGE>

we do, resulting in our loss of market share. If we do not continue to produce
the most advanced products at competitive prices, our customers may use the
services of our competitors instead of our services, which could seriously harm
our company.


WE DEPEND ON OUR TECHNOLOGY PARTNERS TO ADVANCE OUR PORTFOLIO OF PROCESS
TECHNOLOGIES.

     Enhancing our manufacturing process technologies is critical to our ability
to provide services for our customers. We intend to continue to advance our
process technologies through internal research and development efforts and
technology alliances with leading semiconductor vendors. Although we have an
internal research and development team focused on developing new semiconductor
manufacturing process technologies, we are dependent on our technology partners
to advance our portfolio of process technologies. Our most recent joint
development agreement was entered into with International Business Machines, or
IBM, in November 2002. For more information on the joint development agreement
with IBM, please see "Item 4. Information on Our Company -- Research and
Development".

     For example, we are depending on our joint development with IBM for access
to 90nm and 65nm process technologies and have, as a result, delayed our initial
production date for Fab 7 in anticipation of access to 90nm manufacturing
capacity at IBM's facility. If there are problems in the successful
implementation of the IBM joint development and manufacturing agreement, this
would not only result in our having incurred costs, but also adversely impact
our strategy in targeting "first-source" business, as we will then require even
more time to access or develop similar technologies. If this happens, this could
seriously harm our company.

     Our technology alliances have been and may from time to time be subject to
changes, including changes in the technology partner's business strategy (as was
the case with Agere Systems Inc's fab-lite strategy and Agilent Technologies'
ceasing technology development for certain technology nodes) or changes in
ownership of the technology partner (as was the case with Ericsson). For more
information on these changes, please see "Item 4. Information on Our Company --
Strategic Alliances -- Chartered Silicon Partners" and "Item 4. Information on
Our Company -- Research and Development". Although the changes we have
experienced so far have not had a significant impact on our company's
performance, there can be no assurance that this will continue to be the case.

     If we are unable to continue our technology alliances with our partners on
mutually beneficial economic terms, or are unable to enter into new technology
alliances with other leading semiconductor vendors, we may not be able to
continue providing our customers with leading-edge process technologies, which
could seriously harm our company.


OUR CUSTOMERS DO NOT PLACE PURCHASE ORDERS FAR IN ADVANCE. THEREFORE, WE DO NOT
HAVE ANY SIGNIFICANT BACKLOG.

     Our customers generally do not place purchase orders far in advance. In
addition, due to the cyclical nature of the semiconductor industry, our
customers' purchase orders have varied significantly from period-to-period. As a
result, we do not typically operate with any significant backlog. The lack of a
significant backlog makes it difficult for us to forecast our net revenue in
future periods. Moreover, our expense levels are based in part on our
expectations of future revenue and we may be unable to adjust costs in a timely
manner to compensate for revenue shortfalls. We expect that in the future our
revenue in any quarter will continue to be substantially dependent upon purchase
orders received in that quarter. We cannot assure you that any of our customers
will continue to place orders with us in the future at the same levels as in
prior periods.


WE DEPEND ON OUR STRATEGIC ALLIANCES RELATING TO FAB 5 AND FAB 6. TERMINATION OR
MODIFICATION OF EITHER OF THESE ALLIANCES COULD SERIOUSLY HARM OUR COMPANY.

     We currently have two strategic alliances relating to the operation of Fab
5 and Fab 6. Our equity-method joint venture company, SMP, which operates Fab 5,
is jointly-owned with Agere Systems Singapore Pte. Ltd. (formerly Lucent
Technologies Microelectronics Pte. Ltd.), a subsidiary of Agere Systems Inc.
CSP, which owns and operates Fab 6, is jointly-owned with a subsidiary of
Agilent Technologies, EDB Investments Pte. Ltd. and a subsidiary of ST. We
believe our alliances with these companies give us access to select leading-edge
process technologies, moderate our development costs and capital expenditures
and increase our fab utilization rates. The termination of either of these
alliances or any modification of either alliance which adversely affects our
rights under the alliance could seriously harm our company. Please see "Item 4.
Information on Our Company -- Strategic Alliances -- Chartered Silicon Partners"
and "Item 4.

                                       10
<PAGE>
Information on Our Company -- Strategic Alliances -- Silicon Manufacturing
Partners" for a more detailed description of these alliances.


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

     The worldwide semiconductor foundry industry is highly competitive. We
compete with dedicated foundry service providers such as Taiwan Semiconductor
Manufacturing Corporation, or TSMC, and United Microelectronics Corporation, or
UMC, as well as the foundry operation services of some integrated device
manufacturers or IDMs such as IBM. IDMs principally manufacture and sell their
own proprietary semiconductor products, but may offer foundry services. Further,
there have been a number of new entrants to the semiconductor foundry industry.
In particular, foundries in Korea, Malaysia and China are now becoming
increasingly significant. Our competitors may have greater access to capital and
substantially greater production, research and development, marketing and other
resources than we do. As a result, these companies may be able to compete more
aggressively over a longer period of time than we can.

     A number of semiconductor manufacturers, including our primary competitors
have announced plans to increase their manufacturing capacity (including setting
up fabrication facilities in Singapore). Although some of these plans may have
been delayed as a result of the industry downturn, we expect that they will be
initiated when the economic and industry conditions improve. As a result, we
expect that there will be a significant increase in worldwide semiconductor
capacity over the next five years. If growth in demand for this capacity fails
to match the growth in supply, or occurs more slowly than anticipated, there may
be more intense competition and pressure on the pricing of our services may
result. Any significant increase in competition may erode our profit margins and
weaken our earnings.

     The principal elements of competition in the wafer foundry market include
technical competence, time-to-market, research and development quality,
available capacity, device yields, customer service, price, design services,
access to intellectual property and electronic design automation, or EDA, tool
support. We cannot assure you that we will be able to compete successfully in
the future, which could seriously harm our company.


OUR BUSINESS DEPENDS IN PART ON OUR ABILITY TO OBTAIN AND PRESERVE INTELLECTUAL
PROPERTY RIGHTS.

     Our ability to compete successfully and achieve future growth will depend,
in part, on our ability to protect our proprietary technology. As of December
31, 2002, we had filed an aggregate of 1,525 patent applications worldwide, (758
of which had been filed in the U.S.) and held an aggregate of 679 issued patents
worldwide (503 of which are issued U.S. patents) relating to our production
processes. We intend to continue to file patent applications when and where
appropriate to protect our proprietary technologies. The process of seeking
patent protection may take a long time and be expensive. We cannot assure you
that patents will be issued from pending or future applications or that, if
patents are issued, they will not be challenged, invalidated or circumvented or
that the rights granted under the patents will provide us with meaningful
protection or any commercial advantage. In addition, we cannot assure you that
the Asian countries in which we market our services, such as Taiwan and China,
will protect our intellectual property rights to the same extent as the United
States or U.S. Please see "Item 4. Information on Our Company -- Intellectual
Property" for a more detailed description of our proprietary technology.


WE MAY BE SUBJECT TO INTELLECTUAL PROPERTY RIGHTS DISPUTES.

     Our ability to compete successfully depends on our ability to operate
without infringing the proprietary rights of others. We have no means of knowing
what patent applications have been filed in the U.S. and elsewhere. Although we
are not currently a party to any material litigation involving patent
infringement, the semiconductor industry is characterized by frequent litigation
regarding patent and other intellectual property rights. As is typical in the
semiconductor industry, we have from time to time received communications from
third parties asserting patents that cover certain of our technologies and
alleging infringement of certain intellectual property rights of others. We
expect to receive similar communications in the future. In the event any third
party were to make a valid claim against us or our customers we could be
required to:

     -    discontinue using certain process technologies which could cause us to
          stop manufacturing certain semiconductors;

     -    pay substantial monetary damages;

     -    seek to develop non-infringing technologies, which may not be
          feasible; or

                                       11
<PAGE>

     -    seek to acquire licenses to the infringed technology which may not be
          available on commercially reasonable terms, if at all.

     Our company could be seriously harmed by such developments. Litigation,
which could result in substantial costs to us and diversion of our resources,
may also be necessary to enforce our patents or other intellectual property
rights or to defend us against claimed infringement of the rights of others. If
we fail to obtain necessary licenses or if litigation relating to patent
infringement or other intellectual property matters occurs, it could seriously
harm our company.


WE DO NOT CARRY PRODUCT LIABILITY INSURANCE.

     We and our subsidiaries do not carry product liability insurance, as claims
for product liability are usually brought as a result of loss or damage caused
by defective product designs, and the designs for semiconductor devices that we
manufacture are provided by our customers. This, as well as the high costs of
obtaining such product liability insurance, are the reasons why we do not carry
such insurance. However, in the unlikely event that we are faced with a product
liability claim for which we are responsible, we will not be insured against
such claims, and this could seriously harm our company.


WE EXPECT TO EXPERIENCE INCREASING COSTS OF INSURANCE COVERAGE, DECREASES IN THE
SCOPE OF COVERAGE PROVIDED AND LESS FAVORABLE TERMS IN THE INSURANCE MARKET.

     Following the tragic events of September 11, 2001 and the increased risk of
terrorist attacks, the costs of insurance coverage have risen sharply and
continue to remain high. For example, the premiums we paid for our renewal of
our insurance coverage commencing from January 2002 were 2.2 times more than the
premiums we paid for such coverage for the previous year and remained at almost
the same levels for 2003. Further, the resulting shortage of capacity in the
insurance market has also led to increasing difficulty and costs in securing
adequate coverage and in obtaining coverage on the same terms as were previously
available. While we have been able to obtain coverage in the past, we cannot
assure you that we will continue to do so in the future. In the event that we
fail to secure adequate coverage in the future, we could be seriously harmed by
the occurrence of a loss that is not covered.


RISKS RELATING TO MANUFACTURING

WE MAY EXPERIENCE DIFFICULTY IN ACHIEVING ACCEPTABLE DEVICE YIELDS, PRODUCT
PERFORMANCE AND DELIVERY TIMES AS A RESULT OF MANUFACTURING PROBLEMS.

     The process technology for the manufacture of semiconductor wafers is
highly complex, requires advanced and costly equipment and is continuously being
modified or changed in an effort to improve device yields and product
performance. Microscopic impurities such as dust and other contaminants,
difficulties in the production process, disruptions in the supply of utilities
or defects in the key materials and tools used to manufacture wafers can cause a
percentage of the wafers to be rejected or individual semiconductors on specific
wafers to be non-functional, which in each case negatively affects our device
yields. We have, from time to time, experienced production difficulties that
have caused delivery delays, lower than expected device yields and the
replacement of certain vendors of manufacturing equipment used in our production
processes. We may also experience difficulty achieving acceptable device yields,
product performance and product delivery times in the future as a result of
manufacturing problems. These problems may result from, among other things,
production failures, capacity constraints, construction delays, increasing
production at new facilities, upgrading or expanding existing facilities or
changing our process technologies, human errors, equipment malfunction or
process contamination. With regards to our proposed consolidation of Fab 1
business into Fab 2, while we are working towards a smooth transfer of processes
to Fab 2, we cannot assure you that there will be no difficulties or risks
resulting from or associated with the transfer of processes from Fab 1 to Fab 2.
Any of these problems could seriously harm our company.


WE DEPEND ON OUR VENDORS OF RAW MATERIALS, SUPPLIES AND EQUIPMENT AND DO NOT
TYPICALLY HAVE LONG-TERM SUPPLY CONTRACTS WITH THEM.

     We depend on our vendors of raw materials and supplies. To maintain
competitive manufacturing operations, we must obtain from our vendors, in a
timely manner, sufficient quantities of quality materials and supplies at
acceptable prices. We obtain most of our materials and supplies, including
critical materials such as raw semiconductor wafers, from a limited number of
vendors. We typically do not have long term contracts with our vendors. We
purchase most of our key materials and supplies on a blanket purchase order
basis. Although some of our blanket purchase order contracts contain price and
capacity commitments, these commitments tend to be short term in nature. As a
result, from time to time due to capacity constraints, vendors have extended
lead times or limited the supply of required materials and supplies to us.
Consequently, from time to time, and particularly during periods of sudden
increase in demand, we have experienced and may experience difficulty obtaining
quantities of raw materials we need on a timely basis. Further, where we only
have one

                                       12
<PAGE>

qualified supplier for materials and supplies and a need subsequently arises to
look to other alternative suppliers, we would have to qualify these alternative
suppliers, and such qualification could lead to delays in production and
seriously harm our company.

     In addition, from time to time, we may reject materials and supplies that
do not meet our specifications, resulting in declines in output or device
yields. We cannot assure you that we will be able to obtain sufficient
quantities of raw materials and other supplies of an acceptable quality. If our
ability to obtain sufficient quantities of raw materials and other supplies in a
timely manner is substantially diminished or if there are significant increases
in the costs of raw materials, it could seriously harm our company.

     We also depend on a limited number of manufacturers and vendors that make
and sell the complex equipment we use in our manufacturing processes. In periods
of high market demand, the lead times from order to delivery of some of this
equipment could be as long as 12 months, or even longer if, as a result of
reduced orders placed in the preceding period, we are accorded less favorable
priority by manufacturers and vendors. If there are delays in the delivery of
this equipment or if there are increases in the cost of this equipment, it could
seriously harm our company. Further, the long lead time reduces our flexibility
in responding to changing market conditions. Please see "Item 4. Information on
Our Company -- Equipment and Materials" for additional information regarding our
relationships with our suppliers of materials and equipment.


OUR ABILITY TO SUCCESSFULLY PARTNER WITH EDA AND INTELLECTUAL PROPERTY OR IP
VENDORS AND THIRD PARTY DESIGN SERVICE COMPANIES TO MEET CUSTOMERS' DESIGN NEEDS
DEPENDS ON THE AVAILABILITY AND QUALITY OF THE RELEVANT SERVICES, TOOLS AND
TECHNOLOGIES AND OUR ABILITY TO MEET OUR CUSTOMERS' SCHEDULE AND BUDGET
REQUIREMENTS.

     We have established relationships with EDA vendors. Together we work to
develop a complete design platform that is production-proven and tailored to our
customers' design needs. Our ability to successfully meet our customers' design
needs depends on the availability and quality of the relevant services, tools
and technologies, and on whether we, together with our EDA, Intellectual
Property or IP and Design Service partners, are able to meet customers' schedule
and budget requirements. Difficulties or delays in these areas may adversely
affect the success of our partnerships with EDA, IP and Design Service partners
and consequently, our ability to attract customers, and thereby seriously harm
our company.


WE DEPEND ON ST ASSEMBLY TEST SERVICES LTD. FOR MOST OF OUR SEMICONDUCTOR
ASSEMBLY AND TESTING REQUIREMENTS.

     Semiconductor assembly and test operations are an integral part of the
supply chain, and involve specialised equipment and technology. We currently
subcontract to our affiliate, STATS, a significant amount of such orders. STATS
may, from time to time, experience production interruption due to, among other
things, technical problems occurring during the assembly and testing processes.
Because STATS is our major provider of these services, any prolonged
interruption in STATS' operations or the termination of our affiliation with
STATS could seriously harm our company.


AS WE MIGRATE TO MORE ADVANCED TECHNOLOGIES WHICH MAY REQUIRE ACCESS TO ADVANCED
PACKAGING AND WAFER BUMPING SERVICES, WE MAY EXPERIENCE DIFFICULTIES IN SECURING
SUCH ACCESS IN A TIMELY MANNER DUE TO THE LIMITED NUMBER OF VENDORS PROVIDING
SUCH SERVICES.

     As our company migrates to more advanced technologies and devices that
require very high pin counts, the need for advanced packaging and wafer bumping
services will increase. The advanced packaging technology is new and there may
be initial problems resulting from this. While there are sufficient wafer
bumping houses for printing technology, there is currently still limited
capacity for plating technology. Although we are working with our vendors to
qualify them on wafer bumping plating technology, we cannot assure you that the
qualification would be successful or without delays or that we would have ready
access to the limited capacity. In addition, there is currently no 300-mm wafer
bumping capability in Singapore, so we will have to work with our vendors to
establish the capability in Singapore or look for such capability elsewhere,
such as in Taiwan, in order to support our 300-mm fab operations. We cannot
assure you that we would have ready and timely access to such capability. If we
are unable to gain access to such advanced packaging and wafer bumping services
in a timely manner, or if there are delays in the qualification of such
technology, or if there are disruptions in such services, this may adversely
impact our ability to secure business for the more advanced technology nodes and
thereby seriously harm our company.

                                       13
<PAGE>

WE ARE SUBJECT TO THE RISK OF LOSS DUE TO FIRE BECAUSE THE MATERIALS WE USE IN
OUR MANUFACTURING PROCESSES ARE HIGHLY FLAMMABLE.

     We use highly flammable materials such as silane and hydrogen in our
manufacturing processes and are therefore subject to the risk of loss arising
from fires. Although we have implemented industry acceptable risk management
controls at our manufacturing locations, the risk of fire associated with these
materials cannot be completely eliminated and, in the past, we have had minor
interruptions in production as a result of fire. We maintain insurance policies
to guard against losses caused by fire. While we believe our insurance coverage
for damage to our property and disruption of our business due to fire is
adequate, we cannot assure you that it would be sufficient to cover all of our
potential losses. If any of our fabs were to be damaged or cease operations as a
result of a fire, it would temporarily reduce manufacturing capacity and
seriously harm our company.


OUR FAILURE TO COMPLY WITH CERTAIN ENVIRONMENTAL REGULATIONS COULD SERIOUSLY
HARM OUR COMPANY.

     We are subject to a variety of laws and governmental regulations in
Singapore relating to the use, discharge and disposal of toxic or otherwise
hazardous materials used in our production process. While we believe that we are
currently in compliance in all material respects with such laws and regulations,
if we fail to use, discharge or dispose of hazardous materials appropriately,
our company could be subject to substantial liability or could be required to
suspend or adversely modify our manufacturing operations. In addition, we could
be required to pay for the cleanup of our properties if they are found to be
contaminated even if we are not responsible for the contamination. We maintain
insurance policies to guard against losses resulting from unintended and
unexpected pollution caused by our company. While we believe our insurance
coverage is adequate, we cannot assure you that it would be sufficient to cover
all our potential losses.


RISKS RELATING TO OUR INFRASTRUCTURE

WE FACE SEVERAL RISKS IN CONSTRUCTING AND EQUIPPING NEW FABRICATION PLANTS.

     Where we expand by constructing new fabrication plants, there will be
certain uncontrollable events that could delay the project or increase the costs
of construction and equipping, even if we take the project management and
planning steps we believe are necessary to complete the new fabrication plants
on schedule and within budget. Such potential events include:

     -    a major design and/or construction change caused by changes to the
          initial building space utilization plan or equipment layout;

     -    technological, capacity and other changes to our plans for new
          fabrication plants necessitated by changes in market conditions;

     -    shortages and late delivery of building materials and facility
          equipment;

     -    delays in the installation, commissioning and qualification of our
          facility equipment;

     -    a long and intensive wet season that limits construction;

     -    a shortage of foreign construction workers or a change in immigration
          laws preventing such workers from entering Singapore;

     -    strikes and labor disputes;

     -    on-site construction problems such as industrial accidents, fires and
          structural collapse;

     -    delays in securing the necessary governmental approvals and land
          lease;

     -    delays arising from modifications in capacity expansion plans as a
          result of uncertainty in economic conditions; and

     -    delays arising from demand exceeding supply and long lead times for
          delivery of equipment during periods of growth in the industry.

                                       14
<PAGE>

WE DEPEND ON KEY PERSONNEL AND, DUE TO THE SHORTAGE OF SKILLED LABOR IN
SINGAPORE, WE MAY HAVE DIFFICULTY ATTRACTING SUFFICIENT NUMBERS OF SKILLED
EMPLOYEES.

     Our success depends to a significant extent upon the continued service of
our key senior executives and our engineering, marketing, customer services,
manufacturing, support and other personnel. In addition, in connection with our
future growth plans, we are likely to need a greater number of experienced
engineers and other employees in the future. Despite the current economic
downturn, the competition for skilled professionals remains intense and there is
a shortage of such personnel in Singapore. Accordingly, we must recruit our
personnel internationally. This is more expensive than hiring personnel locally,
and therefore increases our operating costs. As of December 31, 2002, a majority
of our employees were citizens of countries other than Singapore. We expect
demand for personnel in Singapore to increase significantly in the future,
particularly as new wafer fabrication facilities, including those of our
competitors, are established in Singapore.

     In October 2002, we took steps to reduce our worldwide workforce by 7% of
the total employment. Further, in February 2003, we announced our plans to phase
out Fab 1 and to consolidate its business into Fab 2, as a result of which we do
not anticipate having positions for Fab 1 employees after March 31, 2004. The
current and future workforce reduction could lead to a perception of
uncertainty, and as such, potentially hinder our efforts to retain existing key
personnel or hire new key personnel in the event of future recovery. Further,
with respect to Fab 1, while we are taking measures to incentivize Fab 1
employees to stay on during the transition period, we cannot assure you that
these employees will continue to stay and as a result, this may adversely affect
the smooth transfer of customers from Fab 1 to Fab 2 and could seriously harm
our company.

     If we were to lose the services of any of our existing key personnel
without adequate replacements, or were unable to attract and retain new
experienced personnel as we grow, it could seriously harm our company. For
example, although we strive to retain employees that we send on assignments with
our technology partners such as IBM, we cannot assure you that we will be
successful in retaining these employees or that if our employees leave, our
technology partners would re-train their replacements. If our employees leave,
this may limit our ability to benefit from the alliances and could seriously
harm our company.

     We do not carry "key person" life insurance on any of our personnel.


WE MAY NOT BE ABLE TO MANAGE OUR GROWTH, WHICH COULD SERIOUSLY HARM OUR COMPANY.

     We have experienced a period of significant growth, particularly in late
1999 and in 2000. This growth has placed, and our future growth may place, a
significant strain on our managerial, technical, financial, production,
operational and other resources. In particular, by expanding our manufacturing
facilities and equipping new facilities we may create additional capacity at our
fabs, which, if not utilized, would reduce our profitability and could seriously
harm our company.


RISKS RELATED TO COVENANTS IN OUR AGREEMENTS.

     Many of our loans, including loans incurred by our subsidiary, CSP, and our
equity-method joint venture company, SMP, contain various financial and other
covenants. Among other things, these covenants require the maintenance of
certain financial ratios (including total debt to net worth) and that ST own,
directly or indirectly, at least a certain percentage ranging from 40% to 51% of
our outstanding shares. If we fail to comply with these covenants, we could be
in a default under these loans and the lenders would have the right to
accelerate our obligation to repay the outstanding borrowings under these loans.
Such a default could also cause cross-defaults under other loans and could
seriously harm us.

     In addition, many of our loans require that we obtain prior written consent
from our lenders prior to incurring indebtedness or creating security interests
over our assets. Consequently, although we have been able to obtain such lender
consent in the past, we may be limited in our ability to obtain future
financing. Any inability to obtain such future financing could seriously harm
our company.

     Our joint development agreement of November 2002 with IBM provides that,
subject to certain exceptions, a change of control will be deemed to occur if
more than 30% of our company's voting securities become beneficially owned by a
person that directly or indirectly derives more than 50% of its revenue from the
manufacture and / or sale of semiconductor products. One of these exceptions is
where ST continues to own directly or indirectly at least 40% or more of our
company's securities. Such a change of control could lead to IBM terminating the
agreement, which could seriously harm our company. For more information on the
IBM joint development agreement, see "Item 10. Additional Information --
Material Contracts -- IBM".

                                       15
<PAGE>

RISKS RELATED TO INVESTMENTS IN A CONTROLLED CORPORATION

SINGAPORE TECHNOLOGIES CONTROLS OUR COMPANY AND ITS INTERESTS MAY CONFLICT WITH
THE INTERESTS OF OUR OTHER SHAREHOLDERS.

     As of February 28, 2003, ST and its affiliate beneficially own
approximately 60.5% of our outstanding ordinary shares. As a result, ST is able
to exercise control over many matters requiring approval by our shareholders,
including the election of directors and approval of significant corporate
transactions.

     ST also provides us with a credit facility, guarantees some of our debt and
enters into forward foreign exchange contracts with us. While we believe that ST
will continue to provide us credit and other support, ST has no obligation to do
so and the availability and the amount of its support may not be at the same
levels as previously provided.

     We also have contractual and other business relationships with ST and its
affiliates and may engage in transactions from time to time that are material to
us. Although the Audit Committee of our Board of Directors will review all
material transactions between our company and ST and its affiliates,
circumstances may arise in which the interests of ST and its affiliates could
conflict with the interests of our other shareholders. Because ST and its
affiliates own a significant portion of our ordinary shares, they could delay or
prevent a change in control of our company, even if a transaction of that nature
would be beneficial to our other shareholders. Our Articles of Association do
not contain any provision requiring that ST and its affiliates own at least a
majority of our ordinary shares. Please see "Item 7. Major Shareholders and
Related Party Transactions" for additional information regarding our
relationship with ST and its affiliates.


RISKS RELATED TO INVESTMENT IN A CORPORATION WITH INTERNATIONAL OPERATIONS

ECONOMIC CONDITIONS WHERE OUR CUSTOMERS AND THEIR MARKETS ARE LOCATED MAY HAVE A
NEGATIVE IMPACT ON OUR REVENUE.

     A significant portion of our revenue is derived from sales to customers
whose semiconductors are used in products that are sold in the U.S., Taiwan,
Japan and Europe, and other countries in East and Southeast Asia. Our results of
operations in the future could be negatively impacted if the economic
environment in these countries deteriorates. For example, in 1998, many
countries in Asia experienced considerable currency volatility and depreciation,
high interest rates and declining asset values. As a result, there was a general
decline in business and consumer spending and a decrease in economic growth as
compared with prior years. Although Singapore was not materially affected by
these events, our results of operations in 1998 were affected by overall
regional economic conditions because demand for semiconductor products generally
rises as the overall level of economic activity increases and falls as activity
decreases. In 2001, the semiconductor industry experienced its sharpest
contraction on record as weakening global economic conditions contributed to a
severe decline in the demand for electronic products that use semiconductors.
Industry recovery began in 2002 but has been slower than expected due to weak
global economies.


TERRORIST ATTACKS OR A WAR COULD ADVERSELY AFFECT OUR BUSINESS, RESULTS OF
OEPRATIONS AND FINANCIAL CONDITION.

     Terrorist attacks, such as the attacks of September 11, 2001 in the United
States and other acts of violence or war, have the potential to have a direct
impact on our clients. To the extent that such attacks affect or involve the
United States, our business may be significantly impacted, as the majority of
our revenues are derived from clients located in the United States.

     Further, tension between the United States and Iraq has recently escalated
and the United Nations has sanctioned inspections within Iraq to examine if it
possesses weapons of mass destruction. These tensions could result in a war that
would have unpredictable consequences on the economic conditions in the U.S. and
the rest of the world.

     In addition, terrorist attacks or a war could adversely impact the
transportation of our products, resulting in an adverse impact on our business,
results of operations and financial condition and thereby seriously harm our
company.

                                       16
<PAGE>

WE OPERATE INTERNATIONALLY AND ARE THEREFORE AFFECTED BY PROBLEMS IN OTHER
COUNTRIES.

     Our principal customers are located in the U.S., Taiwan, Japan and Europe
and our principal vendors are located in the U.S., Japan, Taiwan, Korea and
Europe. As a result, we are affected by economic and political conditions in
those countries, including:

     -    fluctuations in the value of currencies;

     -    changes in labor conditions;

     -    longer payment cycles;

     -    greater difficulty in collecting accounts receivable;

     -    burdens and costs of compliance with a variety of foreign laws;

     -    political and economic instability;

     -    increases in duties and taxation;

     -    imposition of restrictions on currency conversion or the transfer of
          funds;

     -    limitations on imports or exports;

     -    expropriation of private enterprises; and

     -    reversal of the current policies (including favorable tax and lending
          policies) encouraging foreign investment or foreign trade by our host
          countries.

     The geographical distances between Asia, the Americas and Europe also
create a number of logistical and communications challenges. Although we have
not experienced any serious harm in connection with our international
operations, we cannot assure you that such problems will not arise in the
future.


EXCHANGE RATE FLUCTUATIONS MAY AFFECT THE VALUE OF OUR SECURITIES.

     Our financial statements are prepared in U.S. dollars. Our net revenue is
generally denominated in U.S. dollars and our operating expenses are generally
incurred in U.S. dollars and Singapore dollars. Our capital expenditures are
generally denominated in U.S. dollars, Japanese yen, Singapore dollars, Euro and
other currencies. Although we hedge a portion of the resulting net foreign
exchange position through the use of forward exchange contracts, we are still
affected by fluctuations in exchange rates among the U.S. dollar, the Japanese
yen, the Singapore dollar, Euro and other currencies. We are particularly
affected by fluctuations in the exchange rate between the U.S. dollar and the
Singapore dollar. For example, in 2002, substantially all of our revenue and
approximately 77.0% of our cost of revenue were denominated in U.S. dollars. If
the Singapore dollar strengthens against the U.S. dollar by 2.0%, our cost of
revenue will increase by 0.4%. Likewise, if the Singapore dollar weakens against
the U.S. dollar by 2.0%, our cost of revenue will decrease by 0.4%. Any
significant fluctuation in exchange rates may harm our company. In addition,
fluctuations in the exchange rate between the U.S. dollar and the Singapore
dollar could affect the U.S. dollar value of our securities, and the value of
any cash dividends if paid in U.S. or Singapore dollars.


WE MAY BE A PASSIVE FOREIGN INVESTMENT COMPANY

     Based on our asset composition and operations, we do not believe that we
were a passive foreign investment company, or PFIC during 2002. However, there
can be no assurances that we will not be a PFIC in 2003 or in a later year. If,
for example, the "passive income" earned by us exceeds 75% or more of our "gross
income", we will be a PFIC under the "income test". In addition, we will be a
PFIC under the "asset test" if at least 50% of the quarterly average value of
our assets is attributable to assets that produce or are held to produce passive
income. The determination of the value of our assets will be based in part on
the market price of our ordinary shares and ADSs. Because we have historically
held, and may continue to hold a substantial amount of passive assets, there is
a substantial risk that we may be a PFIC in 2003 or in a later year. Passive
income for the PFIC purposes includes, among other things, interest, dividends,
royalties, rents and

                                       17
<PAGE>

annuities. If we were to become a PFIC at any time during a U.S. person's
holding period, such U.S. person holding ordinary shares or ADSs would be
required, if the "mark to market" election were not made, to pay an interest
charge on certain distributions from us or upon a sale or other disposition of
ordinary shares or ADSs and face other adverse tax consequences. Please see
"Item 10. Additional Information -- Taxation -- U.S. Federal Taxation -- PFIC
Rules." It is strongly urged that U.S. persons holding ordinary shares or ADSs
consult their own tax advisers regarding the application of the PFIC rules.


OUR PUBLIC SHAREHOLDERS MAY HAVE MORE DIFFICULTY PROTECTING THEIR INTERESTS THAN
THEY WOULD AS SHAREHOLDERS OF A U.S. CORPORATION.

     Our corporate affairs are governed by our Memorandum and Articles of
Association and by the laws governing corporations incorporated in Singapore.
The rights of our shareholders and the responsibilities of the members of our
Board of Directors under Singapore law may be different from those applicable to
a corporation incorporated in the U.S. Therefore, our public shareholders may
have more difficulty in protecting their interests in connection with actions
taken by our management, members of our Board of Directors or our controlling
shareholders than they would as shareholders of a corporation incorporated in
the U.S. For example, controlling shareholders in U.S. corporations are subject
to fiduciary duties while controlling shareholders in Singapore corporations are
not subject to such duties. Please see "Item 7. Major Shareholders and Related
Party Transactions" for a discussion relating to our controlling shareholders,
ST and its affiliates.


IT MAY BE DIFFICULT FOR YOU TO ENFORCE ANY JUDGMENT OBTAINED IN THE UNITED
STATES AGAINST US OR OUR AFFILIATES.

     Our company is incorporated under the laws of the Republic of Singapore.
Many of our directors and senior management, and some of the experts named in
this document, reside outside the U.S. In addition, virtually all of our assets
and the assets of those persons are located outside the U.S. As a result, it may
be difficult to enforce in or out of the U.S. any judgment obtained in the U.S.
against us or any of these persons, including judgments based upon the civil
liability provisions of the U.S. securities laws. In addition, in original
actions brought in courts in jurisdictions located outside the U.S., it may be
difficult for investors to enforce liabilities based upon U.S. securities laws.

     We have been advised by Allen & Gledhill, our Singapore legal counsel, that
judgments of U.S. courts based on the civil liability provisions of the federal
securities laws of the U.S. are not enforceable in Singapore courts. Allen &
Gledhill has also advised us that there is doubt as to whether Singapore courts
will enter judgments in original actions brought in Singapore courts based
solely upon the civil liability provisions of the federal securities laws of the
U.S.


SINGAPORE LAW CONTAINS PROVISIONS THAT COULD DISCOURAGE A TAKEOVER OF OUR
COMPANY.

     The Singapore Code on Takeovers and Mergers contains certain provisions
that may delay, deter or prevent a future takeover or change in control of our
company. Any person acquiring an interest, either on his or her own or together
with parties acting in concert with him or her, in 30% or more of our voting
shares may be required to extend a takeover offer for our remaining voting
shares in accordance with the Singapore Code on Takeovers and Mergers. A
takeover offer is also required to be made if a person holding between 30% and
50% (both inclusive) of our voting shares (either on his or her own or together
with parties acting in concert with him or her) acquires an additional 1% of our
voting shares in any 6-month period. These provisions may discourage or prevent
certain types of transactions involving an actual or threatened change of
control of our company. Some of our shareholders, which may include you, may
therefore be disadvantaged. as a transaction of that kind might have allowed the
sale of the shares at a price above the prevailing market price.


RISKS RELATED TO OUR SECURITIES AND OUR TRADING MARKET

THE FUTURE SALES OF SECURITIES BY OUR COMPANY OR EXISTING SHAREHOLDERS MAY HURT
THE PRICE OF OUR SECURITIES.

     If we or our shareholders sell a large number of our securities in the
public market, including sales under the shelf registration statement we filed
on March 12, 2001, the trading price of such securities could decrease
dramatically. Any perception that these sales could occur could also result in a
dramatic decline in the trading price of our securities. These sales also might
make it more difficult for us to sell securities in the future at a time and at
a price that we deem appropriate. As of February 28, 2003, we had an aggregate
of 2,497,178,816 ordinary shares outstanding (including ordinary shares
represented by ADSs). ST and its affiliate own 1,510,324,883 of our outstanding
ordinary shares. All of our outstanding shares are freely tradable in Singapore
and in the U.S. (in the form of ADSs), except that the shares owned by

                                       18
<PAGE>

our affiliates, including ST and its affiliate, may only be sold in the U.S. if
they are registered or if they qualify for an exemption from registration,
including under Rule 144 under the Securities Act of 1933, or the Securities
Act. On March 12, 2001, we filed a shelf registration statement registering
$4,000,000,000 of securities, of which $1,791,000,000 relate to securities we
may issue from time to time after taking into account the October 2002 Rights
Offering and $1,000,000,000 relates to ordinary shares that ST and its
affiliate, in the aggregate, may offer from time to time.


THE MARKET PRICES OF OUR SECURITIES HAVE BEEN AND MAY CONTINUE TO BE HIGHLY
VOLATILE.

     The market prices of our securities have fluctuated widely and may continue
to do so. For example, from our initial public offering in October 1999 through
February 28, 2003, the trading price of our ADSs, adjusted for the October 2002
Rights Offering, has ranged from a high of $95.07 per ADS to a low of $3.82 per
ADS. During the same period, the trading price of our ordinary shares, adjusted
for the October 2002 Rights Offering, has ranged from a high of S$16.03 per
ordinary share to a low of S$0.67 per ordinary share. Many factors could cause
the market prices of our securities to rise and fall. Some of these factors
include:

     -    actual or anticipated variations in our quarterly operating results;

     -    announcements of technological innovations;

     -    changes in estimates of our performance or recommendations by
          financial analysts;

     -    market conditions in the semiconductor industry and economy as a
          whole;

     -    introduction of new services by us or our competitors;

     -    changes in market valuations of other foundries and semiconductor
          companies;

     -    announcements made by us or our competitors of significant
          acquisitions, strategic partnerships or joint ventures;

     -    announcements made by our customers of their performance or financial
          results and of their foundry alliances and relationships;

     -    market rumors or speculation about our business, operations or
          affairs;

     -    issue of additional equity or equity linked offerings;

     -    significant reduction or increase of shareholding by our controlling
          shareholder;

     -    additions or departures of key personnel; and

     -    other events or factors, many of which are beyond our control.

     The financial markets in the U.S., Singapore and other countries have
experienced significant price and volume fluctuations, and market prices of
technology companies have been and continue to be extremely volatile. Volatility
in the prices of our securities may be caused by factors outside of our control
and may be unrelated or disproportionate to our operating results. In the past,
following periods of volatility in the market price of a public company's
securities, securities class action litigation has often been instituted against
that company. Such litigation could result in substantial costs and a diversion
of our management's attention and resources.


THE SINGAPORE SECURITIES MARKET IS RELATIVELY SMALL AND MORE VOLATILE THAN U.S.
MARKETS AND MAY CAUSE THE MARKET PRICE OF OUR SECURITIES TO FLUCTUATE.

     The Singapore Exchange Securities Trading Limited, or the Singapore
Exchange, is relatively small and more volatile than stock exchanges in the U.S.
and certain other European countries. As of December 31, 2002, there were 384
Singapore companies listed on the Main Board of the Singapore Exchange and the
aggregate market capitalization of listed equity securities of these companies
was approximately $170 billion. For the year ended December 31, 2002, the
average daily equity trading value on the Singapore Exchange (including shares
traded on the CLOB International trading system) was approximately $259 million,
with an annualized aggregate trading value of approximately $65 billion. The
relatively

                                       19
<PAGE>

small market capitalization of, and trading volume on, the Singapore Exchange
may cause the market price of securities of Singapore companies, including our
securities, to fluctuate in both the domestic and the international markets.


YOUR VOTING RIGHTS WITH RESPECT TO THE ADSs ARE LIMITED BY THE TERMS OF THE
DEPOSIT AGREEMENT FOR THE ADSs.

     Holders may exercise voting rights with respect to the ordinary shares
represented by ADSs only in accordance with the provisions of the deposit
agreement relating to the ADSs. There are no provisions under Singapore law or
under our Articles of Association that limit ADS holders' ability to exercise
their voting rights through the depositary with respect to the underlying
ordinary shares. However, there are practical limitations upon the ability of
ADS holders to exercise their voting rights due to the additional procedural
steps involved in communicating with such holders. For example, our Articles of
Association require us to notify our shareholders at least 14 days in advance of
any annual general meeting unless a special resolution is to be passed at that
meeting, in which case at least 21 days' notice must be given. Our ordinary
shareholders will receive notice directly from us and will be able to exercise
their voting rights by either attending the meeting in person or voting by
proxy.

     ADS holders, by comparison, will not receive notice directly from us.
Rather, in accordance with the deposit agreement, we will provide the notice to
the depositary, which will in turn, as soon as practicable thereafter, mail to
holders of ADSs:

     -    the notice of such meeting;

     -    voting instruction forms; and

     -    a statement as to the manner in which instructions may be given by
          holders.

     To exercise their voting rights, ADS holders must then instruct the
depositary how to vote their shares. Because of this extra procedural step
involving the depositary, the process for exercising voting rights will take
longer for ADS holders than for holders of ordinary shares. ADSs for which the
depositary does not receive timely voting instructions will not be voted at any
meeting.

     Except as described in this document, holders will not be able to exercise
voting rights attaching to the ADSs.


YOUR ABILITY TO PARTICIPATE IN ANY RIGHTS OFFERING OF OUR COMPANY IS LIMITED.

     We distributed in 2002 and may, from time to time, distribute rights to our
shareholders, including rights to acquire securities under the deposit agreement
relating to the ADSs. The depositary will not offer rights to holders in any
jurisdictions unless both the rights and the securities to which such rights
relate are either exempt from registration under the applicable securities laws
of such jurisdictions or are registered in accordance with the provisions of
such laws. However, we are under no obligation to file a registration statement
with respect to any such rights or underlying securities or to endeavor to cause
such a registration statement to be declared effective. Accordingly, holders of
our securities may be unable to participate in rights offerings by us and may
experience dilution of their holdings as a result.


FORWARD-LOOKING STATEMENTS CONTAINED IN THIS DOCUMENT MAY NOT BE REALIZED

     This document contains forward-looking statements, as defined in the safe
harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.
These forward-looking statements, including without limitation, statements
relating to our return-to-profitability strategy with plans to enhance our
growth potential and improve our cost structure; our position with respect to
advanced technology and access to new customer and market opportunities; our
ability to become a first source solutions provider; our enhanced position in
advanced technologies and the opportunity for higher profit margins and
increased customer and market diversification; our fab rationalization plan,
including the adoption of a "borderless fab" approach and its expected impact;
our plan to phase-out Fab 1 and consolidate the business into Fab 2 by March
2004, including our expectation of the transition period and our ability to
retain the majority of the Fab 1 business, the impact on our cost of
manufacturing; our expectation of the financial impact of the closure of Fab 1
including the expected annualized cost savings, one-time pre-tax costs
associated with retention, workforce reduction, plant closure, customer
assistance and other related expenses, the timing of recognition of such
expenses; our capacity utilization, capital expenditures, financings, potential
production capacity and production capacity mix, equipping of our fabrication
facilities (including our revision in plans), the expected initial production
dates for wafers using 90nm technology manufactured at Fab 7 and manufactured
using our capacity at IBM's East Fishkill facility), our research and
development expenditure, our ISO 9001: 2000 certification, our e-Business
strategy, our near-term and long-term outlook in the foundry services market,

                                       20
<PAGE>

the appropriateness of our business model and strategy as well as our technology
roadmap, reflect our current views with respect to future events and financial
performance, and are subject to certain risks and uncertainties, which could
cause actual results to differ materially from historical results or those
anticipated. Among the factors that could cause actual results to differ
materially are: the successful implementation of our partnership, technology and
supply alliances (including our joint development with IBM) and our EDA
approach, changes in the market outlook and trends, the growth rate of fabless
companies and the outsourcing strategy of integrated device manufacturers; the
rate of semiconductor market recovery; economic conditions in the United States
as well as globally; customer demands, unforseen delays or interruptions in our
plans for our fabrication facilities (including Fab 7); the performance level of
and technology mix in our fabrication facilities; our ability to retain our Fab
1 employees during the transition period and to effect a smooth transfer of
customers from Fab 1 to Fab 2; competition; access to or delays in technological
advances, changes in capacity allocation in process technology mix, changes in
our capacity plans, unavailability of materials, equipment, manpower, expertise
and timely regulatory approvals, as well as the availability of financings and
the terms thereof, could cause actual results to differ materially. Although we
believe the expectations reflected in such forward-looking statements are based
upon reasonable assumptions, we can give no assurance that our expectations will
be attained. In addition to the foregoing factors, a description of certain
other risks and uncertainties which cause actual results to differ materially
can be found in "Item 3. Key Information -- Risk Factors." You are cautioned not
to place undue reliance on these forward-looking statements, which reflect
management's current analysis of future events. We undertake no obligation to
publicly update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.


ITEM 4. INFORMATION ON OUR COMPANY

HISTORY AND DEVELOPMENT OF OUR COMPANY

     Chartered's full legal name is Chartered Semiconductor Manufacturing Ltd.
Chartered is a limited liability company incorporated in the Republic of
Singapore in 1987. Our principal executive and registered offices are located at
60 Woodlands Industrial Park D, Street 2, Singapore 738406. Our telephone number
is (65) 6362 2838. We make our annual report on Form 20-F and current reports on
Form 6-K and all amendments to those reports available on our website, free of
charge, as soon as reasonably practicable after they are filed or furnished to
the SEC. Our internet address is www.charteredsemi.com. INFORMATION CONTAINED IN
OUR WEB SITE DOES NOT CONSTITUTE A PART OF THIS DOCUMENT.

     Our agent in the U.S. for the purpose of our securities filings is our
subsidiary, Chartered Semiconductor Manufacturing, Inc., 1450 McCandless Drive,
Milpitas, California 95035, telephone (408) 941 1100.

     In 1997, Chartered acquired equity interests in Chartered Silicon Partners
and in Silicon Manufacturing Partners, For more information on this, please
refer to "Item 4. Information on Our Company -- Strategic Alliances".

     We have one significant subsidiary, Chartered Silicon Partners Pte. Ltd., a
Singapore company incorporated in 1997 in which we have a 51% equity interest.
For information on our other subsidiaries, please see "Item 4. Information on
Our Company -- Organizational Structure".

     Our principal capital expenditures for the fiscal years 2000, 2001 and 2002
comprised mainly of the purchase of semiconductor equipment for the equipping of
fabs. Our capital expenditures amounted to $963.8 million in 2000, $489.6
million in 2001 and $419.5 million in 2002. In 2000, our capital expenditures
were incurred mainly for the initial equipping of Fab 6 as well as increased
capacity in Fab 2 and 3. In 2001, our capital expenditures were incurred
primarily for equipping Fab 3 and Fab 6, and in the construction and
installation of mechanical and electrical fittings for Fab 7. In 2002, our
capital expenditures were incurred primarily for the equipping of Fab 6 and
equipment for use in research and development.

     For the year 2002, our capital expenditures were financed mainly from
borrowings under our existing credit facilities and cash balances. A more
detailed discussion of the use of proceeds from our offerings and credit
facilities can be found under "Item 14. Material Modifications to the Rights of
Security Holders and Use of Proceeds -- Use of Proceeds" and "Item 5. Operating
and Financial Review and Prospects -- Liquidity and Capital Resources"
respectively.


DESCRIPTION OF BUSINESS

     Chartered is one of the world's leading semiconductor foundries. We provide
comprehensive wafer fabrication services and technologies to semiconductor
suppliers and manufacturers of electronic systems. We focus on providing foundry
services to customers that serve high-growth, technologically advanced
applications, in the communication,

                                       21
<PAGE>

computer and consumers applications. In 2002, our top five customers were
Agilent Technologies, Motorola, Broadcom, Ricoh and Standard Microsystems.

     We currently own, or have an interest in, five fabrication facilities, all
of which are located in Singapore. Our sixth fab, Fab 7, which will be developed
as the company's first 300-mm facility, is ready for equipment installation. In
February 2003, we announced our plans to phase out Fab 1, our only 150-mm fab,
and consolidate its business into Fab 2 over an estimated 13 month transition
period, with the aim of significantly reducing our fixed cost base as well as
consolidating all Singapore fab operations onto our main campus in Woodlands.

     As a result of the joint development and manufacturing agreement with IBM
which affords Chartered the flexibility to defer pilot production from Fab 7,
and based on current assessment of market demand, initial production from Fab 7
is expected to be late in the third quarter of 2004 instead of late in the third
quarter of 2003. For more information on the manufacturing agreement with IBM,
please see "Item 4. Information on Our Company -- Manufacturing Facilities"

     We have service operations in 11 locations and in eight countries in North
America, Europe and Asia. We were incorporated in Singapore in 1987. As of
February 28, 2003 we were approximately 60.5% owned by ST and its affiliate. ST
is one of Singapore's largest industrial conglomerates and is indirectly
wholly-owned by the Government of Singapore. Please see "Item 7. Major
Shareholders and Related Party Transactions" for additional information
regarding ST.


INDUSTRY BACKGROUND

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

     Historically, the semiconductor industry was composed primarily of
companies which designed and manufactured semiconductors in their own
fabrication facilities. These companies are known as integrated device
manufacturers, or IDMs. In the mid-1980s, fabless semiconductor companies, which
focused on design and marketing and utilized external manufacturing capacity,
began to emerge. Fabless companies initially relied on the excess capacity
provided by IDMs. As the semiconductor industry continued to grow, fabless
companies and IDMs began to seek reliable and dedicated sources of wafer
fabrication services. This need is being met by the development of independent
companies, known as foundries, that focus primarily on providing wafer
fabrication services to semiconductor suppliers.


THE GROWTH OF THE SEMICONDUCTOR FOUNDRY INDUSTRY

     Semiconductor suppliers presently face increasing demands to offer new
products that provide higher performance and greater functionality at lower
prices. To compete successfully, they must also minimize the time it takes to
bring a product to market. High performance semiconductors, which contain
millions of transistors, are extraordinarily challenging to design and even more
challenging to manufacture. Additionally, these high-performance semiconductors
can only be produced in fabs that employ the most advanced semiconductor process
technologies.

     According to recent industry research reports and company announcements,
the cost of a state-of-the-art 300-mm fab now exceeds $3 billion, approximately
six times higher than the cost a decade ago. Today, only large and
well-capitalized companies can support the substantial technology and investment
requirements of building state-of-the-art fabs. In addition, for companies to
justify the enormous cost of a new fab, a high level of capacity utilization is
essential to ensure that fixed costs are fully absorbed. These trends have led
to the rapid growth in demand in the recent years for advanced semiconductor
manufacturing services provided by semiconductor foundries.

     Foundry services are now utilized by nearly every major semiconductor
company in the world. Historically, IDMs have used foundry services for their
incremental manufacturing needs. Given the high cost of implementing 300-mm
technology, and the mounting pressure on them to improve profit margins and
accelerate time-to-market, we expect IDMs to utilize foundries more extensively
in the future for their core manufacturing needs.


THE REQUIREMENTS OF A FULL-SERVICE FOUNDRY

     As demand for foundry services has grown, many semiconductor suppliers are
seeking highly committed partners that meet their manufacturing technology
requirements. These partners must be able to provide the following:

                                       22
<PAGE>

     Systems Integration Expertise. In recent years, business and consumer
demand for convergent solutions that perform multiple functions that classically
were done by different individual devices increased dramatically. Fueling this
demand has been growth in the merging of data communications,
telecommunications, wireless and consumer markets. This has resulted in greater
demand for faster, smaller semiconductors that integrate an increasing number of
functions onto a single device at a lower cost. This need for increased
system-level integration requires semiconductor foundries to offer specialized
expertise in a number of areas. These include the integration of logic, which
processes data, and memory, which stores data, into a single device and
mixed-signal technologies which translate data between analog and digital form.
Recently, the foundry market has been asked to also provide and support access
to third party IP and design solutions as the customer base increasingly focuses
on system-level expertise and passes on to its foundry more of the design and
product implementation efforts.

     Leading-Edge Process Technologies. Semiconductor foundries must also
provide a range of manufacturing process technologies from standard CMOS
(complementary metal oxide silicon) to technologies that enable extremely fast
transmission and processing speeds, such as specialized CMOS for wireless
applications and the use of copper interconnect for very high speed devices.
Foundries must also continue to offer smaller process geometries which allows
for the integration of more functions in the same size device or more devices
per wafer.

     Long-Term Relationships. As foundries become more integral to the overall
manufacturing strategies of their customers, it has become increasingly
important for foundries to form long-term relationships with them. Semiconductor
suppliers and systems companies need assurance that their foundry suppliers will
continue to provide sufficient advanced manufacturing capacity to keep pace with
their customers' growth, and develop and make available advanced process
technologies capable of producing next-generation products. These relationships
must be also flexible, allowing customers to respond to the variable nature of
the semiconductor market.

     Security. When using foundry services, semiconductor suppliers, systems
companies and their partners entrust highly valuable and proprietary
intellectual property to the foundries manufacturing their devices. These
customers demand foundry partners who understand the importance of protecting
intellectual property.


THE CHARTERED SOLUTION

     Chartered is one of the world's leading semiconductor foundries. We provide
comprehensive wafer fabrication services and technologies to semiconductor
suppliers and systems companies and enable seamless integration of the
semiconductor design and manufacturing processes. By doing so, we enable our
customers to bring high-performance, highly-integrated products to market
rapidly and cost effectively.

     Chartered's partnership approach allows us to work with customers early on
in the product definition stage, often sharing resources, knowledge and even
physical assets, to jointly develop solutions, thus giving our partners the
flexibility to adapt quickly to new market opportunities.

     Chartered has developed an array of technologies and capabilities to drive
converging applications. Our fabrication facilities support the leading-edge
requirements for high-bandwidth, feature-rich wireless and wired applications.
We have proven expertise in mixed signal and Radio Frequency Complementary Metal
Oxide Semiconductor, or RF CMOS, enabling technologies essential to the
convergence of computer, communications and consumer applications.

     In order to augment our internal development efforts, we have entered into
strategic alliances and technology alliances with leading semiconductor
companies such as our strategic alliance with Agere in the context of our joint
venture company, Silicon Manufacturing Partners and in November 2002, our
technology alliance with IBM. For more details on these strategic alliances and
technology alliances, see "Item 4. Information on Our Company -- Silicon
Manufacturing Partners" and "Item 4. Information on Our Company -- Research and
Development" below.

     We have established relationships with leading EDA, IP and Design Services
suppliers. Together we develop a process tailored to our customers' needs and
that is production-proven so as to facilitate first-pass success. We offer
design solutions for a variety of applications and process nodes, giving
customers valuable freedom of choice when it comes to EDA and IP selection.
Customers get early access to design rules and other important manufacturing
specifications so that they can be incorporated into designs early.

     We believe that Chartered is a trusted, customer-oriented service provider,
and it takes a collaborative approach to the foundry industry. We have service
operations in 11 locations and in eight countries in North America, Europe and
Asia. All of our manufacturing operations are located in Singapore, a
politically and economically stable nation with laws that protect our customers'
proprietary technology.

                                       23
<PAGE>

     We plan to launch by the second quarter of 2003 the first phase of our
e-Business strategy and will continue to develop the remaining phases. Our
e-Business strategy will provide our customers with improved information access,
data exchange and e-Business functionality over the Internet. For more
information on our e-Business strategy, please see "Item 4. Information on Our
Company -- Customer Service".


BUSINESS STRATEGY

     Our objective is to be the leading worldwide, full-service provider of
wafer foundry services to semiconductor suppliers and systems companies focused
on high-growth applications that require a high degree of system-level
integration. Recently in February 2003, we have also announced our aim to
accelerate our return to profitability by putting in place strategies to enhance
our growth potential and improve our cost structure. Key elements of our updated
strategy include:


IMPROVE TOP-LINE GROWTH BY TARGETING FIRST SOURCE BUSINESS WHILE CONTINUING TO
SERVE THE MARKETS FOR MATURE TECHNOLOGIES.

     Our ability to engage customers at increasingly advanced technologies,
together with our access to a third-party network of pre-qualified EDA, IP and
design services solutions, and our strengthened technology portfolio following
the recent IBM joint development agreement, has allowed us to target
substantially more "first source" business, which refers to being selected as
first manufacturing source for customers' new product introductions. "First
source" business typically commands higher prices and profit margins.

     As the mature technology segment remains a growing and important part of
Chartered's business, we will also continue to focus on increasing our reach
into mature markets with productization of niche technologies by leveraging our
capabilities in mixed-signal and RF CMOS processes for products such as smart
cards, RFID tags, display power management and battery management for mobile
products. We are also working towards establishing a manufacturing presence in
China, with appropriate partners, to leverage our equipment assets, technology
and expertise in mature processes.


OPTIMIZE OUR CAPACITY BASE

     We aim to optimize our capacity base by rapidly expanding capability for
advanced technologies, reducing excess capacity at mature technology nodes and
adopting a "borderless fab" approach targeted at improving asset utilization and
increasing flexibility and scalability across all our fabs.

     Advanced Technologies. As part of our plan to expand our capability for
advanced technologies, we intend to expand our production capacity for 0.18um
and smaller technology to meet the anticipated needs of our customers. Although
our plans may change in the future depending on market demand and our customers'
requirements, our current plan is to increase our production capacity mix for
0.18um and smaller technology from approximately 15% in 2002 to an estimated 50%
by the end of 2004, and do so without increasing our total capacity base. We
believe that increasing our foundry capacity in lower geometry technology is
critical to ensuring that we can satisfy our customers' volume requirements as
they continue to grow. Any changes in projections for anticipated production
capacity will be subject to market demand.

