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<TITLE>CHARTERED SEMICONDUCTOR MANUFACTURING LTD.</TITLE>
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
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<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION</B>
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<DIV align="center" style="font-size: 18pt; margin-top: 12pt">
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<DIV align="center" style="font-size: 12pt"><B>WASHINGTON, DC 20549</B>
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<DIV align="center" style="font-size: 18pt; margin-top: 12pt"><B>FORM 20-F</B>
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<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(Mark One)</B>
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    <TD width="88%">&nbsp;</TD>
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<TR valign="top">
    <TD align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>Registration statement pursuant to Section&nbsp;12(b) or 12(g) of the Securities Exchange Act
of 1934.</B></TD>
</TR>
</TABLE>
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<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>OR</B>
</DIV>

<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%" style="font-size: 12pt">
<TR style="font-size: 6pt">
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD align="left"><FONT face="Wingdings">&#254;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>Annual Report pursuant to Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934.</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%" style="font-size: 12pt">
<TR style="font-size: 6pt">
    <TD width="7%">&nbsp;</TD>
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    <TD width="88%">&nbsp;</TD>
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    <TD align="center"><FONT face="Wingdings"></FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>For the fiscal year ended December&nbsp;31, 2005.</B></TD>
</TR>
</TABLE>
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<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>OR</B>
</DIV>

<DIV align="center">
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<TR style="font-size: 6pt">
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>Transition Report pursuant to Section&nbsp;13 or 15(d) of
the Securities Exchange Act of 1934. For the transition period from _____________ to _____________.</B></TD>
</TR>
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>OR</B>
</DIV>

<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%" style="font-size: 12pt">
<TR style="font-size: 6pt">
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
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<TR valign="top">
    <TD align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>Shell Company Report pursuant to Section&nbsp;13 or 15(d)
of the Securities Exchange Act of 1934.</B><BR>Date of event requiring this shell company report .........................</TD>
</TR>
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">Commission File Number 000-27811
</DIV>

<DIV align="center" style="font-size: 24pt; margin-top: 12pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD.</B>
</DIV>

<DIV align="center" style="font-size: 10pt">(Exact name of Registrant as specified in its charter)</DIV>



<DIV align="center" style="font-size: 10pt; margin-top: 18pt">Republic of Singapore<BR>
(Jurisdiction of incorporation or organization)
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">60 Woodlands Industrial Park D<BR>
Street 2, Singapore 738406<BR>
&#043;65-6362 2838<SUP style="font-size: 85%; vertical-align: text-top"> </SUP><BR>
(Address of principal executive offices)
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">Securities registered or to be registered pursuant to Section&nbsp;12(b) of the Act:
</DIV>

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<TR valign="bottom">
    <TD align="center" valign="top">Title of Each Class<BR>
None
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Name of Each Exchange on Which Registered<BR>
Not Applicable</TD>
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<DIV align="center" style="font-size: 10pt; margin-top: 18pt">Securities registered or to be registered pursuant to Section&nbsp;12(g) of the Act:
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">American Depositary Shares,<BR>
each represented by ten Ordinary Shares.<BR>
(Title of class)
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">Securities for which there is a reporting<BR>
obligation pursuant to Section&nbsp;15(d) of the Act:<BR>
Not Applicable
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate the number of outstanding shares of each of the issuer&#146;s classes of capital or common
stock as of the close of the period covered by the annual report. 2,513,383,969 Ordinary Shares
and 30,000 Convertible Redeemable Preference Shares as of December&nbsp;31, 2005.<BR>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule&nbsp;405
of the Securities Act.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Yes <FONT face="Wingdings">&#254;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No <FONT face="Wingdings">&#111;</FONT>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If this report is an annual or transition report, indicate by check mark if the registrant is not
required to file reports pursuant to Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Yes <FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No <FONT face="Wingdings">&#254;</FONT>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by check mark whether the registrant (1)&nbsp;has filed all reports required to be filed by
Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12&nbsp;months (or for
such shorter period that the registrant was required to file such reports), and (2)&nbsp;has been
subject to such filing requirements for the past 90&nbsp;days.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Yes <FONT face="Wingdings">&#254;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No <FONT face="Wingdings">&#111;</FONT>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
or a non-accelerated filer. See definition of &#147;accelerated filer and large accelerated filer&#148; in
Rule&nbsp;12b-2 of the Securities Exchange Act of 1934. (Check one):
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Large accelerated filer <FONT face="Wingdings">&#254;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accelerated filer <FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-accelerated filer <FONT face="Wingdings">&#111;</FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by check mark which financial statement item the registrant has elected to follow.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item&nbsp;17 <FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item&nbsp;18 <FONT face="Wingdings">&#254;</FONT>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If this is an annual report, indicate by check mark whether the registrant is a shell company (as
defined in Rule&nbsp;12b-2 of the Securities Exchange Act of 1934).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Yes <FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No <FONT face="Wingdings">&#254;</FONT>
</DIV>

<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>










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<DIV align="left">
<A name="tocpage"></A>
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<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>TABLE OF CONTENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Certain Definitions and Conventions<BR>
Presentation of Certain Financial Information
</DIV>
<DIV align="center">
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    <TD colspan="7" align="left"><A href="#101"><B>PART I</B></A></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#102"><B>ITEM 1.</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#102"><B>IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS</B></A></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#103"><B>ITEM 2.</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#103"><B>OFFER STATISTICS AND EXPECTED TIMETABLE</B></A></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#104"><B>ITEM 3.</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#104"><B>KEY INFORMATION</B></A></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#105"><B>ITEM 4.</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#105"><B>INFORMATION ON OUR COMPANY</B></A></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">21</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#106"><B>ITEM 5.</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#106"><B>OPERATING AND FINANCIAL REVIEW AND PROSPECTS</B></A></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">38</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#107"><B>ITEM 6.</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#107"><B>DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES</B></A></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">63</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#108"><B>ITEM 7.</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#108"><B>MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS</B></A></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">76</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#129"><B>ITEM 8.</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#129"><B>FINANCIAL INFORMATION</B></A></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">78</TD>
    <TD valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#109"><B>ITEM 9.</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#109"><B>THE OFFER AND LISTING</B></A></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">79</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#110"><B>ITEM 10.</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#110"><B>ADDITIONAL INFORMATION</B></A></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">80</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#111"><B>ITEM 11.</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#111"><B>QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</B></A></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">96</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#112"><B>ITEM 12.</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#112"><B>DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES</B></A></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">98</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="7" align="left"><A href="#113"><B>PART II</B></A></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#114"><B>ITEM 13.</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#114"><B>DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES</B></A></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">98</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#115"><B>ITEM 14.</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#115"><B>MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS</B></A></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">98</TD>
    <TD valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#116"><B>ITEM 15.</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#116"><B>CONTROLS AND PROCEDURES</B></A></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">98</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#117"><B>ITEM 16.</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center"><DIV style="margin-left:15px; text-indent:-15px"><A href="#118"><B>A.</B></A></DIV></TD>
    <TD colspan="2" align="left" valign="top"><A href="#118"><B>AUDIT COMMITTEE FINANCIAL EXPERT</B></A></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">99</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center"><DIV style="margin-left:15px; text-indent:-15px"><A href="#119"><B>B.</B></A></DIV></TD>
    <TD colspan="2" align="left" valign="top"><A href="#119"><B>CODE OF ETHICS</B></A></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">99</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center"><DIV style="margin-left:15px; text-indent:-15px"><A href="#120"><B>C.</B></A></DIV></TD>

    <TD colspan="2" align="left" valign="top"><A href="#120"><B>PRINCIPAL ACCOUNTANT FEES AND SERVICES</B></A></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">99</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center"><DIV style="margin-left:15px; text-indent:-15px"><A href="#121"><B>D.</B></A></DIV></TD>

    <TD colspan="2" align="left" valign="top"><A href="#121"><B>EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES</B></A></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center"><DIV style="margin-left:15px; text-indent:-15px"><A href="#122"><B>E.</B></A></DIV></TD>

    <TD colspan="2" align="left" valign="top"><A href="#122"><B>PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS</B></A></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="7" align="left"><A href="#123"><B>PART III</B></A></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#124"><B>ITEM 17.</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#124"><B>FINANCIAL STATEMENTS</B></A></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#125"><B>ITEM 18.</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#125"><B>FINANCIAL STATEMENTS</B></A></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#126"><B>ITEM 19.</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#126"><B>EXHIBITS</B></A></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">102</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="7" align="left"><A href="#127"><B>SIGNATURES</B></A></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" align="left"><A href="#128">Index to Financial Statements</A></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92684exv2w2.txt">EX-2.2 Specimen certificate for convertible redeemable preference shares.</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92684exv4w10w3.txt">EX-4.10.3 Deed of Accession and Ratification dated January 26, 2006 relating to the Restated Joint Venture Agreement dated October 23, 2001 and as further amended by an amendment (No. 1).</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92684exv4w19w1.txt">EX-4.19.1 Agreement for Sub-License and Sub-Lease (Private Lot A12787(k)) dated July 8, 2005 by and between Singapore Technologies Pte Ltd and the company.</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92684exv4w19w2.txt">EX-4.19.2 Novation Agreement dated July 8, 2005 by and among Singapore Technologies Pte Ltd, Terra Investments Pte. Ltd. and the company dated July 8, 2005.</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92684exv12w1.txt">EX-12.1 Certification of the President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92684exv12w2.txt">EX-12.2 Certification of the Senior Vice President and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92684exv13w1.txt">EX-13.1 Certification of the President and Chief Executive Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92684exv13w2.txt">EX-13.2 Certification of the Senior Vice President and Chief Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92684exv15w1.txt">EX-15.1 Consent of KPMG addressed to the Board of Directors and Shareholders of the company.</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92684exv15w2.txt">EX-15.2 Consent of KPMG addressed to the Board of Directors and Shareholders of Silicon Manufacturing Partners Pte Ltd.</A></FONT></TD></TR>
</TABLE>
</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>


<P align="center" style="font-size: 10pt">1
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Certain Definitions and Conventions</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In this document, unless otherwise indicated, all references to &#147;Chartered,&#148; &#147;our company,&#148;
&#147;we,&#148; &#147;our&#148; and &#147;us&#148; refer to Chartered Semiconductor Manufacturing Ltd., a limited liability
company formed in the Republic of Singapore, and its subsidiaries. When we refer to &#147;Singapore
dollars&#148; and &#147;S$&#148; in this document, we are referring to Singapore dollars, the legal currency of
Singapore. When we refer to &#147;U.S. dollars,&#148; &#147;dollars,&#148; &#147;$&#148; and &#147;US$&#148; in this document, we are
referring to United States dollars, the legal currency of the United States, and when we refer to
&#147;<FONT face="'Times New Roman',times,serif">&#128;</FONT>,&#148; we are referring to Euros.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;When we refer to the &#147;noon buying rate,&#148; we are referring to the noon buying rate in New York
for cable transfers in Singapore dollars as certified for customs purposes by the Federal Reserve
Bank of New York. The noon buying rate on January&nbsp;31, 2006 was S$1.6219 = $1.00.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Presentation of Certain Financial Information</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our financial statements are reported in U.S. dollars and presented in accordance with U.S.
generally accepted accounting principles, or U.S. GAAP. This document includes the financial
statements of our equity-method joint venture company, Silicon Manufacturing Partners Pte Ltd, or
SMP, which are reported in U.S. dollars and presented in accordance with U.S. GAAP. Up to the year
ended December&nbsp;31, 2004, the financial statements of SMP were reported in U.S. dollars and were
prepared in accordance with Singapore Financial Reporting Standards, which vary in certain
significant respects from U.S. GAAP. In 2005, SMP changed its fiscal year end to September&nbsp;30.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The share and per share data and American Depositary Share, or ADS, and per ADS data in this
document for the year 2002 and prior periods reflect a retroactive adjustment to give effect to our
eight-for-ten rights offering which we completed in October&nbsp;2002, or the October&nbsp;2002 Rights
Offering. The share price information contained in this document was derived from Bloomberg L.P.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain reclassifications have been made in prior years&#146; financial information to conform to
classifications used in the current year.
</DIV>


<P align="center" style="font-size: 10pt">2
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="left">
<A name="101"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PART I</B>
</DIV>

<DIV align="left">
<A name="102"></A>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>ITEM 1.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Not applicable.
</DIV>

<DIV align="left">
<A name="103"></A>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>ITEM 2.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>OFFER STATISTICS AND EXPECTED TIMETABLE</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Not applicable.
</DIV>

<DIV align="left">
<A name="104"></A>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>ITEM 3.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>KEY INFORMATION</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>A.</B></TD>
    <TD width="5%">&nbsp;</TD>
    <TD><B>SELECTED FINANCIAL DATA</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You should read the following selected financial data in conjunction with our consolidated
financial statements and related notes and &#147;Item&nbsp;5. Operating and Financial Review and Prospects&#148;
included in this document. The selected consolidated balance sheet data as of December&nbsp;31, 2001,
2002 and 2003 and the selected consolidated statements of operations data for the years ended
December&nbsp;31, 2001 and 2002 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 balance sheet data as of December&nbsp;31, 2004 and 2005 and the
selected consolidated statements of operations data for each of the years in the three year period
ended December&nbsp;31, 2005 are derived from our audited consolidated financial statements included
elsewhere in this document which have been audited by KPMG, independent registered public
accounting firm. Our consolidated financial statements are prepared in accordance with U.S. GAAP.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18" style="border-bottom: 1px solid #000000"><B>Year Ended December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2001</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2002</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18"><B>(in thousands, except share and per share data and ratios)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Consolidated Statements
of Operations Data:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">462,656</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">449,241</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">551,911</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">932,131</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,032,734</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">665,261</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">628,726</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">648,330</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">769,318</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">917,048</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(202,605</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(179,485</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(96,419</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">162,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115,686</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Research and
Development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">82,897</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">95,285</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">124,057</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">118,281</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">122,073</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Fab start-up costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,329</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,338</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,219</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,199</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,697</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Sales and marketing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,659</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,182</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,748</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,751</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,181</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">General and
administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,671</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,762</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,850</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,756</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other operating
expenses (income),
net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">10,025</TD>
    <TD nowrap><SUP>(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,001</TD>
    <TD nowrap>)<SUP>(2)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,994</TD>
    <TD nowrap>)<SUP>(3)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">3,938</TD>
    <TD nowrap><SUP>(5)</SUP></TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">177,556</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">197,933</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">201,785</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">214,087</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">229,645</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating income
(loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(380,161</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(377,418</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(298,204</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(51,274</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(113,959</TD>
    <TD nowrap>)</TD>
<TR valign="bottom">
    <TD>&nbsp;</TD>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income (expense):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Equity in income
(loss)&nbsp;of SMP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(92,683</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(84,846</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,194</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,563</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,486</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other income, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,718</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,632</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,186</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">52,299</TD>
    <TD nowrap><SUP>(4)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">2,442</TD>
    <TD nowrap><SUP>(6)</SUP></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,225</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,637</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,168</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,530</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,625</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest expense and
amortization of debt
discount</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(39,652</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(41,661</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(42,222</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(30,093</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(69,839</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Foreign exchange gain
(loss), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,216</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,966</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(733</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,320</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(356</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">3
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18" style="border-bottom: 1px solid #000000"><B>Year Ended December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2001</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2002</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18"><B>(in thousands, except share and per share data and ratios)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;before
income taxes and
minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(442,337</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(465,622</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(282,611</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,345</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(146,601</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense<SUP style="font-size: 85%; vertical-align: text-top">(7)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(14,244</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,029</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,671</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,774</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12,997</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;before
minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(456,581</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(472,651</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(294,282</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,571</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(159,598</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interest in
loss of CSP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">72,629</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55,563</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,491</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)&nbsp;prior
to cumulative effect
adjustment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(383,952</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(417,088</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(284,791</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,571</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(159,598</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cumulative effect
adjustment for change
in accounting
principle<SUP style="font-size: 85%; vertical-align: text-top">(8)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,421</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(383,952</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(417,088</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(291,212</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,571</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(159,598</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Less: Accretion to redemption value
of convertible redeemable
preference shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,196</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net Income (loss)&nbsp;available to
common shareholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(383,952</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(417,088</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(291,212</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,571</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(162,794</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic and diluted net
earnings (loss)&nbsp;per common
share<SUP style="font-size: 85%; vertical-align: text-top">(9)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.24</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.23</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.12</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.06</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Number of shares used in
computing net earnings
(loss)&nbsp;per common share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,588,969</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,799,106</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,502,294</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,508,376</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,511,428</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,588,969</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,799,106</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,502,294</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,516,942</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,512,577</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic and diluted net earnings
(loss)&nbsp;per ADS<SUP style="font-size: 85%; vertical-align: text-top">(9)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2.42</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2.32</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1.16</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.65</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Number of ADSs used in
computing net earnings
(loss)&nbsp;per ADS:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">158,897</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">179,911</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">250,229</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">250,838</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">251,143</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">158,897</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">179,911</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">250,229</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">251,694</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">251,258</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Other
Data</B> (unaudited)<SUP style="font-size: 85%; vertical-align: text-top"><B>(10)</B></SUP><B>:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ratio of earnings to combined fixed
charges
and preferred dividends</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deficiency of earnings
available to cover combined fixed
charges and preferred dividends</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">354,919</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">381,225</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">301,421</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">19,268</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">132,793</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">4
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18" style="border-bottom: 1px solid #000000"><B>As of December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2001</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2002</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18"><B>(in thousands)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Consolidated Balance
Sheet Data:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash
equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,041,616</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,210,925</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">905,472</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">539,399</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">819,856</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Working capital<SUP style="font-size: 85%; vertical-align: text-top">(11)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">642,487</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">942,059</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">682,322</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">162,746</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">550,323</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,144,342</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,333,463</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,021,027</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,090,012</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,517,294</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">980,368</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,154,815</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,049,837</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">960,660</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,187,004</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Convertible redeemable
preference shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">250,663</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term obligations and
convertible redeemable
preference shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">980,368</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,154,815</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,049,837</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">960,660</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,437,667</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Share capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">280,480</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">443,713</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">444,953</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">445,531</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">446,181</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total shareholders&#146;
equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,582,632</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,785,459</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,494,555</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,505,631</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,346,374</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><B>Notes:</B></TD>
    <TD>&nbsp;</TD>
    <TD></TD>
</TR>

</TABLE>



<DIV style="margin-top: 0pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Included in 2002 other operating expenses (income), net line was a charge of $10.0
million associated with a restructuring charge on workforce re-sizing and a fixed asset
impairment charge.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Included in 2003 other operating expenses (income), net line were:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A gain of $27.5&nbsp;million associated with the cancellation of our employee bonus
award plan;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A gain of $4.9&nbsp;million resulting from equipment disposition;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>An impairment charge of $9.0&nbsp;million on certain machinery and equipment, as part
of our fab capacity rationalization; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A restructuring charge of $12.4&nbsp;million relating to the phase out of Fab 1.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Included in 2004 other operating expenses (income), net line were:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A gain of $10.4&nbsp;million resulting from an equipment disposition with CSMC
Technologies Corporation, or CSMC;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A gain of $4.9&nbsp;million associated with the resolution of a goods and services
tax matter;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A restructuring charge of $4.6&nbsp;million relating to the closing of Fab 1; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>An impairment charge of $1.7&nbsp;million resulting from the migration to an
enhanced manufacturing system.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Included in 2004 other income, net line was a gain of $14.3&nbsp;million from the sale of
technology to CSMC and a grant income of $29.5&nbsp;million.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(5)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Other operating expenses (income), net in 2005 relate to a fixed asset impairment
charge on assets held for sale.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(6)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Included in 2005 other income, net line was an expense of $7.0&nbsp;million related to the
termination of
hedging transactions and other costs as a result of the cash tender offer, or Tender Offer,
for and repurchase of any and all of our $575.0&nbsp;million original principal amount of 2.5%
senior convertible notes due 2006, or Convertible Notes. A more detailed discussion of the
Tender Offer can be found under &#147;Item&nbsp;5. Operating and Financial Review and Prospects &#151;
Liquidity and Capital Resources.&#148;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(7)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The pioneer tax status of our fabs had the effect of increasing basic and diluted net
earnings per common share or decreasing basic and diluted net loss per common share by
$(0.05), $(0.04), $(0.02), $0.00 and $(0.01) and increasing basic and diluted net earnings
per ADS or by decreasing basic and diluted net loss per ADS by $(0.48), $(0.36), $(0.15),
$0.02 and $(0.11) for the years ended December&nbsp;31, 2001, 2002, 2003, 2004 and 2005,
respectively.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">5
</DIV>

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<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(8)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Effective January&nbsp;1, 2003, we adopted the provisions of Statement of Financial
Accounting Standards, or SFAS, No.&nbsp;143, &#147;Accounting for Asset Retirement Obligations,&#148;
which addresses financial accounting and reporting for obligations associated with the
retirement of long-lived assets and associated asset retirement costs. This resulted in a
cumulative effect loss of $6.4&nbsp;million, after a reduction in minority interest of $0.5
million, for 2003. The cumulative effect loss represents the depreciation and accretion
expense that would have been recorded previously if SFAS No.&nbsp;143 had been in effect in
prior years.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(9)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For 2003, basic and diluted net loss per common share prior to cumulative effect
adjustment was $(0.11) and basic and diluted net loss per ADS prior to cumulative effect
adjustment was $(1.14).</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(10)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For purposes of calculating the ratio of earnings to combined fixed charges and
preferred dividends and the deficiency of earnings available to cover combined fixed
charges and preferred dividends, if any, earnings consists of income (loss)&nbsp;before income
taxes and minority interest, adjusted to remove equity in income (loss)&nbsp;of equity
affiliates and to add fixed charges, amortization of capitalized interest and distributed
income of equity affiliates, less interest capitalized. Fixed charges consist of interest
expensed, interest capitalized, amortization of capitalized expenses related to
indebtedness, plus an estimated interest portion of rental expenses on operating leases.
Preferred dividend consists of accretion charges relating to our convertible redeemable
preference shares.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(11)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Working capital is calculated as the excess of current assets over current liabilities.</TD>
</TR>

</TABLE>
</DIV>



<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left"><B>B.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>CAPITALIZATION AND INDEBTEDNESS</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Not applicable.
</DIV>


<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left"><B>C.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>REASONS FOR THE OFFER AND USE OF PROCEEDS</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Not applicable.
</DIV>


<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left"><B>D.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>RISK FACTORS</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We wish to caution readers that the following important factors, and those important factors
described in other reports and documents submitted to, or filed with, the United States Securities
and Exchange Commission, or the SEC, among other factors, could affect our 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 us, or on our behalf.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Risks Related to Our Financial Condition</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We have a history of losses and this may continue.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since our inception in 1987, we have incurred significant net losses. This was true even in
years in which our revenue increased such as in 2002 to 2005. In 2001, 2002 and 2003, we
incurred net losses of $384.0&nbsp;million, $417.1&nbsp;million and $291.2&nbsp;million, respectively. In
2004, we generated net income of $6.6&nbsp;million. For the year ended December&nbsp;31, 2005, we incurred a
net loss of $159.6&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2005, we had an accumulated deficit of $1,278.3&nbsp;million. We cannot assure
you that net losses will not continue or increase in the future or that we will become profitable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>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.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 such as financial, shareholding and other
restrictive covenants which are customary to loan documents could have important consequences to
our company. For example, they could:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>increase our vulnerability to general adverse economic and industry conditions;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>limit our ability to pursue our growth plan and technology upgrades or migrations;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>require us to seek the lender&#146;s consent prior to paying dividends on our ordinary shares;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">6
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>and other general corporate purposes. The term &#147;capital expenditures&#148; means
the amount we paid during a particular period for property, plant and equipment;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>limit our flexibility in planning for, or reacting to, changes in our business and the
semiconductor industry; and</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>limit our ability to incur additional borrowings or raise additional financing through
equity or debt instruments.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 ASPs, or demand for our
semiconductor wafers are lower than expected.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We expect to incur substantial capital expenditures, research and development costs and fab
start-up costs in connection with our growth plans and may require additional financing that may
not be available.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 and migrations. For
example, during the cyclical downturn in the semiconductor industry and the subsequent period of
recovery during 2002, 2003, 2004 and 2005, we made substantial capital expenditures of $419.5
million, $220.8&nbsp;million, $686.3&nbsp;million and $628.1&nbsp;million, respectively. We expect our aggregate
capital expenditures in 2006 to be approximately $650&nbsp;million, of which approximately $550&nbsp;million
is expected to be used for capital expenditure for the development of capacities of 0.13 micron, or
um, and smaller process geometry technologies for our fabs. The remaining amounts are expected to
be utilized primarily for purchases of information systems and for adding more equipment in our
fabs running more mature technologies to maximize utilization corresponding to the anticipated
product mix. We estimate aggregate capital expenditures for phase 1 of our build-out of production
capacity in Fab 7 to 18,000 300 millimeter, or mm, wafers per month to be $1,700&nbsp;million. The
targeted total capacity for phase 1 of Fab 7 has been increased by 20% from our previous plan of
15,000 300-mm wafers due to our expected improvement in productivity. As of December&nbsp;31, 2005, we
have spent $1,201.9&nbsp;million on the equipping of Fab 7 as part of its phase 1 ramp up, and as of
December&nbsp;31, 2005, Fab 7 had a capacity of approximately 10,000 300-mm wafers per month. At
completion, Fab 7 is expected to have a capacity of 30,000 300-mm wafers per month and our total capital investment in Fab 7 is expected to be approximately
$2,700&nbsp;million to $3,000&nbsp;million. Our fab start-up costs, all related to Fab 7, decreased by 31.6%
from $33.2&nbsp;million in 2004 to $22.7&nbsp;million in 2005. For more details on the costs of equipping Fab
7, see &#147;Item&nbsp;5. Operating and Financial Review and Prospects &#151; Liquidity and Capital Resources.&#148;
We anticipate that from time to time we also may expand and add equipment to increase the capacity
of our existing fabs, and this may require additional financing. We also expect to incur
approximately $150&nbsp;million for research and development in 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our capital and research and development 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 these planned expenditures, as occurred in 2001,
2002, 2003 and 2005. 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may require additional financing to fund our future growth plans and technology upgrades
and migrations, including to fund the capital expenditures to equip Fab 7 to its full planned
capacity of 30,000 300-mm wafers per month, which is expected to take a number of years and will be
paced by customer demand and industry conditions. 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 or
creditors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Failure to maintain high capacity utilization, optimize the technology mix of our semiconductor
wafer production and continuously improve our device yields would seriously harm our prospects and
financial condition.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The key factors that affect our profit margin are our ability to:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>maintain high capacity utilization;</TD>
</TR>


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>optimize the technology mix of our semiconductor wafer production; and</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>continuously improve our device yields.</TD>
</TR>

</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">7
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The term &#147;capacity utilization&#148; means the actual number of semiconductor wafers we have
processed at a fabrication facility 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 SMP. Our capacity utilization affects our
operating results because a large percentage of our operating costs are fixed. For example, in
2001, 2002 and the first half of 2003, weak market demand and a worldwide overcapacity of
semiconductor wafer supply resulted in low utilization rates at our fabs. In 2004, our average
capacity utilization improved to 80% from 58% in 2003. This was primarily driven by the sequential
growth in shipments during the first two quarters of the year. However, we experienced market
weakness from the second half of 2004 due to excess inventories in the semiconductor companies and
the softening in certain end markets. Our average capacity utilization in 2005 declined to 70% as
we continued to experience market weakness in the first half of 2005 as the industry continued to
work through the excess inventories. The weakness of the first half of 2005 was partially offset in
the second half of 2005 primarily as a result of shipments of our 90 nanometer, or nm, process
geometry technologies and higher demand attributable to improving market conditions. We cannot
assure you that market conditions will continue to improve or that improved market conditions can
be sustained. If market conditions were to deteriorate we may not be able to sustain our capacity
utilization.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. We are unable to control many of the factors which may
affect capacity utilization rates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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
depreciation and other costs associated with an increase in capital expenditures needed to
manufacture such devices.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The term &#147;device yields&#148; 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 prices of our products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we are unable to maintain high capacity utilization, optimize the technology mix of our
wafer production or maintain and improve our device yields, we may not be able to achieve our
targeted profit margin, in which case our financial condition could be seriously harmed and the
market price of our securities could fall.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Risks Related to Our Operations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>The cyclical nature of the semiconductor industry and the periodic overcapacity that results from
this, as well as any rapid change in the end markets we serve, may seriously harm our company.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The semiconductor industry has historically been highly cyclical and, at various times, has
experienced significant economic downturns characterized by production overcapacity, reduced
product demand and rapid erosion of ASPs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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
overcapacity 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. For example, after experiencing average utilization rates around 100% in 2000, our average
utilization rates in 2002 and 2003 fell to 37% and 58%, respectively. In 2004, our average
utilization rate improved to 80%, driven primarily by the sequential growth in shipments during the
first two quarters of the year. However, we experienced market weakness from the second half of
June&nbsp;2004 due to excess inventories in the semiconductor companies and the softening in certain end
markets. This weakness continued into the first half of 2005 as the industry continued to work
through the excess inventories. Although we experienced subsequent sequential quarterly increases
in our utilization rates from the second quarter of 2005, our average utilization rate in 2005
declined to 70% from 80% in 2004. While market conditions started to improve in the third quarter
of 2005, we cannot assure you that market conditions will continue to improve or that the improved
market conditions will be sustained in
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">2006 and beyond. Future downturns in the semiconductor industry may also be severe and could
seriously harm our company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We depend on our technology partners to advance our portfolio of process technologies.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 our
internal research and development efforts and through alliances with leading semiconductor
companies, and we are dependent on these partners for this advancement. Our technology alliance
with International Business Machines, or IBM, began in November&nbsp;2002 with a joint development
agreement to jointly develop and standardize on 90nm, and 65nm bulk complementary metal oxide
semiconductor, or CMOS, processes for foundry chip production on 300-mm silicon wafers. We extended
our IBM joint development agreement to include Infineon Technologies AG, or Infineon, in August
2003 and Samsung Electronics Co., Ltd, or Samsung, in March&nbsp;2004 in the joint development of a
common advanced foundry manufacturing bulk CMOS process technology at 65nm, as well as variants of
that process modified for high performance and low power products. In December&nbsp;2004, we expanded
our joint development efforts with IBM to include 45nm bulk CMOS process technology. For more
information on the joint development agreements with IBM, Infineon and Samsung, please see &#147;Item&nbsp;4.
Information on Our Company &#151; B. Business Overview &#151; Research and Development.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We depend on our joint development agreement with IBM for faster introduction of 90nm and 45nm
bulk CMOS process technologies and our March&nbsp;2004 agreement with IBM, Infineon and Samsung for
faster introduction of 65nm bulk CMOS process technology. If we encounter problems in the
successful implementation of our joint development agreements with these partners, our strategy of
targeting &#147;first-source&#148; business and decreasing the time it takes us to bring the newest
technologies to market would be adversely effected. &#147;First source&#148; business refers to being
selected as the first manufacturing source for customers&#146; new product innovations. We would also
have to incur additional costs to implement this strategy. If this were to happen, it could
seriously harm our company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our technology alliances have been and may from time to time be subject to changes, including
changes in the technology partner&#146;s business strategy (as was the case with Agere Systems Inc.&#146;s
&#147;fab-lite&#148; strategy and Agilent Technologies, Inc. ceasing technology development for certain
technology nodes). For more information on these changes, please see &#147;Item&nbsp;4. Information on Our
Company &#151; B. Business Overview &#151; Strategic Business and Technology Alliances &#151; Chartered Silicon
Partners.&#148; Although the changes in our technology partnerships we have experienced so far have not
had a significant impact on our company&#146;s performance, there can be no assurance that this will
continue to be the case.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we are unable to continue our technology alliances with our partners on mutually beneficial
economic terms, if we are unable to comply with any restrictions contained in our technology
alliance agreements, or if we are unable to enter into new technology alliances with other leading
semiconductor companies, we may not be able to continue providing our customers with leading- edge
process technologies, which could seriously harm our company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We depend on a small number of customers for a significant portion of our revenue.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have been largely dependent on a small number of customers for a substantial portion of our
business. Our top ten customers accounted for approximately 66% and 72% of our total net revenue in
2004 and 2005, respectively. Our top five customers in 2005, in order of revenue contribution, were
Broadcom, IBM, Agilent Technologies, MStar Semiconductor and MediaTek. Collectively, our top five
customers accounted for approximately 56% of our total net revenue in 2005, compared with
approximately 52% in the previous year. Broadcom and IBM&#146;s contribution to total net revenue each
exceeded 10% in 2005. As the end markets we serve are typically cyclical, our top customer profile
may change from period to period depending on the strength of various market segments. We expect
that we will continue to be dependent for a significant portion of our revenue upon a relatively
limited number of customers, which customers from time to time may be concentrated in particular
end markets, as a result of which we will be exposed to the volatility of those markets. Depending
on a relatively small number of customers can also subject us to concentration problems that can
negatively affect our fab utilization, which can in turn affect our revenue and results of
operations, such as was experienced in the fourth quarter of 2004. See &#147;Item&nbsp;5. Operating and
Financial Review and Prospects.&#148; Customer concentration is acute at our new Fab 7, where we are
ramping up production with a very narrow customer and product base initially, and where any reduction or
cancellation of orders would have a significant impact on the utilization of Fab 7. We cannot
assure you that revenue generated from these customers, individually or in aggregate, will reach or
exceed historical levels in any future period. Loss or cancellation of business from, significant
changes in scheduled deliveries to, quality or
</DIV>

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</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">reliability issues raised by, or decreases in the prices of services sold to, any of these
customers could seriously harm our company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>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.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 to meet market demand or
produce such products at competitive prices. There is a risk that our competitors may adopt new
technology before 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>A decrease in demand and average selling prices for end-use applications of semiconductor products
such as communications equipment, personal computers, computer peripherals and consumer products
may significantly decrease the demand for our services and may result in a decrease in our revenue
and gross profit margin.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A significant percentage of our 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 historical and continuing
trend of declining ASPs in these end markets places downward pressure on the prices of the
components that are used in such equipment. If the ASPs 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Our ability to successfully partner with electronic design automation, intellectual property and
design service providers to meet customers&#146; design needs depends on the availability and quality of
the relevant services, tools and technologies and our ability to meet our customers&#146; schedule and
budget requirements.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have relationships with electronic design automation, or EDA, intellectual property and
design service providers. We work with these service providers to develop a design platform that is
tailored to our customers&#146; design needs. Our ability to successfully meet our customers&#146; 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 and design service providers, are able
to meet customers&#146; schedule and budget requirements. Difficulties or delays in these areas may
adversely affect the success of our partnerships with EDA, intellectual property and design service
providers and consequently, our ability to attract or serve customers, and thereby could seriously
harm our company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Our customers do not place purchase orders far in advance. Therefore, we do not have any
significant backlog.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our customers generally do not place purchase orders far in advance. In addition, due to the
cyclical nature of the semiconductor industry, our customers&#146; 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Our growth, technology capabilities, planned capacity expansion and our competitive position depend
on the success of our more advanced manufacturing facilities.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our more advanced manufacturing facilities, especially our 300-mm wafer fab, is critically
important to the success of our company in a number of ways. As our more advanced manufacturing
facilities will contain our leading-edge manufacturing capacity, any problem in those facilities
may limit our ability to manufacture advanced semiconductor products. The process technologies that
we intend to use in these facilities arise from our joint development agreements with IBM and other
third parties, and any problems
</DIV>

