Document:

<PAGE>

                                                                    EXHIBIT 10.6

                                                                  EXECUTION COPY

                             AMENDED AND RESTATED
                            CO-INVESTMENT AGREEMENT

                                 July 14, 2000

                                     among

                  CHASE ASIA INVESTMENT PARTNERS II (Y), LLC

                         ASIA OPPORTUNITY FUND, L.P.,

                                      and

                          CO-INVESTORS LISTED HEREIN
<PAGE>

                             CO-INVESTMENT AGREEMENT

          CO-INVESTMENT AGREEMENT (the "Agreement") dated as of July 14, 2000
among CHASE ASIA INVESTMENT PARTNERS II (Y), LLC, a limited liability company
formed under the laws of Delaware ("CAIP"), ASIA OPPORTUNITY FUND, L.P., an
exempted limited partnership formed under the laws of the Cayman Islands,
("AOF"), and the CO-INVESTORS listed on the signature pages hereof (the "Co-
Investors" and together with AOF and CAIP, the "Investors").

          The parties hereto agree as follows:

                                   ARTICLE I

                              CERTAIN DEFINITIONS

          Capitalized terms used and not defined herein shall have the meanings
given to them in the Subscription Agreement and the Shareholders Agreement. In
addition, the following terms shall have the definitions set forth below:

          "Subscription Agreement" means the Amended and Restated Subscription
Agreement dated as of October 29, 1999 among CAIP, AOF, the Co-Investors, QPL
International Holdings Limited, Bring Luck Limited, The Industrial Investment
Company Limited, Worltek International, Ltd., ASAT Limited and ASAT Holdings
Limited, as amended from time to time.

          "Shareholders Agreement" means the Amended and Restated Shareholders
Agreement dated July 14, 2000, as amended from time to time.

          References to Co-Investors and Investors includes their Permitted
Transferees.

                                  ARTICLE II

                        REPRESENTATIONS AND WARRANTIES

          2.1 Representations and Warranties.  Each Investor represents and
warrants to each other Investor that it is duly authorized to execute and
deliver this Agreement, to perform its obligations under and to consummate the
transactions contemplated by this Agreement, and that this Agreement is a valid
and legally binding agreement of such Investor, enforceable in accordance with
its terms.

          2.2 Reliance on Other Investors.  Each Investor shall be entitled to
rely upon the representations and warranties and agreements of each other
Investor in the Subscription Agreement.

                                      -2-
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                                  ARTICLE III

                          BOARD OF DIRECTORS; VOTING

          3.1. Appointment of Directors. As long as the Co-Investors own in the
aggregate at least 10% of the outstanding Shares, the Co-Investors shall be
entitled to select one of the Board directors (the "Co-Investor Designee") whom
AOF is entitled to appoint pursuant to Section 2.1 of the Shareholders Agreement
(the "AOF Designees"). The director to be selected by the Co-Investors shall be
determined by the Co-Investors holding a majority of the Shares then held by the
Co-Investors. AOF agrees to appoint each Co-Investor Designee as an AOF Designee
pursuant to the Shareholders Agreement. AOF agrees that in connection with any
Transfer of Shares owned by it (other than in a Public Sale), AOF will ensure
that the Transferee of such Shares will assume AOF's obligation under this
Section 3.1 if, following such Transfer, AOF would not be able to fulfill such
obligation. Following an issue of Shares upon exercise of the Warrants or issue
of Shares to employees of any ASAT Company pursuant to an exercise of stock
options granted to such employee, the 10% threshold above shall be reduced to
reflect the dilutive effect or reduction of the numbers of Shares held by the
Co-Investors as a result of such event.

          3.2. Voting by Co-Investor Director.  With respect to any matter voted
upon by the Board, the Co-Investors agree to cause the Co-Investor Designees to
vote in accordance with the instructions of AOF except with respect to matters
as to which the AOF Designees are not entitled to vote under applicable law or
pursuant to 6.3 of the Shareholders Agreement, in which case such director may
vote in accordance with the Co-Investors' instructions (subject to the
requirements of the Shareholders Agreement).

          3.3. Voting of ASAT Shares.  Subject to Section 3.4, with respect to
any matter voted upon by the shareholders of ASAT, each Co-Investor agrees to
vote, in person or by proxy, all Shares owned by it, at any annual or
extraordinary general meeting of shareholders or by consensual action of
shareholders without a meeting, in accordance with the instructions of AOF.

          3.4. No Conflict.  Nothing in this Article III shall require a Co-
Investor or a Co-Investor Designee to vote in conflict with the Shareholders
Agreement or applicable law or in favor of a resolution or other action that
would adversely affect the rights or preferences of any class of Shares held by
such Co-Investor and would not in the same manner adversely affect the rights or
preferences of Shares of the same class held by other Shareholders.

          3.5. Information.  Any Co-Investor Designee shall be entitled to
disclose Confidential Information to the Co-Investors as co-investors referred
to in Section 6.1 of the Shareholders Agreement.

                                      -3-
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                                  ARTICLE IV

                              TRANSFER OF SHARES

          4.1.  Restrictions on Sale of Shares. Except for (a) Transfers to the
Co-Investors' Permitted Transferees pursuant to Section 3.3 of the Shareholders
Agreement, (b) Transfers pursuant to a Public Sale and (c) Transfers required as
a result of the exercise by any Shareholder of drag along rights pursuant to
Section 4.3 of the Shareholders Agreement, each Co-Investor agrees that it shall
not Transfer Shares that it owns until it has first complied with the provisions
of this Article IV.