     Mature Technologies. We intend to utilize mature capacity by developing
niche technologies, targeting strategic partnerships for volume production,
working towards establishing a manufacturing presence in China with appropriate
partners to leverage on our equipment assets, technology and expertise in mature
processes. With the aim of significantly reducing our fixed cost base, we have
announced in February 2003, that we will be phasing out Fab 1 (our only 150-mm
fab) and consolidating its business into Fab 2 on the main campus in Woodlands.
Please see "Item 4. Information on Our Company -- Description of Business" and
"Item 4. Information on Our Company -- Employees" for more details.


FOCUS ON SOLUTIONS THAT SUPPORT THE GROWING TREND OF PRODUCT CONVERGENCE

     We are focused on providing foundry services to customers that serve
high-growth convergence applications which require a high degree of functional
integration. These customers compete based on differentiated products, rapid
time-to-market and device performance, as opposed to suppliers of less complex
commodity semiconductor products, which compete primarily on price and
manufacturing capacity. Many of our customers, including Broadcom, Dialog,
Agilent Technologies and Ricoh, use our custom solution of technology and
services to manufacture their products for applications such as cable modems,
wireless, office automation products and consumer connectivity.

                                       24
<PAGE>

PROVIDE A COMPLETE RANGE OF SERVICES

We are continuing to expand our range of services so that we can effectively
meet our customers' evolving needs. Our goal is to seamlessly integrate the
design and manufacturing process with a wide array of services, tools and
technologies. The services we currently make available to our customers, in
conjunction with our partners, include a number of EDA design tools, design
libraries, third party IP and process technologies that have been validated for
our manufacturing process. We also offer our customers full turnkey services
which include wafer fabrication, assembly and test.


OFFER LEADING-PROCESS TECHNOLOGY

     We intend to continually expand our portfolio of process technologies in
line with our customers' requirements for timing and performance for use with
their products. The schedule and first level definition of the new process
technologies being developed, and to be developed, are provided by our
technology roadmaps. The current roadmaps cover the 2002 through 2004 period,
and the baseline technologies for logic, mixed signal, RF CMOS and BiCMOS,
embedded electrically erasable programmable read-only devices or embedded EEPROM
and HVCMOS. All of these technologies are built on the logic foundation, using
plug-in modules to extend the capability of the combined logic and modules. The
plug-in module approach allows for the reuse of design libraries with the
addition of the modules, since the logic transistor and other electrical device
characteristics remain unchanged from those produced with the logic processes.

     The current development programs for logic are directed to 0.13um and 90nm
technology nodes (re-targeted in the third quarter of 2002 in line with the rest
of the industry from 100nm to 90nm). For 0.13um logic, production capability for
the nominal devices was qualified in the fourth quarter of 2002, with high
performance or low power transistors expected to be qualified in the second
quarter of 2003. We have converged our 90nm development program with the joint
development that we have engaged in with IBM in November 2002. The IBM joint
development agreement is designed to provide customers with greater access to
leading-edge semiconductor technologies and sourcing flexibility. Under the
agreement, the parties will jointly develop and align on 90nm and 65nm logic
processes for foundry chip production on 300-mm silicon wafers. Please see "Item
4. Information on Our Company -- Research and Development" for more details on
this joint development agreement.

     Embedded SRAM devices are developed with the same process flow as the
baseline logic process, and therefore become available on the same schedule as
the logic process. In the case of the mixed signal technologies, which employ
additional devices such as metal-insulator-metal capacitors and poly silicon
resistors that must be characterized for mixed-signal operation, timing follows
closely to the logic development. For RF CMOS, still more devices, such as
inductors and varactors, must be developed and characterized and modeled. This
process builds on the mixed signal, and the logic processes, and is generally
expected to be ready for pilot production within six months after the logic
process becomes available. BiCMOS, which integrates bipolar transistors with the
CMOS and selected modules from mixed signal and RF CMOS, comes to pilot
production later. In September 2002, we strengthened our position in RF and
mixed signal technology by entering into a collaboration agreement with
Interuniversitair Micro-Elektronic Centrum vzw ("IMEC"), relating to 0.18um
silicon germanium (SiGe) BiCMOS. Please see "Item 4. Information on Our Company
-- Research and Development" for more details on this collaboration agreement.

     The availability of logic, mixed-signal RFCMOS, BiCMOS, SiGe and embedded
memories technologies enables us to provide process solutions essential to the
convergence of computer, communications and consumer applications.


ENHANCE AND EXPAND ALLIANCES

     We intend to leverage and expand our existing alliances and to establish
new alliances with leading companies that offer complementary technologies,
products and services. We believe that our alliances with semiconductor
technology leaders and providers of design tools, intellectual property, design
services and assembly and test services have given us access to select
leading-edge system technologies. These alliances have also enhanced our
development efforts and have the potential to increase our fab utilization
rates. We also believe that by establishing these alliances and working closely
with leading companies who are also existing or future customers, such as Agere
Systems and IBM, we are better positioned to win future business with them. For
more details on our alliances and recent developments, please see "Item 4.
Information on Our Company -- Strategic Alliances" and "Item 4. Information on
Our Company -- Research and Development".

                                       25
<PAGE>

MANUFACTURING FACILITIES

     As of December 31, 2002, we own or have an interest in five fabs, all of
which are located in Singapore. Fabs 1, 2 and 3 are wholly-owned and operated by
our company. We do not have a Fab 4. Fab 5 is operated by our equity-method
joint venture company, SMP which we jointly own with Agere Systems Singapore
Pte. Ltd., a subsidiary of Agere Systems Inc. Fab 6 is operated by CSP, which we
jointly own with a subsidiary of Agilent Technologies, EDB Investments and
Singapex Investments Pte. Ltd., a wholly owned subsidiary of ST.

     In February 2003, we announced our plans to phase out Fab 1, our only
150-mm fab, and consolidate its business into Fab 2 over an estimated 13 month
transition period, with the aim of significantly reducing our fixed cost base as
well as consolidating all Singapore fab operations onto our main campus in
Woodlands.

     Our sixth fab, Fab 7, which will be developed as the company's first 300-mm
facility, is ready for equipment installation. Fab 7 is currently wholly owned
and will be operated by our company. As a result of the recent joint development
and manufacturing agreement with IBM, we will be able to offer our customers
some capacity in IBM's 300-mm chip manufacturing facility in East Fishkill, New
York. The baseline 90nm technology is targeted for 300-mm wafer production in
East Fishkill in the third quarter, 2003. In turn, IBM expects to utilize some
capacity in our 300-mm Fab 7 in Singapore to help meet additional future
capacity requirements. This reciprocal manufacturing arrangement affords
Chartered the flexibility to defer pilot production from Fab 7, while still
meeting our customers' needs and allowing us to gain 300-mm manufacturing
experience. As a result of this and based on current assessment of market
demand, initial production from Fab 7 is expected to be late in the third
quarter of 2004 instead of late in the third quarter of 2003.

     In addition to revising our plans for Fab 7, as a result of the
semiconductor downturn in 2001 and 2002 and the uncertainty in the near-term
growth outlook, we have also revised the capacity projections of our other fabs.
Although our plans may change in the future depending on market demand and our
customers' requirements, our current plan is to increase our production capacity
mix for 0.18um and smaller technology from approximately 15% in 2002 to an
estimated 50% by the end of 2004, and do so without increasing our total
capacity base. We believe that increasing our foundry capacity in lower geometry
technology is critical to ensuring that we can satisfy our customers' volume
requirements as they continue to grow. Any changes in projections for
anticipated production capacity will be subject to market demand. The following
table reflects our wafer capacity figures as of December 31, 2002 for each of
our fabs and the fab of our equity-method joint venture company, SMP (Fab 5).
The information in this table does not reflect the changes arising from the
proposed consolidation of Fab 1's business into Fab 2.

<TABLE>
<CAPTION>

                                 FAB 1            FAB 2            FAB 3         FAB 5 (SMP)(1)    FAB 6 (CSP)(1)       FAB 7
                            ---------------  ---------------  ---------------   ----------------  ----------------  --------------
<S>                         <C>              <C>              <C>               <C>               <C>               <C>

PRODUCTION COMMENCED             1989              1995             1997              1999               2000       Expected 2004

CURRENT CAPACITY(2)         26,000 wafers    42,000 wafers    21,000 wafers     18,000 wafers      12,500 wafers    --
                            per month;       per month;       per month;        per month;         per month;

ESTIMATED FULL CAPACITY(3)  26,000 wafers    42,000 wafers    22,000 wafers     20,000 wafers      29,000 wafers    30,000 wafers
                            per month;(4)    per month;       per month;        per month;         per month;       per month; (5)

WAFER SIZE                  Six-inch         Eight-inch       Eight-inch        Eight-inch         Eight-inch       Twelve-inch
                            (150-mm)         (200-mm)         (200-mm)          (200-mm)           (200-mm)         (300-mm)

PROCESS TECHNOLOGIES        1.2 to 0.5um     0.6 to 0.3um(6)  0.35 to           0.25 to            0.25 to          0.09um and
                                                              0.18um (6)        0.13um(6)          0.13um (6)       Lower (6)

MANUFACTURING               Digital;         Digital; Mixed   Digital; Mixed    Digital;           High             Digital;
 TECHNOLOGIES               Mixed Signal;    Signal;          Signal;           RF CMOS;           performance,     high-density
                            ROM; EEPROM;     RF CMOS SRAM;    RF CMOS; SRAM;    BiCMOS; Mixed      high-density     SRAM;
                            HVCMOS; BiCMOS   Flash Memory;    ROM(7)            Signal; eSRAM(7)   CMOS; high       RF CMOS; Mixed
                            (7)              HVCMOS; EEPROM;                                       density SRAM     Signal(7)
                                             OTP(7)                                                Mixed Signal;
                                                                                                   RF CMOS(7)

CLEAN ROOM                  34,000 sq.       109,000 sq.      81,000 sq. ft.    96,540 sq. ft.     123,000 sq. ft.  170,000 sq. ft
                            ft. Class 10;    ft. Class-1      Class-1 SMIF(8)   Class-1 SMIF(8)    Class-1 SMIF(8)  Class-1
                            10,000 sq. ft.   SMIF(8)                                                                 SMIF(8)
                            Class-1 SMIF(8)
</TABLE>

                                       26
<PAGE>
----------
(1)  With respect to Fab 5 and Fab 6, the information includes capacity to which
     our strategic partners are entitled.

(2)  Current capacity is the production output capability based on current
     process technology mix using the installed set of equipment in the fab as
     of December 31, 2002.

(3)  Estimated full capacity is the production output capability based on our
     current and anticipated process technology mix, which may vary. Unlike
     current capacity which is computed based on the currently installed set of
     equipment in the fab, estimated full capacity assumes that the fab is fully
     utilized to its maximum capacity, based on planned equipment additions and
     anticipated technology mix. Our projections of estimated full capacity have
     varied from previous projections in terms of number of wafers because of
     revisions to our earlier plans, including changes to our capacity expansion
     plans and capacity allocation in process technology mix. Such changes
     reflect developments in market conditions and demand.

(4)  Equivalent to 14,625 eight-inch wafers per month. A conversion rate of
     0.5625 is utilized in determining the number of eight-inch equivalent
     wafers to that of six-inch wafers.

(5)  Equivalent to 67,500 eight-inch wafers per month. A 300-mm wafer will have
     2.25 or more times die than a 200-mm wafer. In line with semiconductor
     statistics reports such as World Semiconductor Trade Statistics, a
     conversion rate of 2.25 is utilized in determining the number of eight-inch
     equivalent wafers.

(6)  Some of these manufacturing processes are preliminary and their successful
     implementation depends on various factors, including our ability to achieve
     advances in process technology or to obtain access to advanced process
     technology developed by others or in the case of our 0.18um capability in
     Fab 3, our ability to leverage on certain tool capacities in SMP. These
     fabs can be retrofitted to achieve smaller geometries than those shown
     above.

(7)  Some of these manufacturing technologies are preliminary and their
     successful implementation depends on various factors, including our ability
     to achieve advances in manufacturing technology or to obtain access to
     advanced manufacturing technology developed by others. ROMs are read-only
     memory devices. EEPROMs are electrically erasable programmable read-only
     devices. SRAMs are static random access memory devices. eSRAMs are embedded
     static random access memory devices. CMOS means complementary metal oxide
     silicon. RF CMOS means Radio Frequency Metal Oxide Semiconductor. BiCMOS
     means bipolar complementary metal oxide silicon. HVCMOS refers to high
     voltage complementary metal oxide silicon. OTP refers to one time
     programmable memory.

(8)  Class 10 is a measurement of air cleanliness in which the amount of
     particles is controlled to no more than 10 particles at 0.5 micron per
     cubic foot of air. Class 1 is a measurement of air cleanliness in which the
     amount of particles is controlled to no more that 1 particle at 0.5 micron
     per cubic foot of air. SMIF means standard mechanical interface.

     All our production fabs generally operate 24 hours per day, 7 days per
week. The only exceptions are where scheduled maintenance requires a facility
shutdown, or in periods of weak demand where we are able to idle fabs that are
not required to meet manufacturing schedules to reduce certain operating costs,
as was the case from time to time in 2001 and 2002 and as may be the case in the
future, depending on customer demand. Regular maintenance is otherwise performed
concurrently with production. Whether we choose to carry out scheduled
maintenance requiring a facility shutdown or regular maintenance performed
concurrently with production depends on which is more appropriate at any given
time, having regard to minimizing disruption to our production schedule.

     The following table sets forth information regarding the total wafer output
by each of our fabs and the fab of our equity-method joint venture company, SMP,
during the past five years:

<TABLE>
<CAPTION>

                                            TOTAL OUTPUT(1)
                                             (IN THOUSANDS)
                                 --------------------------------------
   FAB                           1998     1999    2000     2001    2002
   ---                           ----     ----    ----     ----    ----
<S>                              <C>      <C>     <C>      <C>     <C>

   Fab 1(2)                       142      181     180       96      97
   Fab 2(3)                       265      419     524      168     149
   Fab 3(3)                        33       96     210      113      94
   Fab 5(SMP)(3)(4)                --       --      73        7      28
   Fab 6(3)                        --       --      13       14      77
</TABLE>

                                       27
<PAGE>

(1)  Total output of revenue generating eight-inch equivalent wafers.

(2)  Includes output of terminated print-head business for 1998 and 1999.

(3)  Fab 2 commenced production in 1995, Fab 3 commenced production in 1997, Fab
     5 commenced production in 1999 and Fab 6 commenced production in 2000.

(4)  Includes only Chartered's output.


QUALITY ASSURANCE PROGRAMS

     We have implemented systems to ensure high quality service to customers and
manufacturing reliability at our facilities in Singapore. Our in-house
laboratory is equipped with advanced analytical tools and provides the necessary
equipment and resources for our research and development and engineering staff
to continuously enhance product quality and reliability. Our quality assurance
staff comprises engineers, technicians and other employees who monitor and
control our manufacturing processes.

     Our production facilities in Singapore, Fabs 1, 2, 3, 5 and 6 have been
certified by a third party certification body to QS 9000, an internationally
recognized quality standard. QS 9000 includes compliance to ISO 9002: 1994
standards and includes the requirement for continuous improvement, emphasizing
on defect prevention, variation reduction and reduction of waste in the supply
chain. The QS 9000 certification processes involve periodically subjecting
production processes and quality management systems to stringent third-party
review and verification. Our customers often look to QS 9000 certification as a
threshold indication of our quality control standards. In 2003, we are planning
to become certified to the new and more exacting ISO 9001: 2000 standard.

     Our company has adopted the Six Sigma program, which is a well-recognized
method of making breakthrough improvements in business processes and solving
chronic problems. Our strategy is to use the Six Sigma method to give a
structured and rigorous approach to improvements across the whole organization.
Following the completion of the pilot project, we have put more people through
in-depth training to create a critical mass of "Black-Belts", experts in the use
of Six Sigma tools and methods. We are now extending the deployment to the wider
engineering population with Green Belt training. To date, approximately 150
people have gone through Green Belt training and it will continue through 2003.
Apart from training more "Black Belts", we are training our Quality Circles and
managers in Six Sigma methods.


STRATEGIC ALLIANCES

CHARTERED SILICON PARTNERS

     In March 1997, we entered into the CSP strategic alliance with
Hewlett-Packard Europe B.V., or HP Europe, a subsidiary of Hewlett-Packard
Company, or Hewlett-Packard, and EDB Investments Pte. Ltd., or EDB Investments,
relating to the joint ownership of Fab 6. In 1999, Hewlett-Packard spun-off
certain of its businesses, including its semiconductor business, to a new
company, called Agilent Technologies, Inc., or Agilent Technologies. In
connection with the spin-off, Hewlett-Packard assigned and /or novated its
rights and obligations under the agreements it had entered into with us,
including the agreements of its subsidiaries (including HP Europe), to Agilent
Technologies or its subsidiary, Agilent Technologies Europe B.V., or Agilent
Technologies Europe. In particular, Agilent Technologies Europe was substituted
as a party to the strategic alliance agreement in place of HP Europe by a Deed
of Accession and Ratification dated November 9, 1999. The Restated Joint Venture
Agreement dated October 23, 2001 contains the CSP joint venture agreement
together with subsequent amendments. (see "Item 19. Exhibits -- Exhibit 4.14").
We were obliged to make a total of S$367.2 million ($213.2 million) in equity
contributions to CSP, the final payment of which was made in November 2000.

     CSP owns and operates Fab 6. Pursuant to a cost sharing agreement, we
perform certain management and corporate support activities for the benefit of
CSP including accounting, financial, sales and marketing. Under this agreement,
CSP is allocated a portion of our costs in performing such activities. Although
such agreement may be terminated by either party in certain instances, we expect
the cost sharing agreement to remain in place during the term of this strategic
alliance.

     Pursuant to a technology transfer and license agreement, both we and
Agilent Technologies have contributed the process technologies needed by CSP.
Such process technologies are licensed to CSP for its own use and CSP cannot
sub-license them to others. In addition, we and Agilent Technologies
cross-license the rights to use such technologies to one another. These
cross-licenses allow our respective companies to use the process technologies
and related intellectual property licensed to CSP in our respective
manufacturing facilities for our general businesses even if such are not related
to

                                       28
<PAGE>

CSP. Agilent Technologies has ceased its technology development for technology
nodes beyond 0.25um, and as such, Agilent Technologies will cease to contribute
any process technologies involving these technology nodes to CSP and CSP will
instead rely solely on the process technologies contributed by our company.

     U.S. GAAP generally requires consolidation of all majority owned (greater
than 50%) subsidiaries. However, as a result of certain provisions that were
contained in the strategic alliance agreement, the minority shareholders of CSP
were deemed to have substantive participative rights which overcame the
presumption that we should consolidate CSP. Therefore, CSP was accounted for
under the equity method in our financial statements prior to October 1999.

     Effective October 1, 1999, we, Agilent Technologies Europe and EDB
Investments amended our strategic alliance agreement. The amendment eliminated
some of CSP's minority shareholders' approval rights over CSP's annual business
plan. It also increased the thresholds for asset dispositions, borrowings and
capital expenditures that would require the approval of CSP's minority
shareholders. We believe that these changes eliminate CSP's minority
shareholders' substantive participative rights in CSP. As a result of this, we
have treated CSP as a consolidated subsidiary from October 1, 1999 forward.

     Pursuant to our agreement, the CSP strategic alliance continues
indefinitely so long as there are two or more parties to the alliance. Before
any transfer of an interest in CSP can occur, the non-transferring parties may
exercise a right of first refusal with respect to the transferred interests.
Upon a serious, uncured default, the non-defaulting parties have the right to
purchase all of the defaulting party's interest for fair value, as defined in
the agreement. Upon a change of control of a party, the other parties have the
right to purchase, at fair value, all of such party's interest.

     Until October 23, 2001, we, Agilent Technologies Europe and EDB Investments
had a 51%, 30% and 19% equity interest in CSP, respectively. As a result of the
prolonged industry contraction, Agilent Technologies Europe requested and we,
EDB Investments and Singapex Investments Pte. Ltd. ("Singapex"), a wholly owned
subsidiary of ST, agreed to a modification of the ownership structure of CSP.
Agilent Technologies Europe agreed to sell one-half of its 30% share in CSP to
Singapex and EDB Investments, in equal proportion, for an undisclosed amount,
under an agreement signed on October 22, 2001. The sale of the 7.5% share in CSP
to Singapex was completed on October 23, 2001, and the sale of a further 7.5%
share in CSP to EDB Investments was completed on November 7, 2001. Thereafter,
Chartered, EDB Investments, Agilent Technologies Europe and Singapex own a 51%,
26.5%, 15% and 7.5% equity interest in CSP, respectively. As part of the above
arrangements, Agilent Technologies Europe has secured an option to reacquire the
ownership interest which has been sold, such option being valid for a two-year
period beginning October 23, 2002.

     In connection with the above sale by Agilent Technologies Europe and the
modification of CSP's ownership structure, the parties entered into a Deed of
Accession and Ratification dated October 22, 2001 relating to the Joint Venture
Agreement dated March 13, 1997 as amended by Amendment Agreement (No. 1) dated
July 4, 1997 and Amendment Agreement (No. 2) dated October 1, 1999 and Deed of
Accession and Ratification dated November 9, 1999 in respect of CSP. The above
amendments to the Joint Venture Agreement have been consolidated in a Restated
Joint Venture Agreement effective as of October 23, 2001, a copy of which is
filed as Exhibit 4.14 hereto.

     The reduction in Agilent Technologies Europe's ownership in CSP in October
2001 has also had an impact on Agilent Technologies' obligation to purchase a
minimum number of wafers per year and rights to purchase a maximum number of
wafers per year from CSP. Such reduction has automatically resulted in a
reduction in Agilent Technologies' maximum capacity entitlement and in the
financial obligation associated with its minimum wafer purchase commitment
requirement, in accordance with the terms of the Assured Supply and Demand
Agreement, which agreement and amendments are filed as Exhibits 4.16, 4.17 and
4.18 hereto. However, if during the two-year period beginning October 23, 2002,
Agilent Technologies Europe exercises its option to reacquire the ownership
interest, such reacquisition will also lead to an increase in the related
capacity entitlement and purchase requirement.

     As part of Agilent Technologies' strategy that led to Agilent Technologies
Europe reducing its ownership in CSP in October 2001, the parties further agreed
that directors appointed by Agilent Technologies Europe would no longer have
voting rights although they will still remain on CSP's Board of Directors and
retain all their other existing rights and obligations. In addition, Agilent
Technologies Europe is no longer a member of CSP's management committee. This
change regarding CSP is reflected in an Amendment Agreement No. 1 dated January
31, 2002 to the Restated Joint Venture Agreement, a copy of which is also filed
as Exhibit 4.15 hereto.

     As of December 31, 2002, CSP's Board of Directors comprises of eight
directors. As long as we own more than 50% of CSP, we can elect four of the
directors. Agilent Technologies Europe can elect two directors as long as it
owns at least 15% of CSP, EDB Investments can elect one director as long as it
holds any ownership interest in CSP and Singapex can elect one director as long
as it holds 7.5% of CSP.

                                       29
<PAGE>

SILICON MANUFACTURING PARTNERS

     In December 1997, we entered into the SMP strategic alliance with Lucent
Technologies Microelectronics Pte. Ltd. or Lucent Technologies Microelectronics,
now known as Agere Systems Singapore Pte. Ltd. or Agere Systems Singapore,
relating to the joint ownership of Fab 5.

     Agere Systems Singapore has a 51% equity interest in SMP and we have a 49%
equity interest. We were obligated to make S$208.3 million ($121.0 million) in
equity contributions to SMP. The final contribution was made in July 2000. SMP's
Board of Directors is comprised of five directors, three of which are elected by
Agere Systems Singapore and two of which are elected by us. We also nominate the
chairman of the Board of Directors and the general manager, while Agere Systems
Singapore names the finance director.

     SMP operates Fab 5, which is adjacent to our Fab 3 building. SMP owns the
equipment used in Fab 5 and leases the space for Fab 5 from us. Please see "Item
7. Major Shareholders and Related Party Transactions -- Related Party
Transactions" for a description of this lease.

     Pursuant to an assured supply and demand agreement that both the joint
venture partners signed with SMP, we are each required to purchase a specified
percentage of Fab 5's output. However, if one party does not purchase its share
of wafers, the other party is entitled to utilize that unused capacity. In the
event such other party does not utilize the unused capacity, the party who does
not purchase its entitlement will be required to compensate SMP for any
unrecovered costs it incurs in connection with such unused capacity.

     Pursuant to our agreement, the SMP strategic alliance continues
indefinitely until it is terminated by written notice from or by either party.
Neither party may give such written notice of termination until after 2006, and
the termination of the alliance will take effect two years from the date of such
termination notice. In addition, the parties may only transfer their interests
to their respective affiliates. Upon our dissolution, winding up or liquidation,
Agere Systems Singapore can purchase all of our interests in SMP for fair value,
as defined in the agreement. Upon our serious, uncured breach, Agere Systems
Singapore has the right to sell all of its interest in SMP to us for the higher
of fair value or the value of its interest based on SMP's net book value, as
defined in the agreement. Upon Agere Systems Singapore's dissolution, winding up
or liquidation, we have the right to purchase all of its interest in SMP for
fair value. Upon Agere Systems Singapore's serious, uncured breach, we have the
right to purchase all of its interest in SMP for 90% of fair value. Upon a
change of control of a party, the other party has the right to purchase, at fair
value, all of such party's interest in SMP.

     Pursuant to a cost sharing agreement, we perform certain management and
corporate support activities for the benefit of SMP including accounting,
financial and human resources. Under this agreement, SMP is allocated a portion
of our costs in performing such activities. Although such agreement may be
terminated by either party in certain instances, we expect the cost sharing
agreement to remain in place during the term of this strategic alliance.

     Pursuant to a technology transfer and license agreement dated February 17,
1998, (see "Item 19. Exhibits -- Exhibit 4.22") both we and Agere Systems
Singapore contribute the process technologies needed by SMP. Such process
technologies are licensed to SMP for its own use and SMP cannot sublicense them
to others. We and Agere Systems Singapore categorize our licensed technologies
as restricted and unrestricted technologies. We and Agere Systems Singapore
cross-license the unrestricted technologies to one another. These cross-licenses
allow our respective companies and subsidiaries to use certain process
technologies and related intellectual property licensed to SMP in our respective
manufacturing facilities for our general businesses even if such uses are not
related to SMP. We do not cross-license the restricted technologies with one
another, which means that only SMP can use such restricted process technologies
and intellectual property. The above technology transfer and license agreement
has since been amended three times, by an Amendment Agreement (No. 1) dated July
27, 2000 (see "Item 19. Exhibits -- Exhibit 4.23") and an Amendment Agreement
(No.2) dated March 22, 2001 (see "Item 19. Exhibits -- Exhibit 4.24") and an
Amendment Agreement (No. 3) dated March 28, 2002 (see "Item 19. Exhibits --
Exhibit 4.25"), all for the purpose of updating the list of process technologies
transferred by each of our company and Agere Systems Inc. into SMP.

     Agere Systems Singapore, (formerly Lucent Technologies Microelectronics),
was formerly a subsidiary of Lucent Technologies Inc. In 2002, Lucent
Technologies Inc. spun off its microelectronics business to a new company, named
Agere Systems Inc., a fully independent company. As part of the restructuring,
Lucent Technologies Microelectronics ceased to be a subsidiary of Lucent
Technologies Inc., and is now a subsidiary of Agere Systems Inc. and was renamed
Agere Systems Singapore Pte. Ltd., or Agere Systems Singapore.

                                       30
<PAGE>
     With effect from October 15, 2001, we together with Agere Systems Singapore
agreed to run Fab 5 and Fab 3 as one integrated operation, while retaining the
existing ownership and corporate structure of SMP. The fabs shared a single
shell but had two separate administrative structures prior to their operational
integration. By implementing this change, we and Agere Systems Singapore are
able to free up key technical resources and also provide enhanced flexibility
and better utilization of the combined equipment base.

     We account for our 49% investment in SMP using the equity method. Under the
strategic alliance agreement, the parties do not share SMP's net results in the
same ratio as the equity holding. Instead, each party is entitled to the gross
profits from sales to the customers that it directs to SMP, after deducting its
share of the overhead costs of SMP. Accordingly, we account for our due share of
SMP's net results based on the gross sales to the customers that we direct to
SMP, after deducting our 49% share of the overhead costs.

     Under the assured supply and demand agreement mentioned above, the
allocated wafer capacity billed and billable to us was $40.2 million for the
year ended 2002. Such costs are included in our equity in income (loss) of SMP.

     In 2002, SMP's net revenue increased by 2.7% to $205.5 million as a result
of higher shipments, partly offset by lower average selling prices. Cost of
revenue increased as a result of higher depreciation due to higher installed
capacity, resulting in higher gross loss. Included in its other operating income
is allocated wafer capacity cost recovery amounting to $49.5 million. Please see
notes 14 and 15 to SMP's financial statements included elsewhere in this
document. SMP incurred a net loss of $23.4 million in 2002 compared to net
profit of $53.8 million in 2001 mainly due to lower allocated wafer capacity
cost recovery.


WAFER FABRICATION SERVICES

OVERVIEW

     Wafer fabrication is an intricate process that requires many distinct
steps. Each step in the manufacturing process must be completed with extreme
accuracy in order for finished semiconductor devices to work as intended. The
processes required to take raw wafers and turn them into finished semiconductor
devices are accomplished through a series of steps that can be summarized as
follows:

     Circuit Design. Producing a semiconductor device begins with designing the
layout of its components and designating the interconnections between each
component. The result is a pattern of components and connections that defines
the function of the semiconductor device. In highly complex circuits, there may
be more than 35 layers of electronic patterns.

     We do not design semiconductor devices for our customers. If requested, we
assist our customers in the design process by providing them with access to our
partners' EDA tools, design libraries and IP and design services which are
proven and have been qualified for our manufacturing processes. Our field design
engineers assist our customers during the development process to ensure that
their designs can be successfully manufactured in volume.

     Mask Making. The design for each layer of a semiconductor wafer is
imprinted on a photographic negative, called a mask. The mask is the blueprint
for each specific layer of the semiconductor wafer. We do not manufacture masks
for our customers but provide a service through third party mask shops.

     Wafer Fabrication. Transistors and other circuit elements comprising a
semiconductor device are formed by repeating a series of processes in which a
photosensitive material is deposited on the wafer and exposed to light through a
mask. The unwanted material is then etched away, leaving only the desired
circuit pattern on the wafer. This process is repeated for each mask layer. The
final step in the wafer fabrication process is to visually and electronically
inspect each individual semiconductor device, known as wafer probe, in order to
identify the operable semiconductor devices for assembly.

     We provide all aspects of the wafer fabrication process except for wafer
probe, which, if requested by the customer, is outsourced to a qualified third
party. All steps in the wafer manufacturing process are controlled by our
computer-integrated manufacturing, or CIM, system. The CIM system allows us to
monitor equipment performance, wafer processing steps, and the wafers themselves
throughout the fabrication process.

     Assembly and Test. After fabrication and wafer probe, the wafers are
transferred to assembly and test facilities. Assembly protects the semiconductor
device, facilitates its integration into electronic systems and enables the
dissipation of heat. Following assembly, each semiconductor device's
functionality, voltage, current and timing are tested. After testing,

                                       31
<PAGE>
the completed semiconductor device is either shipped to the semiconductor device
supplier or directly to its final destination. If requested by the customer, we
outsource assembly and test services to qualified independent assembly and test
partners.


MANUFACTURING PROCESSES

     We manufacture semiconductors using CMOS and BiCMOS processes. CMOS is the
most widely used process technology because it requires lower power than other
technologies and allows dense placement of components onto a single
semiconductor device. The low power consumption and high-density characteristics
of the CMOS process allow the continued development of high performance
semiconductor devices that are smaller and faster. BiCMOS process technology
combines bipolar's attribute of high speed with the high density and low power
consumption of CMOS. We use CMOS or a combination of CMOS and BiCMOS for the
fabrication of logic, mixed-signal and memory semiconductor wafers.

     We manufacture a variety of semiconductor wafers for a full range of end
market applications including communications, computing, and consumer
electronics. Examples of the types of semiconductors we manufacture are as
follows:

     Logic. All digital electronic systems, such as computing devices, are
     controlled by logic semiconductor devices, which process data.
     Microcontrollers, microprocessors, digital signal processors, and graphics
     chipsets are all logic devices. We manufacture logic semiconductor wafers
     primarily for the computing, consumer and communications markets.

     Mixed-Signal. Mixed-signal semiconductor devices combine analog and digital
     devices on a single semiconductor device to process both analog signals and
     digital data. Mixed-signal semiconductor devices are used in applications
     including wireless equipment, fiber optic communications and data
     networking. We make mixed-signal semiconductor wafers using both CMOS and
     BiCMOS processes.

     Memory. Memory devices store data and can be manufactured as stand-alone
     devices or embedded in system semiconductor devices, which combine a number
     of functions, such as logic and memory components. We manufacture
     stand-alone memory devices including EPROM, EEPROM, ROM, SRAM and Flash
     memory and embedded memory including eSRAM, eEEPROM, and eFLASH (embedded
     memory that can be erased in a flash) memories. For more information on
     what these mean, please see "Item 4. Information on Our Company --
     Manufacturing Facilities". Memory is used in a range of products from
     computers and mobile phones to "smart" chip cards.


TURNKEY SERVICES

     Although we are an independent foundry specializing in wafer fabrication,
we offer our customers the option to purchase from us finished semiconductor
products that have been assembled and tested. We primarily subcontract assembly
and testing of the fabricated semiconductor devices. Testing includes wafer
probe and final testing of assembled semiconductor devices. After final testing,
the semiconductor devices are returned to the customer or drop-shipped according
to our customers' specifications.


CUSTOMERS AND MARKETS

     We manufactured semiconductors for over 100 different active customers in
2002. Our top five customers accounted for approximately 43.2% and 53.1% of our
revenue in 2001 and 2002, respectively. Other than Agilent Technologies who
accounted for more than 10% of our revenue in both 2001 and 2002, Motorola and
Broadcom also accounted for more than 10% of our revenue in 2002.

     The following table sets forth our top five customers for 2002 in order of
revenue:

<TABLE>
<CAPTION>
CUSTOMER                   REPRESENTATIVE PRODUCTS OR APPLICATIONS
--------                   ---------------------------------------
<S>                        <C>
Agilent Technologies       Computer peripherals, networking and wireless communication
Motorola                   Wired and wireless communications
Broadcom                   Cable modem/set-top box and ethernet transceivers
Ricoh                      Computer peripherals
Standard Microsystems      Connectivity for high speed communication and computing applications
</TABLE>

                                       32
<PAGE>
     We categorize a sale geographically based on the country in which the
customer is headquartered. The following table sets forth the geographical
distribution, by percentage, of our net sales for the periods indicated:

<TABLE>
<CAPTION>
                2000     2001     2002
                ----     ----     ----
<S>             <C>      <C>      <C>
USA              60%      67%      71%
Taiwan           12       16       10
France            8        6        4
Japan             4        6       10
Netherlands       3        1        0
Germany           1        2        3
Sweden           10        0        0
Others            2        2        2
                ---      ---      ---
Total           100%     100%     100%
                ===      ===      ===

</TABLE>

     We expect that the majority of our sales will continue to be made to
companies headquartered in the U.S. or to overseas affiliates of U.S. companies.
All of our sales are direct sales to our customers with delivery in Singapore.
We provide customer support in the U.S. through a wholly-owned subsidiary
located in Milpitas, California which has additional offices in Boston,
Massachusetts and Austin, Texas. We also maintain customer support offices in
Hsin-Chu, Taiwan; Yokohama, Japan; Paris, France; London, United Kingdom;
Munich, Germany and as of August 2002, in Shanghai, China, as part of our
company's long term strategy for China. We no longer have an office in Taipei,
Taiwan, as we have consolidated our former offices in Taipei and Hsin-Chu into a
new larger facility in Hsin-Chu. We have also consolidated our former office in
Stockholm, Sweden with our London office for economies of scale.

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

     We currently allocate a portion of our wafer manufacturing capacity to
certain customers under several types of agreements. We are also obligated to
make available capacity to customers under certain other agreements.


CUSTOMER SERVICE

     We focus on providing a high level of customer service in order to attract
customers and maintain their ongoing loyalty. Our culture emphasizes
responsiveness to customer needs, flexibility and delivery accuracy. In
particular, in the area of flexibility, we work closely with customers to
understand their needs and collaborate with them to deliver a solution that is
customized to address their requirements. Our customer-oriented and
collaborative approach is especially evident in two prime functional areas of
customer interaction, customer design development and manufacturing services.

     We emphasize very close interaction with customers throughout the design
development and prototyping process. We provide for an account manager to be
assigned early in the design development process who coordinates an account team
composed of local marketing, EDA, silicon engineering, third-party partner and
customer service/logistical support. The local account team is supported by
additional marketing and customer engineering staff in Singapore.

     After the design moves into manufacturing production, ongoing customer
support is provided through all phases of the manufacturing process. The local
account manager teams with a dedicated customer service representative, along
with marketing and customer engineering support teams at the factory.

     In 1996, we introduced our Chartered On-Line Access Services System,
through which our customers are provided secure access via the Internet to
critical manufacturing data as their products move through the fab. We plan to
launch by the second quarter of 2003 the first phase of our e-Business strategy
and will continue to develop the remaining phases. Our e-Business strategy will
provide our customers with improved information access, data exchange and
e-Business functionality over the Internet. In addition to implementing
Rosettanet standards for our e-Business, we also plan to support business to
business transactions using our customers' and suppliers' specified formats. As
part of our commitment to continued improvement in service to our customers, we
plan to enhance our web services, on-line information portal and design
collaboration support.


RESEARCH AND DEVELOPMENT

                                       33
<PAGE>
     The semiconductor industry is characterized by rapid and relentless
technical advances. We believe effective research and development is essential
to our success, as that research and development spawns the leading-edge
technologies that are critical to attracting and retaining customers who design
highly sophisticated semiconductors. In 2000 and 2001, we invested approximately
$74.9 million and $82.9 million respectively, in research and development. Those
investments represented approximately 6.6% and 17.9% of our net revenue for the
respective periods. In 2002, our research and development expenditures increased
to approximately $95.3 million, or approximately 21.2% of our net revenue for
the year. For 2003, we plan to increase our research and development investments
and currently project our spending to be approximately $120 million. As of
December 31, 2002, we employed 279 professionals in our research and development
department, 43 of whom have Ph.Ds.

     Our investment in research and development allows us to continue developing
new and advanced processes, with line width geometries down to 60nm for the 90nm
technology node, as well as fund research activities for the 65nm technology
node. The research and development programs are structured to ensure that our
baseline manufacturing processes accommodate new technology modules that are the
heart of highly differentiated system-level applications.

     Periodically, we update our technology roadmap based on industry trends,
expected customer adoption of the technology and our internal development plans.
During 2002, the technology node expected to follow 0.13um has generally been
re-targeted by the industry to 90 nanometer (nm) instead of 100nm. Also, we
believe customer adoption of 90nm technology will occur later than earlier
thought due primarily to industry challenges with 0.13um technology.
Accordingly, we have re-targeted our 100nm development program to 90nm and have
re-aligned our internal development schedule.

     Our technology alliances with leading semiconductor suppliers contribute to
our development of new process technologies. For example, in November 2002, we
entered into a multi-year joint development agreement with IBM designed to
provide customers with greater access to leading-edge semiconductor technologies
and sourcing flexibility. Under the agreement, the parties will jointly develop
and align on 90nm and 65nm logic processes for foundry chip production on 300-mm
silicon wafers (See "Item 19. Exhibits -- Exhibits 4.35 to 4.38"). Additionally,
the parties may explore an extension to the agreement to include 45nm
technologies. To assist foundry customers in designing with these technologies,
IBM and Chartered have also agreed to work together with third-party providers
of design tools and open-standard formats to help customers more easily move
their products between the two companies for production. Our agreement with IBM
also includes a reciprocal manufacturing arrangement between the parties. For
more details on the reciprocal manufacturing arrangement, please see "Item 4.
Information on Our Company -- Manufacturing Facilities".

     We have, together with Agere Systems Inc., successfully completed the joint
development of 0.18um back end of line or BEOL copper and aluminum processes in
December 2000. Apart from the above, we have a separate July 2000 joint
development agreement with Agere Systems Inc. addressing the development of CMOS
process technologies at the 0.13um, 0.10um and 0.08um technology nodes. As a
result of Agere System Inc.'s recent initiatives to increase manufacturing
flexibility, we have worked together with Agere Systems Inc. to modify our joint
development agreement so that it would better align with Agere System Inc.'s
fab-lite strategy. An amendment to the original July 2000 joint development
agreement was signed on June 28, 2002. Development work on the first node,
0.13um has been substantially completed. Under the amended agreement, we are to
continue with the sole development of the other technology nodes and in this
connection, we are free to engage with other technology partners on these other
nodes. As a result, we have converged our 90nm development program with the
joint development that we have engaged in with IBM described above.

     While we also have an existing technology development agreement with the
former microelectronics arm of Ericsson for the development of RF CMOS and
BiCMOS process technologies, Ericsson Microelectronics has since been acquired
by Infineon Technologies in September 2002, and parties are in discussions on
the impact of this change of ownership on the agreement. Currently, the
implementation of 0.18um and 0.25um RFCMOS process technologies has been
completed, with the implementation of 0.25um BiCMOS process technologies still
remaining. We do not anticipate that this will have a significant impact on our
performance, as we have access to alternative technology. For example, in
September 2002, we entered into a collaboration agreement with IMEC, Europe's
leading independent research and development centre for microelectronics. The
purpose of the agreement is to enable us to offer 0.18um silicon germanium
(SiGe) BiCMOS manufacturing capabilities by the second half of 2003. The
information transfer from IMEC has been completed, while the process
installation is still in progress.

     We have received research grants from various agencies of the Government of
Singapore. These grants provide funding for a portion of our research and
development related capital expenditures, for the training and staffing costs
associated with some of our process technology development programs and to
implement cost-effective solutions to meet our power quality needs. $29.5
million of the grants were disbursed to us in 2002. The grants are disbursed
based on the amount of expenditures incurred and achievement of program
milestones. The main conditions attached to the grants are the completion of the
project to which the grant relates and the certification of the qualifying costs
incurred.

                                       34
<PAGE>
EQUIPMENT AND MATERIALS

     We depend on a limited number of manufacturers that make and sell the
complex equipment that we use in our manufacturing processes. The principal
pieces of equipment we use to manufacture semiconductors are scanners, steppers,
tracks, etchers, furnaces, wet stations and implanters and sputtering, chemical
vapor deposition and chemical mechanical planarization equipment. In periods of
high market demand the lead times from order to delivery of some of such
equipment can extend beyond 12 months. We seek to manage this process through
early reservation of appropriate delivery slots and constant communication with
our suppliers.

     Our manufacturing processes use highly specialized materials, including
semiconductor wafers, chemicals, gases, targets and masks. We depend on our
vendors of these materials and seek to have more than one vendor for our
material requirements. To maintain competitive manufacturing operations, we must
obtain from our vendors, in a timely manner, sufficient quantities of quality
materials at acceptable prices. We source most of our materials, including
critical items such as semiconductor wafers, from a limited group of vendors. We
purchase most of our key materials on a blanket purchase order basis. We
typically do not have long term contracts with our vendors. Although some of our
blanket purchase order contracts contain price and capacity commitments, these
commitments tend to be short term in nature. For those materials that are wholly
procured from one source, we continuously look to identify and qualify
alternative sources of supply. We have agreements with key material vendors
under which they hold inventory on consignment for us. We are not under any
obligation to purchase inventory that is held on consignment until we actually
use it. We typically work with our suppliers to forecast our raw material
requirements up to one year in advance.


INTELLECTUAL PROPERTY

     Our success depends in part on our ability to obtain patents, licenses and
other intellectual property rights covering our production processes. To that
end, we have acquired certain patents and patent licenses and intend to continue
to seek patents on our production processes.

     As of December 31, 2002, we had filed an aggregate of 1,525 patent
applications worldwide, (758 of which had been filed in the U.S.) and held an
aggregate of 679 issued patents worldwide (503 of which are issued U.S.
patents). Of the 758 aggregate applications filed in the U.S., 503 had been
issued as of December 31, 2002 and 31 had been allowed but not issued. Those 31
allowed patents will be issued if and when we pay the applicable issuance fee.
(Note: References to aggregate figures include not only the figures for the year
itself but figures for previous years as well. Accordingly, if an aggregate of
1,525 patent applications have been filed as of December 31, 2002, these include
not only the patent applications filed in 2002 but all patent applications
previously filed by the company.)

     The results of our U.S. patent filing and issuing showed improvement in the
aggregate number of patents filed and issued as of 2002 compared with those as
of 2001. As of December 31, 2002, there were 19.2% more aggregate number of
patents filed in the U.S. compared with the corresponding figures as of the
previous year, while there were 40.5% more aggregate number of patents issued in
the U.S., compared with the corresponding figures as of the previous year.

     The number of U.S. patents issued to Chartered for each year (excluding
those issued for previous years) was 79, 143 and 145 in 2000, 2001 and 2002
respectively. In the year 2002 alone, the number of patents filed in the U.S.
for that year showed an increase of 5.2% over the number of patents filed in the
U.S. for the year 2001 alone, while the number of patents issued in the U.S. for
both years remained almost the same.

     Our issued patents have expiration dates ranging from 2011 to 2022. All of
the allowed and pending patents will expire after 2023. We have also entered
into various patent licenses and cross-licenses with major semiconductor
companies. We may choose to renew our present licenses or to obtain additional
technology licenses in the future. There can be no assurance that any such
licenses could be obtained on commercially reasonable terms.

     Our ability to compete also depends on our ability to operate without
infringing the proprietary rights of others. The semiconductor industry is
generally characterized by frequent litigation regarding patent and other
intellectual property rights. We have from time to time received communications
from third parties asserting patents that cover certain of our technologies and
alleging infringement of certain intellectual property rights of others. We
expect that we will receive similar communications in the future. Irrespective
of the validity or the successful assertion of such claims, we could incur
significant costs and devote significant management resources to the defense of
these claims which could seriously harm our company. There is no such material
litigation currently pending against us. We market services in several countries
in Asia, such as Taiwan and China, which may not protect our intellectual
property rights to the same extent as the U.S.

                                       35
<PAGE>
COMPETITION

     The worldwide semiconductor foundry industry is highly competitive. Our
principal competitors are Taiwan Semiconductor Manufacturing Corporation, or
TSMC, and United Microelectronics Corporation, or UMC. Our competitors may have
greater access to capital and substantially greater production, research and
development, marketing and other resources than we do. As a result, these
companies may be able to compete more aggressively over a longer period of time
than we can. In addition, several new dedicated foundries have entered the
semiconductor industry, arising from new foundries being established in Malaysia
and China and manufacturers of DRAM products converting to dedicated foundries
in Korea. These new foundries have commenced operations and compete directly
with us. Any significant increase in competition may erode our profit margins
and weaken our earnings.

     A number of semiconductor manufacturers, including our primary competitors,
have announced plans to set up fabrication facilities in Singapore and to
increase their manufacturing capacity. Although some of these plans were delayed
as a result of the industry downturn, we expect that they will be initiated when
the economic and industry conditions improve and, as a result, we expect that
there will be a significant increase in worldwide semiconductor capacity during
the next five years. If growth in demand for this capacity fails to match the
growth in supply or occurs more slowly than anticipated, there may be more
intense competition and pressure on the pricing of our services may result.

     The principal elements of competition in the wafer foundry market include
technical competence, time-to-market, research and development, quality,
available capacity, device yields, customer service, price, design services,
access to intellectual property and EDA tool support.


ENVIRONMENTAL MATTERS AND COMPLIANCE

     We have implemented an extensive environmental management system. This
system is third party certified through internationally recognized ISO 14001.
This system enables our operations to identify applicable environmental
regulations and assist in evaluating compliance status. Programs are established
at manufacturing locations to ensure that all accidental spills and discharges
are properly addressed.

     We are subject to a variety of laws and governmental regulations in
Singapore relating to the use, discharge and disposal of toxic or otherwise
hazardous materials used in our production process. While we believe that we are
currently in compliance in all material respects with such laws and regulations
and have management systems in place to continue to be in compliance, if we fail
to use, discharge or dispose of hazardous materials appropriately, we could
subject our company to substantial liability or could be required to suspend or
adversely modify our manufacturing operations. In addition, we could be liable
for remedial measures if our properties were found to be contaminated even if we
were not responsible for such contamination.


EMPLOYEES

     In October 2002, Chartered took steps to reduce its worldwide workforce by
approximately 300 people, or about 7% of its total employment, as a result of a
reassessment of the pace of recovery in the global semiconductor industry. As of
December 31, 2002, as a result of the above reduction in workforce, the global
slowdown in the semiconductor industry and very selective hiring during the
year, our total staff strength was reduced by 10% from last year to 3,543
employees, with 1,214 in process and equipment engineering, 1,047 in
manufacturing operations, 589 in manufacturing support, 279 in research and
development and 414 in administration, marketing and finance. Geographically,
Chartered employs 87 employees in the U.S., 10 in Taiwan, 8 in Japan and 21 in
Europe, with the remainder in Singapore. We consider our relationship with our
employees to be good. Our employees are not members of a union. In addition,
certain corporate support services, such as treasury, cash management, internal
audit, training and executive resources, are carried out by employees of ST on
our behalf. Please see "Item 7. Major Shareholders and Related Party
Transactions -- Related Party Transactions" for a discussion of the services
provided to us by ST.

     In February 2003, we announced our plans to phase out Fab 1 and to
consolidate its business into Fab 2 over an estimated 13 month transition
period. We currently employ approximately 500 people in Fab 1, about half of
whom are production operations. We are taking measures to incentivize Fab 1
employees to stay on during the transition period so that employment in Fab 1
will be maintained through March 31, 2004 in order to ensure the smooth transfer
of business to Fab 2. Although we expect employment in Fab 1 to be maintained
during the transition period, we cannot assure you that these employees will
continue to stay. After the transition period has expired in March 31, 2004, we
do not anticipate having positions for Fab 1 employees.

                                       36
<PAGE>
     We provide our employees with customary compensation and benefit plans,
including employee bonus plans, an employee share option plan and an employee
share purchase plan, or ESPP. Employees of SMP, our 49% owned affiliate, also
participate in an employee share purchase plan with terms substantially similar
to the ESPP for our employees. Please see "Item 6. Directors, Senior Management
and Employees -- Options to Purchase Securities from Registrant or Subsidiaries"
for a discussion of our share option plan and our ESPP. Our employees are not
covered by any collective bargaining agreements. We have not experienced any
strikes or work stoppages by our employees.


INSURANCE

     We maintain industrial special risk insurance for our facilities, equipment
and inventories. The insurance for fabs (including our strategic alliance fabs)
and their equipment covers physical damage and consequential losses from natural
disaster, business interruption and certain other risks up to their respective
policy limits except for exclusions as defined in the policy. We also maintain
public liability insurance for losses to others arising from our business
operations and carry insurance for business interruption resulting from such
events. Our insurance policies covering public liability and actions by
employees are held by ST through its group insurance policy. We pay our pro rata
share of the costs of such policies based on the industrial all risk amount
insured and the number of its employees, respectively. Some of our insurance
coverage is provided through affiliates of ST. Some of our insurance coverage
for Fab 5 is under Agere's global group insurance program.

     While we believe that our insurance coverage is adequate, significant
damage to any of our production facilities, whether as a result of fire or other
causes, could seriously harm our company. We do not insure against the loss of
key personnel.

     Following the tragic events of September 11, 2001 and the increased risk of
terrorist attacks, the costs of insurance coverage have risen sharply and
continue to remain high. For example, the premiums we paid for our renewal of
our insurance coverage commencing from January 2002 were 2.2 times more than
premiums we paid for such coverage for the previous year and remained at almost
the same levels for 2003. Further, the resulting shortage of capacity in the
insurance market has also led to increasing difficulty and costs in securing
adequate coverage and in obtaining coverage on the same terms as were previously
available.


ORGANIZATIONAL STRUCTURE

     Chartered is part of the Singapore Technologies group of companies. A
description of the group and Chartered's position within the group may be found
at "Item 7. Major Shareholders and Related Party Transactions -- What is the
Singapore Technologies Group".

     Currently, Chartered has five subsidiaries, the particulars of which are as
follows:

<TABLE>
<CAPTION>
                                                            Country of             Date of         Proportion of ownership
Name of subsidiary                                        incorporation         incorporation              interest
------------------                                      -----------------       -------------      -----------------------
<S>                                                     <C>                     <C>                <C>
Chartered Silicon Partners Pte. Ltd.                        Singapore             March 1997                  51%
Chartered Semiconductor Manufacturing Inc.                     U.S.               June 1991                  100%
Chartered Semiconductor Japan Kabushiki Kaisha                Japan              October 2000                100%
Chartered Semiconductor Taiwan Ltd.                           Taiwan             August 2000                 100%
Chartered Semiconductor Europe Ltd.                     England and Wales         March 2001                 100%
</TABLE>


DESCRIPTION OF PROPERTY

     All of the fabrication facilities and our corporate offices are located in
Singapore. Fab 1 is located on land leased from Ascendas Land (Singapore) Pte.
Ltd. or Ascendas (formerly known as "Technology Parks Pte. Ltd."), a private
company wholly-owned by Jurong Town Corporation, or JTC, a statutory board
established by the Government of Singapore to develop and manage industrial
estates in Singapore. The lease runs until 2017 with a conditional option to
extend for another 30 years. Following the announcement of our plans to
consolidate Fab 1's business into Fab 2, we are in discussions with Ascendas on
the future of the lease.

     Fabs 2 and 3 and our corporate offices are located on land leased to ST by
JTC. These leases run until 2024 with conditional options to extend for another
30 years. We have entered into sub-leases with ST for the entire term of the
leases

                                       37
<PAGE>
for Fabs 2 and 3. The sub-leases for Fab 2 and Fab 3 require us to make rental
payments to ST at rates equal to the rent paid by ST to JTC for the subject land
through 2006 for Fab 2 and 2024 for Fab 3.

     CSP leases the land on which Fab 6 is located from ST, which in turn leases
it from JTC. The agreement provides for the land to be leased to ST until 2027,
with a conditional option to extend for an additional 30 years. CSP makes rental
payments to ST at rates equal to the rent paid by ST to JTC for the subject land
through 2027.

     Fab 7 is located on land licensed to ST by JTC for a period of three years
commencing from March 1, 2000 under the terms of a Building Agreement dated July
30, 2001 for the purpose of entering and building on the land (see "Item 19.
Exhibits -- Exhibit 4.52"). Under an Agreement for Sub-License and Sub-Lease
with ST dated July 30, 2001, (see "Item 19. Exhibits -- Exhibit 4.51"), we have
a sub-license from ST to this land for a term of three years less one day
commencing from March 1, 2000, with license fee payments equal to the license
fees payable by ST to JTC under the Building Agreement. While this sub-license
has recently expired, we are in negotiations with ST and JTC to extend it and
have secured in-principle approval from such entities for such extension. Upon
the completion of the Fab 7 building and the satisfaction of certain conditions
(such as investment criteria) contained in the Building Agreement, we expect JTC
to lease the land where Fab 7 is located to ST. We expect to sub-lease this land
from ST for a term of 30 years less 1 day with rental payments equal to the rent
paid by ST to JTC.


ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

     The following discussion of our financial condition and results of
operations should be read in conjunction with the consolidated financial
statements and the related notes included elsewhere in this document. This
discussion contains forward-looking statements that involve risks and
uncertainties. Our actual results may differ significantly from those projected
in the forward-looking statements. Factors that might cause future results to
differ significantly from those projected in the forward-looking statements
include, but are not limited to, those discussed below and elsewhere in this
document particularly in the cautionary risk factors described in "Item 3. Key
Information -- Risk Factors" above.