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</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">with implementing those agreements could have a material and adverse effect on our company. We
typically ramp up production at our more advanced manufacturing facilities with a very narrow
customer and product base initially. While we believe that this narrow customer base facilitates
ramping up production more quickly than we otherwise might be able to do, we also are exposed to a
greater risk of customer concentration at those facilities as a result. Any problems that arise
with these customer relationships or orders (or lack of demand for the ultimate end-products in
which the semiconductors we produce at these facilities are used) can be expected to have a
significantly negative impact on the utilization of these facilities, which could have a material
and adverse effect on our company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We depend on our strategic business alliances relating to our fabs. Termination or modification of
these alliances could seriously harm our company.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We currently have two strategic business alliances relating to the operation of Fab 5 and Fab
6. Our equity-method joint venture company, SMP, which owns and operates Fab 5, is a joint venture
with Agere Systems Singapore Pte Ltd (formerly Lucent Technologies Microelectronics Pte. Ltd.), or
Agere Systems Singapore, a subsidiary of Agere Systems Inc. Our subsidiary, Chartered Silicon
Partners Pte Ltd, or CSP, which owns and operates Fab 6, is a joint venture with Avago Technologies
General IP (Singapore) Pte. Ltd., or Avago, (Avago having acquired all of the shares in CSP
previously held by Agilent Technologies Europe B.V. in January&nbsp;2006), EDB Investments Pte Ltd, or
EDB Investments, and Singapex Investments Pte Ltd, or Singapex, an indirect wholly-owned subsidiary
of Temasek Holdings (Private) Limited, or Temasek.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our alliances with these companies and their predecessors gave us access to select
leading-edge process technologies and moderated our development costs and capital expenditures in
the initial years in Fab 5 and Fab 6. We believe that our alliances with these companies provide us
with access to business on an ongoing basis. 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 &#147;Item&nbsp;4. Information
on Our Company &#151; B. Business Overview
&#151; Strategic Business and Technology Alliances &#151; Chartered Silicon Partners&#148; and &#147;Item&nbsp;4.
Information on Our Company &#151; B. Business Overview &#151; Strategic and Technology Alliances &#151; Silicon
Manufacturing Partners&#148; for a more detailed description of these alliances.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We may not be able to compete successfully in our industry.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The worldwide semiconductor foundry industry is highly competitive. We compete with dedicated
foundry service providers such as Taiwan Semiconductor Manufacturing Corporation, or TSMC, United
Microelectronics Corporation, or UMC, and Semiconductor Manufacturing International Corporation, or
SMIC, 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, new entrants to the semiconductor foundry industry in
China, Malaysia and Korea 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A number of semiconductor manufacturers, including our primary competitors, have announced
plans to increase their manufacturing capacity. As a result, we expect that there will be a
significant increase in worldwide semiconductor capacity over the next few 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 products and
services. Any significant increase in competition may erode our profit margin and weaken our
earnings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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, EDA and tool support. We
cannot assure you that we will be able to compete successfully in the future, including our ability
to obtain &#147;first source&#148; business, which could seriously harm our company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Our operating results fluctuate from quarter to quarter, which makes it difficult to predict our
future performance.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our revenue, 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
</DIV>

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</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">control. These factors include, among others:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the cyclical nature of both the semiconductor industry and the markets served by our customers;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in the economic conditions of geographical regions where our customers and their
markets are located;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>shifts by IDMs between internal and outsourced production;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in demand for products that incorporate semiconductors we produce;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>inventory and supply chain management of our customers;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the loss of a key customer or the postponement or reduction of an order from a key
customer or the failure of a key customer to pay accounts receivables in a timely manner;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the occurrence of losses from a customer&#146;s inability to pay our accounts receivables from them;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the rescheduling or cancellation of large orders;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the rescheduling or cancellation of planned capital expenditures;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our inability to qualify new processes or customer products in a timely manner;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the return of wafers due to quality or reliability issues;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>malfunction of our wafer production equipment;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>unforeseen delays or interruptions in our plans for new fabrication facilities;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the timing and volume of orders relative to our available production capacity;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to obtain raw materials and equipment on a timely and cost effective basis;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>environmental events or industrial accidents such as fires or explosions;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our susceptibility to intellectual property rights disputes;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to continue with existing, and to enter into new partnerships, technology
and supply alliances on mutually beneficial terms;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>actual capital expenditures exceeding planned capital expenditures;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>currency and interest rate fluctuations that may not be adequately hedged; and</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>technological changes.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 comparable securities, or fall.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Our business depends in part on our ability to obtain and preserve intellectual property rights.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our ability to compete successfully and achieve future growth will depend, in part, on our
ability to protect our proprietary technology and our intellectual property, as well as the
intellectual property of our customers. We seek to protect proprietary information and know-how
through the use of confidentiality and non-disclosure agreements and limited access to and
distribution of proprietary information. As of December&nbsp;31, 2005, we had filed an aggregate of
2,146 patent applications worldwide, (1,002 of which had been filed in the U.S.) and held an
aggregate of 1,338 issued patents worldwide (743 of which were 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 will protect our intellectual property rights to the same extent as
the U.S. Additionally, we cannot assure you that our competitors will not develop, patent or gain
access to similar know-how and technology, or reverse engineer our processes, or that our
confidentiality and non-disclosure agreements upon which we rely to protect our trade secrets and
other proprietary information will be effective. The occurrence of any such events could seriously
harm our company. Please see &#147;Item&nbsp;4. Information on Our Company &#151; B. Business &#151; Intellectual
Property&#148; for a more detailed description of our proprietary technology.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We may be subject to intellectual property rights disputes.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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
</DIV>

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</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>discontinue using certain process technologies which could cause us to stop
manufacturing certain semiconductor products;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>pay substantial monetary damages;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>seek to develop non-infringing technologies, which may not be feasible; or</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>seek to acquire licenses to the infringed technology which may not be available on
commercially reasonable terms, if at all.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 in order 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We may experience difficulty in obtaining insurance coverage without incurring increased costs.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;While we have been able to obtain adequate insurance coverage in the past and while we did not
experience any significant increase in premium rates of insurance coverage for 2005, we cannot
assure you that we will continue to be able to do so in the future. For example, following the
terrorists attacks on September&nbsp;11, 2001 in the U.S., the premiums we paid for the renewal of our
insurance coverage commencing from January&nbsp;2002 were 2.2 times more than the premiums we paid for
such coverage for the previous year. 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 insured.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Risks Related to Manufacturing</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We may experience difficulty in achieving acceptable device yields, product performance and product
delivery times as a result of manufacturing problems.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The process technology for the manufacture of semiconductor wafers is highly complex, requires
advanced and costly equipment and is continuously being modified 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. Because certain of our manufacturing process technologies are concentrated in specific manufacturing facilities, any problem in one of these facilities may limit our ability to manufacture products using those process technologies. We may
also experience difficulty achieving acceptable device yields, product performance and product
delivery times in the future as a result of manufacturing problems, especially in our more advanced
manufacturing facilities. We may encounter problems in our manufacturing facilities, as a result
of, 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, which could seriously
harm our company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We depend on our vendors of raw materials, supplies and equipment and do not typically have
long-term supply contracts with them.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
Some of these raw materials and supplies are available from a limited number of vendors in limited
quantity and their procurement may require a long lead time. We purchase most of our key materials
and supplies on a blanket purchase order basis. We typically do not have long-term contracts with
our vendors. 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 in obtaining quantities of raw materials that we need on a timely basis.
Further, where we only have one 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.
</DIV>

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</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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, which may in turn adversely
affect our revenue. 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 and complete qualification of some of this equipment could be as long as 15
months, or even longer. Any delay in the delivery or increase in the cost of this equipment could
seriously harm our company. Further, the long lead time reduces our flexibility in responding to
changing market conditions. Please see &#147;Item&nbsp;4. Information on Our Company &#151; B. Business &#151;
Equipment and Materials&#148; for additional information regarding our relationships with our suppliers
of materials and equipment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We depend on assembly and test subcontractors for our semiconductor assembly and testing
requirements.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Semiconductor assembly and test operations are an integral part of the semiconductor
manufacturing process, and involve specialized equipment and technology. If our customers require
products which have been assembled and/or tested, we will need to depend on assembly and test
subcontractors to provide us with the assembly, test and wafer bumping services as we do not have
such in-house assembly and test capabilities and facilities. Wafer bumping is an advanced packaging
technique where &#147;bumps&#148; made of solder are formed on the wafers before being diced into individual
chips. We currently subcontract to STATS ChipPAC Ltd. (formerly ST Assembly Test Services Ltd), or
STATS ChipPAC, as well as to United Test and Assembly Center Limited, or UTAC, ASE Singapore Pte.
Ltd., ASE Test Limited and Advanced Semiconductor Engineering, Inc., or collectively ASE, a
significant amount of orders for assembly and testing services. STATS ChipPAC, UTAC and ASE may,
from time to time, experience production interruption due to, among other things, technical
problems occurring during the assembly and testing processes. Because STATS ChipPAC, UTAC and ASE
are our major providers of these services, any prolonged interruption in their operations could
seriously harm our company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>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.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As our company migrates to more advanced technologies and devices that require very high pin
counts (or number of connections to the printed circuit board), the need for advanced packaging and
wafer bumping services may increase. The advanced packaging technology is new and there may be
initial problems resulting from this. Although we work with our vendors to qualify them on wafer
bumping in printing and plating technology, we cannot assure you that qualifications would be
successful or without delays or that we would have ready access to
limited capacity. There are
currently no appropriate 200-mm and 300-mm wafer bumping capabilities
in Singapore. Although one of our vendors, Amkor Technology, Inc., has
recently announced that its Singapore bump facility is expected to
commence operations in the second half of 2006 and will provide,
amongst others, wafer bump and wafer probe services to support
emerging applications on 300-mm wafers at the 90nm and 65nm
technology process nodes, we cannot assure you that such capabilities
will be available by the second half of 2006. 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 could seriously harm our
company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We are subject to the risk of loss due to fire because the materials we use in our manufacturing
processes are highly flammable.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 fire. 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 could
seriously harm our company.
</DIV>

<P align="center" style="font-size: 10pt">14
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Our failure to comply with certain environmental regulations could seriously harm our company.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 modify our
manufacturing operations at significant costs to us. 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 found to be
responsible for the contamination. We maintain insurance policies to guard against certain types of
legal liability resulting from sudden, unintended and unexpected pollution causing damage to third
parties. Our insurance policies do not cover losses incurred in relation to the cleanup of our
properties if they are found to be contaminated 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Risks Related to Our Infrastructure</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We face several risks in constructing and equipping new fabrication plants.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a major design and/or construction change caused by changes to the initial building
space utilization plan or equipment layout;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>technological, capacity and other changes to our plans for new fabrication plants
necessitated by changes in market conditions;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>shortages and late delivery of building materials and facility equipment;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>delays in the installation, commissioning and qualification of our facility equipment;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a long and intensive wet season that limits construction;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a shortage of foreign construction workers or a change in immigration laws preventing
such workers from entering Singapore;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>strikes and labor disputes;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>on-site construction problems such as industrial accidents, fires and structural collapse;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>delays in securing the necessary governmental approvals and land lease;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>delays arising from modifications in capacity expansion plans as a result of uncertainty
in economic conditions; and</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>delays arising from demand exceeding supply and long lead times for delivery of
equipment during periods of growth in the industry.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We depend on key personnel and due to the shortage of skilled labor in Singapore, we may have
difficulty attracting and retaining sufficient numbers of skilled employees.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 growth plans, we are likely to need a greater number
of experienced engineers and other employees in the future. 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&nbsp;31, 2005, 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We use share options and employee share purchase plans as compensation tools to attract and
retain our personnel. Recent changes to the accounting standards applicable to our company require
us to record share-based compensation charges as a result of those plans. If we were to terminate
these plans, or were to modify such plans with decreased benefits to employees or were to reduce
the share grants made under these plans to avoid or minimize an adverse impact on our financial
results, we may become uncompetitive from an employee compensation perspective and may not be able
to continue to attract and/or retain required personnel, which could seriously harm our company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we were to lose the services of any of our existing key personnel without adequate
replacements, or
</DIV>

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</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">were unable to attract and retain 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 insurance to protect us against the loss of any
of our key personnel.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Risks Related to Covenants in Our Agreements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Many of our loans contain financial and other covenants which may restrict our operational and
financing activities in ways that restrict our growth or are otherwise not in the best interests of
our company or holders of our securities.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Many of our loans, including loans incurred by our subsidiary, CSP, contain various financial
and other restrictive covenants. Among other things, these covenants require the maintenance of
certain financial ratios (including total debt to net worth) and that Temasek owns, directly or
indirectly, at least a certain percentage of our outstanding shares or is our single largest
shareholder. The loans also require that we own, directly or indirectly, at least a certain
percentage of CSP&#146;s outstanding shares. These covenants may restrict our operational and financing
activities in ways that restrict our growth or are otherwise not in the best interests of our
company or holders of our securities. If we fail to comply with these covenants, we could be in
default under these loans and the lenders would have the right to accelerate our obligation to
repay the outstanding borrowings under these loans. Such default could also cause cross-defaults
under other loans which could seriously harm us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Risks Related to Investments in a Controlled Corporation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Temasek controls our company and its interests may conflict with the interests of our other
shareholders.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2005, Temasek through its subsidiary, Singapore Technologies Semiconductors
Pte Ltd, or ST Semiconductors, beneficially owned approximately 60.09% of our outstanding ordinary
shares. Temasek&#146;s sole shareholder is the Minister for Finance
(Incorporated), a body corporate constituted under the Minister for
Finance (Incorporation) Act, Chapter&nbsp;183 of Singapore. Accordingly,
Temasek is able to exercise control over many matters requiring approval by our shareholders,
including the election of directors and approval of significant corporate transactions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also have contractual and other business relationships with several of Temasek&#146;s affiliates
and may engage in material transactions with them from time to time. Although the Audit Committee
of our Board of Directors will review all material transactions between our company and Temasek and
such affiliates, circumstances may arise in which the interests of Temasek and such affiliates
could conflict with the interests of our other shareholders. Because Temasek, through its
subsidiary, ST Semiconductors, beneficially owns a significant portion of our ordinary shares, it
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 Temasek and/or its affiliates own at least a majority of our ordinary
shares. Please see &#147;Item&nbsp;7. Major Shareholders and Related Party Transactions&#148; for additional
information regarding our relationship with Temasek, Singapore Technologies Pte Ltd, or Singapore
Technologies, and their affiliates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Risks Related to Investment in a Corporation with International Operations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Economic conditions where our customers and their markets are located may have a negative impact on
our revenue.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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, 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
</DIV>

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</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">years. 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.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Terrorist attacks or a war could adversely affect our business, results of operations and financial
condition.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Terrorist attacks, such as the attacks on September&nbsp;11, 2001 in the U.S. and other acts of
violence or war, have the potential to have a direct impact on our customers. To the extent that
such attacks affect or involve the U.S. and any other places in which our customers&#146; markets are
located or affect the countries where our operations are located, our business may be significantly
impacted.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, terrorist attacks or another act of 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 could seriously harm our company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Outbreak of an infectious disease or any other serious public health concerns in Asia (including
Singapore) and elsewhere could adversely impact our business, results of operations and financial
condition.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The outbreak of an infectious disease in Asia (including Singapore) and elsewhere, together
with any resulting restrictions on travel or quarantines imposed, could have a negative impact on
the economies, financial markets and business activities in countries in which our end markets are
located and thereby adversely impact our revenue. Examples are the outbreak in 2003 of Severe Acute
Respiratory Syndrome, or SARS, in East Asia and the outbreaks of Avian Influenza, or Bird Flu, in
2004 and 2005 in Asia and currently around the world. While we took precautionary measures in response
to the outbreak of SARS in 2003, we cannot assure you that any precautionary measures we may take
against SARS or any other infectious diseases in the future would be effective. A future outbreak
of an infectious disease or any other serious public health concern could seriously harm our
company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We operate internationally and are therefore affected by problems in other countries.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>fluctuations in the values of currencies;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in labor conditions;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>longer payment cycles;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>greater difficulty in collecting accounts receivable;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>burdens and costs of compliance with a variety of foreign laws;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>political and economic instability;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>increases in duties and taxation;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>imposition of restrictions on currency conversion or the transfer of funds;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>limitations on imports or exports;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>expropriation of private enterprises; and</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>reversal of the current policies (including favorable tax and lending policies)
encouraging foreign investment or foreign trade by our host countries.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Exchange rate fluctuations may increase our costs and capital expenditures, which could affect our
operating results and financial position.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our 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, Euros and Singapore dollars. Although we hedge a portion of the
resulting net foreign exchange position through the use of forward exchange contracts, we are still
particularly affected by fluctuations in exchange rates between the U.S dollar and the above
mentioned currencies. Any significant fluctuation in exchange rates may lead to an increase in our
costs and capital expenditures, which could
</DIV>

<P align="center" style="font-size: 10pt">17
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">adversely affect our operating results and financial position.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We may be a passive foreign investment company.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on our asset composition and operations, we do not believe that we were a passive
foreign investment company, or PFIC, under U.S. tax laws during 2005. However, there can be no
assurances that we will not be a PFIC in 2006 or in a later year. If the &#147;passive income&#148; earned
by us exceeds 75% or more of our &#147;gross income,&#148; we will be a PFIC under the &#147;income test.&#148; In
addition, we will be a PFIC under the &#147;asset test&#148; 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 risk that we may be a PFIC in 2006 or in a later year. Passive
income for PFIC purposes includes, among other things, interest, dividends, royalties, rents and
annuities. If we were to become a PFIC at any time during a U.S. person&#146;s holding period, such
U.S. person holding ordinary shares or ADS would be required, if the &#147;mark to market&#148; 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 &#147;Item
10. Additional Information &#151; E. Taxation &#151; U.S. Federal Taxation &#151; PFIC rules.&#148; 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Our public shareholders may have more difficulty protecting their interests than they would as
shareholders of a U.S. corporation.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 shareholder 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 &#147;Item&nbsp;7. Major Shareholders and Related
Party Transactions&#148; for a discussion relating to our controlling shareholder, Temasek, and its
affiliates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>It may be difficult for you to enforce any judgment obtained in the U.S. against us or our
affiliates.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 for investors to effect service of process within the U.S. upon us
or any of these persons or to enforce in the U.S. any judgment obtained in the U.S. courts against
us or any of these persons, including judgments based upon the civil liability provisions of the
federal securities laws of the U.S. or any state or territory of the U.S.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Judgments of the U.S. courts based upon the civil liability provisions of the federal
securities laws of the U.S. are not enforceable in Singapore courts, and 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Singapore law contains provisions that could discourage a takeover of our company.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Singapore Code on Take-overs and Mergers contains certain provisions that may delay, deter
or prevent a future take-over 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 may be required to extend a take-over offer for our remaining voting shares in
accordance with the Singapore Code on Take-overs and Mergers. A take-over offer may also be
required to be made if a person holding (either on his own or together with parties acting in
concert with him) between 30% and 50% (both inclusive) of our voting shares acquires more than 1%
of our voting shares in any six-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.
</DIV>


<P align="center" style="font-size: 10pt">18
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Risks Related to Our Securities and Our Trading Market</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>The future sales of securities by our company or existing shareholders may hurt the price of our
securities.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we or our shareholders sell a large number of our securities in the public market 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. 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 our affiliates, including ST
Semiconductors, may only be sold in the U.S. if they are registered or if they qualify for an
exemption from registration, including under Rule&nbsp;144 under the Securities Act of 1933, or the
Securities Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>The market prices of our securities have been and may continue to be highly volatile.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The market prices of our securities have fluctuated widely and may continue to do so. For
example, from our initial public offering in October&nbsp;1999 through December&nbsp;31, 2005, the trading
price of our ADSs, adjusted for the October&nbsp;2002 Rights Offering, has ranged from a high of $95.07
per ADS to a low of $3.48 per ADS. During the same period, the trading price of our ordinary
shares, adjusted for the October&nbsp;2002 Rights Offering, has ranged from a high of S$16.03 per
ordinary share to a low of S$0.63 per ordinary share. Many factors could cause the market prices of
our securities to rise and fall. Some of these factors include:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>actual or anticipated variations in our quarterly operating results;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>announcements of technological innovations;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in estimates of our performance or recommendations by financial analysts;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>market conditions in the semiconductor industry and economy as a whole;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>introduction of new services by us or our competitors;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in market valuations of other foundries and semiconductor companies;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>announcements made by us or our competitors of significant acquisitions, strategic
partnerships or joint ventures;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>problems in our advanced manufacturing facilities;</TD>
</TR>

    <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>announcements made by our customers of their performance or financial results and of
their foundry alliances and relationships;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>market rumors or speculation about our business, operations, capital raising, change in
our controlling shareholder or affairs;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>issue of additional equity or equity linked offerings;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>significant reduction or increase of shareholding by our controlling shareholder;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>additions or departures of key personnel; and</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>other events or factors, many of which are beyond our control.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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&#146;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&#146;s attention and resources.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>The Singapore securities market is relatively small and more volatile than the U.S. markets and may
cause the market price of our securities to fluctuate.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Singapore Exchange Securities Trading Limited, or Singapore Exchange, is relatively small
and more volatile than stock exchanges in the U.S. and certain European countries. As of December
31, 2005, there were 492 companies listed on the Main Board of the Singapore Exchange and the
aggregate market capitalization of listed equity securities of these companies was approximately
S$422.0&nbsp;billion or $254.0&nbsp;billion (based on the noon buying rate as of December&nbsp;30, 2005 of
S$1.6628 to $1.00). For the year ended December&nbsp;31, 2005, the average daily equity trading value on
the Singapore Exchange (including shares traded on the CLOB International trading system) was
approximately S$200.8&nbsp;billion or $121.0&nbsp;billion (based on the noon buying rate as of December&nbsp;30,
2005 of S$1.6628 to $1.00). The relatively small market capitalization of, and trading volume on,
the Main Board of the Singapore Exchange may cause the market
</DIV>

<P align="center" style="font-size: 10pt">19
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">price of securities of listed companies, including our securities, to fluctuate in both the
domestic and the international markets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Your voting rights with respect to the ADSs are limited by the terms of the deposit agreement for
the ADSs.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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&#146; 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&nbsp;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&nbsp;days&#146; 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.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the notice of such meeting;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>voting instruction forms; and</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a statement as to the manner in which instructions may be given by holders.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except as described in this document, holders will not be able to exercise voting rights
attaching to the ADSs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Your ability to participate in any rights offering of our company is limited.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We distributed in October&nbsp;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.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>FORWARD-LOOKING STATEMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This document contains forward-looking statements, as defined in the safe harbor provisions of
the U.S. Private Securities Litigation Reform Act of 1995. Examples of these forward-looking
statements include, without limitation:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>statements relating to our business strategy;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our outlook for 2006;</TD>
</TR>

<TR>
    <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our capacity utilization rate, production capacity and production capacity mix;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our plans to expand our production capacity for 0.13um and smaller process geometry
technologies to meet the anticipated needs of our customers;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our expectation that 0.13 um and smaller process geometry technologies, including 90nm,
will be a large contributor to our revenue in 2006;</TD>
</TR>

<TR>
    <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our 2006 planned capital expenditures, research and development expenditures,
depreciation and
</TD>
</TR>
</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">20
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>amortization and wafer capacity; and</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our sources of liquidity, cash flow, funding needs and financings;</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These forward-looking statements 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:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in the market outlook and trends;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the growth rate of fabless companies and the outsourcing strategy of integrated device
manufacturers;</TD>
</TR>

    <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>demand and supply outlook in the semiconductor market;</TD>
</TR>

    <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>economic conditions in the United States as well as globally;</TD>
</TR>

    <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>customer demands, unforeseen delays or interruptions in our plans for our fabrication facilities;</TD>
</TR>

    <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the performance level of and technology mix in our fabrication facilities;</TD>
</TR>

    <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our progress on leading-edge products;</TD>
</TR>

<TR>
    <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>access to or delays in technological advances or our development of process technologies;</TD>
</TR>

<TR>
    <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the successful implementation of our partnership, technology and supply alliances
(including our joint development agreements with IBM, Infineon and Samsung);</TD>
</TR>

<TR>
    <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in capacity allocation in process technology mix, changes in our capacity plans,
unavailability of materials, equipment, manpower, expertise and timely regulatory
approvals;</TD>
</TR>

<TR>
     <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our expectation that IDMs will utilize foundry capacity more extensively;</TD>
</TR>

<TR>
     <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the availability of financings and the terms thereof; and</TD>
</TR>

<TR>
    <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>terrorist attacks, acts of war, or the possibility of an outbreak of Bird Flu or any other infectious disease in Singapore as well as other parts of the world.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 &#147;Item&nbsp;3. Key Information &#151; D. Risk
Factors&#148; and elsewhere in this document. You are cautioned not to place undue reliance on these
forward-looking statements, which reflect management&#146;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.
</DIV>
<DIV align="left">
<A name="105"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 4. INFORMATION ON OUR COMPANY</B>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="5%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>A.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>HISTORY AND DEVELOPMENT OF OUR COMPANY</B></TD>
</TR>
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Chartered&#146;s full legal name is Chartered Semiconductor Manufacturing Ltd. Chartered is a
limited liability company incorporated in the Republic of Singapore on November&nbsp;16, 1987. Our
principal executive and registered offices are located at 60 Woodlands Industrial Park D, Street 2,
Singapore 738406. Our telephone number is &#043;65-6362-2838. Information pertaining to our company and
our SEC filings are available on our website, www.charteredsemi.com. <B>However, information contained
in our website does not constitute a part of this document.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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
&#043;1-408-941-1100.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 1997, Chartered acquired equity interests in CSP and in SMP. For more information on this,
please refer to &#147;&#151; B. Business Overview &#151; Strategic Business and Technology Alliances.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have a 51% equity interest in our subsidiary, CSP, a Singapore company incorporated in
1997. For information on our other subsidiaries, please see &#147;&#151; B. Business Overview &#151;
Organizational Structure.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our principal capital expenditures for the fiscal years 2003, 2004 and 2005 were comprised
mainly of the purchase of semiconductor equipment for the equipping of our fabs. Our capital
expenditures amounted to $220.8&nbsp;million in 2003, $686.3&nbsp;million in 2004 and $628.1&nbsp;million in 2005.
We expect our aggregate capital expenditures in 2006 to be approximately $650&nbsp;million, of which
approximately $550&nbsp;million is expected to be used for further development of capacities of 0.13um
and smaller process geometry technologies for our fabs. The remaining amounts are expected to be
utilized primarily for purchases of information systems and for adding more equipment in our fabs
running more mature technologies to maximize utilization
</DIV>

<P align="center" style="font-size: 10pt">21
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">corresponding to the anticipated product mix. For more details on the equipping costs of Fab
7, see &#147;Item&nbsp;5. Operating and Financial Review and Prospects &#151; Liquidity and Capital Resources.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the year 2005, our capital expenditures were financed mainly from borrowings under our
credit facilities and cash balances.<SUP style="font-size: 85%; vertical-align: text-top"> </SUP>A more detailed discussion of credit facilities can
be found under &#147;Item&nbsp;5. Operating and Financial Review and Prospects &#151; Liquidity and Capital
Resources.&#148;<SUP style="font-size: 85%; vertical-align: text-top"> </SUP>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="5%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>B.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>BUSINESS OVERVIEW</B></TD>
</TR>
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Overview</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Chartered is one of the world&#146;s leading dedicated semiconductor foundries. We provide
comprehensive wafer fabrication services and technologies to semiconductor suppliers and systems
companies. We focus on providing foundry services to customers that serve high-growth,
technologically advanced applications for the communication, computer and consumer sectors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We currently own, or have an interest in, five fabrication facilities &#151; Fabs 2, 3, 5, 6 and
7, all of which are located in Singapore. Fab 7 is our company&#146;s first 300-mm facility. Fab 7
started commercial shipment in June&nbsp;2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have service operations in nine locations and in eight countries in North America, Europe
and Asia.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Industry Background</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 in relation to these applications has
increased and size and cost have decreased, the use of semiconductors in these applications has
grown significantly.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Historically, the semiconductor industry was composed primarily of companies which designed
and manufactured semiconductors in their own fabrication facilities. These companies are known as
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 more 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 and systems companies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The semiconductor industry generally experiences seasonality which is mainly driven by demand
fluctuations for the electronic products that use semiconductor integrated circuits. The sequential
growth of semiconductor revenue in the first quarter is typically weaker compared to that of other
quarters.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>The Growth of the Semiconductor Foundry Industry</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;According to recent industry research reports and company announcements, the cost of a
state-of-the-art 300-mm fab is approximately $3&nbsp;billion, which is approximately six times higher
than the cost a decade ago. Today, only large and well-capitalized or funded 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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
</DIV>

<P align="center" style="font-size: 10pt">22
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">manufacturing needs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>The Requirements of a Full-Service Foundry</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As demand for foundry services has grown, many semiconductor suppliers are seeking highly
committed foundry partners that meet their manufacturing technology requirements. These partners
must be able to provide the following:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Systems Integration Expertise. </I>Business and consumer demand for convergent solutions that
perform multiple functions that classically were done by different individual devices has increased
dramatically. Fueling this demand has been growth in the merging of data communications,
telecommunications, wireless and consumer markets, which in turn has resulted in greater demand for
faster, more power efficient and denser semiconductors providing solutions for systems totally on a
single die called a system on chip, or SOC, which is more cost effective than producing multiple
devices. In addition, this system level integration requires semiconductor foundries to offer
processes that will easily integrate logic (processes data), memory (stores data) and analog mixed
signal (translates data and provides interface outside the system). The semiconductor foundries
must also provide and support access to third party intellectual property and design solutions to
aid customers, who have increasingly focused on system level expertise, in the design of, and time
to market for SOC solutions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Leading-Edge
Process Technologies.</I> In order to provide their customers with
total systems solutions, semiconductor foundries must provide a full
range of semiconductor process technologies. A semiconductor foundry
will struggle economically if relying solely on mature technologies
and must also be capable of driving the implementation of reduced
geometries which are required for a continuing market convergence as
computer, communications and consumer functions morph onto a single
SOC. These advanced technologies require significant innovation in
material sciences in order to meet the increasing manufacturing
requirements of customers for cost efficient SOCs for their customers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Comprehensive Prefabrication Services. </I>Because of increasing levels of product complexity and
customer demand, foundries are increasingly required to provide value-added services during the
prefabrication phase, such as providing access to EDA tools, design libraries, and intellectual
property and design services to ensure that customers&#146; designs can be implemented on silicon for
commercial production.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Long-Term Relationships. </I>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&#146; growth, and develop and make available advanced process technologies capable
of producing next-generation products. Assurance of supply is critical to their success. These
relationships must also be flexible, allowing customers to respond to the variable nature of the
semiconductor market.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Security. </I>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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>The Chartered Solution</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Chartered is one of the world&#146;s leading dedicated 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Chartered&#146;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 along with providing semiconductor process for the
highest performance microprocessors in the world. We have proven expertise in mixed signal and
radio frequency complementary metal oxide silicon, or RF CMOS, enabling technologies essential to
the convergence of communication, computer and consumer applications.
</DIV>

<P align="center" style="font-size: 10pt">23
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to augment our internal development efforts, we have entered into strategic business
alliances and technology alliances with leading semiconductor companies such as our technology
alliances with IBM, Infineon and Samsung and our strategic business alliance with Agere Systems in
SMP. For more details on these strategic business alliances and technology alliances, see &#147;&#151;
Strategic Business and Technology Alliances &#151; Silicon Manufacturing Partners&#148; and &#147;&#151; Research and
Development.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have relationships with leading EDA, intellectual property and design services providers.
Through these relations, our customers are provided with a design methodology coupled with design
modules which have been tested and manufactured on silicon that will allow a faster time to market.
We offer design solutions for a variety of applications and process nodes, giving customers
valuable freedom of choice when it comes to EDA and intellectual property selection. Customers get
early access to design rules and other important manufacturing specifications so that they can be
incorporated into designs early. In June&nbsp;2005, together with IBM and Samsung, we extended the
Chartered-IBM Cross-Foundry Design Enablement Program, or Design Enablement Program, launched in
March&nbsp;2004 for 90nm bulk CMOS process, to include 65nm bulk CMOS process. Many EDA and intellectual
property companies have supported and developed solutions on Chartered&#146;s processes. Together with
IBM and Samsung, Chartered is expanding the number of new partners to assist our customers in
designing solutions in leading-edge 65nm process technology. Chartered will continue to expand our
design service network to improve our customers&#146; access to more expertise allowing broader choices
and more flexibility for their chip development.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Having launched our e-Business initiatives with customers in April&nbsp;2004, our systems are now
established and are being used by our customers to carry out many of their business interactions
with us online. We have also implemented several automated connections with our subcontractors and
other suppliers, thus enabling us to continue on the path to enhanced supply chain automation. For
more information on our e-Business initiative, please see &#147;&#151; Customer Service.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that our customers value Chartered as a trusted, customer-oriented service provider
which adopts a collaborative approach to the foundry industry. All of our manufacturing operations
are located in Singapore, a politically and economically stable nation with laws that protect our
customers&#146; proprietary technology.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Business Strategy</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our objective is to be a 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. Key elements of our strategy include:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Improve top-line growth by targeting first source business through our advanced technology while
continuing to serve the markets for mature technologies</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our ability to engage customers at increasingly advanced technologies, the strengthening of
our technology roadmap resulting from our joint development agreements with IBM, Infineon and
Samsung and the expansion of our third party network of pre-qualified EDA, intellectual property
and design services solutions, allows us to target substantially more &#147;first source&#148; business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As mature technology products remain a growing and important part of Chartered&#146;s business, we
will also continue to focus on increasing our reach into mature markets. We emphasize on leveraging
our capabilities in mixed-signal and RF CMOS processes with complete solutions for our niche
technologies for products such as smart cards, Radio Frequency Identification, or RFID, tags,
display drivers and power management for mobile products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Optimize our capacity base</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We aim to optimize our capacity base by rapidly expanding capability for leading-edge
technologies, reducing excess capacity at mature technology nodes and adopting a &#147;borderless fab&#148;
approach. The &#147;borderless fab&#148; approach refers to the operation of our fabs in a manner where
wafers may be moved from one fab to another according to available manufacturing capacity and
manufacturing process technologies of our various fabs to meet production requirements. Our
&#147;borderless fab&#148; approach is targeted at improving asset utilization and increasing flexibility and
scalability across all our fabs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Leading-edge Technologies. </I>As part of our plan to expand our capability for leading-edge
technologies, we intend to expand our production capacity for 0.13um and smaller process geometry
technologies to meet the anticipated needs of our customers. We expect our leading-edge technology
capacity per year to
</DIV>