          4.2 Sale of Shares. If any Co-Investor desires to Sell Shares to a
Third Party in a Sale subject to Section 4.1 of the Shareholders Agreement, such
Co-Investor shall comply with the provisions therein. Such Co-Investor shall
advise each other Investor of its intention to make such a Sale at least 14 days
before such Co-Investor gives any other Shareholder a Right of First Offer
Notice in respect thereof. Such Co-Investor shall indicate in its Right of First
Offer Notice that the offer therein is being made to other Shareholders subject
to the prior right of CAIP and AOF to purchase all such Shares as Permitted
Transferees. If CAIP or AOF gives a Section 4.1 Purchase Notice in respect of
such Shares, then all such Shares shall be Sold exclusively to either or both of
them as Permitted Transferees. If CAIP and AOF fail to give a Section 4.1
Purchase Notice within the Right of First Offer Notice Period, then the
provisions of Section 4.1 of the Shareholders Agreement shall apply to such Sale
without regard to this Section 4.2.

          4.3 Drag Along  Rights.  If CAIP and AOF propose to Sell all their
Shares to a Third Party, they may require all (and not less than all) the Co-
Investors to Sell all (and not less than all) their Shares together with CAIP's
and AOF's Shares as follows:

     (a)  At least 14 days before giving a Right of First Offer Notice as
          provided in Section 4.3(b) hereof, CAIP and AOF shall advise the Co-
          Investors of their intention to compel the Co-Investors to sell their
          Shares to such Third Party and their intention to take the other
          actions provided for in this Section 4.3.

     (b)  CAIP and AOF shall provide to all other Shareholders a right of first
          offer for all (and not less than all) CAIP's and AOF's Shares in
          accordance with Section 4.1 of the Shareholders Agreement. The Right
          of First Offer Notice shall state that if the offer therein is not
          accepted, then CAIP and AOF shall include all the Shares then owned by
          Co-Investors in any Sale to a Third Party as provided below. If one or
          more Offerees shall deliver a Section 4.1 Purchase Notice to CAIP and
          AOF accepting such offer, then CAIP and AOF (and the Co-Investors, if
          applicable) shall Sell their Shares to such Offeree(s) as provided in
          such notice and Section 4.1 of the Shareholders Agreement.

     (c)  If no Offeree shall have delivered a Section 4.1 Purchase Notice in
          respect of such offer, CAIP and AOF may Sell all their Shares to a
          Third Party as provided in Section 4.1 of the Shareholders Agreement
          and, in the event of such a Sale, shall include in such Sale all
          Shares then owned by the Co-Investors at the same price per Share and
          on the same terms specified in the Right of First Offer Notice.

                                      -4-
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          CAIP and AOF shall deliver to the Co-Investors promptly after agreeing
          to such a Sale written notice thereof and of their decision to compel
          the Co-Investors to sell their Shares in accordance herewith and a
          copy of all agreements containing the terms and conditions pursuant to
          which the Shares are proposed to be Sold. To the extent that CAIP
          and/or AOF receives any fee or other payment as compensation for
          exercising their drag along rights under Section 4.3 of the
          Shareholders Agreement and causing the Co-Investors' Shares to be
          included in a Sale to a Third Party, the Co-Investors shall receive a
          pro rata portion (in the proportion provided in Section 5.2(a)) of
          such fee or payment.

     (d)  If the proposed Sale to a Third Party hereunder would be a Section 4.3
          Sale, then before the Sale to a Third Party may be consummated, CAIP
          and AOF shall (if required by the Shareholders Agreement) offer to QPL
          (and not the Co-Investors) a right of first refusal with respect to
          all the Investors' Shares to be included in such Sale in accordance
          with Sections 4.3(b) through (e) of the Shareholders Agreement. If QPL
          delivers a Section 4.3 Purchase Notice, then all Investors shall Sell
          all their Shares to QPL as provided in Section 4.3(d) and (e) of the
          Shareholders Agreement.

     (e)  Each Co-Investor (i) shall be required to participate in a Sale on the
          terms and conditions set forth in the notice delivered to them by CAIP
          and AOF pursuant to (c) above, (ii) deliver to the Third Party the
          certificates representing such Shares on or before the closing of such
          Sale and collect directly from the Third Party the consideration to be
          paid for such Shares, and (iii) otherwise cooperate in good faith to
          effect such Sale, including (if necessary) Selling their Shares to
          CAIP or AOF as a Permitted Transferee in exchange for such
          consideration in order to effect the purposes of this Section 4.3. It
          is understood that the number of Investor Shares to be sold in any
          Sale under this Section 4.3 shall be reduced to the extent that QPL
          exercises its tag-along rights in respect of such Sale under Section
          4.2 of the Shareholders Agreement.

     (f)  The last sentence of Section 4.3(k) of the Shareholders Agreement
          shall in no respect restrict CAIP's and AOF's rights herein.

Notwithstanding anything contained in this Section 4.3, there shall be no
liability on the part of CAIP or AOF to any Co-Investor if any Sale of Shares to
a Third Party pursuant to this Section 4.3 is not consummated for whatever
reason. Any decision as to whether to Sell Shares to a Third Party shall be at
the sole and absolute discretion of CAIP and AOF.