OVERVIEW

     Chartered is one of the world's leading semiconductor foundries. We provide
comprehensive wafer fabrication services and technologies to semiconductor
suppliers and manufacturers of electronic systems. We currently own, or have an
interest in, five fabrication facilities, all of which are located in Singapore.
Fabs 1, 2 and 3 are wholly-owned by our company. Fab 5 is operated by SMP, of
which we hold a 49% equity interest and account for using the equity method of
accounting. Fab 6 is owned and operated by CSP, of which we own a 51% equity
interest and account for as a consolidated subsidiary. Fab 7, which will be
developed as the company's first wholly-owned 300-mm facility, is ready for
equipment installation.

     U.S. GAAP generally requires consolidation of all majority-owned (greater
than 50%) subsidiaries. However, as a result of certain provisions that were
contained in our strategic alliance agreement with respect to CSP, the minority
shareholders of CSP were deemed to have substantive participative rights which
overcame the presumption that we should consolidate CSP. Therefore, CSP was
accounted for under the equity method in our financial statements up till
October 1, 1999. As a result of an amendment to the strategic alliance
agreement, we have treated CSP as a consolidated subsidiary from October 1, 1999
forward. Please see "Item 4. Information on Our Company -- Strategic Alliances
-- Chartered Silicon Partners" for a discussion of this amendment.

     As of February 28, 2003, we were 60.5% owned by ST and its affiliate. We
have a service agreement with ST pursuant to which we currently pay ST an annual
management fee for certain management and corporate support services based on a
service based fee arrangement.

     According to the Semiconductor Industry Association, the long-term growth
rate for the worldwide semiconductor industry is expected to be 8% to 10%.
However, the semiconductor industry is highly cyclical. Fabs can take several
years to plan, construct and begin operations. Therefore, during periods of
favorable market conditions, semiconductor manufacturers often begin building
new fabs in response to anticipated demand growth for semiconductors. In
addition, upon operation, fabs increase production volumes rapidly. As a result,
large amounts of semiconductor manufacturing capacity typically become available
during the same time period. In the absence of growth in demand, this sudden
increase in supply results in semiconductor manufacturing over-capacity, which
leads to sharp drops in semiconductor prices.

     From 1996 through the second quarter of 1998, a number of sectors of the
semiconductor industry were in a state of over-capacity resulting in sharp
declines in the average selling price of semiconductor wafers and completed

                                       38
<PAGE>
semiconductor devices. However, from the fourth quarter of 1998 until the end of
2000, global semiconductor demand grew at an accelerated pace. Towards the end
of 2000, this growth began to slow, and in 2001, the semiconductor industry
experienced the sharpest contraction on record, in excess of 30%, with severe
declines in end markets, a protracted correction of abnormally high inventories
and a weakening global economy. Industry recovery began in 2002 but it has been
slower than expected due to weak global economies. Semiconductor industry
revenues in 2002 remained well below peak levels reached in 2000. Further, the
outbreak of war between the U.S. and Iraq could potentially lead to a further
deterioration of economic conditions in the U.S. and elsewhere.

     Semiconductor manufacturing is very capital intensive in nature. A high
percentage of the cost of a fab is fixed, therefore increases or decreases in
capacity utilization rates can have a significant effect on profitability. The
unit cost of wafer fabrication generally decreases as fixed charges, such as
depreciation expense on the facility and semiconductor manufacturing equipment,
are allocated over a larger number of units produced.

     Because the price of wafers varies significantly, the mix of wafers
produced affects revenue and profitability. The value of a wafer is determined
by the complexity of the device on the wafer. Production of devices with higher
level functionality and greater system-level integration requires more
manufacturing steps and commands higher wafer prices. However, increasing the
complexity of devices that we manufacture does not necessarily lead to increased
profitability, because the higher wafer prices for such devices may be offset by
depreciation and other costs associated with an increase in the capital
expenditures needed to manufacture such devices.

     Because prices for wafers of a given level of technology decline over the
product life cycle, a fab must continue to migrate to increasingly sophisticated
technologies to maintain the same level of profitability. This requires
continuous capital investment.

     In our first two fabs, we initially focused on manufacturing semiconductor
wafers for the computer industry. Production commenced in Fab 1 in 1989 and in
Fab 2 in 1995. We achieved profitability in 1993 and continued to increase our
profitability through the first half of 1996. Conditions in the semiconductor
industry began to deteriorate in the second half of 1996. At the same time, our
capacity utilization declined from 90.7% in the first half of 1996 to 57.2% in
the second half of 1996 and average selling price per wafer declined
significantly. Consistent with our long-term view of the growth of the
semiconductor industry, we continued to invest in new process technologies and
the expansion of our manufacturing capacity. During 1997, Fab 3 commenced
production and we entered into strategic alliances to form CSP and SMP. Because
we begin amortizing the capitalized costs associated with a new fab as soon as
the fab commences operation, we incur large depreciation expenses related to the
fab prior to the time the fab reaches volume production. In addition, we expense
all costs as incurred related to the start-up of the fab such as personnel
training costs and payroll and employee related costs.

     Semiconductor market conditions began to improve in the fourth quarter of
1998 and our capacity utilization rates improved to 92% in the first quarter of
1999 and exceeded 100% from the second quarter of 1999 through the third quarter
of 2000. During this period of high capacity utilization, our gross profits and
net income showed progressive improvement as better economies of scale and
operating leverage took effect on the back of rising demand. In the fourth
quarter of 2000, the growth rate of the semiconductor market began to slow and
our utilization rate declined to 94%. In 2001 and 2002, the severe contraction
in the semiconductor industry mentioned above resulted in an average utilization
rate of 35% and 37% for 2001 and 2002 respectively, with a low of 22% in the
third quarter of 2001. As a result of this, we suffered significant net losses
in 2001 and in 2002. We estimate that our capacity utilization in the first
quarter of 2003 will be in the low 40s percentage, compared to 39% in the fourth
quarter of 2002, as market demand remains weak and the over-capacity in market
supply continues.

     Our production generally begins upon receipt of purchase orders from our
customers. Some of our customers are entitled to a discount on a fixed number of
wafers per period. Sales subject to these discounts were approximately 28% and
26% of total revenue in 2001 and in 2002, respectively.

     Our 1999 share option plan is accounted for as a fixed option plan.
Compensation expense represents the difference between the exercise price of
employee share option grants and the fair value of our ordinary shares at the
date of the grant, recognized over the vesting period of the applicable options.
As a result of our October 2002 Rights Offering, changes were made to both the
exercise price and the number of all outstanding options offered as granted.
Please see "Item 6. Directors, Senior Management and Employees -- Employee
Benefit Plans -- Share Option Plan 1999" and "Item 10. Additional Information --
Rights Offering " for additional information.

     We expect that a significant change to the rate of inflation and the
changing prices of our equipment and materials may affect our cost of operations
and impact our net income. Based on the generally low inflation rates in
Singapore for the

                                       39
<PAGE>
years ended December 31, 2000, 2001 and 2002, we believe that such changes in
Singapore inflation rates did not have a material impact on our cost of
operations or net income.

     We accrued a liability and recorded a charge of $11.6 million to reflect
the estimated loss on a licensing agreement in 2000. The loss represents the
estimated amounts to be paid to the licensor as a result of restructuring the
terms of the agreement. The loss has been charged to 2000 results of operations
as we do not expect to derive value from the payments in future periods. In
2002, we accrued a liability and recorded a charge of $10.0 million associated
with the workforce re-sizing announced in October 2002 and a fixed asset
impairment charge. Annual savings in payroll and benefits are expected to be
approximately $8 million.

     On February 13, 2003, the company announced its strategy for moving faster
towards its return to profitability with plans to enhance the company's growth
potential and improve its cost structure. This included phasing out Fab 1's
business and consolidating its business into Fab 2 by March 2004, together with
corresponding work force reduction for Fab 1 employees. For more details, please
see "Item 4. Information on Our Company -- Description of Business" and "Item 4.
Information on Our Company -- Employees". The pre-tax costs associated with
retention, work force reduction, plant closure, customer assistance and other
related expenses are estimated to total approximately $18 to $22 million, not
including potential gains on disposition of fixed assets. Timing of recognition
of these expenses will begin in the first quarter of 2003 and continue over the
periods until the closure is complete. Approximately three-quarters of these
expenses are expected to be recognized in 2003, with approximately $4 million
recognized in the first quarter.


CRITICAL ACCOUNTING POLICIES

Our critical accounting policies are as follows:

-    depreciation, amortization and valuation of long-lived and intangible
     assets;
-    valuation of inventory; and
-    sales returns, product warranties and allowances for doubtful accounts.


Depreciation, amortization and valuation of long-lived and intangible assets

     Our results of operations are generally affected by the capital-intensive
nature of our business. A large proportion of our costs of revenues are fixed in
nature. The major component of our fixed costs included in our cost of revenue
relates to depreciation on wafer fab properties, plant and equipment.

     Depreciation of our wafer fabs, and the mechanical and electrical
installations in the fabs, is provided on straight-line basis over their
estimated useful lives of 20 years and 10 years respectively. Depreciation of
the wafer fabs, and the mechanical and electrical installations therein,
commences from the date when the building is ready for its intended use.
Depreciation of our equipment and machinery is provided on a straight-line basis
over their estimated useful lives of 5 years, commencing from the date that the
equipment or machinery is ready for its intended use which is not to exceed 12
months from the purchase date.

     The depreciation useful life estimates reflect our estimate of the periods
that we expect to derive economic benefits from the use of our property, plant
and equipment. In estimating the useful lives and determining whether subsequent
revisions to the useful lives are necessary, we consider the likelihood of
technological obsolescence arising from changes in production techniques or in
market demand. The effect of any future changes to the estimated useful lives of
our property, plant and equipment could be significant to our results of
operations. Depreciation charged to results of our operations amounted to $333.3
million, $429.5 million and $434.3 million for 2000, 2001 and 2002,
respectively.

     We capitalize 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.

     We routinely review the remaining estimated useful lives of our property,
plant and equipment to determine if such lives should be adjusted due to changes
in technology, production techniques and demand. We also review our long-lived
assets for impairment whenever events or changes in circumstances indicate that
their carrying amounts may not be recoverable. Recoverability of assets to be
held and used is measured by a comparison of the carrying amount of the asset to
future undiscounted cash flows expected to be generated from the assets. If such
assets are considered to be impaired, an impairment charge is recognized for the
amount that the carrying value of the asset exceeds its fair value. Assets to be
disposed of are reported at the lower of the carrying amount or fair value less
costs to sell.

                                       40
<PAGE>
     Due to the cyclical nature of our industry and changes in our business
strategy or market requirements, we may not be able to anticipate declines in
the utility of our equipment. Consequently, impairment charges may be necessary
in the future.

     In the course of our operations, we enter into technology license
arrangements in order to advance our process technologies. When such
arrangements require the payment of an initial license fee, the fee is recorded
as an intangible asset and amortized on a straight-line basis over the estimated
useful life of the license. We routinely review the remaining estimated useful
lives of our capitalized technology licenses. We also review our capitalized
technology licenses for impairment whenever events or changes in circumstances
indicate that their carrying amounts may not be recoverable. In 2000, we
recorded a $11.6 million charge related to a technology license which no longer
met our requirements.

     We intend to continue to advance our process technologies and we expect to
enter into additional technology licenses in the future. Due to the nature of
our business and the changing needs of our customers, further impairment charges
in respect of technology licenses could occur in the future.


Valuation of inventory

     Our inventories are stated at the lower of cost, determined on the weighted
average basis, or net realizable value. We capitalize labor and overhead costs
associated with the manufacture of our products. Cost is generally computed on a
standard cost basis, based on normal fab capacity utilization, with unrecovered
costs arising from underutilization of capacity expensed when incurred. Net
realizable value is the estimated selling price in the ordinary course of
business less the estimated costs of completion and the estimated costs
necessary to make a sale.

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


Sales returns, product warranties and allowances for doubtful accounts

     Revenue is recognized upon shipment provided title and risk of loss has
passed to the customer, there is evidence of a final understanding between us
and the customers as to the specific terms of the agreed upon sales, selling
prices to the customers are fixed or determinable and collection of the sales
revenue is reasonably assured. Revenue represents the invoiced value of goods
and services supplied, excluding goods and services tax, less allowances for
sales returns.

     The process technology for the manufacture of semiconductor wafers is
highly complex. The presence of contaminants, difficulties in the production
process, disruption in the supply of utilities or defects in key materials and
tools can all cause reductions in device yields and increase the risk of claims
under our warranty guarantees and sales returns. We make estimates of potential
warranty costs and sales returns related to current period product revenue. We
provide for such costs based upon historical experience and our estimate of the
level of future claims. Additionally, we accrue for specific items at the time
their existence is known and the amounts are estimable. Significant management
judgments and estimates must be made and used in connection with establishing
the warranty and sales return allowances in any accounting period. Material
differences may result in the amount and timing of our revenue for any period if
we make different judgments or utilize different estimates. As at December 31,
2002, our sales return allowance balance was $6.3 million and our provision for
warranties was $4.4 million.

     Similarly, we must make estimates of the collectability of our accounts
receivable. We review the accounts receivable on a periodic basis and make
specific allowances when there is doubt as to the collectability of individual
receivable balances. In evaluating the collectability of individual receivable
balances, we consider the age of the balance, the customer's historical payment
history, their current credit-worthiness and current economic trends. We believe
that we adequately manage our credit risk through our evaluation process, credit
policies, and credit control and collection procedures. However, losses on
amounts receivable from our largest customers could be material to our results
of operations. As at December 31, 2002, our allowance for doubtful accounts was
$2.5 million.

                                       41
<PAGE>
RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
                                                Year ended December 31,
                                             ------------------------------
                                              2000        2001       2002
                                              ----        ----       ----
<S>                                          <C>         <C>        <C>
Net revenue                                  100.0%      100.0%      100.0%
Cost of revenue                               66.1       143.8       140.0
                                             -----       -----      ------
Gross margin (loss)                           33.9       (43.8)      (40.0)
                                             -----       -----      ------

Operating expenses:
  Research and development                     6.6        17.9        21.2
  Fab start-up costs                           2.4         2.9         1.9
  Sales and marketing                          3.1         8.3         9.2
  General and administrative                   7.0         9.1         9.7
  Stock-based compensation                     0.2         0.2        (0.1)
  Other operating expenses                     1.0           -         2.2
                                             -----       -----      ------
     Total operating expenses                 20.3        38.4        44.1
                                             -----       -----      ------
Operating income (loss)                       13.6       (82.2)      (84.1)

Other income (expense):
  Equity in income (loss) of SMP               0.7       (20.0)      (18.9)
  Other income                                 1.1         4.3         5.4
  Interest income                              4.8        10.0         3.7
  Interest expense                            (1.5)       (8.6)       (9.3)
  Exchange gain  (loss)                        0.7         0.9        (0.4)
                                             -----       -----      ------
Income (loss) before income taxes             19.4       (95.6)     (103.6)
Income tax expense                            (1.6)       (3.1)       (1.6)
                                             -----       -----      ------
Income (loss) before minority interest        17.8       (98.7)     (105.2)
Minority interest in loss of CSP               3.8        15.7        12.4
                                             -----       -----      ------
Net income (loss)                             21.6%      (83.0)%     (92.8)%
                                             =====       =====      ======
</TABLE>


YEARS ENDED DECEMBER 31, 2001 AND DECEMBER 31, 2002

     Net revenue. We generate revenue primarily from fabricating semiconductor
wafers. In addition, we derive revenue from associated subcontracted assembly
and test services. Revenue is recognized upon shipment of goods to our
customers. Net revenues were $449.2 million in 2002, down 2.9% compared to
$462.7 million in 2001.

     Wafer shipments increased from 390.7 thousand wafers in 2001 to 417.0
thousand wafers in 2002, an increase of 6.7%. Average selling prices decreased
by 9.0% to $1,077 per wafer in 2002 compared to $1,184 per wafer in 2001. The
decrease in average selling prices was due primarily to pricing declines which
more than offset the favorable impact of a richer product mix.

     Cost of revenue and gross loss. Cost of revenue includes depreciation
expense, attributed overhead, cost of labor and materials as well as
subcontracted expenses for assembly and test services. Cost of revenue decreased
5.5% from $665.3 million in 2001 to $628.7 million in 2002 primarily due to
reductions in manufacturing costs. Gross loss was $179.5 million, or 40.0% of
net revenues, down from a gross loss of $202.6 million, or 43.8% of net revenues
a year ago, due primarily to lower manufacturing cost such as depreciation and
payroll costs.

     Research and development expenses. Research and development expenses
consist primarily of salaries and benefits for research and development
personnel, depreciation of research and development equipment and material
expenses for development wafers. Research and development expenses increased by
$12.4 million, or 14.9%, from $82.9

                                       42
<PAGE>
million in 2001 to $95.3 million in 2002, due to increased investments to
accelerate the company's technology roadmap, which provide customers a breadth
of processes enabling systems-level integration.

     Fab start-up costs. Fab start-up costs represent costs incurred (other than
capitalized costs, including capitalized interest related to acquisition or
construction of property, plant and equipment) in connection with the
establishment of new fabs and operations. Fab start-up costs, all related to Fab
7, decreased from $13.3 million in 2001 to $8.3 million in 2002, primarily due
to the decision to delay equipping the fab, as a result of the overall depressed
market environment for the semiconductor market.

     Sales and marketing expenses. Sales and marketing expenses consist
primarily of salaries and benefits for sales and marketing personnel, expenses
associated with overseas offices, wafer samples, promotions and receivables
provisions. Sales and marketing expenses increased by 6.5% from $38.7 million in
2001 to $41.2 million in 2002, primarily due to expansion of worldwide sales and
marketing activities to further enhance the level of customer support.

     General and administrative expenses. General and administrative expenses
consist primarily of salaries and benefits for administrative personnel,
depreciation of non-production equipment consultancy, legal and professional
fees and recruitment and training expenses. General and administrative expenses
increased by 3.5% from $41.9 million in 2001 to $43.4 million in 2002.

     Other operating expenses. In 2002, we recorded a charge of $5.2 million
associated with the workforce re-sizing announced in October 2002 and a fixed
asset impairment charge of $4.8 million. The restructuring charged relating to
workforce re-sizing reflects the costs of the compensation package paid to the
affected employees and has been substantially paid. Annual savings in payroll
and benefits is expected to be approximately $8 million.

     Equity in income (loss) of SMP. Our equity share of the loss in SMP
decreased from $92.7 million in 2001 to $84.8 million in 2002, due primarily to
higher SMP revenues. Please see "Item 4. Information on Our Company -- Strategic
Alliances -- Silicon Manufacturing Partners" and the stand-alone financial
statements of SMP included elsewhere in this document.

     Other income. Other income increased 19.8%, from $19.7 million in 2001 to
$23.6 million in 2002, primarily due to an increase in grant income.

     Interest income. Interest income decreased 64.0%, from $46.2 million in
2001 to $16.6 million in 2002, due to lower interest rates and to a lesser
extent, a lower average cash balance.

     Interest expense. Interest expense increased 5.1%, from $39.7 million in
2001 to $41.7 million in 2002 primarily due to higher average outstanding loan,
partly offset by a lower average interest rate.

     Exchange gain (loss). Exchange loss was $2.0 million in 2002 compared with
an exchange gain of 4.2 million in 2001, primarily due to fluctuations between
the U.S. dollar and the Singapore dollar and Japanese yen.

     Income tax expense. Currently, we pay tax on interest income, rental income
and other income not specifically exempted from income tax. Each of our existing
fabs, other than Fab 1, has been exempted from income tax on profits from the
sale of manufactured goods for ten years following the date specified production
milestones are achieved. We have been granted post-pioneer status for Fab 1
which allows us to pay a concessionary tax rate of 10% effective January 1, 2001
with respect to certain qualifying income earned by Fab 1. In February 2003, we
announced our plan to consolidate Fab 1's business into Fab 2, which may affect
Fab 1's post-pioneer status. Please see "Item 5. Operating and Financial Review
and Prospectus -- Special Tax Status" for further discussion.

     We recorded income tax expense of $7.0 million in 2002 compared to $14.2
million in 2001. The lower tax expense in 2002 was primarily the result of lower
tax payable on the lower level of interest income.

     Minority interest in loss of CSP. The minority interest in loss of CSP was
$55.6 million in 2002 compared to $72.6 million in 2001, reflecting the improved
financial performance of CSP which resulted primarily from significantly higher
revenues, partially offset by increased depreciation.

                                       43
<PAGE>
YEARS ENDED DECEMBER 31, 2000 AND DECEMBER 31, 2001

     Net revenue. Net revenues were $462.7 million in 2001, down 59.2% compared
to $1,134.1 million in 2000. This decrease in revenue was due primarily to the
fact that in 2001, the semiconductor industry experienced the sharpest
contraction on record, in excess of 30%, with severe declines in end markets
particularly in the communications sector, which represented more than 50% of
our revenue in 2000.

     Wafer shipments decreased from 926.7 thousand wafers in 2000 to 390.7
thousand wafers in 2001, a decrease of 57.8%. Average selling prices decreased
by 3.3% to $1,184 per wafer in 2001 compared to $1,224 per wafer in 2000. The
decrease in average selling prices was due primarily to a shift in customer mix
and to a lesser extent, pricing declines.

     Cost of revenue and gross loss. Cost of revenue decreased 11.2% from $749.6
million in 2000 to $665.3 million in 2001. Lower direct costs and cost savings
from our cost reduction programs were partly offset by higher depreciation of
$90.2 million, as a result of an increase in installed capacity in the third and
fourth quarters of 2000. Gross profit was negative $202.6 million, or negative
43.8% of net revenues, down from a gross profit of $348.5 million, or 33.9% of
net revenues a year ago, due primarily to significantly lower revenues and to a
lesser extent, higher depreciation.

     Research and development expenses. Research and development expenses
increased by $8.0 million, or 10.7%, from $74.9 million in 2000 to $82.9 million
in 2001, as the company stepped up investments in next-generation technologies
and modules in support of its strategy to provide a full suite of processes
necessary for enabling system-level integration.

     Fab start-up costs. Fab start-up costs were $13.3 million in 2001 for Fab
7, compared to $27.5 million in 2000 for CSP and Fab 7. The fab start-up costs
relating to CSP ended in the second quarter of 2000 as CSP started production in
May 2000.

     Sales and marketing expenses. Sales and marketing expenses increased by
10.0% from $35.0 million in 2000 to $38.7 million in 2001, primarily due to
increased support for customer prototyping activities, partly offset by reduced
payroll and related expenses.

     General and administrative expenses. General and administrative expenses
decreased by 46.8% from $78.8 million in 2000 to $41.9 million in 2001,
primarily due to reduced payroll and related expenses.

     Other operating expenses. During 2000, we accrued a liability and recorded
a charge of $11.6 million to reflect the estimated loss on a licensing
agreement. The loss represents the estimated amounts to be paid to the licensor
as a result of restructuring the terms of the agreement. The loss has been
charged to 2000 results of operations as we do not expect to derive value from
the payments in future periods. As of December 31, 2002, we have paid $8.0
million of this liability and we believe that the accrued balance covers the
specified issue and do not anticipate the need for additional accruals for this
matter.

     Equity in income (loss) of SMP. Our equity share of the loss in SMP was
$92.7 million in 2001, compared to a income of $7.6 million in 2000, due
primarily to a sharp drop in capacity utilization as a result of reduced demand.
Please see "Item 4. Information on Our Company -- Strategic Alliances -- Silicon
Manufacturing Partners" and the stand-alone financial statements of SMP included
elsewhere in this document.

     Other income. Other income increased $6.8 million, or 52.5%, from $12.9
million in 2000 to $19.7 million in 2001, primarily due to higher recognizable
grants from the Government of Singapore for both research and development and
staff training.

     Interest income. Interest income decreased $8.3 million, or 15.3%, from
$54.5 million in 2000 to $46.2 million in 2001, due to lower interest rates.

     Interest expense. Interest expense increased $22.1 million, or 125.8%, from
$17.6 million in 2000 to $39.7 million in 2001 primarily due to interest expense
associated with the convertible bond offering completed in April 2001.

     Exchange gain (loss). Exchange gain decreased 49.9% from $8.4 million in
2000 to $4.2 million in 2001.

     Income tax expense. We had tax expense of $14.2 million in 2001 compared to
$18.7 million in 2000. The lower tax expense in 2001 was primarily the result of
lower tax payable on the lower level of interest income, partly offset by higher
taxes payable on our income for Fab 1. Each of our existing fabs, other than Fab
1, has been exempted from income

                                       44
<PAGE>
tax on profits from the sale of manufactured goods for ten years following the
date specified production milestones are achieved. With respect to Fab 1, we
have received approval for post-pioneer status which will allow us to pay a
concessionary tax rate of 10% effective January 1, 2001 with respect to certain
income earned by Fab 1.

     Minority interest in loss of CSP. The minority interest in loss of CSP
increased $29.1 million, or 66.8%, from $43.5 million in 2000 to $72.6 million
in 2001. The increase was primarily due to higher depreciation and significantly
lower utilization as a result of reduced demand.


QUARTERLY RESULTS

     The following table sets forth certain unaudited consolidated financial
information, including as a percentage of net revenue, for the eight fiscal
quarters ended December 31, 2002. We believe that all necessary adjustments,
consisting only of normal recurring adjustments, have been included in the
amounts stated below to present fairly the selected quarterly information when
read in conjunction with our consolidated financial statements and the related
notes included elsewhere in the document. Our results of operations have varied
and may continue to vary significantly from quarter-to-quarter and are not
necessarily indicative of the results of any future period. Accordingly, we
believe that period-to-period comparisons should not be relied upon as an
indication of future performance.

<TABLE>
<CAPTION>
                                                                                  Quarter ended
                                               -----------------------------------------------------------------------------------
                                               Mar 31,    Jun 30,   Sep 30,    Dec 31,    Mar 31,    Jun 30,    Sep 30,    Dec 31,
                                                2001       2001      2001       2001       2002       2002       2002       2002
                                               -------    -------   -------    -------    -------    -------    -------    -------
                                                                                  (in millions)
<S>                                            <C>        <C>       <C>        <C>        <C>        <C>        <C>        <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Net revenue                                     206.7      100.7       79.2       76.1       84.4      127.5      129.5      107.9
Cost of revenue                                 196.4      164.2      154.1      150.6      148.2      162.1      156.8      161.8
                                                -----     ------     ------     ------     ------      -----      -----     ------
Gross profit (loss)                              10.3      (63.5)     (74.9)     (74.5)     (63.8)     (34.6)     (27.3)     (53.9)
                                                -----     ------     ------     ------     ------      -----      -----     ------

Operating expenses:
  Research and development                       21.7       21.3       18.9       21.0       24.7       21.6       20.9       28.1
  Fab start-up costs                              5.3        3.7        1.9        2.3        1.9        1.4        2.4        2.6
  Sales and marketing                             7.7        8.7        7.6       14.8        9.7       10.3       11.4        9.8
  General and administrative                     12.9       10.5       10.1        9.2       14.6       10.3       10.1        8.1
  Other operating expenses                          -          -          -          -          -          -          -       10.0
                                                -----     ------     ------     ------     ------      -----      -----     ------
     Total operating expenses                    47.6       44.2       38.5       47.3       50.9       43.6       44.8       58.6
                                                -----     ------     ------     ------     ------      -----      -----     ------
Operating loss                                  (37.3)    (107.7)    (113.4)    (121.8)    (114.7)     (78.2)     (72.1)    (112.5)

Other income (expense):
  Equity in loss of SMP                         (18.6)     (25.2)     (20.9)     (27.9)     (29.8)     (22.0)     (21.5)     (11.5)
  Other income                                    7.6        5.4        4.9        1.8        5.2        6.8        7.3        4.4
  Interest income                                12.8       14.9       11.6        6.8        4.3        3.9        3.4        4.9
  Interest expense                               (3.4)     (11.6)     (12.1)     (12.6)     (10.7)     (10.6)     (10.7)      (9.6)
  Exchange gain (loss)                           (1.4)       2.9       (1.7)       4.4        1.8       (2.0)      (2.1)       0.2
                                                -----     ------     ------     ------     ------      -----      -----     ------
Income (loss) before income taxes               (40.3)    (121.3)    (131.6)    (149.3)    (143.9)    (102.1)     (95.7)    (124.1)
Income tax benefit (expense)                     (8.6)      (4.6)      (4.2)       3.2       (1.6)      (1.0)      (2.2)      (2.2)
                                                -----     ------     ------     ------     ------      -----      -----     ------
Income (loss) before minority interest          (48.9)    (125.9)    (135.8)    (146.1)    (145.5)    (103.1)     (97.9)    (126.3)
Minority interest in loss of CSP                 18.0       18.3       17.5       18.9       17.1       12.4        8.5       17.6
                                                -----     ------     ------     ------     ------      -----      -----     ------
Net loss                                        (30.9)    (107.6)    (118.3)    (127.2)    (128.4)     (90.7)     (89.4)    (108.7)
                                                =====     ======     ======     ======     ======      =====      =====     ======
</TABLE>

                                       45
<PAGE>
<TABLE>
<CAPTION>
                                                                                  Quarter ended
                                               -----------------------------------------------------------------------------------
                                               Mar 31,    Jun 30,   Sep 30,    Dec 31,    Mar 31,    Jun 30,    Sep 30,    Dec 31,
                                                2001       2001      2001       2001       2002       2002       2002       2002
                                               -------    -------   -------    -------    -------    -------    -------    -------
                                                                         (as a percentage of net revenue)
<S>                                            <C>        <C>       <C>        <C>        <C>        <C>        <C>        <C>

CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Net revenue                                     100.0%     100.0%     100.0%     100.0%     100.0%     100.0%     100.0%     100.0%
Cost of revenue                                  95.0      163.0      194.6      198.0      175.6      127.1      121.1      149.9
                                                -----     ------     ------     ------     ------      -----      -----     ------
Gross margin (loss)                               5.0      (63.0)     (94.6)     (98.0)     (75.6)     (27.1)     (21.1)     (49.9)
                                                -----     ------     ------     ------     ------      -----      -----     ------

Operating expenses:
  Research and development                       10.5       21.1       23.9       27.6       29.3       17.0       16.1       26.0
  Fab start-up costs                              2.6        3.7        2.4        3.1        2.3        1.1        1.8        2.4
  Sales and marketing                             3.7        8.6        9.5       19.5       11.5        8.1        8.8        9.1
  General and administrative                      6.2       10.5       12.7       12.0       17.2        8.1        7.8        7.5
  Other operating expenses                          -          -          -          -          -          -          -        9.3
                                                -----     ------     ------     ------     ------      -----      -----     ------
      Total operating expenses                   23.1       43.9       48.5       62.1       60.3       34.3       34.5       54.3
                                                -----     ------     ------     ------     ------      -----      -----     ------
Operating loss                                  (18.1)    (106.9)    (143.1)    (160.1)    (135.9)     (61.4)     (55.6)    (104.2)

Other income (expense):
  Equity in loss of SMP                          (9.0)     (25.0)     (26.5)     (36.6)     (35.4)     (17.2)     (16.6)     (10.7)
  Other income                                    3.7        5.4        6.2        2.3        6.2        5.3        5.6        4.0
  Interest income                                 6.2       14.8       14.7        8.9        5.2        3.1        2.6        4.6
  Interest expense                               (1.6)     (11.6)     (15.2)     (16.5)     (12.7)      (8.3)      (8.3)      (8.9)
  Exchange gain (loss)                           (0.7)       2.9       (2.2)       5.8        2.1       (1.5)      (1.6)       0.2
                                                -----     ------     ------     ------     ------      -----      -----     ------
Income (loss) before income taxes               (19.5)    (120.4)    (166.1)    (196.2)    (170.5)     (80.0)     (73.9)    (115.0)
Income tax benefit (expense)                     (4.2)      (4.6)      (5.3)       4.2       (1.9)      (0.8)      (1.7)      (2.0)
                                                -----     ------     ------     ------     ------      -----      -----     ------
Income (loss) before minority interest          (23.7)    (125.0)    (171.4)    (192.0)    (172.4)     (80.8)     (75.6)    (117.0)
Minority interest in loss of CSP                  8.7       18.2       22.0       24.8       20.2        9.7        6.6       16.3
                                                -----     ------     ------     ------     ------      -----      -----     ------
Net loss                                        (15.0)%   (106.8)%   (149.4)%   (167.2)%   (152.2)%    (71.1)%    (69.0)%   (100.7)%
                                                =====     ======     ======     ======     ======      =====      =====     ======
</TABLE>

     The semiconductor industry market environment continued to be very
challenging in 2002. There was little year-over-year growth as three quarters of
sequential increase were followed by an abnormally low fourth quarter.

     Despite this difficult market environment, Chartered registered sequential
growth in the first three quarters of 2002. This growth, which was driven
primarily by customers in the Company's communications segment, was largely
related to a sharp increase in shipments of leading-edge 0.18-micron wafers.
Revenues declined in fourth quarter 2002 primarily due to lower demand from
customers in the company's computer segment. Even with the decline in fourth
quarter, Chartered's revenues were still up 42% from the year-ago quarter, which
was Chartered's cyclical trough.

     Average selling price, or ASP, decreased 2% from fourth quarter 2001 to
fourth quarter 2002, as the negative impact of market pressure was largely
offset by the positive impact of a richer product mix, particularly in the
second and third quarters. Market pressure intensified in the fourth quarter.

     Gross margin as a percentage of net revenue improved for the first three
quarters primarily as a result of higher revenue. However, in the fourth
quarter, gross margin as a percentage of revenue declined primarily due to lower
revenues.

     Research and development expenses trended up in 2002 as the company
increased investments to accelerate its technology roadmap. With the exception
of $10.0 million in other operating expenses in fourth quarter 2002, associated
with the workforce re-sizing announced in October 2002 and a fixed asset
impairment charge, the remaining operating expenses were essentially flat in
dollar terms in 2002.

     Equity in loss of our equity-method joint venture fab, SMP (Fab 5),
continuously improved across the quarters of 2002, primarily due to growing SMP
revenues over the period.

     Minority interest in loss of our joint-venture fab, CSP (Fab 6), trended
down through third quarter 2002, primarily due to higher revenues, partially
offset by higher depreciation, and then increased in fourth quarter 2002
primarily due to lower revenues and higher depreciation.

                                       46
<PAGE>
     Net loss generally narrowed during the year, compared to fourth quarter
2001, primarily due to higher revenues


LIQUIDITY AND CAPITAL RESOURCES

     As of December 31, 2002, our principal sources of liquidity included
$1,210.9 million in cash and cash equivalents and $521.3 million of unutilized
banking and credit facilities consisting of short and medium term advances and
bank guarantees.

     Net cash provided by operating activities totaled $84.8 million in 2001 and
net cash used in operating activities totaled $10.9 million in 2002. The
decrease was primarily due to the higher net loss incurred in 2002, after taking
into account the effect of non-cash adjustments and the less favorable cash
generated by working capital changes. The non-cash adjustments in both 2001 and
2002 were primarily due to depreciation and amortization, partly offset by
minority interest in loss of CSP. The less favorable cash generated by working
capital changes in 2002 was primarily due to the decrease in amount due to SMP,
as a result of lower outstanding amounts payable for allocated wafer capacity,
and a decrease in accrued operating expenses, resulting from higher payments,
partly offset by a decrease in accounts receivable as a result of lower revenue.

     Net cash used in investing activities totaled $480.0 million in 2001 and
$447.3 million in 2002. Investing activities consisted primarily of capital
expenditures totaling $489.6 million in 2001 and $419.5 million in 2002. Capital
expenditures in 2001 were mainly related to the equipping of Fab 3 and Fab 6,
and in the construction and installation of mechanical and electrical fittings
for Fab 7. Capital expenditures in 2002 were mainly related to the equipping of
Fab 6 and purchase of equipment for research and development use.

     Net cash provided by financing activities totaled $512.7 million in 2001.
This was principally from the net cash proceeds from our convertible note
offering in April 2001 of $560.6 million and long-term borrowings incurred to
finance the capital expenditures at Fab 6 of $119.0 million, partly offset by
the repayment of term loans. Net cash provided by financing activities totaled
$627.2 million in 2002. This was principally from the net cash proceeds of
$611.7 million from the October 2002 Rights Offering and long-term borrowings
incurred to finance the capital expenditures at Fab 6, partly offset by the
repayment of term loans.

     We have an oral agreement for a multi-currency $100 million short-term
credit facility with ST. Interest on the facility accrues at the monthly average
interest rate of three specific banks as indicated by ST. Borrowings are
unsecured. As of December 31, 2002, there were no borrowings outstanding under
this facility. There is a possibility that ST may not continue to make this
credit facility available to us, as we have not utilized it during the last
three years.

     As of December 31, 2002, we had two loans for capital expenditures and
equipment with outstanding principal amounts of $8.8 million (S$15.4 million)
and $79.5 million (S$138.5 million) respectively. Each of the loans is
denominated in Singapore dollars and we fully hedge both interest and principal
payments against fluctuations in foreign exchange rates. The loans bear interest
of 4.0%. Both the loan agreements are unsecured and guaranteed by ST.

     -    The first loan matures on September 1, 2003. Interest is payable
          semi-annually and principal is payable in equal semi-annual
          installments which commenced on September 1, 1997 (see "Item 19.
          Exhibits -- Exhibit 4.10").

     -    The second loan matures on September 1, 2005. Interest is payable
          semi-annually and principal is payable in equal semi-annual
          installments which commenced on September 1, 1999 (see "Item 19.
          Exhibits -- Exhibit 4.11")

     A third loan for capital expenditures and equipment with an outstanding
amount as of December 31, 2001 of $46.8 million (S$85.7 million), has since
matured on September 1, 2002 and was fully repaid.

     Also, in 2002, two bank loans with outstanding amounts as of December 31,
2001 of $27.3 million (S$50.0 million) each, due on February 14, 2002 and June
16, 2002, respectively, were fully repaid.

     On April 2, 2001, we issued $575 million of senior unsecured convertible
notes due April 2, 2006, which bear interest at the rate of 2.50% per year and
have a yield to maturity of 5.25% per year. The notes could have been converted
into ordinary shares or ADSs at a conversion price of S$6.5170 per ordinary
share (equivalent to approximately US$36.3611 per ADS, based on a fixed exchange
rate of US$1.00 = S$1.7923, and the current ratio of ten ordinary shares per
ADS; the conversion price and ratio of ADS to shares may be subject to
adjustment for certain events). As a result of the October 2002 Rights Offering,
adjustments were made to the conversion price per ordinary share so that this is
now

                                       47
<PAGE>
S$4.7980 per ordinary share (equivalent to approximately US$26.7701 per ADS,
based on a fixed exchange rate of US$1.00 = S$1.7923 and the ordinary share to
ADS ratio of 10:1).

     We may redeem all or a portion of the convertible notes at any time on or
after April 2, 2003 at a price to yield of 5.25% per year on the redemption date
if our shares or ADSs trade at 125% of the conversion price for a period of 20
days in any consecutive 30 trading day period. During 2001, we entered into an
interest rate swap contract in respect of the fixed-rate interest obligations
associated with $200 million of the convertible notes, with the effect of
swapping the fixed-rate interest obligations to a floating-rate obligation based
on LIBOR rates.

     As of December 31, 2002, CSP has a U.S. dollar term loan with several banks
and financial institutions for capital expenditures and equipment (the "CSP
Second Phase Credit Agreement"). The loan was first put in place on September
28, 2000 and matures on September 28, 2006. (See "Item 19. Exhibits -- Exhibit
4.1"). The loan is for an amount of $820.0 million of which $377.0 million in
principal has been drawn and as of December 31, 2002, the remaining $443.0
million in principal remains undrawn. It carries an interest rate of 0.60% to
0.85% (depending on certain criteria relating to wafer starts and debt-net worth
ratio) above the LIBOR rates for U.S. dollars deposits quoted by specified banks
to the lender. As of December 31, 2002, this rate was 2.2875%. Interest is
payable semi-annually in U.S. dollars and principal will be amortized in six
equal semi-annual installments commencing March 28, 2004. Borrowings under this
facility are secured by a floating charge over a CSP project bank account and a
fixed charge over CSP's debt service reserve account both of which were
established pursuant to this loan. The fixed charge over CSP's debt service
reserve account will not permit the use of the funds in that account by CSP for
as long as the loan remains outstanding. The actual amount of debt to be
incurred under the facility will be influenced by several factors, including
without limitation, the speed and timing of the ramp up of operations at Fab 6,
the company's cash flow position and the need to comply with specified debt-net
worth ratios under the terms of the credit facility.

     A second U.S. dollar term loan (the "CSP First Phase Credit Agreement") for
the amount of $143.2 million with several banks and financial institutions for
capital expenditure and equipment that was first put in place on March 12, 1998,
has since been fully repaid in 2002. (See "Item 19. Exhibits -- Exhibits 4.1.1
to 4.1.6 and Exhibits 4.2.1 to 4.2.3" for this agreement together with
subsequent amendments and related agreements). Although the CSP First Phase
Credit Agreement has been fully repaid, the guarantee that the lenders under
this agreement had provided in favor of the Economic Development Board or EDB in
respect of CSP's obligations under its loan with EDB dated November 24, 1999
(See "Item 19. Exhibits -- Exhibit 4.9" for a copy of the EDB loan agreement)
remains unaffected. As such, certain provisions under the CSP First Phase Credit
Agreement arising out of or in connection with the guarantee (such as indemnity
provisions from CSP as a result of the guarantee and the debt-net worth ratio
obligations) continue to apply.

     In our Form 6-K filed on May 14, 2002, we had announced that we were
seeking consents from one or more of our lenders and several of CSP's lenders to
allow us to substantially increase CSP's net worth to enable CSP to satisfy a
total debt to net worth ratio for the CSP First and Second Phase Credit
Agreements. Such increase in CSP's net worth was effected by converting amounts
payable by CSP to us into a loan from us to CSP (the "Chartered Loan"). We
obtained the necessary consents from the lenders and CSP was in compliance with
the total debt to net worth ratio for both loans as at June 30, 2002, and also
as at December 31, 2002.

     In obtaining the consents, the two CSP loan agreements were amended to
include the Subordination Agreements which subordinated amounts under the
Chartered Loan to the amounts due by CSP to its other lenders under the above
loans. For copies of the respective Letter Agreements incorporating the
Subordination Agreements,, see "Item 19. Exhibits -- Exhibit 4.1.6 and Exhibit
4.3.3" and for copies of the respective Subordination Agreements, see "Item 19.
Exhibits -- Exhibit 4.1.5 and Exhibit 4.3.2".

     In addition, as of December 31, 2002, CSP has a loan from EDB for capital
expenditures and equipment which was first put in place on November 24, 1999.
The loan provided for an availability of S$450.0 million (US$245.8 million), of
which S$225.0 million (US$122.9 million) in principal has been drawn down and
S$175.0 million (US$100.4 million) is outstanding as of December 31, 2002. As
the interest rate for the balance of the funds available under the facility was
not competitive at the time of the intended draw-down, we decided against
drawing on the balance and allowed the availability of the balance to lapse. The
loan is denominated in Singapore dollars and we fully hedge both interest and
principal payments so as to minimize our exposure to fluctuations in foreign
exchange rates. The loan has an interest rate of 4.25%. The loan matures on
March 1, 2006. Interest is payable semi-annually and principal was amortized in
equal semi-annual installments commencing on March 1, 2002. While the loan is
unsecured, it is backed by a bank guarantee from a syndicate of banks. (See
"Item 19. Exhibits -- Exhibit 4.9").

     Many of our loans, including loans incurred by our subsidiary, CSP, and our
joint venture company, SMP, contain various financial and other covenants. Among
other things, those covenants require the maintenance of certain financial

                                       48
<PAGE>
ratios (including total debt to net worth) and that ST own, directly or
indirectly, at least a certain percentage ranging from 40% to 51% of our
outstanding shares. If we fail to comply with these covenants, we could be in a
default under these loans and the lenders would have the right to accelerate our
obligation to repay the outstanding borrowings under these loans. Such a default
could also cause cross-defaults under other loans and could seriously harm us.

     As of December 31, 2002, the minimum future rental payments on
non-cancelable operating leases amounted to $96.8 million.

     The following table sets forth our contractual obligations and commitments
to make future payments as of December 31, 2002 and 2001. Our "other contractual
obligations" include our payment obligations relating to our agreements to
purchase technology, jointly perform research and development, and provide
reciprocal manufacturing arrangements. The following excludes our accounts
payable, accrued operating expenses and other current liabilities which are
payable in the normal course of operations and which are included in current
liabilities at December 31, 2002 and 2001:

<TABLE>
<CAPTION>
                                                                    AS OF DECEMBER 31, 2002
                                       -------------------------------------------------------------------------------
                                                            EXPECTED PAYMENT DATE                                           AS OF
                                       ----------------------------------------------------------------                    DEC 31,
                                                                                                                             2001
                                                                                                  THERE                   ---------
                                         2003        2004        2005        2006       2007      AFTER       TOTAL         TOTAL
                                         ----        ----        ----        ----       ----      ------      -----         -----
                                                                              (in thousands)
<S>                                    <C>         <C>         <C>         <C>         <C>       <C>        <C>           <C>
Long term debt                         $ 64,001    $180,840    $180,840    $754,250         -          -    $1,179,931    $1,112,230
Operating lease commitments               7,879       6,402       5,430       5,242    $3,825    $68,053        96,831        89,341
Capital expenditure commitments          76,155     370,225           -           -         -          -       446,380       263,644
Other contractual commitments           170,000     115,000      70,000           -         -          -       355,000             -
                                       --------    --------    --------    --------    ------    -------    ----------    ----------
Total                                  $318,035    $672,467    $256,270    $759,492    $3,825    $68,053    $2,078,142    $1,465,215
                                       ========    ========    ========    ========    ======    =======    ==========    ==========
</TABLE>

     The nature of our industry is such that, in the short-term, we may reduce
our capital expenditures by delaying planned capital expenditures in response to
a difficult business environment, such as the one that existed in 2001 and 2002.
However, the semiconductor market is characterized by rapid technological
change, which we expect to result in significant capital expenditure
requirements within our longer-term horizon. Factors which may affect our level
of future capital expenditures include the degree and the timing of
technological changes within our industry, changes in demand for the use of our
equipment and machinery as a result of changes to our customer base and the
level of growth within our industry.

     We expect our aggregate capital expenditures to be approximately $275
million in 2003, 35% lower compared to the $420 million we spent on capital
expenditure in 2002. We also expect our aggregate research and development
expenditures to be approximately $120 million in 2003. We believe that our cash
on hand, existing credit facilities and credit terms with our equipment vendors
will be sufficient to meet our capital and research and development expenditures
and working capital needs for 2003. For the year 2004, we will require
additional financing in order to complete our capital expenditure and research
and development expenditure projects currently in progress and contemplated and
to meet our working capital needs. There can be no assurance that additional
financing will be available or, if available, that such financing will be
obtained on terms favorable to us or that any additional financing will not be
dilutive to our shareholders.

     We have received research grants from various agencies of the Government of
Singapore. These grants provide funding for a portion of our research and
development related capital expenditures and for the training and staffing costs
associated with some of our process technology development programs and to
implement cost-effective solutions to meet our power quality needs. $29.5
million of the grants was disbursed to us in 2002. The grants are disbursed
based on the amount of expenditures incurred and achievement of program
milestones. The main conditions attached to the grants are the completion of the
project to which the grant relates and the certification of the costs incurred.

     In December 2000, our company entered into an agreement to sell, on a
revolving basis, trade receivables to a special purpose vehicle, Wafer
Fabrication Accounts Receivable Funding Corp or Funding Corp. As of February 28,
2002, our company had not sold any receivables pursuant to this securitization
program because in 2001, we experienced a decline in our revenues which in turn
resulted in a decline in our accounts receivables. Following an evaluation of
the cost effectiveness of maintaining this facility, we terminated the facility
in March 2002.

                                       49
<PAGE>
SPECIAL TAX STATUS

     We have been granted pioneer status under the Economic Expansion Incentives
(Relief from Income Tax) Act (Chapter 86) of Singapore for:

     -    the manufacture of integrated circuits using submicron technology at
          Fab 2 for a ten-year period beginning July 1, 1996;

     -    the manufacture of integrated circuits using submicron technology at
          Fab 3 for a ten-year period beginning July 1, 1999; and

     -    the wafer fabrication of Application Specific Integrated Circuits
          (ASIC) and other advanced semiconductor devices at Fab 6 for a
          ten-year period for which the date of commencement is to be
          determined.

     Under the Economic Expansion Incentives (Relief from Income Tax) Act, we
have also been granted:

     -    development and expansion company status for wafer fabrication of
          integrated circuits at Fab 1 for a five-year period beginning January
          1, 2001;

     -    post-pioneer enterprise status for the manufacture of integrated
          circuits using submicron technology at Fab 2 for a five-year period
          beginning July 1, 2006;

     -    development and expansion company status for the manufacture of
          integrated circuits using submicron technology at Fab 3 for a
          five-year period beginning July 1, 2009; and

     -    development and expansion company status for the wafer fabrication of
          ASICs and other advanced semiconductor devices at Fab 6 for a
          five-year period from the expiration of the term of the pioneer
          status.

     During the period for which our pioneer status is effective, subject to our
compliance with certain conditions, income from our pioneer trade (that is, sale
of integrated circuits) is exempt from Singapore income tax. During the periods
for which our post-pioneer status and development and expansion company status
are effective, subject to our compliance with certain conditions, income from
our post-pioneer trade and development and expansion activities are taxed at a
concessionary rate of 10%. The income tax exempt profits arising from the
pioneer trade may be distributed as tax-exempt dividends, and holders of
ordinary shares are not subject to Singapore income tax on such dividends.
Please see "Item 10. Additional Information -- Taxation -- Singapore Taxation --
Income Tax" for information regarding the taxation of dividends. Losses
accumulated before the pioneer status period cannot be carried forward. Losses
accumulated in the pioneer status period may be carried forward and may be
offset against profits from the same pioneer trade arising after the expiration
of the pioneer status period, subject to our compliance with certain conditions.
Profits arising during pioneer status offset any accumulated pioneer loss carry
forward balance. Without this exemption from income tax or the concessionary tax
rate of 10%, we would be subject to income tax at the applicable corporate
income tax rate which is currently 22% for the year of assessment 2003. Interest
income is not exempt from taxation during the pioneer status period or entitled
to the concessionary tax rate during the post-pioneer status period or the
development and expansion company status period.

     The development and expansion company status for wafer fabrication of
integrated circuits at Fab 1 required us to fulfil certain conditions during the
five-year period beginning January 1, 2001. In February 2003, we announced our
plan to consolidate the business of Fab 1 into Fab 2, and as a result of the
proposed consolidation, we will not be able to fulfil the conditions required to
maintain our development and expansion company status. We are currently
discussing with the relevant authority as to the taxation impact resulting from
our not being able to fulfil the conditions.


RECENT ACCOUNTING PRONOUNCEMENTS

     In June 2001, the Financial Accounting Standards Board, or FASB issued
Statement of Financial Accounting Standards or SFAS No. 143, "Accounting for
Asset Retirement Obligations", which addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and associated asset retirement costs. This statement applies to legal
obligations associated with the retirement of long-lived assets that result from
the acquisition, construction, development and (or) normal use of the asset.

                                       50
<PAGE>
     SFAS No. 143 requires that the fair value of a liability for an asset
retirement obligation be recognized in the period in which it is incurred if a
reasonable estimate of fair value can be made. The fair value of the liability
is added to the carrying amount of the associated asset and this additional
carrying amount is depreciated over the life of the asset. The liability is
accreted at the end of each period through charges to operating expense. If the
obligation is settled for other than the carrying amount of the liability, we
will recognize a gain or loss on settlement. We will adopt the provisions of
SFAS No. 143 as of January 1, 2003. On the date of adopting this statement, we
expect to record liabilities related to the requirements in its lease agreements
for the return of buildings to tenantable condition and the return of land on
which fabs have been built to our original condition. We estimate that the
combined liability at the adoption date will be approximately $27 million. This
would be recorded as an increase in fixed assets of the same amount, net of
accumulated depreciation since the lease commencement dates of approximately $7
million and an offsetting cumulative effect of adoption of $6.5 million plus a
reduction in minority interest of $0.5 million. As a result of adoption, we
expect annual depreciation to increase by $1.3 million.

     In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities", which addresses financial
accounting and reporting for costs associated with exit and disposal activities
to be recorded at their fair values when a liability has been incurred. Under
previous guidance, certain exit costs were accrued upon management's commitment
to an exit plan, which is generally before an actual liability has been
incurred. SFAS No. 146 will be effective for exit or disposal activities that
are initiated after December 31, 2002. We expect the adoption of SFAS No. 146 to
impact the timing and classification of the prospective recognition of such
costs, if and when they occur.


ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

DIRECTORS AND OFFICERS OF REGISTRANT

     On June 25, 2002, our Board of Directors named our former Senior Vice
President, Chief Financial Officer and Chief Administrative Officer, Chia Song
Hwee, as President and Chief Executive Officer. Mr. Chia succeeds James A.
Norling who had been serving as interim President and Chief Executive Officer
since May 1, 2002, when our former President and Chief Executive Officer, Barry
Waite, retired. Mr. Chia was also appointed to our Board of Directors on June
25, 2002. On June 25, 2002, George Thomas, our former Vice President, Finance,
succeeded Mr. Chia as Vice President and Chief Financial Officer.

     With effect from August 1, 2002, the Board of Directors appointed Mr.
Norling, previously Deputy Chairman of the Board of Directors, to succeed Ho
Ching as Chairman. Ms. Ho, who has served as Chairman of the Board since August
1, 1995, stepped down as Chairman and Director. With effect from the same day,
the Board of Directors also appointed Koh Beng Seng as Chairman of the Audit
Committee. Mr. Koh succeeds Sum Soon Lim, who will continue as a member of the
Audit Committee.

     The following table sets forth, as of February 28, 2003, the name, age and
position of each director and senior manager of our company.

<TABLE>
<CAPTION>
NAME                        AGE   POSITION
----                        ---   --------
<S>                         <C>   <C>
BOARD OF DIRECTORS(1)
James A. Norling(2)(3)       61   Chairman of the Board
Lim Ming Seong(3)(4)         55   Deputy Chairman of the Board
Chia Song Hwee(2)            40   Director
Sum Soon Lim(3)(4)(5)        59   Director
James H. Van Tassel(4)       74   Director
Aubrey C. Tobey(3)(5)        77   Director
Robert E. La Blanc(5)        68   Director
Andre Borrel(3)(4)           66   Director
Charles E. Thompson(3)       73   Director
Koh Beng Seng(5)             52   Director
Tsugio Makimoto              65   Director
Tay Siew Choon(2)(3)(4)      55   Director
Peter Seah Lim Huat(2)(3)    56   Director
Premod Paul Thomas(6)        45   Alternate Director to Sum Soon Lim
</TABLE>

                                       51
<PAGE>
<TABLE>
<CAPTION>
NAME                        AGE   POSITION
----                        ---   --------
<S>                         <C>   <C>
SENIOR MANAGEMENT(1)
Chia Song Hwee               40   President and Chief Executive Officer
Ang Kay Chai                 44   Senior Vice President, Fab Operations
Bruno Guilmart               42   Senior Vice President, Worldwide Sales and Marketing
Sun Shi-Chung                55   Senior Vice President, Technology Development
Ang Tang Yong                45   Vice President, Quality, Reliability Assurance and Support Operations
Tan Seng Chai                40   Vice President, Human Resources
George Thomas                49   Vice President and Chief Financial Officer
Michael J. Rekuc             53   President, Americas
</TABLE>

---------------
(1)  A portion of our directors (including our President and Chief Executive
     Officer) are elected at each annual general meeting of shareholders. The
     number of directors retiring and eligible to stand for re-election each
     year varies, but generally, it is equal to one-third of the board, with the
     directors who have been in office longest since their re-election or
     appointment standing for re-election. However, where a director is 70 years
     or over in age, he is required to stand for re-election each year. Except
     for James A. Norling and Tay Siew Choon, our contracts with senior
     management and/or directors do not have fixed expiry dates but can be
     terminated by either party through notice provisions. On May 1, 2002, we
     have entered into a contract with James A. Norling for his appointment as
     interim President and Chief Executive Officer, pending the recruitment of a
     new Chief Executive Officer. On the same date, we have also entered into a
     contract with Tay Siew Choon for him to provide support to Mr. Norling
     during this interim period. Messrs. Norling's and Tay's contracts expired
     at the end of December 2002.