<P align="center" style="font-size: 10pt">24
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">constitute approximately 35% of our total expected wafer capacity per year in 2006, compared
with 25% in 2005. We believe that increasing our foundry capacity in 0.13um and smaller process
geometry technologies will allow us to take advantage of the market opportunities opening up to
Chartered as a result of the technological progress we have made in recent years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Mature Technologies. </I>We intend to utilize our capacity for mature technologies by leveraging
on our existing technologies, targeting strategic partnerships for volume production and working
towards establishing a manufacturing presence in China with appropriate partners to leverage on our
equipment, technology and expertise in mature processes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Focus on solutions that support the growing trend of product convergence</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 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 products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Provide a complete range of services</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are continuing to expand our range of services so that we can effectively meet our
customers&#146; evolving needs. Our goal is to seamlessly integrate the design and manufacturing process
with a wide array of services, tools and technologies. The design enablement support we currently
make available to our customers, in conjunction with our partners, include a number of EDA design
tools, design libraries, third party intellectual property and process technologies that have been
validated for our manufacturing process. We also offer our customers turnkey services, which
typically include, in addition to fabricating semiconductor wafers, pre-fabrication services such
as engineering services and masks generation, and associated assembly and test services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Offer leading process technology</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We intend to continually expand our portfolio of process technologies in line with our
customers&#146; requirements for timing and performance for use with their products. The schedule and
initial process specifications of the new process technologies being developed, and to be
developed, are provided by our technology roadmaps. The current roadmaps cover 2006 and 2007 and
90nm, 65nm and 45nm logic processes, including their generic, low power and high speed variants.
The roadmaps also cover 90nm mixed signal and RF modules, and 0.18um high voltage and eFLASH
(embedded FLASH memory, a memory based on an erasable and
programmable memory technology) processes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The current development programs for logic are directed to the 65nm technology node. Under our
March&nbsp;2004 joint development agreement with IBM, Infineon and Samsung, we are jointly developing
with our partners a common advanced foundry manufacturing process technology at 65nm, as well as
variants of that process modified for high performance and low power products. Please see &#147;&#151;
Research and Development&#148; for more details on this joint development agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2004, we expanded our joint development efforts with IBM under our joint
development agreement entered into with IBM in November&nbsp;2002 to include 45nm bulk CMOS process
technology. We expect this reciprocal manufacturing arrangement to enable us to achieve scale,
cycle time and cost efficiencies in 300-mm manufacturing, while also providing customers multiple
sources of supply. The strengthening of our technology roadmap resulting from our joint development
agreements with IBM, Infineon and Samsung provides us with faster access to leading-edge
technology. This faster technological development allows us to target substantially more &#147;first
source&#148; business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the case of 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 typically follows the introduction of the logic development
schedule. For RF CMOS, still more devices such as inductors and varactors must be developed,
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. Bipolar complementary metal oxide silicon, or BiCMOS, which integrates bipolar
transistors with the CMOS and selected modules from mixed signal and RF CMOS, comes to pilot
production later.
</DIV>

<P align="center" style="font-size: 10pt">25
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The availability of logic, mixed-signal RF CMOS, BiCMOS, Silicon Germanium, or SiGe, and
embedded memories technologies enables us to provide process solutions essential to the convergence
of communication, computer and consumer applications.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Enhance and expand alliances</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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, Inc., IBM and Infineon, we are better positioned to secure future
business with them.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Overview of Wafer Fabrication Services</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Pre-Fabrication Services</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Circuit Design. </I>Producing a semiconductor device involves 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 40 layers of electronic patterns.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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&#146; EDA tools, design
libraries and intellectual property and design services that are proven and have been qualified for
our manufacturing processes. Our field engineers assist our customers during the development
process to ensure that their designs can be successfully manufactured in volume.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Mask Making. </I>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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Wafer Fabrication</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Wafer Manufacturing. </I>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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 transistors&#146; 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 semiconductor wafers,
which are used in a full range of end market applications, including communication, computing, and
consumer electronics. Examples of the types of semiconductors we manufacture are as follows:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Logic. </I>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 communication, computer and consumer markets.
</TD>
</TR>
</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">26
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Mixed-Signal. </I>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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Memory. </I>Memory devices store data and can be manufactured as stand-alone devices or
embedded in system semiconductor devices that combine a number of functions, such as logic
and memory components. We manufacture stand-alone memory devices including EPROM, EEPROM,
SRAM and Flash memory and embedded memory including eSRAM, eEEPROM, and eFLASH memories.
For more information on what these mean, please see &#147;&#151; Manufacturing Facilities.&#148; Memory
devices are used in a range of products from computers and mobile phones to &#147;smart&#148; chip
cards.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Wafer Probe. </I>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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Other Services</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Assembly and Test. </I>After fabrication and wafer probe, the wafers are transferred to assembly
and test facilities. The assembly process protects the semiconductor device, facilitates its
integration into electronic systems and enables the dissipation of heat. Following assembly, each
semiconductor device&#146;s functionality, voltage, current and timing are tested. After testing, the
completed semiconductor device is either delivered to the customer or directly to its final
destination.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although we are an independent foundry specializing in wafer fabrication, we offer our
customers the option to purchase from us turnkey services, which mean finished semiconductor
products that have been assembled and tested. When requested by our customers, we outsource
assembly and testing of the fabricated semiconductor devices. Alternatively, our customers may
directly arrange with assembly and test facilities for these services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Manufacturing Facilities</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2005, we owned or had an interest in five fabs, all of which are located in
Singapore. Fabs 2, 3 and 7 are wholly-owned and operated by our company. Fab 5 is owned and
operated by SMP, our joint venture company with Agere Systems Singapore, a subsidiary of Agere
Systems Inc. Fab 6 is owned and operated by CSP, our joint venture company with Avago, EDB
Investments and Singapex, an indirect wholly-owned subsidiary of Temasek. Avago&#146;s shares in CSP
were previously owned by Agilent Technologies Europe B.V. As part of Agilent Technologies, Inc&#146;s
restructuring in 2005, Agilent Technologies Europe B.V. transferred its entire shareholding in CSP
to Avago in January&nbsp;2006. Our Fab 1, which was wholly-owned by our company, ceased operations at
the end of March&nbsp;2004. We do not have a Fab 4.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Production Capacity and Utilization</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table reflects our capacity utilization in our fabs, including our share of SMP, for the periods indicated.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Quarterly Shipment and Capacity</B><SUP style="font-size: 85%; vertical-align: text-top"><B>(1)</B></sup>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="34%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">

<TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Data
Including Chartered&#146;s Share of SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>3Q 2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>4Q 2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>1Q 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2Q 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>3Q 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>4Q 2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Thousand eight-inch equivalent wafers:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total wafers shipped</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">287.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">200.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">186.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">224.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">295.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">345.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total capacity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">322.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">327.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">317.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">346.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">401.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">435.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Utilization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">89</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">61</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">59</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">65</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">74</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">79</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">27
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>


<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Capacity by Fab</B><SUP style="font-size: 85%; vertical-align: text-top"><B>(1)</B></SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>3Q 2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>4Q 2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>1Q 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2Q 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>3Q 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>4Q 2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Thousand eight-inch equivalent wafers:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fab 2</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">131.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">131.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">130.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">137.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">139.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">145.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fab 3</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fab 5<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fab 6</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">81.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fab 7<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">322.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">327.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">317.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">346.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">401.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">435.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">

    <TD><B>Notes:</B></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Fab 1 ceased operations at the end of March&nbsp;2004, with some of its operations moved to Fab 2.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>49% of total capacity, based on Chartered&#146;s equity ownership.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Fab 7, our first 300-mm wafer facility, started commercial shipments in June&nbsp;2005.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Wafer Capacity</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our fab capacity plans have been updated consistent with our company&#146;s efforts to better align
manufacturing capability with our growing market opportunities in leading-edge technologies. We
expect to achieve total wafer capacity of approximately 1,800,000 wafers (eight-inch equivalent)
for the full year 2006, compared to 1,500,000 wafers (eight-inch equivalent) for the full year
2005. Leading-edge capacity (0.13um and smaller process geometry technologies) per year is planned
to increase from approximately 25% of our total wafer capacity per year in 2005 to approximately
35% of our total expected wafer capacity per year in 2006. The following table reflects our wafer
capacity figures as of December&nbsp;31, 2005 for each of our fabs and the fab of our equity-method
joint venture company, SMP (Fab 5).
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Fab 2</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Fab 3</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Fab 5 (SMP)</B><SUP style="font-size: 85%; vertical-align: text-top"><B>(1)</B></SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Fab 6 (CSP)</B><SUP style="font-size: 85%; vertical-align: text-top"><B>(1)</B></SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Fab 7</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Production
commenced</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">1995</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">1997</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">1999</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">2000</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">2005<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></TD>
</TR>
<TR valign="bottom" style="padding-top: 0em"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Estimated full
capacity<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">48,000 wafers</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">25,000 wafers</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">24,000 wafers</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">39,000 wafers</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">30,000 wafers</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">per month</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">per month</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">per month</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">per month</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">per month<SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP></TD>
</TR>
<TR valign="bottom">
<!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Wafer size</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">Eight-inch</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">Eight-inch</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">Eight-inch</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">Eight-inch</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">Twelve-inch</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">(200-mm)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">(200-mm)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">(200-mm)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">(200-mm)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">(300-mm)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Process
technologies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">0.6 to 0.3um<SUP style="font-size: 85%; vertical-align: text-top">(5)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">0.35 to</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">0.25 to</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">0.25 to</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">0.13um and</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">0.18um<SUP style="font-size: 85%; vertical-align: text-top">(5)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">0.13um<SUP style="font-size: 85%; vertical-align: text-top">(5)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">0.11um<SUP style="font-size: 85%; vertical-align: text-top">(5)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">smaller process</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">geometry</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">technologies</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Manufacturing
technologies<SUP style="font-size: 85%; vertical-align: text-top">(6)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">Digital; Mixed</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">Digital; Mixed</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">Digital; RF</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">High</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">High</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">Signal; RF</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">Signal; RF</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">CMOS;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">performance,</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">performance,</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">CMOS; SRAM;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">CMOS; SRAM</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">BiCMOS;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">high-density</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">high-density</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">Flash Memory;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">Mixed Signal;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">CMOS; high</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">CMOS; Mixed</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">HVCMOS;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">eSRAM</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">density SRAM</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">Signal; SOI</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">EEPROM;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">Mixed Signal; RF</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">DMOS;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">CMOS</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">BiCMOS,</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">BiPolar; OTP</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Clean room</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">109,000 sq. ft.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">81,000 sq. ft.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">96,540 sq. ft.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">126,000 sq. ft.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">181,000 sq. ft</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">Class-1 SMIF<SUP style="font-size: 85%; vertical-align: text-top">(7)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">Class-1 SMIF<SUP style="font-size: 85%; vertical-align: text-top">(7)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">Class-1 SMIF<SUP style="font-size: 85%; vertical-align: text-top">(7)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">Class-1 SMIF<SUP style="font-size: 85%; vertical-align: text-top">(7)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">Class-1 SMIF<SUP style="font-size: 85%; vertical-align: text-top">(7)</SUP></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>Notes:</B></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>With respect to Fab 5 and Fab 6, the information includes capacity of our strategic partners.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">28
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Commercial shipments started in June&nbsp;2005.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Estimated full capacity is the production output capability based on our current and
anticipated process technology mix, which may vary. 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.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>Equivalent to 67,500 eight-inch wafers per month. A conversion rate of 2.25 is utilized in
determining the number of eight-inch wafer equivalent to that of twelve-inch wafers. We are
taking a phased approach to the full equipping of Fab 7 to 30,000 300-mm wafers per month, and
this is expected to take a number of years and will be paced by customer demand and industry
conditions. As of December&nbsp;31, 2005, Fab 7 has a capacity of approximately 10,000 300-mm
wafers per month.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(5)</TD>
    <TD>&nbsp;</TD>
    <TD>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 process geometry technologies than those shown
above.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(6)</TD>
    <TD>&nbsp;</TD>
    <TD>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.
EEPROMs are electrically erasable programmable read-only memory 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 complementary metal
oxide silicon. BiCMOS means bipolar complementary metal oxide silicon. HVCMOS refers to high
voltage complementary metal oxide silicon. DMOS refers to double diffused vertical MOSFET
(metal oxide semiconductor field effect transistor). OTP refers to one time programmable
memory.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(7)</TD>
    <TD>&nbsp;</TD>
    <TD>Class&nbsp;1 is a measurement of air cleanliness in which the amount of particles is controlled to
no more that one particle at 0.5um per cubic foot of air. SMIF means standard mechanical
interface.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All our production fabs generally operate 24 hours per day, seven days per week. The only
exceptions are when scheduled maintenance requires a facility shut-down, or in periods of weak
demand where we 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 shut-down 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth information regarding the total output of eight-inch equivalent
wafers of our fabs, including our share of SMP:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="19" style="border-bottom: 1px solid #000000"><B>Year Ended December 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2001</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2002</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18"><B>(in thousands)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total Output</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">398</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">445</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">722</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">1,035</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">1,052</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Quality Assurance Programs</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have implemented systems to ensure that products manufactured at our facilities in
Singapore meet or exceed our customers&#146; specifications on quality and reliability. Our in-house
laboratories are equipped with advanced analytical tools, providing the necessary equipment and
resources for our engineering and research and development 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our production facilities in Singapore have been certified by the International Organization
for Standardization, or ISO, to meet ISO 9001 standards. ISO 9001 standards set forth the
requirements necessary to ensure the production of quality products and services, including
standards relating to management systems, management responsibility, resource management, product
realization, measurement, analysis and improvement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also achieved ISO/TS16949 (Technical Specification) certification in May&nbsp;2005. ISO/TS
16949:2002, commonly referred to as TS2, was introduced by ISO in March&nbsp;2002 and is currently
considered to be one of
</DIV>

<P align="center" style="font-size: 10pt">29
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">the most comprehensive quality standards in the industry. It defines the quality system
requirements for use in the automotive supply chain, which some of our products may go into, and
requires companies to emphasize meeting customer requirements, defect prevention, reduction of
variation and waste in the supply chain and to continually improve the effectiveness and efficiency
of business processes. The ISO/TS16949 and TS2 certifications involve stringent periodic third
party review and verification of our production processes and quality management systems. Our
customers often look to these certifications as a threshold indication of our quality control
standards.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Strategic Business and Technology Alliances</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>IBM, Infineon and Samsung</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In November&nbsp;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, we agreed with IBM to jointly develop and standardize our 90nm
and 65nm bulk CMOS processes for foundry chip production on 300-mm silicon wafers. Together, we are
providing a common 90nm design manual and guidelines for the jointly developed process platform. To
assist foundry customers in designing with these technologies, we and IBM have agreed to work
together with third party providers of design enablement and open-standard formats to help
customers move their products more easily between us and IBM for production.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In August&nbsp;2003, we extended the IBM joint development agreement to include Infineon and in
March&nbsp;2004, the agreement was further extended to include Samsung. Under the expanded agreement,
IBM, Infineon, Samsung and Chartered are jointly developing a common advanced foundry manufacturing
bulk CMOS process technology at 65nm, as well as variants of that process modified for high
performance and low power products. In December&nbsp;2004, we expanded our joint development efforts
with IBM under the IBM joint development agreement to include 45nm bulk CMOS process technology.
The Chartered-IBM joint development now spans three separate generations of technologies from 90nm,
65nm and 45nm. The development of both 65nm and 45nm bulk CMOS processes are being carried out at
IBM&#146;s facilities at East Fishkill, New York. Each of the four participating companies will have the
ability to implement the jointly developed 65nm processes in their respective manufacturing
facilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our agreement with IBM includes a reciprocal manufacturing arrangement pursuant to which we
are able to offer our customers some capacity in IBM&#146;s 300-mm chip manufacturing facility in East
Fishkill, New York. In turn, IBM is able to utilize some capacity in our 300-mm Fab 7 to help meet
additional capacity requirements. In order to reserve such capacity, we and IBM placed deposits
with each other. Neither IBM nor we are required, however, to utilize this capacity. Beginning
April&nbsp;2005, we started manufacturing selected 90nm SOI products for IBM.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Further, in June&nbsp;2005, together with IBM and Samsung, we extended the Design Enablement
Program, launched in March&nbsp;2004 for 90nm bulk CMOS processes, to include 65nm bulk CMOS processes.
Many of the leading EDA vendors and intellectual property companies have developed platform
solutions and we are working with IBM to bring new partners to the program. The Design Enablement
Program sets a platform for foundry compatibility, design portability and flexible sourcing between
our company and IBM at 90nm bulk CMOS processes and for our company, IBM and Samsung at 65nm bulk
CMOS processes. The Design Enablement Program facilitates designers in the development of
compatible design layout files that can be used interchangeably across manufacturing facilities at
our company, IBM and Samsung. We also continue to expand our design service partnership network to
improve our customers&#146; access to more expertise, broader choices and greater flexibility for their
chip development.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Through our joint development program with IBM, Infineon and Samsung and our manufacturing
arrangement with IBM, we are seeking to achieve scale, cycle time and cost efficiencies in both
leading-edge process technology development and 300-mm manufacturing, while also providing
customers multiple sources of supply.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Chartered Silicon Partners</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our subsidiary, CSP, was established in March&nbsp;1997 and is a joint venture with Avago, EDB
Investments and Singapex. Avago&#146;s shares in CSP was previously owned by Agilent Technologies
Europe B.V. As part of Agilent Technologies, Inc&#146;s restructuring in 2005, Agilent Technologies
Europe B.V. transferred its entire shareholding in CSP to Avago in January&nbsp;2006 and consequently,
Avago has replaced Agilent Technologies Europe B.V. in January&nbsp;2006 as a shareholder of CSP. In
addition, with effect from January&nbsp;2006, Agilent Technologies Europe B.V. has transferred and/or
assigned all its rights and obligations under
</DIV>

<P align="center" style="font-size: 10pt">30
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">the joint venture agreement with our company, EDB Investments and Singapex to Avago.
Currently, Chartered, Avago, EDB Investments and Singapex hold 51%, 15%, 26.5% and 7.5% equity
interest in CSP, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CSP owns and operates Fab 6. U.S. GAAP generally requires consolidation of all majority owned
(greater than 50%) subsidiaries. CSP is a consolidated subsidiary. Due to the cumulative losses of
CSP, our obligations to the minority shareholders of CSP were reduced to zero in the first quarter
of 2003. Therefore, none of CSP&#146;s losses from that point forward have been allocated to the
minority interest in our consolidated statements of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From March&nbsp;1997 until October&nbsp;2001, Agilent Technologies Europe B.V. had a 30% equity interest
in CSP. In October&nbsp;2001, Agilent Technologies Europe B.V. sold one-half of its 30% share in CSP to
Singapex and EDB Investments, in equal proportion, resulting in our company, EDB Investments,
Agilent Technologies Europe B.V. and Singapex owning 51%, 26.5%, 15% and 7.5% equity interest in
CSP, respectively. Although Agilent Technologies Europe B.V. had a two-year option from October
2002 to reacquire the ownership interest that was sold, Agilent Technologies Europe B.V. did not
exercise the option within the stipulated two-year period and consequently, the option lapsed in
October&nbsp;2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The reduction in Agilent Technologies Europe B.V.&#146;s ownership in CSP in 2001 also had an
impact on Agilent Technologies, Inc.&#146;s obligation to purchase a minimum number of wafers per year
and rights to purchase a maximum number of wafers per year from CSP. This reduction automatically
resulted in a reduction in Agilent Technologies, Inc.&#146;s maximum capacity entitlement and in the
financial obligation associated with its minimum wafer purchase commitment requirement. As Agilent
Technologies Europe B.V. did not exercise its option to reacquire the ownership interest, Agilent
Technologies, Inc.&#146;s maximum capacity entitlement and minimum wafer purchase commitment requirement
remain unchanged.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With the reduction of Agilent Technologies Europe B.V.&#146;s ownership in CSP in 2001, the
joint-venture parties also agreed that directors appointed by Agilent Technologies Europe B.V.
would no longer have voting rights, although they would still remain on CSP&#146;s Board of Directors
and retain all their other existing rights and obligations. In addition, with effect from October
2001, Agilent Technologies Europe B.V. ceased to be a member of CSP&#146;s management committee. CSP&#146;s
Board of Directors comprises eight directors. As long as we own more than 50% of CSP, we can elect
four of the directors. Avago, having acquired all of the shares in CSP previously held by Agilent
Technologies Europe B.V. in January&nbsp;2006, 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We and Agilent Technologies, Inc. contributed the original process technologies needed by CSP.
These process technologies are licensed to CSP for its own use and CSP cannot sub-license them to
others. Agilent Technologies, Inc., CSP and ourselves also 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 they are not related to CSP. Agilent Technologies,
Inc. has ceased its technology development for technology nodes beyond 0.25um, and as such, Agilent
Technologies, Inc. has ceased to contribute any process technologies involving these technology
nodes to CSP and CSP has since then been relying solely on the process technologies contributed by
our company. As part of Agilent Technologies, Inc.&#146;s sale of its Semiconductor Products Group to
Avago Technologies Limited, Agilent Technologies, Inc. has, with effect from December&nbsp;2005,
transferred or assigned all its rights and obligations under the cross-licenses to Avago
Technologies General IP (Singapore) Pte. Ltd.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to our joint venture agreement, the CSP alliance will continue 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
interests proposed to be transferred. Upon a serious, uncured default of the joint-venture
agreement, the non-defaulting parties have the right to purchase all of the defaulting party&#146;s
interest in CSP 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&#146;s interest.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Silicon Manufacturing Partners</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;1997, we entered into the SMP strategic business alliance with Lucent Technologies
</DIV>

<P align="center" style="font-size: 10pt">31
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Microelectronics Pte. Ltd., now known as Agere Systems Singapore, relating to the joint
venture ownership of Fab 5.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Agere Systems Singapore has a 51% equity interest in SMP and we have a 49% equity interest.
SMP&#146;s Board of Directors comprises five directors, three of whom are elected by Agere Systems
Singapore and two of whom are elected by us. We nominate the chairman of the Board of Directors and
the general manager, while Agere Systems Singapore names the finance director.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to our agreement, the SMP strategic business alliance continues indefinitely until it
is terminated by written notice by either party. Neither party may give notice of termination prior
to February&nbsp;2006, and the termination of the alliance will take effect two years from the date of
any 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 any serious,
uncured breach by us of our agreement, Agere Systems Singapore has the right to sell all of its
interest in SMP to us at the higher of fair value or the value of its interest based on SMP&#146;s net
book value, as defined in the agreement. Upon Agere Systems Singapore&#146;s dissolution, winding up or
liquidation, we have the right to purchase all of its interest in SMP for fair value. Upon any
serious, uncured breach by Agere Systems Singapore of our agreement, we have the right to purchase
all of its interest in SMP at 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&#146;s interest in SMP.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We and Agere Systems Singapore contribute the original process technologies needed by SMP.
These process technologies are licensed to SMP for its own use and SMP cannot sub-license them to
others. The licensed technologies are categorized as restricted and unrestricted technologies. We
and Agere Systems Singapore also 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 these uses are not related to SMP. We do not cross-license the
restricted technologies to one another, which means that only SMP can use such restricted process
technologies and intellectual property.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Chartered and Agere Systems Singapore have signed an assured supply and demand agreement with
SMP. Under this agreement, each of Chartered and Agere Systems Singapore is billed for allocated
wafer capacity if the wafers started for production for them are less than their respective
allocated capacity. These billings, if any, do not change the equity in income (loss)&nbsp;of SMP that
we recognize in our consolidated statements of operations. For the year ended December&nbsp;31, 2005,
the wafers started for our company were less than the allocated capacity; however, we and Agere
Systems Singapore have agreed that such billings for this period will be waived. There were also no
such billings made to us for the corresponding period in 2004. To the extent the wafers started for
us is less than our allocated capacity in the future, there is no assurance that the billings for
our allocated wafer capacity would continue to be waived.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 these activities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SMP owns and 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. With effect from October&nbsp;2001, Agere Systems
Singapore and we 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We account for our 49% investment in SMP using the equity-method. Under the strategic business
alliance agreement, we and Agere Systems Singapore do not share SMP&#146;s net results in the same ratio
as our equity holdings. 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 share of SMP&#146;s net results based on the gross sales to the
customers that we direct to SMP, after deducting our share of the overhead costs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
2005, we and Agere Systems Singapore agreed to a reduction in wafer
prices for Agere Systems Singapore, related to the wafer capacity
allocated to Agere Systems Singapore, to the minimum price allowed
under the assured supply and demand agreement. As each shareholder is
entitled to the gross profits from sales to the customers that it
directs to SMP, the wafer price reduction did not affect the equity
in income (loss) of SMP and the share of retained post formation loss
that is included in our consolidated statements of operations and
consolidated balance sheets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In September&nbsp;2004, we and Agere Systems Singapore entered into a Supplemental Agreement to the
Joint Venture Agreement to provide that SMP could pay dividends out of the profits of the venture
determined on a year to year basis rather than a cumulative basis as previously was the case. We
received dividends of $29.5&nbsp;million from SMP for the year ended December&nbsp;31, 2005. We did not
receive any
</DIV>

<P align="center" style="font-size: 10pt">32
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">dividend from SMP for the year ended December&nbsp;31, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In September&nbsp;2005, we and Agere Systems Singapore agreed to reduce the issued and paid up
share capital of SMP from S$425,000,000 divided into 208,250,000 &#147;A&#148; ordinary shares of S$1 each
and 216,750,000 &#147;B&#148; ordinary shares of $1 each, to S$141,515,511 divided into 69,343,426 &#147;A&#148;
ordinary shares and 72,172,085 &#147;B&#148; ordinary shares. The capital reduction for SMP was approved by
the High Court of Singapore on October&nbsp;13, 2005. The portion to be returned to us in the form of cash was $20.4&nbsp;million, of which we had received $17.3 million in 2005. The
capital reduction through the extinguishment of accumulated losses
does not qualify as a quasi-reorganization under U.S.&nbsp;GAAP and accordingly has not been reflected in our consolidated financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Customers and Markets</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We manufactured semiconductors for over 100 different active customers in 2005. Our top five
customers in 2005, in order of revenue contribution, were Broadcom, IBM, Agilent Technologies,
MStar Semiconductor and MediaTek. Collectively, our top five customers accounted for approximately
56% of our total net revenue in 2005, compared with approximately 52% in the previous year.
Broadcom and IBM each exceeded 10% of our total net revenue in 2005 compared with 2004 where
Broadcom, Agilent Technologies and MediaTek each exceeded 10% of our
total revenue. As the end markets we serve are typically cyclical, our top customer profile may change
from period to period depending on the strength of various market segments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth our top five customers for 2005 in order of revenue:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="67%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Customer</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Representative Products or Applications</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Broadcom
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Local area network switches/routers, set-top boxes,
cable modems, ethernet transceivers, network
processors, bluetooth and High Definition TV</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">IBM
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Video game devices</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Agilent Technologies
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mobile phone handsets and computer peripherals</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">MStar Semiconductor
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Computer peripherals and TVs</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">MediaTek
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Optical storage</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We categorize revenue geographically based on the country in which the customer is
headquartered. The following table sets forth the geographical distribution of our revenue for the
periods indicated:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By Percentage:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="70%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Americas</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">64</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">68</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">75</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Europe</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Asia-Pacific</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Japan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By $ (in thousands):
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Americas</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">351,930</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">631,150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">774,950</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Europe</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">72,249</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85,125</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91,844</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Asia-Pacific</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151; Singapore</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,862</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,392</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,995</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151; Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,071</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">179,206</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">123,449</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Japan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,799</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,258</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,496</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">551,911</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">932,131</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,032,734</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 an additional office in Austin,
Texas. We also maintain customer support offices in Hsin-Chu, Taiwan; Yokohama, Japan; Paris,
France; London, United Kingdom; Munich, Germany and Shanghai, China.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our customers generally do not place their purchase orders far in advance. As a result, we do
not typically operate with any significant backlog.
</DIV>

<P align="center" style="font-size: 10pt">33
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We currently allocate a portion of our wafer manufacturing capacity to certain customers under
several types of agreements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Customer Service</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We focus on providing a high level of customer service in order to attract customers and
maintain their on-going 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 three prime functional areas of customer interaction, customer design
development and manufacturing services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 marketing, EDA, silicon
engineering, third party partner and customer service/logistical support. The account team is
supported by additional marketing and customer engineering staff in Singapore.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;After the design moves into manufacturing production, ongoing customer support is provided
through all phases of the manufacturing process. The account manager works with a dedicated
customer service representative, along with marketing and customer engineering support teams at the
factory.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Significant enhancements to our Chartered On-Line Access System, or COLAS, have enabled
customers to do more of their business with us online. Chartered is very committed to implementing
system-to-system links with customers and other partners. These linkages will take the human
dependence out of the transactions, and provide for data to be sent from our systems to our
customers&#146; systems (and vice versa) directly and securely. We started COLAS with logistics-related
data and have now added other types of data, such as commercial and engineering information, to
this automated information-interchange process. The result is that communication between us and our
partners happens closer to the time events occur.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Research and Development</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 2003 and 2004, we invested $124.1
million and $118.3&nbsp;million, respectively, in research and development. Those investments
represented 22.5% and 12.7% of our net revenue for the respective periods. In 2005, our research
and development expenses, including our share of expenses related to the IBM joint-development
agreement, were $122.1&nbsp;million, or 11.8% of our net revenue, for the year. As of December&nbsp;31, 2004,
we employed 280 professionals in our research and development department, 49 of whom have PhDs. As
of December&nbsp;31, 2005, we employed 370 professionals in our research and development department, 62
of whom have PhDs. The increase in headcount in our research and development department was
primarily to support internal development for process specific intellectual property, customized
design developments, increased design activities to address design-for-manufacturability, or DFM,
for advanced technologies and increased customer design support required for both our mature and
advanced technologies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our investment in research and development allows us to continue developing new and advanced
processes down to the 45nm 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Periodically, we update our technology roadmap based on industry trends, expected customer
adoption of the technology and our internal development plans.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In August&nbsp;2003, we and IBM extended our joint development agreement to include Infineon and in
March&nbsp;2004, the agreement was extended to include Samsung. The March&nbsp;2004 agreement replaces and is
in substitution of our joint development agreement with IBM and Infineon. Under the March&nbsp;2004
agreement, IBM, Infineon, Samsung and Chartered are jointly developing a common advanced foundry
manufacturing bulk CMOS process technology at 65nm, as well as variants of that process modified
for high performance and low power products. Additionally, the parties can extend the March&nbsp;2004
agreement to include 45nm technology.
</DIV>

<P align="center" style="font-size: 10pt">34
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2004, we and IBM expanded our joint development efforts to include 45nm bulk CMOS
process technology. We expect this reciprocal manufacturing arrangement to enable us to achieve
scale, cycle time and cost efficiencies in both leading-edge process technology and 300-mm
manufacturing, while also providing customers multiple sources of supply. The strengthening of our
technology roadmap resulting from our joint development agreements with IBM, Infineon and Samsung
provides us with faster access to leading-edge technology. This faster technological development
allows us to target substantially more &#147;first source&#148; business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. In 2004 and 2005, $19.0&nbsp;million and $7.5&nbsp;million, respectively, of such grants were
disbursed to us. These grants are disbursed in connection with research and development carried out
in Singapore, based on the amount of expenditures incurred, achievement of program milestones and
certification of the costs incurred. The main condition attached to the grants is the completion of
the project to which the grant relates. As our 65nm and 45nm bulk CMOS processes are jointly
developed in IBM&#146;s East Fishkill, New York, facilities, the amount of grants we were eligible to
receive from the Government of Singapore was significantly lower in 2005, as compared with 2004
and we expect that the amount of grants we may be eligible to receive from the Government of
Singapore will also be lower in 2006, as compared with 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Equipment and Materials</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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, implanters,
sputterers, chemical vapor deposition, chemical mechanical planarization equipment, and metrology
equipment. In periods of high market demand, the lead times from order to delivery and complete
qualification of some of these types of equipment can extend beyond 15&nbsp;months. We seek to manage
this process through early reservation of appropriate delivery slots and constant communication
with our suppliers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our manufacturing processes use highly specialized materials, including semiconductor wafers
(including SOI wafers), chemicals, gases, targets, quartz, equipment spare parts and consumables
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. 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 typically 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 six months in advance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Intellectual Property</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2005, we had filed an aggregate of 2,146 patent applications worldwide,
(1,002 of which had been filed in the U.S.) and held an aggregate of 1,338 issued patents worldwide
(743 of which are issued U.S. patents). Of the 1,002 aggregate applications filed in the U.S., 743
had been issued as of December&nbsp;31, 2005 and 23 had been allowed but not issued. Those 23 allowed
patent applications will be issued if and when we pay the applicable issuance fee. (Note:
References in this paragraph to aggregate figures include not only the figures for the period
itself but figures for previous years as well. Accordingly, if an aggregate of 2,146 patent
applications have been filed as of December&nbsp;31, 2005, these include not only the patent
applications filed in the 12&nbsp;months ended December&nbsp;31, 2005 but all patent applications previously
filed by our company.)
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The number of patents filed by us in 2004 and 2005 were 90 and 133, respectively, and the
number of patents issued to us in 2004 and 2005 were 198 and 239, respectively.
</DIV>