                                   ARTICLE V

                           UK CREDITOR ARRANGEMENTS

          5.1. The UK Creditor Arrangements. The Co-Investors acknowledge that
(a) CAIP and AOF entered into an Option Agreement dated as of October 29, 1999
with The Industrial Investment Company Limited ("TIIC") and QPL International
Holdings Limited

                                      -5-
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("QPLIH"); the Investor Inter-Creditor Agreement dated as of October 29, 1999
among the UK Creditors, the Investors (as defined therein) and Standard
Chartered Bank, as Security Trustee; the Inter-Creditor Agreement dated as of
October 29, 1999 among the UK Creditors, the Investors (as defined therein) and
Standard Chartered Bank, as Security Trustee; the Option Loss Indemnity Deed
dated as of October 29, 1999 among CAIP, AOF, Worltek International, Ltd.
("Worltek"), TIIC and QPLIH; the Comdisco Side Letter dated October 29, 1999
from the UK Creditors to Comdisco and acknowledged by CAIP and AOF; and the
Charge Over Shares dated as of October 29, 1999 between Worltek, CAIP, AOF,
Standard Chartered bank, as Trustee, (collectively, the "UK Creditor
Arrangements"); and (b) CAIP and AOF entered into the UK Creditor Arrangements
on behalf of themselves and for the benefit of the Co-Investors in connection
with the Investors' investment in ASAT Holdings Limited pursuant to the
Subscription Agreement.

               5.2  Co-Investors' Back-Stop.  Olympus Capital Holdings Asia I,
L.P., Reservoir-Olympus II, L.P., Olympus KB, L.P., Olympus Capital Asia, L.P.,
Olympus Capital Asia Offshore, L.P., Olympus Holdings, L.P. and ZAM-Olympus Co-
Invest, L.L.C. (the "Olympus Group"), severally and jointly among themselves but
severally and not jointly with respect to Orchid Hong Kong Investment Holdings
("Orchid"), and Orchid severally and not jointly with respect to the Olympus
Group, each agrees:

       (a)   to pay pro rata (in the proportion that the number of Shares
             acquired by it pursuant to the Subscription Agreement bears to the
             total number of Shares acquired thereunder by all Investors) to
             CAIP and AOF any amount that CAIP or AOF is required to pay at any
             time under the UK Creditor Arrangements, at or before the time CAIP
             or AOF is required to make such payment; and

       (b)   to perform or comply with all obligations undertaken by CAIP and
             AOF as Shareholders in the UK Creditor Arrangements to the same
             extent as if such Co-Investor were a party thereto.

               5.3  Pass Through of Benefits. CAIP and AOF severally and not
jointly agree to transfer promptly to each Co-Investor such Co-Investor's pro
rata share (in the proportion provided in Section 5.2(a)) of the benefits
actually received by CAIP and/or AOF under the UK Creditor Arrangements.

               5.4  Instructions by Investors. CAIP and AOF will exercise their
rights under the UK Creditor Arrangements in accordance with the instructions of
Investors (including CAIP and AOF) holding a majority of Shares held by all
Investors on the date hereof (the "Majority Investors") and take such other
actions reasonably requested by the Majority Investors. CAIP and AOF may also
take such other actions in connection with the UK Creditor Arrangements as they
shall determine to be necessary or desirable and in the interests of the
Investors as a whole.

               5.5  Liability of CAIP and AOF;  Duties; Indemnification. (a)
Neither CAIP nor AOF shall have any liability to any Co-Investor for any action
taken or not taken by them except for liability directly and primarily due to
gross negligence or wilful misconduct on their part. Neither CAIP nor AOF shall
be deemed to have, or be acting in, any fiduciary duty or trustee capacity for
or on behalf of the Co-Investors.

                                      -6-
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               (b)  Neither CAIP nor AOF shall have any duty hereunder except as
expressly provided herein or in the UK Creditor Arrangements. Nothing herein
shall require either CAIP or AOF to expend or risk its own funds or otherwise
incur any financial liability except as expressly provided in the UK Creditor
Arrangements, it being understood that any such expenditure or liability shall
be covered by this Article V.

               (c)  Each member of the Olympus Group, severally and jointly
among themselves but severally and not jointly with respect to Orchid Hong Kong
Investment Holdings ("Orchid"), and Orchid severally and not jointly with
respect to the Olympus Group, each agrees:

          (i)  to reimburse CAIP and AOF upon request for all reasonable
               disbursements, expenses and advances incurred or made by them in
               connection with the UK Creditor Arrangements, including expenses
               of counsel; and

          (ii) to indemnify CAIP and AOF and each of their officers, directors,
               employees, partners, controlling persons and agents for, and hold
               it harmless against, any claim, demand, expense, loss or
               liability incurred by any of them (other than directly and
               primarily due to gross negligence or wilful misconduct on their
               part) arising out of or in connection with any action taken by
               them on behalf of the Co-Investors in accordance or in connection
               with the UK Creditor Arrangements.

The Co-Investors' obligations under this Section 5.5(c) shall be pro rata on the
basis provided in Section 5.2(a).

               (d)  The provisions of this Section 5.5 shall survive the
termination of this Agreement.

               5.6   Modifications to the UK Creditor Arrangements.
Notwithstanding anything to the contrary in this Agreement, neither CAIP nor AOF
shall consent to any amendments or modifications to the UK Creditor Arrangements
without the prior written consent of each Co-Investor, which consent shall not
unreasonably be withheld.

                                  ARTICLE VII

                                 MISCELLANEOUS

               6.1. Expenses;  Indemnity and Termination Fee Proceeds. Any
expense incurred by the Investors in connection with the transactions
contemplated by the Transaction Agreements (including expenses incurred in
enforcing such agreements before or after the Closing) and not paid or
reimbursed by QPL or ASAT shall be paid on a combined basis by each Investor in
the proportion that the number of Shares to be purchased by such Investor under
the Subscription Agreement bears to the total number of Shares to be purchased
thereunder by all Investors (the "Pro Rata Purchase Percentage"). Any proceeds
of any payments received by the Investors (net of any related expenses or
deductions applied against such proceeds) under Article 9 or Section 10.3 of the
Subscription Agreement or as a result of any recovery in respect of any claim
asserted by any Investor against the parties to the Subscription Agreement

                                      -7-
<PAGE>

(excluding other Investors) shall be shared by the Investors based on their Pro
Rata Purchase Percentage.