(2)  Member of the Executive Committee

(3)  Member of the Executive Resource and Compensation Committee, or the ERCC.

(4)  Member of the Budget Committee

(5)  Member of the Audit Committee.

(6)  Under our Articles of Association, a director is entitled to designate an
     alternate director to take his place when he is absent from a meeting. An
     alternate director, when serving in place of an absent director, may
     exercise all of the powers and authority of the absent director, except the
     power to appoint an alternate director. When not acting in place of an
     absent director for whom he has been appointed alternate director, an
     alternate director is not entitled to attend, participate or vote in any
     board meetings.


THE OFFICE OF THE PRESIDENT

     Following the appointment of Mr. Chia as President and Chief Executive
Officer, the Office of the President has since been replaced by the CEO staff
team, comprising persons who report directly to the CEO, as the decision making
body.


BIOGRAPHICAL INFORMATION

JAMES A. NORLING

     James A. Norling has served on our Board of Directors since March 1, 2001
and as our Chairman of the Board since August 1, 2002. Mr. Norling also served
as interim CEO from May 2002 to June 2002. He has 37 years of working experience
in the electronics industry. Mr. Norling was with Motorola Inc. from 1965 to
2000 holding various positions, including President of the Semiconductor
Products Section in 1986, President of the Europe, Middle East and Africa region
in 1993, Deputy to the Chief Executive Officer in 1998 and President of the
Personal Communications Sector in 1999 until his retirement. He has previously
served as a board member and the Chairman of the Semiconductor Industry
Association. Mr. Norling is currently a board member of Harley-Davidson, Inc.
Mr. Norling holds a B.Sc and a Masters degree in Electrical Engineering from the
University of Illinois.

                                       52
<PAGE>
LIM MING SEONG

     Lim Ming Seong has served on our Board of Directors since November 1987 and
as our Deputy Chairman of the Board since August 1995. Mr. Lim is currently a
corporate adviser to ST, and currently sits on the boards of various companies,
including as Deputy Chairman of STATS and Chairman of CSE Systems & Engineering
Ltd. After joining ST in December 1986, Mr. Lim has held various senior
positions in the Singapore Technologies group. Prior to joining ST, Mr. Lim was
with the Ministry of Defence of Singapore. Mr. Lim received his Bachelor of
Science (Honors) in Mechanical Engineering from the University of Toronto and
his Diploma in Business Administration from the University of Singapore. Mr. Lim
also participated in the Advanced Management Programs at INSEAD and Harvard
University.

CHIA SONG HWEE

     Chia Song Hwee has served on our Board of Directors and as our President
and Chief Executive Officer since June 2002. Prior to his appointment, Mr. Chia
had served as our Chief Administrative Officer since September 2000, as our
Senior Vice President since February 2000 and as our Chief Financial Officer
since December 1997. Mr. Chia was our Director of Finance from April 1996 to
December 1997. Since joining our company in 1996, his responsibilities have
steadily expanded to include the areas of finance, strategic development,
technology alliances and legal. From May 1992 through December 1994, Mr. Chia
was Regional Financial Controller (Asia and Middle East) for Anadrill Technical
Services, Inc. From January 1995 to April 1996, Mr. Chia was Regional Controller
(Asia, Australia and Middle East) for Sedco Forex Technical Services, Inc. Mr.
Chia received his Bachelor of Business (Accountancy), with distinction, from
Edith Cowan University, Australia and is a Certified Practicing Accountant by
the Australian Society of CPAs.

SUM SOON LIM

     Sum Soon Lim has served on our Board of Directors since February 1994. He
is currently a corporate adviser to ST and Temasek. Mr. Sum had worked with the
Singapore Economic Development Board, DBS Bank, J.P. Morgan Inc., Overseas Union
Bank and Nuri Holdings (S) Pte. Ltd., a private investment holding company. He
is also a member of the Securities Industry Council. Mr. Sum currently also sits
on the board of various companies, including CapitaLand Ltd., Singapore Health
Services Pte. Ltd., Singapore Technologies Telemedia Pte. Ltd. and Vertex
Venture Holdings Ltd. He is also a Commissioner in P.T. Indonesian Satellite
Corporation. Mr. Sum received his B.Sc (Honors) in Production Engineering from
the University of Nottingham, England.

JAMES H. VAN TASSEL

     James H. Van Tassel has served on our Board of Directors since June 1993.
He is a consultant in the semiconductor industry and has been involved in the
electronics and microelectronics industry since 1960. From 1980 to 1991, Dr. Van
Tassel was Vice President (Microelectronics) with NCR Corporation. Dr. Van
Tassel received his Bachelor of Science degree from the University of Wisconsin
at La Crosse, and his Master of Science Degree (Inorganic Chemistry) and Doctor
of Philosophy from Texas Technological University.

AUBREY C. TOBEY

     Aubrey C. Tobey has served on our Board of Directors since March 1998 and
is currently the President of ACT International providing consultancy in the
management and marketing of high technology. He has served on the board of
Rudolph Technologies since July 1998. From 1983 to 1987, Mr. Tobey was Vice
President of Micronix Corporation and from 1965 to 1983 was Corporate Vice
President at GCA Corporation. Mr. Tobey was with Arthur D. Little, Inc., a
management, science and technology consulting firm from 1959 to 1965. Mr. Tobey
received his Bachelor of Science degree in Mechanical Engineering from Tufts
University and his Master of Science degree in Mechanical Engineering from the
University of Connecticut.

ROBERT E. LA BLANC

     Robert E. La Blanc has served on our Board of Directors since May 1998 and
is the President of Robert E. La Blanc Associates, Inc., an information
technologies consulting and investment banking firm. From 1979 to 1981, Mr. La
Blanc was Vice Chairman of Continental Telecom, Inc. and from 1969 to 1979, a
General Partner of Salomon Brothers Inc. Mr. La Blanc has also held various
senior positions within companies in the telecommunications industry including
AT&T, Bell Telephone Laboratories and New York Telephone Company. Mr. La Blanc
received his B.E.E. from Manhattan College and his MBA from New York University.
Mr. La Blanc also is a graduate of the Operating Engineers Program at Bell
Telephone Laboratories and the USAF Communications Officers School.

                                       53
<PAGE>
ANDRE BORREL

     Andre Borrel has served on our Board of Directors since July 1998 and is
currently working as a consultant in the semiconductor industry. Prior to
joining our company, Mr. Borrel was Senior Vice President and General Manager of
Communications, Power and Signal Technology Group at Motorola Inc. Mr. Borrel is
also an Officer of the French National Order of Merit and holds a Master Degree
in Electronics from "Ecole Nationale Superieure des Telecommunications" in
Paris, France.

CHARLES E. THOMPSON

     Charles E. Thompson has served on our Board of Directors since September
1998 and is currently working as a consultant in the information
technology/semiconductor technology industry. From 1973 to 1996, Mr. Thompson
was World Marketing Senior Vice President at Motorola Inc. Prior thereto, Mr.
Thompson was Computer Department Sales Director at General Electric. Mr.
Thompson received his Bachelor of Science in Mathematics from the University of
Washington.

KOH BENG SENG

     Koh Beng Seng has served on our Board of Directors since February 1999. He
is currently the Deputy President and a director of United Overseas Bank Ltd.
Mr. Koh is also a board member of STATS. Prior to joining United Overseas Bank
Ltd., Mr. Koh was a senior adviser to Asia Pulp & Paper Co. Ltd. and an adviser
to the International Monetary Fund. He is active in the financial services
sector and was with the Monetary Authority of Singapore from 1973 to 1998, where
he served as Deputy Managing Director from 1988 to 1998. Mr. Koh received his
Bachelor of Commerce (First Class Honors) from Nanyang University and his MBA
from Columbia University. Mr. Koh was awarded an Overseas Postgraduate
Scholarship by the Monetary Authority of Singapore in 1978. In 1987, the
President of the Republic of Singapore awarded him a Meritorious Service Medal.

TSUGIO MAKIMOTO

     Tsugio Makimoto has served on our Board of Directors since September 1999
and has 43 years of working experience in the semiconductor industry. He is
currently Corporate Adviser/ Chief Technology Officer to Sony Corporation or
Sony. Prior to joining Sony, Dr Makimoto has worked for Hitachi Ltd. since 1959
where he has held various senior positions, including Executive Managing
Director in 1993, Senior Executive Managing Director in 1997 and Corporate Chief
Technologist since 1998. Dr. Makimoto is an Auditor of Hitachi Chemical
Corporation since 2000. He was also nominated a Fellow of the Institute of
Electrical and Electronics Engineers, Inc. in 1997. Dr. Makimoto is also a
visiting professor at Toyo University.

TAY SIEW CHOON

     Tay Siew Choon has served on our Board of Directors since July 2001. Mr.
Tay is the Managing Director and Chief Operating Officer of ST and Deputy
Chairman and Chief Executive Officer of Green Dot Capital Pte. Ltd., a wholly
owned subsidiary of ST. Prior to joining ST, he was the Managing Director and
Deputy Chief Executive Officer of SembCorp Industries Ltd. and has held various
senior positions in Singapore Technologies Industrial Corporation Ltd. Mr. Tay
currently also sits on the board of various companies including Sembcorp
Industries Ltd., Singapore Computer Systems Ltd., SNP Corporation Ltd. and
STATS. Mr. Tay received his Bachelor of Engineering (Electrical) (Honours)
Degree from Auckland University and his Masters of Science in Systems
Engineering from the former University of Singapore (now National University of
Singapore).

PETER SEAH LIM HUAT

     Peter Seah has served on our Board of Directors since January 2002. Mr.
Seah is the President and Chief Executive Officer of ST. Prior to joining ST, he
has been a banker for the past 32 years, 22 of which have been with the Overseas
Union Bank Ltd. ("OUB") and before that with Citibank. He retired from his
position as Vice Chairman and CEO at OUB in September 2001. Mr. Seah currently
sits on the board of various companies including SembCorp Industries Ltd.,
CapitaLand Ltd., ST Engineering Ltd. and STATS. Mr. Seah graduated from the
University of Singapore in 1968 with an honours degree in Business
Administration. For his public service, he was awarded the Public Service Medal
(1995) as well as the Public Service Star in 1999 by the Singapore Government.

                                       54
<PAGE>
PREMOD PAUL THOMAS

     Premod Paul Thomas was appointed to our Board of Directors as the Alternate
Director to Sum Soon Lim in July 1999. Mr. Thomas is currently Managing
Director, Strategic Development of Temasek. Between 1998 and 2003, he held the
positions of Director (Finance) and Director, Corporate Business and Treasury of
ST. In addition to his responsibilities at ST, he sat on the boards of a number
of ST group companies. Before joining ST, he was with Tirtamas Group, Jakarta,
as Group Executive Adviser from 1995 to 1998 and with Bank of America from 1983
to 1995. Mr. Thomas received his B.Com. (First Class Honors) from Loyola
College, India in 1977. He is a Certified Associate of the Indian Institute of
Bankers, Bombay, and has an MBA from the Indian Institute of Management,
Ahmedabad.

ANG KAY CHAI

Ang Kay Chai has served as our Senior Vice President, Fab Operations, since
September 2002. Mr. Ang is responsible for manufacturing strategy and
operational excellence across all of Chartered's fabs, and he reports to the
President and Chief Executive Officer. Mr. Ang returned to Chartered after
spending four years at Silterra Malaysia Sdn, Bhd., where he was responsible for
fab operations. There, he led teams in technology partner selection, green field
fab startup, transfer of 0.25um and 0.18um technology and developing
foundry-compatible process capabilities. Prior to that, Mr. Ang spent nine years
at Chartered where he led the initial conception, development and ramp up of Fab
2 and Fab 3. Mr. Ang first joined Chartered in 1989 and was one of the pioneers
on Chartered's Fab 1 team. Mr. Ang holds a Master of Science degree in
Engineering from the University of Texas and a Bachelor of Engineering degree
from the National University of Taiwan.

BRUNO GUILMART

Bruno Guilmart has served as our Senior Vice President, Worldwide Sales and
Marketing since June 2002. He reports to the President and CEO and has overall
responsibility for global sales, marketing and services, and customer support
operations activities. From 1999 to June 2002, Mr. Guilmart served as President
of our Asia Pacific and Japan operations. He has more than 19 years of
experience in semiconductor engineering, marketing and business development.
Prior to joining our company, Mr. Guilmart was the vice president, professional
services for Cadence Design Systems covering Asia Pacific. From 1989 to 1996, he
was executive director - Northeast Asia sales at Temic Semiconductors'
Daimler-Benz group located in Hong Kong. From 1982 to 1989 he also held
engineering and business development positions at Hewlett-Packard Company in
Europe, United States and Asia. He holds a Bachelor of Science degree in
electrical engineering and a master's degree in electronics and business
management from Paris XI Institute of Technology, France.

SUN SHI-CHUNG

     Sun Shi-Chung has served as our Senior Vice President, Technology
Development since December 2001. Dr Sun reports to the President and Chief
Executive Officer and has the overall responsibility for technology development
and execution according to the competitive technology roadmap. Dr Sun has more
than 29 years of experience in the semiconductor industry. He joined us from
Promos Technologies in Taiwan, where he was the head of research and
development. During his career, he has held various positions with TSMC,
Advanced Micro Devices Inc., Catalyst Semiconductor, Hewlett-Packard and AT & T
Bell Labs. Dr Sun received his Ph.D. in electrical engineering from Stanford
University, his M.S. in electrical engineering from the State University of New
York and his B.S. in electrical engineering from National Cheng Kung University
in Taiwan. Dr Sun has been awarded eight U.S. patents with 8 more pending, and
his work has been featured in more than 100 technical publications.

ANG TANG YONG

Ang Tang Yong has served as our Vice President, Quality, Reliability Assurance
and Support Operations since July 2002. He reports to the President and Chief
Executive Officer and has overall responsibility for facilities, supply
management and quality assurance. Mr. Ang first joined our company in 1993 as
Facilities Director and during the next seven years served consecutively as Vice
President and Operations Manager of our Fab 1, General Manager of our
joint-venture fab, Silicon Manufacturing Partners (SMP or Fab 5), and as General
Manager of our equity-method joint-venture fab, Chartered Silicon Partners (CSP
or Fab 6). Mr. Ang has more than 21 years of working experience in the
semiconductor industry. Prior to joining our company, Mr. Ang held positions in
the United States and Singapore with AT&T, Hitachi and Texas Instruments. From
March 2001 to July 2002, he was president of Ellipsiz, a provider of
semiconductor engineering and manufacturing services, headquartered in
Singapore. Mr. Ang received a diploma in electrical engineering from Singapore
Polytechnic and a master's degree in business administration from the State
University of New York.

                                       55
<PAGE>
TAN SENG CHAI

     Tan Seng Chai has served as our Vice President, Human Resources since July
1999 and has overall responsibility for the development and implementation of
policies and processes in our human resource management system. From October
1997 to June 1999, Mr. Tan was our Human Resource Director. Mr. Tan joined our
company as human resource manager in April 1996. He has more than 14 years of
experience in the semiconductor industry. He began his career at National
Semiconductor in 1987 where he held various positions in engineering, production
and human resource management. Mr. Tan later joined Creative Technology Ltd. in
1994 and prior to joining our company, he was Creative's Senior Manager, Human
Resource. Mr. Tan holds a Bachelor of Engineering (Hons) from the National
University of Singapore in 1987 and a M.Sc (Industrial and System Eng) from the
National University of Singapore in 1991.

GEORGE THOMAS

     George Thomas has served as our Vice President and Chief Financial Officer
since June 2002 and has overall responsibility for our company's finance,
investor relations and legal functions. From September 2000 to June 2002. Mr.
Thomas served as Vice President, Finance. He joined our company in May 2000 as
Group Controller. Mr. Thomas began his Finance/Accounting career with Canadian
Met-Chem, a subsidiary of U.S. Steel Corporation as Internal Auditor and Senior
Accounts Executive from 1978 to 1983. From June 1983 to April 2000, he held
various positions at Schlumberger's Sedco Forex Division, including Controller,
Operations-Worldwide, Regional Controller, Asia & Australia, Controller,
Indonesia Operations, and Finance Manager of Arabian Drilling Company, a joint
venture between Schlumberger and Petromin. He has served on the Board of
Directors of Chartered Silicon Partners Pte. Ltd. since April 2001. Mr. Thomas
received his Bachelor Degree in Commerce and in General Law. He is also a member
of the Institute of Chartered Accountants of India.

MICHAEL J. REKUC

     Michael J. Rekuc has served as President of our Americas operations since
December 1998. Mr. Rekuc is responsible for all day-to-day activities in our
company's Americas region including sales, customer engineering and support
services, and all regional administrative activities. From 1976 until December
1998, Mr. Rekuc held sales, management and director positions in the
semiconductor product sector of Motorola Inc. His most recent positions at
Motorola Inc. included worldwide responsibilities as global sales director for
wireless subscriber systems and a two year role as vice president and sales
director for PC, computing and peripherals. Mr. Rekuc holds a B.Sc in Electrical
Engineering from Lawrence University of Michigan.


BOARD COMPOSITION AND COMMITTEES

     Our Articles of Association set the minimum number of directors at two. As
of February 28, 2003, we have 13 directors and one alternate director. A portion
of our directors (including our President and Chief Executive Officer) are
elected at each annual general meeting of shareholders. The number of directors
retiring and eligible to stand for reelection each year varies, but generally it
is equal to one-third of the board, with the directors who have been in office
longest since their reelection or appointment standing for reelection. Because
ST and its affiliate own approximately 60.5% of our outstanding ordinary shares,
they are able to control actions over many matters requiring approval by our
shareholders, including the election of directors.

     The Executive Resource and Compensation Committee, or the ERCC, of our
Board of Directors oversees executive compensation and development in our
company with the goal of building capable and committed management teams through
competitive compensation, focused management and progressive policies which can
attract, motivate and retain a pool of talented executives to meet our current
and future growth plans. Specifically, the ERCC:

     -    establishes compensation policies for key executives;

     -    approves salary reviews, bonuses and incentives for key executives;

     -    approves share incentives, including share options and share ownership
          for executives;

     -    approves key appointments and reviews succession plans for key
          positions; and

     -    oversees the development of key executives and younger executives.

                                       56
<PAGE>
     The members of the ERCC are Messrs. Seah (chairman), Norling, Borrel, Lim,
Thompson, Sum, Tobey, Tay and Ms. Cheo Hock Kuan (co-opted member).

     The Audit Committee of our Board of Directors consists of four members, of
which a majority may not be officers or employees of our company. The Audit
Committee reviews, acts on and reports to the Board of Directors regarding
various auditing and accounting matters. In particular, the Audit Committee
reviews the financial statements of our company, the scope and results of annual
audits (both internal and external), the recommendation of our independent
auditors and the response of our company's management to both the internal and
external audits. The Audit Committee meets up at least once a year with the
external and internal auditors without the presence of management. It also
oversees related party transactions, including all material transactions between
us and the Singapore Technologies group. Please see "Item 7. Major Shareholders
and Related Party Transactions -- Related Party Transactions" for a description
of our relationship with ST. The members of the Audit Committee are Messrs. Koh
(chairman), Sum, La Blanc and Tobey. We are in the process of evaluating the
impact of the Sarbanes-Oxley Act and the Nasdaq Rules on the Audit Committee and
are working towards being in compliance with these when they come into effect.

     The Budget Committee of our Board of Directors is responsible for reviewing
our annual budget and our quarterly financial performance in relation to our
budget. The members of the Budget Committee are Messrs. Borrel (chairman), Lim,
Van Tassel, Sum and Tay. In 2002, the Budget Committee reviewed the capital
spending and financial plans for the year 2003, and subsequently approved the
same in January 2003.

     The Executive Committee of our Board of Directors was established in May
2002 with the objective of enabling our Board to delegate some of its powers and
functions regarding the governing of the affairs of the company and its
subsidiaries to the Executive Committee in order to facilitate timely
decision-making processes within the limits of authority as determined by our
Board. The members of the Executive Committee are Messrs. Norling (chairman),
Seah, Tay and Chia. In 2002, the Executive Committee had reviewed major
investments, capital raising proposals and other specific matters assigned by
the Board for the company.


COMPENSATION OF DIRECTORS AND OFFICERS

     The aggregate compensation we paid to or accrued for all of our directors
and senior management for services rendered to us and our subsidiaries during
the fiscal year ended December 31, 2002 was approximately $8.2 million. In 2002,
we decided to suspend the implementation of the retirement benefits plan for our
senior executives. We also provide our directors and certain of our officers
with customary director or officer insurance, as appropriate.

     During 2002, we also granted options to purchase 8,939,047 ordinary shares
to our directors and senior management. These options were granted under our
1999 Share Option Plan. The exercise prices of these options range from S$1.86
to S$4.06. The expiration dates of these options range from May 1, 2002 to
September 9, 2012, subject to annual vesting requirements. Both the number of
shares and exercise prices have been adjusted to give effect to our rights
offering completed in October 2002. Please see "Item 10. Additional Information
-- Rights Offering" for additional information.

     All of our officers and employees are eligible to participate in our
employee bonus plans. The plans provide for bonus payments based upon our
achievement of certain operational, financial and customer satisfaction targets.
Upon achievement of these targets, the participants in our plans are awarded
bonuses based on a percentage of their annual salary. Our new President and CEO
does not have a guaranteed minimum annual bonus. None of our directors receive
benefits upon termination of their appointment in their capacity as directors.


SHARE OWNERSHIP FOR DIRECTORS AND SENIOR MANAGEMENT

     The following table sets forth certain information with respect to the
beneficial ownership of our ordinary shares for each of our directors and our
chief executive officer and all of our directors and senior management as a
group as of February 15, 2003, based on an aggregate of 2,497,178,816 ordinary
shares outstanding as of such date:

                                       57
<PAGE>
<TABLE>
<CAPTION>
                                                                   ORDINARY SHARES(1)
                                                                  BENEFICIALLY OWNED(2)
                                                                  ---------------------
DIRECTORS                                                          NUMBER       PERCENT
---------                                                          ------       -------
<S>                                                               <C>           <C>
James A. Norling                                                  1,384,022        *
Lim Ming Seong                                                      175,827        *
Chia Song Hwee                                                    1,269,107        *
Sum Soon Lim                                                        822,229        *
James H. Van Tassel                                                 390,141        *
Aubrey C. Tobey                                                     329,525        *
Robert E. La Blanc                                                  283,660        *
Andre Borrel                                                        429,913        *
Charles E. Thompson                                                 339,488        *
Koh Beng Seng                                                       108,539        *
Tsugio Makimoto                                                     177,242        *
Tay Siew Choon                                                      287,186        *
Peter Seah Lim Huat                                                  23,443        *
Premod Paul Thomas                                                  108,587        *
All directors and senior management(3) as a group (21 persons)    8,485,827        *
</TABLE>

---------------
* Less than 1% of our outstanding shares

(1)  The number of ordinary shares listed in this table includes ordinary shares
     held directly or in the form of ADSs.

(2)  Gives effect to the ordinary shares issuable within 60 days of February 15,
     2003 upon the exercise of all options and other rights beneficially owned
     by the indicated shareholders on that date. Beneficial ownership is
     determined in accordance with the rules of the SEC and includes voting and
     investment power with respect to ordinary shares. Save for 36,000 shares
     held by James A. Norling and 78,170 shares held by Michael J. Rekuc which
     are jointly held, the persons named in the table have sole voting and sole
     investment control with respect to all ordinary shares beneficially owned.

(3)  Each of our senior management owns less than 1% of our outstanding shares.


SHARE OPTIONS FOR DIRECTORS

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

<TABLE>
<CAPTION>
                                                 AT END OF         EXERCISE                 EXERCISABLE
                                                 THE YEAR            PRICE                    PERIOD
                                                 ---------         --------                 ------------
                                                                      S$
<S>                                           <C>                  <C>                <C>
James A Norling                                  58,609*             $4.05*           28/03/2002 to 28/03/2006
                                                 58,609*             $4.26*           15/08/2002 to 15/08/2006
                                                 58,609*+            $3.46*           22/02/2003 to 22/02/2007
                                              1,172,195*+            $3.88*           01/05/2002 to 01/05/2012
                                                 58,609*+            $1.86*           30/08/2003 to 30/08/2007


Lim Ming Seong                                   58,609*             $4.05*           28/03/2002 to 28/03/2006
                                                 58,609*             $4.26*           15/08/2002 to 15/08/2006
                                                 58,609*+            $3.46*           22/02/2003 to 22/02/2007
                                                 58,609*+            $1.86*           30/08/2003 to 30/08/2007
</TABLE>

                                       58
<PAGE>
<TABLE>
<CAPTION>
                                                 AT END OF         EXERCISE                 EXERCISABLE
                                                 THE YEAR            PRICE                    PERIOD
                                                 ---------         --------                 ------------
                                                                      S$
<S>                                           <C>                  <C>                <C>
Chia Song Hwee                                   10,467*             $1.18*           07/10/1999 to 28/10/2006
                                                 20,935*             $1.00*           07/10/1999 to 28/11/2007
                                                 61,704*             $0.80*           07/10/1999 to 29/11/2008
                                                 26,444*             $0.80*           07/10/1999 to 29/04/2009
                                                 70,331*             $2.86*           29/04/2000 to 29/10/2009
                                                234,439*             $2.86*           29/10/1999 to 29/10/2009
                                                410,268*            $14.24*           06/04/2001 to 06/04/2010
                                                527,487*            $10.12*           03/10/2001 to 03/10/2010
                                                263,743*             $4.05*           28/03/2002 to 28/03/2011
                                                263,743*             $4.26*           15/08/2002 to 15/08/2011
                                                234,439*+            $3.46*           22/02/2003 to 22/02/2012
                                              2,344,391*+            $1.86*           30/08/2003 to 30/08/2012

James H. Van Tassel                              44,074*             $0.80*           30/04/2000 to 30/04/2004
                                                 35,165*             $2.86*           29/04/2000 to 29/10/2004
                                                 23,443*             $2.86*           29/10/2000 to 29/10/2004
                                                 58,609*            $14.24*           06/04/2001 to 06/04/2005
                                                 58,609*            $10.12*           03/10/2001 to 03/10/2005
                                                 29,304*             $4.05*           28/03/2002 to 28/03/2006
                                                 29,304*             $4.26*           15/08/2002 to 15/08/2006
                                                 29,304*+            $3.46*           22/02/2003 to 22/02/2007
                                                 29,304*+            $1.86*           30/08/2003 to 30/08/2007

Sum Soon Lim                                     16,748*             $0.94*           07/10/1999 to 07/10/2004
                                                 41,870*             $0.80*           07/10/1999 to 07/10/2004
                                                 70,331*             $2.86*           29/04/2000 to 29/10/2004
                                                 23,443*             $2.86*           29/10/2000 to 29/10/2004
                                                 93,775*            $14.24*           06/04/2001 to 06/04/2005
                                                 93,775*            $10.12*           03/10/2001 to 03/10/2005
                                                 46,887*             $4.05*           28/03/2002 to 28/03/2006
                                                 46,887*             $4.26*           15/08/2002 to 15/08/2006
                                                 46,887*+            $3.46*           22/02/2003 to 22/02/2007
                                                 46,887*+            $1.86*           30/08/2003 to 30/08/2007

Aubrey C. Tobey                                  41,870*             $0.86*           07/10/1999 to 07/10/2004
                                                 22,037*             $0.80*           30/04/2000 to 30/04/2004
                                                 35,165*             $2.86*           29/04/2000 to 29/10/2004
                                                 23,443*             $2.86*           29/10/2000 to 29/10/2004
                                                 58,609*            $14.24*           06/04/2001 to 06/04/2005
                                                 58,609*            $10.12*           03/10/2001 to 03/10/2005
                                                 29,304*             $4.05*           28/03/2002 to 28/03/2006
                                                 29,304*             $4.26*           15/08/2002 to 15/08/2006
                                                 29,304*+            $3.46*           22/02/2003 to 22/02/2007
                                                 29,304*+            $1.86*           30/08/2003 to 30/08/2007

Robert Edmund La Blanc                           41,870*             $0.86*           07/10/1999 to 07/10/2004
                                                 11,721*             $2.86*           29/04/2000 to 29/10/2004
                                                 11,721*             $2.86*           29/10/2000 to 29/10/2004
                                                 23,443*            $14.24*           06/04/2001 to 06/04/2005
                                                 58,609*            $10.12*           03/10/2001 to 03/10/2005
                                                 29,304*             $4.05*           28/03/2002 to 28/03/2006
                                                 29,304*             $4.26*           15/08/2002 to 15/08/2006
                                                 29,304*+            $3.46*           22/02/2003 to 22/02/2007
                                                 29,304*+            $1.86*           30/08/2003 to 30/08/2007
</TABLE>

                                       59
<PAGE>
<TABLE>
<CAPTION>
                                                 AT END OF         EXERCISE                 EXERCISABLE
                                                 THE YEAR            PRICE                    PERIOD
                                                 ---------         --------                 ------------
                                                                      S$
<S>                                           <C>                  <C>                <C>
Andre Borrel                                     16,748*             $0.86*           07/10/1999 to 07/10/2004
                                                 42,199*             $2.86*           29/04/2000 to 29/10/2004
                                                 23,443*             $2.86*           29/10/2000 to 29/10/2004
                                                 93,775*            $14.24*           06/04/2001 to 06/04/2005
                                                 93,775*            $10.12*           03/10/2001 to 03/10/2005
                                                 46,887*             $4.05*           28/03/2002 to 28/03/2006
                                                 46,887*             $4.26*           15/08/2002 to 15/08/2006
                                                 46,887*+            $3.46*           22/02/2003 to 22/02/2007
                                                 46,887*+            $1.86*           30/08/2003 to 30/08/2007

Charles E Thompson                               41,870*             $0.86*           07/10/1999 to 07/10/2004
                                                 35,165*             $2.86*           29/04/2000 to 29/10/2004
                                                 23,443*             $2.86*           29/10/2000 to 29/10/2004
                                                 58,609*            $14.24*           06/04/2001 to 06/04/2005
                                                 58,609*            $10.12*           03/10/2001 to 03/10/2005
                                                 29,304*             $4.05*           28/03/2002 to 28/03/2006
                                                 29,304*             $4.26*           15/08/2002 to 15/08/2006
                                                 29,304*+            $3.46*           22/02/2003 to 22/02/2007
                                                 29,304*+            $1.86*           30/08/2003 to 30/08/2007

Koh Beng Seng                                    44,074*             $0.80*           30/04/2000 to 30/04/2004
                                                 11,721*             $2.86*           29/04/2000 to 29/10/2004
                                                 11,721*             $2.86*           29/10/2000 to 29/10/2004
                                                 11,721*            $14.24*           06/04/2001 to 06/04/2005
                                                 11,721*            $10.12*           03/10/2001 to 03/10/2005
                                                  5,860*             $4.05*           28/03/2002 to 28/03/2006
                                                 11,721*             $4.26*           15/08/2002 to 15/08/2006
                                                 29,304*+            $1.86*           30/08/2003 to 30/08/2007

Tsugio Makimoto                                  11,721*            $14.24*           06/04/2001 to 06/04/2005
                                                 58,609*            $10.12*           03/10/2001 to 03/10/2005
                                                 29,304*             $4.05*           28/03/2002 to 28/03/2006
                                                 29,304*             $4.26*           15/08/2002 to 15/08/2006
                                                 29,304*+            $3.46*           22/02/2003 to 22/02/2007
                                                 29,304*+            $1.86*           30/08/2003 to 30/08/2007

Tay Siew Choon                                   23,443*             $4.26*           15/08/2002 to 15/08/2006
                                                 29,304*+            $3.46*           22/02/2003 to 22/02/2007
                                                234,439*+            $3.88*           01/05/2002 to 01/05/2007
                                                 46,887*+            $1.86*           30/08/2003 to 30/08/2007

Peter Seah Lim Huat                              23,443*+            $3.46*           22/02/2003 to 22/02/2007
                                                 46,887*+            $1.86*           30/08/2003 to 30/08/2007

Premod Paul Thomas                               11,721*             $2.86*           29/10/2000 to 29/10/2004
                                                 11,721*            $14.24*           06/04/2001 to 06/04/2005
                                                 11,721*            $10.12*           03/10/2001 to 03/10/2005
                                                 29,304*             $4.05*           28/03/2002 to 28/03/2006
                                                  5,860*             $4.26*           15/08/2002 to 15/08/2006
                                                  5,860*+            $3.46*           22/02/2003 to 22/02/2007
                                                  5,860*+            $1.86*           30/08/2003 to 30/08/2007
</TABLE>

*    As a result of the company's October 2002 Rights Offering, changes were
     made to both the exercise price and the number of shares of all outstanding
     options offered or granted. The adjustments were made by multiplying each

                                       60
<PAGE>
     existing option exercise price by 0.8531 and dividing the number of shares
     issuable upon exercise of each option by 0.8531.
+    Options that were granted in 2002

     None of our directors or senior management individually own 1% or more of
our outstanding shares


OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT OR SUBSIDIARIES

ISSUANCE OF SHARE OPTIONS

     As of December 31, 2002, options to purchase 99,693,211 ordinary shares
were issued and outstanding. The outstanding options were granted under our 1999
Share Option Plan, of which 15,009,469 were held by our directors and senior
management. The exercise prices of these options to purchase 99,693,211 ordinary
shares range from S$0.80 to S$14.24, and the expiration dates of these options
range from November 2003 to September 2012. In February 2003, we granted options
to purchase approximately 12,031,150 ordinary shares under our 1999 Share Option
Plan at an exercise price equal to the fair market value of our ordinary shares
at the time of the grant.


           EQUITY COMPENSATION PLAN INFORMATION AS OF DECEMBER 31, 2002

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
Plan Category                    (a) Number of securities to    (b) Weighted-average           (c) Number of securities
                                 be issued upon exercise of     exercise price of              remaining available for
                                 outstanding options,           outstanding options,           future issuance under equity
                                 warrants and rights            warrants and rights            compensation plans
                                                                                               (excluding securities in
                                                                                               column (a))
-----------------------------------------------------------------------------------------------------------------------------
<S>                              <C>                            <C>                            <C>
Equity compensation plans        99,693,211                     US$3.49                        118,169,427
approved by security holders
-----------------------------------------------------------------------------------------------------------------------------
Equity compensation plans not    N.A.*                          N.A.*                          N.A.*
approved by security holders
-----------------------------------------------------------------------------------------------------------------------------
Total                            99,693,211                     US$3.49                        118,169,427
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>


* Note: The company does not have any equity compensation plans which are not
        approved by security holders.


EMPLOYEE BENEFIT PLANS

SHARE OPTION PLAN 1999

     Effective March 30, 1999, we adopted our Share Option Plan 1999. The
purpose of the plan is to offer selected individuals an opportunity to acquire
or increase a proprietary interest in our company by purchasing our ordinary
shares. Options granted under the 1999 plan may be non-statutory options or
incentive stock options intended to qualify under Section 422 of the U.S.
Internal Revenue Code.

     The 1999 plan is administered by the ERCC. Our employees, outside directors
and consultants are eligible to receive option grants except as follows:

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

     -    employees, outside directors and consultants of our affiliates who are
          citizens of the U.S. or who are deemed to be residents in the U.S. are
          not eligible for the grant of options; and

     -    employees of SMP who are citizens of the U.S. or who are deemed to be
          residents in the U.S. are not eligible for the grant of options.

                                       61
<PAGE>
     An individual who owns more than 10% of the total combined voting power of
all classes of our outstanding shares is not eligible for the grant of options
unless:

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

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

     The aggregate number of shares that may be issued under the 1999 plan and
under any other share incentive and option schemes or agreements may not exceed
197,160,000 shares. As a result of our rights offering in October 2002, the
shares available for future grants were increased by 18,212,283 shares. The
total shares provided under the 1999 Option Plan is hence 215,372,283 shares. If
an outstanding option expires for any reason or is cancelled or otherwise
terminated, the shares allocable to the unexercised portion of such option will
again be available for the purposes of the plan and all other share incentive
and option schemes approved by the ERCC.

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

     The exercisability of options outstanding under the 1999 plan may be fully
or partially accelerated under certain circumstances such as a change in control
of our company, as defined in the 1999 plan. In addition, the vesting periods of
17,273,481 outstanding options were accelerated by 12 months upon the closing of
our initial public offering.

     Each grant under the 1999 plan is evidenced by a share option agreement and
the term of options granted may not exceed 10 years from the date of grant. If
the optionee's service with us is terminated, the optionee's outstanding
options, to the extent then exercisable, remain exercisable for a specified
period (which is based on the reason for the termination) following the date of
termination. All options which are not exercisable at the date of termination
lapse when the optionee's service terminates.

     Options are generally not transferable under the plan. Shares issued upon
the exercise of an option are subject to such rights of first refusal as the
ERCC may determine.

     In the event of certain changes in our capitalization, our Board of
Directors will make appropriate adjustments in one or more of the number of
shares available for future grants under the 1999 plan, the number of shares
covered by each outstanding option or the exercise price of each outstanding
option. If we are a party to a merger or consolidation, outstanding options will
be subject to the agreement of merger or consolidation.

     The 1999 plan will terminate automatically on January 23, 2009, ten years
after the date on which the Board adopted the 1999 plan. The ERCC may amend,
suspend or terminate the 1999 plan at any time and for any reason, provided that
any amendment which increases the number of shares available for issuance under
the 1999 plan, or which materially changes the class of persons who are eligible
for the grant of incentive share options, will be subject to the approval of our
shareholders.

     We amended the plan in connection with our initial public offering to
enable the plan and, at the ERCC's discretion, awards granted thereunder, to
comply with Section 162(m) of the U.S. Internal Revenue Code.

     At our annual general meeting in May 2001, our shareholders approved an
increase in the aggregate number of shares for issuance from 107,160,000 to
197,160,000 under the 1999 plan. As a result of our rights offering in October
2002, the shares available for future grants were increased by 18,212,283
shares. The total shares provided under the 1999 Option Plan is hence
215,372,283 shares. Our shareholders have also given approval to the effect that
the limit on the number of option shares which may be granted to an individual
in any fiscal year will apply irrespective of whether the Board or the ERCC
determines that the 1999 plan is to comply with Section 162(m) of the U.S.
Internal Revenue Code.

     As a result of the company's October 2002 Rights Offering, changes were
made to both the exercise price and the number of shares of all outstanding
options offered or granted. The adjustments were made so that the aggregate
intrinsic value of the options and the ratio of the exercise price per share to
the market value per share for each outstanding option tranche remain unchanged
immediately after the rights offering. The adjustments were made by multiplying
each existing option exercise price by 0.8531 and dividing the number of shares
issuable upon exercise of each option by 0.8531. Please see "Item 10. Additional
Information - Rights Offering" for additional information.

                                       62
<PAGE>
EMPLOYEE SHARE PURCHASE PLAN

     Upon our shareholders' approval given during the annual general meeting in
May 2001, we implemented an employee share purchase plan, or ESPP. The purpose
of the ESPP is to provide eligible employees with an opportunity to increase
their proprietary interest in the success of our company through the purchase of
its shares, which are paid for through payroll deductions. The ESPP is generally
open to employees of our company and its subsidiaries whose customary employment
is more than five months per calendar year and is more than 20 hours per week,
and who have been employed by our company or such subsidiary for at least 6
months, subject to the following:

     -    Where the employee's participation is prohibited by the law of any
          country which has jurisdiction over him or her; or
     -    Where the employee is subject to a collective bargaining agreement
          that does not provide for participation in the ESPP; or
     -    Where the employee, immediately after his or her election to purchase
          shares under the ESPP, would own shares exceeding 5% of the total
          combined voting power or value of all classes of shares in the capital
          of our company or any parent or subsidiary of our company.

     At our May 2001 annual general meeting, our shareholders also approved the
establishment of a separate Share Purchase Plan, or the SMP ESPP, for the
employees of SMP, where Chartered holds a 49% equity interest. The terms of this
plan are substantially similar to the terms of the preceding plan. The aggregate
number of shares that were available for purchase under our company ESPP and the
SMP ESPP was 10,000,000 ordinary shares of our company. Following the October
2002 Rights Offering, the number of shares available for purchase has been
adjusted by dividing such number by 0.8531, resulting in an adjusted aggregate
number of 11,721,955 shares available for purchase.


ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

MAJOR SHAREHOLDERS

     The following table sets forth certain information with respect to each
person or group of affiliated persons who is known by us to beneficially own 5%
or more of our ordinary shares as of February 28, 2003 based on an aggregate of
2,497,178,816 ordinary shares outstanding as of such date:

<TABLE>
<CAPTION>
                                                                           ORDINARY SHARES(1)
                                                                          BENEFICIALLY OWNED(2)
                                                                        -----------------------
SHAREHOLDERS HOLDING 5% OR MORE                                           NUMBER        PERCENT
-------------------------------                                           ------        -------
<S>                                                                     <C>             <C>
Singapore Technologies Pte. Ltd.(3)                                     898,409,073      35.98%
Singapore Technologies Semiconductors Pte. Ltd.(3)                      611,915,810      24.50%
</TABLE>

---------------
(1)  The number of ordinary shares listed in this table includes ordinary shares
     held directly or in the form of ADSs.
(2)  Beneficial ownership is determined in accordance with the rules of the SEC
     and includes voting and investment power with respect to ordinary shares.
     Unless otherwise indicated, the persons named in the table have sole voting
     and sole investment control with respect to all ordinary shares
     beneficially owned.
(3)  As of February 28, 2003, Temasek Holdings (Private) Limited or Temasek, the
     principal holding company of the Government of Singapore, owned 78.6% of
     Singapore Technologies Pte. Ltd., or ST, and 100% of Singapore Technologies
     Holdings Pte. Ltd., or ST Holdings. ST Holdings owns 21.4% of ST which, in
     turn, owns 100% of Singapore Technologies Semiconductors Pte. Ltd., or ST
     Semiconductors. Temasek may be deemed to beneficially own the shares
     directly owned by ST and ST Semiconductors because it is the parent company
     of ST and ST Holdings. ST and ST Semiconductors have the same voting rights
     as our other shareholders. Over the last three years, ST's percentage
     shareholding of our outstanding shares as of December of each year has
     changed from 36.2% in 2000 to 36.1% in 2001 and 35.98% in 2002. ST
     Semiconductor's percentage of shareholding of our outstanding shares for
     the same period has changed from 24.6% in 2000 to 24.6% in 2001 and 24.5%
     in 2002.

     As of February 15, 2003, 685,754 of our ordinary shares, representing 0.03%
of our outstanding shares, were held by a total of 67 holders of record with
addresses in the U.S. As of the same date, 7,111,458 of our ADSs (representing
71,114,580 ordinary shares), representing 2.85% of our outstanding shares, were
held by a total of 10 registered holders of record with addresses in the U.S.
Since certain of these ordinary shares and ADSs were held by brokers or other
nominees, the number of record holders in the U.S. may not be representative of
the number of beneficial holders or where the beneficial holders are resident.

                                       63
<PAGE>
RELATED PARTY TRANSACTIONS

WHAT IS THE SINGAPORE TECHNOLOGIES GROUP

     Singapore Technologies Pte. Ltd., or ST, is a holding company for a group
of technology-based companies. As of February 28, 2003, ST was 21.4% owned by
Singapore Technologies Holdings Pte. Ltd., or ST Holdings. ST and ST Holdings
were 78.6% and 100% owned, respectively, by Temasek Holdings (Private) Limited
through which the corporate investments of the Government of Singapore are held.
Temasek is owned by the Minister for Finance (Incorporated) of Singapore. ST
owns 100% of Singapore Technologies Semiconductors Pte. Ltd., or ST
Semiconductors. As of February 28, 2003, ST and ST Semiconductors hold
approximately a 35.98% and 24.50% interest in our company, respectively. ST
Semiconductors holds interests in our sister company, STATS. In 2002, our
revenues represented approximately 9% of ST's revenues and our assets
represented approximately 18% of ST's assets (in each case based on unaudited
numbers).

     ST has five principal business groups: engineering, technology,
infrastructure, property and financial services. ST has two operating
subsidiaries that are engaged in the semiconductor business, namely:

     -    Chartered; and
     -    STATS.

     STATS specializes in assembly and testing of semiconductors. ST may in the
future establish other subsidiaries, or form strategic alliances with companies,
which are engaged in the semiconductor business.

     As of February 28, 2003, ST and its affiliate own approximately 60.5% of
our outstanding ordinary shares and, as a result, are able to control actions
over many matters requiring approval by our shareholders, including the election
of directors and approval of significant corporate transactions. In addition,
Messrs. Sum, Koh, Seah, Tay and Thomas, each a member of our Board of Directors
(other than Mr. Thomas who serves as alternate member), serve as directors of
companies in the Singapore Technologies group. Messrs. Lim, Seah and Tay, each a
member of our Board of Directors, are employed by companies in the Singapore
Technologies group. As of January 16, 2003, Mr. Thomas has ceased to be employed
by companies in the Singapore Technologies group. Mr. Lim is a corporate adviser
to ST while Mr. Sum is a corporate adviser to both ST and Temasek.

     In 1996, our Board of Directors established an Audit Committee that, among
other things, reviews all material transactions between us and the Singapore
Technologies group. Please see "Item 6. Directors, Senior Management and
Employees -- Board Composition and Committees" for a summary of the function and
composition of the Audit Committee. Mr. Koh, the chairman of the Audit
Committee, serves as a director for other ST affiliates.

     We also have contractual and other business relationships with ST and its
affiliates and we engage in material transactions with ST from time to time.
Consequently, conflicts of interest may arise between us in certain
circumstances. Our Audit Committee reviews all material transactions between our
company and the Singapore Technologies group. In addition, we are not obligated
to conduct any business with members of the ST group if the costs of doing so
are greater than they would be if we were conducting business with unaffiliated
third parties.


FINANCIAL SUPPORT PROVIDED TO US BY SINGAPORE TECHNOLOGIES GROUP

     Through its subsidiary, ST Treasury Services Ltd. or ST Treasury, ST
currently provides us with short-term financing and guarantees some of our debt.
Certain of our loan agreements require ST to own at least a majority of our
outstanding ordinary shares. ST and ST Treasury have also in the past provided
loans to us and have entered into forward foreign exchange contracts with us to
hedge transactions denominated in Singapore dollar and Japanese Yen, primarily
for principal and interest payments on our Singapore dollar denominated debt and
certain of our equipment purchase commitments with foreign vendors. As of
December 31, 2002, approximately $88.3 million of our debt was guaranteed by ST
at no cost. In addition, $46.8 million of our debt, which has since been fully
repaid in 2002, was guaranteed by commercial banks at the request of ST, at a
weighted average cost to us of 0.29%.

     In addition, from time to time we advance funds to, or borrow funds from,
ST Treasury (and from ST prior to the second half of 1998). In general, advances
to and borrowings from ST and ST Treasury bear interest at rates comparable to
the rates offered by commercial banks in Singapore, are unsecured and are
repayable for periods not more than three months on a renewable basis. The
amount of interest income received from ST Treasury in 2000, 2001 and 2002 was
$27.0 million, $20.2 million and $7.5 million respectively.

                                       64
<PAGE>
     We have also entered into an oral multi-currency credit facility with ST
Treasury in connection with our borrowing arrangements with it. Under this
facility, ST Treasury has agreed to make available to us funds of up to $100
million. We may, upon notice to ST Treasury, draw down at any time any amount
available under the facility. We are not restricted in our utilization of drawn
funds. Funds drawn under the facility are required to be repaid within one year
of the date on which they are drawn. Payment schedules and directions will be as
agreed to by us and ST Treasury at the time of the draw down. Unless otherwise
agreed to, amounts drawn under the facility are unsecured and neither we nor ST
Treasury are subject to conditions or events of default. Interest on drawn funds
accrues at a rate based on the monthly average interest rate of three banks, as
chosen by ST Treasury. As of December 31, 2002, there were no unsecured
borrowings outstanding under this facility. There is a possibility that ST may
not continue to make this credit facility available to us, as we have not
utilized it during the last three years.

     While ST has historically provided credit and other support to us, ST has
no obligation to continue doing so and the availability and amount of such
support will depend on various factors, including our ability to raise funds
without such support and the expenses relating to such fundraising.


CORPORATE SERVICES PROVIDED TO US BY SINGAPORE TECHNOLOGIES

     We have a service agreement with ST pursuant to which it provides us with
services and support which are tangible as well as intangible in nature. The
services provided by ST include management and corporate support services, such
as treasury, cash management, internal audit, training and executive resources.
In addition, ST is able to offer us the benefits of a global network and the
"Singapore Technologies" name and ST's wide spectrum of industries provide us
with operational and financial leverages in our dealings with external third
parties. In return for those services, support and benefits, we currently pay ST
an annual management fee based on a service based fee arrangement. In addition,
we reimburse ST for the third-party costs and expenses it incurs on our behalf.

     In 2000, 2001 and 2002, management fees paid or payable to ST amount to
$4.3 million, $4.0 million and $4.0 million respectively. In addition, we
reimbursed ST for costs and expenses incurred on our behalf, principally certain
of our payroll expenses paid through ST. Those reimbursements totaled $18.6
million, $18.3 million and $14.8 million in 2000, 2001 and 2002 respectively.

     The service agreement expires in the event we cease to be a subsidiary of
ST. It can be terminated by ST upon our prolonged failure to pay the management
fees due to ST. The management fees we pay ST under the service agreement are
itemized to allow us to compare them with similar services provided by unrelated
third parties. We also believe that we derive economic benefits from the
corporate services and support ST provides us. For example, ST guarantees a
portion of our debt without fees or covenants and provides standby credit
facilities without charge. In addition, we have used ST's leverage to secure
loans and terms (including interest rates and covenants) that we would not
otherwise have obtained.

     In the event that the service agreement is terminated, however, we will be
required to provide the corporate services previously provided by ST either
internally or obtain them from third parties and the cost to us could be greater
than that charged by ST.


OTHER TRANSACTIONS WITH THE SINGAPORE TECHNOLOGIES GROUP

     We transact business with ST and its affiliates in the normal course of our
respective businesses. The transaction prices were established on an arms-length
basis.

     We paid STATS $29.6 million, $9.2 million and $10.4 million in 2000, 2001
and 2002, respectively, for services rendered in those years. We also paid other
affiliates of ST $0.6 million, $1.7 million and $1.2 million in 2000, 2001 and
2002, respectively, for services rendered in those years. We purchased $0.6
million, $0.02 million and $0.3 million in assets from affiliates of ST in 2000,
2001 and 2002, respectively. We also paid affiliates of ST $0.7 million in 2000,
for construction costs rendered in that year.

     Fabs 2 and 3 and our corporate offices are located on land leased to ST by
Jurong Town Corporation, or JTC, a statutory board established by the Government
of Singapore to develop and manage industrial estates in Singapore. These leases
run until 2024 with conditional options to extend for another 30 years. We have
entered into sub-leases with ST for the entire term of the leases for Fabs 2 and
3. The sub-leases for Fab 2 and Fab 3 require us to make rental payments to ST
at rates equal to the rent paid by ST to JTC for the subject land through 2006
for Fab 2 and 2024 for Fab 3. The rental rates may be re-negotiated thereafter.
In total, we paid ST $1.2 million, $1.3 million and $1.3 million, respectively,
in lease payments for 2000, 2001 and 2002.

                                       65
<PAGE>
     CSP leases the land on which Fab 6 is located from ST, which in turn leases
it from JTC. The agreement provides for the land to be leased to ST until 2027,
with a conditional option to extend for an additional 30 years. CSP makes rental
payments to ST at rates equal to the rent paid by ST to JTC for the subject land
through 2027. CSP paid ST $0.7 million, $0.6 million and $0.5 million in lease
payments for 2000, 2001 and 2002, respectively.

     Fab 7 is located on land licensed to ST by JTC for a period of three years
commencing from March 1, 2000 under the terms of a Building Agreement dated July
30, 2001 for the purpose of entering and building on the land (see "Item 19.
Exhibits -- Exhibit 4.52"). Under an Agreement for Sub-License and Sub-Lease
with ST dated July 30, 2001, (see "Item 19. Exhibits -- Exhibit 4.51") we have a
sub-license from ST to this land for a term of three years less one day
commencing from March 1, 2000, with license fee payments equal to the license
fees payable by ST to JTC under the Building Agreement. While this sub-license
has recently expired, we are in negotiations with ST and JTC to extend it and
have secured in-principle approval from such entities for such extension. Upon
the completion of the Fab 7 building and the satisfaction of certain conditions
contained in the Building Agreement, we expect JTC to lease the land where Fab 7
is located to ST. We expect to sub-lease this land from ST for a term of 30
years less 1 day with rental payments equal to the rent paid by ST to JTC.

     Some of our insurance coverage is held under various insurance policies
which are negotiated and maintained by ST but billed directly to us. This
enables us to benefit from the group rates negotiated by ST.

     We also engage in transactions with other companies directly or indirectly
controlled by Temasek Holdings, the parent company of Singapore Technologies, in
the ordinary course of business. These transactions, such as, phone services
from Singapore Telecom and airline tickets from Singapore Airlines are on
customary terms and conditions and are generally not subject to additional
review by the Audit Committee.


ITEM 8. FINANCIAL INFORMATION

DIVIDEND POLICY

     In December 1995 and January 1997, we paid a cash dividend on our ordinary
shares in an amount equivalent to US$87,000 and US$93,000, respectively, for the
purpose of qualifying our ordinary shares as "trustee stock" eligible for
investment by account holders of the Central Provident Fund, a mandatory
employee pension plan administered by the Government of Singapore. Except for
these dividends, we have not, since our inception, declared or paid any cash
dividends on our ordinary shares. We do not currently anticipate paying any cash
dividends for 2003. We may, by ordinary resolution, declare dividends at a
general meeting, but we may not pay dividends in excess of the amount
recommended by our Board of Directors. Our Board of Directors may also declare
interim dividends without seeking shareholder approval. We must pay all
dividends out of our profits or pursuant to Section 69 of the Companies Act
(Chapter 50) of Singapore (the "Companies Act"). In making its recommendation,
our Board of Directors will consider, among other things, our future earnings,
operations, capital requirements and general financial condition, as well as
general business conditions and other factors which our Board of Directors may
determine are appropriate. Some of our loan agreements restrict the payment of
dividends without the consent of the lender. We currently intend to retain
future earnings, if any, to finance expansion of our business.


LEGAL PROCEEDINGS

     As of February 28, 2003, we are not involved in any legal proceedings that
we believe would be harmful to our company.


ITEM 9. THE OFFER AND LISTING

PRICE RANGE OF OUR ADSs AND ORDINARY SHARES

     The following table sets forth, for the periods indicated, the high and low
last reported sales prices per ADS and ordinary share since trading on October
29, 1999 as furnished by the Nasdaq National Market, or Nasdaq, and the
Singapore Exchange. The initial public offering price of our ADSs on October 29,
1999 was $20.00 per ADS and S$3.344 per ordinary share. Per ADS and per share
prices reflect the adjustment due to the October 2002 Rights Offering.