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</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our issued patents have expiration dates ranging from 2011 to 2024. All of the allowed and
pending patents will expire after 2025. 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 communication 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. Additionally, we market services in several
countries in Asia which may not protect our intellectual property rights to the same extent as the
U.S.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Competition</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The worldwide semiconductor foundry industry is highly competitive. Our principal competitors
are TSMC, UMC and SMIC as well as the foundry operation services of some IDMs, such as IBM. IDMs
principally manufacture and sell their own proprietary semiconductor products, but may offer
foundry services. In addition to those well-established companies, there have been a number of new
entrants to the semiconductor foundry industry. In particular, foundries in China, Malaysia and
Korea 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A number of semiconductor manufacturers, including our primary competitors have announced
plans to increase their manufacturing capacity. As a result, we expect that there will be a
significant increase in worldwide semiconductor capacity during the next few 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Environmental Matters and Compliance</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have implemented an extensive environmental management system. Four of the fabrication
facilities which we currently own or have an interest in, namely Fabs 2, 3, 5 and 6, are third
party certified through an internationally recognized ISO 14001 certifying body and our first
300-mm facility, Fab 7, which started commercial shipments in June&nbsp;2005, is expected to be
certified in 2006. 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 these
environmental 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Insurance</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We maintain industrial all-risk insurance for our facilities, equipment and inventories. The
insurance for our 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 relevant policy.
We also maintain public
</DIV>

<P align="center" style="font-size: 10pt">36
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">liability insurance for losses to others arising from our business operations, including
liabilities arising from the actions of our employees, and carry insurance for business
interruption resulting from these types of events. In addition, we also maintain product liability
insurance for damages sustained by others for bodily injury or property damage caused by our
product(s) except for exclusions as defined in the relevant policy. Some of our insurance coverage
for SMP is under Agere Systems, Inc.&#146;s global group insurance policies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, we also have various insurance policies in place which cover our employees,
including our key employees, for work-related and general claims, including hospitalization,
personal accidents, business travel and workman&#146;s compensation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="5%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>C.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>ORGANIZATIONAL STRUCTURE</B></TD>
</TR>
</TABLE>
</DIV>




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2005, Chartered is part of the Temasek group of companies. A description of
the Temasek group and Chartered&#146;s position within the group may be found at &#147;Item&nbsp;7. Major
Shareholders and Related Party Transactions &#151; Related Party Transactions &#151; The Temasek Group.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Currently, Chartered has five subsidiaries, the particulars of which are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Proportion of</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Country of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Date of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Ownership</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Name of Subsidiary</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Incorporation</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Incorporation</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Interest</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Chartered Silicon Partners Pte Ltd</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Singapore</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">March 1997</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">51</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Chartered Semiconductor Manufacturing, Inc.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">U.S.</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">June 1991</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Chartered Semiconductor Japan Kabushiki Kaisha</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Japan</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">October 2000</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Chartered Semiconductor Taiwan Ltd</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Taiwan</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">August 2000</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Chartered Semiconductor Europe Ltd</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">England and Wales</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">March 2001</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="5%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>D.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>PROPERTY, PLANT AND EQUIPMENT</B></TD>
</TR>
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Leases</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All of our fabrication facilities and our corporate offices are located in Singapore. Our
company previously operated Fab 1, which ceased operations at the end of March&nbsp;2004, on land leased
from Ascendas Land (Singapore) Pte Ltd, or Ascendas, 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. Our company has sold and transferred its leasehold interest
in respect of Fab 1 and the plant and equipment located in the property to Amkor Technology Pte Ltd
for a total consideration of $6.5&nbsp;million. The transaction was completed in January&nbsp;2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fabs 2 and 3 and our corporate offices are located on land which we lease from Terra
Investments Pte. Ltd., or Terra, a wholly owned subsidiary of Temasek, which in turn leases the
land from JTC. These leases run until 2024 with conditional options to extend the leases for
another 30&nbsp;years. The sub-leases for Fab 2 and Fab 3 require us to make rental payments to Terra at
rates equal to the rent paid by Terra to JTC for the subject land through 2024. The sub-leases are registered with the
Singapore Land Authority (see &#147;Item&nbsp;19. Exhibits &#151; Exhibit&nbsp;4.17 and Exhibit&nbsp;4.18.2&#148;)
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The site slurry treatment plant for Fabs 2 and 3 is also located on land which we lease from
Terra, which in turn leases the land from JTC. This lease runs until 2030 with a conditional option
to extend for another 30&nbsp;years. We are required to make rental payments to Terra at rates equal to
the rent paid by Terra to JTC for the subject land through 2030 (see &#147;Item&nbsp;19. Exhibits &#151; Exhibit
4.19.1 and Exhibit&nbsp;4.19.2&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CSP leases the land on which Fab 6 is located from Terra, which in turn leases it from JTC.
The lease runs until 2027 with a conditional option to extend for an additional 30&nbsp;years. CSP is
required to make rental payments to Terra at rates equal to the rent paid by Terra to JTC for the
subject land through 2027 (see &#147;Item&nbsp;19. Exhibits &#151; Exhibit&nbsp;4.20.2 and Exhibit&nbsp;4.20.3&#148;).
</DIV>

<P align="center" style="font-size: 10pt">37
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fab 7 is located on land which we lease from Terra which in turn leases the land from JTC. The
lease runs until 2030 with a conditional option to extend for an additional 30&nbsp;years. Our company
is required to make rental payments to Terra at rates equal to the rent paid by Terra to JTC for
the subject land through 2030 (see &#147;Item&nbsp;19. Exhibits &#151; Exhibit&nbsp;4.21.1 and Exhibit&nbsp;4.21.3&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Production Capacity and Utilization</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For information on our production capacity and utilization, including wafer capacity, please
see &#147;&#151; B. Business Overview &#151; Manufacturing Facilities.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 4A. UNRESOLVED STAFF COMMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Not applicable.
</DIV>
<DIV align="left">
<A name="106"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>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 &#147;Item
3. Key Information &#151; D. Risk Factors&#148; above.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>INDUSTRY OVERVIEW</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The semiconductor industry is highly cyclical. For example, according to the Semiconductor
Industry Association, or the SIA, in terms of revenue, the worldwide semiconductor industry
contracted by approximately 32% from 2000 to 2001, then grew by approximately 18% from 2002 to
2003, and by approximately 28% and 7% sequentially in 2004 and 2005, respectively. Fabs can take
several years to plan, construct and begin operations. Therefore, during periods of favorable
market conditions, semiconductor manufacturers, which include dedicated foundry service providers,
often begin building new fabs in response to anticipated demand growth for semiconductors. As these
new fabs commence operations, a significant amount of manufacturing capacity is made available to
the semiconductor market resulting from the steep initial ramp up of these fabs. In the absence of
growth in demand, or if growth occurs more slowly than anticipated, this sudden increase in supply
results in semiconductor manufacturing over capacity, which can lead to sharp drops in utilization
of semiconductor fabs and put pressure on wafer selling prices.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Semiconductor manufacturing is very capital intensive in nature. For example, even in the
midst of challenging economic conditions in 2002, we invested $419.5&nbsp;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 invested $220.8&nbsp;million in capital expenditures in 2003, focused primarily on leading-edge
technologies. In 2004 and 2005, we invested $686.3&nbsp;million and $628.1&nbsp;million, respectively, in
capital expenditures, primarily in equipping Fab 7 as part of its phase 1 ramp with the balance
mainly for capacity additions in Fab 6. A high percentage of the cost of operating a fab is fixed
and therefore increases or decreases in capacity utilization rates can have a significant effect on
profitability. The unit cost of a wafer generally decreases as fixed overhead charges, such as
depreciation expense on the facility and semiconductor manufacturing equipment, are allocated over
a larger number of wafers produced.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. As the price of wafers vary
significantly with technology and device complexity, the mix of wafers produced affects revenue and
profitability. In general, the prices for wafers of a given level of technology and device
complexity will decline over the product life cycle and foundries must continue to migrate to
increasingly sophisticated technologies or introduce value added solutions to maintain the same
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">level of profitability. This requires continuous capital investment and depends on other
factors, as discussed in &#147;Item&nbsp;3. Key Information &#151; D. Risk Factors&nbsp;&#151; Risks Related to Our
Financial Condition&nbsp;&#151; Failure to maintain high capacity utilization, optimize the technology mix of
our semiconductor wafer production and continuously improve our device yields would seriously harm
our prospects and financial condition,&#148; &#147;Item&nbsp;3. Key
Information &#151; D. Risk Factors&nbsp;&#151; Risks
Related to Our Operations&nbsp;&#151; We may not be able to compete successfully in our industry&#148; and
elsewhere in this document.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Following a period of high utilization rates during the industry upturn in 1999 and 2000, the
industry contraction in 2001 was the most severe in its history. Largely as a result of this, our
average utilization rate in 2001 and 2002 was 35% and 37%, respectively, resulting in significant
net losses in those periods. As the semiconductor industry recovered, our average capacity
utilization improved to 58% in 2003. Driven primarily by sequential growth in shipments during the
first half of 2004, despite experiencing market weakness from the second half of June&nbsp;2004, our
average capacity utilization improved further to 80% in 2004. Correspondingly, 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 and our net loss in 2003 decreased significantly from the
previous year, and we reported net income in 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The market weakness, which we experienced from the second half of June&nbsp;2004 due to excess
inventories in the semiconductor companies and the softening in certain end markets, continued into the first
half of 2005 as the industry continued to work through the excess inventories. Our average capacity
utilization was 59% in the first quarter of 2005 and improved to 65% in the second quarter of 2005,
due mainly to improving market conditions. As market conditions continued to be favorable and due
mainly to the ramp up of 90nm shipments from our new Fab 7 from the third quarter of 2005, we
recorded sequential growth in shipments in the last two quarters of 2005 and our average
utilization rate was 74% and 79%, respectively, with an overall average capacity utilization of 70%
for the year 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our average capacity utilization, based on eight-inch equivalent wafers, from 2001 to 2005 is
as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="55%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2001</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2002</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B><SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B><SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Average capacity utilization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">35</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">37</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">58</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">80</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">70</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>Notes:</B></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Fab 1 ceased operations at the end of March&nbsp;2004, with some of its operations moved to Fab 2.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Fab 7 started commercial shipment in June&nbsp;2005.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>2005 OVERVIEW</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>General Overview</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The market weakness that we experienced from the second half of June&nbsp;2004 continued into the
first half of 2005 as the industry continued to work through the excess inventories. Net revenue in
the first quarter of 2005 was $181.4&nbsp;million and increased sequentially by 7% to $194.0&nbsp;million in
the second quarter of 2005 as we began to see a recovery in demand in that same quarter. In the
second quarter of 2005, we saw strength in the communications and computer sectors, partially
offset by weakness in the consumer sector.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We posted significant revenue growth in the third quarter of 2005 mainly due to the ramp up of
90nm shipments from our first 300mm fab, Fab 7, which commenced commercial production in the second
quarter of 2005. Our net revenue in the third quarter of 2005 increased by 50% sequentially to
$290.1&nbsp;million, due primarily to significant growth in the consumer sector followed by the
communications sector.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the fourth quarter of 2005, our net revenue further increased by 27% sequentially to $367.2
million as we capitalized on the growth in our leading-edge technologies and also benefited from
favorable market conditions. The revenue growth came mainly from the consumer sector, and to a
lesser extent, the computer sector. Within the consumer sector, our 90nm shipments, driven by the
initial volume build for a new product launch before year-end, provided the impetus for growth. We
achieved our target to bring down our breakeven utilization to 75% in the fourth quarter of 2005
and returned to profitability in that same quarter.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Leading-edge technologies (0.13um and smaller process geometry technologies)</B>
</DIV>

<P align="center" style="font-size: 10pt">39
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We continued to see increased adoption of our leading-edge technologies as revenue from our
0.13um and smaller process geometry technologies increased by 145% between 2004 and 2005. Revenue
from our 0.13um and smaller process geometry technologies, including 90nm, represented 42% of our
total net revenue and revenue from 90nm technologies alone contributed 19% of our total net revenue
for 2005. In the third quarter of 2005, revenue from our 0.13um and smaller process geometry
technologies crossed the $100&nbsp;million mark in a quarter, contributing over 40% of our total net
revenue. Revenue from our 90nm technologies alone exceeded $100&nbsp;million in the fourth quarter of
2005, contributing 31% of our total net revenue in just the second full quarter of ramp.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During 2005, we increased our capacity of 0.13um and smaller process geometry technologies by
approximately 118% while we increased our total capacity by approximately 16% to 1.5&nbsp;million
eight-inch equivalent wafers from 1.3&nbsp;million eight-inch equivalent wafers in 2004, due primarily
to the ramp up of Fab 7.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2005, we announced the following in relation to our efforts in leading-edge technology:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Extension of our joint development efforts with IBM to include 45nm bulk CMOS process
technology. The Chartered-IBM joint development now spans three separate generations of
technologies from 90nm, 65nm to 45nm; and
</TR>
</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">

    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Availability of a comprehensive 65nm design manual and Simulation Program with
Integrated Circuit Emphasis, or SPICE, models and production of 65nm multi-project wafers
in the fourth quarter of 2005.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Customers</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In November&nbsp;2005, we announced a sourcing agreement with Infineon for the manufacture of 65nm
logic products. Under the agreement, we will manufacture low-power mobile-phone products, with
initial prototypes expected in the first quarter of 2006 and production scheduled to begin in the
fourth quarter of 2006. This announcement builds on the joint 65nm technology development efforts
between IBM, Chartered, Infineon and Samsung.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additionally, we announced in September&nbsp;2005 that we will manufacture for ATI Technologies,
Inc., or ATI, on our 0.13um low-power, all copper process, providing ATI with additional
manufacturing capacity for its IMAGEON 2240 media processor for high-volume camera phones.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Electronic Design Automation/Intellectual Property</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We further expanded the common design enablement platform during 2005 and also announced a
common DFM initiative to develop a standard platform that brings greater process control, higher
model accuracy and increased manufacturing awareness. Together with IBM and Samsung, we extended
the Design Enablement Program, launched in March&nbsp;2004 for 90nm bulk CMOS processes, to include 65nm
bulk CMOS processes. The Design Enablement Program sets a platform for foundry compatibility,
design portability and flexible sourcing between our company and IBM at 90nm bulk CMOS processes
and for our company, IBM and Samsung at 65nm bulk CMOS processes. The Design Enablement Program
facilitates designers in the development of compatible design layout files that can be used
interchangeably across manufacturing facilities at our company, IBM and Samsung and includes
participation by leading EDA and DFM tool suppliers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Financing</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the third quarter of 2005, we raised a total of $925&nbsp;million from a public
offering of senior notes and a private placement of units. The senior notes consisted of $375
million of 5.75% senior notes due 2010 and $250&nbsp;million of 6.375% senior notes due 2015. The units
comprised convertible redeemable preference shares, or Preference Shares, of par value $0.01 each
and amortizing bonds due 2010, or Amortizing Bonds, totaling $300&nbsp;million. Chartered also
successfully completed a cash tender offer, repurchasing approximately 83.1%, or $478&nbsp;million, of
our outstanding $575&nbsp;million 2.5% senior convertible notes due April&nbsp;2006.
</DIV>


<P align="center" style="font-size: 10pt">40
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>2006 PLANS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Planned Capacity</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We expect to achieve total wafer capacity of approximately 1.8&nbsp;million wafers (eight-inch
equivalent) for the full year of 2006, compared to approximately 1.5&nbsp;million wafers (eight-inch
equivalent) for the full year of 2005. As part of our plan to expand our capability for
leading-edge technologies, we intend to expand our production capacity for 0.13um and smaller
process geometry technologies from approximately 25% of our total yearly wafer capacity in 2005 to
approximately 35% of our planned yearly wafer capacity in 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Planned Capital Expenditures</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our aggregate capital expenditures for 2006 is expected to be approximately $650&nbsp;million, of
which approximately $550&nbsp;million is expected to be utilized for capital expenditure in our 0.13um
and smaller process geometry technologies. The remaining amounts are expected to be utilized
primarily for purchases of information systems, and for adding equipment in our fabs running more
mature technologies to maximize utilization corresponding to the anticipated product mix. We expect
depreciation and amortization to be approximately $520&nbsp;million in 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Planned Research and Development Expenditures</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We expect to incur approximately $150&nbsp;million for research and development, or R&#038;D, in 2006,
as we expect an increase in development activities related to the 65nm technology node and also in
our share of expenses related to the Chartered-IBM joint-development for the 45nm technology node.
Our investment in R&#038;D allows us to continue developing new and advanced processes down to the 45nm
technology node.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>CRITICAL ACCOUNTING POLICIES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The preparation of the consolidated financial statements in accordance with U.S. 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 revenue and expenses during the reporting period. Estimates are based
on historical experience, current conditions and on various other assumptions that are believed to
be reasonable under the circumstances. Actual results could differ from these estimates. We believe
the following critical accounting policies require us to make significant judgments and estimates
in the preparation of our consolidated financial statements:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Depreciation and Amortization of Long-lived Assets</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our results of operations are generally affected by the capital intensive nature of our
business. A large proportion of our cost of revenue is fixed in nature. The major components of our
fixed costs included in our cost of revenue relate to depreciation on property, plant and equipment
and amortization of technology license arrangements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We depreciate wafer fab buildings over 20&nbsp;years, mechanical and electrical installations in
the fabs over ten years, and equipment and machinery over five years using the straight-line method
to their estimated recoverable salvage values. We amortize technology licenses over the shorter of
the license period or the estimated useful life of the license, which on weighted average is
approximately six years, using the straight-line method. These lives represent our estimate of the
periods that we expect to derive economic benefits from the assets. In estimating these useful
lives and recoverable salvage values of our property, plant and equipment and technology licenses
and in determining whether subsequent revisions to the useful lives and salvage values are
necessary, we consider the likelihood of technological obsolescence arising from changes in
production techniques, technology, market demand and intended use. We routinely review the
remaining estimated useful lives and salvage values of our property, plant and equipment and our
technology licenses to determine if such lives and values should be adjusted.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In commencing depreciation of Fab 7, our first 300-mm wafer fabrication facility, during the
second quarter of 2005, we have estimated recoverable salvage values that are higher than our
historical estimates for equipment when our other fabs began service. This is due primarily to the
equipment being at the early introduction of the life cycle of this technology and thus we expect
the estimates of salvage values at the end of our use of the equipment to be higher than we have
historically expected in our other fabs. We have historically estimated that we would not have recoverable salvage values.
</DIV>

<P align="center" style="font-size: 10pt">41
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There have been no significant changes to our estimates of useful lives or salvage values
during any of the last three years. However, actual useful lives and salvage values of our
long-lived assets may be shorter or longer and higher or lower, respectively, than our estimates.
If we had used different estimates of useful lives or salvage values of our long-lived assets, our
results might have been materially different.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Recoverability of Long-lived Assets</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also routinely review our long-lived assets that are held for disposal for impairment in
comparison to their fair values, and we review assets that are held and used, including technology
licenses, for impairment whenever events or changes in circumstances indicate that their carrying
amounts may not be recoverable. We perform impairment tests for groups of assets at the lowest
level of identifiable independent cash flows. In determining the appropriate asset groupings, we
must make subjective judgments in identifying the independent cash flows that can be related to
each asset group considering our foundry model and the degree of interchangeability of the various
components of our manufacturing capacity. We consider the degree to which each asset group&#146;s
revenue depends on the revenue-producing activities of one or more other asset groups and the
availability of financial information on such asset groups. In some cases, it is not practical to
identify the cash flows associated with a particular asset or group of assets due to the integrated
nature of our production process and the multi-technology capability of our process equipment. The
result of our analysis is that we have identified the lowest level of identifiable independent cash
flows as our individual fabs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The determination of recoverability is based on an estimate of undiscounted cash flows
expected to result from the use of the asset group and its eventual disposition. The estimate of
cash flows is based upon, among other things, certain assumptions about expected future operating
performance, ASP, utilization rates and other factors. If the sum of the undiscounted cash flows
(excluding interest) is less than the carrying value, an impairment charge is recognized for the
amount that the carrying value of the asset exceeds its fair value based on the best information
available, including discounted cash flow analysis. However, due to the cyclical nature of our
industry and changes in our business strategy, market requirements or the needs of our customers,
we may not always be in a position to accurately anticipate declines in the utility of our
equipment or licenses until they occur.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2003, 2004 and 2005, we recorded impairment charges of $9.0&nbsp;million, $1.0&nbsp;million and $3.9
million, respectively, on assets held for sale resulting from decisions to rationalize capacity and
therefore to sell certain assets. In 2004, we also recorded an impairment charge of $1.7&nbsp;million
resulting from the migration to an enhanced manufacturing system.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;However, if we had made different estimates of our future cash flows or fair values of our
assets held for sale, we might have reached different conclusions regarding impairments, and our
results might therefore have been materially different.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Valuation of Inventory</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our inventories are stated at the lower of cost or market (net realizable value) and consist
of work-in-progress, raw materials and consumable supplies and spares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Cost. </I>Cost is determined using standard cost and an allocation of the cost variances arising
in the period of production, which approximates actual costs determined on the weighted average
basis. We determine the standard cost of each wafer based on estimates of the materials, labor, and
other costs incurred in each process step associated with the manufacture of our products. We
allocate labor and overhead costs to each step in the wafer production process based on normal fab
capacity utilization, with costs arising from abnormal under-utilization of capacity expensed when
incurred. The unit cost of a wafer generally decreases as fixed overhead charges are allocated over
a larger number of units produced. Conversely, during periods of low utilization of capacity, the
unit cost of a wafer would generally increase.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Net Realizable Value. </I>We routinely review our inventories for their saleability and for
indications of obsolescence to determine if inventories should be recorded at net realizable value.
Net realizable value is the estimated selling price in the ordinary course of business less the
estimated costs necessary to make a sale. In estimating the net realizable value of our
inventories, we consider the likelihood of changes in market demand for our inventories.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Judgments and estimates regarding future selling prices, level of demand and indications of
obsolescence must be made and used in connection with evaluating whether such write-downs are
needed and in what amount.
</DIV>

<P align="center" style="font-size: 10pt">42
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2004 and 2005, we reduced carrying values of inventory by $30.2&nbsp;million and
$32.7&nbsp;million, respectively, to write-down certain inventories to estimated net realizable value.
Subsequent to these write-downs, we sold or disposed of certain portions of such inventories. The
amounts ultimately realized for the years ended December&nbsp;31, 2004 and 2005 were at or near to the
net realizable value we had previously estimated for these inventories, resulting in no significant
impact to our gross margins in each of those years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we had made different estimates on allocation of costs to different process steps, normal
and abnormal capacity utilization, future demand for existing inventory, or inventory selling
prices, we might have reached different conclusions regarding inventory values, and therefore our
results might have been materially different.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Revenue Recognition</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We enter into arrangements with customers which typically include, in addition to
fabricating semiconductor wafers, pre-fabricating services such as engineering services and masks
generation, and associated assembly and test services. We derive revenue primarily from fabricating
semiconductor wafers and, to a lesser extent, from providing associated subcontracted assembly and
test services and pre-fabricating services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;When our arrangements include multiple deliverables, we evaluate whether to divide the
deliverables into separate units of accounting using certain specified criteria. The total
arrangement consideration is allocated to each unit of accounting based on fair values in
accordance with the methodology in Financial Accounting Standards Board, or FASB, Emerging Issues Task Force, or EITF, Issue 00-21,
&#147;Accounting for Revenue Arrangements with Multiple Deliverables&#148;. Substantially all of our
arrangements for the sale of
semiconductor wafers and related services consists of a single unit of accounting. If we
had made different judgments and estimates regarding the components of our multiple-element
arrangements or their fair values, our results might be materially different.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenue for each unit of accounting is recognized when the contractual obligations have been
performed and, where applicable, delivery has occurred and title and risk of loss has passed to the
customer, there is evidence of a final arrangement as to the specific terms of the agreed upon sales,
selling prices to the customers are fixed or determinable and collection of the revenue is
reasonably assured. Generally, this results in revenue recognition upon shipment of wafers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other arrangements include sale of equipment and contemporaneous licensing of intellectual
property. Arrangement consideration is allocated between equipment and licensing of
intellectual property using the residual method based on the fair value of equipment sold.
Estimates of fair value of equipment are based on the resale prices of similar equipment sold
on the used equipment market. However, if we had made different estimates of fair value of
equipment, the allocation of income between gain on asset sales and income from intellectual
property might have been materially different. Income from intellectual property is
classified as a component of other income, net, in our consolidated statement of operations
as it is not considered as a source of income from our principal operations, and is
recognized when the title and risk of loss have passed to the customer or the license is
delivered, there is evidence of a final arrangement, fees are fixed or determinable, and
collectibility is reasonably assured.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also receive income-related grants to subsidize training and research and development
expenses. Income is recognized on these grants when we believe it is probable that expenditures
already incurred will constitute qualifying expenditures for purposes of reimbursement under the
grants that have been awarded. If we had made different estimates of the amount or timing of
qualifying expenditures, our results might be materially different.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Sales Credits and Returns Allowances</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our revenue per wafer is generally dependent upon the wafer yield. The process technology for
the manufacture of semiconductor wafers is highly complex and 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 sales
credits or returns. We make estimates of wafer yield and potential sales credits and returns and
provide for such credits and returns 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. We have charged $5.9&nbsp;million, $4.8&nbsp;million and $18.3&nbsp;million to
results of our operations for sales credits and returns for 2003, 2004 and 2005, respectively.
Sales credits and returns as a percentage of gross revenue may fluctuate from year to year and not
necessarily follow the gross revenue trend due to specific claims in any particular period related
to certain new processes and variations in wafer yield. We typically experience lower sales credits
and returns
</DIV>

<P align="center" style="font-size: 10pt">43
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>


<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">as the manufacturing processes mature and higher sales credits and returns on new processes.
Our actual sales credits and returns have not historically been significantly different from our
estimates, and our method of estimating sales credits and returns and the significant assumptions
used have been consistently determined over the past three years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Significant management judgments and estimates must be made and used in connection with
determining revenue per wafer and in establishing the sales credits and returns allowances in any
accounting period. Had we made different estimates of wafer yield or future sales credits and
returns, our results might be materially different.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Collectibility of Accounts Receivable</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Similarly, we must make estimates of the collectibility of our accounts receivable. We believe
that we adequately manage our credit risk through our credit evaluation process, credit policies,
and credit control and collection procedures. We review our accounts receivable on a periodic basis
and make specific allowances when there is doubt as to the collectibility of individual receivable
balances. In evaluating the collectibility of individual receivable balances we consider the age of
the balance, the customer&#146;s historical payment history, their current credit-worthiness and current
economic trends. Our actual uncollectible accounts have not historically been significantly
different from our estimates. However, if we had made different estimates of collectibility of
individual receivable balances, our results might have been materially different.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Income Taxes</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The tax rates used in the calculation of our tax liabilities, deferred tax assets and
deferred tax liabilities, assumes that we will fulfill qualifying conditions of the special tax
incentive. Those conditions require us to achieve fixed amounts of capital expenditure and
headcount by certain dates. If we do not meet those conditions, we will need to adjust the recorded
tax liabilities, deferred tax assets and deferred tax liabilities and apply the applicable
prevailing corporate tax rates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, the calculation of our tax liabilities and deferred tax assets and liabilities
involves dealing with uncertainties in the application of complex tax regulations. We recognize
liabilities based on our estimate of whether, and the extent to which, tax payments are probable.
If we ultimately determine that payment of these amounts is unnecessary, we reverse the liability
during the period in which we determine that the liability is no longer necessary. We record an
additional charge in our provision for taxes in the period in which we determine that the recorded
tax liability is less than we expect the ultimate assessment to be. Resolution of the uncertainties
in a manner inconsistent with our expectations could have a material impact on our results of
operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 unutilized wear and tear allowances. 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have evaluated our deferred tax asset position and the need for a valuation allowance. The
assessment requires the exercise of judgment on the part of our management with respect to, among
other things, expected future taxable income, as well as past performance, and prudent and feasible
tax planning strategies. Our forecast of expected future taxable income is based on historical
taxable income and projections of future taxable income over the periods that the deferred tax
assets are deductible. We consider the need for a valuation
allowance where negative evidence, such as cumulative losses in recent years, creates
significant uncertainty about our ability to earn future taxable income sufficient to realize tax
benefits in future years and is difficult to overcome.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A valuation
allowance is established for unutilized wear and tear allowances and other deferred tax assets
where it is more likely than not that such allowances and deferred tax assets will not be realized. As a result of this assessment, we have
recorded valuation allowance of $68.2&nbsp;million and $322.4&nbsp;million as of December&nbsp;31, 2004 and
2005,
respectively. This did not result in a significant impact to our consolidated statement of
operations due primarily to a corresponding decrease and increase in deferred tax assets recorded
as of December&nbsp;31, 2004 and 2005, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in market conditions that differ materially from our current expectations and changes
in future tax laws in the Singapore and international jurisdictions may cause us to change our
judgments of future taxable income. These changes, if any, may require us to adjust our existing
tax valuation allowance higher or lower than the amount we currently have recorded; such adjustment
could have a material impact on the tax expense for the fiscal year in which these changes
occur.
</DIV>

<P align="center" style="font-size: 10pt">44
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>RESULTS OF OPERATIONS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth certain operating data as a percentage of net revenue for the
periods indicated:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Years ended December 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">117.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">82.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">88.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(17.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>


<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Research and development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Fab start-up costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Sales and marketing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other operating expenses (income), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(54.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(11.0</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income (expense):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Equity in income (loss)&nbsp;of SMP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest expense and amortization of debt discount, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4.0</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Exchange gain (loss), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.0</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;before income taxes and minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(51.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(14.2</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;before minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(53.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(15.5</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interest in loss of CSP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)&nbsp;prior to cumulative effect adjustment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(51.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(15.5</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cumulative effect adjustment for change in accounting
principle</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(52.8</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(15.5</TD>
    <TD nowrap>)%</TD>
</TR>

<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less: Accretion to redemption value of convertible
redeemable preference shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.3</TD>
    <TD nowrap>)%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)&nbsp;available to common shareholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(52.8</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(15.8</TD>
    <TD nowrap>)%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth a breakdown of revenue by market sector for the periods
indicated:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Years ended December 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Communications</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">46</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">51</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">35</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Computer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Consumer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other&nbsp;*</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth a breakdown of revenue by geographical region for the
periods indicated:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Years ended December 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Americas</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">64</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">68</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">75</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Europe</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Asia-Pacific</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Japan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">45
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth a breakdown of revenue by technology (um)&nbsp;for the periods
indicated:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Years ended December 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">0.09 and below</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">19</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Up to 0.13</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Up to 0.18</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Up to 0.25</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Up to 0.35</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Above 0.35</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other *</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><B>Note:</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>&nbsp;</B></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><B>*</B></TD>
    <TD>&nbsp;</TD>
    <TD>Includes revenue from generation of customers&#146; mask sets</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Years ended December&nbsp;31, 2004 and December&nbsp;31, 2005</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Net revenue</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We derive revenue primarily from fabricating semiconductor wafers and, to a lesser extent,
under some arrangements with our customers, from providing associated subcontracted assembly and
test services as well as pre-fabrication services such as masks generation and engineering
services. Net revenue increased 10.8% from $932.1&nbsp;million in 2004 to $1,032.7&nbsp;million in 2005. The
semiconductor industry recovery, which began to accelerate in the second half of 2003, continued
into the first half of 2004. However, we experienced market weakness from the second half of June
2004 due to excess inventories in the semiconductor companies and softening in certain end markets.
This weakness continued into the first half of 2005 as the industry continued to work through the
excess inventories. We began to see a recovery in demand in the second quarter of 2005 as revenue
increased sequentially by 7.0% from the first quarter of 2005 to the second quarter of 2005. Our
revenue continued to increase sequentially by 49.5% and 26.6% in the third and fourth quarters of
2005, respectively. The increase in revenue in the third quarter of 2005 was due mainly to the ramp
up of 90nm shipments from our new Fab 7. Our net revenue increased in the fourth quarter of 2005
as we capitalized on the growth in our leading-edge technologies and also benefited from favorable
market conditions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our customers continued to make increased use of our leading-edge technologies, and revenue
from our 0.13um and smaller process geometry technologies increased by 145% between 2004 and 2005.
Revenue from these leading-edge technologies represented 19% of our total revenue in 2004 as
compared to 42% of our total revenue in 2005. Out of our total revenue in 2005, 19% was
attributable to revenue from our 90nm technologies, driven by 90nm shipments in the second half of
2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shipments increased 4.8% from 921,014 wafers (eight-inch equivalent) in 2004 to 965,045 wafers
(eight-inch equivalent) in 2005. ASP increased slightly from $1,012 per wafer (eight-inch
equivalent) to $1,036 per wafer (eight-inch equivalent) over the same period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2004, the communications sector, which represented 51% of our total revenue, was our
highest revenue contributor, followed by the computer sector at 30% of our total revenue. In 2005,
each of the communications and the consumer sectors represented 35% of our total revenue, while the
computer sector represented 25% of our total revenue.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due primarily to a significant decrease in demand for mobile phone handsets devices, and to a
lesser extent, a decrease in demand for cable modems partially offset by an increase in demand for
digital subscriber line devices, communications sector revenue decreased by 24% between 2004 and
2005. Concurrently, computer sector revenue also decreased, but to a lesser extent, by 8% between
2004 and 2005, due primarily to a decrease in demand for optical storage devices, partially offset
by an increase in demand for personal computer peripherals, workstations and personal computer
motherboard devices.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On the other hand, revenue from the consumer sector, which represented 15% of our total
revenue in 2004, increased by 159% to account for 35% of our total revenue in 2005. This increase
was due primarily to a significant increase in demand for video game devices, and to a lesser
extent, an increase in demand
</DIV>