          6.2.  Notices. All notices, requests and other communications to any
party hereunder shall be in writing and shall be deemed to have been duly given
or made if sent by fax (with confirmation in writing), delivered personally or
sent by registered or certified mail (postage prepaid, return receipt requested)
to the parties at the fax number or address set forth in the Shareholders
Agreement or at such other addresses as shall be furnished by the parties by
like notice, and such notice or communication shall be deemed to have been given
or made upon receipt.

          6.3.  Amendments  and Waivers.  (a) Any provision of this Agreement
may be amended or waived only if such  amendment  or waiver is in writing and is
signed, in the case of an amendment,  by each party to this Agreement, or in the
case of a waiver, by the party against whom the waiver is to be effective.

            (b) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.

          6.4.  Binding Effect; Benefit. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective heirs,
successors, legal representatives and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended to confer on any Person other than
the parties, and their respective heirs, successors, legal representatives and
permitted assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement. References herein to any Investor includes its
Permitted Transferees.

          6.5.  Assignment. An Investor may assign, delegate or otherwise
Transfer any of its rights or obligations under this Agreement only if the
Transfer is in accordance with this Agreement and the Shareholders Agreement and
the person acquiring Shares (other than in connection with a Public Sale) shall
execute and deliver to the other Investors a deed of adherence to be bound by
this Agreement.

          6.6.  Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of England.

          6.7.  Submission to Jurisdiction, Etc. (a) Each party hereby
irrevocably agrees that the courts of England shall have non-exclusive
jurisdiction to settle any dispute which may arise out of or in connection with
this Agreement and that accordingly any suit, action or proceedings (together
referred to as "Proceedings") arising out of or in connection therewith may be
brought in such courts. Each party hereto irrevocably waives any objection which
it may have now or hereafter to the laying of the venue of any Proceedings in
any such court and any claim that any such Proceedings have been brought in an
inconvenient forum and hereby further irrevocably agrees that a judgment in any
Proceedings brought in the courts of England shall be conclusive and binding
upon it and may be enforced in the courts of any jurisdiction.

                                      -8-
<PAGE>

            (b) Each Investor appoints Trusec Limited of 35 Basinghall Street,
London EC2V 5DB to be its agent for the receipt of service of process in
England. Each party agrees that any Service Document may be effectively served
on it in connection with Proceedings in England and Wales by service on its
agent.

            (c) Any Service Document shall be deemed to have been duly served on
a party if marked for the attention of such party's agent at the address set out
above in Section 6.7(b) in respect of such agent or such other address within
England or Wales as may be notified to the other parties and: (i) left at the
specified address; or (ii) sent to the specified address by first class post. In
the case of (i), the Service Document shall be deemed to have been duly served
when it is left. In the case of (ii), the Service Document shall be deemed to
have been duly served two clear UK Business Days after the date of posting.
"Service Document" means a writ, summons, order, judgment or other process
issued out of the courts of England and Wales in connection with any
Proceedings, "UK Business Days" means a day other than a Saturday, Sunday or any
day on which banks located in England are obligated to close.

          6.8.  Section Headings. The headings of Sections in this Agreement are
provided for convenience only and will not affect its construction or
interpretation

          6.9.  Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

          6.10. Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings, both oral and written,
between the parties with respect to the subject matter hereof. No
representation, inducement, promise, understanding, condition or warranty not
set forth herein has been made or relied upon by any party hereto. Without
limitation of the foregoing, it is understood that the Subscription Agreement,
the Transaction Agreements and the agreements and arrangements referred to
therein entail in all material respects the agreements and arrangements being
entered into in connection with the Investors' investment in ASAT.

          6.11. Specific Enforcement. Each party hereto acknowledges that the
remedies at law of the other parties for a breach or threatened breach of this
Agreement would be inadequate and, in recognition of this fact, any party to
this Agreement, without posting any bond, and in addition to all other remedies
which may be available, shall be entitled to obtain equitable relief in the form
of specific performance, a temporary restraining order, a temporary or permanent
injunction or any other equitable remedy which may then be available.

          6.12. Confidentiality. The provisions of Section 6.1 of the
Shareholders Agreement shall apply to this Agreement, mutatis mutandis; provided
that for the purposes of this Agreement, "Confidential Information" shall
include information concerning this Agreement, the transactions contemplated
hereby, the terms and conditions hereof and any discussions, correspondence or
other communications among the parties hereto or their respective
Representatives relating to this Agreement or any of the transactions
contemplated hereby.