                                       66
<PAGE>
(a)  Annual high and low market prices

<TABLE>
<CAPTION>
                                             Nasdaq Stock Market National Market
                                             -----------------------------------
                                               High                        Low
                                               ----                        ---
<S>                                          <C>                         <C>
October 29, through December 31, 1999         $65.63                     $28.09
January 1, through December 31, 2000          $95.07                     $23.71
January 1, through December 31, 2001          $32.37                     $14.72
January 1, through December 31, 2002          $27.10                      $3.94
</TABLE>


<TABLE>
<CAPTION>
                                            Singapore Exchange Securities Trading Limited
                                            ---------------------------------------------
                                               High                                 Low
                                               ----                                 ---
<S>                                         <C>                                    <C>
November 1, through December 31, 1999         S$ 8.75                              S$4.46
January 1, through December 31, 2000          S$16.03                              S$4.11
January 1, through December 31, 2001          S$ 5.46                              S$2.59
January 1, through December 31, 2002          S$ 4.81                              S$0.71
</TABLE>


(b)  Quarterly high and low market prices

<TABLE>
<CAPTION>
                                             Nasdaq Stock Market National Market
                                             -----------------------------------
                                               High                        Low
                                               ----                        ---
<S>                                          <C>                         <C>
January 1, through March 31, 2001            $32.37                      $21.62
April 1, through June 30, 2001               $30.21                      $19.27
July 1, through September 30, 2001           $26.28                      $14.72
October 1, through December 31, 2001         $26.10                      $14.97
January 1, through March 31, 2002            $27.10                      $19.64
April 1, through June 30, 2002               $24.20                      $17.52
July 1, through September 30, 2002           $19.20                       $5.43
October 1, through December 31, 2002         $ 6.63                       $3.94
</TABLE>


<TABLE>
<CAPTION>
                                            Singapore Exchange Securities Trading Limited
                                            ---------------------------------------------
                                             High                                   Low
                                             ----                                   ---
<S>                                         <C>                                    <C>
January 1, through March 31, 2001           S$5.46                                 S$3.67
April 1, through June 30, 2001              S$5.20                                 S$3.40
July 1, through September 30, 2001          S$4.51                                 S$2.62
October 1, through December 31, 2001        S$4.42                                 S$2.59
January 1, through March 31, 2002           S$4.81                                 S$3.47
April 1, through June 30, 2002              S$4.28                                 S$2.96
July 1, through September 30, 2002          S$3.29                                 S$0.98
October 1, through December 31, 2002        S$1.20                                 S$0.71
</TABLE>


(c)  Monthly high and low market prices

<TABLE>
<CAPTION>
                                             Nasdaq Stock Market National Market
                                             -----------------------------------
                                               High                        Low
                                               ----                        ---
<S>                                          <C>                          <C>
September 1, through September 30, 2002       $8.67                       $5.43
October 1, through October 31, 2002           $5.61                       $4.74
November 1, through November 30, 2002         $6.63                       $4.68
December 1, through December 31, 2002         $6.29                       $3.94
January 1, through January 31, 2003           $5.17                       $3.97
February 1, through February 28, 2003         $4.34                       $3.82
</TABLE>

                                       67
<PAGE>
<TABLE>
<CAPTION>
                                            Singapore Exchange Securities Trading Limited
                                            ---------------------------------------------
                                             High                                   Low
                                             ----                                   ---
<S>                                         <C>                                    <C>
September 1, through September 30, 2002     S$1.46                                 S$0.98
October 1, through October 31, 2002         S$1.00                                 S$0.86
November 1, through November 30, 2002       S$1.20                                 S$0.85
December 1, through December 31, 2002       S$1.12                                 S$0.71
January 1, through January 31, 2003         S$0.90                                 S$0.71
February 1, through February 28, 2003       S$0.76                                 S$0.67
</TABLE>

     The last reported sale price of the ADSs as quoted on Nasdaq on February
28, 2003 was $4.14 per ADS. The last reported sale price of the ordinary shares
as quoted on the Singapore Exchange on February 28, 2003 was S$0.71 per ordinary
share.

     Please see "Item 3. Key Information -- Risk Factors -- Risks Related to Our
Securities and Our Trading Market" regarding the nature of the trading market
for our ADSs and ordinary shares.


ITEM 10. ADDITIONAL INFORMATION

RIGHTS OFFERING

     In October 2002, the company completed a rights offering pursuant to which
it issued to holders of :

     -    its ordinary shares, rights to subscribe for new ordinary shares in
          the ratio of eight ordinary shares for every ten ordinary shares held.
          The ordinary share subscription price was S$1.00.
     -    its ADSs, rights to subscribe for new ADSs, in the ratio of eight ADSs
          for every ten ADSs held. The definitive ADSs subscription price was
          US$5.58.

     The company issued 1,109.6 million new ordinary shares (directly or in the
form of ADSs) and received net proceeds of $612 million from the rights
offering.


EMPLOYEE BONUS AWARD PLAN CANCELLATION

     In prior years, the company had implemented an employee bonus award plan
with respect to the payment of bonuses to employees. In March 2003, the company
cancelled the employee bonus award plan. As a result, compensation accrued for
past services under the bonus award plan of $27.5 million was eliminated by
decreasing compensation expense in the period of the cancellation.


SUMMARY OF OUR MEMORANDUM AND ARTICLES OF ASSOCIATION

     Set forth is a summary of various provisions in our Memorandum and Articles
of Association. This summary is qualified in its entirety by reference to our
Memorandum and Articles of Association (see "Item 19. Exhibits -- Exhibit 1").


Objects and Purposes

     Our objects and purposes are found in paragraph 3 of our Memorandum of
Association. Our main object and purpose includes, but is not limited to, the
business of manufacturing, assembling and testing semiconductor components and
related activities.


Directors

     A Director is not entitled to vote in respect of any contract or
arrangement or any other proposal whatsoever in which he has any interest,
directly or indirectly. A Director will not be counted in a quorum at a Board of
Directors' meeting in relation to a resolution in which he is not entitled to
vote.

     The compensation of our Directors is determined by our shareholders in
general meeting. Our Directors may vote on the payment of extra compensation to
an executive Director, a Director who serves on a Directors' committee or to a
Director who performs services which are outside the scope of the ordinary
duties of a Director. Our Directors have the power to determine pensions and
other retirement, superannuation, death or disability benefits for an executive
Director and to fix the compensation of a Chief Executive Officer or President.

                                       68
<PAGE>
     Our Directors may exercise all powers of our company to borrow money, to
mortgage or charge its undertaking, property and uncalled capital and to issue
debentures and other securities.

     At each annual general meeting at least, one-third of our Directors must
retire from office by rotation. A retiring Director is eligible for re-election
and the Directors to retire every year are those who have been longest in office
since their last re-election or appointment. A Director holding office as
President or Chief Executive Officer is subject to retirement by rotation as
with the other Directors of the company.

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

     No person over the age of 70 years may be appointed by the Board as a
Director of our company. The office of a Director becomes vacant at the
conclusion of the annual general meeting following the date the Director attains
the age of 70 years. Thereafter, the Director is required to stand for
re-appointment by the shareholders each year.


New Ordinary Shares

     We have only one class of shares, known as ordinary shares. New ordinary
shares may only be issued with the prior approval in a general meeting of our
shareholders. The approval, if granted, will lapse at the conclusion of the
annual general meeting following the date on which the approval was granted or
the date by which such annual general meeting is required to be held, whichever
is earlier. Our shareholders have given us general authority to issue any
remaining approved but unissued ordinary shares prior to our next annual general
meeting. Subject to the foregoing, the provisions of the Companies Act and any
special rights attached to any class of shares currently issued, all new
ordinary shares are under the control of our Board of Directors who may allot
and issue the same with such rights and restrictions as it may think fit,
provided that new ordinary shares may not be issued to transfer a controlling
interest in our company without the prior approval in general meeting of our
shareholders. Our shareholders are not entitled to pre-emptive rights under our
Articles of Association.

     Our Directors may make calls upon our shareholders in respect of any moneys
unpaid on their shares (whether on account of the nominal value of the shares,
or when permitted, by way of premium) but subject to the terms of issue of such
shares. This call right does not apply to our currently outstanding ordinary
shares, all of which are fully paid.


Transfer of Ordinary Shares

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


General Meetings of Shareholders

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

                                       69
<PAGE>
Voting Rights

     A shareholder is entitled to attend, speak and vote at any general meeting,
in person or by proxy. A proxy need not be a shareholder. A person who holds
ordinary shares in the book-entry clearance system maintained by The Central
Depository (Pte) Limited, or CDP, will only be entitled to vote at a general
meeting as a shareholder if his name appears on the depository register
maintained by CDP 48 hours before the general meeting. Except as otherwise
provided under our Articles of Association, two or more shareholders holding at
least 331/3 per cent. of our issued and outstanding ordinary shares must be
present in person or by proxy to constitute a quorum at any general meeting.
Under our Articles of Association, on a show of hands, every shareholder present
in person and each proxy shall have one vote, and on a poll, every shareholder
present in person or by proxy shall have one vote for each ordinary share held.
A poll may be demanded in certain circumstances, including by the chairman of
the meeting or by any shareholder present in person or by proxy.


Dividends

     We may, by ordinary resolution, declare dividends at a general meeting, but
we may not pay dividends in excess of the amount recommended by our Board of
Directors. We must pay all dividends out of our profits or pursuant to Section
69 of the Companies Act. Our Board of Directors may also declare an interim
dividend. All dividends are paid pro rata among the shareholders in proportion
to the amount paid up on each shareholder's ordinary shares, unless the rights
attaching to an issue of any ordinary share provides otherwise. Unless otherwise
directed, dividends are paid by cheque or warrant sent through the post to each
shareholder at his registered address. Notwithstanding the foregoing, our
payment to CDP of any dividend payable to a shareholder whose name is entered in
the depository register shall, to the extent of payment made to CDP, discharge
us from any liability to that shareholder in respect of that payment.


Bonus and Rights Issue

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


Liquidation or Other Return of Capital

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

Limitations on Rights to Hold or Vote Shares

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


Provisions Discriminating against any Existing or Prospective Holder of Shares

     There are no provisions in our Articles of Association discriminating
against any existing or prospective holder of shares as a result of a
shareholder owning a substantial number of shares.


Recent alterations to our Articles of Association

     In May 2002, the shareholders approved amendments to our Articles of
Association that:

     a)   provide that our Chief Executive Officer and President stands for
          re-election with respect to his board seat, as is required for the
          other board seats; and

     b)   permit us to electronically distribute notices and documents to our
          shareholders, subject to compliance with the applicable regulatory
          requirements.

     In addition, the shareholders approved at the same meeting alterations to
the objects and purposes clauses of our Memorandum of Association to provide for
our entering into, or investing in, derivatives and other financial instruments
and products.

                                       70
<PAGE>
Takeovers

     The Singapore Code on Takeovers and Mergers (the "Take-Over Code")
regulates the acquisition of, among others, ordinary shares of public companies
and contains certain provisions that may delay, deter or prevent a future
takeover or change in control of our company. Any person acquiring an interest,
either on his own or together with parties acting in concert with him, in 30% or
more of our voting shares or, if such person holds, either on his own or
together with parties acting in concert with him, between 30% and 50% (both
inclusive) of our voting shares, and acquires additional voting shares
representing more than 1% of our voting shares in any six-month period, must
extend a takeover offer for the remaining voting shares in accordance with the
provisions of the Take-Over Code.

     "Parties acting in concert" comprise individuals or companies who, pursuant
to an arrangement or understanding (whether formal or informal), co-operate,
through the acquisition by any of them of shares in a company, to obtain or
consolidate effective control of that company. Certain persons are presumed
(unless the presumption is rebutted) to be acting in concert with each other.
They are as follows: A company and its related and associated companies and
companies whose associated companies include any of these companies, a company
and its directors (including their close relatives, related trusts and companies
controlled by any of the directors, their close relatives and related trusts), a
company and its pension funds and employee share schemes, a person and any
investment company, unit trust or other fund whose investment such person
manages on a discretionary basis, a financial or other professional adviser and
its client in respect of shares held by the financial adviser and persons
controlling, controlled by or under the same control as the adviser and all the
funds managed by the adviser on a discretionary basis, where the shareholding of
the adviser and any of those funds in the client total 10% or more of the
client's equity share capital, directors of a company (including their close
relatives, related trusts and companies controlled by any of such directors,
their close relatives and related trusts) which is subject to an offer or where
the directors have reason to believe a bona fide offer for the company may be
imminent, partners, and an individual and his close relatives, related trusts,
any person who is accustomed to act in accordance with his instructions and
companies controlled by the individual, his close relatives, his related trusts
or any person who is accustomed to act in accordance with his instructions.

     An offer for consideration other than cash must, subject to certain
exceptions, be accompanied by a cash alternative at not less than the highest
price paid by the offeror or parties acting in concert with the offeror within
the preceding six months.


Indemnity

     Under the Take-over Code, where effective control of a company is
acquired or consolidated by a person, or persons acting in concert, a general
offer to all other shareholders is normally required. An offeror must treat all
shareholders of the same class in an offeree company equally. A fundamental
requirement is that shareholders in the company subject to the takeover offer
must be given sufficient information, advice and time to consider and decide on
the offer.

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


Substantial Shareholdings

     Under the Companies Act, a person has a substantial shareholding in a
company if he has an interest (or interests) in one or more voting shares in the
company and the nominal amount of that share (or the aggregate amount of the
nominal amounts of those shares) is not less than 5 per cent. of the aggregate
of the nominal amount of all voting shares in the company. A person having a
substantial shareholding in our company is required to make certain disclosures
under the Companies Act and the Securities and Futures Act, (Chapter 289 of
Singapore), including the particulars of his interests in our company and the
circumstances by which he has such interests.

                                       71
<PAGE>


Minority Rights

     The rights of minority shareholders of Singapore-incorporated companies are
protected under Section 216 of the Companies Act, which gives the Singapore
courts a general power to make any order, upon application by any shareholder of
the company, as they think fit to remedy any of the following situations:

     -    the affairs of the company are being conducted or the powers of the
          board of directors are being exercised in a manner oppressive to, or
          in disregard of the interests of, one or more of our shareholders; or

     -    the company takes an action, or threatens to take an action, or the
          shareholders pass a resolution, or propose to pass a resolution, which
          unfairly discriminates against, or is otherwise prejudicial to, one or
          more of the shareholders, including the applicant.

     Singapore courts have wide discretion as to the reliefs they may grant and
those reliefs are in no way limited to those listed in the Companies Act
itself. Without prejudice to the foregoing, Singapore courts may:

     -    direct or prohibit any act or cancel or vary any transaction or
          resolution;

     -    regulate the conduct of our affairs in the future;

     -    authorize civil proceedings to be brought in the name of, or on behalf
          of, our company by a person or persons and on such terms as the court
          may direct;

     -    provide for the purchase of a minority shareholder's shares by the
          other shareholders or by our company and, in the case of a purchase of
          shares by us, a corresponding reduction of the share capital;

     -    provide that the Memorandum or Articles of Association be amended; or

     -    provide that our company be wound up.


MATERIAL CONTRACTS

     The following is a summary of each contract that is material to us as of
the date hereof and was not entered into by us in the ordinary course of
business. Cross-references are provided where these agreements are described
elsewhere in this document. These agreements are also listed in "Item 19 --
Exhibits".


Loan Agreements

     Chartered Silicon Partners Pte. Ltd. entered into a Loan Agreement with the
Economic Development Board dated November 24, 1999 for an amount of up to
S$450.0 million ($245.8 million) (see "Item 19. Exhibits -- Exhibit 4.9") (for a
summary of this arrangement, see "Item 5. Operating and Financial Review and
Prospects -- Liquidity and Capital Resources").

     CSP entered into a Loan Agreement with a syndicate of banks and ABN Amro
Bank N.V., Singapore Branch, as agent, dated September 28, 2000 (see "Item 19.
Exhibits -- Exhibit 4.1") for an amount of up to $820 million (known as the "CSP
Second Phase Credit Agreement"). For a summary of this arrangement, see "Item 5.
Operating and Financial Review and Prospects -- Liquidity and Capital
Resources". In connection with this loan, Agilent Technologies Europe B.V. and
ourselves provided a Shareholders Undertaking dated December 14, 2000 (see "Item
19. Exhibits -- Exhibit 4.4"). Under the Shareholders Undertaking, we and
Agilent agreed to guarantee completion of Fab 6 and to provide equity support
for CSP. Our obligation to provide equity support under the Shareholders
Undertaking was subject to a maximum liability equal to the amount of any unpaid
equity contributions we were obligated to make in CSP. We completed our equity
contribution payments in CSP in November 2000 and, consequently, are no longer
liable for equity support in CSP under the Shareholders Undertaking.

     A second U.S. dollar term loan (the "CSP First Phase Credit Agreement") for
an amount of $143.2 million with several banks and financial institutions for
capital expenditure and equipment that was first put in place on March 12, 1998,
has since been fully repaid in 2002. (See "Item 19. Exhibits - Exhibits 4.1.1 to
4.1.6 and Exhibits 4.2.1 to 4.2.3" for this agreement together with subsequent
amendments and related agreements). Although the CSP First Phase Credit
Agreement has been fully repaid, the guarantee that the lenders under this
agreement had provided in favor of the Economic Development Board or EDB in
respect of CSP's obligations under its loan with EDB dated November 24, 1999
(For the

                                       72
<PAGE>
EDB loan agreement, see "Item 19. Exhibits -- Exhibit 4.9") remains unaffected.
As such, certain provisions under the CSP First Phase Credit Agreement arising
out of or in connection with the guarantee (such as indemnity provisions from
CSP as a result of the guarantee and the debt-net worth ratio obligations) would
continue to apply.

     In 2002, we announced that we were seeking consents from one or more of our
lenders and several of CSP's lenders to allow us to substantially increase CSP's
net worth to enable CSP to satisfy a total debt to net worth ratio for the CSP
First and Second Phase Credit Agreements. Such increase in CSP's net worth was
effected by converting amounts payable by CSP to us into a loan from us to CSP
(the "Chartered Loan"). We obtained the necessary consents from the lenders and
CSP was in compliance with the total debt to net worth ratio for both loans as
at June 30, 2002, and also as at December 31, 2002.

     In obtaining the consents, the above two CSP loan agreements were amended
to include the Subordination Agreements which subordinated amounts under the
Chartered Loan to the amounts due by CSP to its other lenders under the above
loans. For copies of the respective Letter Agreements incorporating the
Subordination Agreements, see "Item 19. Exhibits -- Exhibit 4.1.6 and Exhibit
4.3.3" and for copies of the respective Subordination Agreements, see "Item 19.
Exhibits -- Exhibit 4.1.5 and Exhibit 4.3.2". For more information on this
arrangement, see "Item 5. Operating and Financial Review and Prospects --
Liquidity and Capital Resources".

     Silicon Manufacturing Partners Pte. Ltd. entered into a Loan Agreement with
a syndicate of banks and Citicorp Bank, as agent, dated September 3, 1999 (see
"Item 19. Exhibits -- Exhibit 4.5") for an amount of up to $445 million, of
which $300 million is Tranche A and $145 million is Tranche B, at an interest
rate of LIBOR plus margin of 1.5% or less (the "SMP Syndicated Loan"). The final
repayment date for the Tranche A loan is March 17, 2005, and the final repayment
date for the Tranche B loan is December 3, 2005. In connection with this loan,
we and Lucent Technologies Microelectronics Pte. Ltd. provided a Shareholders
Undertaking dated September 3, 1999 (see "Item 19. Exhibits -- Exhibit 4.7") in
which we agreed to guarantee completion of Fab 5 and to provide equity support
for SMP. Our obligation to provide equity support under the Shareholders
Undertaking was subject to a maximum liability equal to the amount of any unpaid
equity contributions we were obligated to make in SMP. We completed our equity
contribution payments in SMP in July 2000 and, consequently, are no longer
liable for equity support in SMP under the Shareholders Undertaking. On July 20,
2000, the parties to the SMP Syndicated Loan entered into a Supplemental
Agreement which amends the terms of the Loan Agreement (see "Item 19. Exhibits
-- Exhibit 4.6") to permit SMP to draw down the Tranche B facility in more than
one drawdown instead of a single drawdown.

     On May 2, 2001, the parties to the SMP Syndicated Loan and the
corresponding Shareholders Undertaking entered into an Amendment to these
agreements (see "Item 19. Exhibits -- Exhibit 4.8"). Lucent Technologies Inc.
had on February 1, 2001, transferred the assets and liabilities of its
Microelectronics group into an independent company known as Agere Systems Inc.
(Please see "Item 4. Information on Our Company -- Strategic Alliances --
Silicon Manufacturing Partners"). In connection with the transfer, Lucent
Technologies Inc. ("Lucent") and Lucent Technologies International Inc. ("LTI")
transferred certain assets related to Agere Systems Inc.'s business, including
LTI's interest in Lucent Technologies Microelectronics Pte. Ltd. ("LTM") to
Agere Systems International LLC, a wholly-owned direct subsidiary of Agere
Systems Inc. LTM changed its name to Agere Systems Singapore Pte. Ltd. with
effect from February 1, 2001. The Amendment dated May 2, 2001 was to record the
parties' agreement to the abovementioned transfer.

     As a result of the Loan Agreement with the Economic Development Board dated
July 21, 1997 for an amount of up to S$300 million being fully repaid in 2002,
we now have two existing Loan Agreements with the Economic Development Board:
one dated August 1, 1995 for an amount of up to S$100 million (see "Item 19.
Exhibits -- Exhibit 4.10"); one dated April 14, 1997 for an amount of up to
S$600 million, as supplemented on May 29, 1997 (see "Item 19. Exhibits --
Exhibit 4.11"). (for a summary of these arrangements, see "Item 5. Operating and
Financial Review and Prospects -- Liquidity and Capital Resources").

     The two Loan Agreements with the Development Bank of Singapore (formerly
Post Office Savings Bank of Singapore): one dated February 11, 1997 for an
amount of up to S$50 million ($28.8 million); and the other dated June 10, 1997
for an amount of up to S$50 million ($28.8 million), have since been fully
repaid in 2002.

     Some of our loan agreements restrict the payment of dividends by us without
the consent of the lender. In addition, some of the loan agreements of CSP and
SMP restrict the payment of dividends to us and the other shareholders of CSP
and SMP, respectively.


Strategic Alliances

1.   Chartered Silicon Partners

                                       73
<PAGE>

     We entered into a Joint Venture Agreement with Hewlett-Packard Europe B.V.
and EDB Investments Pte. Ltd. dated March 13, 1997, as amended by Amendment
Agreement No. 1 dated July 4, 1997 and Amendment No. 2 dated October 1, 1999, to
form the Chartered Silicon Partners strategic alliance relating to the joint
ownership of Fab 6, all of which are contained in the Restated Joint Venture
Agreement dated October 23, 2001 ((see "Item 19. Exhibits -- Exhibit 4.14"). As
part of the CSP alliance, we also entered into an Assured Supply and Demand
Agreement with Chartered Silicon Partners Pte. Ltd. and Hewlett-Packard Company
dated July 4, 1997 (see "Item 19. Exhibits -- Exhibit 4.16"), as amended by
Amendment Agreement No. 2 dated June 17, 1999 (see "Item 19. Exhibits -- Exhibit
4.17") which supercedes the previous amendments contained in Amendment Agreement
No. 1 dated November 5, 1998 and a License and Technology Agreement with
Chartered Silicon Partners Pte. Ltd. and Hewlett-Packard Company dated July 4,
1997 (for a summary of this arrangement, see "Item 4. Information on Our Company
-- Strategic Alliances -- Chartered Silicon Partners").

     Hewlett-Packard assigned its rights and obligations under the CSP
agreements to Agilent Technologies and its subsidiaries under agreements among
Hewlett-Packard, Agilent Technologies Europe and us dated November 9, 1999: Deed
of Accession and Ratification with respect to the Joint Venture Agreement,
Novation and Amendment Agreement with respect to the Assured Supply and Demand
Agreement as amended (see "Item 19. Exhibits -- Exhibit 4.18") and Novation and
Amendment Agreement with respect to the License and Technology Agreement (for a
summary of this arrangement, see "Item 4. Information on Our Company --
Strategic Alliances -- Chartered Silicon Partners").

     Pursuant to a Deed of Accession and Ratification dated October 22, 2001
(see "Item 19. Exhibits -- Exhibit 4.14"), we, EDB Investments Pte. Ltd. and
Agilent Technologies Europe agreed to the sale by Agilent Technologies Europe of
15% of its shareholding in CSP to EDB Investments and Singapex Investments Pte.
Ltd. Consequent to such sale, certain terms of the Joint Venture Agreement were
amended and restated in the in the Restated Joint Venture Agreement dated
October 23, 2001.

     As part of Agilent's strategy that led to Agilent Technologies Europe
reducing its ownership in CSP in October 2001, Agilent Technologies Europe
relinquished the voting rights of its nominees on the Board of Directors of CSP.
The parties entered into the Amendment No. 1 dated January 31, 2002 to the
Restated Joint Venture Agreement dated October 23, 2001 (see "Item 19. Exhibits
-- Exhibit 4.15") to effect such change.

     For more details on the sale by Agilent Technologies Europe of part of its
shareholding in CSP, please see "Item 4. Information on Our Company -- Strategic
Alliances -- Chartered Silicon Partners".


2.   Silicon Manufacturing Partners

     We entered into a Joint Venture Agreement with Lucent Technologies
Microelectronics Pte. Ltd., now known as Agere Systems Singapore Pte. Ltd.,
dated December 19, 1997 (see "Item 19. Exhibits -- Exhibit 4.19"), to form the
Silicon Manufacturing Partners strategic alliance relating to the joint
ownership of Fab 5.

     As part of the SMP alliance, we also entered into an Assured Supply and
Demand Agreement with Silicon Manufacturing Partners Pte. Ltd. and Lucent
Technologies Microelectronics Pte. Ltd. dated February 17, 1998 (see "Item 19.
Exhibits -- Exhibit 4.20"), as amended by the Supplemental Assured Supply and
Demand Agreement dated September 3, 1999 (see "Item 19. Exhibits -- Exhibit
4.21") and a License and Technology Agreement with Silicon Manufacturing
Partners Pte. Ltd. and Lucent Technologies Microelectronics Pte. Ltd. dated
February 17, 1998 (see "Item 19. Exhibits -- Exhibit 4.22"), as amended by
Amendment Agreement No. 1 dated July 27, 2000 (see "Item 19. Exhibits -- Exhibit
4.23"), by Amendment Agreement No. 2 dated March 22, 2001 (see "Item 19.
Exhibits -- Exhibit 4.24") and by Amendment Agreement (No. 3) dated March 28,
2002 (See "Item 19. Exhibits -- Exhibit 4.25"), the amendment agreements
relating to additional process technologies to be transferred (for a summary of
this arrangement, see "Item 4. Information on Our Company -- Strategic Alliances
-- Silicon Manufacturing Partners").


Technology Transfer, License, Joint Development and other related agreements

1.   Agere Systems

                                       74
<PAGE>

     We entered into a Technology Transfer Agreement with Lucent Technologies
Inc., now known as Agere Systems Inc. dated February 17, 1998 (see "Item 19.
Exhibits -- Exhibit 4.26"), the purpose of which was to transfer technology into
each of our company and Agere Systems Inc. so as to maintain the compatibility
of the processes running in Silicon Manufacturing Partners with the processes
running in our fabs. (For a summary of this arrangement, see "Item 4.
Information on Our Company -- Offer Leading Process Technology " and "Item 4.
Information on Our Company -- Research and Development"). Under this Agreement,
Lucent and our company transferred one another 0.25um process technology. This
above agreement has since been amended three times by Amendment Agreement (No.
1) dated July 31, 2000 (see "Item 19. Exhibits -- Exhibit 4.27"), by Amendment
Agreement (No. 2) dated March 20, 2001 (see "Item 19. Exhibits -- Exhibit
4.28"), and by Amendment Agreement (No. 3) dated March 28, 2002 (see "Item 19.
Exhibits -- Exhibit 4.29"), all for the purpose of updating the list of process
technologies transferred by each of our company and Agere Systems Inc.

     We also have a Patent License Agreement with Agere Systems Inc. dated
January 1, 1998 (see "Item 19. Exhibits -- Exhibit 4.30"), as amended August 18,
2000 (see "Item 19. Exhibits -- Exhibit 4.31"). Under this Agreement, Agere and
our company granted to one another a license to use certain of each other's
patents and for us to provide wafer capacity to Agere in lieu of royalty
payments for the use of Agere's patents.

     On September 26, 2002, we entered into a Letter Agreement with Agere
Systems Inc. ("Agere"), 1998 (see "Item 19. Exhibits -- Exhibit 4.32"), where in
exchange for our agreement to waive Agere's capacity shortfall fees under our
manufacturing agreement with them, Agere agreed to treat our royalty obligations
under the patent license agreement with Agere as satisfied until such time as
Agere's ownership interest in Silicon Manufacturing Partners Ltd. falls below
49%. Thereafter, the existing provisions in the patent license agreement
allowing us to offset royalty payments in exchange for the provision of short
and long term flexibility in wafer capacity to Agere continue to apply.


2.   Toshiba

     We entered into a Patent Cross-License Agreement with Toshiba Corporation
dated August 12, 1999 (see "Item 19. Exhibits -- Exhibit 4.33"). Under this
Agreement, Toshiba and our company granted one another a license to use certain
of each other's patents and for us to provide wafer capacity to Toshiba in lieu
of royalty payments for the use of Toshiba's patents.


3.   IBM

     We entered into a Patent Cross-License Agreement with IBM dated January 1,
2001 (see "Item 19. Exhibits -- Exhibit 4.34"). Under this agreement, IBM and
our company granted to one another a license to use certain of each other's
patents.

     This Agreement was amended effective as of November 26, 2002 to expand the
scope of the licenses and to extend the term of the licences granted to each
party (see "Item 19. Exhibits -- Exhibit 4.35").

     Effective as of November 26, 2002, we entered into the following agreements
with IBM : "SF" Process Development and Cost Sharing Agreement (see "Item 19.
Exhibits -- Exhibit 4.36"), Copper/Related FEOL Technology Agreement (see "Item
19. Exhibits -- Exhibit 4.37") and Refundable Cross Deposit Agreement (see "Item
19. Exhibits -- Exhibit 4.38"). The "SF" Process Development and Cost Sharing
Agreement provides for the development of 90 nm and 65 nm logic processes on 300
mm silicon wafers. Under the Copper/Related FEOL Technology License Agreement,
IBM transferred and licensed to Chartered certain know-how and skills relating
to certain copper back end of line and related front end of line techniques.
Under the Refundable Cross Deposit Agreement, each of IBM and Chartered would
deposit certain funds with the other party to secure certain manufacturing
capacity in each other's facility.


Property Agreements

1.   Fab 1

                                       75
<PAGE>

     We lease the land where Fab 1 is located from Ascendas Land (Singapore)
Pte. Ltd. (formerly known as "Technology Parks Private Limited") under a Lease
of Lot 2164 Mukim 3-2 Science Park Drive dated January 18, 1995 (see "Item 19.
Exhibits -- Exhibit 4.39"). The lease has a 30-year term. (for a summary of this
arrangement, see "Item 4. Information on Our Company -- Description of
Property").


2.   Fab 2

     Singapore Technologies Pte. Ltd. or ST leased the land where Fab 2 is
located from Jurong Town Corporation under a Building Agreement relating to
Private Lot A12787 Mukim No. 13 Sembawang dated April 11, 1995 (see "Item 19.
Exhibits -- Exhibit 4.40"). Under an Agreement for Sub-License and Sub-Lease
dated September 30, 1997 with ST. (see "Item 19. Exhibits -- Exhibit 4.41"), we
sub-lease this land until 2024 with rental payments equal to the rent paid by ST
to Jurong Town until 2006 (for a summary of this arrangement, see "Item 4.
Information on Our Company -- Description of Property" and "Item 7. Major
Shareholders and Related Party Transactions -- Related Party Transactions --
Other Transactions with the Singapore Technologies Group").


3.   Fab 3

     ST leased the land where Fab 3 is located from Jurong Town Corporation
under Building Agreements relating to Private Lot A12787 (a) Woodlands
Industrial Park D, Mukim No. 13 Sembawang dated February 17, 1998 (see "Item 19.
Exhibits -- Exhibit 4.42"), as amended on October 7, 1998 (see "Item 19.
Exhibits -- Exhibit 4.43"), and Private Lot A12787 (b) dated February 17, 1998
(see "Item 19. Exhibits -- Exhibit 4.45"), also amended on October 7, 1998 (see
"Item 19. Exhibits -- Exhibit 4.46"), in Woodlands Industrial Park D, Mukim No.
13 Sembawang. Under Agreements for Sub-License and Sub-Lease with ST dated
February 17, 1998 (see "Item 19. Exhibits -- Exhibit 4.44 and Exhibit 4.47"), we
sub-lease this land until 2024 with rental payments equal to the rent paid by ST
to Jurong Town through 2024. Under a Sub-Lease dated February 17, 1998, we in
turn sub-lease space in Fab 3 to Silicon Manufacturing Partners for the
operation of Fab 5 (see "Item 19. Exhibits -- Exhibit 4.48") (for a summary of
this arrangement, see "Item 4. Information on Our Company -- Strategic Alliances
-- Silicon Manufacturing Partners", "Item 4. Information on Our Company --
Description of Property" and "Item 7. Major Shareholders and Related Party
Transactions -- Related Party Transactions-- Other Transactions with the
Singapore Technologies Group").


4.   Fab 6

     ST leased the land where Fab 6 is located from Jurong Town Corporation
under a Building Agreement relating to Private Lot A12787 (d) Mukim No. 13
Sembawang dated September 24, 1999 (see "Item 19. Exhibits -- Exhibit 4.49").
Under an Agreement for Sub-License and Sub-Lease dated September 24, 1999 with
ST (see "Item 19. Exhibits -- Exhibit 4.50"), Chartered Silicon Partners Pte.
Ltd. sub-leases this land until 2027 with rental payments equal to the rent paid
by ST to Jurong Town through 2027 (for a summary of this arrangement, see "Item
4. Information on Our Company -- Strategic Alliances -- Chartered Silicon
Partners", "Item 4. Information on our Company -- Description of Property" and
"Item 7. Major Shareholders and Related Party Transactions -- Related Party
Transactions -- Other Transactions with the Singapore Technologies Group").


5.   Fab 7

     ST has a license from Jurong Town Corporation to enter and build on the
land where Fab 7 is located under a Building Agreement relating to Private Lot
A12787(e) Mukim No. 13 dated July 30, 2001 (see "Item 19. Exhibits -- Exhibit
4.52"). Under an Agreement for Sub-License and Sub-Lease dated July 30, 2001
(see "Item 19. Exhibits -- Exhibit 4.51"), we have a sub-license from ST to this
land for a term of 3 years less 1 day with license fee payments equal to the
license fees paid by ST to Jurong Town Corporation. While this sub-license has
recently expired, we are in negotiations with ST and JTC to extend it and have
secured in-principle approval from such entities for such extension. Upon the
completion of the Fab 7 building and the satisfaction of certain conditions in
the Building Agreement, we expect Jurong Town Corporation to lease the land
where Fab 7 is located to ST. We expect to sub-lease this land from ST for a
term of 30 years less 1 day with rental payments equal to the rent paid by ST to
Jurong Town Corporation. (for a summary of this arrangement, see "Item 4.
Information on Our Company -- Description of Property" and "Item 7. Major
Shareholders and Related Party Transactions -- Related Party Transactions --
Other Transactions with the Singapore Technologies Group").


Related Party Agreements

                                       76
<PAGE>

     We entered into an ST Group Management and Support Services Agreement with
ST dated November 1, 1999 (see "Item 19. Exhibits -- Exhibit 4.53") (for a
summary of this arrangement, see "Item 7. Major Shareholders and Related Party
Transactions -- Related Party Transactions -- Corporate Services Provided to us
by Singapore Technologies").

     We entered into a Turnkey Subcontract Agreement for Sort, Assembly, and/or
Final Test Services with ST Assembly Services Ltd. dated March 21, 2000 (for a
summary of this arrangement, see "Item 4. Information on Our Company -- Turnkey
Services and The Chartered Solution" and "Item 7. Major Shareholders and Related
Party Transactions -- Other Transactions with the Singapore Technologies
Group"). This agreement has since been amended by an Amended and Restated
Turnkey Subcontract Agreement for Sort, Assembly, and/or Final Test Services
with ST Assembly Services Ltd. dated October 30, 2002 (see "Item 19. Exhibits --
Exhibit 4.54") under which the term of the contract has been extended from March
21, 2003 to October 30, 2005. Apart from the updating or aligning of some terms
with the terms of our standard agreements with end customers, most of the other
terms remain the same.


EXCHANGE RATES

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

     The following table sets forth, for the fiscal years indicated, information
concerning the exchange rates between Singapore dollars and U.S. dollars based
on the average of the noon buying rate in the City of New York on the last
business day of each month during the period for cable transfers in Singapore
dollars as certified for customs purposes by the Federal Reserve Bank of New
York. The table illustrates how many Singapore dollars it would take to buy one
U.S. dollar.


<TABLE>
<CAPTION>

                                                       SINGAPORE DOLLARS PER U.S. $1.00
                                                                NOON BUYING RATE
                                        ------------------------------------------------------------------
FISCAL YEAR ENDED DECEMBER 31,          AVERAGE(1)               LOW            HIGH            PERIOD END
------------------------------          ----------             ------          ------           ----------
<S>                                     <C>                    <C>             <C>              <C>
1998                                      1.6722               1.5810          1.7960             1.6510
1999                                      1.6951               1.6565          1.7370             1.6670
2000                                      1.7250               1.6535          1.7600             1.7315
2001                                      1.7937               1.7275          1.8540             1.8470
2002                                      1.7908               1.7310          1.8525             1.7352
</TABLE>


<TABLE>
<CAPTION>

MONTH                                   AVERAGE(2)              LOW             HIGH            PERIOD END
-----                                   ----------             ------          ------           ----------
<S>                                     <C>                    <C>             <C>              <C>
September 2002                            1.7682               1.7460          1.7845             1.7780
October 2002                              1.7843               1.7672          1.8035             1.7672
November 2002                             1.7653               1.7581          1.7735             1.7672
December 2002                             1.7532               1.7352          1.7760             1.7352
January 2003                              1.7363               1.7308          1.7448             1.7396
February 2003                             1.7451               1.7325          1.7582             1.7374
</TABLE>

----------

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

     Certain Singapore dollar amounts contained in this document have been
translated to U.S. dollars as at December 31, 2002, which was S$1.7429 =
US$1.00. No representation is made that the Singapore dollar or U.S. dollar
amounts shown in this document could have been or could be converted at such
rate or at any other rate.

EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS.

                                       77
<PAGE>

     Currently, no exchange control restrictions exist in Singapore. There are
no provisions under Singapore law or under our Articles of Association that
limit our ADS holders' ability to exercise their voting rights. However, under
the deposit agreement for the ADSs, there may be practical limitations upon the
ability of our ADS holders to exercise their voting rights. Please see "Item 3.
Key Information -- Risk Factors -- Your voting rights with respect to the ADSs
are limited by the terms of the deposit agreement for the ADSs" regarding the
practical limitations applicable to holders of our ADSs with respect to voting
rights.


TAXATION

SINGAPORE TAXATION

     The following discussion is a summary of the material Singapore income tax,
stamp duty and estate duty consequences of the purchase, ownership and disposal
of the ordinary shares or ADSs (collectively the "securities") to a holder of
the securities that is not resident in Singapore. This discussion does not
purport to be a comprehensive description of all of the tax considerations that
may be relevant to a decision to purchase, own or dispose of the securities and
does not purport to deal with the tax consequences applicable to all categories
of investors.

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


INCOME TAX

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

     Subject to the provisions of any applicable double taxation treaty,
non-resident taxpayers who derive certain types of income from Singapore are
subject to a withholding tax on that income at a current rate of 22% for the
year of assessment 2003 (or 15% in the case of interest, royalty and rental of
movable equipment), subject to certain exceptions.

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

     Dividend Distributions.

     Dividends paid out of Tax-Exempt Income or Income subject to Concessionary
Tax Rates.

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

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

     Dividends paid out of Income subject to Normal Corporate Taxation

     Imputation System. Before January 1, 2003 (and to a certain extent between
January 1, 2003 and December 31, 2007, pursuant to the transitional rules for
the new one-tier corporate tax system (see "New One-Tier Corporate Tax System"
below)), the imputation system of corporate taxation applied in Singapore. Under
this system, the tax we paid on income subject to tax at the prevailing
corporate income tax rate (currently 22% for the year of assessment 2003) would
be

                                       78
<PAGE>

imputed to, and deemed to be paid on behalf of, our shareholders upon
distribution of such income as dividends. Our shareholders would have received
dividends ("Franked Dividends") net of such tax and would be taxed on the gross
amount of dividends (that is, on the amount of net dividends plus an amount
equal to the amount of gross dividends multiplied by the prevailing corporate
tax rate). In this way, the tax we paid would have been available to our
shareholders as a tax credit to offset their tax liability on their overall
income subject to Singapore income tax (including the gross amount of
dividends).

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

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

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

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

     For the period up to 31 December 2007, when the imputation system will
co-exist with the one-tier corporate tax system, if we have not moved to the
one-tier system, tax vouchers issued by us will distinguish between franked
dividends and normal tax exempt dividends not being exempt dividends under the
one-tier system, such as dividends paid out of tax-exempt income, approved
deduction or further deduction of expenses or foreign tax credit allowed. If we
have fully utilised our dividend franking credits (that is, we are required to
move to the one-tier system) or if we elect to move to the one-tier system at an
earlier date, tax vouchers issued by us will distinguish between normal tax
exempt dividends and exempt dividends under the one-tier system. We do not
presently intend to migrate to the new one tier corporate tax system until our
dividend franking credits as at December 31, 2002 are fully utilized or until
the transition period comes to an end, whichever is earlier.

     No tax treaty currently exists between Singapore and the U.S.

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


STAMP DUTY

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


ESTATE DUTY

                                       79
<PAGE>

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

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


U.S. FEDERAL TAXATION

     The following is a summary of certain material U.S. federal income and
estate tax consequences that may be relevant to a U.S. holder with respect to
the acquisition, ownership and disposition of ordinary shares or ADSs. For
purposes of this summary, a "U.S. holder" is a beneficial owner of ordinary
shares or ADSs who is included in at least one of the following categories:

     -    citizens or residents of the U.S. for U.S. federal income tax
          purposes,

     -    corporations or other entities created or organized under the laws of
          the U.S. or of any political subdivision thereof,

     -    estates the income of which is subject to U.S. federal income taxation
          regardless of source,

     -    any trust the administration of which is subject to the primary
          supervision of a U.S. court and which has one or more U.S. persons who
          have the authority to control all substantial decisions of the trust,
          or, if the trust was in existence on August 20, 1996, has elected to
          continue to be treated as a U.S. person, or

     -    persons otherwise subject to U.S. federal income taxation on their
          worldwide income regardless of its source.

     This summary deals only with ordinary shares and ADSs held as capital
assets (within the meaning of section 1221 of the Internal Revenue Code of 1986,
as amended (the "Code")) and does not address the tax consequences applicable to
holders that may be subject to special tax rules, including without limitation
financial institutions, insurance companies, regulated investment companies,
dealers in securities or currencies, persons holding ordinary shares or ADSs as
a hedge against currency risks or as a position in a "straddle" or "conversion
transaction" or other integrated investment transaction for tax purposes,
persons whose "functional currency" is not the U.S. dollar, or holders of 10% or
more, by voting power or value, of the stock of our company. This summary is
based upon the Code, existing temporary and proposed Treasury Regulations,
Internal Revenue Service ("IRS") rulings and judicial decisions as now in effect
and as currently interpreted and does not take into account possible changes in
such tax laws or interpretations, any of which may be applied retroactively and
could affect the tax consequences described below. This summary further is based
in part on the assumption that each obligation in the deposit agreement and any
related agreement will be performed in accordance with its terms.


OWNERSHIP OF ADSs

     For U.S. federal income tax purposes, U.S. holders of ADSs will be treated
as the owners of the ordinary shares represented by such ADSs.


DIVIDENDS

     Distributions of cash or property (other than certain distributions of
ordinary shares, if any) with respect to ordinary shares will be generally
included in income by a U.S. holder as foreign source dividend income at the
time of receipt, which in the case of a U.S. holder of ADSs generally will be
the date of receipt by the depositary, to the extent such distributions are made
from the current or accumulated earnings and profits of our company. Such
dividends will not be eligible for the dividends received deduction generally
allowed to corporate U.S. holders. To the extent, if any, that the amount of any
distribution by our company exceeds our company's current and accumulated
earnings and profits as determined under U.S. federal income tax principles, it
will be treated first as a tax-free return of the U.S. holder's tax basis in the
ordinary shares or ADSs and thereafter as capital gain.

     A U.S. holder will not be eligible for a foreign tax credit against its
U.S. federal income tax liability for Singapore dividend distribution taxes, if
any, paid by our company. U.S. holders should be aware that dividends paid by
our company

                                       80
<PAGE>

generally will constitute "passive income" or, in the case of certain U.S.
holders, "financial services income" for purposes of the foreign tax credit.

     If dividends are paid in Singapore dollars, the amount of the dividend
distribution includible in the income of a U.S. holder will be the U.S. dollar
value of the payments made in Singapore dollars, determined at a spot exchange
rate between Singapore dollars and U.S. dollars on the date the dividend is
includible in income by the U.S. holder in accordance with its method of
accounting, regardless of whether the payment is in fact converted into U.S.
dollars. Generally, gain or loss, if any, resulting from currency exchange
fluctuations during the period from the date of distribution to the date such
payment is converted into U.S. dollars will be treated as ordinary income or
loss.


SALE OR EXCHANGE OF ORDINARY SHARES OR ADSs.

     A U.S. holder generally will recognize gain or loss on the sale or exchange
of ordinary shares or ADSs equal to the difference between the amount realized
on such sale or exchange and the U.S. holder's tax basis in the ordinary shares
or ADSs, as the case may be. Such gain or loss will be capital gain or loss, and
will be long-term capital gain or loss if the ordinary shares or ADSs, as the
case may be, were held for more than one year. Gain or loss, if any, recognized
by a U.S. holder generally will be treated as U.S. source income or loss for
U.S. foreign tax credit purposes.


PFIC RULES.

     A non-U.S. corporation will be classified as a PFIC for U.S. federal income
tax purposes if either (i) 75% or more of its gross income for the taxable year
is passive income, or (ii) on a quarterly average for the taxable year by value
(or, if it is not a publicly traded corporation and so elects, by adjusted
basis), 50% or more of its gross assets produce or are held for the production
of passive income.

     We do not believe that we satisfied either of the tests for PFIC status in
2002 and the summary above assumes that we are not, and will not become, a PFIC
in the future. However, there can be no assurances that we will not be a PFIC in
2003 or a later year. If, for example, the "passive income" earned by us exceeds
75% or more of our "gross income", we will be a PFIC under the "income test". In
addition, it is also possible that we will be a PFIC under the "asset test". The
determination of the value of our assets will be based in part on the market
price of our ordinary shares and ADSs. Because we have historically held, and
may continue to hold a substantial amount of passive assets, there is a
substantial risk that we may be a PFIC in 2003 or in a later year. Passive
income for PFIC purposes includes, among other things, interest, dividends,
royalties, rents and annuities. For manufacturing businesses, gross income for
PFIC purposes should be determined by reducing total sales by the cost of goods
sold. Although not free from doubt, if our cost of goods sold exceeds our total
sales by an amount greater than our passive income, such that we are treated as
if we had no gross income for PFIC purposes, we would not be a PFIC as a result
of the income test.

     If we were to be a PFIC at any time during a U.S. holder's holding period,
such U.S. holder would be required to either: (i) pay an interest charge
together with tax calculated at maximum ordinary income rates on "excess
distributions," which is defined to include gain on a sale or other disposition
of ordinary shares or ADSs, or (ii) so long as the ordinary shares or ADSs are
"regularly traded" on a qualifying exchange, elect to recognize as ordinary
income each such year the excess in the fair market value, if any, of its
ordinary shares or ADSs at the end of the taxable year over such holder's
adjusted basis in such ordinary shares or ADSs and, to the extent of prior
inclusions of ordinary income, recognize ordinary loss for the decrease in value
of such ordinary shares or ADSs (the "mark to market" election). For this
purpose, the Nasdaq National Market will qualify as a qualifying exchange. U.S.
holders are strongly urged to consult their own tax advisers regarding the
application of the PFIC rules.


ESTATE TAXES

     An individual shareholder who is a citizen or resident of the U.S. for U.S.
federal estate tax purposes will have the value of the ordinary shares or ADSs
owned by such holder included in his or her gross estate for U.S. federal estate
tax purposes. An individual holder who actually pays Singapore estate tax with
respect to the ordinary shares or ADSs will, however, be entitled to credit the
amount of such tax against his or her U.S. federal estate tax liability, subject
to certain conditions and limitations.


BACKUP WITHHOLDING TAX AND INFORMATION REPORTING REQUIREMENTS

                                       81
<PAGE>

     In general, information reporting requirements will apply to payments of
dividends in respect of the ordinary shares or ADSs or the proceeds received on
the sale, exchange or redemption of the ordinary shares or ADSs by a paying
agent within the U.S. to a non-corporate U.S. holder that is not otherwise
exempt, and a backup withholding tax may apply to such amounts if the U.S.
holder fails to provide an accurate taxpayer identification number to the paying
agent. Amounts withheld as backup withholding will be creditable against the
U.S. holder's U.S. federal income tax liability, provided that the required
information is furnished in a timely manner to the Internal Revenue Service.

     The above summary is not intended to constitute a complete analysis of all
tax consequences relating to ownership of ordinary shares or ADSs. You should
consult your tax adviser concerning the tax consequences of your particular
situation.


SUBSIDIARY INFORMATION

     For more information on our subsidiaries, please see "Item 4. Information
on Our Company -- Organizational Structure".


DOCUMENTS ON DISPLAY

     Publicly filed documents concerning our company can be obtained from the
Public Reference Section of the SEC, 450 Fifth Street, N.W., Washington D.C.
20549, at prescribed rates.

     The SEC maintains a website at www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that make
electronic filings with the SEC using its EDGAR system. As a foreign private
issuer, we are now required to use the EDGAR system. We have done so in the past
and will continue to do in order to make our reports available over the
Internet.


ITEM 11. QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Our exposure to financial market risks derives primarily from the changes
in interest rates and foreign exchange rates. To mitigate these risks, our
company utilizes derivative financial instruments, the application of which is
primarily for hedging purposes and not for speculative purposes.


INTEREST RATE RISK

     Our cash equivalents and short-term investments are exposed to financial
market risk due to fluctuation in interest rates, which may affect our interest
income and the fair market value of our investments. We manage the exposure to
financial market risk by performing ongoing evaluations of our investment
portfolio and investing in short-term investment-grade corporate securities.
These securities are highly liquid and generally mature within 12 months from
our purchase date. Due to the short maturities of our investments, the carrying
value approximates the fair value. In addition, we do not use our investments
for trading or other speculative purposes.

     We are exposed to interest rate risk on our existing floating rate debt and
on additional debt financing that may be periodically needed for the capital
expenditures associated with our capacity expansion and new fabs. The interest
rate that we will be able to obtain on debt financing will depend on market
conditions at that time, and may differ from the rates we have secured on our
current debt.

     As of December 31, 2002, our debt obligations are as follows:

                                       82
<PAGE>
<TABLE>
<CAPTION>
                                                          AS OF DECEMBER 31, 2002
                                                          -----------------------

                                                                       EXPECTED MATURITY DATE
                                                                   (IN THOUSANDS, EXCEPT INTEREST RATE)
                                          -----------------------------------------------------------------------------
                                                                                                   THERE-
                                            2003      2004        2005        2006        2007      AFTER       TOTAL
                                          -------   --------    --------    --------      ----     ------    ----------
<S>                                       <C>       <C>         <C>         <C>           <C>      <C>       <C>
LONG TERM DEBT
U.S. dollar at floating rate              $     0   $125,667    $125,667    $125,666       $0        $0      $  377,000
Singapore dollar at fixed rate(1)          64,001     55,173      55,173      14,345        0         0         188,692
Singapore dollar at floating rate(1)            0          0           0           0        0         0               0
2.5% convertible notes(2)                       0          0           0     603,609        0         0         603,609
Other                                           0          0           0      10,630        0         0          10,630
                                          -------   --------    --------    --------       --        --       ----------
Total                                     $64,001   $180,840    $180,840    $754,250       $0        $0      $1,179,931
                                          =======   ========    ========    ========       ==        ==      ==========
<CAPTION>

                                                                                          AS OF
                                                                                       DECEMBER 31,
                                                                                          2001
                                                                  WEIGHTED       ---------------------------
                                                                  AVERAGE
                                                 FAIR             INTEREST                           FAIR
                                                 VALUE              RATE            TOTAL            VALUE
                                               ----------         --------       ----------       ----------
<S>                                            <C>                <C>            <C>              <C>
LONG TERM DEBT
U.S. dollar at floating rate                   $  377,000           2.29%        $  184,800       $  184,800
Singapore dollar at fixed rate(1)                 195,091           5.64%           287,355          287,561
Singapore dollar at floating rate(1)                    0              -             54,620           54,620
2.5% convertible notes(2)                         644,743           5.25%           587,559          582,452
Other                                              10,630              -             (2,104)          (2,104)
                                               ----------                        ----------       ----------
Total                                          $1,227,464                        $1,112,230       $1,107,329
                                               ==========                        ==========       ==========
</TABLE>
<TABLE>
<CAPTION>
                                             AS OF DECEMBER 31
                                          ------------------------
                                             2002            2001
                                           --------        -------
<S>                                        <C>             <C>
ACCOUNTS PAYABLE
U.S. dollar                                $ 84,456        $38,547
Singapore dollar(2)                          16,156         22,767
Japanese yen(2)                              14,906          5,878
Others                                       11,474         15,551
                                           --------        -------
Total Payable                              $126,993        $82,743
                                           ========        =======
</TABLE>

----------

(1)  We have entered into forward foreign contracts related to a portion of
     these amounts to exchange the related cash flows to U.S. dollars. Please
     see "Foreign Currency Risk" below.

(2)  In 2001, we entered into an interest rate swap contract in respect of the
     fixed-rate interest obligations associated with $200.0 million of the
     convertible notes issued on April 2001, with the effect of swapping the
     fixed-rate interest obligations to a floating-rate obligation based on
     LIBOR rates to take advantage of the low interest rate. The fair value of
     the interest rate swap contract at December 31, 2002 was $8.5 million.

     As of December 31, 2002, 49.4% of our outstanding debt obligations bore
fixed interest rates (inclusive of Singapore dollar floating rate debt which has
been swapped to U.S. dollar fixed rate debt). We have no cash flow or earnings
exposure due to market interest rate changes for our fixed debt obligations.
50.6% of our outstanding debt obligations bear floating interest rates
(inclusive of the $200.0 million fixed rate interest obligations associated with
the convertible notes which was swapped into a floating rate obligation). We
have cash flow and earnings exposure due to market interest rate changes for our
floating debt obligations. A half percentage point change in interest rates
would affect our interest payments by 6.6% annually.


FOREIGN CURRENCY RISK

     Our foreign currency exposures give rise to market risk associated with
exchange rate movements of the U.S. dollar, our functional currency, against the
Japanese yen and the Singapore dollar. Substantially all of our revenue was
denominated in U.S. dollars during the year ended December 31, 2002 and as a
result, we had relatively little foreign currency exchange risk with respect to
any of our revenue. In 2002, approximately 18% of our cost of revenue was
denominated in Singapore dollars. In addition, approximately 62% of our capital
expenditures were denominated in U.S. dollars, approximately 18% were
denominated in Euro, approximately 12% were denominated in Japanese yen and
approximately 8% were denominated in Singapore dollars. In addition, a
substantial part of our debt is denominated in foreign currency, primarily
Singapore dollars.