<P align="center" style="font-size: 10pt">46
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">for MP3/CD/MD audio player/recorders devices and set-top box devices, partially offset by a
decrease in demand for DVD player/recorders devices.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result of customer mix changes, net revenue by geographical region increased by 22%, 11%,
11% in the Americas, Japan and Europe regions, respectively, in 2005 as compared to 2004. The Asia
Pacific region recorded a decline of 28% over the same period. The Americas continued to be our
largest contributor to revenue, representing 75% of our total revenue in 2005, an increase from 68%
of our total revenue in 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Cost of revenue and gross profit</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of revenue includes depreciation expense, attributed overheads, cost of labor and
materials, subcontracted expenses for assembly and test services, masks generation costs, as well
as amortization of certain technology licenses. Cost of revenue increased by 19.2% from $769.3
million in 2004 to $917.0&nbsp;million in 2005 as compared to a 4.8% increase in shipments due primarily
to increased depreciation and other manufacturing costs associated with the addition of new
capacity in 2005. A large proportion of our cost of revenue is fixed in nature and depreciation
continued to be a significant portion of our cost of revenue, comprising 50.8% and 47.6% of the
cost of revenue in 2004 and 2005, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The unit cost of a wafer generally decreases as fixed overhead charges, such as depreciation
expense on the facility and semiconductor manufacturing equipment, are allocated over a larger
number of wafers produced. Conversely, the unit cost of a wafer generally increases when a smaller
number of wafers are produced. However, when cost of revenue increases at a faster rate compared to
the increase in number of wafers produced, the unit cost of a wafer generally increases. Although
shipments increased by 4.8% between 2004 and 2005, cost per wafer shipped increased by 10.3% from
$835 (eight-inch equivalent) in 2004 to $921 (eight-inch equivalent) in 2005. This was due
primarily to our cost of revenue increasing at a higher rate than the increase in shipments,
arising from increased depreciation and other manufacturing costs associated with the addition of
new capacity in 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As described in &#147;Item&nbsp;3. Key Information &#151; D. Risk Factors &#151; Risks Related to
Investment in a Corporation with International Operations &#151; Exchange rate fluctuations may
increase our costs and capital expenditures, which could affect our operating results and financial
position,&#148; exchange rate fluctuations may increase our costs. However in 2004 and 2005, there is no
significant impact on our cost of revenue arising from fluctuations in exchange rates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our gross profit deteriorated from 17.5% of net revenue in 2004 to 11.2% of net revenue in
2005, due primarily to a lower utilization rate and increased depreciation and other manufacturing
costs associated with the addition of new capacity in 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Research and development expenses</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;R&#038;D expenses consist primarily of our share of expenses related to the Chartered-IBM
joint-development (on 90nm and 65nm technology node processes), salaries and benefits for R&#038;D
personnel and depreciation of R&#038;D equipment. R&#038;D expenses increased by 3.2% from $118.3&nbsp;million in
2004 to $122.1&nbsp;million in 2005 due primarily to increased design services activities and higher
development activities related to our 65nm technology node, partially offset by lower R&#038;D
expenditures related to 0.13um technologies as we completed our 0.13um technology development
program.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Fab start-up costs</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fab start-up costs, all related to Fab 7, decreased by 31.6% from $33.2&nbsp;million in 2004 to
$22.7&nbsp;million in 2005. From the first quarter of 2004, the ramp up activity level had increased in
support of our efforts to begin commercial shipments. Fab start-up costs decreased in the
second quarter of 2005 as Fab 7 entered commercial production during that quarter. No fab start-up
costs were recorded in the second half of 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Sales and marketing expenses</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales and marketing expenses consist primarily of payroll related costs for sales and
marketing personnel, EDA-related expenses and costs related to customer prototyping activities.
EDA-related expenses and costs related to customer prototyping activities represent some of our
sales and marketing efforts to attract new customers and expand our penetration on existing
customers. Sales and marketing expenses increased by 11.7% from $37.8&nbsp;million in 2004 to $42.2
million in 2005. The increase was due primarily to higher expenses resulting from expanded offering
of EDA tools provided to assist customers in their design activities and higher financial support
for customer prototyping activities.
</DIV>

<P align="center" style="font-size: 10pt">47
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>General and administrative expenses</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and administrative, or G&#038;A, expenses consist primarily of salaries and benefits for
administrative personnel, consultancy, legal and professional fees and depreciation of
non-production equipment. G&#038;A expenses increased by 14.5% from $33.9&nbsp;million in 2004 to $38.8
million in 2005. This was due primarily to higher payroll-related expenses in 2005 and several
transactions in 2004 including a gain of $3.0&nbsp;million associated with the resolution of
contingencies related to a technology license agreement and a gain of $1.1&nbsp;million associated with
the resolution of a supplier advance that was considered doubtful of recovery.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Other operating expenses (income), net</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other operating income, net, of $9.0&nbsp;million in 2004 related primarily to a gain of $10.4
million resulting from an equipment disposition with CSMC and resolution of a goods and services
tax matter of $4.9&nbsp;million, partially offset by Fab 1 restructuring charges of $4.6&nbsp;million and an
impairment charge of $1.7&nbsp;million resulting from the migration to an enhanced manufacturing system.
Other operating expenses, net, of $3.9&nbsp;million in 2005 related to a fixed asset impairment charge
on assets held for sale resulting from decisions to rationalize capacity and therefore to sell
certain assets. Further details are disclosed in Note 22 of the consolidated financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Equity in income of SMP</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Equity in income of SMP was $27.6&nbsp;million in 2004 compared to $6.5&nbsp;million in 2005, due
primarily to significantly lower revenue in 2005 arising from demand weakness in certain end
markets. As with the results of our majority-owned fabs, the equity in income of SMP can have a
material effect on our results of operations. In 2004, the equity in income of SMP was $27.6
million compared to our net income of $6.6&nbsp;million. The equity in income of SMP was $6.5&nbsp;million in
2005 compared to our net loss of $159.7&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have provided, for the two fiscal years ended December&nbsp;31, 2005, the following information
on our total business base revenue, which includes our share of SMP revenue. Chartered&#146;s share of
SMP revenue and net revenue, including Chartered&#146;s share of SMP presented in the following table,
are non-U.S. GAAP financial measures. We have included this information because SMP can have a
material effect on our consolidated statements of operations and we believe that it is useful to
provide information on our share of SMP revenue in proportion to our total business base revenue.
However, SMP is a minority-owned joint venture company that is not consolidated under U.S. GAAP. We
account for our 49.0% investment in SMP using the equity-method. Under the strategic alliance
agreement with Agere Systems Singapore, the parties do not share SMP&#146;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 share of SMP&#146;s net results based on the gross profits from sales to
the customers that we direct to SMP, after deducting our share of the overhead costs. The following
table provides a reconciliation showing comparable data based on net revenue determined in
accordance with U.S. GAAP, which do not include our share of SMP:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>(in millions)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenue (U.S. GAAP)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">932.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,032.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Chartered&#146;s share of SMP revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">170.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">99.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenue including Chartered&#146;s share of SMP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,102.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,131.9</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additionally, the following table provides information that indicates the effect of SMP&#146;s
operations on some of our non-U.S. GAAP performance indicators:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="80%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Excluding</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Including</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Excluding</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Including</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Chartered&#146;s share</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Chartered&#146;s share</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Chartered&#146;s share</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Chartered&#146;s share</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>of SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>of SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>of SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>of SMP</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shipments (in thousands)*</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">921.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,035.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">965.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,051.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ASP per wafer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,012</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,065</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,036</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,045</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><B>Note:</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>&nbsp;</B><B>&nbsp;</B></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Eight-inch equivalent wafers</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">48
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">






<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Other income, net</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other income, net, in 2004 included the recognition of a gain of $14.3&nbsp;million from the sale
of technology to CSMC, grant income of $29.5&nbsp;million, of which $16.1&nbsp;million arose from the closure
of a pending grant claim associated with a previously terminated joint technology development
agreement, and a gain of $2.8&nbsp;million related to an intellectual property licensing agreement.
Other income, net, in 2005 included an expense of $7.0&nbsp;million related to the termination of
hedging transactions and other costs as a result of the Tender Offer for and repurchase of our
Convertible Notes. Due primarily to the above, other income, net, decreased by 95.3% from $52.3
million in 2004 to $2.4&nbsp;million in 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Interest expense and amortization of debt discount, net</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense and amortization of debt discount, net, increased by 122.0% from $18.6
million in 2004 to $41.2&nbsp;million in 2005, due primarily to higher interest expense resulting from
higher interest rates and higher outstanding debt balances, partially offset by higher interest
income, and to a lesser extent, higher interest capitalization associated with capital expenditures
related to Fab 7 and Fab 6. See the &#147;&#151; Liquidity and Capital Resources &#151; Current and expected
liquidity&#148; section below for details of the borrowings we had obtained during the periods
indicated.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Income tax expense</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We currently pay tax on (1)&nbsp;interest income, (2)&nbsp;rental income, (3)&nbsp;sales of wafers using
technologies that do not benefit from preferential tax treatment and (4)&nbsp;other income not
specifically exempted from income tax. In 2004, we recorded income tax expense of $4.8&nbsp;million on
an income before income taxes of $11.3&nbsp;million, including a reversal of $9.8&nbsp;million of accrued
taxes resulting from the resolution of certain matters related to the closure of Fab 1. In 2005, we
recorded income tax expense of $13.0&nbsp;million on a loss before income taxes of $146.6&nbsp;million. The
increase in the effective tax expense in 2005 was due primarily to higher taxable net interest
income.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Minority interest in CSP</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due to cumulative losses, our obligations to the minority shareholders of CSP were reduced to
zero in the first quarter of 2003. Therefore none of CSP&#146;s losses from that point forward have been
allocated to the minority interest in our consolidated statements of operations. The effect of this
on our results of operations for 2004 and 2005 was losses not allocated to the minority interest
according to their proportionate ownership of $55.8&nbsp;million and $64.9&nbsp;million, respectively, and
this reduced net income (loss)&nbsp;in the same amounts indicated for the respective periods.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Accretion to redemption value of convertible redeemable preference shares</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are required to accrete the carrying amounts of the preference shares to their redemption
values at maturity and record such accretion over the remaining period until the maturity date on
August&nbsp;17, 2010 using the effective interest method. Such accretion adjusts net income (loss)
available to common shareholders. Accretion charges for 2005 were $3.2&nbsp;million. There were no
accretion charges for 2004. Refer to Note 15 of the consolidated financial statements for more
details on the preference shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Years ended December&nbsp;31, 2003 and December&nbsp;31, 2004</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Net revenue</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net revenue was $932.1&nbsp;million in 2004, up 68.9% compared to $551.9&nbsp;million in 2003. The
semiconductor industry recovery began to accelerate in the second half of 2003 and continued into
the first half of 2004. However, we experienced market weakness from the second half of June&nbsp;2004
due to excess inventories in the semiconductor companies and the softening in certain end markets
and we experienced a sequential revenue decline of 25.9% in the fourth quarter of 2004. The demand
weakness was concentrated in our 0.18um and 0.25um capacity and attributed to five of our larger
customers, even though our engagements with these customers are in diverse end markets. Despite a
weaker fourth quarter in 2004, we registered year-over-year revenue growth of 68.9% in 2004. This
growth was primarily the result of higher demand. Shipments in 2004 were 921,014 wafers (eight-inch
equivalent), an increase of 52.0% compared to 606,039 wafers (eight-inch equivalent) in 2003, due
to higher demand. ASP increased by 11.1% to $1,012
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">per wafer (eight-inch equivalent) from $911 per wafer (eight-inch equivalent) over the same
period, due primarily to richer product and customer mix.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2003, the communications sector, which represented 46% of our total revenue, was our
highest revenue contributor, followed by the computer sector at 33% of our total revenue. Due
primarily to a significant increase in demand from mobile phone handset and LAN switches/routers
customers, communications sector revenue increased by 88% between 2003 and 2004. Concurrently,
computer sector revenue increased by 50% over the same period mainly due to significant increases
in revenue of the optical storage and personal computer peripherals markets, arising primarily from
a significant increase in shipments to these markets. As a result, communications and computer
sector revenue represented 51% and 30%, respectively, of our total revenue in 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net revenue by geographical region increased by 79%, 77%, 34% and 18% in the Americas, Asia
Pacific, Japan and Europe regions, respectively, in 2004 as compared to 2003. This was driven
primarily by increased shipments to all geographical regions in 2004. The Americas continued to be
our largest contributor to revenue, representing 68% of our total revenue in 2004, an increase from
64% of our total revenue in 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fab 1 ceased operations at the end of March&nbsp;2004, having successfully transitioned a
significant portion of ongoing business to Fab 2. Our first quarter of 2004 revenue benefited
approximately $10&nbsp;million from end-of-life and safety stock purchases by Fab 1 customers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Cost of revenue and gross profit (loss)</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of revenue increased by 18.7% from $648.3&nbsp;million in 2003 to $769.3&nbsp;million in 2004
despite a 52.0% increase in volumes. Depreciation continued to be a significant portion of our cost
of revenue, comprising 58.6% and 50.8% of our cost of revenue in 2003 and 2004, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The unit
cost of a wafer generally decreases as fixed overhead charges, such as depreciation
expense on the facility and semiconductor manufacturing equipment, are allocated over a larger
number of units produced. Cost per wafer shipped decreased by 22.0% from $1,070 in 2003 to $835 in
2004 due to higher volumes and to a lesser extent, cost savings and avoidance from our cost
reduction programs. As described in &#147;Item&nbsp;3. Key Information &#151; D. Risk Factors &#151; Risks Related to
Investment in a Corporation with International Operations &#151; Exchange rate fluctuations may
increase our costs and capital expenditures, which could affect our operating results and financial
position,&#148; exchange rate fluctuations may increase our costs. However in 2003 and 2004, there is no
significant impact on our cost of revenue arising from fluctuations in exchange rates. In 2003, as a percentage of net revenue, we recorded a gross loss of 17.5% of
net revenue. Due primarily to significantly higher revenue, we recorded a gross profit of 17.5% of
net revenue in 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Research and development expenses</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;R&#038;D expenses decreased by 4.7%, from $124.1&nbsp;million in 2003 to $118.3&nbsp;million in 2004, due
primarily to lower R&#038;D expenditures related to 0.13um process.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Fab start-up costs</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fab start-up costs, all related to Fab 7, increased by 260.1% from $9.2&nbsp;million in 2003 to
$33.2&nbsp;million in 2004, as the activity level increased in support of our plan to begin commercial
production by mid-2005. We began equipment move-in at Fab 7, our first 300-mm fab, at the end of
March&nbsp;2004. Fab 7 achieved functional 0.13um 300-mm wafers within five months of equipment move-in,
and launched engineering 300-mm wafers for both our 0.11um process and the Chartered-IBM 90nm
platform in 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Sales and marketing expenses</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales and marketing expenses decreased by 2.6% from $38.7&nbsp;million in 2003 to $37.8&nbsp;million
in 2004. The decrease was due primarily to lower financial support for customer prototyping
activities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>General and administrative expenses</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;G&#038;A expenses decreased by 17.0% from $40.8&nbsp;million in 2003 to $33.9&nbsp;million in 2004. This is
due primarily to a gain of $3.0&nbsp;million associated with the resolution of contingencies related to
a technology license agreement and a gain of $1.1&nbsp;million associated with the resolution of a
supplier advance that was previously considered doubtful of recovery and a decrease in payroll
related expenses.
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Other operating expenses (income), net</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other operating income, net, of $9.0&nbsp;million in 2004 related primarily to a gain of $10.4
million resulting from an equipment disposition with CSMC and resolution of a goods and services
tax matter of $4.9&nbsp;million, partially offset by Fab 1 restructuring charges of $4.6&nbsp;million and an
impairment charge of $1.7&nbsp;million resulting from the migration to an enhanced manufacturing system.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 0pt">Fab 1 ceased operations at the end of March&nbsp;2004, as planned. A summary of estimated and actual
restructuring and related costs incurred arising from the shutdown of Fab 1 is disclosed in Note 22
of the consolidated financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other operating income, net, of $11.0&nbsp;million in 2003 related to the following items:
</DIV>

<DIV style="margin-top: 0pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A gain of $27.5&nbsp;million associated with the cancellation of our employee bonus award plan.</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A gain of $4.9&nbsp;million resulting from equipment disposition.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Partially offset by:
</DIV>

<DIV style="margin-top: 0pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A restructuring charge of $12.4&nbsp;million relating to the phase out of Fab 1.</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>An impairment charge of $9.0&nbsp;million on certain machinery and equipment that were
classified as held for sale on December&nbsp;31, 2003, as part of our fab capacity
rationalization.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Further details are disclosed in Note 22 of the consolidated financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Equity in income (loss)&nbsp;of SMP</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Equity in income of SMP was $23.2&nbsp;million in 2003 compared to an income of $27.6&nbsp;million in
2004, due primarily to lower depreciation charge and no interest cost in the second half of 2004 as
a result of early repayment of bank loans by SMP. As with the results of our majority-owned fabs,
the equity in income or loss of SMP can have a material effect on our consolidated statements of
operations. In 2003, the equity in income of SMP was $23.2&nbsp;million compared to our net loss of
$291.2&nbsp;million. The equity in income of SMP was $27.6&nbsp;million in 2004 compared to our net income of
$6.6&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have provided, for the two fiscal years ended December&nbsp;31, 2004, the following information
on our total business base revenue, which includes our share of SMP revenue. Chartered&#146;s share of
SMP revenue and net revenue, including Chartered&#146;s share of SMP presented in the following table,
are non-U.S. GAAP financial measures. We have included this information because SMP can have a
material effect on our consolidated statements of operations and we believe that it is useful to
provide information on our share of SMP revenue in proportion to our total business base revenue.
However, SMP is a minority-owned joint venture company that is not consolidated under U.S. GAAP. We
account for our 49.0% investment in SMP using the equity method. Under the strategic alliance
agreement with Agere, the parties do not share SMP&#146;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 share of SMP&#146;s net results based on the gross profits from sales to the customers that we
direct to SMP, after deducting our share of the overhead costs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table provides a reconciliation showing comparable data based on net revenue
determined in accordance with U.S. GAAP, which do not include our share of SMP:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>(in millions)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenue (U.S. GAAP)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">551.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">932.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Chartered&#146;s share of SMP revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">175.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">170.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenue including Chartered&#146;s share of SMP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">727.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,102.9</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


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<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additionally, the following table provides information that indicates the effect of SMP&#146;s
operations on some of our non-U.S. GAAP performance indicators:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Excluding</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Including</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Excluding</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Including</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Chartered&#146;s share</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Chartered&#146;s share</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Chartered&#146;s share</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Chartered&#146;s share</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>of SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>of SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>of SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>of SMP</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shipments (in thousands)*</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">606.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">722.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">921.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,035.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ASP per wafer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">911</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,012</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,065</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><B>Note:</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>&nbsp;</B></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Eight-inch equivalent wafers</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Other income, net</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other income, net, increased by 125.6% from $23.2&nbsp;million in 2003 to $52.3&nbsp;million in 2004,
due primarily to the recognition of a gain of $14.3&nbsp;million from the sale of technology to CSMC
as well as from higher grant income, in particular from the recognition of income of $16.1&nbsp;million
arising from the closure of a pending grant claim associated with a previously terminated joint
technology development agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Interest expense and amortization of debt discount, net</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense and amortization of debt discount, net, decreased by 38.2% from $30.1&nbsp;million
in 2003 to $18.6&nbsp;million in 2004, due primarily to higher interest capitalization associated with
the capital expenditures related to Fab 7 and Fab 6.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Income tax expense</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2003 and 2004, we paid tax on interest income, rental income and other income not
specifically exempted from income tax. Each of our existing fabs 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. Income taxes decreased from $11.7&nbsp;million in 2003 to $4.8
million in 2004. The decrease was due primarily to reversal of $9.8&nbsp;million of accrued taxes
resulting from the resolution of certain matters related to the closure of Fab 1, partially offset
by a $3.6&nbsp;million tax on income on the sale of technology to CSMC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Minority interest in CSP</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None of the losses in CSP were allocated to the minority interest in 2004, compared to $9.5
million in 2003. Due to cumulative losses, our obligations to the minority shareholders of CSP were
reduced to zero in the first quarter of 2003. Therefore, none of CSP&#146;s losses from that point
forward have been allocated to the minority interest in our consolidated statements of operations.
The result of this on our consolidated statements of operations was losses not allocated to the
minority interest according to their proportionate ownership of $74.3&nbsp;million and $55.8&nbsp;million for
2003 and 2004, respectively, and this reduced net (loss)&nbsp;income in the same amounts indicated for
the respective periods.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Quarterly Results</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth certain unaudited consolidated financial information, including
as a percentage of net revenue, for the eight fiscal quarters ended December&nbsp;31, 2005. 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 consolidated statements 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. See &#147;Item&nbsp;3. Key Information &#151; D. Risk Factors &#151; Risks Related to Our Operations
&#151; Our operating results fluctuate from quarter to quarter, which makes it difficult to predict our
future performance.&#148;
</DIV>


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</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="30"><B>Quarter ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="30" style="border-bottom: 1px solid #000000"><B>(in millions $)</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Mar 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Jun 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Sep 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Dec 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Mar 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Jun 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Sep 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Dec 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Consolidated Statements of
Operations Data:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">228.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">255.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">257.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">190.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">181.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">194.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">290.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">367.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">183.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">195.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">199.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">189.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">191.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">193.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">253.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">279.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">87.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Research and development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Fab start-up costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Sales and marketing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other operating expenses
(income), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(44.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(71.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(59.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(15.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income (expense):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Equity in income (loss)&nbsp;of SMP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other income (loss), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest expense and
amortization of debt
discount, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(14.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(16.1</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Exchange gain (loss), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.1</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(30.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(81.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(64.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(29.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax benefit (expense)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(26.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(84.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(67.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(34.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less: Accretion to redemption value
of convertible redeemable
preference shares
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss) available to
common shareholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(26.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(84.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(67.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(35.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">53
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
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    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
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    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="30"><B>Quarter ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="30" style="border-bottom: 1px solid #000000"><B>(as a percentage of net revenue)</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Mar 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Jun 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Sep 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Dec 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Mar 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Jun 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Sep 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Dec 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Consolidated Statements of
Operations Data:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">99.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">105.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">99.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">87.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Research and development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Fab start-up costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Sales and marketing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other operating expenses
(income), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(23.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(39.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(30.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income (expense):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Equity in income (loss)
of SMP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other income (loss), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest expense and
amortization of debt
discount, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Exchange gain (loss), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;before income
taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(15.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(44.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(33.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax benefit (expense)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(14.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(46.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(34.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less: Accretion to
redemption value of
convertible redeemable
preference shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.6</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss) available
to common shareholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">6.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">6.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(14.1</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(46.6</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(34.6</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12.2</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">6.6</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Net revenue</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The global recovery in the semiconductor industry, which began to accelerate in the second
half of 2003, continued through the first half of 2004. As a result, net revenue increased
sequentially from the first quarter of 2004 to the second quarter of 2004. However, we experienced
market weakness from the second half of June&nbsp;2004 due to excess inventories in the semiconductor companies and softening in certain end markets. This weakness continued into the first half of 2005 as the
industry continued to work through the excess inventories. This resulted in a sequentially flat
third quarter of 2004 followed by a sequential decline of 25.9% and 4.9% in net revenue for the
fourth quarter of 2004 and the first quarter of 2005, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We began to see a recovery in demand in the second quarter of 2005 as revenue increased
sequentially by 7.0% from the first quarter of 2005 to the second quarter of 2005. Our revenue
continued to increase sequentially by 49.5% and 26.6% in the third and fourth quarters of 2005,
respectively. The increase in revenue in the third quarter of 2005 was due mainly to the ramp up of
our new Fab 7 90nm shipments. Our
</DIV>

<P align="center" style="font-size: 10pt">54
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">net revenue increased in the fourth quarter of 2005 as we capitalized on the growth in our
leading-edge technologies and also benefited from favorable market conditions.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Gross margin</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The unit cost of a wafer generally decreases as fixed overhead charges, such as depreciation
expense on the facility and semiconductor manufacturing equipment, are allocated over a larger
number of units produced. Gross margin improved from the first quarter of 2004 to the second
quarter of 2004, due primarily to sequential increases in quarterly net revenue. In the third
quarter of 2004, gross margin was down 4.1% sequentially from $60.0&nbsp;million, or 23.4%, of revenue
in the second quarter of 2004, due primarily to increased costs associated with addition of new
capacity and lower utilization rate. Gross margin declined further by 98.7% sequentially in the
fourth quarter of 2004 due primarily to lower revenue as overall market demand fell, partially
offset by sale amounting to $1.6&nbsp;million of certain inventories for which we had previously written
down to an estimated net realizable value of zero in the third quarter of 2004. Such sale improved
our gross margin by approximately $1.6&nbsp;million in the fourth quarter of 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We recorded a negative gross margin of 5.4% for the first quarter of 2005 as revenue continued
to decline further from the fourth quarter of 2004. We began to see a recovery in demand in the
second quarter of 2005 and gross margin improved to a positive 0.2%. The revenue growth in the
third and fourth quarters of 2005 resulted in the further improvement of our gross margin in the
third and fourth quarters of 2005 to 12.8% and 24.0%, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Research and development expenses</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The sequential increase of R&#038;D expenses in the second quarter of 2004 was due primarily to an
increase in EDA development costs. R&#038;D expenses decreased sequentially in the third quarter of 2004
due primarily to a reduction in R&#038;D activities related to 0.13um technologies and remained at
approximately similar levels in the fourth quarter of 2004 and through to the second quarter of
2005. The increase in the third quarter of 2005 is due primarily to increased activity level at the
65nm technology node, while the sequential increase in the fourth quarter of 2005 was due primarily
to increased design services activities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Fab start-up costs</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fab start-up costs, all related to Fab 7, increased sequentially from the first quarter of
2004 to the third quarter of 2004, as we began equipment move-in in the first quarter of 2004. Fab
7 started pilot production at the end of 2004 and fab start-up costs increased sequentially in the
first quarter of 2005 as the activity level increased in support of our efforts to begin commercial
shipments. Fab start-up costs decreased in the second quarter of 2005 as Fab 7 entered commercial
production during the second quarter of 2005. No fab start-up costs were recorded in the second
half of 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Other operating expenses (income), net</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2004, we recorded a total of $4.6&nbsp;million in restructuring charges related to Fab 1, mainly
incurred in the first quarter of 2004 when the operations of Fab 1 ceased. Other operating
expenses, net, in the second quarter of 2004 related primarily to an impairment charge of $1.7
million resulting from the migration to an enhanced manufacturing system. In the third quarter of
2004, we recorded an income of $4.9&nbsp;million related to resolution of a goods and services tax
matter. In the fourth quarter of 2004, we recorded a gain of $10.4&nbsp;million resulting from an
equipment disposition with CSMC. Other operating expenses of $3.9&nbsp;million in the second quarter of
2005 related to a fixed asset impairment charge on assets held for sale. We did not incur any other
operating expenses (income), net, in the first, third and fourth quarters of 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Equity in income (loss)&nbsp;of SMP</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As with the results of our majority-owned fabs, the equity in income or loss of SMP can have a
material effect on our quarterly consolidated statements of operations. We recognized equity in
income of SMP in each of the quarters for the period from the first quarter of 2004 to the third
quarter of 2004, due primarily to growing SMP revenue over that period. However, due primarily to
significantly lower demand in the fourth quarter of 2004 and the first quarter of 2005, we recorded
equity in loss of SMP of $10.4&nbsp;million and $9.0&nbsp;million, respectively. In the second quarter of
2005, we recognized equity in income of SMP of $0.8&nbsp;million due primarily to higher revenue. The
sequential increase in equity in income of SMP in the third quarter of 2005 was due primarily to
lower depreciation expense recorded by SMP. Equity in income of SMP continued to increase
sequentially in the fourth quarter of 2005 due primarily to higher revenue. The equity in income
</DIV>

<P align="center" style="font-size: 10pt">55
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">or loss of SMP for the eight fiscal quarters ended December&nbsp;31, 2005 were significant amounts
when compared to the net income or net loss of the respective fiscal quarters during that period.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have provided, for the eight fiscal quarters ended December&nbsp;31, 2005, the following
information on our total business base revenue, which includes our share of SMP revenue.
Chartered&#146;s share of SMP revenue and net revenue, including Chartered&#146;s share of SMP presented in
the following table, are non-U.S. GAAP financial measures. We have included this information
because SMP can have a material effect on our consolidated statements of operations and we believe
that it is useful to provide information on our share of SMP revenue in proportion to our total
business base revenue. However, SMP is a minority-owned joint venture company that is not
consolidated under U.S. GAAP. We account for our 49.0% investment in SMP using the equity-method.
Under the strategic alliance agreement with Agere Systems Singapore, the parties do not share SMP&#146;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 share of SMP&#146;s net results based on the
gross profits from sales to the customers that we direct to SMP, after deducting our share of the
overhead costs. The following table provides a reconciliation showing comparable data based on net
revenue determined in accordance with U.S. GAAP, which do not include our share of SMP:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Mar 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Jun 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Sep 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Dec 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Mar 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Jun 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Sep 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Dec 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="31"><B>(in millions)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenue (U.S. GAAP)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">228.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">255.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">257.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">190.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">181.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">194.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">290.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">367.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Chartered&#146;s share of
SMP revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">55.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">52.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">49.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">14.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">14.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">25.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">26.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">32.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenue including
Chartered&#146;s share of
SMP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">283.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">308.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">306.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">204.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">196.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">219.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">316.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">399.4</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additionally, the following tables provide information that indicates the effect of SMP&#146;s
operations on some of our non-U.S. GAAP performance indicators:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>Mar 31, 2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>Jun 30, 2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>Sep 30, 2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>Dec 31, 2004</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Excluding</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Including</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Excluding</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Including</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Excluding</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Including</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Excluding</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Including</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Chartered&#146;s</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Chartered&#146;s</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Chartered&#146;s</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Chartered&#146;s</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Chartered&#146;s</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Chartered&#146;s</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Chartered&#146;s</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Chartered&#146;s</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>share of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>share of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>share of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>share of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>share of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>share of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>share of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>share of</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Quarter ended</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>SMP</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shipments (in
thousands)*</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">232.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">268.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">244.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">279.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">252.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">287.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">191.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">200.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ASP per wafer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">981</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,057</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,048</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,019</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,068</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">994</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,019</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>






<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><B>Note:</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>&nbsp;</B></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Eight-inch equivalent wafers</TD>
</TR>

</TABLE>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>Mar 31, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>Jun 30, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>Sep 30, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>Dec 31, 2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Excluding</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Including</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Excluding</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Including</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Excluding</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Including</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Excluding</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Including</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Chartered&#146;s</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Chartered&#146;s</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Chartered&#146;s</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Chartered&#146;s</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Chartered&#146;s</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Chartered&#146;s</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Chartered&#146;s</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Chartered&#146;s</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>share of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>share of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>share of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>share of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>share of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>share of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>share of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>share of</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Quarter ended</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>SMP</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shipments (in
thousands)*</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">175.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">186.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">203.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">224.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">270.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">295.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">314.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">345.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ASP per wafer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">996</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,019</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">913</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">944</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,035</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,039</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,139</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,130</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><B>Note:</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>&nbsp;</B></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Eight-inch equivalent wafers</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">56
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">






<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Other income (loss), net</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We recognized rental income in each of the eight fiscal quarters ended December&nbsp;31, 2005 and
R&#038;D and training grant income in each of the fiscal quarters from the first quarter of 2004 to the
third quarter of 2005. We also recognized a gain of $2.8&nbsp;million related to an intellectual
property licensing agreement in the first quarter of 2004. In the second quarter of 2004, we
recognized higher grant income, in particular from the recognition of an income of $16.1&nbsp;million
arising from the closure of a pending grant claim associated with a previously terminated joint
technology development agreement. Other income in the fourth quarter of 2004 included a gain of
$14.3&nbsp;million related to the sale of technology to CSMC and training grant income of $8.4&nbsp;million.
Other loss, net, in the third quarter of 2005 was due primarily to an expense of $7.0&nbsp;million
related to the termination of hedging transactions and other costs as a result of the Tender Offer
for and repurchase of our Convertible Notes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Interest expense and amortization of debt discount, net</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense and amortization of debt discount, net, remained at approximately similar
levels from the first quarter of 2004 to the second quarter of 2004. Interest expense and
amortization of debt discount, net, declined sequentially by 30.6% in the third quarter of 2004 and
decreased further by 25.6% in the fourth quarter of 2004. These decreases were due primarily to
higher interest capitalization associated with the capital expenditure related to Fab 7 and Fab 6.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We started to record sequential quarterly increases in interest expense and amortization of
debt discount, net, from the first quarter of 2005 to the third quarter of 2005, due primarily to
higher interest expense resulting from higher outstanding debt balances and higher interest rates,
partially offset by higher interest income. The sequential increase in interest expense and
amortization of debt discount, net, in the fourth quarter of 2005 was due primarily to higher
interest expense on capital lease obligations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Accretion to redemption value of convertible redeemable preference shares</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are required to accrete the carrying amounts of the preference shares, which were issued in
the third quarter of 2005, to their redemption values at maturity and record such accretion over
the remaining period until the maturity date on August&nbsp;17, 2010 using the effective interest
method. Such accretion adjusts net income (loss)&nbsp;available to common shareholders. Accretion
charges for the third and fourth quarters of 2005 were $0.8&nbsp;million and $2.4&nbsp;million, respectively.
There were no accretion charges prior to the third quarter of 2005. Refer to Note 15 of the
consolidated financial statements for more details on the preference shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>LIQUIDITY AND CAPITAL RESOURCES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Current and expected liquidity</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2005, our principal sources of liquidity included $819.9&nbsp;million in cash
and cash equivalents, and $591.8&nbsp;million of unutilized banking facilities consisting of term loans,
short-term advances and bankers&#146; guarantees.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In August&nbsp;2005, mainly to repurchase our Convertible Notes, we raised an aggregate of $925.0
million from a public offering of $625.0&nbsp;million of senior notes and a private placement of $300.0
million of units. We used the remaining proceeds from the offerings in excess of the amount used to
repurchase our Convertible Notes for working capital purposes. The units comprise preference shares
of par value $0.01 each and Amortizing Bonds, with an aggregate issue price of $300.0&nbsp;million. See
&#147;&#151; Outstanding indebtedness&#148; below for further details on the senior notes and the Amortizing
Bonds.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In August&nbsp;2005, we also commenced the Tender Offer for our Convertible Notes. As of the
expiration of the Tender Offer in September&nbsp;2005, $477.8&nbsp;million original principal amount of our
Convertible Notes, representing approximately 83.1% of our Convertible Notes, were validly tendered
for purchase and not withdrawn and we accepted these Convertible Notes, or Accepted Notes, for
purchase. The purchase price for the Accepted Notes was $1,140 for each $1,000 of original
principal amount of Convertible Notes plus the pro rata portion of the 2.5% per year semi-annual
interest payment accrued and unpaid up to, but excluding the settlement date of the Tender Offer.
The aggregate purchase price for the Accepted Notes was $549.7&nbsp;million. Following the completion of
the Tender Offer, $97.2&nbsp;million original principal amount of our Convertible Notes remained
outstanding as of December&nbsp;31, 2005. The interest rate swap contracts, which were previously
entered into in respect of the fixed-rate obligations associated with the Convertible Notes, were
terminated in September&nbsp;2005, and we recorded an expense of $7.0&nbsp;million related to the
</DIV>