                                      -9-
<PAGE>

          6.13. No Reliance. Each Co-Investor acknowledges that it has been
afforded an opportunity to request and to review, and has received, all
information considered by it necessary or advisable to make a decision to
acquire ASAT Shares. Each Co-Investor acknowledges that CAIP and AOF have not
independently verified any oral or written information provided by them or any
of their representatives, agents or Affiliates to any Co-Investor regarding the
transactions contemplated by the Transaction Agreements (including any Co-
Investor's investment in Shares) and agrees that (a) it has not relied on CAIP
or AOF or any of their Affiliates, employees, officers, directors, partners,
advisors, counsel, representatives or agents in connection with its
investigation of the ASAT Companies and its investment in the Shares and (b)
that in providing such information to Co-Investors, such persons shall not be
deemed to have made any representation to any Co-Investor and shall not have any
liability whatsoever in connection with any Co-Investor's investment in ASAT
Shares. CAIP and AOF hereby represent and warrant that as of the date hereof,
none of CAIP, AOF and their respective Affiliates has entered into any
agreements with QPL or its Affiliates relating to or in connection with any of
the ASAT Companies other than the Subscription Agreement, Shareholder Agreement,
the UK Creditor Agreements and agreements referred to therein or contemplated
thereby. Each Co-Investor acknowledges and agrees that neither CAIP nor AOF have
any fiduciary, sponsor or other duty to any Co-Investor in any transaction now
or hereafter contemplated by the Transaction Agreements.

          6.14  Several Obligations. All obligations, undertakings,
representations, warranties and agreements of the Investors herein are several
and not joint. Nothing in this Agreement or in any document referred to in it
shall constitute any of the parties a partner of any other, nor shall the
execution, completion and implementation of this Agreement confer on any party
any power to bind or impose any obligations on any other party or to pledge the
credit of any other party.

          6.15  Termination. This Agreement shall terminate upon the earliest of
(a) termination of the Subscription Agreement, (b) termination of the
Shareholders Agreement, and (c) the time when CAIP and AOF together own less
than 20% of the then outstanding Shares. Following an issue of Shares upon
exercise of the Warrants or issue of Shares to employees of any ASAT Company
pursuant to an exercise of stock options granted to such employee, the 20%
threshold above shall be reduced to reflect the dilutive effect or reduction of
the numbers of Shares held by CAIP and AOF as a result of such event. The
provisions of Section 2.2, Article V and this Article VI shall survive such
termination.

                                      -10-
<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.

                          CHASE ASIA INVESTMENT
                              PARTNERS II (Y), LLC

                          By: Chase Asia Investment Partners, L.P.,
                              its member

                          By: Chase Asia Equity Partners, L.P.,
                              its general partner

                          By: CCP Asia Equity Company,
                              a managing general partner

                          By: /s/ Maura Wong
                              --------------------------------
                              Name: Maura Wong
                              Title: Managing Director

                          ASIA OPPORTUNITY FUND, L.P.

                          By: Asia Opportunity Company, its general partner

                          By: /s/ Maura Wong
                              --------------------------------
                              Name: Maura Wong
                              Title: Managing Director

                          ORCHID HONG KONG
                          INVESTMENT HOLDINGS

                          By: Orchid Asia II, L.P., its sole member

                          By: Orchid Asia Holdings, LLC, its general partner

                          By: /s/ Gabriel Li
                              --------------------------------
                              Name: Gabriel Li
                              Title: Vice President

                                      -11-
<PAGE>

                    RESERVOIR-OLYMPUS II, L.P.

                    By: Olympus Capital Holdings Asia, L.L.C.,
                        its general partner

                    By: Olympus Capital Holdings Asia, its managing member

                    By: /s/ Terrye Dewey
                        --------------------------------
                        Name:  Terrye Dewey
                        Title: Chief Financial Officer

                    OLYMPUS HOLDINGS, L.P.

                    By: Olympus Management GP Corporation,
                        its general partner

                    By: /s/ Terrye Dewey
                        --------------------------------
                        Name:  Terrye Dewey
                        Title: Chief Financial Officer

                    OLYMPUS CAPITAL ASIA, L.P.

                    By: Olympus Capital Holdings Asia, L.L.C.,
                        its general partner

                    By: Olympus Capital Holdings Asia, its managining member

                    By: /s/ Terrye Dewey
                        --------------------------------
                        Name:  Terrye Dewey
                        Title: Chief Financial Officer

                    OLYMPUS CAPITAL ASIA OFFSHORE, L.P.

                    By: Olympus Capital Holdings Asia, L.L.C.,
                        its general partner

                    By: Olympus Capital Holdings Asia, its managing member

                    By: /s/ Terrye Dewey
                        --------------------------------
                        Name:  Terrye Dewey
                        Title: Chief Financial Officer

                                      -12-
<PAGE>

                          OLYMPUS KB, L.P.

                          By: Olympus Capital Holdings Asia, L.L.C.,
                              its general partner

                          By: Olympus Capital Holdings Asia,
                              its managing member

                          By: /s/ Terrye Dewey
                              --------------------------------
                              Name: Terrye Dewey
                              Title: Chief Financial Officer

                          OLYMPUS CAPITAL HOLDINGS ASIA I, L.P.

                          By: Olympus Capital Holdings Asia, L.L.C.,
                              its general partner

                          By: Olympus Capital Holdings Asia,
                              its managing member

                          By: /s/ Terrye Dewey
                              --------------------------------
                              Name: Terrye Dewey
                              Title: Chief Financial Officer

                          ZAM-OLYMPUS CO-INVEST, L.L.C.,

                          By: Olympus Capital Holdings Asia, L.L.C.,
                              its managing member

                          By: Olympus Capital Holdings Asia,
                              its managing member

                          By: /s/ Terrye Dewey
                              --------------------------------
                              Name: Terrye Dewey
                              Title: Chief Financial Officer

                                      -13-
<PAGE>

                          OLYMPUS-ASAT I, L.L.C.