     To protect against reductions in value and the volatility of future cash
flows caused by changes in foreign exchange rates, we utilize currency forward
contracts to minimize the impact of foreign currency fluctuations on our results
of operations. We utilize, from time to time, currency forward contracts to
hedge so as to minimize our exposure to specific currency risks related to
equipment purchase commitments, primarily in Japanese yen and Euro. In addition,
we minimize

                                       83
<PAGE>

our currency risk by purchasing certain raw materials and equipment in U.S.
dollars and borrowing in U.S. dollars. Prior to July 1, 1998, our exposure to
foreign currency risk was viewed as exposure to non-Singapore dollar assets and
liabilities. Effective July 1, 1998, we changed our functional currency to the
U.S. dollar. In connection with the change, we entered into foreign currency
forward contracts to mitigate the effects to us of exchange rate fluctuations
between the U.S. dollar and the Singapore dollar related to our non-U.S. dollar
denominated borrowings. The table below provides information about our
derivative financial instruments and presents the information in U.S. dollar
equivalents.

<TABLE>
<CAPTION>


                                                          AS OF DECEMBER 31, 2002
                                                          -----------------------
                                                                                                                    AS OF
                                    EXPECTED MATURITY DATE OF NOTIONAL AMOUNTS                                   DECEMBER 31,
                                       (IN THOUSANDS, EXCEPT EXCHANGE RATE)                                         2001
                                 --------------------------------------------------                          -------------------
                                                                             THERE-                  FAIR                  FAIR
                                   2003      2004      2005    2006   2007    AFTER     TOTAL       VALUE      TOTAL      VALUE
                                 -------   -------   -------   ----   ----   ------   --------      -----    --------    -------
<S>                              <C>       <C>       <C>       <C>    <C>    <C>      <C>           <C>      <C>         <C>
FORWARD EXCHANGE AGREEMENTS
(Receive Yen/Pay US$)
Contract Amount                  $11,401                                              $ 11,401      $  84          --         --
Average Contractual
 Exchange Rate                    120.58

(Receive S$/Pay US$)
Contract Amount                  $38,247   $28,292   $27,409      -                   $ 93,948       1,181   $242,333    $(8,734)
Average Contractual
 Exchange Rate                      1.75      1.75      1.73      -

(Receive Euro/Pay US$)
Contract Amount                  $12,676                                                12,676         183         --         --
Average Contractual
 Exchange Rate                     1.018
                                 -------   -------   -------   ----   ----   ------   --------      ------   --------    -------
Total Contract Amount            $62,324   $28,292   $27,409      -      -        -   $118,025      $1,448   $242,333    $(8,734)
                                 =======   =======   =======   ====   ====   ======   ========      ======   ========    =======

</TABLE>

<TABLE>
<CAPTION>
                                                          AS OF DECEMBER 31, 2002
                                                          -----------------------
                                                                                                                     AS OF
                                    EXPECTED MATURITY DATE  OF NOTIONAL AMOUNTS                                   DECEMBER 31,
                                       (IN THOUSANDS, EXCEPT EXCHANGE RATE)                                           2001
                                 ----------------------------------------------------                          -------------------
                                                                               THERE-                 FAIR                  FAIR
                                   2003      2004      2005    2006     2007    AFTER     TOTAL       VALUE      TOTAL      VALUE
                                 -------   -------   -------   ----     ----   ------   --------    --------   --------    -------
<S>                              <C>       <C>       <C>       <C>      <C>    <C>      <C>         <C>        <C>         <C>
CROSS CURRENCY SWAP
(Swapping S$ into US$)
Contract Amount(1)               $28,690   $28,690   $28,690   $14,345                  $100,415    $(8,853)   $122,895   $(19,339)
                                 -------   -------   -------   -------  ----   ------   --------    --------   --------    -------
Total                            $28,690   $28,690   $28,690   $14,345     -        -   $100,415    $(8,853)   $122,895   $(19,339)
                                 =======   =======   =======   =======  ====   ======   ========    =======    ========   ========
</TABLE>

(1)  We have entered into a cross currency swap to convert one of the Singapore
     dollar fixed rate loans to a U.S. dollar denominated fixed rate instrument.

<TABLE>
<CAPTION>
                                                   As of December 31, 2002                      As of December 31, 2001
                                           --------------------------------------      ----------------------------------------
                                           Carrying        Amount      Percentage       Carrying         Amount      Percentage
                                            Amount         Hedged        Hedged          Amount          Hedged        Hedged
                                           --------       --------     ----------      ---------       --------      ----------
<S>                                        <C>            <C>          <C>              <C>            <C>           <C>

NON-US DOLLAR LIABILITIES
Accounts Payable
  Japanese yen                             $ 14,906       $ 11,401        76.0%         $  5,878             --           --
  Singapore dollar                           16,156             --          --            22,767             --           --
  Others                                     11,474         11,474       100.0          $ 15,551             --           --
Foreign Currency Loan
  Singapore dollar                          188,692        188,692       100.0           341,975        341,975        100.0%
Future Interest Payable on Debt
  Singapore dollar                            3,647          3,647       100.0             5,791          5,791        100.0
                                           --------       --------       -----          --------       --------        -----
    Total                                  $234,875       $215,214        91.6%         $391,962       $347,766         88.7%
                                           ========       ========       =====          ========       ========        =====
</TABLE>

                                       84
<PAGE>


ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.


                                     PART II


ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

DEFAULTS UPON SENIOR SECURITIES

None.


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

USE OF PROCEEDS

Not applicable.


ITEM 15. CONTROLS AND PROCEDURES

     The company maintains disclosure controls and procedures that are designed
to ensure that information required to be disclosed in the Company's Exchange
Act reports is recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms, and that such information is
accumulated and communicated to the company's management, including its Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure. In designing and evaluating the
disclosure controls and procedures, management recognized that any controls and
procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and management
necessarily was required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures. Also, the company has
investments in certain unconsolidated entities. As the company's control is
limited only to certain management and operational aspects of these entities,
its disclosure controls and procedures with respect to such entities are
necessarily limited compared to those it maintains with respect to its
consolidated subsidiaries.

     Within 90 days prior to the date of this report, the company carried out an
evaluation, under the supervision and with the participation of the company's
management, including the company's Chief Executive Officer and the company's
Chief Financial Officer, of the effectiveness of the design and operation of the
company's disclosure controls and procedures. Based on the foregoing, the
company's Chief Executive Officer and Chief Financial Officer concluded that the
company's disclosure controls and procedures were effective.

     There have been no significant changes in the company's internal controls
or in other factors that could significantly affect the internal controls
subsequent to the date the company completed its evaluation.


ITEM 16.

Not applicable.


                                     PART IV

ITEM 17. FINANCIAL STATEMENTS

See Item 18 for a list of financial statements filed under Item 17.

                                       85
<PAGE>
ITEM 18. FINANCIAL STATEMENTS

          Financial Statements

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

          Chartered Semiconductor Manufacturing Ltd. Consolidated Financial
          Statements

               Independent Auditors' Report

               Consolidated Balance Sheets as of December 31, 2001 and 2002

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

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

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

               Notes to Consolidated Financial Statements

          Silicon Manufacturing Partners Pte, Ltd., Financial Statements

               Independent Auditors' Report

               Balance Sheets as of December 31, 2001 and 2002

               Profit and Loss Accounts for the years ended December 31, 2000,
               2001 and 2002

               Statements of Changes in Equity for the years ended December 31,
               2000, 2001 and 2002

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

               Notes to the Financial Statements


ITEM 19. EXHIBITS

<TABLE>
<S>                        <C>
1(1)                       Memorandum and Articles of Association of the Registrant

2.1(2)                     Specimen certificate for ordinary shares

2.2(3)                     Deposit Agreement dated November 4, 1999 by and among the Registrant, 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)

                           LOAN AGREEMENTS AND INDENTURES

4.1.1(1)                   Credit Agreement dated March 12, 1998 by and among Chartered Silicon Partners Pte. Ltd.,
                           the banks named on the signature pages thereto, as lenders, and ABN Amro Bank (Singapore
                           Branch), as Agent, as amended by the First Supplemental Agreement dated December 14, 1998

4.1.2(3)                   Second Supplemental Agreement dated November 9, 1999 by and among Chartered Silicon
                           Partners Pte. Ltd., the banks on the signature pages thereto, as Lenders, and ABN Amro
                           Bank N.V. (Singapore Branch), as agent
</TABLE>

                                       86
<PAGE>
<TABLE>
<S>                        <C>
4.1.3(6)                   Third Supplemental Agreement dated December 14, 2000 by and among Chartered Silicon
                           Partners Pte. Ltd., the banks on the signature pages thereto, as Lenders and ABN Amro
                           Bank N.V. (Singapore Branch) as agent

4.1.4(5)                   Fourth Supplemental Agreement dated May 21, 2002 by and among Chartered Silicon Partners
                           Pte. Ltd., the banks on the signature pages thereto, as Lenders and ABN Amro Bank N.V.
                           (Singapore Branch) as agent

4.1.5(5)                   Subordination Agreement dated June 28, 2002 by and among the Registrant, Chartered
                           Silicon Partners Pte. Ltd. as Borrower and ABN Amro Bank N.V. Singapore Branch as
                           Security Trustee, relating to the CSP First Phase Credit Agreement

4.1.6(5)                   Letter dated June 26, 2002 from ABN Amro Bank N.V., Singapore Branch to the Registrant
                           amending the CSP First Phase Credit Agreement by incorporating the Subordination
                           Agreement relating to the CSP First Phase Credit Agreement

4.2.1(1)                   Shareholders Undertaking dated July 1, 1998 by and among the Registrant, Chartered
                           Silicon Partners Pte. Ltd., EDB Investments Pte. Ltd., Hewlett-Packard Europe B.V. and
                           ABN Amro Bank N.V. (Singapore Branch), as Agent, as supplemented on December 16, 1998

4.2.2(3)                   Second Supplemental Shareholders Undertaking dated November 9, 1999 by and among
                           Chartered  Silicon Partners Pte. Ltd., as Borrower, the Registrant, EDB Investments Pte.
                           Ltd., Agilent Technologies Europe B.V., as Shareholders, Hewlett-Packard Europe B.V., as
                           Retiring Shareholder, and ABN Amro Bank N.V. (Singapore Branch), as Agent

4.2.3(6)                   Third Supplemental Shareholders Undertaking dated December 14, 2000 by and among
                           Chartered Silicon Partners Pte. Ltd., as Borrower, the Registrant, EDB Investments Pte.
                           Ltd., Agilent Technologies Europe B.V., as Shareholders, and ABN Amro Bank N.V.
                           (Singapore Branch) as Agent

4.3.1(4)                   Credit Agreement dated September 28, 2000 by and among Chartered Silicon Partners Pte.
                           Ltd., the banks on the signature pages thereto, as Lenders, and ABN Amro Bank N.V.,
                           Singapore Branch, as agent and security trustee (the "CSP Second Phase Credit Agreement")

4.3.2(5)                   Subordination Agreement dated June 28, 2002 by and among the Registrant, Chartered
                           Silicon Partners Pte. Ltd. as Borrower and ABN Amro Bank N.V. Singapore Branch as
                           Security Trustee, relating to the CSP Second Phase Credit Agreement

4.3.3(5)                   Letter dated June 26, 2002 from ABN Amro Bank N.V., Singapore Branch to the Registrant
                           amending the CSP Second Phase Credit Agreement by incorporating the Subordination
                           Agreement relating to the CSP Second Phase Credit Agreement

4.4(6)                     Shareholders' Undertaking dated December 14, 2000 by and among Chartered Silicon Partners
                           Pte. Ltd. as Borrower, the Registrant, EDB Investments Pte. Ltd., Agilent Technologies
                           Europe B.V., as Shareholders and ABN Amro Bank N.V., Singapore Branch as Security Trustee

4.5(7)                     Syndicated Credit Facilities Agreement dated September 3, 1999 by and among Silicon
                           Manufacturing Partners Pte. Ltd., ABN Amro Bank N.V. (Singapore Branch), Citibank, N.A.
                           (Singapore Branch) and Overseas Union Bank Limited, as Lead Arrangers, the banks and
                           financial institutions named on the signature pages thereto, as lenders, Citicorp
                           Investment Bank (Singapore) Limited, as Facility Agent, and Citicorp Investment Bank
                           (Singapore) Limited, as Security Agent
</TABLE>


                                       87
<PAGE>
<TABLE>
<S>                        <C>
4.6(8)                     Supplemental Agreement dated July 20, 2000 (the "Supplemental Agreement") to the
                           Syndicated Credit Facilities Agreement dated September 3, 1999 by and among Silicon
                           Manufacturing Partners Pte. Ltd., ABN Amro Bank N.V. (Singapore Branch), Citibank, N.A.
                           (Singapore Branch) and Overseas Union Bank Limited, as Lead Arrangers, the banks and
                           financial institutions named on the signature pages thereto, as lenders, Citicorp
                           Investment Bank (Singapore) Limited, as Facility Agent, and Citicorp Investment Bank
                           (Singapore) Limited, as Security Agent

4.7(7)                     Shareholders Undertaking dated September 3, 1999 by and among the Registrant, Lucent
                           Technologies Microelectronics Pte. Ltd., Silicon Manufacturing Partners Pte. Ltd. and
                           Citicorp Investment Bank (Singapore) Limited

4.8(8)                     Amendment dated May 2, 2001 to (a) the Syndicated Credit Facilities Agreement dated
                           September 3, 1999 by and among Silicon Manufacturing Partners Pte. Ltd., ABN Amro Bank
                           N.V. (Singapore Branch), Citibank, N.A. (Singapore Branch) and Overseas Union Bank
                           Limited, as Lead Arrangers, the banks and financial institutions named on the signature
                           pages thereto, as lenders, Citicorp Investment Bank (Singapore) Limited, as Facility
                           Agent, and Citicorp Investment Bank (Singapore) Limited, as Security Agent, as amended by
                           the Supplemental Agreement and to (b) the Shareholders Undertaking dated September 3,
                           1999 by and among the Registrant, Lucent Technologies Microelectronics Pte. Ltd., Silicon
                           Manufacturing Partners Pte. Ltd. and Citicorp Investment Bank (Singapore) Ltd

4.9(6)                     Loan Agreement dated November 24, 1999 between Economic Development Board and Chartered
                           Silicon Partners Pte. Ltd.

4.10(7)                    Loan Agreement dated August 1, 1995 by and between the Registrant and the Economic
                           Development Board of Singapore

4.11(7)                    Loan Agreement dated April 14, 1997 by and between the Registrant and the Economic
                           Development Board of Singapore, as supplemented on May 29, 1997

4.12(9)                    Indenture dated as of April 2, 2001 by and between the Registrant and Wells Fargo Bank
                           Minnesota, National Association

4.13(9)                    Supplemental Indenture dated as of April 2, 2001, by and between the Registrant and Wells
                           Fargo Bank Minnesota, National Association

                           STRATEGIC ALLIANCES

                           CSP

4.14(10)                   Deed of Accession and Ratification dated October 22, 2001 by and among the Registrant,
                           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)

4.15(10)                   Amendment No. 1 dated January 31, 2002 to Restated Joint Venture Agreement dated October
                           23, 2001

4.16(2)(+)                 Assured Supply and Demand Agreement dated July 4, 1997 by and among the Registrant,
                           Chartered Silicon Partners Pte. Ltd. and Hewlett-Packard Company

4.17(2)(+)                 Amendment Agreement No. 2 to Assured Supply and Demand Agreement dated June 17, 1999 by
                           and among the Registrant, Chartered Silicon Partners Pte. Ltd. and Hewlett-Packard
                           Company, which replaces the amendments contained in Amendment Agreement No. 1 to Assured
                           Supply and Demand Agreement dated November 5, 1998.

4.18(3)                    Novation and Amendment Agreement dated November 9, 1999 by and among Chartered
</TABLE>

                                       88
<PAGE>
<TABLE>
<S>                        <C>
                           Silicon Partners Pte. Ltd., the Registrant, Hewlett-Packard Company and Agilent Technologies, Inc.
                           relating to the Assured Supply and Demand Agreement 64-225 dated July 4, 1997, as amended

                           SMP

4.19(2)(+)                 Joint Venture Agreement dated December 19, 1997 by and between the Registrant and Lucent
                           Technologies Microelectronics Pte. Ltd

4.20(2)(++)                Assured Supply and Demand Agreement dated February 17, 1998 by and among the Registrant,
                           Silicon Manufacturing Partners Pte. Ltd. and Lucent Technologies Microelectronics Pte. Ltd

4.21(2)(+)                 Supplemental Assured Supply and Demand Agreement dated September 3, 1999 by and among the
                           Registrant, Silicon Manufacturing Partners Pte. Ltd. and Lucent Technologies
                           Microelectronics Pte. Ltd.

4.22(2)(++)                License and Technology Transfer Agreement dated February 17, 1998 by and among the
                           Registrant, Lucent Technologies Microelectronics Pte. Ltd. and Silicon Manufacturing
                           Partners Pte. Ltd

4.23(11)(++)               Amendment Agreement (No. 1) to License and Technology Transfer Agreement dated July 27,
                           2000 by and between the Registrant, Lucent Technologies Microelectronics Pte. Ltd. and
                           Silicon Manufacturing Partners Pte. Ltd

4.24(12)(++)               Amendment Agreement (No. 2) dated March 22, 2001 to License and Technology Transfer
                           Agreement dated February 17, 1998 between the Registrant, Agere Systems Singapore Pte.
                           Ltd. (formerly known as "Lucent Technologies Microelectronics Pte. Ltd") and Silicon
                           Manufacturing Partners Pte. Ltd.

4.25(13)(++)               Amendment Agreement (No. 3) dated March 28, 2002 to License and Technology Transfer
                           Agreement dated February 17, 1998 between the Registrant, 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 AGREEMENTS.

                           AGERE/LUCENT

4.26(2) (++)               Technology Transfer Agreement dated February 17, 1998 by and between the Registrant and
                           Lucent Technologies Inc.

4.27(12)(++)               Amendment Agreement (No. 1) dated July 31, 2000 to Technology Transfer Agreement dated
                           February 17, 1998 between Lucent Technologies Inc. and the Registrant

4.28(12)(++)               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 Registrant

4.29(13)(++)               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 Registrant.

4.30(2)(+)                 Patent License Agreement dated January 1, 1998 by and between the Registrant and Lucent
                           Technologies Inc.

4.31(11)(+)                Patent License Agreement Amendment dated August 18, 2000 by and between the Registrant
                           and Lucent Technologies Inc.
</TABLE>

                                       89
<PAGE>
<TABLE>
<S>                        <C>
4.32(14)                   Letter Agreement dated September 26, 2002 between the Registrant and Agere Systems Inc.
                           (formerly "Lucent Technologies Inc.") amending the Patent License Agreement between the
                           parties dated January 1, 1998.

                           TOSHIBA

4.33(2)(+)                 Patent Cross License Agreement dated August 12, 1999 by and between the Registrant and
                           Toshiba Corporation

                           IBM

4.34(10)(+)                Patent Cross-License Agreement dated January 1, 2001 by and between the Registrant and IBM

4.35(15)(++)               Amendment No. 1 dated November 26, 2002 to Patent License Agreement dated January 1, 2001
                           by and between the Registrant and IBM

4.36(15)(++)               "SF" Process Development and Cost Sharing Agreement dated November 26, 2002 by and
                           between the Registrant and IBM

4.37(15)(++)               Copper / Related FEOL Technology License Agreement dated November 26, 2002 by and between
                           the Registrant and IBM

4.38(15)(++)               Refundable Cross Deposit Agreement dated November 26, 2002 by and between the Registrant
                           and IBM

                           PROPERTY AGREEMENTS

                           FAB 1

4.39(7)                    Lease of Lot 2164 Mukim 3-2 Science Park Drive dated January 18, 1995 by and between
                           Ascendas Land (Singapore) Pte. Ltd. (formerly known as "Technology Parks Private
                           Limited") and the Registrant

                           FAB 2

4.40(7)                    Building Agreement relating to Private Lot A12787 Mukim No. 13 Sembawang dated April 11,
                           1995 by and between Jurong Town Corporation and Singapore Technologies Pte. Ltd

4.41(7)                    Agreement for Sub-License and Sub-Lease dated September 30, 1997 by and between Singapore
                           Technologies Pte. Ltd. and the Registrant relating to Private Lot A12787 Mukim No. 14
                           Sembawang

                           FAB 3

4.42(7)                    Building Agreement relating to Private Lot A12787(a) Woodlands Industrial Park D, Mukim
                           No. 13 Sembawang dated February 17, 1998 by and between Jurong Town Corporation and
                           Singapore Technologies Pte. Ltd

4.43(7)                    First Supplementary Agreement to Building Agreement relating to Private Lot A12787(a)
                           Woodlands Industrial Park D, Mukim No. 13 dated October 7, 1998 by and between Jurong
                           Town Corporation and Singapore Technologies Pte. Ltd

4.44(7)                    Agreement for Sub-License and Sub-Lease (Private Lot A12787(a)) dated February 17, 1998
                           by and between Singapore Technologies Pte. Ltd. and the Registrant

4.45(7)                    Building Agreement relating to Private Lot A12787(b) Woodlands Industrial Park D, Mukim
                           No. 13 Sembawang dated February 17, 1998 by and between Jurong Town Corporation and
                           Singapore Technologies Pte. Ltd
</TABLE>

                                       90
<PAGE>
<TABLE>
<S>                        <C>
4.46(7)                    First Supplementary Agreement to Building Agreement relating to Private Lot A12787(b)
                           Woodlands Industrial Park D, Mukim No. 13 dated October 7, 1998 by and between Jurong
                           Town Corporation and Singapore Technologies Pte. Ltd

4.47(7)                    Agreement for Sub-License and Sub-Lease (Private Lot A12787(b)) dated February 17, 1998
                           by and between Singapore Technologies Pte. Ltd. and the Registrant

4.48(7)                    Sub-Lease dated February 17, 1998 by and between the Registrant and Silicon Manufacturing
                           Partners Pte. Ltd.

                           FAB 6

4.49(7)                    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

4.50(7)                    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.

                           FAB 7

4.51(16)                   Agreement for Sub-License and Sub-Lease (Private Lot A12787(e)) dated July 30, 2001 by
                           and between Singapore Technologies Pte. Ltd. and the Registrant

4.52(16)                   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

                           RELATED PARTY AGREEMENTS

4.53(3)                    ST Group Management and Support Services Agreement dated November 1, 1999 by and between
                           the Registrant and Singapore Technologies Pte. Ltd

4.54(15)                   Amended and Restated Turnkey Subcontract Agreement for Sort, Assembly and/or Final Test
                           Services dated October 30, 2002 by and between the Registrant and ST Assembly Test Services Ltd

8(15)                      Table of the Registrant's subsidiaries

10(15)                     Consent of KPMG
</TABLE>

(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 shareholders resolutions which are 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 June 29, 2001, and were as
     set forth in the proxy statement for the company's annual general meeting
     in May 2001 which is 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 April 18, 2001, which exhibits are 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)  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
     November 23, 1999, which exhibit is incorporated herein by reference.

(4)  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
     September 28, 2000, which exhibit is incorporated herein by reference.

                                       91
<PAGE>

(5)  Filed as an exhibit to our company's Second Quarterly Report 2002 on Form
     6-K (File No. 000-27811), as submitted with the Securities and Exchange
     Commission on August 14, 2002, which exhibit is incorporated herein by
     reference.

(6)  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
     21, 2001, which exhibit is incorporated herein by reference.

(7)  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.

(8)  Filed as an exhibit to our company's Second Quarterly Report 2001 on Form
     6K (File No. 000-27811), as submitted with the Securities and Exchange
     Commission on August 14, 2001, which exhibit is incorporated herein by
     reference.

(9)  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
     April 4, 2001, which exhibit is incorporated herein by reference.

(10) 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.

(11) Filed as an exhibit to our company's Third Quarterly Report 2000 on Form 6K
     (File No. 000-27811), as submitted with the Securities and Exchange
     Commission on September 28, 2000, which exhibit is incorporated herein by
     reference.

(12) Filed as an exhibit to our company's First Quarterly Report 2001 on Form 6K
     (File No. 000-27811), as submitted with the Securities and Exchange
     Commission on May 15, 2001, which exhibit is incorporated herein by
     reference.

(13) Filed as an exhibit to our company's First Quarterly Report 2002 on Form 6K
     (File No. 000-27811), as submitted with the Securities and Exchange
     Commission on May 14, 2002, which exhibit is incorporated herein by
     reference.

(14) Filed 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.

(15) Filed herewith.

(16) Filed as an exhibit to our company's Third Quarterly Report 2001 on Form 6K
     (File No. 000-27811), as submitted with the Securities and Exchange
     Commission on November 14, 2001, which exhibit is incorporated herein by
     reference.

(+)  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.

                                       92
<PAGE>
                                   SIGNATURES

     The Registrant certifies that it meets all of the requirements for filing
on Form 20-F and has duly caused this annual report to be signed on its behalf
by the undersigned, thereunto duly authorized on this 13th day of March 2003

                                       CHARTERED SEMICONDUCTOR MANUFACTURING LTD


                                       By: /s/ George Thomas
                                           -------------------------------------
                                           Name:  George Thomas
                                           Title: Vice President and
                                                  Chief Financial Officer

     This annual report has been signed by the following persons in the
capacities indicated:

<TABLE>
<CAPTION>
                SIGNATURE                                   TITLE                                     DATE
-------------------------------------      -------------------------------------          ----------------------------
<S>                                        <C>                                            <C>

          /s/ James A. Norling             Chairman of the Board
-------------------------------------
            JAMES A. NORLING


           /s/ Lim Ming Seong              Deputy Chairman of the Board
-------------------------------------
             LIM MING SEONG


           /s/ Chia Song Hwee              President and Chief Executive Officer
-------------------------------------      (principal executive officer)
             CHIA SONG HWEE


            /s/ George Thomas              Vice President and Chief Financial
-------------------------------------      Officer (principal financial and
             GEORGE THOMAS                 accounting officer)


            /s/ Sum Soon Lim               Director
-------------------------------------
              SUM SOON LIM


         /s/ James H. Van Tassel           Director
-------------------------------------
           JAMES H. VAN TASSEL


           /s/ Aubrey C. Tobey             Director
-------------------------------------
             AUBREY C. TOBEY


       /s/ Robert Edmund La Blanc          Director
-------------------------------------
         ROBERT EDMUND LA BLANC


            /s/ Andre Borrel               Director
-------------------------------------
              ANDRE BORREL


         /s/ Charles E. Thompson           Director
-------------------------------------
           CHARLES E. THOMPSON


            /s/ Koh Beng Seng              Director
-------------------------------------
              KOH BENG SENG


           /s/ Tsugio Makimoto             Director
-------------------------------------
             TSUGIO MAKIMOTO
</TABLE>

                                       93

<PAGE>

<TABLE>
<CAPTION>
                SIGNATURE                                   TITLE                                     DATE
-------------------------------------      -------------------------------------          ----------------------------
<S>                                        <C>                                            <C>

           /s/ Tay Siew Choon              Director
-------------------------------------
             TAY SIEW CHOON

         /s/ Peter Seah Lim Huat           Director
-------------------------------------
           PETER SEAH LIM HUAT

</TABLE>

                                       94

<PAGE>


            CERTIFICATION UNDER SECTION 302 OF THE SARBANES-OXLEY ACT

I, Chia Song Hwee, certify that:

1.   I have reviewed this annual report on Form 20-F of Chartered Semiconductor
     Manufacturing Ltd (the "Registrant");

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

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

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

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

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

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

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

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

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

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


Date: March 11, 2003

                                                             /s/ Chia Song Hwee
                                                            --------------------
                                                               Chia Song Hwee
                                                             President and Chief
                                                              Executive Officer

                                       95


<PAGE>


            CERTIFICATION UNDER SECTION 302 OF THE SARBANES-OXLEY ACT

I, George Thomas, certify that:

1.   I have reviewed this annual report on Form 20-F of Chartered Semiconductor
     Manufacturing Ltd (the "Registrant");

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

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

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

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

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

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

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

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

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

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


Date: March 11, 2003

                                                            /s/ George Thomas
                                                        ------------------------
                                                              George Thomas
                                                        Vice President and Chief
                                                            Financial Officer

                                       96
<PAGE>
                    CHARTERED SEMICONDUCTOR MANUFACTURING LTD
                                AND SUBSIDIARIES


                     FINANCIAL STATEMENTS FOR THE YEAR ENDED
                         DECEMBER 31,2000, 2001 AND 2002

<PAGE>
                    CHARTERED SEMICONDUCTOR MANUFACTURING LTD
                                AND SUBSIDIARIES

                           FINANCIAL STATEMENTS INDEX

<TABLE>
<CAPTION>

                                                                                PAGE NUMBER
                                                                                -----------
<S>                                                                             <C>

Independent Auditors' Report                                                        F-1

Consolidated Balance Sheets                                                         F-2

Consolidated Statements of Operations and Comprehensive Income (Loss)               F-3

Consolidated Statements of Shareholders' Equity                                     F-4

Consolidated Statements of Cash Flows                                               F-5

Notes to the Financial Statements                                                   F-6

</TABLE>

<PAGE>
                          INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholders
Chartered Semiconductor Manufacturing Ltd:

We have audited the accompanying consolidated balance sheets of Chartered
Semiconductor Manufacturing Ltd and subsidiaries as of December 31, 2001 and
2002, and the related consolidated statements of operations and comprehensive
income (loss), shareholders' equity and cash flows for the years ended December
31, 2000, 2001 and 2002. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Chartered Semiconductor Manufacturing Ltd and subsidiaries as of December 31,
2001 and 2002, and the results of their operations and their cash flows for the
years ended December 31, 2000, 2001 and 2002, in conformity with accounting
principles generally accepted in the United States of America.



KPMG

SINGAPORE
March 13, 2003

                                       F-1
<PAGE>

           CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
                   CONSOLIDATED BALANCE SHEETS - IN US DOLLARS
                                AS OF DECEMBER 31
                      IN THOUSANDS (EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                          NOTE        2001          2002
                                                          ----     ----------    ----------
<S>                                                       <C>      <C>           <C>

ASSETS
Cash and cash equivalents                                   4      $1,041,616    $1,210,925
Accounts receivable, net
  Trade                                                     5          63,176        70,208
  Others                                                    5          28,243         6,710
Amounts due from ST affiliates                              3           1,247             4
Amounts due from SMP                                                   13,287        18,842
Inventories                                                 6          12,766        21,275
Prepaid expenses                                                        1,905         4,081
                                                                   ----------    ----------
     Total current assets                                           1,162,240     1,332,045

Investment in SMP                                           7          77,406        33,764
Other non-current assets.                                              36,108        94,320
Technology license agreements                               8          15,167        16,540
Property, plant and equipment, net.                         9       1,853,421     1,861,231
                                                                   ----------    ----------
     Total assets                                                  $3,144,342    $3,337,900
                                                                   ==========    ==========

LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable
  Trade                                                            $   10,305    $   16,495
  Fixed asset purchases                                                72,438       110,498
Current installments of long-term debt                     12         198,160        64,001
Accrued operating expenses                                 10         153,635       141,016
Amounts due to ST and ST affiliates                         3           6,557         7,583
Amounts due to SMP                                                     31,099           174
Income taxes payable                                                   24,667        20,578
Other current liabilities                                  11          22,892        29,641
                                                                   ----------    ----------
     Total current liabilities                                        519,753       389,986
Long-term debt, excluding current installments             12         914,070     1,115,930
Long-term customer deposits                                11          41,281        10,431
Other non-current liabilities                              14          25,017        28,454
                                                                   ----------    ----------
     Total liabilities                                              1,500,121     1,544,801
Minority interest                                                      61,589         7,640


Share capital:  ordinary shares of S$0.26 par value
  Authorized 3,076,923 shares
  Issued and outstanding: 1,383,756 shares in 2001
   and 2,497,179 shares in 2002                            16         280,480       443,713
Additional paid-in capital                                 17       1,782,633     2,238,752
Accumulated deficit                                        18        (416,925)     (834,013)
Accumulated other comprehensive loss                       19         (63,556)      (62,993)
                                                                   ----------    ----------
     Total shareholders' equity                                    $1,582,632    $1,785,459
                                                                   ----------    ----------
Commitments and contingencies                              21
     Total liabilities and shareholders' equity                    $3,144,342    $3,337,900
                                                                   ==========    ==========

</TABLE>
          See accompanying notes to consolidated financial statements.

                                       F-2
<PAGE>
           CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 AND COMPREHENSIVE INCOME (LOSS) - IN US DOLLARS
                         FOR THE YEARS ENDED DECEMBER 31
                      IN THOUSANDS (EXCEPT PER SHARE DATA)


<TABLE>
<CAPTION>
                                                               2000             2001             2002
                                                            ----------       ----------       ----------
<S>                                                         <C>              <C>              <C>
Net revenue                                                 $1,134,104       $  462,656       $  449,241
Cost of revenue                                               (749,582)        (665,261)        (628,726)
                                                            ----------       ----------       ----------
Gross profit (loss)                                            384,522         (202,605)        (179,485)
                                                            ----------       ----------       ----------

OPERATING EXPENSES
  Research and development                                      74,876           82,897           95,285
  Fab start-up costs                                            27,481           13,329            8,338
  Sales and marketing                                           35,019           38,659           41,182
  General and administrative                                    78,788           41,908           43,356
  Stock-based compensation (note 20)                             2,778              763             (253)
  Other operating expenses (note 21(d) and 22)                  11,570                -           10,025
                                                            ----------       ----------       ----------
     Total operating expenses                                  230,512          177,556          197,933
                                                            ----------       ----------       ----------

Operating income (loss)                                        154,010         (380,161)        (377,418)
Equity in income (loss) of SMP                                   7,588          (92,683)         (84,846)
Other income                                                    12,926           19,718           23,632
Interest income                                                 54,546           46,225           16,637
Interest expense                                               (17,561)         (39,652)         (41,661)
Foreign exchange gain (loss)                                     8,414            4,216           (1,966)
                                                            ----------       ----------       ----------
Income (loss) before income taxes                              219,923         (442,337)        (465,622)
Income tax expense (note 15)                                   (18,704)         (14,244)          (7,029)
                                                            ----------       ----------       ----------
Income (loss) before minority interest                         201,219         (456,581)        (472,651)
Minority interest in loss of CSP                                43,547           72,629           55,563
                                                            ----------       ----------       ----------
Net income (loss)                                           $  244,766       $ (383,952)      $ (417,088)
                                                            ==========       ==========       ==========

Derivative and hedging activities, including cumulative
 effect-type-adjustment in 2001 (note 23)                            -          (10,838)             509
Foreign currency translation                                         -              (22)              54
                                                            ----------       ----------       ----------
Comprehensive income (loss)                                 $  244,766       $ (394,812)      $ (416,525)
                                                            ==========       ==========       ==========

Net income (loss) per share and ADS*

Basic net income (loss) per share                           $     0.16       $    (0.24)      $    (0.23)
Diluted net income (loss) per share                         $     0.16       $    (0.24)      $    (0.23)

Basic net income (loss) per ADS                             $     1.59       $    (2.42)      $    (2.32)
Diluted net income (loss) per ADS                           $     1.56       $    (2.42)      $    (2.32)

Number of shares used in computing:
  - basic net income (loss) per share                        1,543,893        1,588,969        1,799,106
  - effect of dilutive options                                  25,078                -                -
                                                            ----------       ----------       ----------
  - diluted net income (loss) per share                      1,568,971        1,588,969        1,799,106
                                                            ==========       ==========       ==========

Number of ADSs used in computing:
  - basic net income (loss) per ADS                            154,389          158,897          179,911
  - effect of dilutive options                                   2,508                -                -
                                                            ----------       ----------       ----------
  - diluted net income (loss) per ADS                          156,897          158,897          179,911
                                                            ==========       ==========       ==========
</TABLE>

*    Share and per share data reflect a retroactive adjustment due to the rights
     offering.

          See accompanying notes to consolidated financial statements.


                                      F-3
<PAGE>

           CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
         CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - IN US DOLLARS
                                  IN THOUSANDS


<TABLE>
<CAPTION>
                                                                                                 ACCUMULATED
                                                                                                    OTHER           TOTAL
                                                                   ADDITIONAL                      COMPRE-          SHARE
                                                                     PAID-IN       ACCUMULATED     HENSIVE         HOLDERS'
                                            ORDINARY SHARES          CAPITAL         DEFICIT         LOSS          EQUITY
                                       ----------------------      ----------      -----------   -----------      ---------
                                          NO.            $              $               $             $               $
<S>                                    <C>            <C>          <C>             <C>           <C>              <C>
Balance at January 1, 2000             1,278,978      264,529       1,207,656       (277,739)      (52,696)       1,141,750
Net income                                     -            -               -        244,766             -          244,766
Issuance of shares                        11,013        1,667           9,367              -             -           11,034
Stock compensation                             -            -           2,778              -             -            2,778
Follow-on offering,
 net of expenses                          89,700       13,697         552,999              -             -          566,696
Share options issued and
 charged to SMP                                -            -           2,259              -             -            2,259
                                       ---------      -------       ---------       --------       -------        ---------
Balance at December 31, 2000           1,379,691      279,893       1,775,059        (32,973)      (52,696)       1,969,283

Net loss                                       -            -               -       (383,952)            -         (383,952)
Issuance of shares                         4,065          587           3,838              -             -            4,425
Stock compensation                                          -             763              -             -              763
Derivative and hedging activities
 including cumulative
 effect-type-adjustment                        -            -               -              -       (10,838)         (10,838)
Foreign currency translation                   -            -               -              -           (22)             (22)
Share options issued and
    charged to SMP                             -            -           2,973              -             -            2,973
                                       ---------      -------       ---------       --------       -------        ---------
Balance at December 31, 2001           1,383,756      280,480       1,782,633       (416,925)      (63,556)       1,582,632

Net loss                                       -            -               -       (417,088)            -         (417,088)
Issuance of shares                         3,799          547           4,750              -             -            5,297
Right offering, net of expenses        1,109,624      162,686         448,964              -             -          611,650
Stock compensation                             -            -            (253)             -             -             (253)
Derivative and hedging activities              -            -               -              -           509              509
Foreign currency translation                   -            -               -              -            54               54
Share options issued and
 charged to SMP                                -            -           2,658              -             -            2,658
                                       ---------      -------       ---------       --------       -------        ---------
Balance at December 31, 2002           2,497,179      443,713       2,238,752       (834,013)      (62,993)       1,785,459
                                       =========      =======       =========       ========       =======        =========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-4
<PAGE>
           CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF CASH FLOWS - IN US DOLLARS
                         FOR THE YEARS ENDED DECEMBER 31
                                  IN THOUSANDS

<TABLE>
<CAPTION>
                                                                   2000            2001              2002
                                                                ---------       ----------        ----------
<S>                                                             <C>             <C>               <C>
OPERATING ACTIVITIES

Net income (loss)                                               $ 244,766       $ (383,952)       $ (417,088)
Adjustments to reconcile net income (loss) to net
 cash provided by operating activities:
  Equity in loss (income) of SMP                                   (7,588)           2,722            44,651
  Depreciation and amortization                                   345,853          444,061           452,417
  Foreign exchange loss (gain)                                     (3,856)           2,637            (1,642)
  Loss (gain) on disposal of property, plant and equipment          3,008              100              (784)
  Minority interest in loss of CSP                                (43,547)         (72,629)          (55,563)
  Stock-based compensation                                          2,778              763              (253)
  Others                                                            4,656           (7,342)            6,093
Change in operating working capital:
  Accounts receivable                                             (36,659)         105,116            11,295
  Amounts due to/from ST and ST affiliates, net                     2,770           (5,613)            2,269
  Amounts due to/from SMP, net                                     (8,346)          37,227           (32,930)
  Inventories                                                        (384)          21,237            (8,509)
  Prepaid expenses                                                    476             (381)           (2,176)
  Trade accounts payable                                            2,521           (2,776)            6,190
  Accrued operating expenses                                       69,631          (51,335)          (12,619)
  Other current liabilities                                        (5,578)            (804)           (1,680)
  Advances to suppliers                                             3,040           (8,248)            3,503
  Income taxes payable                                             17,760            3,986            (4,089)
                                                                ---------       ----------        ----------
Net cash provided by (used in) operating activities               591,301           84,769           (10,915)

INVESTING ACTIVITIES

Proceeds from sale of property, plant, equipment
 and other assets                                                  33,163           15,654            20,978
Purchase of property, plant and equipment                        (963,792)        (489,645)         (419,501)
Technology fees paid                                              (10,180)          (6,000)          (48,803)
Investment in SMP                                                 (35,784)               -                 -
                                                                ---------       ----------        ----------
Net cash used in investing activities                            (976,593)        (479,991)         (447,326)

FINANCING ACTIVITIES

Customer deposits, net                                             15,394           (8,919)          (11,599)
Debt
  - borrowings                                                    179,929          679,625           228,000
  - repayments                                                   (120,409)        (155,540)         (206,176)
Loan origination fees                                              (6,485)               -                 -
Issuance of ordinary shares                                       577,730            4,425           616,947
Issuance of shares by CSP to minority shareholders                124,404                -                 -
Capital lease payments                                             (5,767)          (6,883)                -
                                                                ---------       ----------        ----------
Net cash provided by financing activities                         764,796          512,708           627,172

Net increase in cash and cash equivalents                         379,504          117,486           168,931
Effect of exchange rate changes on cash
 and cash equivalents                                                (384)              14               378
Cash and cash equivalents at the beginning of the year            544,996          924,116         1,041,616
                                                                ---------       ----------        ----------
Cash and cash equivalents at the end of the year                $ 924,116       $1,041,616        $1,210,925
                                                                =========       ==========        ==========

Supplemental Cash Flow Information

Interest paid (net of amounts capitalized)                      $  16,735       $   25,091        $   27,099
Income taxes paid                                               $   1,659       $   12,141        $   10,956
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-5

<PAGE>
           CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - IN US DOLLARS
                      IN THOUSANDS (EXCEPT PER SHARE DATA)

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

1.   BUSINESS AND ORGANIZATION

     Chartered Semiconductor Manufacturing Ltd (the "Company") is an independent
     semiconductor foundry providing wafer fabrication services and
     technologies. The Company operates in Singapore and has service operations
     in eight countries in North America, Europe and Asia, including Singapore.
     Its principal markets are the United States of America, Taiwan, Europe and
     Japan.

     The Company is a majority-owned subsidiary of Singapore Technologies Pte
     Ltd ("ST"), which is itself ultimately wholly-owned by Temasek Holdings
     (Private) Limited ("Temasek"). Temasek is a holding company through which
     corporate investments of the government of Singapore are held.

     In March 1997, the Company, Hewlett-Packard Europe B.V. ("HP Europe") and
     EDB Investments Pte Ltd ("EDBI") formed Chartered Silicon Partners Pte Ltd
     ("CSP"). The Company owns a controlling 51% and therefore consolidates CSP.
     HP Europe subsequently assigned its interest in CSP to Agilent Technologies
     Europe B.V. ("Agilent Technologies Europe"). In October and November 2001,
     Agilent Technologies Europe sold 7.5% each of its 30% share in CSP to
     Singapex Investments Pte Ltd ("Singapex"), a wholly-owned subsidiary of ST,
     and EDBI, respectively. Thereafter, the Company, EDBI, Agilent Technologies
     Europe and Singapex own a 51%, 26.5%, 15% and 7.5% equity interest in CSP.

     In January 1998, the Company and Lucent Technologies Microelectronics Pte
     Ltd formed Silicon Manufacturing Partners Pte Ltd ("SMP"), in which the
     Company has a 49% equity interest. Subsequently, Lucent Technologies Inc.
     spun-off its microelectronics business to Agere Systems Inc. As part of the
     restructuring, Lucent Technologies Microelectronics Pte Ltd was renamed
     Agere Systems Singapore Pte Ltd. The Company accounts for SMP on the equity
     method. See Note 2(c).


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     (a)  ACCOUNTING PRINCIPLES

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


     (b)  PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements reflect the consolidated accounts of
     Chartered Semiconductor Manufacturing Ltd and its majority-owned and
     controlled affiliates. Significant intercompany accounts and transactions
     have been eliminated in consolidation.


     (c)  INVESTMENT IN SMP

     The equity accounting method is applied for the investment in SMP. The
     Company's share of the results of SMP's operations is included in the
     consolidated statements of operations and comprehensive income (loss). The
     Company's equity interest in SMP, including its share of accumulated
     post-formation results, is included as investment in SMP in the
     consolidated balance sheets.

                                      F-6
<PAGE>
           CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - IN US DOLLARS
                      IN THOUSANDS (EXCEPT PER SHARE DATA)

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

     (d)  USE OF ESTIMATES

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


     (e)  RECLASSIFICATIONS

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


     (f)  FOREIGN CURRENCY TRANSACTIONS

     The Company utilizes the US dollar as its functional currency. Assets and
     liabilities which are denominated in foreign currencies are converted into
     the functional currency at the rates of exchange prevailing at the balance
     sheet date. Income and expenses are converted at the average rates of
     exchange prevailing during the period. Foreign currency transaction gains
     or losses are included in results of operations.


     (g)  CONCENTRATION OF RISK

     The Company is an independent foundry that fabricates integrated circuits
     on silicon wafers for customers in the semiconductor industry. The five
     largest customers of the Company accounted for 42%, 43% and 53% of net
     revenue in the years ended December 31, 2000, 2001 and 2002, respectively
     (see Note 25). As a result, loss or cancellation of business from, or
     significant changes in scheduled deliveries or decreases in the prices of
     products sold to any of these customers could materially and adversely
     affect the Company's results of operations or financial position.

     In addition, certain of the Company's treasury management activities are
     undertaken by ST or carried out together with other companies in the ST
     Group. The Company participates in a pooled cash management arrangement and
     places short-term advances with other companies in the ST Group. The
     Company also contracts a majority of its forward purchases of foreign
     exchange with ST. See Notes 3 and 23.


     (h)  DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

     The Company adopted Statement of Financial Accounting Standards No. 133,
     "Accounting for Derivative Instruments and Certain Hedging Activities", as
     amended by SFAS No. 138, "Accounting for Certain Derivative Instruments and
     Certain Hedging Activities" on January 1, 2001. SFAS No. 133 requires
     companies to record derivatives on the balance sheet as assets or
     liabilities measured at fair value. In accordance with the transition
     provisions of SFAS No. 133, the company recorded a cumulative-effect-type
     adjustment of $8,144 in 2001 in accumulated other comprehensive income to
     recognize at fair value all derivatives that are designated as cash-flow
     hedging instruments and to derecognize net gains or losses on derivatives
     that had been previously deferred. Gains and losses on derivatives that
     were previously deferred as adjustments to the carrying amount of hedged
     items were not adjusted.

                                      F-7
<PAGE>
           CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - IN US DOLLARS
                      IN THOUSANDS (EXCEPT PER SHARE DATA)

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

     Derivatives are recognized on the balance sheet at their fair value in
     other assets or other liabilities. On the date a derivative contract is
     entered into, the Company will consider if the derivative instrument is
     part of a hedging relationship. If the derivative will be designated as a
     hedge, 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. 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.

     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 is
     determined 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 continues to
     carry the derivative on the balance sheet at its fair value, and 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 continues to carry the derivative on the balance sheet at its fair
     value, 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, the Company
     continues to carry the derivative on the balance sheet at its fair value,
     and gains and losses that were accumulated in other comprehensive income
     are recognized immediately in earnings. In all other 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.

                                      F-8
<PAGE>
           CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - IN US DOLLARS
                      IN THOUSANDS (EXCEPT PER SHARE DATA)

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

     Prior to the adoption of SFAS No.133 on January 1, 2001, gains and losses
     on hedges of existing assets or liabilities were included in the carrying
     amounts of those assets or liabilities and were ultimately recognized in
     income as part of those carrying amounts. Gains and losses related to
     qualifying hedges of firm commitments were deferred and were recognized in
     income or as adjustments of carrying amounts when the hedged transaction
     occurred. Any derivative contracts held or issued that did not meet the
     requirements of a hedge were recorded at fair value in the balance sheet
     and any changes in that fair value recognized in income.


     (i)  CASH AND CASH EQUIVALENTS

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


     (j)  INVENTORIES

     Inventories are stated at the lower of cost, determined on the weighted
     average basis, or market (net realizable value).


     (k)  TECHNOLOGY LICENSE AGREEMENTS

     Technology license agreements are stated at cost. These intangible assets
     are amortized to results of operations on the straight-line basis over the
     shorter of the expected technology life or the license period.


     (l)  PROPERTY, PLANT AND EQUIPMENT

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

<TABLE>
<S>                                                  <C>
          Buildings                                  - 20 years (or, if shorter, the
                                                       remaining period of the lease of
                                                       the land on which the buildings
                                                       are erected)
          Mechanical and electrical installations    - 10 years
          Equipment and machinery                    - 5 years
          Office and computer equipment              - 2 to 5 years
</TABLE>

     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. Repairs and replacements of a routine nature are expensed,
     while those that extend the life of an asset are capitalized.

     Plant and equipment under capital leases are stated at the present value of
     minimum lease payments. Plant and equipment held under capital leases and
     leasehold improvements are amortized straight-line over the estimated
     useful life of the asset.

                                      F-9
<PAGE>
           CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - IN US DOLLARS
                      IN THOUSANDS (EXCEPT PER SHARE DATA)

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

     (m)  IMPAIRMENT OF LONG-LIVED ASSETS AND INTANGIBLE ASSETS

     The Company reviews long-lived assets and certain identifiable intangibles
     for impairment whenever events or changes in circumstances indicate that
     its 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 amount of the long-lived assets exceed
     their fair value.

     For intangible assets that are subject to amortization, an impairment loss
     is recognized if the carrying amount exceeds the fair value. Intangible
     assets with an indefinite useful life are evaluated at each reporting
     period to determine whether events and circumstances continue to support an
     indefinite useful life. If an intangible asset that is not being amortized
     is subsequently determined to have a finite useful life, it is amortized
     prospectively over its estimated remaining useful life and is subject to
     impairment testing for intangible assets subject to amortization.

     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, and depreciation is
     ceased. Long-lived assets to be abandoned will be considered held and used
     until disposed of.


     (n)  COMPREHENSIVE INCOME (LOSS)

     The Company applies SFAS No. 130, "Reporting Comprehensive Income" with
     respect to reporting and presentation of comprehensive income and its
     components in a full set of financial statements. Comprehensive income
     (loss) consists of net income (loss), foreign currency translation
     adjustments and adjustments relating to derivatives and hedging activities
     including cumulative effective-type-adjustments, and is presented in the
     consolidated statements of operations and comprehensive income (loss).


     (o)  REVENUE RECOGNITION

     Revenue is recognized upon shipment provided title and risk of loss has
     passed to the customer, there is evidence of an arrangement, fees are fixed
     or determinable and collectibility is reasonably assured. Revenue
     represents the invoiced value of goods and services supplied excluding
     goods and services tax, less allowances for sales returns. Included in
     accounts receivable allowances are sales allowances provided for expected
     returns and an allowance for doubtful accounts. The Company estimates
     allowances for sales returns based on historical experience. Provision for
     doubtful debts for the years ended December 31, 2000, 2001 and 2002 was
     $542, $738, and $(498), respectively.

     Intellectual property license income is classified as non-operating income
     and is recognized when the license is delivered, collection is reasonably
     assured and no further obligations with the other party exist.

                                      F-10
<PAGE>
           CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - IN US DOLLARS
                      IN THOUSANDS (EXCEPT PER SHARE DATA)

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

     (p)  GRANTS

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

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


     (q)  STOCK-BASED EMPLOYEE COMPENSATION

     The Company measures stock-based employee compensation cost for financial
     statement purposes in accordance with the intrinsic method of Accounting
     Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
     ("APB 25"), and its related interpretations and includes pro forma
     information in Note 20 in accordance with Statement of Financial Accounting
     Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation".
     Compensation cost is measured as the excess of fair market value of the
     stock subject to the option at the grant date over the exercise price of
     the option.

     Compensation cost for stock options granted to non-employees in connection
     with the Company's fixed option plan is measured as the fair market value
     of the stock options valued based upon an option pricing model over the
     period in which the options vest in accordance with SFAS No. 123.


     (r)  OPERATING LEASES

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


     (s)  PRODUCT WARRANTIES

     The Company guarantees that products will meet the stated functionality as
     agreed to in each sales arrangement. Products are tested against specified
     functionality requirements prior to delivery, but the Company nevertheless
     from time to time experiences claims under its warranty guarantees. The
     Company 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 determinable.


     (t)  FAB START-UP COSTS

     The Company expenses costs related to start-up activities, including fab
     start-up costs, as they are incurred.

                                      F-11

<PAGE>
           CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - IN US DOLLARS
                      IN THOUSANDS (EXCEPT PER SHARE DATA)

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

     (u)  INCOME TAXES

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


     (v)  NET INCOME (LOSS) PER SHARE

     Basic net income (loss) per share is computed using the weighted-average
     number of common shares outstanding. Diluted net income (loss) per share is
     computed using the weighted average number of common shares outstanding and
     dilutive potential common shares from the assumed exercise of options
     outstanding during the period, if any, using the treasury stock method plus
     other potentially dilutive securities outstanding, such as convertible
     notes. The share and ADS amounts below have been adjusted in all periods
     presented for the bonus element of the eight-for-ten rights offering
     completed in October, 2002 and described in Note 16. The bonus element
     arises because the exercise price of the shares at issuance was less than
     their fair value, and is imputed as the number of shares issued that
     exceeds the expected number of shares. The expected number of shares is
     calculated using the fair value per share immediately prior to the rights
     exercise compared to the actual proceeds of the rights exercise. The
     following table sets forth the computation of basic and diluted net income
     (loss) per common share:

<TABLE>
<CAPTION>
                                                              YEARS ENDED DECEMBER 31,
                      --------------------------------------------------------------------------------------------------------
                                    2000                                 2001                                2002
                      ------------------------------    ---------------------------------    ---------------------------------
                                               PER                                  PER                                  PER
                         NET                  SHARE        NET                     SHARE        NET                     SHARE
                       INCOME      SHARES     AMOUNT       LOSS         SHARES     AMOUNT       LOSS         SHARES     AMOUNT
                      --------    ---------   ------    ---------     ---------    ------    ---------     ---------    ------
<S>                   <C>         <C>         <C>       <C>           <C>          <C>       <C>           <C>          <C>
Basic net income
 (loss) per share     $244,766    1,543,893    $0.16    $(383,952)    1,588,969    $(0.24)   $(417,088)    1,799,106    $(0.23)
Effect of dilutive
 securities                          25,078                                   -                                    -
                                  ---------                           ---------                            ---------
Diluted net income
 (loss) per share     $244,766    1,568,971    $0.16    $(383,952)    1,588,969    $(0.24)   $(417,088)    1,799,106    $(0.23)
                      ========    =========    =====    =========     =========    ======    =========     =========    ======
</TABLE>


<TABLE>
                                                            YEARS ENDED DECEMBER 31,
                      -----------------------------------------------------------------------------------------------------
                                     2000                               2001                              2002
                      -------------------------------   --------------------------------   --------------------------------
                         NET                  PER ADS      NET                   PER ADS      NET                   PER ADS
                       INCOME        ADS      AMOUNT       LOSS         ADS      AMOUNT       LOSS         ADS      AMOUNT
                      --------     -------    -------   ---------     -------    -------   ---------     -------    -------
<S>                   <C>          <C>        <C>       <C>           <C>        <C>       <C>           <C>        <C>
Basic net income
 (loss) per ADS       $244,766     154,389     $ 1.59   $(383,952)    158,897     $(2.42)  $(417,088)    179,911     $(2.32)
Effect of dilutive
 securities                          2,508     $(0.03)                      -                                  -
                                   -------     ------                 -------                            -------
Diluted net income
 (loss) per ADS       $244,766     156,897     $ 1.56   $(383,952)    158,897     $(2.42)  $(417,088)    179,911     $(2.32)
                      ========     =======     ======    =========     =======    ======   =========     =======     ======
</TABLE>

                                      F-12

<PAGE>
           CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - IN US DOLLARS
                      IN THOUSANDS (EXCEPT PER SHARE DATA)

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

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

<TABLE>
<CAPTION>
                           YEARS ENDED DECEMBER 31,
                         ----------------------------
                          2000       2001       2002
                         ------    -------    -------
<S>                      <C>       <C>        <C>
     Convertible debt         -    214,792    214,792
     Stock options       45,598     87,925     99,693
</TABLE>

     The conversion price of convertible debt outstanding was S$4.7980 per share
     (equivalent to approximately US$26.7701 per ADS) as of December 31, 2002.
     The weighted average exercise prices of options outstanding were $4.90,
     $4.19, and $3.49 as of December 31, 2000, 2001 and 2002, respectively. The
     excluded stock options have per share exercise prices ranging from $5.81 to
     $8.31, $0.46 to $8.31 and $0.46 to $8.31 for the years ended December 31,
     2000, 2001 and 2002, respectively.