<P align="center" style="font-size: 10pt">57
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">termination of these hedging transactions and other costs as a result of the Tender Offer for
and repurchase of our Convertible Notes.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Working capital, which is calculated as the excess of current assets over current liabilities,
was $162.7&nbsp;million as of December&nbsp;31, 2004. Our working
capital increased to $550.3&nbsp;million as of
December&nbsp;31, 2005. This resulted primarily from our cash and cash equivalents balance increasing
from $539.4&nbsp;million as of December&nbsp;31, 2004 to $819.9&nbsp;million as of December&nbsp;31, 2005, due mainly
to the remaining proceeds from the senior notes and units offerings in excess of the amount used to
repurchase our Convertible Notes in 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our target cash and cash equivalents balance as of December&nbsp;31, 2006 is approximately $700
million. This is based on our cash and cash equivalents of $820&nbsp;million as of December&nbsp;31, 2005,
planned draw downs of approximately $300&nbsp;million of our existing credit facilities, estimated net
receipts of capacity deposits of approximately $140&nbsp;million, expected cash outflows for capital
expenditures of approximately $650&nbsp;million and debt repayments of approximately $320&nbsp;million in
2006. Our target cash and cash equivalents balance also depends on our ability to generate
operating cash flow in 2006 and will depend largely on our operations and other factors, as
discussed in &#147;Item&nbsp;3. Key Information &#151; D. Risk Factors &#151; Risks Related To Our Operations &#151; Our
operating results fluctuate from quarter to quarter, which makes it difficult to predict our future
performance&#148; and elsewhere in this document.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on our current level of operations, we believe that our cash on hand, planned use of existing
credit facilities, credit terms with our vendors, and projected cash flows from operations will be
sufficient to meet our 2006 capital and research and development expenditures and working capital
needs. Depending on the pace of our future growth and technology
upgrades and migration, we may require additional financing from time to time, including for purposes of funding the capital
expenditure to equip Fab&nbsp;7 to its full planned capacity of
30,000 300-mm wafers per month. The completion of Fab&nbsp;7 is expected to take a number of years and will be paced by customer
demand and industry conditions. Our total capital investment in
Fab&nbsp;7 at completion is expected to be
approximately $2,700&nbsp;million to $3,000&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe in maintaining maximum flexibility when it comes to financing our business. We
regularly evaluate our current and future financing needs and may take advantage of favorable
market conditions to raise additional financing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There can be no assurance that our business will generate and continue to generate sufficient cash
flow to fund our liquidity needs in the future, or 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Historic operating cash flows</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2003, 2004 and 2005, net cash provided by operating activities was $48.1&nbsp;million, $331.7
million and $404.4&nbsp;million respectively. The $283.6&nbsp;million improvement in cash provided by
operating activities in 2004 as compared to 2003 was primarily a result of higher revenues in 2004.
In addition, we had higher collections from SMP. These improvements were partially offset by higher
payments on our payables and other current liabilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The $72.7&nbsp;million increase in cash flow from operating activities in 2005 as compared to 2004
was due primarily to higher collections as a result of higher sales. Cash flows from operating
activities in 2005 include receipt of a pre-payment of $40.0&nbsp;million from a customer for future
purchases which also secures access to wafer capacity, of which a fixed amount per wafer will be
recorded by us as additional revenue for every qualifying wafer purchased by the customer, with no
future related cash inflows. There was no receipt of pre-payment for future purchases in 2004. Cash
flow from operating activities in 2005 also included dividends of $29.5&nbsp;million from SMP, compared
to zero dividends in 2004.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Historic investing cash flows and capital expenditures</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities was $384.3&nbsp;million, $732.7&nbsp;million and $571.1&nbsp;million in
2003, 2004 and 2005 respectively. Investing activities consisted primarily of capital expenditures
totaling $220.8&nbsp;million, $686.3&nbsp;million and $628.1&nbsp;million in 2003, 2004 and 2005 respectively.
Capital expenditures in 2003 related mainly to capacity additions in Fab 6. Capital expenditures in
2004 and 2005 related mainly to the equipping of Fab 7 as part of its phase 1 ramp and capacity
additions in Fab 6.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investing activities in 2003 also included placement of a refundable deposit to secure wafer
capacity for one of our more advanced technologies and payments for technology licenses and for
purchase of marketable investments. Investing activities in 2004 also included placement of a
refundable deposit to secure wafer capacity for one of our more advanced technologies and payments
for technology licenses and for the purchase of marketable investments, partially offset by
proceeds from sale of property, plant and equipment and from the redemption and maturity of
marketable instruments. Investing activities in 2005 also included proceeds from the redemption and
maturity of marketable instruments and the return of capital from
SMP.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are taking a phased approach to the full equipping of Fab 7 to 30,000 300-mm wafers per
month, which is expected to take a number of years and will be paced by customer demand and
industry conditions. Our aggregate capital expenditures for 2006 is expected to be approximately
$650&nbsp;million, of which approximately $550&nbsp;million is expected to be utilized for capital
expenditures for the further expansion of capacities of 0.13um and smaller process geometry
technologies for our fabs. The remaining amounts are expected to be utilized primarily for
purchases of information systems, and for adding equipment in our fabs running more mature
technologies to maximize utilization corresponding to the anticipated product mix. We estimate
aggregate capital expenditures for phase 1 of our build-out of production capacity in Fab 7 to
18,000 300-mm wafers per month to be $1,700&nbsp;million. The total capacity for phase 1 has been
increased by 20% from our previous plan of 15,000 300-mm wafers due to our expected improvement in
productivity. As of December&nbsp;31, 2003, December&nbsp;31, 2004 and December&nbsp;31, 2005, we have spent an
accumulated total of $227.1&nbsp;million, $637.9&nbsp;million and $1,201.9&nbsp;million, respectively, on the
equipping of Fab 7 as part of its phase 1 ramp, where Fab 7 had a wafer capacity of approximately
10,000 300-mm wafers per month as of December&nbsp;31, 2005. At completion, which is expected to give
Fab 7 a capacity of 30,000 300-mm wafers per month, our total capital investment in Fab 7 is
expected to be approximately $2,700&nbsp;million to $3,000&nbsp;million. As of December&nbsp;31, 2003, December
31, 2004 and December&nbsp;31, 2005, we had commitments on contracts for capital expenditures of $398.3
million, $312.9&nbsp;million and $205.7&nbsp;million, respectively.
</DIV>


<P align="center" style="font-size: 10pt">58
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 and the importance of economies of scale, which we
expect to result in significant capital expenditure requirements. Factors that 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 as discussed in &#147;Item&nbsp;3. Key
Information &#151; D. Risk Factors&#148; and elsewhere in this document.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Historic financing cash flows</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by financing activities was $30.8&nbsp;million, $34.9&nbsp;million and $447.6&nbsp;million
in 2003, 2004 and 2005 respectively. Net cash provided by financing activities in 2003 and 2004
reflected primarily the net impact of borrowings and repayments of debt during those periods. Net
cash of $447.6&nbsp;million was provided by financing activities in 2005, consisting primarily of the
drawdown of loan facilities, the issuance of the senior notes, Amortizing Bonds and preference
shares, and receipts of customer deposits to secure wafer capacity for one of our more advanced
technologies, partially offset by repayments of debt, including the repurchase of a significant
portion of our Convertible Notes arising from the Tender Offer of the Convertible Notes. See the
&#147;&#151; Outstanding indebtedness&#148; below for details of the borrowings we obtained during the periods
indicated.
</DIV>




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Research and development and training grants</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2004 and 2005 we received $19.0&nbsp;million and $7.5&nbsp;million, respectively, in research grants
from various agencies of the Government of Singapore, which are included in operating cash flows.
These grants provide funding for a portion of our R&#038;D related capital expenditures and for the
training and staffing costs associated with some of our process technology development programs.
The grants are disbursed to us in connection with research and development carried out in
Singapore, based on the amount of expenditures incurred, achievement of program milestones and
certification of the costs incurred. The main condition attached to the grants is the completion of
the project to which the grant relates. As our 65nm and 45nm bulk CMOS processes are jointly
developed in IBM&#146;s East Fishkill, New York, facilities, the amount of grants we received from the
Government of Singapore in 2005 was significantly lower than in 2004 and we expect that the amount
of such grants we may be eligible to receive from the Government of Singapore will be significantly
lower in 2006, as compared with 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Off-balance sheet arrangements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
were not a party to any off-balance sheet arrangement in 2005, as
defined in Item&nbsp;303(a)(4)(ii) of SEC Regulation&nbsp;S-K. We do
not currently have any relationships with unconsolidated entities or
financial partnerships, such as entities often referred to as
structured finance or special purpose entities, which might be
established for the purpose of facilitating off-balance sheet
arrangements or other contractually narrow or limited purposes.
</DIV>

<P align="center" style="font-size: 10pt">59
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Outstanding indebtedness</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2005, our total loans outstanding were $1,447.9&nbsp;million, comprising our
Amortizing Bonds, senior notes, Convertible Notes and other U.S. dollar loans as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>As of</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(In thousands)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2.5% senior convertible notes due 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">97,155</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">U.S. dollar loans at floating rates:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">CSP Syndicated Loan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">214,533</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">SMBC/OCBC Term Loan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">300,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Exim Loan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">122,124</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Bank of America Term Loan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">5.75% senior notes due 2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">371,161</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">6.375% senior notes due 2015</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">246,540</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">6.00% Amortizing bonds due 2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,703</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(324</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,447,892</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Refer to Note 14 of the consolidated financial statements for more details on our outstanding loans.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Loan Covenant Compliance</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Some of our outstanding loans and unutilized banking facilities available to us, including
loans to our subsidiary, CSP, contain various financial, shareholding and other restrictive
covenants that are customary to loan documents.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the financial covenants, we are required to maintain certain financial conditions and/or
ratios such as consolidated net worth, a total debt to net worth ratio and a historical debt
service coverage ratio. We are required to ensure that our consolidated net worth will not at any
time be less than $1,000&nbsp;million and our total debt will not at any time exceed 180% of our total
net worth. In 2002, we negotiated and effected an increase in CSP&#146;s net worth by converting
inter-company amounts payable by CSP to us into a shareholders&#146; loan to CSP, or the Chartered Loan.
The Chartered Loan was made to enable CSP to satisfy its total debt-to-net worth ratio under the
CSP loan agreement. The amount of the Chartered Loan to CSP is increased from time to time by
converting additional inter-company amounts payable by CSP in order to enable CSP to satisfy the
total debt-to-net worth ratio. The amounts under the Chartered Loan are subordinated to the amounts
due from CSP to its other lenders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the shareholding covenants of some of our loans, Temasek is required to own, directly or
indirectly, a certain percentage of our outstanding shares, or is required to be our single largest
shareholder. These covenants also require that we own, directly or indirectly, at least a certain
percentage of CSP&#146;s outstanding shares. If Temasek or we fail to comply with these covenants, we
could be in default under these loans and the lenders would have the right to require us to repay
or accelerate our obligation to repay the outstanding borrowings under these loan documents. In
some cases, a default could also cause cross-defaults under other loans and could seriously harm
us. In addition, the outstanding loans and unutilized banking facilities available to us impose
other restrictive covenants that are customary to loan documents, such as restrictions on incurring
further indebtedness, creating security interests over our assets, payments of dividends, disposals
of assets, and mergers and other corporate restructurings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2005, we believe we were in compliance with the various financial,
shareholding and other restrictive covenants in our loan documents. If we fail to comply with any
of the loan covenants, we could be in default under the loan documents and the lenders would have
the right to require us to repay or accelerate our obligation to repay the outstanding borrowings
under the loan documents. In some cases, a default could also cause cross-defaults under other
loans and could seriously harm us.
</DIV>

<P align="center" style="font-size: 10pt">60
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Contractual Obligations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth the payments due related to specific contractual obligations as
of December&nbsp;31, 2005:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="26"><B>Expected Payment Date</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="26" style="border-bottom: 1px solid #000000"><B>(in thousands)</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Thereafter</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Total</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term debt including principal and
interest <SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">402,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">207,976</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">209,859</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">197,637</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">503,651</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">370,049</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,891,572</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital lease obligations including
principal and interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,613</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,613</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,613</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,613</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,613</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,866</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63,931</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capacity deposits <SUP style="font-size: 85%; vertical-align: text-top">(2)</sup></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">60,174</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,174</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating lease obligations <SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,985</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,293</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,478</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,194</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,183</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,132</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73,265</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchase obligations <SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP> under:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Capital expenditures</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">173,535</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,154</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">205,689</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Technology agreements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80,775</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74,350</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">199,875</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">108,889</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">188</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">188</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">188</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">158</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">473</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">110,084</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other long-term liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,561</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,361</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">838,371</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">325,374</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">257,388</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">209,882</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">515,855</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">475,081</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,621,951</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><B>Notes:</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>&nbsp;</B></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>These amounts represent the expected principal and interest repayments at each of the periods
indicated and do not include the unamortized debt discount relating to the senior notes. The
senior notes due 2010 were issued at a price of 98.896% of the principal amount and the senior
notes due 2015 were issued at a price of 98.573% of the principal amount. As of December&nbsp;31,
2005, the face amounts of the senior notes due 2010 and the senior notes due 2015 were $371.2
million and $246.5&nbsp;million, respectively, as the unamortized debt discount was reported as a
direct reduction to the face amounts of the senior notes. The estimated interest repayments on
floating-rate obligations were calculated using the prevailing floating interest rates related
to these obligations as of December&nbsp;31, 2005. Actual outcome could differ from these
estimates.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>This amount relates to our contractual obligation to refund deposits placed with us to secure wafer capacity for one of our
more advanced technologies.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>As of December&nbsp;31, 2005, we have included in the above table operating lease obligations in
respect of Fab 1 amounting to $4.1&nbsp;million. In January&nbsp;2006, we have sold and transferred our
leasehold interest in Fab 1 for a total consideration of $6.5&nbsp;million.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>We have not included purchase obligations that have been recorded on our consolidated balance
sheet as of December&nbsp;31, 2005. These obligations amounted to $78.0&nbsp;million, $10.2&nbsp;million and
$227.2&nbsp;million for capital expenditures, technology agreements and other purchase obligations
primarily relating to operating expenses, respectively.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Assuming no conversion or redemption of the preference shares until the maturity date on
August&nbsp;17, 2010, we will redeem, out of funds legally available for such payment, each preference
share at a redemption price equal to $10,000 per preference share amounting to $300.0&nbsp;million at
maturity. Refer to Note 15 of the consolidated financial statements for more details on the
preference shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Chartered and Agere Systems Singapore have signed an assured supply and demand agreement with
SMP. Under this agreement, each of Chartered and Agere Systems Singapore is billed for allocated
wafer capacity if the wafers started for production for them are less than their respective
allocated capacity. These billings, if any, do not change the equity in income (loss)&nbsp;of SMP that
we recognize in our consolidated statements of operations. In 2005, the wafers started for us were
less than our allocated capacity, however all parties to the agreement have agreed that such
billings will not be made to us. There were also no such billings made to us for the corresponding
periods in 2004 and 2003. To the extent the wafers started for us is less than our allocated
capacity in the future, there is no assurance that the billings for our allocated wafer capacity
would continue to be waived.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have disclosed the expected timing of payment of obligations and the amounts to be paid
based on current information. Timing of payments and actual amounts paid may be different depending
on the time of receipt of goods or services or changes to agreed-upon amounts or events for some
obligations.
</DIV>


<P align="center" style="font-size: 10pt">61
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Special Tax Status</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have been granted pioneer status under the Economic Expansion Incentives (Relief from
Income Tax) Act (Chapter&nbsp;86) of Singapore for:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the manufacture of integrated circuits using submicron technology at Fab 2 for a
ten-year period beginning July&nbsp;1, 1996;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the manufacture of integrated circuits using submicron technology at Fab 3 for a
ten-year period beginning July&nbsp;1, 1999;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the wafer fabrication of Application Specific Integrated Circuits, or ASIC, and other
advanced semiconductor devices at Fab 6 for a ten-year period beginning September&nbsp;1, 2003;
and</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the wafer fabrication of integrated circuits at Fab 7 for a fifteen year period
beginning October&nbsp;1, 2005.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Economic Expansion Incentives (Relief from Income Tax) Act (Chapter&nbsp;86) of
Singapore, we have also been granted:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>post-pioneer enterprise status for the manufacture of integrated circuits using
submicron technology at Fab 2 for a five-year period beginning July&nbsp;1, 2006;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>development and expansion incentive status for the manufacture of integrated circuits
using submicron technology at Fab 3 for a five-year period beginning July&nbsp;1, 2009; and</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>development and expansion incentive status for the wafer fabrication of ASICs and other
advanced semiconductor devices at Fab 6 for a five-year period beginning September&nbsp;1, 2013.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the period for which our pioneer status is effective, subject to our compliance with
certain conditions, income from our pioneer trade (that is, manufacture and sale of integrated
circuits) is exempt from Singapore income tax. During the periods for which our post-pioneer
status and development and expansion incentive 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%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The income tax exempt profits arising from our pioneer trade or our post-pioneer trade and
development and expansion activities which have been taxed at a concessionary rate of 10% may be
distributed as tax-exempt dividends, and holders of ordinary shares are not subject to Singapore
income tax on such dividends. Please see &#147;Item&nbsp;4. Information on Our Company &#151; E. Taxation &#151;
Singapore Taxation &#151; Dividends paid out of Tax-Exempt Income or Income subject to Concessionary
Tax Rates&#148; for information regarding the taxation of such dividends.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. 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 that
is currently 20% for the year ended December&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other income, which is outside the definition of pioneer status, post-pioneer enterprise
status or the development and expansion incentive status, 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 incentive status period. The income tax expense for the
year ended December&nbsp;31, 2005 represents primarily income tax payable on non-pioneer income,
principally interest income, rental income and income from the sale of wafers using technologies
that do not benefit from the preferential tax treatment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>RECENT ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2004,
the FASB published FASB Statement, or FAS, 123(R), &#147;Share-Based Payments.&#148;
FAS 123(R) requires that the compensation cost relating to share-based
payment transactions be recognized in financial statements. That cost will
be measured based on the fair value of the equity or liability instruments
issued. FAS 123(R) replaces FASB Statement No.&nbsp;123, &#147;Accounting for
Stock-Based Compensation,&#148; and supersedes APB Opinion No.&nbsp;25, &#147;Accounting
for Stock Issued to Employees.&#148; In March&nbsp;2005, the SEC issued Staff
Accounting Bulletin No.&nbsp;107, or SAB 107, on the interaction between FAS
123(R) and certain SEC rules and regulations, and on SEC Staff&#146;s views
regarding the valuation of share-based payment arrangements for public
companies. In April&nbsp;2005, the SEC approved a new rule that permits
companies to defer the effective date of FAS 123(R). We
</DIV>

<P align="center" style="font-size: 10pt">62
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">have elected to
adopt FAS 123(R) on January&nbsp;1, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We currently determine the fair value of stock-based compensation using a
Black-Scholes option-pricing model. The adoption of FAS 123(R) and its
related FASB Staff Positions, or FSPs, as described below, on January&nbsp;1, 2006 is expected to
decrease our net income in 2006 by as much as $6&nbsp;million. The pro forma
amounts disclosed in Note 1(p) of the consolidated financial statements
are not necessarily indicative of the impact FAS 123(R) and its related
FSPs will have on our consolidated statements of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In May&nbsp;2005, the
FASB issued FSP EITF 00-19-1 to clarify the guidance in EITF 00-19, &#147;Accounting for
Derivative Financial Instruments Indexed to, and Potentially Settled in, a
Company&#146;s Own Stock.&#148; The FSP clarifies that a requirement to deliver
registered shares will not, in and of itself, result in liability
classification for freestanding financial instruments that were originally
issued as employee compensation (for example, an employee stock option).
The FSP indicates that this clarification is consistent with the FASB&#146;s
intent in issuing FAS 123(R). The FSP goes into effect the same day that a
company implements FAS 123(R). We have elected to adopt FAS 123(R) on
January&nbsp;1, 2006 so accordingly, this FSP goes into effect on January&nbsp;1,
2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In August&nbsp;2005, the FASB issued FSP No.&nbsp;FASB 123(R)-1, which deferred the
requirement of FAS 123(R), that freestanding financial instruments issued
as employee compensation would be subject to the recognition and
measurement requirements of other generally accepted accounting principles
when the rights conveyed by the instrument no longer depend on employment.
Thus, a freestanding financial instrument (e.g., a stock option) that was
issued to an employee in exchange for past or future employee services and
that is subject to FAS 123(R) will continue to be subject to the
recognition and measurement provisions of FAS 123(R) throughout the life
of the instrument, unless its terms are modified when the holder is no
longer an employee. The FSP goes into effect the same day that a company
implements FAS 123(R). We have elected to adopt FAS 123(R) on January&nbsp;1,
2006 so accordingly, this FSP goes into effect on January&nbsp;1, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In October&nbsp;2005, the FASB issued FSP No.&nbsp;FAS 123(R)-2, which provided a
practical accommodation for determining the grant date of a share-based
payment award. The final FSP is a change from the informal view expressed
by the FASB staff in August&nbsp;2005 that communication of the terms to the
recipient would be necessary to establish a grant date. The FSP provides a
company more latitude by allowing it a relatively short time period after
the award is approved to communicate the award&#146;s terms to the recipient.
The FSP goes into effect the same day that a company implements FAS
123(R). We have elected to adopt FAS 123(R) on January&nbsp;1, 2006 so
accordingly, this FSP goes into effect on January&nbsp;1, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In November&nbsp;2005, the FASB issued FSP No.&nbsp;FAS 123(R)-3, &#147;Transition
Election Related to Accounting for the Tax Effects of Share-Based Payment
Awards.&#148; The FSP provided companies with the option to use a &#147;short-cut&#148;
method for calculating their pool of windfall tax benefits under FAS 123(R). The &#147;short-cut&#148;
method is significantly less complex than the detailed calculation
currently required by FAS 123(R)&#146;s &#147;long-form&#148; method and provides relief
to companies that do not have the records or resources to perform the
&#147;long-form&#148; calculation. The guidance in this FSP is effective after
November&nbsp;10, 2005. We have elected to adopt FAS 123(R) on January&nbsp;1, 2006
so accordingly, this FSP goes into effect on January&nbsp;1, 2006.
</DIV>
<DIV align="left">
<A name="107"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="5%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 6.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="5%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>A.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>DIRECTORS AND SENIOR MANAGEMENT</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth, as of January&nbsp;31, 2006, the name, age and position of each
director and member of senior management of our company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Board of Directors</I></B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="50%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Age</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Position</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">James A. Norling<SUP style="font-size: 85%; vertical-align: text-top">(1)(2)(4)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">63</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman of the Board</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Chia Song Hwee<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">43</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Sum Soon Lim<SUP style="font-size: 85%; vertical-align: text-top">(2)(3)(4)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">62</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Robert E. La Blanc<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">71</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Andre Borrel<SUP style="font-size: 85%; vertical-align: text-top">(2)(3)(4)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">69</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Charles E. Thompson<SUP style="font-size: 85%; vertical-align: text-top">(2)(4)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">76</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tsugio Makimoto, PhD</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">68</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tay Siew Choon<SUP style="font-size: 85%; vertical-align: text-top">(1)(2)(4)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">58</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">63
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="50%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Age</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Position</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Peter Seah Lim Huat<SUP style="font-size: 85%; vertical-align: text-top">(1)(2)(4)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">59</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Philip Tan Yuen Fah<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">61</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Pasquale Pistorio</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">70</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Steven H. Hamblin <SUP style="font-size: 85%; vertical-align: text-top">(3)(5)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">57</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Senior Management</I></B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="50%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Age</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Position</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Chia Song Hwee
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">43</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">President and Chief Executive Officer</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">George Thomas
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">52</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Vice President and Chief Financial Officer</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Ang Kay Chai
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">46</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Vice President, Fab Operations</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Hsia Liang Choo, PhD
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">57</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Vice President, Technology Development</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Michael J. Rekuc
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">56</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Vice President, Worldwide Sales and Marketing</TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Simon
Yang, PhD
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">46</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Vice President and Chief Technology Officer</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Ang Tang Yong
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">48</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice President, Fab Support Operations</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Roy Kannan
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">53</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice President and Chief Information Officer</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Seungil Kim
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">53</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice President, Quality and Reliability Assurance</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Ng Seng Huwi
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">48</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice President, Human Resources</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Tan Seng Chai
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">43</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice President, Strategy Resources</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><B>Notes:</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>&nbsp;</B></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Member of the Executive Committee.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Member of the Executive Resource and Compensation Committee, or the ERCC.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Member of the Audit Committee.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>Member of the Nominating Committee.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(5)</TD>
    <TD>&nbsp;</TD>
    <TD>Appointed as Director to our Board of Directors on January&nbsp;1, 2006.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Biographical Information</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>James A. Norling</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;James A. Norling has served on our Board of Directors since March&nbsp;1, 2001 and as our Chairman
of the Board since August&nbsp;1, 2002. Mr.&nbsp;Norling also served as interim Chief Executive Officer from
May&nbsp;2002 to June&nbsp;2002. He has 37&nbsp;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 Sector 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.&nbsp;Norling is currently a board member of Harley-Davidson,
Inc. Mr.&nbsp;Norling holds a Bachelor of Science and a Master&#146;s degree in Electrical Engineering from
the University of Illinois.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Chia Song Hwee</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Chia Song Hwee has served on our Board of Directors and as our President and Chief Executive
Officer since June&nbsp;2002. Prior to his appointment, Mr.&nbsp;Chia had served as our Chief Administrative
Officer since September&nbsp;2000, as our Senior Vice President since February&nbsp;2000 and as our Chief
Financial Officer since December&nbsp;1997. Mr.&nbsp;Chia was our Director of Finance from April&nbsp;1996 to
December&nbsp;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&nbsp;1992
through December&nbsp;1994, Mr.&nbsp;Chia was Regional Financial Controller (Asia and Middle East) for
Anadrill Technical Services, Inc. From January&nbsp;1995 to April&nbsp;1996, Mr.&nbsp;Chia was Regional Controller
(Asia, Australia and Middle East) for Sedco Forex Technical Services, Inc. Mr.&nbsp;Chia received his
Bachelor of Business (Accountancy), with distinction, from Edith Cowan University, Australia and is
a member of CPA Australia.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Sum Soon Lim</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sum Soon Lim has served on our Board of Directors since February&nbsp;1994. He was a corporate
advisor to Temasek Holdings (Private) Limited from September&nbsp;2002 to December&nbsp;31, 2005. Prior to
the cessation of operations of Singapore Technologies Pte Ltd on December&nbsp;31, 2004, Mr.&nbsp;Sum was
also a corporate advisor to Singapore Technologies Pte Ltd. Mr.&nbsp;Sum had worked with the Singapore
Economic
</DIV>

<P align="center" style="font-size: 10pt">64
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Development Board, DBS Bank, J.P. Morgan Inc., Overseas Union Bank Ltd and Nuri Holdings (S)
Pte Ltd, a private investment holding company. He was also a member of the Securities Industry
Council from January&nbsp;1, 1998 to December&nbsp;31, 2005. Mr.&nbsp;Sum currently also sits on the board of
various companies, including Singapore Health Services Pte Ltd, Singapore Technologies Telemedia
Pte Ltd and Singapore Press Holdings Ltd. He is also a Commissioner in P.T. Indosat Tbk. Mr.&nbsp;Sum
received his Bachelor of Science (Honors) in Production Engineering from the University of
Nottingham, England.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Robert E. La Blanc</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Robert E. La Blanc has served on our Board of Directors since May&nbsp;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.&nbsp;La Blanc was Vice Chairman of Continental Telecom, Inc. and from 1969
to 1979, a General Partner of Salomon Brothers Inc. Mr.&nbsp;La Blanc has also held various senior
positions within companies in the telecommunications industry including AT&#038;T, Bell Telephone
Laboratories and New York Telephone Company. Mr.&nbsp;La Blanc received his B.E.E from Manhattan College
and his Master of Business Administration from New York University. Mr.&nbsp;La Blanc also is a graduate
of the Operating Engineers Program at Bell Telephone Laboratories and the USAF Communications
Officers School.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Andre Borrel</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Andre Borrel has served on our Board of Directors since July&nbsp;1998 and is currently working as
a consultant in the semiconductor industry. Prior to joining our Board of Directors, Mr.&nbsp;Borrel was
Senior Vice President and General Manager of Communications, Power and Signal Technology Group at
Motorola Inc. Mr.&nbsp;Borrel is also an Officer of the French National Order of Merit and holds a
Master&#146;s degree in Electronics from &#147;Ecole Nationale Superieure des Telecommunications&#148; in Paris,
France.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Charles E. Thompson</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Charles E. Thompson has served on our Board of Directors since September&nbsp;1998 and is currently
working as a consultant in the information technology/semiconductor technology industry. From 1973
to 1996, Mr.&nbsp;Thompson was World Marketing Senior Vice President at Motorola Inc. Prior thereto, Mr.
Thompson was Computer Department Sales Director at General Electric. Mr.&nbsp;Thompson received his
Bachelor of Science in Mathematics from the University of Washington.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Tsugio Makimoto, PhD</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dr.&nbsp;Tsugio Makimoto has served on our Board of Directors since September&nbsp;1999 and has more
than 40&nbsp;years of working experience in the semiconductor industry. He is currently a consultant in
the field of electronics after retiring from Sony Corporation, or Sony, in May&nbsp;2005. He joined Sony
in 2000 as Corporate Senior Executive Vice President, followed by Corporate Advisor in 2001. Prior
to joining Sony, Dr.&nbsp;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.&nbsp;Makimoto was an auditor of Hitachi
Chemical Corporation from 2000 to 2003. Dr.&nbsp;Makimoto is currently the Chairman of PDF Solutions
(Japan) KK. He was nominated a Fellow of the Institute of Electrical and Electronics Engineers,
Inc. in 1997. Dr.&nbsp;Makimoto was also a visiting professor at Toyo University (1999-2001).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Tay Siew Choon</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tay Siew Choon has served on our Board of Directors since July&nbsp;2001. Mr.&nbsp;Tay was formerly a
corporate advisor to Singapore Technologies Pte Ltd which ceased operations on December&nbsp;31, 2004.
Prior to that, he was Managing Director and Chief Operating Officer in Singapore Technologies Pte
Ltd. From 1998 to 2000, Mr.&nbsp;Tay 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.&nbsp;Tay currently also sits on the board of various companies including STATS
ChipPAC Ltd (formerly ST Assembly Test Services Ltd), SNP-LeeFung Holdings Limited, Straco
Corporation Limited and Pan-United Corporation Ltd. He is currently Chairman of SNP Corporation Ltd
and Deputy Chairman of Green Dot Capital Pte Ltd, a wholly owned subsidiary of Temasek Holdings
(Private) Limited. Mr.&nbsp;Tay received his Bachelor of Engineering (Electrical) (Honors) from Auckland
University and his Masters of Science in Systems Engineering from the former University of
Singapore (now National University of Singapore).
</DIV>

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</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Peter Seah Lim Huat</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Peter Seah has served on our Board of Directors since January&nbsp;2002. Mr.&nbsp;Seah is currently a
member of the Temasek Advisory Panel. Prior to the cessation of operations of Singapore
Technologies Pte Ltd on December&nbsp;31, 2004, Mr.&nbsp;Seah was the President and Chief Executive Officer
of Singapore Technologies Pte Ltd. Before joining Singapore Technologies Pte Ltd, he was a banker
for 32&nbsp;years, 22 of which were with the Overseas Union Bank Ltd and before that with Citibank. He
retired from his position as Vice Chairman and Chief Executive Officer at Overseas Union Bank Ltd
in September&nbsp;2001. Mr.&nbsp;Seah currently sits on the board of various companies including SembCorp
Industries Ltd, CapitaLand Ltd, ST Engineering Ltd and STATS ChipPAC Ltd (formerly ST Assembly Test
Services Ltd). Mr.&nbsp;Seah graduated from the former University of Singapore in 1968 with an honors
degree in Business Administration. For his public service, he was awarded the Public Service Medal
(1995)&nbsp;as well as the Public Service Star (1999)&nbsp;by the Singapore Government.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Philip Tan Yuen Fah</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Philip Tan has served on our Board of Directors and as our Chairman of the Audit Committee
since October&nbsp;2003. He is currently an independent consultant and also sits on the board of
companies such as Overseas Union Insurance Ltd and Singapore Food Industries Ltd. Mr.&nbsp;Tan is a
veteran in the banking and financial industry. He retired in 2002 from Overseas Union Bank Ltd
after holding various positions since joining the bank in 1979. Mr.&nbsp;Tan holds a Bachelor of
Accountancy from the University of Singapore and a Bachelor of Law from the University of
Wolverhampton, UK. In addition, Mr.&nbsp;Tan also holds a graduate diploma in Business Administration
from the Manchester Business School, UK. He is a Certified Public Accountant and a member of the
Accounting Standards Committee of the Institute of Certified Public Accountants of Singapore. He is
also a Chartered Management Accountant of the Chartered Institute of Management Accountants of UK
and a Fellow of CPA Australia.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Pasquale Pistorio</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pasquale Pistorio has served on our Board of Directors since May&nbsp;2005 and is currently the
Honorary Chairman of STMicroelectronics. Mr.&nbsp;Pistorio brings to Chartered more than 38&nbsp;years of
industry leadership experience. Mr.&nbsp;Pistorio is known for his business acumen, his contributions to
Europe&#146;s microelectronics industry, and his strong advocacy of environmental protection and
corporate social responsibility. Among his numerous accolades, Mr.&nbsp;Pistorio received the &#147;Lifetime
Achievement Award&#148; from Reed Electronics Group in 2003, was named first place in the &#147;Top 25 Movers
and Shakers&#148; ranking by Time magazine in 2002, and was voted among the top 50 &#147;Stars of Europe&#148; by
Business Week magazine. Mr.&nbsp;Pistorio&#146;s greatest achievement was the integration of SGS Group with
Thomson Semiconducteurs in 1987 to form SGS-THOMSON Microelectronics, which was renamed
STMicroelectronics in 1998. Mr.&nbsp;Pistorio served as STMicroelectronics&#146; president and Chief
Executive Officer from 1998 until his retirement in March&nbsp;2005, during which STMicroelectronics
grew to become one of the world&#146;s top semiconductor companies. Mr.&nbsp;Pistorio holds a degree in
electronics from the Polytechnic of Turin, Italy.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Steven H. Hamblin</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Steven H. Hamblin has served on our Board of Directors and as a member of the Audit Committee
since January&nbsp;2006. He is currently an independent consultant and also sits on the Board of STATS
ChipPAC Ltd, which is also dual listed on the Singapore Exchange and NASDAQ. Mr.&nbsp;Hamblin brings to
Chartered more than 30&nbsp;years of experience in the electronics industry. From 1984 to 1996, Mr.
Hamblin held various senior positions in Compaq Computer Corporation, or Compaq, including Vice
President of Systems Division Operations, Vice President of Finance and Manufacturing Strategy, and
Vice President and General Manager of the Asia/Pacific Division. Prior to joining Compaq, Mr.
Hamblin held various financial controller positions with Texas Instruments and General Instrument.
Mr.&nbsp;Hamblin holds a Bachelor of Science degree in Civil Engineering from the University of
Missouri, Columbia and a Master of Science degree in Industrial Administration from Carnegie-Mellon
University.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>George Thomas</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;George Thomas has served as our Senior Vice President and Chief Financial Officer since March
2005 and oversees our company&#146;s finance, investor relations and legal functions. He also served as
our Vice President and Chief Financial Officer since August&nbsp;2002 and Vice President of Finance
since September&nbsp;2000. He joined our company in May&nbsp;2000 as Group Controller. Mr.&nbsp;Thomas began his
Finance/Accounting career with Canadian Met-Chem, a subsidiary of U.S. Steel Corporation as
Internal Auditor and Senior Accounts Executive in 1978. From June&nbsp;1983 to April&nbsp;2000, he held
various positions at Schlumberger&#146;s
</DIV>