                          By: Olympus Capital Holdings Asia, L.L.C.,
                              its managing member

                          By: Olympus Capital Holdings Asia,
                              its managing member

                          By: /s/ Terrye Dewey
                              --------------------------------
                              Name: Terrye Dewey
                              Title: Chief Financial Officer

                          OLYMPUS-ASAT II, L.L.C.,

                          By: Olympus Capital Holdings Asia, L.L.C.,
                              its managing member

                          By: Olympus Capital Holdings Asia,
                              its managing member

                          By: /s/ Terrye Dewey
                              --------------------------------
                              Name: Terrye Dewey
                              Title: Chief Financial Officer

                                      -14-
<PAGE>

                          OLYMPUS-ASAT I, L.L.C.

                          By: Olympus Capital Holdings Asia, L.L.C.,
                              its managing member

                          By: Olympus Capital Holdings Asia,
                              its managing member

                          By: /s/ Terrye Dewey
                              ----------------------------
                              Name: Terrye Dewey
                              Title: Chief Financial Officer

                          OLYMPUS-ASAT II, L.L.C.

                          By: Olympus Capital Holdings Asia, L.L.C.,
                              its managing member

                          By: Olympus Capital Holdings Asia,
                              its managing member

                          By: /s/ Terrye Dewey
                              ----------------------------
                              Name: Terrye Dewey

                          Title: Chief Financial Officer

                                      -15-<PAGE>

                                                                    EXHIBIT 10.7

                                                           EXECUTION COPY

                               INDEMNITY AGREEMENT

                            dated as of July 10, 2000

                                      among

                   THE INDUSTRIAL INVESTMENT COMPANY LIMITED,

                   CHASE ASIA INVESTMENT PARTNERS II (Y), LLC,

                          ASIA OPPORTUNITY FUND, L.P.,

                      ORCHID HONG KONG INVESTMENT HOLDINGS,

                           RESERVOIR-OLYMPUS II, L.P.,

                           OLYMPUS CAPITAL ASIA, L.P.,

                      OLYMPUS CAPITAL ASIA OFFSHORE, L.P.,

                             OLYMPUS HOLDINGS, L.P.,

                             OLYMPUS-ASAT I, L.L.C.

                             OLYMPUS-ASAT II, L.L.C.

                                       and

                              ASAT HOLDINGS LIMITED
<PAGE>

                               INDEMNITY AGREEMENT

         AGREEMENT (the "Agreement") dated July 10, 2000 among THE INDUSTRIAL
INVESTMENT COMPANY LIMITED, CHASE ASIA INVESTMENT PARTNERS II (Y), LLC, ASIA
OPPORTUNITY FUND, L.P., ORCHID HONG KONG INVESTMENT HOLDINGS, RESERVOIR-OLYMPUS
II, L.P., OLYMPUS CAPITAL ASIA, L.P., OLYMPUS CAPITAL ASIA OFFSHORE, L.P., and
OLYMPUS HOLDINGS, L.P., (each a "Shareholder" and collectively, the
"Shareholders") and ASAT HOLDINGS LIMITED (the "Company").

                              W I T N E S S E T H :

               WHEREAS, the Shareholders own all the currently issued ordinary
shares of the Company;

               WHEREAS, the Shareholders have agreed to enable the Company to
raise additional equity funds through an initial public offering (the
"Offering") of American depositary receipts ("ADRs") representing ordinary
shares of the Company (the "Shares");

               WHEREAS, the Shareholders have agreed to sell a portion of the
Shares held by them in the Offering in the form of ADRs; and

               WHEREAS, the Company has prepared and filed with the United
States Securities and Exchange Commission (the "Commission"), in accordance with
the provisions of the United States Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder (collectively, the "Act"), a
registration statement on Form F-1, (File No. 333-12124), including a
preliminary prospectus, relating to the ADRs. As used in this Agreement, the
term "Registration Statement" means such registration statement as amended to
the date of this Agreement, and the term "Prospectus" means the prospectus
included in the Registration Statement as amended to the date of this Agreement
and as amended by a prospectus relating to the ADRs to be filed with the
Commission pursuant to Rule 424 under the Act. The Company has also entered into
an underwriting agreement of even date herewith with Chase Securities, Inc.,
Donaldson, Lufkin & Jenrette Securities Corporation and Salomon Smith Barney
Inc. (each, an "Underwriter" and such agreement, the "Underwriting Agreement")
as representatives for the several underwriters named therein.

               NOW, THEREFORE, in consideration of the mutual promises and
covenants set forth herein, the parties hereto agree as follows:

               1. The Company agrees to indemnify and hold harmless each
Shareholder, its directors, its officers and each person, if any, who controls
any Shareholder within the meaning of Section 15 of the Act or Section 20 of the
United States Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission thereunder (collectively, the "Exchange Act"),
from and against any and all losses, claims, damages, liabilities and judgments
(including, without limitation, any legal or other expenses incurred in
connection with

                                       2
<PAGE>

investigating or defending any matter, including any action, that could give
rise to any such losses, claims, damages, liabilities or judgments) caused by
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment thereto), the Prospectus (or any
amendment or supplement thereto) or any preliminary prospectus, or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or judgments are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to such Shareholder furnished in
writing to the Company by such Shareholder to the Company and expressly for use
in the Registration Statement and appearing in the sections entitled "Principal
Shareholders" or "Related Party Transactions."

               2. Each Shareholder agrees, severally and not jointly, to
indemnify and hold harmless the Company and the Company's directors and officers
who sign the Registration Statement, each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act (other than a Shareholder) to the same extent as the foregoing
indemnity from the Company to such Shareholder but only with reference to
information relating to such Shareholder furnished in writing to the Company by
such Shareholder expressly for use in the Registration Statement (or any
amendment thereto), the Prospectus (or any amendment or supplement thereto) or
any preliminary prospectus. Notwithstanding the foregoing, the aggregate
liability of any Shareholder pursuant to this section shall be limited to an
amount equal to the net proceeds received by such Shareholder from the sale of
the ADRs representing Shares sold by such Shareholder in the Offering.