     (w)  RECENTLY ADOPTED ACCOUNTING STANDARDS

     In June 2001, the FASB issued Statement of Financial Accounting Standards
     (SFAS) No. 141, "Business Combinations", and SFAS No. 142, "Goodwill and
     Other Intangible Assets". SFAS No. 141 requires that the purchase method of
     accounting be used for all business combinations initiated after June 30,
     2001 as well as all purchase method business combinations completed after
     June 30, 2001. SFAS No. 141 also specifies criteria intangible assets
     acquired in a purchase method business combination must meet to be
     recognized and reported apart from goodwill, noting that any purchase price
     allocable to an assembled workforce may not be accounted for separately.
     SFAS No. 142 requires that goodwill and intangible assets with indefinite
     useful lives no longer be amortized, but instead be tested for impairment
     at least annually in accordance with the provisions of SFAS No. 142. SFAS
     No. 142 also requires that intangible assets with estimable useful lives be
     amortized over their respective estimated useful lives to their estimated
     residual values, and reviewed for impairment in accordance with SFAS No.
     144, "Accounting for the Impairment or Disposal of Long-Lived Assets",
     which was issued in August 2001. The Company adopted the provisions of SFAS
     No. 141 as of July 1, 2001, and SFAS No. 142 as of January 1, 2002. The
     adoption of SFAS No.'s 141 and 142 did not have a material effect on the
     Company's financial position or results of operations.

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

                                      F-13
<PAGE>
           CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - IN US DOLLARS
                      IN THOUSANDS (EXCEPT PER SHARE DATA)

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

     (x)  RECENTLY ISSUED ACCOUNTING STANDARDS

     In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
     Retirement Obligations", which addresses financial accounting and reporting
     for obligations associated with the retirement of tangible long-lived
     assets and associated asset retirement costs. This statement applies to
     legal obligations associated with the retirement of long-lived assets that
     result from the acquisition, construction, development and (or) normal use
     of the asset.

     SFAS No. 143 requires that the fair value of a liability for an asset
     retirement obligation be recognized in the period in which it is incurred
     if a reasonable estimate of fair value can be made. The fair value of the
     liability is added to the carrying amount of the associated asset and this
     additional carrying amount is depreciated over the life of the asset. The
     liability is accreted each period through charges to operating expense. If
     the obligation is settled for other than the carrying amount of the
     liability, the Company will recognize a gain or loss on settlement. The
     Company will adopt the provisions of SFAS No. 143 on January 1, 2003. On
     the date of adopting this statement, the Company expects to record
     liabilities related to the requirements in its lease agreements for the
     return of buildings to tenantable condition and the return of land on which
     fabs have been built to its original condition. The Company estimates that
     the combined liability at the adoption date will be approximately $27,000.
     This would be recorded as an increase in property, plant and equipment of
     the same amount, net of accumulated depreciation since the lease
     commencement dates of approximately $7,000 and an offsetting cumulative
     effect of adoption of $6,500 plus a reduction in minority interest of $500.
     As a result of adoption, the Company expects annual depreciation to
     increase by $1,300. The Company also expects additional annual expense for
     the increase in the liability due to the effects of inflation.

     In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
     Associated with Exit or Disposal Activities," which addresses financial
     accounting and reporting for costs associated with exit and disposal
     activities to be recorded at their fair values when a liability has been
     incurred. Under previous guidance, certain exit costs were accrued upon
     management's commitment to an exit plan, which is generally before an
     actual liability has been incurred. SFAS No. 146 will be effective for exit
     or disposal activities that are initiated after December 31, 2002. The
     Company expects the adoption of SFAS No. 146 to impact the timing and
     classification of the prospective recognition of such costs, if and when
     they occur.


3.   RELATED PARTY TRANSACTIONS

     (a)  ST

     ST, one of Singapore's largest industrial conglomerates, is indirectly
     wholly-owned by the government of Singapore. The Company transacts business
     with ST and its affiliates in the normal course of their respective
     businesses, including ST Assembly Test Services Ltd ("STATS").

                                      F-14
<PAGE>
           CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - IN US DOLLARS
                      IN THOUSANDS (EXCEPT PER SHARE DATA)

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

     In addition to the transactions with related parties disclosed in Note 9
     and Note 12, the Company had the following significant transactions with
     related parties:

<TABLE>
<CAPTION>
                                                   2000       2001       2002
                                                  -------    -------    -------
<S>                                               <C>        <C>        <C>
     ST
       Management fees                            $ 4,295    $ 4,012    $ 4,014
       Reimbursement of expenses incurred on
        behalf of the Company                      18,579     18,281     14,753
       Rental for leasehold land                    1,849      1,916      1,800

     Affiliates of ST
       Services purchased from STATS               29,560      9,209     10,356
       Other services purchased                       599      1,682      1,329
       Property, plant and equipment purchased        606         22        275
       Building construction costs                    681        105         90
       Interest income                             26,983     20,213      7,514
</TABLE>

     The fabs of the Company are built on land held on long-term operating
     leases from entities controlled by the government of Singapore. Fab 1 is
     built on land leased by the Company from Ascendas Land (Singapore) Pte Ltd
     ("Ascendas"), formerly known as Technology Parks Pte Ltd, a private company
     wholly-owned by Jurong Town Corporation ("JTC"), under a long-term lease
     which expires in 2017, with an option, subject to certain conditions, to
     extend by another 30 years. JTC is a statutory board established by the
     Singapore government to develop and manage industrial estates in Singapore.

     Fabs 2, 3, 5 (occupied by SMP), 6 (occupied by CSP) and 7 occupy land
     leased by ST from JTC. The Company has entered into sub-leases for Fabs 2,
     3 and 5 and sub-licence for Fab 7 with ST in respect of the underlying land
     for the entire term of the lease between ST and JTC. The leases expire at
     different dates between 2024 and 2030 with an option, subject to certain
     conditions, to extend for another 30 years.

     Rental rates on ST and Ascendas leases are subject to revisions at market
     rates at periodic intervals in accordance with the rental agreements, with
     such increases generally capped at 4% to 10% per annum.

     ST provides management and corporate services to the Company. Management
     fees and expenses incurred on behalf of, or allocated to, the Company by ST
     are charged to the Company. Under a service agreement, annual management
     fees are payable for the provision of specified services on mutually agreed
     terms which the Company believes approximates the cost of providing those
     services. Fees are also payable as a proportion of revenues for affiliation
     and network benefits. In addition, fees are payable as a percentage of
     guarantees and similar financial support provided.

     Short-term financing is also provided by ST to the Company (generally on 3
     to 6 months renewable basis) using ST's cost competitive corporate banking
     advantage in the banking community. Surplus funds are placed with ST from
     time to time. Advances to and from ST bear interest at rates comparable to
     rates offered by commercial banks in Singapore. The Company also
     participates with ST in a cash management program managed by a bank. Under
     the program, cash balances are pooled and daily cash surpluses or
     shortfalls may, on a short-term basis, be lent to or borrowed from other ST
     affiliates participating in the arrangement at prevailing inter-bank rates.

                                      F-15
<PAGE>
           CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - IN US DOLLARS
                      IN THOUSANDS (EXCEPT PER SHARE DATA)

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

     The amounts due from or to ST and its affiliates are:

<TABLE>
<CAPTION>
                                          DECEMBER 31,
                                       ----------------
                                        2001      2002
                                       ------    ------
<S>                                    <C>       <C>
     Amounts due from ST affiliates
       Accounts receivable
         Trade                         $1,070    $    4
         Others                           177         -
                                       ------    ------
                                       $1,247    $    4
                                       ======    ======

     Amounts due to ST
       Other current liabilities       $1,658    $3,218

     Amounts due to ST affiliates
       Accounts payable
         Trade                         $3,681    $3,780
         Others                         1,218       585
                                       ------    ------
                                       $6,557    $7,583
                                       ======    ======
</TABLE>


     (b)  SMP

     The Company provides management and corporate support services including
     accounting, financial, sales and marketing services to SMP and allocates a
     portion of its costs to SMP. Such charges to SMP amounted to $7,038, $6,685
     and $8,266 in the years ended December 31, 2000, 2001 and 2002,
     respectively. The Company also recharged expenses paid on behalf of SMP
     amounting to $19,471, $20,928 and $22,806 in the years ended December 31,
     2000, 2001 and 2002, respectively. The Company is also committed to
     purchase a specified percentage of SMP's output or compensate SMP for any
     costs SMP incurs in connection with unused capacity arising from such
     specified percentage not purchased (see note 7).

     SMP leases its fab from the Company, under a long-term lease agreement
     which expires in 2008. The rental income from SMP for the years ending
     December 31, 2000, 2001 and 2002 was $13,011, $14,804 and $14,713,
     respectively.

     The Company bought plant and equipment of $nil, $2,661 and $1,918 from SMP
     during 2000, 2001 and 2002, respectively. The Company also sold plant and
     equipment of $23,331, $17,338 and $3,211 to SMP during 2000, 2001 and 2002,
     respectively.

     The Company bought $10,615, $10,601 and $6,815 of processed wafers from SMP
     for the years ending December 31, 2000, 2001 and 2002, respectively.


     (c)  LEASES

     Rental expense for land leased from ST for the years ended December 31,
     2000, 2001 and 2002 was $1,849, $1,916 and $1,936, respectively.

     Minimum future rental payments on non-cancellable operating leases of land
     from ST as of December 31, 2002 are as follows:

<TABLE>
<S>                                          <C>
     Payable in year ending December 31,
     2003                                    $ 3,535
     2004                                      3,535
     2005                                      3,535
     2006                                      3,535
     2007                                      3,535
     Thereafter                               65,226
                                             -------
                                             $82,901
                                             =======
</TABLE>

                                      F-16

<PAGE>
           CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - IN US DOLLARS
                      IN THOUSANDS (EXCEPT PER SHARE DATA)

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

4.   CASH AND CASH EQUIVALENTS

     Cash and cash equivalents consist of the following:

<TABLE>
<CAPTION>
                                           DECEMBER 31,
                                    --------------------------
                                       2001            2002
                                    ----------      ----------
<S>                                 <C>             <C>
     Cash at banks and on hand      $   15,805      $   23,312
     Cash equivalents
       Short-term deposits             561,455         524,642
       ST pooled cash                  464,356         662,971
                                    ----------      ----------
                                    $1,041,616      $1,210,925
                                    ==========      ==========
</TABLE>

     Certain of the Company's treasury management activities are undertaken by
     ST or its affiliates. The Company participates in a pooled cash management
     arrangement under which the Company may place surplus cash with ST as
     short-term deposits with maturities of less than three months.


5.   ACCOUNTS RECEIVABLE

     Trade accounts receivable consist of the following:

<TABLE>
<CAPTION>
                                                DECEMBER 31,
                                           ----------------------
                                             2001          2002
                                           --------      --------
<S>                                        <C>           <C>
     Trade receivables                     $67,212       $78,918
     Allowance for doubtful accounts        (4,036)       (2,460)
     Allowance for sales returns                 -        (6,250)
                                           -------       -------
                                           $63,176       $70,208
                                           =======       =======
</TABLE>

     Receivables from others consist of the following:

<TABLE>
<CAPTION>
                                                DECEMBER 31,
                                            -------------------
                                              2001        2002
                                            -------      ------
<S>                                         <C>          <C>
     Advances to suppliers                  $16,101      $1,095
     Loans to employees                       1,809         619
     Deposits                                 1,112       1,215
     Receivable from research partners        6,386       2,118
     Others                                   2,835       1,663
                                            -------      ------
                                            $28,243      $6,710
                                            =======      ======
</TABLE>

     Movements in the allowance for doubtful accounts are as follows:

<TABLE>
<CAPTION>
                                                           2000          2001          2002
                                                         -------       -------       -------
<S>                                                      <C>           <C>           <C>
     Beginning                                           $ 5,547       $ 3,368       $ 4,036
     Utilized in year                                     (2,721)          (70)       (1,078)
     Charge for the year                                     542           738           478
     Reversal of specific reserve due to collection            -             -          (976)
                                                         -------       -------       -------
     Ending                                              $ 3,368       $ 4,036       $ 2,460
                                                         =======       =======       =======
</TABLE>

     Movements in the allowance for sales returns are as follows:

<TABLE>
<CAPTION>
                              2000      2001       2002
                              ----      ----      ------
<S>                           <C>       <C>       <C>
     Beginning                $  -      $  $           -
     Utilized in year            -         -           -
     Charge for the year         -         -       6,250
                              ----      ----      ------
     Ending                   $  -      $  -      $6,250
                              ====      ====      ======
</TABLE>

                                      F-17
<PAGE>
           CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - IN US DOLLARS
                      IN THOUSANDS (EXCEPT PER SHARE DATA)

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

6.   INVENTORIES

     Inventories consist of the following:

<TABLE>
<CAPTION>
                                             DECEMBER 31,
                                         --------------------
                                           2001         2002
                                         -------      -------
<S>                                      <C>          <C>
     Raw materials                       $   653      $ 1,296
     Work in process                       7,263       17,308
     Consumable supplies and spares        4,850        2,671
                                         -------      -------
                                         $12,766      $21,275
                                         =======      =======
</TABLE>

7.   INVESTMENT IN SMP

     The investment in SMP consists of the following:

<TABLE>
<CAPTION>
                                                                DECEMBER 31,
                                                          -----------------------
     SMP                                                    2001          2002
     ---                                                  --------       --------
<S>                                                       <C>            <C>
     Cost                                                 $120,959       $120,959
     Share of retained post-formation loss                 (33,273)       (77,924)
     Share of accumulated other comprehensive losses       (10,280)        (9,271)
                                                          --------       --------
                                                          $ 77,406       $ 33,764
                                                          ========       ========
</TABLE>

     SMP is a semiconductor foundry providing wafer fabrication services and
     technologies. The Company accounts for its 49% investment in SMP using the
     equity method.

     Under the strategic alliance agreement with the majority shareholder of
     SMP, the parties do not share SMP's net results in the same ratio as the
     equity holding. Instead, each party is entitled to the gross profits from
     sales to the customers that it directs to SMP after deducting its share of
     the overhead costs of SMP. Accordingly, the Company accounts for its share
     of SMP's net results based on the gross sales to the customers that it
     directs to SMP, after deducting its share of the overhead costs.

     Under the assured supply and demand agreement that both the joint venture
     partners signed with SMP, the joint venture partners are billed beginning
     January 1, 2001 for allocated wafer capacity if the wafers started for them
     are less than their allocated capacity. The allocated wafer capacity billed
     and billable to the Company were $89,961 and $40,195 for 2001 and 2002,
     respectively. Such costs are included in equity in income (loss) of SMP in
     the accompanying consolidated statements of operations and comprehensive
     income (loss).

     Reconciliation of equity in income (loss) of SMP between consolidated
     statements of operations and comprehensive income (loss) and consolidated
     statements of cash flows:

<TABLE>
<CAPTION>
                                                          2000         2001           2002
                                                         ------      --------       --------
<S>                                                      <C>         <C>            <C>
     Equity in income (loss) of SMP in consolidated
      statements of operations and
      comprehensive income (loss)                        $7,588      $(92,683)      $(84,846)
     Allocated wafer capacity cost                            -        89,961         40,195
                                                         ------      --------       --------
     Equity in income (loss) of SMP in consolidated
      statements of cash flows                           $7,588      $ (2,722)      $(44,651)
                                                         ======      ========       ========
</TABLE>

                                      F-18
<PAGE>
           CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - IN US DOLLARS
                      IN THOUSANDS (EXCEPT PER SHARE DATA)

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

     Shown below is aggregated summarized financial information for SMP:

<TABLE>
<CAPTION>
                                               DECEMBER 31,
                                        -------------------------
                                           2001            2002
                                        ---------       ---------
<S>                                     <C>             <C>
     Current assets                     $ 164,663       $ 160,083
     Other assets                           3,696           2,688
     Property, plant and equipment        512,376         405,116
     Other current liabilities           (138,983)       (160,149)
     Long-term debt                      (278,571)       (171,429)
     Other liabilities                    (25,984)        (20,703)
                                        ---------       ---------
     Shareholders' equity               $ 237,197       $ 215,606
                                        =========       =========
</TABLE>

<TABLE>
<CAPTION>
                              2000           2001          2002
                            --------      --------       --------
<S>                         <C>           <C>            <C>
     Net revenue            $238,104      $312,378       $254,970
     Gross profit             56,315        85,358         12,221
     Operating income         47,917        78,986          5,517
     Net income (loss)        35,127        48,788        (23,649)
</TABLE>

     Net revenue includes billings for allocated wafer capacity to joint venture
     partners of $112,411 and $49,512 for 2001 and 2002 respectively.


8.   TECHNOLOGY LICENSE AGREEMENTS

     Technology license agreements consist of the following:

<TABLE>
<CAPTION>
                                             DECEMBER 31,
                                       ----------------------
                                         2001           2002
                                       -------        -------
<S>                                    <C>            <C>
     Technology licenses, at cost      $20,000        $23,453
     Accumulated amortization           (4,833)        (6,913)
                                       -------        -------
                                       $15,167        $16,540
                                       =======        =======
</TABLE>

     Amortization charged to results of operations amounted to $2,000, $2,000
     and $2,080, for 2000, 2001 and 2002, respectively. Estimated amortization
     for future periods is as follows:

<TABLE>
<S>                  <C>
     2003            $ 2,616
     2004              2,991
     2005              2,991
     2006              2,616
     2007              2,160
     Thereafter        3,166
                     -------
                     $16,540
                     =======
</TABLE>

     Obligations payable under the agreements are included in other current
     liabilities (see note 11).

                                      F-19
<PAGE>
           CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - IN US DOLLARS
                      IN THOUSANDS (EXCEPT PER SHARE DATA)

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

9.   PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment consist of the following:

<TABLE>
<CAPTION>
                                                            DECEMBER 31,
                                                     --------------------------
                                                        2001            2002
                                                     ----------      ----------
<S>                                                  <C>             <C>
     COST
     Buildings                                       $  194,049      $  195,480
     Mechanical and electrical installations            348,955         389,212
     Equipment and machinery                          2,376,173       2,628,758
     Office and computer equipment                       77,521          81,430
     Assets under installation and construction         400,643         519,332
                                                     ----------      ----------
          Total cost                                 $3,397,341      $3,814,212
                                                     ==========      ==========

     ACCUMULATED DEPRECIATION
     Buildings                                       $   42,469      $   52,246
     Mechanical and electrical installations            154,065         191,057
     Equipment and machinery                          1,295,061       1,644,402
     Office and computer equipment                       52,325          65,276
                                                     ----------      ----------
          Total accumulated depreciation             $1,543,920      $1,952,981
                                                     ==========      ==========

     Property, plant and equipment (net)             $1,853,421      $1,861,231
                                                     ==========      ==========
</TABLE>


     Depreciation charged to results of operations amounted to $333,341,
     $429,502 and $434,327 for 2000, 2001 and 2002, respectively. Buildings
     consist of wafer plants, including administrative offices, built on land
     licensed to ST and Ascendas, and sub-leased to the Company. See Note 3.

     Capitalized interest relating to property, plant and equipment amounted to
     $14,356, $15,236 and $10,400 in the years ended December 31, 2000, 2001 and
     2002, respectively.


10.  ACCRUED OPERATING EXPENSES

     Accrued operating expenses consist of the following:

<TABLE>
<CAPTION>
                                                              DECEMBER 31,
                                                         ----------------------
                                                           2001           2002
                                                         --------      --------
<S>                                                      <C>           <C>
     Employee bonuses and related expenses               $ 49,745      $ 44,965
     Unbilled raw materials                                37,969        38,643
     Technology costs                                      10,398        11,386
     Interest                                               9,210         6,041
     Warranty obligations                                   4,895         4,437
     Research and development cost                         11,482         4,947
     Loss on licensing agreement (see Note 21)              6,570         3,186
     Cancellation of contracted capital expenditure
      charges                                              14,314        14,224
     Others                                                 9,052        13,187
                                                         --------      --------
                                                         $153,635      $141,016
                                                         ========      ========
</TABLE>

                                      F-20
<PAGE>
           CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - IN US DOLLARS
                      IN THOUSANDS (EXCEPT PER SHARE DATA)

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

     Movements in the accrual for warranty obligations are as follows:

<TABLE>
<CAPTION>

                                                             2000        2001        2002
                                                           -------     -------     -------
<S>                                                        <C>         <C>         <C>
     Beginning accrual for warranty obligations            $ 4,574     $ 4,421     $ 4,895
     Warranty accruals related to current periods sales      9,313       9,298       5,405
     Warranty costs incurred                                (9,466)     (8,824)     (5,863)
                                                           -------     -------     -------
     Ending accrual for warranty obligations               $ 4,421     $ 4,895     $ 4,437
                                                           =======     =======     =======
</TABLE>

     Movements in the accrual for technology costs are as follows:

<TABLE>
<CAPTION>
                              2000         2001         2002
                            -------      -------      -------
<S>                         <C>          <C>          <C>
     Beginning              $12,126      $11,339      $10,398
     Payments                (3,319)      (2,371)      (2,861)
     Charge for the year      2,532        1,430        3,849
                            -------      -------      -------
     Ending                 $11,339      $10,398      $11,386
                            =======      =======      =======
</TABLE>

11.  OTHER CURRENT LIABILITIES

     Other current liabilities consist of the following:

<TABLE>
<CAPTION>
                                                        DECEMBER 31,
                                                     ------------------
                                                       2001       2002
                                                     -------    -------
<S>                                                  <C>        <C>
     Customer deposits                               $ 5,000    $24,251
     Derivative instruments (see note 23)              6,476      1,004
     Obligations payable under technology license
      agreements (see note 8)                          6,000        650
     Others                                            5,416      3,736
                                                     -------    -------
                                                     $22,892    $29,641
                                                     =======    =======
</TABLE>

     The Company entered into deposit and supply agreements with several
     customers under which the customers are required to maintain deposits with
     the Company to secure wafer capacity. These non-interest bearing deposits
     are refundable at the end of the agreed period of such allocated capacity,
     typically within three to five years. As of December 31, 2002, deposits
     held by the Company amounted to $34,682, of which $24,251 is repayable
     within one year. These agreements require the Company to make available
     production capacity to customers over the terms of the agreements.


12.  LONG-TERM DEBT

     Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                                      DECEMBER 31,
                                                               -------------------------
                                                                  2001            2002
                                                               ----------     ----------
<S>                                                            <C>            <C>
     Singapore dollar loans at fixed rates of 4% to 4.25%      $  287,355     $  188,692
     Singapore dollar loans at floating rates                      54,620              -
     US dollar loans at floating rates                            184,800        377,000
     2.50% Senior convertible notes                               587,559        603,609
     Other                                                         (2,104)        10,630
                                                               ----------     ----------
                                                                1,112,230      1,179,931
     Less current installments                                   (198,160)       (64,001)
                                                               ----------     ----------
     Long-term debt, excluding current installments            $  914,070     $1,115,930
                                                               ==========     ==========
</TABLE>

                                      F-21
<PAGE>
           CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - IN US DOLLARS
                      IN THOUSANDS (EXCEPT PER SHARE DATA)

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

     All Singapore dollar loans are unsecured.

     Fixed rate Singapore dollar loans of $117,643 and $88,277 as of December
     31, 2001 and 2002, respectively, are guaranteed by ST. A fixed rate
     Singapore dollar loan of $46,817 and $nil as of December 31, 2001 and 2002,
     respectively, is guaranteed by commercial banks at the request of ST. The
     Company's management and services support agreement with ST includes a
     charge for such guarantees. See note 3. The fixed rate Singapore dollar
     loans contain certain covenants which restrict the ability of the Company
     to pay dividends without prior approval from the lender. The loans are
     repayable in semi-annual installments and mature between 2002 and 2006.

     The floating rate US dollar loan was first put in place on September 28,
     2000 and matures on September 28, 2006. The loan facility is for an amount
     of $820,000 of which $149,000 and $377,000 was outstanding as of December
     31, 2001 and 2002, respectively. The loan bears interest at 0.60% to 0.85%
     (depending on certain criteria relating to wafer starts and debt/equity
     ratio) above the LIBOR rates for US dollars deposits quoted by specified
     banks to the lender. As of December 31, 2001 and 2002, this rate was
     2.7875% and 2.2875%, respectively. Interest is payable semi-annually in US
     dollars and principal is payable in six equal semi-annual installments
     commencing March 28, 2004. Borrowings under this facility are secured by a
     floating charge over a project bank account and a fixed charge over a debt
     service reserve account, both of which were established pursuant to this
     loan.

     During 2002, the Company obtained consents from one of its lenders and
     several of CSP's lenders to allow the Company to substantially increase
     CSP's net worth to enable CSP to satisfy a total debt to net worth ratio
     for two of its loan agreements. CSP's net worth, as defined under the loan
     agreements, includes loans from the Company. The increase in CSP's net
     worth was effected by converting amounts payable by CSP to the Company into
     a loan from the Company to CSP (the "Chartered Loan"). In obtaining the
     consents, the two CSP loan agreements were amended to include the
     corresponding Subordination Agreements which subordinated amounts under the
     Chartered Loan to the amounts due by CSP to its other lenders under the
     above loans.

     On April 2, 2001, the Company issued $575,000 of senior unsecured
     convertible notes due April 2, 2006, which bear interest at the rate of
     2.50% per year and have a yield to maturity of 5.25% per year. The notes
     could have been converted into the Company's ordinary shares or American
     Depository Shares ("ADS") at a conversion price of S$6.5170 per ordinary
     share (equivalent to approximately US$36.3611 per ADS, based on a fixed
     exchange rate of US$1.00 = S$1.7923, and the current ratio of ten ordinary
     shares per ADS; the conversion price and the ratio of ADSs to shares may be
     subject to adjustment for certain events). The Company may redeem all or a
     portion of the convertible notes at any time on or after April 2, 2003 at a
     price to yield of 5.25% per year on the redemption date if the Company's
     shares or ADS's trade at 125% of the conversion price for a period of 20
     days in any consecutive 30 trading day period.

     In October, 2002, the Company completed a rights offering pursuant to which
     it issued to holders of its ordinary shares, rights to subscribe for new
     ordinary shares ("ordinary share rights"), and to holders of its American
     Depository Shares ("ADSs"), rights to subscribe for new ADSs ("ADS
     rights"). Prior to the rights offering, the 2.50% Senior Convertible Notes
     due 2006 were convertible to ordinary shares at a conversion price of
     S$6.5170, or ADSs at a conversion price of approximately US$36.3611 per
     ADSs, based on a fixed exchange rate of US$1.00 = S$1.7923 and the ordinary
     share to ADS ratio of 10:1. The terms of the convertible notes required an
     adjustment to the note conversion price per ordinary share as a result of
     the issuance by the Company of the ordinary share rights and the ADS
     rights. The conversion price per ordinary share was adjusted to S$4.7980
     (equivalent to approximately US$26.7701 per ADS, based on a fixed exchange
     rate of US$1.00 = S$1.7923 and the ordinary share to ADS ratio of 10:1).

                                      F-22
<PAGE>
           CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - IN US DOLLARS
                      IN THOUSANDS (EXCEPT PER SHARE DATA)

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

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

<TABLE>
<S>                                         <C>
     Payable in year ending December 31,
       2003                                 $   64,001
       2004                                    180,840
       2005                                    180,840
       2006                                    754,250
                                            ----------
                                            $1,179,931
</TABLE>

13.  UNUTILIZED CREDIT FACILITIES

     As of December 31, 2002, the Company has unutilized banking facilities of
     approximately $521,290 for short-term advances, term loans and bankers'
     guarantees and an unutilized short-term credit facility with ST of
     approximately $100,000.


14.  OTHER NON-CURRENT LIABILITIES

     Other liabilities consist of the following:

<TABLE>
<CAPTION>
                                                DECEMBER 31,
                                             ------------------
                                               2001       2002
                                             -------    -------
<S>                                          <C>        <C>
     Deferred grants                         $ 1,316    $ 7,937
     Deferred income                               -     12,392
     Derivative instruments (see note 23)     23,701      8,125
                                             -------    -------
                                             $25,017    $28,454
                                             =======    =======
</TABLE>

     The Company has obtained approval for funding of certain research and
     development projects from the Economic Development Board of Singapore
     ("EDB"), under the Research and Development Assistance Scheme ("RDAS") and
     the Research Incentive Scheme for Companies ("RISC") administered by EDB.
     The programs provide for funds to be disbursed to the Company over the
     terms of the projects. Amounts received for asset-related grants are
     deferred and recognized in other income over the shorter of the life of the
     related asset or the remaining life of the relevant grant project.

     The Company has entered into an agreement to sell equipment, license its
     0.18 micron baseline logic process technology and grant patent license
     rights in exchange for cash, a convertible note, preferred stock, and a
     capacity access commitment. Income from this transaction has been deferred
     and will be recognized upon the fulfillment of the conditions of the
     agreement, which include completion of the transfer of the process
     technology expected to occur in April 2003.


15.  INCOME TAXES

     The Company has been granted pioneer status under the Economic Expansion
     Incentives (Relief from Income Tax) Act, Chapter 86 of Singapore (the
     "Act"), for sub-micron technology manufacturing in three of its fabs,
     effective for ten years from July 1, 1996, July 1, 1999, and one for which
     the date of commencement has not been determined.

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

                                      F-23
<PAGE>
           CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - IN US DOLLARS
                      IN THOUSANDS (EXCEPT PER SHARE DATA)

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

     The Company has been granted post-pioneer status for one of its fabs (Fab
     1), which entitles it to a concessionary tax rate of 10% for the five years
     after the expiration of its pioneer status on December 31, 2000. The
     Company has also been granted post-pioneer status for another two of the
     fabs that are currently in pioneer status, which entitles them to a
     concessionary tax rate of 10% for five years from the expiration of their
     pioneer status in 2006 and 2009. The concessionary tax rate is subject to
     compliance with conditions stated in the post-pioneer certificate and the
     Act.

     The tax-exempt profits arising from the pioneer trade can be distributed as
     tax-exempt dividends which are not subject to Singapore income tax in the
     hands of the holders of ordinary shares. Losses arising in the pioneer and
     post-pioneer status period are available for carryforward to be offset
     against profits arising in subsequent periods, including profits arising
     after the pioneer and post-pioneer status period. Pioneer and post-pioneer
     loss carryforwards are available indefinitely, subject to more than 50% of
     the Company's equity staying with the same shareholders from the incurrence
     of the tax loss to its utilization. Pioneer and post-pioneer loss
     carryforwards are determined on a fab-by-fab basis. As of December 31,
     2002, the Company has pioneer loss carryforwards of $5,760 and unutilized
     property, plant and equipment related wear and tear allowances
     carryforwards of $593,428. Since profits during the pioneer status period
     are not taxable and substantially all such pioneer loss carryforwards as of
     December 31, 2002 are expected to reverse within the pioneer status period,
     deferred tax assets have not been recognized for such carryforwards
     expected to reverse within the pioneer period.

     The income tax expense for the years ended December 31, 2000, 2001 and 2002
     represents income tax payable on non-pioneer trade income, principally
     interest and rental income.

     Income tax expense consists of the following:

<TABLE>
<CAPTION>
                   2000         2001        2002
                 -------      -------      ------
<S>              <C>          <C>          <C>
     Current     $19,419      $16,127      $7,204
     Deferred       (715)      (1,883)       (175)
                 -------      -------      ------
     Total       $18,704      $14,244      $7,029
                 =======      =======      ======
</TABLE>

     Included in other non-current assets are $2,671 and $2,846 of net deferred
     tax assets as of December 31, 2001 and 2002 which primarily relate to the
     difference in the tax and book basis of property, plant and equipment. The
     ultimate realization of deferred tax assets depends upon the generation of
     future taxable income during the periods in which those temporary
     differences become deductible. The Company believes that it is more likely
     than not that the results of future operations will generate sufficient
     taxable income to realize the deferred tax assets.

     A reconciliation of the expected tax expense computed by applying statutory
     rates to pre-tax income (loss) to the actual tax expense is as follows:

<TABLE>
<CAPTION>
                                                                              DECEMBER 31,
                                                                  ------------------------------------
                                                                    2000          2001          2002
                                                                  --------     ---------     ---------
<S>                                                               <C>          <C>           <C>
     Income taxes computed at Singapore
      statutory tax rate of 22% (2000: 25.5%, 2001: 24.5%)        $ 56,080     $(108,373)    $(102,437)
     Permanent non-deductible expenses                              28,392        48,039        33,372
     Effect of pioneer status, including losses and allowances
      not recognized as deferred benefit                           (64,486)       75,536        65,383
     Effect of pioneer status of equity investee                    (1,935)          667         9,823
     All other items, net                                              653        (1,625)          888
                                                                  --------     ---------     ---------
     Income tax expense                                           $ 18,704     $  14,244     $   7,029
                                                                  ========     =========     =========
</TABLE>

                                      F-24
<PAGE>
           CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - IN US DOLLARS
                      IN THOUSANDS (EXCEPT PER SHARE DATA)

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

     The pioneer tax status had the effect of changing diluted net income per
     share by $0.04, $0.05 and $0.04 and diluted net income per ADS by $0.41,
     $0.48 and $0.36 for the years ended December 31, 2000, 2001 and 2002,
     respectively.


16.  SHARE CAPITAL

     The Company's authorized share capital at December 31, 2002 comprised
     3,076,923 ordinary shares of Singapore dollars S$0.26 par value each.

     Share capital consists of the following:

<TABLE>
<CAPTION>
                                  DECEMBER 31,
                             --------------------
                               2001        2002
                             --------    --------
<S>                          <C>         <C>
     Issued share capital    $219,319    $382,552
     Capital reduction         61,161      61,161
                             --------    --------
                             $280,480    $443,713
                             ========    ========
</TABLE>

     In November 1992, the Company reorganized its paid-up share capital by the
     extinguishment of accumulated losses of $61,161 against the paid-up share
     capital in a capital reduction sanctioned by the High Court of Singapore.
     The capital reduction does not qualify as a quasi-reorganization under US
     GAAP and accordingly has not been reflected in the financial statements.

     In October 2002, the Company completed a rights offering pursuant to which
     it issued to holders of :

     -    its ordinary shares, rights to subscribe for new ordinary shares in
          the ratio of eight ordinary share for every ten ordinary shares held.
          The ordinary share subscription price was S$1.00.

     -    its ADSs, rights to subscribe for new ADSs, in the ratio of eight ADSs
          for every ten ADSs held. The definitive ADSs subscription price was
          US$5.58.

     The Company issued 1,109,624 new ordinary shares (directly or in the form
     of ADSs) and received net proceeds of $611,650 from the rights offering.

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


17.  ADDITIONAL PAID-IN CAPITAL

     Additional paid-in capital as of December 31, 2001 and 2002 represents
     principally the excess of proceeds received from issues of share capital
     (net of the costs of issue) over the par value of shares issued, which
     under Singapore law must be credited to the share premium account. The
     share premium may only be applied in paying up unissued shares to be issued
     to shareholders, paying up in whole or in part the balance unpaid on shares
     in issue, in writing off preliminary expenses and share and debenture issue
     expenses and by provision for premiums payable on the redemption of
     redeemable preferred shares. The share premium account had a balance of
     $2,204,608 as of December 31, 2002.

                                      F-25
<PAGE>
           CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - IN US DOLLARS
                      IN THOUSANDS (EXCEPT PER SHARE DATA)

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

18.  ACCUMULATED DEFICIT

     Singapore law allows dividends to be paid only out of profits of the
     Company. 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.

     Distributions of profits from non-pioneer activities which have been
     subject to income tax are paid with a franking tax credit which Singapore
     tax-resident shareholders can apply as a prepayment of income tax on the
     dividend. Shareholders who are not tax-resident in Singapore are not liable
     for further Singapore income tax.

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

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


19.  ACCUMULATED OTHER COMPREHENSIVE LOSS

     The components of accumulated other comprehensive loss:

<TABLE>
<CAPTION>
                                                        DECEMBER 31,
                                                    ------------------
                                                     2001        2002
                                                    -------    -------
<S>                                                 <C>        <C>
     Currency translation loss                      $52,718    $52,664
     Derivative and hedging activities including
      cumulative effect-type-adjustment in 2001      10,838     10,329
                                                    -------    -------
                                                    $63,556    $62,993
                                                    =======    =======
</TABLE>

20.  SHARE OPTIONS AND INCENTIVE PLANS

     (a)  1999 OPTION PLAN

     Effective March 1999, the Company adopted the Chartered Semiconductor
     Manufacturing Ltd Share Option Plan 1999 (the "1999 Option Plan") which
     provided for a maximum of 107,160 shares (subject to adjustment under the
     plan) to be reserved for option grants. This amount was revised to 197,160
     shares in May 2001. As a result of the Company's rights offering in October
     2002, the shares available for future grants were increased by 18,212
     shares. The total shares provided under the 1999 Option Plan is hence
     215,372 shares. The remaining shares available for future grants at
     December 31, 2002, are 107,641. Options granted under the plan may include
     nonstatutory options as well as incentive stock options intended to qualify
     under Section 422 of the United States Internal Revenue Code.

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

                                      F-26
<PAGE>
           CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - IN US DOLLARS
                      IN THOUSANDS (EXCEPT PER SHARE DATA)

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

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

     As a result of the Company's rights offering which was completed in October
     2002, changes were made to both the exercise price and the number of shares
     of all outstanding options offered or granted. The adjustments were made so
     that the aggregate instrinsic value of the options and the ratio of the
     exercise price per share to the market value per share for each outstanding
     option tranche remain unchanged immediately after the rights offering. The
     adjustments were made by multiplying each existing option exercise price by
     0.8531 and dividing the number of shares issuable upon exercise of each
     option by 0.8531

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

     Information on options granted is as follows:

<TABLE>
<CAPTION>
                                                    WEIGHTED
                                                    AVERAGE
                                                    EXERCISE
                                         OPTIONS     PRICE
                                         -------    --------
<S>                                      <C>        <C>
     Outstanding at January 1, 2000       39,593     $1.13
     Granted                              46,582     $6.93
     Exercised                           (12,909)    $0.90
     Lapsed                               (2,852)    $4.01
                                         -------
     Outstanding at December 31, 2000     70,414     $4.90
     Granted                              30,022     $2.35
     Exercised                            (4,765)    $1.00
     Lapsed                               (7,746)    $5.37
                                         -------
     Outstanding at December 31, 2001     87,925     $4.19
     Granted                              31,457     $1.46
     Exercised                            (3,018)    $1.10
     Lapsed                              (16,671)    $3.78
                                         -------     -----
     Outstanding at December 31, 2002     99,693     $3.49
     Exercisable at end of year           30,344     $4.15
                                         =======     =====
</TABLE>

     Weighted average fair values of options granted in 2000, 2001 and 2002 were
     $4.73, $1.99 and $1.13 respectively.

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

<TABLE>
<CAPTION>
                               OPTIONS OUTSTANDING              OPTIONS EXERCISABLE
                      ------------------------------------    -----------------------
                                     WEIGHTED
                        NUMBER        AVERAGE     WEIGHTED                   WEIGHTED
     RANGE            OUTSTANDING    REMAINING    AVERAGE       NUMBER       AVERAGE
     OF EXERCISE          AT        CONTRACTUAL   EXERCISE    EXERCISABLE    EXERCISE
     PRICES           12/31/2002       LIFE        PRICE      12/31/2002       PRICE
     -----------      -----------   -----------   --------    -----------    --------
<S>                   <C>           <C>           <C>         <C>            <C>
     $0.46 to $0.69      4,132       5.0 years     $0.52         3,690         $0.53

     $1.06 to $1.95     34,404       8.5 years     $1.45         5,070         $1.71

     $2.14 to $2.44     27,298       8.0 years     $2.33         7,225         $2.31

     $5.81              19,468       7.3 years     $5.81         8,225         $5.81

     $8.31              14,391       6.8 years     $8.31         6,134         $8.31
                        ------                                  ------
                        99,693                                  30,344
                        ======                                  ======
</TABLE>

                                      F-27
<PAGE>
           CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - IN US DOLLARS
                      IN THOUSANDS (EXCEPT PER SHARE DATA)

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

     The options vest over one to five years and expire on dates ranging from
     November 2003 to September 2012. The 1999 Option Plan is accounted for in
     accordance with fixed-plan accounting under APB 25 and related
     interpretations. Total compensation expense recognized for 2000, 2001 and
     2002 totalled $2,778, $763 and $(253), respectively.

     The fair value of the option grants are estimated using the Black-Scholes
     option pricing model with the following assumptions used for grants in
     2000, 2001 and 2002.

<TABLE>
<CAPTION>
                                         2000         2001         2002
                                      ----------   ----------   ----------
<S>                                   <C>          <C>          <C>
     Risk free interest rate           5.907% to    4.550% to    3.195% to
                                        6.457%       4.854%      5.060%
     Expected volatility              73.152% to   81.130% to   67.690% to
                                        79.258%      90.540%      75.89%
     Expected lives                     5 to         5 to        5 to
                                       10 years     10 years    10 years
     Dividend yield                       NA           NA          NA
</TABLE>

     Options of 2,607, 1,789 and 1,474 shares of the Company were granted to
     employees of SMP in 2000, 2001 and 2002, respectively. SMP bears the
     stock-based compensation charge in respect of these options.

     Had the Company determined employee compensation cost based on the fair
     value at the grant date for its share options under SFAS 123, the Company's
     net income (loss) would have been reduced or increased to the pro forma
     amounts indicated below:

<TABLE>
<CAPTION>
                                                    2000            2001            2002
                                                  --------       ---------       ---------
<S>                                               <C>            <C>             <C>
     Stock-based employee compensation cost
       As reported (intrinsic method)             $  2,778       $     763       $    (253)
       Pro forma (fair-value method)              $ 67,326       $  78,580       $  49,921

     Net income (loss)
       As reported                                $244,766       $(383,952)      $(417,088)
       Pro forma                                  $180,218       $(461,769)      $(467,262)

     Basic net income (loss) per share
       As reported                                $   0.16       $   (0.24)      $   (0.23)
       Pro forma                                  $   0.12       $   (0.29)      $   (0.26)

     Diluted net income (loss) per share
       As reported                                $   0.16       $   (0.24)      $   (0.23)
       Pro forma                                  $   0.11       $   (0.29)      $   (0.26)
</TABLE>

     (b)  2001 SHARE PURCHASE PLANS

     As approved by the shareholders in May 2001, the Company has adopted the
     Chartered Semiconductor Manufacturing Ltd Employee Share Purchase Plan 2001
     (the "Chartered Purchase Plan") and the Share Purchase Plan 2001 for
     Employees of Silicon Manufacturing Partners Pte Ltd (the "SMP Purchase
     Plan"), collectively "the Plans", which provides for the issuance of a
     maximum of 10,000 shares (subject to adjustment under the Plans). The
     amount was subsequently revised to 11,722 shares as a result of the
     Company's rights offering which was completed in October 2002.

                                      F-28
<PAGE>
           CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - IN US DOLLARS
                      IN THOUSANDS (EXCEPT PER SHARE DATA)

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

     The Plans permit eligible employees to purchase shares through payroll
     deductions of between 1 percent to 10 percent of an employee's
     compensation, including salaries, wages, bonuses, incentive compensations,
     commissions, overtime pay and shift premiums. The offering periods consist
     of the six-month periods commencing on each March 1 and September 1. The
     purchase price for each share purchased at the close of an offering period
     shall be the lower of 85% of the fair market value of the share on the last
     trading day in such offering period or last trading day before the
     commencement of such offering period. The purchase price for each share
     shall in no event be less than the par value of each share. The plans are
     intended to qualify under Section 423 of the United States Tax Code.

     The Plans are administered by a committee appointed by the Directors.
     During 2002, approximately 1,200 shares were purchased at prices from $1.06
     to $1.92 (S$1.85 to S$3.52) in 2002 under the Plans. No shares were issued
     in 2001 under the Plans.


21.  COMMITMENTS AND CONTINGENCIES

     (a)  COMMITMENTS

     The Company has a patent license agreement with a technology partner under
     which the parties grant to one another a license to use certain of each
     other's patents. Under the terms of the patent license agreement, the
     Company may provide wafer capacity in lieu of payment for royalties. The
     patent license agreement continues for as long as the joint venture
     agreement between the parties remains.

     During the year, over and above the Company's right to secure a waiver of
     royalties by providing wafer capacity, the parties further agreed that
     royalties under the patent license agreement would be waived until such
     time as the interest of the technology partner in SMP falls below 49%. In
     exchange, the Company agreed to waive capacity shortfall obligations from
     the technology partner.

     The Company has entered into agreements to purchase technology licenses,
     jointly perform research and development, and swap capacity commitments.
     The payment obligations under these agreements are $170 million in 2003,
     $115 million in 2004, and $70 million in 2005.

     The Company entered into subscription and participation agreements with
     seven customers (the "Equity Investor Customers"), a technology partner and
     an investor to raise equity for the establishment of a new fab. Under the
     agreements, the Equity Investor Customers, technology partner and the
     investor subscribed for shares with the right to subscribe for new shares
     pro-rata to their interest in the Company. The subscription and
     participation agreements were terminated on November 5, 1999. The Company
     is committed to provide the Equity Investor Customers and technology
     partner with rights to wafer capacity first granted under those agreements
     through August 2005.


     (b)  CAPITAL EXPENDITURE COMMITMENTS

     The Company has the following capital commitments:

<TABLE>
<CAPTION>
                                                  DECEMBER 31,
                                             --------------------
                                               2001         2002
                                             --------     -------
<S>                                          <C>          <C>
     Contracts for capital expenditure       $263,644     446,380
</TABLE>

                                      F-29
<PAGE>
           CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - IN US DOLLARS
                      IN THOUSANDS (EXCEPT PER SHARE DATA)

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

     (c)  LEASES

     Rental expense, excluding amounts payable to ST disclosed in Note 3, for
     the years ended December 31, 2000, 2001 and 2002 was $2,907, $5,236 and
     $5,748 respectively.

     Minimum future rental payments on non-cancellable operating leases
     excluding amounts payable to ST disclosed in Note 3(c), as of December 31,
     2002, are as follows:

<TABLE>
<S>                                         <C>
     Payable in year ending December 31,
       2003                                 $ 4,344
       2004                                   2,867
       2005                                   1,895
       2006                                   1,707
       2007                                     290
       Thereafter                             2,827
                                            -------
                                            $13,930
                                            =======
</TABLE>


     (d)  CONTINGENCIES

     During 2000, the Company determined that it would not derive future value
     from an existing technology license. The Company restructured the terms of
     the agreement with the licensor, and accrued a liability of $11,570 for the
     estimated future payments under the restructured agreement. The accrual was
     charged to other operating expenses in 2000 as the Company did not expect
     to derive future value from the payments. The Company has paid $8,000 under
     the restructured agreement, and has a remaining accrual of $3,570 as of
     December 31, 2002. The Company believes that the remaining accrual will be
     adequate to cover all future payments under the restructured agreement.

     The Company is 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. In
     addition, the Company is subject to various taxes in the different
     jurisdictions in which it operates. These include taxes on income,
     property, goods and services, and other taxes. The Company submits tax
     returns and claims with the respective government taxing authorities, which
     are subject to agreement by those taxing authorities. The Company accrues
     costs associated with these matters when they become probable and
     reasonably estimable. The Company does not believe that it is probable that
     losses associated with these matters beyond those already recognized will
     be incurred in amounts that would be material to its financial position or
     results of operations.


22.  OTHER OPERATING EXPENSES

     During 2002, other operating expenses include a property, plant and
     equipment impairment charge of $4,868 and a restructuring charge of $5,157.
     The impairment charge resulted from the decision to abandon certain
     production processes. As the associated machinery had no further productive
     use, it was taken out of service and will be abandoned. As the machinery
     has no value on the secondary machinery market, its carrying value was
     reduced to zero. The restructuring charge relates to a workforce reduction
     in the fourth quarter, and represents the cost of the compensation package
     paid to the affected employees. The compensation was substantially paid
     during the fourth quarter.

                                      F-30
<PAGE>
           CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - IN US DOLLARS
                      IN THOUSANDS (EXCEPT PER SHARE DATA)

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

23.  DERIVATIVE INSTRUMENTS

     The Company has the following notional amounts of derivative instruments:

<TABLE>
<CAPTION>
                                                                  DECEMBER 31,
                                                             --------------------
                                                               2001         2002
                                                             --------    --------
<S>                                                          <C>         <C>
     Forward foreign exchange contracts to hedge:
     - Singapore dollar debt                                 $232,269    $ 94,102
     - plant and equipment purchases (mainly Japanese yen
        and Euro)                                                   -      24,185
     Cross currency swap                                      122,895     100,415
     Convertible notes interest rate swap                     200,000     200,000
                                                             --------    --------
                                                             $555,164    $418,702
                                                             ========    ========
</TABLE>

     The Company has only limited involvement with derivative financial
     instruments and does not use them for trading purposes. The Company uses
     derivative instruments principally to manage identified foreign currency
     risks resulting from its Singapore dollar denominated debt and, to a lesser
     extent, its foreign currency denominated purchase commitments which are
     denominated principally in Japanese yen and Euro. The Company uses foreign
     currency forward contracts to manage these risks and has designated 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. Amounts included in other comprehensive income related to
     hedges of Singapore dollar denominated debt are reclassified into earnings
     in amounts equal to the transaction gain or loss resulting from the
     remeasurement of the debt into US dollars. The amounts reclassified into
     earnings are included in foreign exchange gain (loss). Amounts included in
     other comprehensive income related to hedges of foreign currency purchase
     commitments are reclassified into earnings (cost of revenue) when the asset
     related to the purchase commitment is depreciated. The maximum term over
     which the Company is hedging exposures to the variability of cash flows for
     currency exchange rates risk is 6 years. During 2001, a loss of $1,819
     related to SMP, an equity affiliate, was reclassified from other
     comprehensive income to equity in loss of SMP because it became probable
     that the original forecasted transaction would not occur in the near term.

     The Company also uses derivative instruments to manage interest rate risks.
     During 2001, the Company entered into an interest rate swap contract to
     hedge the fixed-rate interest obligations associated with $200,000 of the
     convertible notes issued in April 2001, with the effect of swapping the
     fixed-rate interest obligations to a floating-rate obligation based on
     LIBOR rates. The Company has designated this interest rate swap contract as
     a fair-value hedge.

     Most of the Company's derivatives are formally designated as cash flow
     foreign currency hedges and fair value hedges. However, certain derivative
     instruments are not designated as part of a hedging relationship. These
     consist primarily of foreign currency forward contracts related to groups
     of forecasted foreign currency denominated purchases of fixed assets. While
     the Company expects these derivatives 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.
     Gains and losses on these instruments are included in foreign exchange gain
     (loss).

     At December 31, 2002, the estimated net amount of existing losses from cash
     flow hedges expected to be reclassified into earnings within the next year
     is $585. For the year ended December 31, 2002, net realized gains (losses)
     recognized from cash flow hedges were $(1,813) and from fair value hedges
     were $283.

                                      F-31
<PAGE>
           CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - IN US DOLLARS
                      IN THOUSANDS (EXCEPT PER SHARE DATA)

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

     The components of other comprehensive income (loss) related to derivative
     and hedging activities:

<TABLE>
<CAPTION>
                                                                             DECEMBER 31,
                                                                        ---------------------
                                                                          2001         2002
                                                                        --------     --------
<S>                                                                     <C>          <C>
     Beginning                                                          $      -     $(10,838)
     Cumulative effective-type-adjustment at January 1, 2001 net           8,144            -
     Reclassifications into earnings                                      (1,476)      (1,813)
     Net changes associated with current period hedging transactions     (15,617)       1,313
     Share of other comprehensive loss of SMP                             (1,889)       1,009
                                                                        --------     --------
     Ending                                                             $(10,838)    $(10,329)
                                                                        ========     ========
</TABLE>

     By using derivative instruments to hedge exposures to changes in foreign
     currency rates and interest rates, the Company exposes itself to credit
     risk and market risk. 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
     does not possess 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 market risk associated with interest rate contracts is managed by
     establishing and monitoring parameters that limit the types and degree of
     market risk that may be undertaken. The Company assesses interest rate cash
     flow risk and currency exchange cash flow risk by continually 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.


24.  FAIR VALUES OF FINANCIAL INSTRUMENTS

<TABLE>
<CAPTION>
                                                     DECEMBER 31,
                                 -------------------------------------------------------
                                           2001                           2002
                                 -------------------------     -------------------------
                                  CARRYING       ESTIMATED      CARRYING       ESTIMATED
                                   AMOUNT       FAIR VALUE       AMOUNT       FAIR VALUE
                                 ----------     ----------     ----------     ----------
                                      $              $              $              $
<S>                              <C>            <C>            <C>            <C>
     ASSET/(LIABILITY)
     Long term debt              (1,112,230)    (1,107,329)    (1,179,931)    (1,227,464)
     Forward foreign exchange
      contracts                      (8,734)        (8,734)         1,448          1,448
     Cross currency swap            (19,339)       (19,339)        (8,853)        (8,853)
     Interest rate swap              (2,104)        (2,104)         8,526          8,526
</TABLE>

     Cash and cash equivalents, amounts owing from and to ST and affiliates,
     accounts receivable and accounts payable. The carrying amounts approximate
     fair value in view of the short term nature of these balances.

     Long-term debt. The fair value is based on current interest rates available
     to the Company for issuance of debts of similar terms and remaining
     maturities, or by obtaining quotes from brokers.

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

                                      F-32
<PAGE>
           CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - IN US DOLLARS
                      IN THOUSANDS (EXCEPT PER SHARE DATA)

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

     Cross currency swap. The fair value is estimated by obtaining quotes from
     brokers.

     Interest rate swap. The fair value is estimated by obtaining quotes from
     brokers.

     Limitations. Fair value estimates are made at a specific point in time, and
     are based on relevant market information and information about the
     financial 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.


25.  BUSINESS SEGMENT, GEOGRAPHIC AND MAJOR CUSTOMER DATA

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

     The following table presents a summary of revenues by country of domicile
     of customer and long-lived assets by geographic region:

<TABLE>
<CAPTION>
                             2000           2001         2002
                          ----------    ----------    ----------
<S>                       <C>           <C>           <C>
     REVENUES
     USA                  $  681,301    $  308,093    $  317,218
     Taiwan                  136,494        75,977        44,894
     Japan                    48,309        27,485        43,967
     France                   89,823        27,451        16,470
     Germany                   8,108         9,824        14,515
     Sweden                  110,201             -            94
     Netherlands              34,092         2,996           353
     Singapore                   284           449           485
     Others                   25,492        10,381        11,245
                          ----------    ----------    ----------
                          $1,134,104    $  462,656    $  449,241
                          ==========    ==========    ==========

     LONG-LIVED ASSETS
     Singapore            $1,916,433    $1,852,473    $1,860,555
     Others                    1,463           948           676
                          ----------    ----------    ----------
                          $1,917,896    $1,853,421    $1,861,231
                          ==========    ==========    ==========
</TABLE>

     Revenues from major customers, as a percentage of total revenue, were as
     follows:

<TABLE>
<CAPTION>
                    2000      2001      2002
                   -----     -----     -----
<S>                <C>       <C>       <C>
     Customer A     12.9%     21.0%     19.2%
     Customer B      0.0       4.0      11.0
     Customer C      7.9       6.4      10.7
     Others         79.2      68.6      59.1
                   -----     -----     -----
                   100.0%    100.0%    100.0%
                   =====     =====     =====
</TABLE>

                                      F-33
<PAGE>
           CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - IN US DOLLARS
                      IN THOUSANDS (EXCEPT PER SHARE DATA)

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

     The top five customers of the Company accounted for 42%, 43% and 53%, of
     the Company's net revenue in the years ended December 31, 2000, 2001 and
     2002, respectively. As a result, loss or cancellation of business from, or
     significant changes in scheduled deliveries or decreases in the prices of
     products sold to any of these customers could materially and adversely
     affect the Company's results of operations or financial position. The
     Company believes that the concentration of its credit risk in trade
     receivables is mitigated substantially by its credit evaluation process,
     credit policies, credit control and collection procedures.