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</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Sedco Forex Division, including Controller, Operations-Worldwide, Regional Controller, Asia &#038;
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&nbsp;2001 and the Board of Directors of Silicon
Manufacturing Partners Pte Ltd as an alternate director since July&nbsp;2003. Mr.&nbsp;Thomas received his
bachelor degree in Commerce and in General Law. He is also a member of the Institute of Chartered
Accountants of India.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Ang Kay Chai</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ang Kay Chai has served as our Senior Vice President, Fab Operations, since September&nbsp;2002 and
is currently the General Manager of Chartered Silicon Partners Pte Ltd. Mr.&nbsp;Ang is responsible for
the manufacturing strategy and operational excellence across all of Chartered&#146;s fabs. Mr.&nbsp;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 start-up, transfer of 0.25um and 0.18um technology and development of foundry-compatible
process capabilities. Prior to that, Mr.&nbsp;Ang spent nine years at Chartered where he led the initial
conception, development and ramp of Fab 2 and Fab 3. Mr.&nbsp;Ang first joined Chartered in 1989 and was
one of the pioneers on Chartered&#146;s Fab 1 team. Mr.&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Hsia Liang Choo, PhD</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dr.&nbsp;Hsia Liang Choo has served as our Senior Vice President, Technology Development, since
June&nbsp;2005. He is responsible for Chartered&#146;s technology development organization and directing our
company&#146;s efforts toward technology leadership in the foundry industry. From October&nbsp;2000 to May
2005, Dr.&nbsp;Hsia served as our Vice President of Advanced Module Development and led Chartered&#146;s
collaborative development efforts at 90nm and 65nm. Dr.&nbsp;Hsia draws on nearly 25&nbsp;years of experience
in semiconductor technology development. Prior to joining Chartered, Dr.&nbsp;Hsia was director of
technology development at United Microelectronics Corporation in Taiwan. He also spent over a
decade with IBM as an advisory scientist in various divisions. Dr.&nbsp;Hsia was awarded 25 US patents
with 16 more pending, and his work has been featured in more than 80 technical publications. Dr.
Hsia holds a doctorate degree in physics from Ohio State University.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Michael J. Rekuc</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Michael J. Rekuc has served as our Senior Vice President, Worldwide Sales and Marketing, since
August&nbsp;2003. He has the overall responsibility for global sales, marketing and services, customer
support and regional business operations. From January&nbsp;1999 to July&nbsp;2003, Mr.&nbsp;Rekuc served as
President of our Americas operations. Mr.&nbsp;Rekuc has over 30&nbsp;years of electronics and semiconductor
industry experience. From 1976 until joining Chartered in January&nbsp;1999, Mr.&nbsp;Rekuc held sales,
management and director positions in the semiconductor product sector of Motorola Inc. His last few
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 personal
computers, computing and peripherals. Mr.&nbsp;Rekuc holds a BSEE from Lawrence Institute of Technology.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Simon Yang, PhD</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dr.&nbsp;Simon Yang has served as our Senior Vice President and Chief Technology Officer since
October&nbsp;2005. Dr.&nbsp;Yang is responsible for developing and driving strategic programs in support of
Chartered&#146;s corporate objectives and long-term strategic direction. Dr.&nbsp;Yang brings more than 18
years of experience in the semiconductor industry. He previously held key positions in technology
development and advanced fab operations. Dr.&nbsp;Yang was a senior vice president for logic technology
development and manufacturing at Semiconductor Manufacturing International Corporation (SMIC)&nbsp;and
prior to that, a director of logic device and process integration at Intel. Prior to joining
Chartered, he was president and Chief Executive Officer of Ciwest, a semiconductor start-up based
in China. Dr.&nbsp;Yang has been awarded 12 U.S. patents and is the author or co-author of more than 30
technical papers. Dr.&nbsp;Yang holds a bachelor&#146;s degree in electrical engineering from Shanghai
University of Science and Technology, and a master&#146;s degree in physics and doctorate degree in
materials engineering from Rensselaer Polytechnic Institute in Troy, New York.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Ang Tang Yong</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ang Tang Yong has served as our Vice President, Fab Support Operations since July&nbsp;2002 and has
overall responsibility for facilities and supply management. Mr.&nbsp;Ang first joined our company in
1993 as
</DIV>

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</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Facilities Director and during the next seven years served consecutively as Vice President and
Operations Manager of our Fab 1, General Manager of Silicon Manufacturing Partners Pte Ltd, and as
General Manager of Chartered Silicon Partners Pte Ltd. Mr.&nbsp;Ang has more than 20&nbsp;years of working
experience in the semiconductor industry. Prior to joining our company, Mr.&nbsp;Ang held positions in
the United States and Singapore with AT&#038;T, Hitachi and Texas Instruments. From March&nbsp;2001 to July
2002, he was president of Ellipsiz, a provider of semiconductor engineering and manufacturing
services, headquartered in Singapore. Mr.&nbsp;Ang received a diploma in electrical engineering from
Singapore Polytechnic and a master&#146;s degree in business administration from the State University of
New York.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Roy Kannan</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Roy Kannan has served as our Vice President and Chief Information Officer, or CIO, since
September&nbsp;2003. Mr.&nbsp;Kannan is responsible for our global information technology organization and
for driving our company&#146;s strategic initiative to extend a virtual business systems network for
supporting the business systems network for supporting the business requirements of customers,
partners, suppliers and employees. He joined us from the RGM group, a multi-divisional
conglomerate, where he was the CIO. His responsibilities included the revamp of our company&#146;s data,
voice, network and security infrastructure, as well as the management of information systems, or
IS, operations and data centers. During Mr.&nbsp;Kannan&#146;s more than 20&nbsp;years of experience in the IS
industry, he has held senior positions at leading IS solutions companies such as Compaq, Mastek,
Digital Equipment and Patni. Mr.&nbsp;Kannan holds a Bachelor of Chemical Engineering from the Indian
Institute of Technology, Madras, and a post-graduate diploma in management from the Indian
Institute of Management, Ahmedabad.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Seungil Kim</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Seungil Kim has served as our Vice President, Quality and Reliability Assurance, or QRA, since
March&nbsp;2005. Mr.&nbsp;Kim is responsible for Chartered&#146;s quality control and reliability assurance
management initiatives, for continually enhancing our company&#146;s global standards of quality
excellence in operational and business best practices across its fabrication facilities and
regional offices worldwide. Mr.&nbsp;Kim brings more than 20&nbsp;years of experience in the semiconductor
industry, and has held management positions in QRA, sales and marketing, and fab operations. Before
joining Chartered, he was senior advisor of QRA with United Microelectronics Corporation in Taiwan.
Prior to that, Mr.&nbsp;Kim spent 15&nbsp;years with Hynix Semiconductor in the United States and Korea. His
last position was president and Chief Executive Officer of Hynix Semiconductor Manufacturing
America and was responsible for the region&#146;s activities, including manufacturing, QRA, engineering
and facilities management. Previously in Korea, he served as senior vice president of Hynix
Semiconductor Manufacturing Division and vice president of corporate quality and reliability
division. He started his career with IBM Corporation in East Fishkill, New York, as a senior
associate engineer responsible for semiconductor product quality assurance testing. Mr.&nbsp;Kim holds a
bachelor&#146;s degree in electrical engineering from Illinois Institute of Technology, Chicago.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Ng Seng Huwi</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ng Seng Huwi has served as our Vice President, Human Resources, since July&nbsp;2003. Mr.&nbsp;Ng is
responsible for the overall development and implementation of policies and processes in our
company&#146;s human resources management system. Mr.&nbsp;Ng brings with him extensive work experience in a
number of large multi-national companies. He joined us from Praxair Inc., where he was vice
president of Asia Human Resources with responsibilities that included ensuring organizational
effectiveness, improving productivity and managing performance. During his 24-year professional
career, Mr.&nbsp;Ng has lived and worked around the world, holding a variety of human resources,
engineering and operations positions in global companies, including Schlumberger, Unilever and ICI.
Mr.&nbsp;Ng holds a Bachelor of Engineering (Honors) from the University of Aberdeen in Scotland and an
MBA from the University of Sheffield, England.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Tan Seng Chai</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tan Seng Chai has served as our Vice President, Strategy Resources, since July&nbsp;2003. Mr.&nbsp;Tan
has overall responsibility for the coordination of Chartered&#146;s long-term strategic initiatives and
serves as the liaison with the management team, as well as the external communication teams. Prior
to his appointment, Mr.&nbsp;Tan served as our Vice President, Human Resources from July&nbsp;1999 to July
2003. He joined our company in April&nbsp;1996 as a human resource manager. Mr.&nbsp;Tan has more than 17
years of experience in the semiconductor industry. He began his career at National Semiconductor
Manufacturer Pte Ltd in 1987 where he held various positions in engineering, production and human
resource management. Mr.&nbsp;Tan later joined Creative Technology Ltd in 1994 and prior to joining our
company, he was Creative Technology Ltd&#146;s Senior Manager, Human Resource. Mr.&nbsp;Tan holds a Bachelor
of Engineering (Honors) from the National
</DIV>

<P align="center" style="font-size: 10pt">68
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">University of Singapore in 1987 and a Master of Science (Industrial and System Engineering)
from the National University of Singapore in 1991.
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="5%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>B.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>COMPENSATION OF DIRECTORS AND SENIOR MANAGEMENT</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 years ended December
31, 2004 and 2005 were approximately $3.4&nbsp;million and $5.2&nbsp;million, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The increase in the aggregate compensation in 2005 was mainly due to the addition of two new
staff members to our senior management team, namely Messrs.&nbsp;Seungil Kim and Simon Yang who joined
us as Vice President of QRA and Senior Vice President, Chief Technology Officer, respectively and a
payment in lieu of notice as well as an ex-gratia payment to Dr.&nbsp;Sun Shih Chung, our Senior Vice
President of Technology Development who left our company during 2005. It also included a variable
bonus of $0.6&nbsp;million for the senior management which was declared by the ERCC in February&nbsp;2006 as
recognition for the achievement of key strategic milestones in 2005. No other bonus was paid to
our senior management. Our President and Chief Executive Officer does not have a guaranteed minimum
annual bonus<B>.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The table below sets out the compensation paid or proposed to be paid to our directors for
services rendered during the fiscal year ended December&nbsp;31, 2005:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Salary</B><SUP style="font-size: 85%; vertical-align: text-top"><B>(1)</B></SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Bonus</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Others</B><SUP style="font-size: 85%; vertical-align: text-top"><B>(2)</B></SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Director's Fees</B><SUP style="font-size: 85%; vertical-align: text-top"><B>(3)</B></SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Total</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="19"><B>(in $ thousands)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">James A. Norling</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">87</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">87</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Lim Ming Seong<SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Chia Song Hwee</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">406</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">194</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(5)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">635</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Sum Soon Lim</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Robert E. La Blanc</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Andre Borrel</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Charles E. Thompson</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tsugio Makimoto</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tay Siew Choon</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Peter Seah Lim Huat</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Philip Tan Yuen Fah</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Pasquale Pistorio<SUP style="font-size: 85%; vertical-align: text-top">(6)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total as of December&nbsp;31, 2005</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">406</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">194</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">463</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,098</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total as of December&nbsp;31, 2004</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">416</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">460</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">905</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><B>Notes:</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>&nbsp;</B></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Base salary (inclusive of employers&#146; Central Provident Fund, or CPF).</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Allowances (inclusive of employers&#146; CPF) and others.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Shareholders&#146; approval will be sought at our annual general meeting to be held in April&nbsp;2006
for the payment of our directors&#146; fees of approximately $462,334 for the fiscal year ended
December&nbsp;31, 2005.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>Mr.&nbsp;Lim Ming Seong retired in April&nbsp;2005.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(5)</TD>
    <TD>&nbsp;</TD>
    <TD>Bonus to be paid in 2006, inclusive of employer CPF contribution and converted to US$ based
on average buying rate on January&nbsp;25, 2006 of S$1.6219 = $1.00.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(6)</TD>
    <TD>&nbsp;</TD>
    <TD>Mr.&nbsp;Pasquale Pistorio was appointed a Director to our Board of Directors in May&nbsp;2005.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During 2005, we also granted options to purchase 1,700,000 ordinary shares to our
directors and senior management. These options were granted under our 1999 Option Plan. The
exercise price of these options was S$1.16. The expiration dates of these options range from August
26, 2010 to August&nbsp;26, 2015, subject to annual vesting requirements. See &#147;Item&nbsp;6. Directors, Senior
Management and Employees &#151; E. Share ownership for Directors and Senior Management&#148; for further
details. We also provide our directors and our senior management with customary director or senior
management insurance, as appropriate.
</DIV>

<P align="center" style="font-size: 10pt">69
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To drive growth and profitability of the company and to motivate our senior management and
employees work towards achieving the company&#146;s annual and long-term performance goals, the ERCC has
and may, from time to time, introduce compensation schemes such as performance bonus, executive
incentive plans and stock-based compensation plans.
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="5%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>C.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>BOARD PRACTICES</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>BOARD COMPOSITION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Articles of Association set the minimum number of directors at two. We currently have 12
directors. A portion of our directors (including our President and Chief Executive Officer) retire
by rotation and are re-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. Our contracts with our directors (and also our
senior management) do not have fixed expiry dates but can be terminated by either party through
notice provisions. None of our directors receive benefits upon termination of their appointment in
their capacity as directors. Mr.&nbsp;Lim Ming Seong, our Deputy Chairman of the Board, retired at our
annual general meeting of shareholders in April&nbsp;2005 and did not seek re-election. Mr.&nbsp;Pasquale
Pistorio was appointed to our Board of Directors on May&nbsp;31, 2005 and Mr.&nbsp;Steven H. Hamblin was
appointed to our Board of Directors on January&nbsp;1, 2006. Messrs.&nbsp;Sum Soon Lim and Robert La Blanc
will be retiring at our annual general meeting of shareholders to be held on April&nbsp;26, 2006 and
neither will be seeking re-election and re-appointment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2005, Temasek, through its subsidiary, ST Semiconductors, beneficially
owned approximately 60.09% of our outstanding ordinary shares. As such, it is able to control
actions over many matters requiring approval by our shareholders, including the election of
directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Nasdaq rules, companies that satisfy the definition of a &#147;Controlled Company&#148; may be
exempt from certain regulatory requirements. The regulatory requirements which a &#147;Controlled
Company&#148; is exempt from include:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the requirement that a majority of Board members must be independent;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the requirement that the compensation committee must be comprised solely of independent
directors, or that compensation of our senior management must be made by a majority of the
independent directors on the full Board; and</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the requirement that the nomination committee must be comprised solely of independent
directors or that nominations must be made by a majority of the independent directors on
the full Board.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A &#147;Controlled Company&#148; is defined as a company of which more than 50% of the voting power is
held by an individual, group or another company. As Temasek through its subsidiary owns more than
50% of our outstanding ordinary shares, our company falls under the definition of &#147;Controlled
Company&#148; and our Board has resolved to rely on the exemption for a &#147;Controlled Company&#148; as provided
under the Nasdaq rules. However, our Board may from time to time review this decision.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The current Nasdaq rules require that our Audit Committee be comprised solely of independent
directors. One of our Audit Committee members, Mr.&nbsp;Sum Soon Lim, does not qualify as an
independent director under the Nasdaq rules as he was until December&nbsp;31, 2005 a corporate advisor to Temasek and prior
to that, a corporate advisor to Singapore Technologies Pte Ltd (our then majority shareholder)
prior to the cessation of operations of Singapore Technologies Pte Ltd on December&nbsp;31, 2004 and
accepted compensation in excess of $60,000 during each of the last three fiscal years. We had
previously relied on an exemption from Nasdaq&#146;s corporate governance rules received from Nasdaq.
Nasdaq recently informed our company that the exemption is no longer applicable. Following
therefrom, we are relying on the Nasdaq rule which permits one non-independent director to be
appointed to the Audit Committee for a period of up to two years if the Board, under exceptional
and limited circumstances, determines that membership on the committee by that director is in the
best interests of the company and our shareholders. Our Board of Directors has determined that Mr.
Sum&#146;s membership on the Audit Committee is in the best interest of the company and our shareholders
as he has extensive experience and knowledge of the operations, finance and auditing procedures of
our company, having served on our Audit Committee longer than any other member on the committee.
Mr.&nbsp;Sum was appointed to our Board in February&nbsp;1994 and has served on our Audit Committee since
January&nbsp;1996, including as the Chairman of our Audit Committee from January&nbsp;1996
</DIV>

<P align="center" style="font-size: 10pt">70
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">to August&nbsp;2002. Mr Sum will be retiring from our Board and our Audit Committee at our 2006 Annual
General Meeting in April&nbsp;2006. Each of our Audit Committee members is an &#147;independent&#148; director, as
such term is used in Section&nbsp;10A-3(m)(3) of the Securities Exchange Act of 1934, or the Exchange Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board of Directors held six meetings during the fiscal year ended December&nbsp;31, 2005,
including four regularly scheduled meetings and two special meetings. The Board of Directors also
held meetings without senior management in regular sessions which are generally held immediately
after a regularly scheduled Board meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Committees of the Board of Directors</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Executive Committee</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Executive Committee of our Board of Directors was established to enable our Board to
delegate some of its powers and functions regarding the governing of the affairs of our company and
our 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.&nbsp;James A. Norling (chairman), Peter Seah Lim Huat, Tay Siew Choon and Chia Song Hwee.
The Executive Committee held one meeting during the fiscal year ended December&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Audit Committee</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Audit Committee of our Board of Directors consists of five members. 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&#146;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 Temasek group. In December&nbsp;2004, the Audit Committee
adopted a Whistleblower Program to encourage ethical conduct and facilitate disclosures. In
addition, the Audit Committee has also established a Business Ethics and Review Committee to
implement and administer our company&#146;s policies on ethical conduct and to receive, retain,
investigate and act on complaints and concerns of employees regarding violations of our company&#146;s
human resource policies addressing employee business practices and code of ethics.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The members of the Audit Committee are Messrs.&nbsp;Philip Tan Yuen Fah (chairman), Sum Soon Lim,
Robert E. La Blanc, Andre Borrel and Steven H. Hamblin (appointed as of January&nbsp;1, 2006). The Audit
Committee held eight meetings during the fiscal year ended December&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Executive Resource and Compensation Committee</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. 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 talented executives.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The members of the ERCC are Messrs.&nbsp;Peter Seah Lim Huat (chairman), James A. Norling, Andre
Borrel, Charles E. Thompson, Sum Soon Lim and Tay Siew Choon. The ERCC held five meetings during
the fiscal year ended December&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Nominating Committee</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Nominating Committee, or the NC, of our Board of Directors was established primarily to
support and advise our company in ensuring that the Board of our company is comprised of
individuals who are best able to discharge their responsibilities as directors having regard to the
law and the highest standards of governance. The NC is responsible for recommending suitable
candidates to the Board for election as directors of our company focusing, in particular, on
candidates who can add value to the management through their contributions in the relevant
strategic business areas and who collectively will result in a strong and diverse board.
</DIV>

<P align="center" style="font-size: 10pt">71
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The members of the NC in the fiscal year ended December&nbsp;31, 2005 were Messrs.&nbsp;Peter Seah Lim
Huat (chairman), James A. Norling, Andre Borrel, Charles E. Thompson, Sum Soon Lim and Tay Siew
Choon. With effect from January&nbsp;2006, the members of the NC are Messrs.&nbsp;James A. Norling
(chairman), Peter Seah Lim Huat, Andre Borrel, Charles E. Thompson, Sum Soon Lim and Tay Siew
Choon. The NC held four meetings during the fiscal year ended December&nbsp;31, 2005.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left"><B>D.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>EMPLOYEES</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2005, our total staff strength (including employees of our subsidiary, CSP)
was 4,073 employees. The following tables sets forth the total number of employees as of the dates
indicated by functional responsibility and by geographical locations.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11"><B>As of December 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Functions</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Engineering (Modules, Yield Engineering, Process
Integration, Product Engineering, Joint Venture
Technology, Metrology)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,186</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,410</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,677</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Manufacturing Operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">890</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">900</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">880</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Manufacturing Support</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">591</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">572</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">638</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Research and Development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">225</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">253</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">370</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Administration, Marketing and Finance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">391</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">471</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">508</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,283</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,606</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,073</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11"><B>As of December 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Geographical Locations</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Singapore</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,161</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,479</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,932</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Americas</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">87</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Europe</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Asia-Pacific (other than Singapore)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,283</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,606</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,073</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
of December&nbsp;31, 2005, we had a total of 773 temporary employees.
The average number of temporary employees in 2005 based on the number
of temporary employees at the end of each month end was 588 per month.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In February&nbsp;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. The consolidation process was
completed as scheduled and Fab 1 ceased operations at the end of March&nbsp;2004. As a result of our
consolidation of business, we redeployed 126 of our Fab 1 employees to work at our other Fabs and
released the remaining 363 employees. In connection with the ramp up and commencement of production
of Fab 7, we redeployed certain of our employees from our other Fabs to work at Fab 7 and also
hired new employees. As of December&nbsp;31, 2005, Fab 7 had 634 employees, a majority of whom comprise
new hires.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our employees are not covered by any collective bargaining agreements and are not members of a
union. We have not experienced any strikes or work stoppages by our employees. We consider our
relationship with our employees to be good.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. Employees of SMP,
our 49% owned affiliate, are eligible to receive option grants under our company&#146;s employee share
option plan subject to certain exceptions as provided in the plan. In addition, employees of SMP
also participate in an employee share purchase plan with terms substantially similar to the share
purchase plan for our employees. Please see &#147;Item&nbsp;6. Directors, Senior Management and Employees &#151;
D. Share Ownership for Directors and Senior Management &#151; Employee Benefit Plans&#148; for a discussion
of our share option plan and our share purchase plan.
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left"><B>E.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SHARE OWNERSHIP FOR DIRECTORS AND SENIOR MANAGEMENT</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth certain information with respect to the beneficial ownership of
our ordinary shares including ordinary shares held directly or in the form of ADSs for each of our
directors and our president and chief executive officer and all of our directors and senior
management as a group as of December&nbsp;31, 2005, based on an aggregate of 2,513,383,969 ordinary
shares outstanding as of such date.
</DIV>

<P align="center" style="font-size: 10pt">72
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="65%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>No. of Ordinary</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Directors</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Beneficially Owned</B><SUP style="font-size: 85%; vertical-align: text-top"><B>(1)</B></SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">James A. Norling</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1,662,631</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="font-family: Symbol">&#246;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Chia Song Hwee</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4,870,857</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="font-family: Symbol">&#247;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Sum Soon Lim</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">716,166</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="font-family: Symbol">&#247;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Robert E. La Blanc</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">302,470</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="font-family: Symbol">&#247;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Andre Borrel</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">393,608</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="font-family: Symbol">&#247;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Charles E. Thompson</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">312,966</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="font-family: Symbol">&#247;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tsugio Makimoto</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">256,216</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="font-family: Symbol">&#247;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tay Siew Choon</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">454,073</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="font-family: Symbol">&#241;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Please see</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Peter Seah Lim Huat</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">240,330</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="font-family: Symbol">&#247;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Note&nbsp;(2)&nbsp;below.</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Philip Tan Yuen Fah</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">85,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="font-family: Symbol">&#247;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Pasquale Pistorio</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">250,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="font-family: Symbol">&#247;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">All directors and senior management<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP> as a group (21 persons))</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">16,786,939</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="font-family: Symbol">&#248;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>Notes:</B></TD>
    <TD nowrap align="left"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Gives effect to the ordinary shares issuable within 60&nbsp;days from December&nbsp;31, 2005 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. Except for 36,000 shares
held by James A. Norling and 132,070 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.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Less than 1% of our outstanding ordinary shares as of December&nbsp;31, 2005.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>None of our directors or senior management individually owns 1% or more of our outstanding
ordinary shares.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Share Options for Directors</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table contains information pertaining to share options held by directors as of
December&nbsp;31, 2005.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Directors</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>As of December 31, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Exercise Price S$</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Exercise Period</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">James A. Norling</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58,609</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.05</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">28/03/2002 to 28/03/2006</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58,609</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">15/08/2002 to 15/08/2006</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58,609</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">22/02/2003 to 22/02/2007</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,172,195</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.88</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">01/05/2002 to 01/05/2012</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58,609</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.86</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">30/08/2003 to 30/08/2007</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.72</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">28/02/2004 to 28/02/2008</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">29/08/2004 to 29/08/2008</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">110,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">27/02/2005 to 27/02/2009</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">110,000</TD>
    <TD nowrap>&nbsp;*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">26/08/2006 to 26/08/2010</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Chia Song Hwee</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,467</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">28/10/1997 to 28/10/2006</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,935</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">28/11/1998 to 28/11/2007</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,704</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.80</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">30/11/1998 to 29/11/2008</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,444</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.80</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">30/04/1999 to 29/04/2009</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">234,439</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.86</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">29/10/1999 to 29/10/2009</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,331</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.86</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">29/04/2000 to 29/10/2009</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">410,268</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">06/04/2001 to 06/04/2010</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">527,487</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">03/10/2001 to 03/10/2010</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">263,743</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.05</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">28/03/2002 to 28/03/2011</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">263,743</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">15/08/2002 to 15/08/2011</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">234,439</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">22/02/2003 to 22/02/2012</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,344,391</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.86</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">30/08/2003 to 30/08/2012</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">300,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.72</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">28/02/2004 to 28/02/2013</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">700,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">29/08/2004 to 29/08/2013</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">27/02/2005 to 27/02/2014</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">220,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.02</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">30/07/2004 to 30/07/2014</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1,000,000</TD>
    <TD nowrap>&nbsp;*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">26/08/2006 to 26/08/2015</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">73
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Directors</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>As of December 31, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Exercise Price S$</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Exercise Period</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Sum Soon Lim</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,887</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.05</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">28/03/2002 to 28/03/2006</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,887</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">15/08/2002 to 15/08/2006</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,887</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">22/02/2003 to 22/02/2007</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,887</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.86</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">30/08/2003 to 30/08/2007</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.72</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">28/02/2004 to 28/02/2008</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">29/08/2004 to 29/08/2008</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">27/02/2005 to 27/02/2009</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">60,000</TD>
    <TD nowrap>&nbsp;*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">26/08/2006 to 26/08/2010</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Robert E. La Blanc</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.05</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">28/03/2002 to 28/03/2006</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">15/08/2002 to 15/08/2006</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">22/02/2003 to 22/02/2007</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.86</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">30/08/2003 to 30/08/2007</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.72</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">28/02/2004 to 28/02/2008</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">29/08/2004 to 29/08/2008</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">27/02/2005 to 27/02/2009</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">60,000</TD>
    <TD nowrap>&nbsp;*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">26/08/2006 to 26/08/2010</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Andre Borrel</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,887</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.05</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">28/03/2002 to 28/03/2006</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,887</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">15/08/2002 to 15/08/2006</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,887</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">22/02/2003 to 22/02/2007</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,887</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.86</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">30/08/2003 to 30/08/2007</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.72</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">28/02/2004 to 28/02/2008</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">29/08/2004 to 29/08/2008</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">27/02/2005 to 27/02/2009</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">60,000</TD>
    <TD nowrap>&nbsp;*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">26/08/2006 to 26/08/2010</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Charles E. Thompson</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.05</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">28/03/2002 to 28/03/2006</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">15/08/2002 to 15/08/2006</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">22/02/2003 to 22/02/2007</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.86</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">30/08/2003 to 30/08/2007</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.72</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">28/02/2004 to 28/02/2008</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">29/08/2004 to 29/08/2008</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">27/02/2005 to 27/02/2009</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">60,000</TD>
    <TD nowrap>&nbsp;*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">26/08/2006 to 26/08/2010</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tsugio Makimoto</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.05</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">28/03/2002 to 28/03/2006</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">15/08/2002 to 15/08/2006</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">22/02/2003 to 22/02/2007</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.86</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">30/08/2003 to 30/08/2007</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.72</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">28/02/2004 to 28/02/2008</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">29/08/2004 to 29/08/2008</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">27/02/2005 to 27/02/2009</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">60,000</TD>
    <TD nowrap>&nbsp;*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">26/08/2006 to 26/08/2010</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Peter Seah Lim Huat</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,443</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">22/02/2003 to 22/02/2007</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,887</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.86</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">30/08/2003 to 30/08/2007</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.72</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">28/02/2004 to 28/02/2008</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">29/08/2004 to 29/08/2008</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">27/02/2005 to 27/02/2009</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">85,000</TD>
    <TD nowrap>&nbsp;*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">26/08/2006 to 26/08/2010</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tay Siew Choon</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,443</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">15/08/2002 to 15/08/2006</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">22/02/2003 to 22/02/2007</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">234,439</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.88</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">01/05/2002 to 01/05/2007</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,887</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.86</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">30/08/2003 to 30/08/2007</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.72</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">28/02/2004 to 28/02/2008</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">29/08/2004 to 29/08/2008</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">27/02/2005 to 27/02/2009</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">60,000</TD>
    <TD nowrap>&nbsp;*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">26/08/2006 to 26/08/2010</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Philip Tan Yuen Fah</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">27/02/2005 to 27/02/2009</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">85,000</TD>
    <TD nowrap>&nbsp;*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">26/08/2006 to 26/08/2010</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Pasquale Pistorio</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">60,000</TD>
    <TD nowrap>&nbsp;*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">26/08/2006 to 26/08/2010</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>


</TABLE>

<DIV align="left" style="font-size: 10pt"><B>Note:</B><br>
&nbsp;* Options that were granted in 2005.</DIV>



<P align="center" style="font-size: 10pt">74
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Employee Benefit Plans</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Share Option Plan 1999</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;30, 1999, we adopted our Share Option Plan 1999, which we refer to as the 1999 Option
Plan. The purpose of the plan is to put our company in a competitive position as an employer.
Options granted under the 1999 Option Plan may be non-statutory options or incentive stock options
intended to qualify under Section&nbsp;422 of the U.S. Internal Revenue Code of 1986, as amended, or the
Code.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The 1999 Option Plan is administered by the ERCC. Our employees, employees of SMP, our outside
directors and consultants are eligible to receive option grants subject to certain exceptions as
provided in the 1999 Option Plan. 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:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the exercise price of the option is at least 110% of the fair market value of an
ordinary share on the date of grant; and</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The aggregate number of ordinary shares that may be issued under the 1999 Option Plan and
under any other share incentive and option schemes or agreements may not exceed 227,647,883
ordinary shares, as adjusted from 197,160,000 to give effect to the October&nbsp;2002 Rights Offering.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If an outstanding option expires for any reason or is cancelled or otherwise terminated, the
ordinary 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
an ordinary share on the date of grant. In no event will the exercise price for an option be below
par value.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The exercisability of options outstanding under the 1999 Option Plan may be fully or partially
accelerated under certain circumstances such as a change in control of our company, as defined in
the 1999 Option Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each grant under the 1999 Option Plan is evidenced by a share option agreement and the term of
options granted may not exceed ten years from the date of grant. If the optionee&#146;s service with us
is terminated, the optionee&#146;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&#146;s service terminates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2005, options to purchase 113,480,367 ordinary shares were issued and
outstanding under our 1999 Option Plan, of which options to purchase 24,955,223 ordinary shares
were held by our directors and senior management. The exercise prices of all outstanding options
range from S$0.69 to S$14.24 and the expiration dates of all options range from March&nbsp;28, 2006 to
November&nbsp;23, 2015.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The 1999 Option Plan will terminate automatically on January&nbsp;28, 2009, ten years after the
date on which the Board adopted the 1999 Option Plan. The ERCC may amend, suspend or terminate the
1999 Option Plan at any time and for any reason, provided that any amendment which increases the
number of shares available for issuance under the 1999 Option 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Employee Share Purchase Plans</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In May&nbsp;2001, we implemented a Chartered Employee Share Purchase Plan 2001, which we refer to
as the Chartered ESPP 2001, and a Share Purchase Plan for Employees of SMP, which we refer to as
the SMP ESPP 2001. The purpose of the plans was to put our respective companies in a competitive
position as an employer. Employees purchase shares from our respective companies through payroll
deductions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The aggregate number of shares that were available for purchase under the Chartered ESPP 2001
and the SMP ESPP 2001, was an aggregate number of 11,721,955 shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All available shares under the Chartered ESPP 2001 and the SMP ESPP 2001 were issued and
allotted
</DIV>