               3. In case any action shall be commenced  involving any person in
respect of which  indemnity may be sought  pursuant to Section 1 or 2 above (the
"indemnified  party"),  the  indemnified  party shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying  party") in writing
and the  indemnifying  party shall assume the defense of such action,  including
the employment of counsel  reasonably  satisfactory to the indemnified party and
the  payment  of all  fees  and  expenses  of such  counsel,  as  incurred.  Any
indemnified  party shall have the right to employ  separate  counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel  shall  be at the  expense  of the  indemnified  party  unless  (i)  the
employment of such counsel shall have been specifically authorized in writing by
the indemnifying  party, (ii) the indemnifying party shall have failed to assume
the  defense of such action or employ  counsel  reasonably  satisfactory  to the
indemnified  party or (iii) the named parties to any such action  (including any
impleaded  parties)  include  both the  indemnified  party and the  indemnifying
party,  and the  indemnified  party shall have been  advised by its counsel that
there may be one or more legal defenses available to it which are different from
or additional to those  available to the  indemnifying  party (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the indemnified  party).  In any such case, the indemnifying  party
shall not,  in  connection  with any one action or  separate  but  substantially
similar or  related  actions in the same  jurisdiction  arising  out of the same
general allegations or circumstances, be liable for (i) the fees and expenses of
more than one separate firm of attorneys (in addition to any local  counsel) for
all  Shareholders,  their  officers and directors  and all persons,  if any, who
control any  Shareholders  within the meaning of either Section 15 of the Act or
Section 20 of the  Exchange  Act and (ii) the fees and

                                       3
<PAGE>

expenses of more than one separate firm of attorneys (in addition to any local
counsel) for the Company, its directors, its officers who sign the Registration
Statement and all persons, if any, who control the Company within the meaning of
either such Section (other than a Shareholder), and all such fees and expenses
shall be reimbursed as they are incurred. In the case of any such separate firm
for the Company and such directors, officers and control persons of the Company,
such firm shall be designated in writing by the Company. In the case of any such
separate firm for the Shareholders and such control persons of any Shareholders,
such firm shall be designated in writing by the Shareholders. If a Shareholder
is advised by its counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the other
Shareholders, such Shareholder may retain its own counsel, which shall be
designated in writing. The indemnifying party shall indemnify and hold harmless
the indemnified party from and against any and all losses, claims, damages,
liabilities and judgments by reason of any settlement of any action (i) effected
with its written consent or (ii) effected without its written consent if the
settlement is entered into more than twenty business days after the indemnifying
party shall have received a request from the indemnified party for reimbursement
for the fees and expenses of counsel (in any case where such fees and expenses
are at the expense of the indemnifying party) and, prior to the date of such
settlement, the indemnifying party shall have failed to comply with such
reimbursement request. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement or compromise of, or
consent to the entry of judgment with respect to, any pending or threatened
action in respect of which the indemnified party is or could have been a party
and indemnity or contribution may be or could have been sought hereunder by the
indemnified party, unless such settlement, compromise or judgment (i) includes
an unconditional release of the indemnified party from all liability on claims
that are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.

               4. To the extent the indemnification provided for in this
Agreement is unavailable to an indemnified party or insufficient in respect of
any losses, claims, damages, liabilities or judgments referred to therein, then
each indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the relevant Shareholder or Shareholders on the
other hand from the Offering or (ii) if the allocation provided by clause 4(i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause 4(i) above but
also the relative fault of the Company on the one hand and the relevant
Shareholder or Shareholders on the other hand in connection with the statements
or omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the relevant Shareholder or
Shareholders on the other hand shall be deemed to be in the same proportion as
the total net proceeds from the offering received by the relevant Shareholder or
Shareholders bear to the total price to the public of the ADRs as set forth in
the table on the cover page of the Prospectus. The relative fault of the Company
on the one hand and the relevant Shareholder or Shareholders on the other hand
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material

                                       4
<PAGE>

fact relates to information supplied by the Company on the one hand or the
relevant Shareholder or Shareholders on the other hand and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.

               5. The Company and the Shareholders agree that it would not be
just and equitable if contribution pursuant to Section 4 above were determined
by pro rata allocation (even if the Shareholders were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses incurred by such indemnified party in
connection with investigating or defending any matter, including any action,
that could have given rise to such losses, claims, damages, liabilities or
judgments. Notwithstanding the provisions of this section, the aggregate
liability of any Shareholder shall be limited to an amount equal to the total
net proceeds received by such Shareholder from the sale of the ADRs representing
Shares sold by such Shareholder in the Offering. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Shareholders' obligations to contribute pursuant to this
section are several in proportion to the respective number of ADRs representing
Shares sold by each of the Shareholders in the Offering and not joint or joint
and several.

               6. Except as otherwise provided herein, the provisions of this
Agreement may not be amended, modified or supplemented unless in writing signed
by the Company and each of the Shareholders. Each Shareholder shall be bound by
any consent obtained in the manner authorized by this section.