26.  SUBSEQUENT EVENTS

     On February 13, 2003, the Company announced that, as a result of continuing
     under-utilization of its fabs resulting from the deep and continuing
     semiconductor industry downturn, it would close Fab 1 and consolidate its
     business currently in Fab 1 into Fab 2. The Company expects to complete
     this closure by March 2004. As a result, the Company expects to incur
     approximately $18 to $22 million of employee termination benefit costs,
     contract termination costs, and other associated costs of consolidating and
     closing the facility. These amounts do not include potential gains on
     disposition of fixed assets. The Company also expects this closure to
     result in the loss of post-pioneer tax status for Fab 1 with resulting tax
     expense of approximately $6 million. The change in depreciable lives of the
     long-lived assets utilized in Fab 1 resulting from this closure are
     expected to increase annual depreciation expense by approximately $6
     million through the date of closure.

     In prior years, the Company had implemented an employee bonus award plan
     with respect to the payment of bonuses to employees. In March 2003, the
     Company cancelled the employee bonus award plan. As a result, compensation
     accrued for past services under the bonus award plan of $28 million was
     eliminated by decreasing compensation expense in the period of the
     cancellation.

                                      F-34
<PAGE>
                     SILICON MANUFACTURING PARTNERS PTE LTD



                           FINANCIAL STATEMENTS INDEX

<TABLE>
<CAPTION>
                                                               Page Number
                                                               -----------
<S>                                                            <C>
Independent Auditors' Report                                       F-35
Balance Sheets                                                     F-36
Profit and Loss Accounts                                           F-37
Statements of Changes in Equity                                    F-38
Statements of Cash Flows                                           F-39
Notes to the Financial Statements                                  F-41
</TABLE>
<PAGE>
                          INDEPENDENT AUDITORS' REPORT


The Board of Directors and Shareholders
Silicon Manufacturing Partners Pte Ltd:

We have audited the accompanying balance sheets of Silicon Manufacturing
Partners Pte Ltd as of December 31, 2001 and 2002, and the related profit and
loss accounts, statements of changes in equity and statements of cash flows for
the years ended December 31, 2000, 2001 and 2002. 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 in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by the management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Silicon Manufacturing Partners
Pte Ltd as of December 31, 2001 and 2002, and the results of its operations and
cash flows for the years ended December 31, 2000, 2001 and 2002 in conformity
with Singapore Statements of Accounting Standard.

Singapore Statements of Accounting Standard vary in certain significant respects
from accounting principles generally accepted in the United States of America.
The application of United States generally accepted accounting principles would
have affected the results of operations for each of the years in the three year
period ended December 31, 2002 and shareholders' equity as of December 31, 2001
and 2002, to the extent summarized in Note 23.


KPMG


SINGAPORE

March 13, 2003

                                      F-35
<PAGE>
                     SILICON MANUFACTURING PARTNERS PTE LTD
                                 BALANCE SHEETS
                        AS OF DECEMBER 31, 2001 AND 2002
                           IN THOUSANDS OF US DOLLARS


<TABLE>
<CAPTION>
                                                       NOTE      2001          2002
                                                       ----   ---------     ---------
                                                                   $             $
<S>                                                    <C>    <C>           <C>
NON-CURRENT ASSETS
Property, plant and equipment                            3    $ 511,138     $ 404,681
Intangible assets                                        4        1,238           436
Deferred expenses                                        5        3,696         2,688
                                                              ---------     ---------
                                                                516,072       407,805

CURRENT ASSETS
Inventories                                              6        6,526        17,116
Trade receivables                                                   523        10,883
Amounts due from related companies
 and affiliated companies                                7       71,180        16,980
Other receivables, deposits and
 prepayments                                             8        3,291         2,370
Cash and cash equivalents                                9       83,143       112,721
                                                              ---------     ---------
                                                                164,663       160,070
                                                              ---------     ---------
   Less:
CURRENT LIABILITIES
Trade payables                                                    1,650         4,077
Amounts due to related companies
 and affiliated companies                                7       14,153        19,346
Other payables and accruals                             10       25,998        24,965
Current portion of interest-bearing borrowings
 (secured)                                              12       96,429       107,142
Current tax payable                                                 753         1,167
                                                              ---------     ---------
                                                                138,983       156,697
                                                              ---------     ---------
NET CURRENT ASSETS                                               25,680         3,373
                                                              ---------     ---------
                                                                541,752       411,178
NON-CURRENT LIABILITY
Interest-bearing borrowings (secured)                   12     (278,571)     (171,429)
                                                              ---------     ---------
                                                              $ 263,181     $ 239,749
                                                              =========     =========

SHARE CAPITAL                                           13    $ 252,389     $ 252,389
ACCUMULATED PROFITS/(LOSSES)                                     10,792       (12,640)
                                                              ---------     ---------
                                                              $ 263,181     $ 239,749
                                                              =========     =========
</TABLE>

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

                                      F-36
<PAGE>
                     SILICON MANUFACTURING PARTNERS PTE LTD
                            PROFIT AND LOSS ACCOUNTS
              FOR THE YEARS ENDED DECEMBER 31, 2000, 2001 AND 2002
                           IN THOUSANDS OF US DOLLARS

<TABLE>
<CAPTION>
                                               NOTE       2000           2001          2002
                                               ----     ---------     ---------     ---------
                                                            $             $             $
<S>                                            <C>      <C>           <C>           <C>
Revenue                                           .     $ 238,104     $ 199,965     $ 205,458
Cost of sales                                            (181,789)     (227,020)     (242,749)
                                                        ---------     ---------     ---------
Gross profit/(loss)                                        56,315       (27,055)      (37,291)
Other operating income                           15         2,264       116,832        51,578
Sales and marketing expenses                                 (195)         (165)          (85)
General and administrative expenses                        (6,591)       (5,911)       (7,069)
                                                        ---------     ---------     ---------
Profit from operations                           16        51,793        83,701         7,133
Finance costs                                    17       (16,289)      (29,582)      (30,080)
                                                        ---------     ---------     ---------
Profit/(loss) from ordinary activities
 before taxation                                           35,504        54,119       (22,947)
Income tax expense                               18          (377)         (326)         (485)
                                                        ---------     ---------     ---------
Net profit/(loss) for the year                          $  35,127     $  53,793     $ (23,432)
                                                        =========     =========     =========
</TABLE>

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

                                      F-37
<PAGE>
                     SILICON MANUFACTURING PARTNERS PTE LTD
                         STATEMENTS OF CHANGES IN EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 2000, 2001 AND 2002
                           IN THOUSANDS OF US DOLLARS


<TABLE>
<CAPTION>
                                      ACCUMULATED
                              SHARE     (LOSSES)/
                             CAPITAL     PROFITS       TOTAL
                            --------  -----------    ---------
                                $           $             $
<S>                         <C>       <C>            <C>
At January 1, 2000           179,358     (78,128)      101,230
Issue of ordinary shares      73,031           -        73,031
Net profit for the year            -      35,127        35,127
                            --------    --------     ---------
At December 31, 2000         252,389     (43,001)      209,388
Net profit for the year            -      53,793        53,793
                            --------    --------     ---------
At December 31, 2001         252,389      10,792       263,181
Net loss for the year              -     (23,432)      (23,432)
                            --------    --------     ---------
At December 31, 2002        $252,389    $(12,640)    $ 239,749
                            ========    ========     =========
</TABLE>

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

                                      F-38
<PAGE>
                     SILICON MANUFACTURING PARTNERS PTE LTD
                            STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 2000, 2001 AND 2002
                           IN THOUSANDS OF US DOLLARS

<TABLE>
<CAPTION>
                                                     2000         2001         2002
                                                   --------     --------     --------
                                                       $            $            $
<S>                                                <C>          <C>          <C>
OPERATING ACTIVITIES
  Profit/(loss) from ordinary activities
   before taxation                                   35,504       54,119      (22,947)
  Adjustments for:
    Amortisation of deferred finance expenses         1,008        1,008        1,008
    Amortisation of intangible assets                   703        1,325          795
    Depreciation of property, plant and
     equipment                                       79,138      128,982      150,367
    Exchange difference                                (228)           -            -
    Gain on disposal of intangible assets                 -            -         (178)
    Loss/(gain) on disposal of property,
     plant and equipment                               (367)           6          728
    Interest expense, net of amount capitalised      14,677       28,277       28,797
    Interest income                                  (1,472)      (1,844)      (1,882)
    Write off of property, plant and equipment          857            -            -
                                                   --------     --------     --------

  Operating profit before working
   capital changes                                  129,820      211,873      156,688
  Changes in working capital:
    Inventories                                      (7,479)       6,348      (10,590)
    Trade receivables                                 7,150        3,994      (10,360)
    Amount due from related companies and
     affiliated companies                           (22,806)     (41,343)      51,593
    Other receivables, deposits and prepayments         482          340          922
    Trade payables                                      745         (448)       2,427
    Amount due to related companies and
     affiliated companies                            15,917       (5,702)       5,193
    Other payables and accruals                      13,950      (12,055)       2,840
                                                   --------     --------     --------

  Cash generated from operations                    137,779      163,007      198,713
  Interest received                                   1,434        1,809        1,823
  Interest paid, net of amount capitalised          (15,854)     (28,425)     (29,320)
  Income taxes paid                                     (61)         (70)         (71)
                                                   --------     --------     --------

  CASH FLOWS GENERATED FROM
   OPERATING ACTIVITIES                             123,298      136,321      171,145

INVESTING ACTIVITIES
  Purchase of property, plant and equipment
   including interest paid of
   $1,240 (2001: $3,780 and 2000: $8,774)          (342,566)    (107,181)     (49,918)
  Purchase of intangible assets                      (1,245)        (457)        (109)
  Proceeds on disposal of intangible assets               -            -          294
  Proceeds on disposal of property, plant
   and equipment                                      2,279            -        4,595
                                                   --------     --------     --------

  CASH FLOWS USED IN INVESTING ACTIVITIES          (341,532)    (107,638)     (45,138)
                                                   --------     --------     --------
  Balance carried forward                          (218,234)      28,683      126,007
</TABLE>

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


                                      F-39
<PAGE>
                     SILICON MANUFACTURING PARTNERS PTE LTD
                            STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 2000, 2001 AND 2002
                           IN THOUSANDS OF US DOLLARS

<TABLE>
<CAPTION>
                                                 NOTE       2000       2001        2002
                                                 ----     --------    ------     -------
                                                              $          $          $
<S>                                              <C>      <C>         <C>        <C>
  Balance brought forward                                 (218,234)   28,683     126,007

FINANCING ACTIVITIES
  Issue of shares by the Company                            73,031         -           -
  Bank loan
  - drawn down                                             188,000         -           -
  - repayments                                                   -         -     (96,429)
  Grant income received                                        252         -           -
                                                          --------    ------     -------
  CASH FLOWS USED IN FINANCING
   ACTIVITIES                                              261,283         -     (96,429)
                                                          --------    ------     -------

NET INCREASE IN CASH AND CASH EQUIVALENTS                   43,049    28,683      29,578

CASH AND CASH EQUIVALENTS AT BEGINNING
 OF YEAR                                                    11,183    54,460      83,143

EFFECT OF EXCHANGE RATE CHANGES ON BALANCES
 HELD IN FOREIGN CURRENCIES                                    228         -           -
                                                          --------    ------     -------
Cash and cash equivalents at end of year          9         54,460    83,143     112,721
                                                          ========    ======     =======
</TABLE>

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

                                      F-40
<PAGE>
                     SILICON MANUFACTURING PARTNERS PTE LTD
                        NOTES TO THE FINANCIAL STATEMENTS
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

These notes form an integral part of the financial statements.

The financial statements were authorized for issue by the directors on March 13,
2003.


1.   DOMICILE AND ACTIVITIES

     Silicon Manufacturing Partners Pte Ltd (the "Company") is incorporated in
     the Republic of Singapore and has its registered office at 60 Woodlands
     Industrial Park Street 2, Singapore 738406.

     The principal activities of the Company are those relating to an
     independent foundry of semiconductor integrated circuits using its advanced
     production facilities and proprietary integrated circuit designs of its
     customers.

     The immediate and ultimate holding companies during the financial year are
     Agere Systems Singapore Pte Ltd and Agere Systems Inc., which are
     incorporated in the Republic of Singapore and the United States of America,
     respectively.


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     (a)  BASIS OF PREPARATION

          The financial statements are prepared in accordance with the Singapore
          Statements of Accounting Standard ("SAS") including related
          Interpretations promulgated by the Institute of Certified Public
          Accountants of Singapore and the applicable requirements of the
          Singapore Companies Act, Chapter 50 (the "Act").

          The historical cost basis is used. Amounts are expressed in United
          States dollars, unless otherwise stated.


     (b)  FOREIGN CURRENCIES TRANSLATION

          The Company considers its functional currency to be United States
          dollars. Monetary assets and liabilities in foreign currencies, except
          for foreign currency liabilities hedged by forward exchange contracts,
          are translated into United States dollars at rates of exchange
          approximate to those ruling at the balance sheet date. Foreign
          currency assets and liabilities hedged by forward exchange contracts
          are translated into United States dollars at the contracted forward
          exchange rates. Transactions in foreign currencies are translated at
          rates ruling on transaction dates. Translation differences are
          included in the profit and loss account.

                                      F-41
<PAGE>
                     SILICON MANUFACTURING PARTNERS PTE LTD
                        NOTES TO THE FINANCIAL STATEMENTS
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)

     (c)  PROPERTY, PLANT AND EQUIPMENT

          (i)   OWNED ASSETS

                Property, plant and equipment are stated at cost less
                accumulated depreciation and impairment losses.

          (ii)  SUBSEQUENT EXPENDITURE

                Subsequent expenditure relating to property, plant and equipment
                that has already been recognized is added to the carrying amount
                of the asset when it is probable that future economic benefits,
                in excess of the originally assessed standard of performance of
                the existing asset, will flow to the Company. All other
                subsequent expenditure is recognized as an expense in the period
                in which it is incurred.

          (iii) DISPOSAL

                Gains or losses arising from the retirement or disposal of
                property, plant and equipment are determined as the difference
                between the estimated net disposal proceeds and the carrying
                amount of the asset and are recognized in the profit and loss
                account on the date of retirement or disposal.

           (iv) DEPRECIATION

                No depreciation is provided for property, plant and equipment
                under installations and construction. Depreciation is provided
                on a straight-line basis so as to write off the cost of other
                property, plant and equipment over their estimated useful lives
                as follows:

                Equipment and machinery                  - 5 years
                Mechanical and electrical installations  - 10 years
                Office furniture, fittings and equipment - 5 years
                Computers                                - 2 to 3 years

                Interest incurred during the year of construction or acquisition
                of major items of property, plant and equipment is capitalized
                into cost of property, plant and equipment. Interest capitalized
                is based on the average cost of the Company's pooled borrowings.

                                      F-42
<PAGE>
                     SILICON MANUFACTURING PARTNERS PTE LTD
                        NOTES TO THE FINANCIAL STATEMENTS
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)

     (d)  INTANGIBLE ASSETS

          (i)   COMPUTER SOFTWARE

                Computer software, not forming an integral part of a related
                hardware, which is acquired by the Company, is stated at cost
                less accumulated amortization and impairment losses.

          (ii)  SUBSEQUENT EXPENDITURE

                Subsequent expenditure on capitalized intangible assets is
                capitalized only when it increases the future economic benefits
                embodied in the specific asset to which it relates. All other
                expenditure is expensed as incurred.

          (iii) AMORTIZATION

                Amortization is charged to the profit and loss account on a
                straight-line basis over the estimated useful lives of 2 to 3
                years of the computer software.


     (e)  DERIVATIVES AND HEDGING

          Derivative financial instruments are used to manage exposure to
          foreign exchange and interest rate risks arising from operational,
          financing and investment activities. Derivative financial instruments
          are not used for trading purposes.

          Derivative financial instruments used for hedging purposes are
          accounted for on an equivalent basis to the underlying assets,
          liabilities or net positions. Any profit or loss arising is recognized
          on the same basis as that arising from the related assets, liabilities
          or positions.


     (f)  DEFERRED EXPENSES

          The deferred expenses represent the arrangement fees incurred for the
          long-term bank loan. The amount is amortized over the repayment term
          of the long-term bank loan.

                                      F-43
<PAGE>
                     SILICON MANUFACTURING PARTNERS PTE LTD
                        NOTES TO THE FINANCIAL STATEMENTS
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)

     (g)  INVENTORIES

          Inventories are stated at the lower of cost and net realizable value.

          Cost is determined principally on a standard cost basis which
          approximates actual cost on the weighted average basis. For
          work-in-progress and manufactured inventories, cost consists of the
          cost of raw materials, direct labor and an appropriate proportion of
          production overheads.

          In arriving at the net realizable value, due allowance is made for all
          obsolete and slow-moving items.


     (h)  AFFILIATED COMPANIES

          An affiliated company is defined as one, other than a related company,
          which has common direct or indirect shareholders or common directors
          with the Company.


     (i)  CASH AND CASH EQUIVALENTS

          Cash and cash equivalents comprise cash balances, bank deposits and
          highly liquid investments which are readily convertible to cash and
          which are subject to an insignificant risk of changes in value. For
          the purpose of the statement of cash flows, cash and cash equivalents
          are presented net of bank overdrafts which are repayable on demand and
          which form an integral part of the Company's cash management.


     (j)  IMPAIRMENT

          The carrying amounts of the Company's assets, other than inventories,
          are reviewed at each balance sheet date to determine whether there is
          any indication of impairment. If any such indication exists, the
          asset's recoverable amount is estimated. For intangible assets that
          are not yet available for use, the recoverable amount is estimated at
          each balance sheet date.

          An impairment loss is recognized whenever the carrying amount of an
          asset or its cash-generating unit exceeds its recoverable amount.
          Impairment losses are recognized in the profit and loss account.

                                      F-44
<PAGE>
                     SILICON MANUFACTURING PARTNERS PTE LTD
                        NOTES TO THE FINANCIAL STATEMENTS
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)

     (j)  IMPAIRMENT (CONT'D)

          (i)  CALCULATION OF RECOVERABLE AMOUNT

               The recoverable amount is the greater of the asset's net selling
               price and value in use. In assessing value in use, the estimated
               future cash flows are discounted to their present value using a
               pre-tax discount rate that reflects current market assessments of
               the time value of money and the risks specific to the asset. For
               an asset that does not generate cash inflows largely independent
               of those from other assets, the recoverable amount is determined
               for the cash-generating unit to which the asset belongs.

          (ii) REVERSAL OF IMPAIRMENT LOSS

               An impairment loss is reversed if there has been a change in the
               estimates used to determine the recoverable amount. An impairment
               loss is reversed only to the extent that the asset's carrying
               amount does not exceed the carrying amount that would have been
               determined, net of depreciation or amortization, if no impairment
               loss had been recognized.

     (k)  WARRANTIES

          A provision for warranties is recognized when the underlying products
          or services are sold. The provision is based on historical experience
          and management's estimate of the level of future claims and accrues
          for specific items at the time their estimate is known and the amounts
          are determinable.

          Costs incurred are charged against the provision and any over or under
          provision is charged to the profit and loss account.

     (l)  DEFERRED TAX

          Deferred tax is provided in full, using the liability method, on
          temporary differences arising between the tax bases of assets and
          liabilities and their carrying amounts in the financial statements.
          Temporary differences are not recognized for goodwill not deductible
          for tax purposes and the initial recognition of assets or liabilities
          that affect neither accounting nor taxable profit. The amount of
          deferred tax provided is based on the expected manner of realization
          or settlement of the carrying amount of assets and liabilities, using
          tax rates enacted or substantively enacted at the balance sheet date.

          A deferred tax asset is recognized to the extent that it is probable
          that future taxable profit will be available against which the
          temporary differences can be utilized.

                                      F-45
<PAGE>
                     SILICON MANUFACTURING PARTNERS PTE LTD
                        NOTES TO THE FINANCIAL STATEMENTS
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)

     (m)  REVENUE RECOGNITION

          Provided it is probable that the economic benefits will flow to the
          Company and the revenue and costs, if applicable, can be measured
          reliably, revenue is recognized in the profit and loss account as
          follows:

          (i)   SALE OF GOODS

                Revenue is recognized when significant risks and rewards of
                ownership have been transferred to the buyer. Revenue represents
                the invoiced value of goods and services supplied, excluding
                goods and services tax, less an allowance for returns. Revenue
                is recognized upon the shipment of goods.

          (ii)  ALLOCATED WAFER CAPACITY COST RECOVERY

                Allocated wafer capacity cost recoveries are recognized in
                accordance with the terms under the assured supply and demand
                agreement between the shareholders. Such recoveries represent
                the unrecovered cost when the capacity allocated to the
                shareholders is not met.

          (iii) INTEREST INCOME

                Interest income from bank deposits and cash pool deposits with
                an affiliated company is accrued on a time-apportioned basis.

     (n)  OPERATING LEASES

          Where the Company has the use of assets under operating leases,
          payments made under the leases are recognized in the profit and loss
          account on a straight-line basis over the term of the lease. Lease
          incentives received are recognized in the profit and loss account as
          an integral part of the total lease payments made. Contingent rentals
          are charged to the profit and loss account in the accounting period in
          which they are incurred.

     (o)  FINANCE COSTS

          Finance costs are expensed in the profit and loss account in the
          period in which they are incurred, except to the extent that they are
          capitalized as being directly attributable to the acquisition,
          construction or production of an asset which necessarily takes a
          substantial period of time to get ready for its intended use or sale.

                                      F-46
<PAGE>
                     SILICON MANUFACTURING PARTNERS PTE LTD
                        NOTES TO THE FINANCIAL STATEMENTS
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

3.   PROPERTY, PLANT AND EQUIPMENT

<TABLE>
<CAPTION>
                                                                 COST
                                  ------------------------------------------------------------------
                                  AT BEGINNING                                             AT END OF
                                   OF THE YEAR  ADDITIONS    TRANSFERS      DISPOSALS      THE YEAR
                                  ------------  ---------    ---------      ---------      --------
                                        $           $             $              $             $
<S>                               <C>           <C>          <C>            <C>            <C>
     2001
     Equipment and machinery         547,043           -       165,795              -       712,838
     Mechanical and electrical
      installations                    2,773           -             -              -         2,773
     Office furniture, fittings
      and equipment                      904           -            71              -           975
     Computers                         3,587           -           641            (29)        4,199
     Assets under installation
      and construction               126,050      68,315      (166,507)        (2,666)       25,192
                                     -------      ------      --------       --------       -------
                                     680,357      68,315             -         (2,695)      745,977
                                     =======      ======      ========       ========       =======
</TABLE>


<TABLE>
<CAPTION>
                                                 ACCUMULATED DEPRECIATION
                                  -----------------------------------------------------
                                  AT BEGINNING   CHARGE FOR                   AT END OF
                                   OF THE YEAR    THE YEAR      DISPOSALS     THE YEAR
                                  ------------  ------------    ---------     ---------
                                        $             $             $              $
<S>                               <C>           <C>             <C>           <C>
     2001
     Equipment and machinery         102,937       127,223              -       230,160
     Mechanical and electrical
      installations                      646           277              -           923
     Office furniture, fittings
      and equipment                      411           190              -           601
     Computers                         1,886         1,292            (23)        3,155
                                     -------      --------       --------       -------
                                     105,880       128,982            (23)      234,839
                                     =======      ========       ========       =======
</TABLE>

<TABLE>
<CAPTION>
                                                               COST
                                  ---------------------------------------------------------------
                                  AT BEGINNING                                          AT END OF
                                   OF THE YEAR   ADDITIONS    TRANSFERS    DISPOSALS    THE YEAR
                                  ------------   ---------    ---------    ---------    ---------
                                        $            $            $             $            $
<S>                               <C>            <C>          <C>          <C>          <C>
     2002
     Equipment and machinery         712,838            -       61,286       (2,781)     771,343
     Mechanical and electrical
      installations                    2,773            -            -            -        2,773
     Office furniture, fittings
      and equipment                      975            -            -            -          975
     Computers                         4,199            -           20            -        4,219
     Assets under installation
      and construction                25,192       46,567      (61,306)        (840)       9,613
                                     -------       ------      -------     --------      -------
                                     745,977       46,567            -       (3,621)     788,923
                                     =======       ======      =======     ========      =======
</TABLE>

                                      F-47
<PAGE>
                     SILICON MANUFACTURING PARTNERS PTE LTD
                        NOTES TO THE FINANCIAL STATEMENTS
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

3.   PROPERTY, PLANT AND EQUIPMENT (CONT'D)

<TABLE>
<CAPTION>
                                                ACCUMULATED DEPRECIATION
                                  ----------------------------------------------------
                                  AT BEGINNING    CHARGE FOR                 AT END OF
                                   OF THE YEAR     THE YEAR    DISPOSALS      THE YEAR
                                  ------------   ------------  ---------     ---------
                                       $              $            $              $
<S>                               <C>            <C>           <C>           <C>
     2002
     Equipment and machinery         230,160       149,188       (964)       378,384
     Mechanical and electrical
      installations                      923           277          -          1,200
     Office furniture, fittings
      and equipment                      601           194          -            795
     Computers                         3,155           708          -          3,863
                                     -------      --------       ----        -------
                                     234,839       150,367       (964)       384,242
                                     =======      ========       ====        =======
</TABLE>

<TABLE>
<CAPTION>
                                   DEPRECIATION CHARGED               CARRYING AMOUNT
                             --------------------------------      --------------------
                              2000         2001         2002         2001         2002
                             ------      -------      -------      -------      -------
                               $            $            $            $            $
<S>                          <C>         <C>          <C>          <C>          <C>
     Equipment and
      machinery              77,562      127,223      149,188      482,678      392,959
     Mechanical and
      electrical
      installations             277          277          277        1,850        1,573
     Office furniture,
      fittings and
      equipment                 174          190          194          374          180
     Computers                1,125        1,292          708        1,044          356
     Assets under
      installation
      and construction            -            -            -       25,192        9,613
                             ------      -------      -------      -------      -------
                             79,138      128,982      150,367      511,138      404,681
                             ======      =======      =======      =======      =======
</TABLE>

     During the year, interest expenses of approximately $1,218 (2001: $3,760;
     2000: $8,122) were capitalized in the cost of property, plant and
     equipment.

                                      F-48
<PAGE>
                     SILICON MANUFACTURING PARTNERS PTE LTD
                        NOTES TO THE FINANCIAL STATEMENTS
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

4.   INTANGIBLE ASSETS

<TABLE>
<CAPTION>
                              2001       2002
                             -----     ------
                               $          $
<S>                          <C>       <C>
     COMPUTER SOFTWARE

     COST

     At January 1,           3,175      3,632
     Additions                 457        109
     Disposals                   -       (293)
                             -----     ------
     At December 31,         3,632      3,448
                             =====     ======

     AMORTIZATION

     At January 1,           1,069      2,394
     Charge for the year     1,325        795
     Disposals                   -       (177)
                             -----     ------
     At December 31,         2,394      3,012
                             =====     ======

     CARRYING AMOUNT

     December 31,            1,238        436
                             =====     ======
</TABLE>


5.   DEFERRED EXPENSES

<TABLE>
<CAPTION>
                                                2001      2002
                                                -----     -----
                                                  $         $
<S>                                             <C>       <C>
     Deferred finance cost                      6,048     6,048
       Less:
     Amortization for deferred finance cost
       At January 1,                            1,344     2,352
       Charge for the year                      1,008     1,008
                                                -----     -----
       Balance as at December 31,               2,352     3,360
                                                -----     -----
                                                3,696     2,688
                                                =====     =====
</TABLE>

6.   INVENTORIES

<TABLE>
<CAPTION>
                                                  2001      2002
                                                 -----     ------
                                                   $          $
<S>                                              <C>       <C>
     Raw materials                                 565        690
     Work-in-progress                            5,801     16,369
     Consumable supplies and spares                198        596
                                                 -----     ------
                                                 6,564     17,655
       Less:
     Allowance for inventories obsolescence         38        539
                                                 -----     ------
                                                 6,526     17,116
                                                 =====     ======
</TABLE>

   Inventories include work-in-progress stated at net realizable value of $186
   (2001: Nil).

                                      F-49
<PAGE>
                     SILICON MANUFACTURING PARTNERS PTE LTD
                        NOTES TO THE FINANCIAL STATEMENTS
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

7.   AMOUNTS DUE FROM AND TO RELATED COMPANIES AND AFFILIATED COMPANIES

<TABLE>
<CAPTION>
                                                2001       2002
                                               ------     ------
                                                 $           $
<S>                                            <C>        <C>
     Amount due from related companies and
      affiliated companies
       - affiliated company (trade)             2,816         67
       - minority shareholder (trade)          28,358        107
       - related company (trade)                4,806      1,169
       - immediate holding company
          (trade)                              35,200     15,637
                                               ------     ------
                                               71,180     16,980
                                               ======     ======

     Amount due to related companies and
      affiliated companies
       - affiliated company (trade)                44        147
       - related company (trade)                  708          -
       - minority shareholder
          (non-trade)                           5,987      8,645
       - minority shareholder (trade)           7,334     10,133
       - immediate holding company
          (trade)                                  80        421
                                               ------     ------
                                               14,153     19,346
                                               ======     ======
</TABLE>

     The above non-trade amounts due to minority shareholder are unsecured and
     interest-free.


8.   OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

<TABLE>
<CAPTION>
                                  2001      2002
                                 -----     -----
                                   $          $
<S>                              <C>       <C>
     Deposits                      123        66
     Prepayments                 3,054     2,244
     Staff loan and advances        35        14
     Goods and services tax          -         -
     Other receivables              79        46
                                 -----     -----
                                 3,291     2,370
                                 =====     =====
</TABLE>

                                      F-50
<PAGE>
                     SILICON MANUFACTURING PARTNERS PTE LTD
                        NOTES TO THE FINANCIAL STATEMENTS
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

9.   CASH AND CASH EQUIVALENTS

<TABLE>
<CAPTION>
                                                2001        2002
                                               ------     -------
                                                  $           $
<S>                                            <C>        <C>
     Cash at bank and in hand                  16,006      21,856
     Cash pool deposits with an affiliated
      company                                  67,137      90,865
                                               ------     -------
     Cash and cash equivalents                 83,143     112,721
                                               ======     =======
</TABLE>


10.  OTHER PAYABLES AND ACCRUALS

<TABLE>
<CAPTION>
                                                 NOTE     2001       2002
                                                 ----    ------     ------
                                                           $           $
<S>                                              <C>     <C>        <C>
     Payables for purchase of property,
      plant and equipment                                 9,310      5,982
     Accrued operating expenses                          13,215     15,512
     Provision for warranty                       11      1,907      2,656
     Liability for short-term accumulated
      compensated absences                                    -        107
     Other payables                                       1,566        708
                                                         ------     ------
                                                         25,998     24,965
                                                         ======     ======
</TABLE>


11.  PROVISION FOR WARRANTY

<TABLE>
<CAPTION>
                                               NOTE      2001        2002
                                               ----     ------      ------
                                                           $           $
<S>                                            <C>      <C>         <C>
     At January 1,                                       8,721       1,907
     Provision made/(written back)
      during the year                                   (1,233)      3,468
     Provision utilised during the year                 (5,581)     (2,719)
                                                        ------      ------
     At December 31,                            10       1,907       2,656
                                                        ======      ======
</TABLE>

     The provision is made based on historical experience and management's
     estimate of the level of future claims. The Company expects to incur the
     liability within one year.

                                      F-51
<PAGE>
                     SILICON MANUFACTURING PARTNERS PTE LTD
                        NOTES TO THE FINANCIAL STATEMENTS
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

12.  INTEREST-BEARING BORROWINGS

     The bank loan, which consists of $214,286 (2001: $300,000) from Tranche A
     and $64,285 (2001: $75,000) from Tranche B, is secured by a debenture,
     giving the holder thereof a first floating charge on all of the Company's
     assets.

     Tranche A bears interest at a margin rate of 1% to 1.35% above London
     inter-bank offering rates (depending on the debt to equity ratio) and is
     repayable over seven equal semi-annual instalments commencing on March 17,
     2002.

     Tranche B bears interest at a margin rate of 1% to 1.45% above London
     inter-bank offering rates (depending on the debt equity ratio) and is
     repayable over seven equal semi-annual instalments commencing on December
     3, 2002.

<TABLE>
<CAPTION>
                                  2001       2002
                                -------     -------
                                   $           $
<S>                             <C>         <C>
     Repayable as follows:
       Due within 12 months      96,429     107,142
       Due after 12 months      278,571     171,429
                                -------     -------
                                375,000     278,571
                                =======     =======
</TABLE>

13.  SHARE CAPITAL

<TABLE>
<CAPTION>
                                                    2001                    2002
                                             -------------------    ---------------------
                                                NO. OF SHARES           NO. OF SHARES
                                             -------------------    ---------------------
                                              '000         $          '000          $
<S>                                          <C>        <C>         <C>         <C>
     Authorized:
     490,000,000 (2001: 490,000,000)
       "A" ordinary shares of S$1
       (2001: S$1) each                      490,000   S$490,000    $490,000    S$490,000
                                             =======   =========    ========    =========

     510,000,000 (2001: 510,000,000)
       "B" ordinary shares of S$1
       (2001: S$1) each                      510,000   S$510,000     510,000    S$510,000
                                             =======   =========    ========    =========

     Issued and fully paid:

     "A" ordinary shares of S$1
       (2001: S$1) each

       At January 1                          208,250     123,670     208,250      123,670
       Shares issued during the year               -           -           -            -
                                             -------   ---------    --------    ---------
       At December 31,                       208,250     123,670     208,250      123,670
                                             -------   ---------    --------    ---------

     "B" ordinary shares of
       S$1 (2001: S$1) each

       At January 1,                         216,750     128,719     216,750      128,719
       Shares issued during the year               -           -           -            -
                                             -------   ---------    --------    ---------
       At December 31,                       216,750     128,719     216,750      128,719
                                             -------   ---------    --------    ---------
                                                       $ 252,389                $ 252,389
                                                       =========                =========
</TABLE>

     The "A" and "B" ordinary shares rank pari passu in all respects, except
     that the rates of dividend may differ. All shares issues have been made at
     par for cash considerations.

                                      F-52
<PAGE>
                     SILICON MANUFACTURING PARTNERS PTE LTD
                        NOTES TO THE FINANCIAL STATEMENTS
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

14.  SHAREHOLDERS' AGREEMENTS

     Under the strategic alliance agreement with the two shareholders of the
     Company, the shareholders do not share the Company's net results in the
     same ratio as the equity holding. 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 the shareholders
     signed with the Company, the shareholders are billed with effect from
     January 1, 2001 for allocated wafer capacity if the wafers started for them
     are less than their allocated capacity. Such amounts represent the
     unrecovered cost to the Company when the allocated capacity is not taken up
     by one, or both, of the shareholders.


15.  OTHER OPERATING INCOME

<TABLE>
<CAPTION>
                                                  NOTE       2000     2001        2002
                                                 -----      -----    -------     ------
                                                              $         $           $
<S>                                              <C>        <C>      <C>         <C>
     Allocated wafer capacity cost
      recovery                                   14,20          -    112,413     49,512
     Interest income
     - banks                                                  301        214        133
     - cash pool deposits with an
        affiliated company                                  1,171      1,630      1,749
     Exchange gain                                            425      2,341          -
     Gain on disposal of property, plant
      and equipment                                           367          -          -
     Gain on disposal of intangible assets                      -          -        178
     Others                                                     -        234          6
                                                            -----    -------     ------
                                                            2,264    116,832     51,578
                                                            =====    =======     ======
</TABLE>

16.  PROFIT FROM OPERATIONS

<TABLE>
<CAPTION>
                                           NOTE     2000        2001        2002
                                           ----    ------     -------     -------
                                                      $           $           $
<S>                                        <C>     <C>        <C>         <C>

     The following items have been included in arriving at profit from operations:

     AFTER CHARGING:

     Allowance made for inventories                     -          38         501
     Amortisation of deferred expenses       5      1,008       1,008       1,008
     Amortisation of intangible assets       4        703       1,325         795
     Depreciation of property, plant and
      equipment                              3     79,138     128,982     150,367
     Exchange loss                                      -           -         547
     Staff costs*                                  25,500      18,139      16,788
     Loss on disposal of property, plant
      and equipment                                     -           6         728
     Operating lease expense                       12,901      15,166      15,705
</TABLE>

                                      F-53
<PAGE>
                     SILICON MANUFACTURING PARTNERS PTE LTD
                        NOTES TO THE FINANCIAL STATEMENTS
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

16.  PROFIT FROM OPERATIONS (CONT'D)

     *    Staff cost includes $931 (2001: $1,019 and 2000: $762) relating to
          contributions to Central Provident Fund, a Singapore Government
          defined contribution employee benefit plan.

<TABLE>
<CAPTION>
                                                   2000     2001    2002
                                                   ----     ----    ----
<S>                                                <C>      <C>     <C>
     Number of employees as at December 31,         758      662     551
                                                   ====     ====    ====
</TABLE>

17.  FINANCE COSTS

<TABLE>
<CAPTION>
                                               2000         2001         2002
                                              ------       ------       ------
                                                $             $            $
<S>                                           <C>          <C>          <C>
     Interest paid and payable to banks       22,799       32,037       30,015
     Other finance costs paid and payable
      to banks                                 1,612        1,305        1,283
                                              ------       ------       ------
     Total finance costs                      24,411       33,342       31,298
       Less:
     Finance costs capitalised into
      property, plant and equipment           (8,122)      (3,760)      (1,218)
                                              ------       ------       ------
                                              16,289       29,582       30,080
                                              ======       ======       ======
</TABLE>

18.  INCOME TAX EXPENSE

     (a)  RECOGNIZED IN THE PROFIT AND LOSS ACCOUNT

<TABLE>
<CAPTION>
                                  2000     2001     2002
                                  ----     ----     ----
                                    $        $        $
<S>                               <C>      <C>      <C>
          Current tax expense:
          - current year           377      352      485
          - over provided
             in prior years          -      (26)       -
                                   ---     ----      ---
                                   377      326      485
                                   ---     ----      ---
</TABLE>

                                      F-54
<PAGE>
                     SILICON MANUFACTURING PARTNERS PTE LTD
                        NOTES TO THE FINANCIAL STATEMENTS
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

18.  INCOME TAX EXPENSE (CONT'D)

     (b)  RECONCILIATION OF EFFECTIVE TAX RATE

<TABLE>
<CAPTION>
                                                         2000        2001         2002
                                                       -------      -------      -------
                                                          $            $            $
<S>                                                    <C>          <C>          <C>
          Profit/(Loss) before tax                      35,504       54,119      (22,947)
                                                       =======      =======      =======

          Income taxes using Singapore tax rate
           of 22% (2001: 24.5%, 2000: 25.5%)             9,054       13,259       (5,048)
          Expenses not deductible for tax purposes         933        1,048          867
          Exempt pioneer profits                       (10,828)     (13,981)           -
          Pioneer losses and allowances not
           recognized as deferred benefit                    -            -        4,666
          Pre-pioneer losses not recognized as
           deferred benefit                              1,218            -            -
                                                       -------      -------      -------
                                                           377          326          485
                                                       =======      =======      =======
</TABLE>

     The Company has been granted pioneer status for a period of ten years under
     the Singapore Economic Expansion Incentives (Relief from Income Tax) Act,
     Chapter 86 ("the Income Tax Act"), for the manufacture of integrated
     circuits using sub-micron technology effective from May 1, 2000. During the
     pioneer status period, income from pioneer trade is exempt from income tax,
     subject to compliance with the conditions stated in the pioneer certificate
     and the Income Tax Act.

     The income tax expense of the Company is for income tax payable on income
     derived from non-pioneer activities, principally interest income.

     As at December 31, 2002, the Company has unutilized property, plant and
     equipment related wear and tear allowance carryforwards of approximately
     $6,315. Since profits during the pioneer status period are not taxable and
     all such pioneer loss carryforwards as of December 31, 2002 are expected to
     reverse within the pioneer status period, no deferred tax assets related to
     such carryforwards have been recognized.


19.  CHANGES IN ACCOUNTING POLICIES

     In the financial year ended December 31, 2002, four new or revised
     accounting standards were adopted. The adoption of SAS 12 (2001) - Income
     Taxes, SAS 38 - Financial Reporting in Hyperinflationary Economies, SAS 39
     - Agriculture and the limited revisions to SAS 17 (2001) - Employee
     Benefits did not give rise to any adjustments to the opening balances of
     accumulated profits of the prior and current periods or to changes in
     comparatives. The impact of their adoption on the current year is
     immaterial.

                                      F-55
<PAGE>
                     SILICON MANUFACTURING PARTNERS PTE LTD
                        NOTES TO THE FINANCIAL STATEMENTS
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

20.  SIGNIFICANT RELATED PARTY TRANSACTIONS

     For the purpose 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.

     RELATED PARTY TRANSACTIONS

     During the financial year, there were the following significant
     transactions with related parties on terms agreed between the parties:

<TABLE>
<CAPTION>
                                                       2000        2001        2002
                                                     -------     -------     -------
                                                       $            $            $
<S>                                                  <C>         <C>         <C>
     IMMEDIATE HOLDING COMPANY
       Recharge of employee expenses
        to Company                                        28           1          73
       Sale of processed wafers                      121,311     166,446     158,456
       Allocated wafer capacity cost recovery              -      22,452       9,317
       Purchase of wafers                                  -       3,812       3,599

     RELATED COMPANIES
       Recharge of employee expenses
        to Company                                     2,846         708       2,096
       Recharge of other expenses to Company               -          87           -
        Sale of processed wafers                       4,977      10,990       7,779

     MINORITY SHAREHOLDER
       Purchase of processed wafers                        -          23         724
       Purchase of property, plant and equipment      22,081      15,582       3,211
       Payment of rental expense                      13,101      14,804      14,713
       Recharge of employee related expenses
        to Company                                     3,566       4,110       2,986
       Recharge of other expenses to Company          22,943      23,503      28,086
       Sale of processed wafers                       10,615      10,601       6,650
       Allocated wafer capacity cost recovery              -      89,961      40,195
       Sale of property, plant and equipment               -           -       1,069

     AFFILIATED COMPANIES
       Purchase of property, plant and equipment      10,066       1,756           -
       Payment of car park rental                         99          96          93
       Purchase of processed wafers                        -          43         116
       Sale of processed wafers                           82           -         165
       Sale of property, plant and equipment               -       2,661         849
       Interest income                                 1,171       1,630       1,749
       Payment of freight charges                         30           -           -
</TABLE>

                                      F-56
<PAGE>
                     SILICON MANUFACTURING PARTNERS PTE LTD
                        NOTES TO THE FINANCIAL STATEMENTS
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

21.  COMMITMENTS

     (a)  CAPITAL COMMITMENTS

<TABLE>
<CAPTION>
                                                  2000        2001        2002
                                                 -------     -------     ------
                                                    $           $           $
<S>                                              <C>         <C>         <C>
          Contracted but not provided for         33,163      15,026      6,434
          Amounts approved by the
           directors but not contracted for      254,493     210,313     10,661
                                                 =======     =======     ======
</TABLE>

     (b)  OPERATING LEASE COMMITMENTS

          The Company leases its fab from its minority shareholder, under a
          long-term lease agreement which expires in 2008. At December 31, the
          Company had commitments for future minimum lease payments under the
          non-cancellable operating leases as follows:

<TABLE>
<CAPTION>
                                                   2000       2001       2002
                                                 -------     ------     ------
                                                    $           $          $
<S>                                              <C>         <C>        <C>
          Payable:
            Within 1 year                         15,678     15,052     15,391
            After 1 year but within 5 years       60,678     58,310     60,640
            After 5 years                         33,957     18,180      3,786
                                                 -------     ------     ------
                                                 110,313     91,542     79,817
                                                 =======     ======     ======
</TABLE>

22.  FINANCIAL INSTRUMENTS

     The Company has only limited involvement with derivative financial
     instruments and does not use them for trading purposes. The Company uses
     derivative financial instruments principally to manage identified interest
     rate risks resulting from its floating rate loan and, to a lesser extent,
     its foreign currency purchase commitments which are principally denominated
     in Japanese yen. While these are subject to the risk of market rates
     changing subsequent to acquisition, such changes are generally offset by
     opposite effects on the items being hedged. The Company's accounting
     policies in relation to the derivative financial instruments are set out in
     note 2(e).

     By using derivative instruments to hedge exposures to changes in interest
     rates and foreign currency rates, the Company exposes itself to credit risk
     and market risk.


     (a)  CREDIT RISK

          Credit risk is the potential financial loss resulting from the failure
          of a customer or a counterparty to settle its financial and
          contractual obligations to the Company, as and when they fall due.

                                      F-57
<PAGE>
                     SILICON MANUFACTURING PARTNERS PTE LTD
                        NOTES TO THE FINANCIAL STATEMENTS
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

22.  FINANCIAL INSTRUMENTS (CONT'D)

     (a)  CREDIT RISK (CONT'D)

          The Company has established credit limits for customers and monitors
          their balances. Cash and fixed deposits are placed with banks and
          financial institutions which are regulated. Investments and
          transactions involving derivative financial instruments are allowed
          only with counterparties that are of high quality.


     (b)  LIQUIDITY RISK

          The Company monitors and maintains a level of cash and cash
          equivalents deemed adequate by management to finance the Company's
          operations and to mitigate the effects of fluctuations in cash flows.


     (c)  MARKET RISK

          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 uses interest rate swaps to redenominate
          its floating rate interest obligations of its loan to fixed rate
          interest obligations. The swaps mature over the next four years and
          have interest rates from 7.70% to 8.39%.


     (d)  FOREIGN CURRENCY RISK

          The Company incurs foreign currency risk on purchases, primarily of
          fixed assets, that are denominated in currencies other than US
          dollars. The currencies giving rise to this risk are primarily the
          Singapore dollar and the Japanese yen.

          The Company uses forward exchange contracts to hedge its foreign
          currency risk. The Company fully hedges its payables, and estimated
          foreign currency exposure in respect of forecast purchases over the
          following six months, relating to fixed asset purchases. Where
          necessary, the forward exchange contracts are rolled over at maturity
          at market rates. The Company only enters into forward exchange
          contracts with maturities of less than one year.

          In respect of other monetary liabilities denominated in currencies
          other than the US dollar, the Company ensures that the net exposure is
          kept to an acceptable level by buying or selling foreign currencies at
          spot rates, where necessary.


     (e)  EFFECTIVE INTEREST RATES AND REPRICING ANALYSIS

          In respect of interest-earning financial assets and interest bearing
          financial liabilities, the following table indicates their effective
          interest rates at the balance sheet date and the periods in which they
          reprice:

                                      F-58
<PAGE>
                     SILICON MANUFACTURING PARTNERS PTE LTD
                        NOTES TO THE FINANCIAL STATEMENTS
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

22.  FINANCIAL INSTRUMENTS (CONT'D)

     (e)  EFFECTIVE INTEREST RATES AND REPRICING ANALYSIS (CONT'D)

<TABLE>
<CAPTION>
                                                            EFFECTIVE
                                                             INTEREST                WITHIN    1 TO 5    AFTER
                                                 NOTE          RATE     TOTAL        1 YEAR     YEARS  5 YEARS
                                                 ----       ---------  --------      --------  ------  -------
                                                                 %        $             $         $        $
<S>                                              <S>        <C>        <C>           <C>       <C>     <C>
          2002
          FINANCIAL ASSETS

          Cash and cash
           equivalents                             9            1.32    112,721       112,721      -        -
                                                                       ========      ========    ===     ====
          FINANCIAL LIABILITIES

          Secured US$ floating rate
           bank loan                              12            2.54   (278,571)     (278,571)     -        -
          Effect of interest rate swaps                         5.34          -             -      -        -
                                                                ----   --------      --------    ---     ----
                                                                7.88   (278,571)     (278,571)     -        -
                                                                ====   ========      ========    ===     ====
          2001
          FINANCIAL ASSETS

          Cash and cash
           equivalents                             9            1.68     83,143        83,143      -        -
                                                                       ========      ========    ===     ====
          FINANCIAL LIABILITIES

          Secured US$ floating rate
           bank loan                              12            3.14   (375,000)     (375,000)     -        -
          Effect of interest rate swaps                         4.82          -             -      -        -
                                                                ----   --------      --------    ---     ----
                                                                7.96   (375,000)     (375,000)     -        -
                                                                ====   ========      ========    ===     ====
</TABLE>

     (f)  FAIR VALUES

          (i)  RECOGNIZED FINANCIAL INSTRUMENTS, CASH AND CASH EQUIVALENTS,
               AMOUNT DUE FROM AND TO RELATED COMPANIES AND AFFILIATED
               COMPANIES, ACCOUNTS RECEIVABLES AND ACCOUNTS PAYABLE

               The carrying amounts approximate fair value.

          (ii) BANK LOAN

               The carrying amount approximates fair value in view of the debt
               bearing floating interest rate.

                                      F-59
<PAGE>
                     SILICON MANUFACTURING PARTNERS PTE LTD
                        NOTES TO THE FINANCIAL STATEMENTS
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

22.  FINANCIAL INSTRUMENTS (CONT'D)

     (f)  FAIR VALUES (CONT'D)

          (iii) UNRECOGNIZED FINANCIAL INSTRUMENTS

                The valuation of financial instruments not recognized in the
                balance sheet reflects amounts which the Company expects to pay
                or receive to terminate the contracts or replace the contracts
                at their current market rates at the balance sheet date.

                The notional amount and net fair value of financial instruments
                not recognized in the balance sheet as at December 31, are:


<TABLE>
<CAPTION>
                                        NOTIONAL        FAIR       NOTIONAL       FAIR
                                         AMOUNT        VALUE        AMOUNT        VALUE
                                          2002          2002         2001          2001
                                        --------      -------      --------      -------
                                            $            $             $            $
<S>                                     <C>           <C>          <C>           <C>
                Interest rate
                 swap agreements        (338,571)     (24,118)     (445,000)     (25,984)

                Forward foreign
                 exchange contracts       (2,665)         (24)            -            -
                                        ========      =======      ========      =======
</TABLE>


23.  RECONCILIATION FROM SAS TO US GAAP

     The Company's financial statements are prepared in accordance with SAS
     which differs in certain respects from US GAAP. The effect of such
     differences on net profit/(loss) and shareholders' equity is summarized
     below.

     ACCOUNTING FOR DERIVATIVE FINANCIAL INSTRUMENTS

     Under SAS, there are no established principles for recognizing and
     measuring derivative financial instruments. Consequently, the Company only
     recognizes the accounting effect of derivative financial instruments as,
     and to the extent, the derivative financial instruments have an effect on
     the Company's cash flows.

     Under US GAAP (through December 31, 2000), gains and losses on hedges of
     existing assets or liabilities are included in the carrying amounts of
     those assets or liabilities and are ultimately recognized in income as part
     of those carrying amounts. Gains and losses related to qualifying hedges of
     firm commitments are deferred and are recognized in income or as
     adjustments of carrying amounts when the hedged transaction occurs. Any
     derivative contracts held or issued that do not meet the requirements of a
     hedge are recorded at fair value in the balance sheet and any changes in
     that fair value recognized in income.

                                      F-60
<PAGE>
                     SILICON MANUFACTURING PARTNERS PTE LTD
                        NOTES TO THE FINANCIAL STATEMENTS
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

23.  RECONCILIATION FROM SAS TO US GAAP (CONT'D)

     Effective January 1, 2001, SFAS No.133, "Accounting for Derivative
     Instruments and Hedging Activities", as amended, became effective for the
     Company for US GAAP purposes. All derivatives are recognized on the balance
     sheet at their fair value in other assets or other liabilities. On the date
     the derivative contract is entered into, 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 cashflows 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. This process includes linking all derivatives that are
     designated as fair-value, cashflows, 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.

     Changes in the fair value of a derivative that is highly effective and that
     is designated and qualifies as a fair-value hedge, along with the loss or
     gain on the hedged asset or liability or unrecognized firm commitment of
     the hedged item that is attributable to the hedged risk are recorded in
     earnings. Changes in the fair value of a derivative that is highly
     effective and that is designated and qualifies as a cash-flow hedge are
     recorded in other comprehensive income, until earnings are affected by the
     variability in cash flows of the designated hedged item. 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.

     Hedge accounting is discontinued prospectively when it is determined that
     the 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 dedesignated 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
     derivative continues to be carried on the balance sheet at its fair value,
     and the hedged asset or liability is no longer adjusted 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.

                                      F-61
<PAGE>
                     SILICON MANUFACTURING PARTNERS PTE LTD
                        NOTES TO THE FINANCIAL STATEMENTS
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

23.  RECONCILIATION FROM SAS TO US GAAP (CONT'D)

     When hedge accounting is discontinued because the hedged item no longer
     meets the definition of a firm commitment, the derivative continues to be
     carried on the balance sheet at its fair value, any asset or liability that
     was recorded pursuant to recognition of the firm commitment from the
     balance sheet is removed and any gain or loss is recognized in earnings.
     When hedge accounting is discontinued because it is probable that a
     forecasted transaction will not occur, the derivative continues to be
     carried on the balance sheet at its fair value, and gains and losses that
     were accumulated in other comprehensive income are recognized immediately
     in earnings. In all other situations in which hedge accounting is
     discontinued, the derivative continues to be carried at its fair value on
     the balance sheet, and any changes in its fair value is recognized in
     earnings.

<TABLE>
<CAPTION>
                                                         2000       2001           2002
                                                       -------     -------       -------
                                                          $           $              $
<S>                                                    <C>         <C>           <C>
          Net profit/(loss) in accordance with SAS      35,127      53,793       (23,432)
           Adjustment:
             Fair value adjustment for
              ineffective hedge elements
              of derivative contracts                        -      (5,005)         (217)
                                                       -------     -------       -------
          Net profit/(loss) in accordance
           with US GAAP                                 35,127      48,788       (23,649)
                                                       =======     =======       =======

          Other comprehensive (loss)/income
           in accordance with SAS                            -           -             -
            Adjustment:
              Fair value adjustment for
               effective hedge elements
               of derivative contracts                       -     (20,979)        2,059
                                                       -------     -------       -------
          Other comprehensive (loss)/income
           in accordance with US GAAP                        -     (20,979)        2,059
                                                       =======     =======       =======

          Shareholders' equity in accordance
           with SAS                                    209,388     263,181       239,749
            Adjustment:
              Fair value adjustment
               related to derivative contracts               -     (25,984)      (24,142)
                                                       -------     -------       -------
          Shareholders' equity in accordance
           with US GAAP                                209,388     237,197       215,607
                                                       =======     =======       =======

          Accumulated other comprehensive
           loss in accordance with SAS                       -           -             -
            Adjustment:
              Fair value adjustment for
               effective hedge elements
               of derivative contracts                       -     (20,979)      (18,920)
                                                       -------     -------       -------
          Other comprehensive loss
           in accordance with US GAAP                        -     (20,979)      (18,920)
                                                       =======     =======       =======
</TABLE>

                                      F-62
<PAGE>
                     SILICON MANUFACTURING PARTNERS PTE LTD
                        NOTES TO THE FINANCIAL STATEMENTS
          IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)

24.  SUBSEQUENT EVENT

     In prior years, the Company had implemented an employee bonus plan with
     respect to the payment of bonuses to employees. In March 2003, the Company
     cancelled the employee bonus award plan. As a result, compensation accrued
     for past services under the bonus award plan of $3.6 million was eliminated
     by decreasing compensation expense in the period of the cancellation.

                                      F-63