               7. All communications provided for in connection with this
Agreement shall be sent by first-class mail or overnight courier and (a) if
addressed to the Shareholders, addressed to the Shareholders in the manner set
forth in Annex C to the Amended and Restated Shareholders Agreement to be dated
July 14, 2000 among the Company, the Shareholders and the other shareholders
named therein, or at such other address as the Shareholders shall have furnished
to the Company in writing, or (b) if addressed to the Company, to ASAT Holdings
Limited, QPL Industrial Building, 14th Floor, 138 Texaco Road, Tsuen Wan, New
Territories, Hong Kong, Attention: Terence Scandrett, Facsimile: (852) 2407-
1868, or at such other address, or to the attention of such other officer, as
the Company shall have furnished to each Shareholder in writing.

               8. This Agreement shall be construed and enforced in accordance
with, and the rights and obligations of the parties shall be governed by, the
laws of the State of New York.

               9. The parties of this Agreement irrevocably agree that the
courts of Hong Kong are to have exclusive jurisdiction to settle any disputes
which may arise out of or in connection with this Agreement and each party
submits to the jurisdiction of the Hong Kong courts. Any proceeding, suit or
action arising out of or in connection with this Agreement ("Proceedings") shall
be brought in the Hong Kong courts. Each of the parties to this Agreement
irrevocably

                                       5
<PAGE>

waives (and irrevocably agrees not to raise) any objection which it may have now
or hereafter to the laying of the venue of any Proceedings in the Hong Kong
courts and any claim that such Proceedings have been brought in any inconvenient
forum.

               10. The Company hereby appoints ASAT Limited, QPL Industrial
Building, 14th Floor, 138 Texaco Road, Tsuen Wan, New Territories, Hong Kong,
Attention: Terence Scandrett, Facsimile: (852) 2407-1868, as its agent to accept
service of process on its behalf in respect of any proceedings in Hong Kong and
agrees that any Proceedings may be commenced by service on such agent. Nothing
contained herein shall affect the right to serve process in any other manner
permitted by law.

               11. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all such counterparts shall
together constitute one and the same agreement and shall become effective only
when one or more of the counterparts shall have been signed by each party and
delivered to the other party, it being understood that all the parties need not
sign the same counterpart.

                                       6
<PAGE>

                  IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their respective officers thereunto duly authorized
as of the date first above written.

                                    ASAT HOLDINGS LIMITED

                                    By: /s/ Terence P. Scandrett
                                            -------------------------
                                        Name: Terence P. Scandrett
                                        Title: Chief Financial Officer

                                    THE INDUSTRIAL INVESTMENT COMPANY LIMITED

                                    By: /s/ Li Tung Lok
                                        -----------------------------
                                        Name: Li Tung Lok
                                        Title: Director

<PAGE>

                          CHASE ASIA INVESTMENT PARTNERS II (Y), LLC

                          By:  Chase Asia Investment Partners, L.P., its member

                          By:  Chase Asia Equity Partners, L.P., its general
                               partner

                          By:  CCP Asia Equity Company, a managing general
                               partner

                          By:   /s/ Maura Wong
                                --------------------------------
                                Name: Maura Wong
                                Title: Managing Director

                          ASIA OPPORTUNITY FUND, L.P.

                          By:  Asia Opportunity Company, its general partner

                          By:   /s/ Maura Wong
                                --------------------------------
                                Name: Maura Wong
                                Title: Managing Director

                          ORCHID HONG KONG INVESTMENT HOLDINGS

                          By:   Orchid Asia II, L.P., its sole member

                          By:   Orchid Asia Holdings, LLC, its general partner

                          By:   /s/ Gabriel Li
                                ----------------------------------
                                Name: Gabriel Li
                                Title: Vice President

                                       8
<PAGE>

                              RESERVOIR-OLYMPUS II, L.P.

                              By:  Olympus Capital Holdings Asia, L.L.C., its
                                   general partner

                              By:  Olympus Capital Holdings Asia, its
                                   managing member

                              By:  /s/ Terrye Dewey
                                   ------------------------------
                                   Name: Terrye Dewey
                                   Title: Chief Financial Officer

                              OLYMPUS CAPITAL ASIA, L.P.

                              By:  Olympus Capital Holdings Asia, L.L.C., its
                                   general partner

                              By:  Olympus Capital Holdings Asia, its managing
                                   member

                              By:  /s/ Terrye Dewey
                                   -------------------------------
                                   Name: Terrye Dewey
                                   Title: Chief Financial Officer

                              OLYMPUS CAPITAL ASIA OFFSHORE, L.P.

                              By:  Olympus Capital Holdings Asia, L.L.C., its
                                   general partner

                              By:  Olympus Capital Holdings Asia, its
                                   managing member

                              By:  /s/ Terrye Dewey
                                   --------------------------------
                                   Name: Terrye Dewey
                                   Title: Chief Financial Officer

                              OLYMPUS HOLDINGS, L.P.

                              By:  Olympus Management GP Corporation, its
                                   general partner

                              By:  /s/ Terrye Dewey
                                   ---------------------------------
                                   Name: Terrye Dewey
                                   Title: Chief Financial Officer

                                       9
<PAGE>

                    OLYMPUS-ASAT I, L.L.C.

                    By: Olympus Capital Holdings Asia, L.L.C., its managing
                        member

                    By: Olympus Capital Holdings Asia, its managing member

                    By: /s/ Terrye Dewey
                        ---------------------------------
                        Name: Terrye Dewey
                        Title: Chief Financial Officer

                    OLYMPUS-ASAT II, L.L.C.

                    By: Olympus Capital Holdings Asia, L.L.C., its managing
                        member

                    By: Olympus Capital Holdings Asia, its managing member

                    By: /s/ Terrye Dewey
                        ---------------------------------
                        Name: Terrye Dewey
                        Title: Chief Financial Officer

                                       10

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