<P align="center" style="font-size: 10pt">75
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">by the end of February&nbsp;2004, and as a result, both the Chartered ESPP 2001 and the SMP ESPP
2001 were terminated.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Chartered Employee Share Purchase Plan, which we refer to as the Chartered ESPP 2004, and
Share Purchase Plan for employees of SMP, which we refer to as the SMP ESPP 2004, were approved by
shareholders at our 2004 Annual General Meeting. The aggregate number of ordinary shares that are
available for purchase under the Chartered ESPP 2004 and the SMP ESPP 2004, is 30,000,000 ordinary
shares with a limit of 3,000,000 ordinary shares per calendar year (and a limit of 1,500,000
ordinary shares per offering period). A total of 2,347,810 ordinary shares were issued in 2005
under the Chartered ESPP 2004 and the SMP ESPP 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Equity Compensation Plan Information as of December&nbsp;31, 2005</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>(c)</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Number of Securities</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>(a)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Remaining Available</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Number of Securities</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>(b)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>for Future Issuance</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>to be Issued upon</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Weighted-average</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>under Equity</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Exercise of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Exercise Price of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Compensation Plans</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Outstanding Options,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Outstanding Options,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>(Excluding Securities</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Plan Category</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Warrants and Rights</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Warrants and Rights</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>in Column (a))</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity compensation plans approved
by shareholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">113,480,367</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">$2.04</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">90,521,003</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity compensation plans not
approved by shareholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">N.A.*</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">N.A.*</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">N.A.*</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">113,480,367</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">$2.04</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">90,521,003</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>Note:</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&nbsp;</B></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Chartered does not have any equity compensation plans which have not been approved by shareholders.</TD>
</TR>
</TABLE>


<DIV align="left">
<A name="108"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="5%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 7.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="5%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>A.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>MAJOR SHAREHOLDERS</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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
December&nbsp;31, 2005 based on an aggregate of 2,513,383,969 ordinary shares outstanding as of such
date:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Ordinary Shares</B><SUP style="font-size: 85%; vertical-align: text-top"><B>(1)</B></SUP></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>Beneficially Owned</B><SUP style="font-size: 85%; vertical-align: text-top"><B>(2)</B></SUP></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Shareholders Holding 5% or More</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Percentage</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Temasek
Holdings (Private) Limited<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,511,831,883</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">60.15</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>Notes:</B></TD>
    <TD nowrap align="left"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>

</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>The number of ordinary shares listed in this table includes ordinary shares held in the form of ADSs.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>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.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>The 1,511,831,883 ordinary shares beneficially owned by
Temasek includes (a)&nbsp;the 1,295,324,883 ordinary shares held by
ST Semiconductors; (b)&nbsp;the 215,000,000 ordinary shares subject
to the terms of a securities lending agreement entered into by ST
Semiconductors with a certain financial institution and (c)&nbsp;the
1,507,000 ordinary shares held by other companies within the Temasek
group. ST Semiconductors is a wholly-owned subsidiary of Temasek. Temasek may therefore be deemed to
beneficially own the shares owned by ST Semiconductors, because it is the parent company of ST
Semiconductors.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2005, 719,606 of our ordinary shares, representing 0.03% of our
outstanding ordinary shares, were held by a total of 109 holders of record with addresses in the
U.S. As of the same date, 4,772,080 of our ADSs (representing 47,720,800 ordinary shares),
representing 1.90% of our outstanding ordinary shares, were held by a total of 12 registered
holders of record with addresses in and outside of 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.
</DIV>

<P align="center" style="font-size: 10pt">76
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="5%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>B.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>RELATED PARTY TRANSACTIONS</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>The Temasek Group</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2005, Temasek, through its wholly-owned subsidiary, ST Semiconductors,
beneficially owned approximately 60.09% of our outstanding ordinary shares. As a result, Temasek is
able to control actions over many matters requiring approval by our shareholders, including the
election of directors and approval of significant corporate transactions. Temasek is owned by the
Minister for Finance (Incorporated) of Singapore and is an Asia investment company with investments
in a range of industries, which include telecommunications and media, financial services, property,
transportation and logistics, energy and resources, infrastructure, engineering and technology, as
well as pharmaceuticals and biosciences. Mr.&nbsp;Peter Seah Lim Huat is a member of the Temasek
Advisory Panel and Mr.&nbsp;Sum Soon Lim was a corporate advisor to Temasek until December&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to December&nbsp;31, 2004, Singapore Technologies (then a subsidiary of Temasek) was our
substantial shareholder and was a holding company for a group of companies. On December&nbsp;31, 2004,
Temasek, as part of the rationalization plan to manage Temasek&#146;s capital structure more
efficiently, acquired all of Singapore Technologies&#146; interest in our company and pursuant to such
restructuring, Singapore Technologies&#146; holdings were transferred to Temasek.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also have contractual and other business relationships with several of Temasek&#146;s affiliates
and we may also engage in material transactions with several of Temasek&#146;s affiliates from time to
time. Consequently, conflicts of interest may arise between us in certain circumstances.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Financial Support Provided by Singapore Technologies</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to December&nbsp;31, 2004, we had contracted with Singapore Technologies a majority of our
forward purchases of foreign exchange and from time to time, we had also advanced funds to or
borrowed funds from Singapore Technologies at interest rates comparable to rates offered by
commercial banks in Singapore. We also participated with Singapore Technologies and/or its
affiliates in a pooled cash management arrangement managed by a bank where cash balances were
pooled and daily cash surpluses or shortfalls were allowed, on a short-term basis, to be lent to or
borrowed from other Singapore Technologies affiliates participating in the arrangement at
prevailing interbank rates. In addition, we had also placed short-term deposits with Singapore
Technologies and/or its affiliates having maturities of less than three months. The interest income
received in 2003 and 2004 was $6.7&nbsp;million and $2.9&nbsp;million, respectively. Singapore Technologies
also provided us with a short-term credit facility. Since December&nbsp;31, 2004, these activities have
discontinued.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2004, $28.1&nbsp;million of our debt was guaranteed by Singapore Technologies
and as of December&nbsp;31, 2005, none of our debt was guaranteed by Singapore Technologies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Corporate Services Provided by Singapore Technologies</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to December&nbsp;31, 2004, we had a service agreement with Singapore Technologies pursuant to
which it provided us with management and corporate support services such as treasury, cash
management, internal audit, training and executive resources, information technology, bank
guarantees and provision of standby credit facilities. In return for those services, support and
benefits, we paid Singapore Technologies an annual management fee based on a service based fee
arrangement. The management fee was itemized to allow us to compare them with similar services
provided by unrelated third parties. In addition, we reimbursed Singapore Technologies for the
third-party costs and expenses it incurred on our behalf. Since December&nbsp;31, 2004, the service
agreement with Singapore Technologies was terminated and we now perform these services internally
or directly contract with other service providers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2003 and 2004, management fees with Singapore Technologies amounted to $3.4&nbsp;million and
$2.7&nbsp;million, respectively. There were no management fees payable to Singapore Technologies in 2005
as our service agreement with Singapore Technologies was terminated since December&nbsp;31, 2004. We
also reimbursed Singapore Technologies for costs and expenses incurred on our behalf, principally
certain of our payroll expenses paid through Singapore Technologies. Such reimbursements totaled
$8.5&nbsp;million and $7.1&nbsp;million in 2003 and 2004, respectively. There were no such reimbursements in
2005.
</DIV>

<P align="center" style="font-size: 10pt">77
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Other Transactions</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2005, we transacted business with affiliates of Temasek in the normal course of our
respective businesses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We paid STATS ChipPAC $13.5&nbsp;million, $19.1&nbsp;million and $12.9&nbsp;million in 2003, 2004 and 2005
respectively, for services rendered in those years. We also paid other affiliates of Temasek $1.4
million, $2.2&nbsp;million and $0.9&nbsp;million in 2003, 2004 and 2005, respectively, for services rendered
in those years. We purchased $0.2&nbsp;million, $0.4&nbsp;million and $4.0&nbsp;million in assets from affiliates
of Temasek in 2003, 2004 and 2005, respectively. These transactions were in the normal course of
business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our company previously operated Fab 1, which ceased operations at the end of March&nbsp;2004, on
land leased from Ascendas. Our company has sold and transferred its leasehold interest in respect
of Fab 1 and the plant and equipment located in the property to Amkor Technology Pte Ltd for a
total consideration of $6.5&nbsp;million. The transaction was completed in January&nbsp;2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fabs 2 and 3 and our corporate offices are located on land which we lease from Terra which in
turn leases the land from JTC. These leases run until 2024 with conditional options to extend for
another 30&nbsp;years. The sub-leases for Fab 2 and Fab 3 require us to make rental payments to Terra at
rates equal to the rent paid by Terra to JTC for the subject land through 2024.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The site slurry treatment plant for fabs 2 and 3 is also located on land which we lease from
Terra, which in turn leases the land from JTC. This lease runs until 2030 with a conditional option
to extend for another 30&nbsp;years. Our company is required to make rental payments to Terra at rates
equal to the rent paid by Terra to JTC for the subject land through 2030.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CSP leases the land on which Fab 6 is located from Terra, which in turn leases it from JTC.
The lease runs until 2027 with a conditional option to extend for an additional 30&nbsp;years. CSP is
required to make rental payments to Terra at rates equal to the rent paid by Terra to JTC for the
subject land through 2027.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fab 7 is located on land which we lease from Terra which in turn leases the land from JTC. The
JTC lease runs until 2030 with a conditional option to extend for an additional 30&nbsp;years. Our
company is required to make rental payments to Terra at rates equal to the rent paid by Terra to
JTC for the subject land through 2030.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lease payments in respect of the leases described above for the years ended December&nbsp;31, 2003,
2004 and 2005 were approximately $2.8&nbsp;million, $2.8&nbsp;million and $2.7&nbsp;million, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also engaged in transactions with other companies directly or indirectly controlled by
Temasek in the ordinary course of business. These transactions, such as phone services from
Singapore Telecommunications and airline tickets from Singapore Airlines, are on customary terms
and conditions and are generally not subject to review by the Audit Committee.
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="5%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>C.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>INTERESTS OF EXPERTS AND COUNSEL</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Not applicable.
</DIV>

<DIV align="left">
<A name="129"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="5%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 8.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>FINANCIAL INFORMATION</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="5%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>A.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION</B></TD>
</TR>
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Please see &#147;Item&nbsp;18. Financial Statements&#148; for a list of financial statements filed under Item&nbsp;17.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Export Sales</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Please see &#147;Item&nbsp;4. Information On Our Company &#151; B. Business Overview &#151; Customers and Markets.&#148;
</DIV>


<P align="center" style="font-size: 10pt">78
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Dividend Policy</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;1995 and January&nbsp;1997, we paid a cash dividend on our ordinary shares in an amount
equivalent to $87,000 and $93,000, respectively, for the purpose of qualifying our ordinary shares
as &#147;trustee stock&#148; eligible for investment by account holders of the CPF, 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 2005. 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&nbsp;69 of the
Companies Act, Chapter&nbsp;50 of Singapore, or 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 prior consent of the lender. We currently intend to
retain future earnings, if any, to finance expansion of our business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Legal Proceedings</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2005, we are not involved in any legal proceedings that we believe would be
significantly harmful to our company.
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="5%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>B.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>SIGNIFICANT CHANGES</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There have been no significant subsequent events following the close of the last financial
year up to the date of this document that are known to us and require disclosure in this document
for which disclosure was not made in this document.
</DIV>
<DIV align="left">
<A name="109"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="5%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 9.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>THE OFFER AND LISTING</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>PRICE RANGE OF OUR ADSs AND ORDINARY SHARES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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&nbsp;29, 1999 as furnished by Nasdaq
and the Singapore Exchange. The initial public offering price of our ADSs on October&nbsp;29, 1999 was
$20.00 per ADS and S$3.344 per ordinary share. Per ADS and per share prices below reflect the
adjustment due to the October&nbsp;2002 Rights Offering.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left"><B>(a)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Annual high and low market prices</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Nasdaq</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">High</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Low</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;1, through December&nbsp;31, 2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">32.37</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">14.72</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;1, through December&nbsp;31, 2002</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">27.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3.94</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;1, through December&nbsp;31, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">11.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3.48</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;1, through December&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">11.35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.76</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;1, through December&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">9.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.52</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Singapore Exchange</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">High</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Low</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;1, through December&nbsp;31, 2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$5.46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$2.59</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;1, through December&nbsp;31, 2002</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$4.81</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$0.71</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;1, through December&nbsp;31, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.93</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$0.63</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;1, through December&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.89</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$0.92</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;1, through December&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.44</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$0.92</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">79
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left"><B>(b)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Quarterly high and low market prices</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Nasdaq</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">High</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Low</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;1, through March&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">11.35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">8.50</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">April&nbsp;1, through June&nbsp;30, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">10.55</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7.54</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">July&nbsp;1, through September&nbsp;30, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">8.13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.80</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">October&nbsp;1, through December&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6.65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.76</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;1, through March&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7.37</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.62</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">April&nbsp;1, through June&nbsp;30, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">8.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.56</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">July&nbsp;1, through September&nbsp;30, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">9.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6.58</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">October&nbsp;1, through December&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7.90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.52</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Singapore Exchange</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">High</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Low</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;1, through March&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.89</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.49</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">April&nbsp;1, through June&nbsp;30, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.76</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.33</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">July&nbsp;1, through September&nbsp;30, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.01</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">October&nbsp;1, through December&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$0.92</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;1, through March&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$0.92</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">April&nbsp;1, through June&nbsp;30, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$0.93</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">July&nbsp;1, through September&nbsp;30, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.44</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.10</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">October&nbsp;1, through December&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$0.95</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left"><B>(c)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Monthly high and low market prices</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Nasdaq</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">High</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Low</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">September&nbsp;1, through September&nbsp;30, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7.16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6.58</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">October&nbsp;1, through October&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6.88</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.52</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">November&nbsp;1, through November&nbsp;30, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7.51</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6.26</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">December&nbsp;1, through December&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7.90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6.94</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;1, through January&nbsp;31, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">8.52</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7.60</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:15px; text-indent:-15px">February&nbsp;1,
through February&nbsp;28, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">8.60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">8.09</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Singapore Exchange</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">High</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Low</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">September&nbsp;1, through September&nbsp;30, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.12</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">October&nbsp;1, through October&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$0.95</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">November&nbsp;1, through November&nbsp;30, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.07</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">December&nbsp;1, through December&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.16</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;1, through January&nbsp;31, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.26</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:15px; text-indent:-15px">February&nbsp;1,
through February&nbsp;28, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.39</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.33</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
last reported sale price of the ADSs as quoted on Nasdaq on
February&nbsp;28, 2006 was
$8.16 per ADS. The last reported sale price of the ordinary shares as quoted on the Singapore
Exchange on February&nbsp;28, 2006 was S$1.35 per ordinary share.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Please see &#147;Item&nbsp;3. Key Information &#151; D. Risk Factors &#151; Risks Related to Our Securities and
Our Trading Market&#148; regarding the nature of the trading market for our ADSs and ordinary shares.
</DIV>
<DIV align="left">
<A name="110"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="5%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 10.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>ADDITIONAL INFORMATION</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="5%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>A.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>SHARE CAPITAL</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Not applicable.
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="5%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>B.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>OUR MEMORANDUM AND ARTICLES OF ASSOCIATION</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A summary of various provisions in our Memorandum and Articles of Association is provided
below. This summary is qualified in its entirety by reference to our Memorandum and Articles of
Association (see &#147;Item&nbsp;19. Exhibits &#151; Exhibit&nbsp;1&#148;).
</DIV>

<P align="center" style="font-size: 10pt">80
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Objects and purposes</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Directors</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 the quorum at a Board of Directors&#146; meeting in relation to a resolution in which he is
not entitled to vote.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The ordinary remuneration of our Directors is determined by our shareholders in general
meeting. Our Directors determine the payment of extra remuneration to an executive Director, a
Director who serves on a Directors&#146; 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 remuneration of a President or Chief Executive Officer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No shares are required to be held by a Director for director&#146;s qualification.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No person over the age of 70&nbsp;years may be appointed as a Director of our company unless an
ordinary resolution is passed at our company&#146;s annual general meeting to appoint such person as a
Director.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Shares</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have two classes of shares &#151; ordinary shares and convertible redeemable preference shares,
or preference shares. As of December&nbsp;31, 2005, there are 2,513,383,969 ordinary shares and 30,000
preference shares issued and allotted by our company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Until January&nbsp;30, 2006, our company&#146;s ordinary shares had a par value of S$0.26 and each
preference share had a par value of US$0.01 each. The Companies (Amendment) Act 2005, or Companies
Amendment Act, which came into effect on January&nbsp;30, 2006, abolished the concept of &#147;par value&#148; and
&#147;authorized capital.&#148; As such, as of January&nbsp;30, 2006, the shares of our company have no par or
nominal value.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>New ordinary shares</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;New ordinary shares may only be issued with the prior approval in a general meeting of
shareholders of our ordinary shares, or ordinary 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 ordinary 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 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 ordinary shareholders are not entitled to pre-emptive
rights under our Articles of Association.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Directors may make calls upon our shareholders in respect of any moneys unpaid on their
shares 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Transfer of ordinary shares</B>
</DIV>

<P align="center" style="font-size: 10pt">81
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 the applicant pays a fee which will not exceed S$2
and furnishes any evidence and indemnity that our Board of Directors may require.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Convertible redeemable preference shares</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to a special resolution of our ordinary shareholders obtained on August&nbsp;17, 2005, we
amended our Articles of Association to facilitate the issuance of preference shares. The preference
shares rank, with respect to rights upon liquidation, winding up or dissolution as follows:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>junior to all our existing and future debt obligations;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>junior to each class of our shares the terms of which provide that such class will rank
senior to the preference shares as regards repayment of amounts paid up or credited as paid
up on such class of shares;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>on a parity with any class of our shares that has terms which provide that such class
will rank on a parity with the preference shares as regards repayment of amounts paid up or
credited as paid up on such class of shares; and</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>senior to our ordinary shares (including those represented by ADSs) and to any class of
our shares that has terms which provide that such class will rank junior to the preference shares
as regards payment of amounts paid up or credited as paid up on such class of shares.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>General meetings of shareholders</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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% of the total voting rights of all ordinary shareholders request in
writing that such a meeting be held. In addition, two or more ordinary shareholders holding not
less than 10% 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% 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. We must give at least 21&nbsp;days&#146; notice in writing for every general meeting convened for
the purpose of passing a special resolution. Ordinary resolutions generally require at least 14
days&#146; 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Voting rights</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An ordinary shareholder is entitled to attend, speak and vote at any general meeting, in
person or by proxy. A proxy need not be a shareholder. A person who holds ordinary shares through
the book-entry clearance system maintained by The Central Depository (Pte) Limited, or CDP, is
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 33<SUP style="font-size: 85%; vertical-align: text-top">1</SUP>/<SUB style="font-size: 85%; vertical-align: text-bottom">3</SUB>%
of our issued and fully paid up 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
ordinary shareholder present in person and each proxy shall have one vote, and on a poll, every
ordinary 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 ordinary shareholder present in person or by proxy and entitled to vote.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders of our preference shares, or preference shareholders, are entitled to receive copies
of our reports, accounts, circulars and notes of general meetings sent to our ordinary
shareholders. Preference shareholders are entitled to attend, speak and vote at any class meeting
of the preference shareholders, in
</DIV>

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</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">person or by proxy, but they are not entitled to attend, speak or vote at our general
meetings. A proxy need not be a shareholder. However, the preference shareholders are only entitled
to attend and vote (but not speak) at those meetings, in person or by proxy, where at least one of
the proposed resolutions is either in respect of amending the rights of the preference shareholders
or in respect of our winding-up and such vote is restricted to those resolutions that pertain to
the election of the chairman of such meeting, amendment of the rights of the preference
shareholders, to our winding-up or any motion for adjournment of such meeting. Under our Articles
of Association, at class meetings of the preference shareholders or general meetings where the
preference shareholders are entitled to attend and vote, on a show of hands, every preference
shareholder present in person and each proxy shall have one vote, and on a poll, every preference
shareholder present in person or by proxy shall have one vote for each ordinary share into which
each preference share held by such preference shareholder would have been converted if the
Conversion Date for such preference share were the date 48 hours preceding the date of such class
meeting or general meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Dividends</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may, by ordinary resolution of our ordinary shareholders, 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. Our Board of Directors may also declare
interim dividends without seeking shareholder approval. All dividends are paid pro rata among the
ordinary shareholders in proportion to the amount paid up on each ordinary shareholder&#146;s ordinary
shares, unless the rights attaching to an issue of any ordinary share provide 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 an ordinary 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our preference shareholders are not entitled to receive any dividends, regardless of whether
dividends are paid to our ordinary shareholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Bonus and rights issue</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Board of Directors may, with the approval of our ordinary shareholders at a general
meeting, capitalize any reserves or profits (including profit or monies carried and standing to any
reserve 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 ordinary shareholders in proportion to their shareholdings. Such
rights are subject to any conditions attached to such issue and the regulations of any stock
exchanges on which we are listed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Liquidation or other return of capital</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Preference shareholders, upon our liquidation will be entitled to payment, out of our assets
available for distribution to our shareholders (ordinary or otherwise), of $10,000 per preference
share. After payment in full of the liquidation preference, preference shareholders will not be
entitled to any further participation in any distribution of our assets. If, upon our liquidation,
the amounts payable with respect to preference shares and all other shares that have terms which
provide that such shares will rank on a parity with the preference shares are not paid in full,
preference shareholders and the holders of such parity shares will share equally and ratably in any
distribution of our assets in proportion to the full liquidation preference to which each such
holder is entitled.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If our company liquidates or in the event of any other return of capital, holders of ordinary
shares will be entitled to participate in the distribution of any surplus assets (including after
paying the preference share liquidation preference) in proportion to their shareholdings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Redemption of preference shares</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under our Articles of Association, we are required to redeem, out of funds legally available
for such redemption, each preference share on the maturity date, which is August&nbsp;17, 2010, at the
redemption amount in accordance with all applicable law and the provisions of our Articles of
Association, unless earlier redeemed, converted or purchased and cancelled by our company. In
addition, we may at any time prior to the maturity date redeem the preference shares at the early
redemption price under the following circumstances:
</DIV>

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</DIV>

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<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Tax call</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If we determine that, as a result of:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 0pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any change in or amendment to the laws or regulations of Singapore or any authority
of or in Singapore having power to tax, or rulings promulgated under any such laws or
regulations by any authority of or in Singapore having power to tax, or</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any change in the general application or official or judicial interpretation of any
such laws, regulations or rulings, or</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any change in the application or official or judicial interpretation of, or any
execution or amendment to, any treaty or treaties affecting taxation to which Singapore
is a party, which change, execution or amendment, in each case, becomes effective on
or after August&nbsp;17, 2005, the date on which the preference shares are first allotted
and issued, we will be required to pay additional amounts with respect to the
preference shares (notwithstanding the foregoing, we may not redeem those preference
shares, the holders of which have irrevocably waived their rights to such additional
amounts at least seven business days prior to such redemption),</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD style="background: transparent">&nbsp;</TD>
    <TD colspan="3">we will have the option to redeem in whole, but not in part, the outstanding preference
shares at the early redemption price.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 0pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Clean-up call</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If at least 95% of the preference shares originally issued have been converted, redeemed or
purchased and cancelled, we will have the option to redeem in whole, but not in part, the
outstanding preference shares at the early redemption price.</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Optional call redemption</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We may, at any time on or after August&nbsp;17, 2007, redeem the preference shares in whole or in
part at any time, at the early redemption price, if the closing sale price of our ordinary
shares on the Singapore Exchange for any 20 trading days (translated in U.S. dollars at the
U.S. dollar / Singapore dollar noon buying rate in New York on each such day, as certified
for customs purposes by the Federal Reserve Bank of New York) in any 45 consecutive calendar
day period ending not more than five business days prior to the date on which notice of such
redemption is given, is at least 125% of the conversion price per ordinary share, in each
case as adjusted through, and effective on, such notice date.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The early redemption price and the closing sale price is defined in our Articles of
Association.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, if a specified fundamental change event occurs before the close of business on
the seventh business day prior to maturity or early redemption, the preference shareholders may
under certain circumstances require our company to redeem all or any of the preference shares at
the early redemption price per preference share.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our preference shareholders will not have the right to require our company to redeem any
preference shares if a fundamental change occurs as defined in Article&nbsp;4A.8(2)(b), (c)&nbsp;and (d)&nbsp;of
our Articles of Association.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Singapore law restricts our ability to redeem our preference shares, as described in our
Articles of Association.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Conversion rights of Preference Shareholders</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our preference shareholders may convert all or any of the preference shares that they hold
into either ordinary shares or ADSs during hours as may be agreed between our company and the
appointed conversion agent on any business day during the conversion period:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>commencing on September&nbsp;26, 2005; and</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>ending on the date falling seven business days prior to the earlier of:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 0pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>in the case of any preference share called for redemption, the date fixed for such
redemption unless our company shall default in making the redemption payment, provided
that in no event shall any such conversion right extend beyond the maturity date; or</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the maturity date.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The conversion price will be a price expressed in U.S. dollars per ordinary share. The
initial conversion price per ordinary share will be determined by multiplying (1)&nbsp;the sum of the
conversion premium, 20%, plus 100%, by (2)&nbsp;the reference share price (converted to U.S. dollars).
The reference share price is defined in our Articles of Association. The conversion price is
subject to adjustments in certain circumstances prescribed in our Articles of Association.
</DIV>


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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Limitations on rights to hold or vote shares</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except as described in &#147;&#151; Voting Rights&#148; above, there are no limitations imposed
under our Articles of Association on the rights of ordinary shareholders who are non-resident in
Singapore to hold or exercise voting rights attached to ordinary shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Provisions discriminating against any existing or prospective holder of shares</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are no provisions under 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Take-overs</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Singapore Code on Take-overs and Mergers, or 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 take-over 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, may be required to extend a take-over offer for the remaining voting shares in accordance
with the provisions of the Take-Over Code.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Parties acting in concert&#148; 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 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 shareholdings of the
adviser and any of those funds in the client total 10% or more of the client&#146;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to certain exceptions, a take-over offer must be in cash or 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Indemnity</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 or 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 our
Directors and officers against any liability which by law would otherwise attach to them in respect
of any negligence, default, breach of duty or breach of trust of which they may be guilty in
relation to our company.
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Substantial shareholdings</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Companies Act and the Securities and Futures Act, Chapter&nbsp;289 of Singapore require the
substantial shareholders of our company to give notice to our company and the Singapore Exchange,
including particulars of their interest and the circumstances by reason of which they have such
interest, within two business days of their becoming substantial shareholders of our company and of
any change in the percentage level of their interest.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Companies Act, a person has a substantial shareholding in our company if he has an
interest (or interests) in one or more voting shares in our company and the total votes attached to
that share, or those shares, is not less than 5% of the total votes attached to all the voting
shares in our company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Percentage level&#148;, in relation to a substantial shareholder, means the percentage figure
ascertained by expressing the total votes attached to our voting shares in which the substantial
shareholder has an interest or interests immediately before or (as the case may be) immediately
after the relevant time as a percentage of the total votes attached to all the voting shares in our
company, and, if it is not a whole number, rounding that figure down to the next whole number.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Minority rights</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The rights of minority shareholders of Singapore-incorporated companies are protected under
Section&nbsp;216 of the Companies Act, which gives the Singapore courts a general power to make any
order, upon application by any shareholder of our company, as they think fit to remedy any of the
following situations:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="2%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="95%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">if the affairs of our company are being conducted or the powers of our 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</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">if our company takes an action, or threatens to take an action, or our shareholders pass
a resolution, or propose to pass a resolution, which unfairly discriminates against, or is
otherwise prejudicial to, one or more of our shareholders, including the applicant.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="2%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="95%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">direct or prohibit any act or cancel or vary any transaction or resolution;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">regulate the conduct of our affairs in the future;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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 courts may direct;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">provide for the purchase of a minority shareholder&#146;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
our share capital;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">provide that the Memorandum or Articles of Association be amended; or</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">provide that our company be wound up.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left"><B>C.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>MATERIAL CONTRACTS</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is a summary of each contract that is material to us and which was entered into
by us in the last two years. These agreements are also listed in &#147;Item&nbsp;19 &#151; Exhibits.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(a)&nbsp;Loan and financing agreements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>CSP Loan Agreements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CSP entered into a loan agreement with a syndicate of banks and ABN Amro Bank N.V., Singapore
Branch, as agent in September&nbsp;2000 for an amount of up to $820&nbsp;million. We refer to this loan
agreement as the CSP Second Phase Credit Agreement. On September&nbsp;18, 2003, CSP entered into a
Supplemental Agreement to the Second Phase Credit Agreement to extend the availability period of
the loan for a further one year period (see &#147;Item&nbsp;19. Exhibits &#151; Exhibit&nbsp;4.1.2&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2002, we sought consents from one or more of our lenders and several of CSP&#146;s lenders to
allow us to substantially increase CSP&#146;s net worth to enable CSP to satisfy a total debt to net
worth ratio for the CSP
</DIV>

<P align="center" style="font-size: 10pt">86
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Second Phase Credit Agreement. Such increase in CSP&#146;s net worth was effected by converting
amounts payable by CSP to us into a loan from us to CSP, which we refer to as the Chartered Loan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In obtaining the consents, the CSP Second Phase Credit Agreement was amended to provide for
the subordination of the amount of the Chartered Loan to the amounts due by CSP to its other
lenders. For a copy of the Letter Agreement incorporating the Subordination Agreement (see &#147;Item
19. Exhibits &#151; Exhibit&nbsp;4.1.4,&#148;) and for a copy of the Subordination Agreement (see &#147;Item&nbsp;19.
Exhibits &#151; Exhibit&nbsp;4.1.3.&#148;)
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Chartered Loan Agreements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>EXIM Loan</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;23, 2004, we entered into a facility agreement as borrower with JPMorgan Chase
Bank, N.A, or JP Morgan, as lender, Export-Import Bank of the United States, or Exim, and JP Morgan
as facility agent (see &#147;Item&nbsp;19. Exhibits  &#151;  Exhibit&nbsp;4.5&#148;). Pursuant to this agreement,
we secured a $653&nbsp;million term loan facility from JP Morgan, guaranteed by Exim. The facility is
divided into two tranches, has an availability period of between two to four years, and each
tranche will be repaid over a period of five years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>SMBC/OCBC Term Loan</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;23, 2004, we entered into a facility agreement as borrower with Sumitomo Mitsui
Banking Corporation, or SMBC, and Oversea-Chinese Banking Corporation Limited, or OCBC, as lenders
and arrangers, pursuant to which the lenders have agreed to provide us with a $200&nbsp;million term
loan facility (with a $100&nbsp;million green-shoe option) (see &#147;Item&nbsp;19. Exhibits  &#151;  Exhibit
4.6&#148;). The $100&nbsp;million green-shoe option was subsequently subscribed by ABN AMRO Bank, United
Overseas Bank and Deutsche Bank. As of December&nbsp;31, 2005, the entire $300&nbsp;million loan facility,
which includes the $100&nbsp;million green-shoe option, has been fully drawn down. The repayment period
will commence from the end of the 30<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> month from the date of the first draw down, and
the amount drawn down is to be repaid in six equal semi-annual installments.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>BOA Term Loan</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;22, 2004, we entered into a facility agreement as borrower with Bank of America,
or BOA as lender, pursuant to which BOA has agreed to provide us with a $50&nbsp;million term loan
facility (see &#147;Item&nbsp;19. Exhibits  &#151;  Exhibit&nbsp;4.8&#148;). The facility has an availability
period of three months from the date of the facility agreement, and is repayable as a lump sum
repayment 36&nbsp;months after the date of the facility agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Goldman Sachs International</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In August&nbsp;2004, we entered into a bilateral option transaction with Goldman Sachs
International, as counter-party, to pro-actively manage our Convertible Notes due April&nbsp;2, 2006
(see &#147;Item&nbsp;19. Exhibits &#151; Exhibit&nbsp;4.9&#148;). Under the transaction, we have a choice of physical or
cash settlement. Goldman Sachs International may purchase 214,800,000 of our ordinary shares at $0.93 per share and
the option to purchase these shares is exercisable by Goldman Sachs International from January&nbsp;2,
2005 and will expire on April&nbsp;2, 2006, matching the maturity date of the Convertible Notes. As of
December&nbsp;31, 2005, Goldman Sachs International had not exercise its rights under the option
transaction.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>5.75% senior notes due 2010 and 6.375% senior notes due 2015</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In July&nbsp;2005, we issued $375&nbsp;million of 5.75% senior notes due 2010 and $250&nbsp;million of 6.375%
senior notes due 2015. These senior notes are our unsecured, senior and unsubordinated
obligations. The senior notes, however, will be effectively subordinated to the indebtedness and
other liabilities of our subsidiaries and joint ventures and any of our secured obligations with
respect to assets that secure such obligations. The 5.75% senior notes due 2010 will mature on
August&nbsp;3, 2010, with interest at the rate of 5.75% per annum
</DIV>

<P align="center" style="font-size: 10pt">87
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">payable semi-annually on February 3 and August 3 of each year, commencing February&nbsp;3, 2006.
The 6.375% senior notes due 2016 will mature on August&nbsp;3, 2015, with interest at the rate of 6.375%
per annum payable semi-annually on February&nbsp;3, and August 3 of each year, commencing on February&nbsp;3,
2006. We will pay 100% of the principal amount of the senior notes, together with any accrued and
unpaid interest, on their respective maturity dates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event we determine that, as a result of any change in or amendment to the laws or
regulations of Singapore, we have been or will be required to pay additional amounts, we may, at
our option, redeem each series of these senior notes at a redemption price equal to the principal
amount, plus any accrued and unpaid interest to the redemption date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon the occurrence of specified change of control events, holders of these senior notes may
require us to repurchase all or any part of their senior notes at a repayment price equal to 101%
of the principal amount, plus any accrued and unpaid interest at the time of the repayment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to certain exceptions, we and our material subsidiaries are restricted in creating or
permitting the subsistence of any security interest upon any property or assets to secure the
repayment of, or any guarantee or indemnity in respect of, any indebtedness.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(b)&nbsp;Strategic business alliances</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>CSP</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our subsidiary, CSP, is a joint venture established in March&nbsp;1997 among Chartered, EDB
Investments, Agilent Technologies Europe B.V. (previously Hewlett-Packard Europe B.V.), and Singapex. As of December&nbsp;31, 2005, the equity interests of CSP was held as
follows: Chartered (51%), EDB Investments (26.5%), Agilent Technologies Europe B.V. (15%) and
Singapex (7.5%).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As part of Agilent Technologies Inc.&#146;s strategy that led to Agilent Technologies Europe B.V.
reducing its ownership in CSP from 30% to 15% in October&nbsp;2001, Agilent Technologies Europe B.V.
relinquished the voting rights of its nominees on the Board of Directors of CSP. The parties
entered into Amendment Agreement No.&nbsp;1 dated January&nbsp;31, 2002 to the Restated Joint Venture
Agreement dated October&nbsp;23, 2001 to effect such change.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As part of Agilent Technologies, Inc&#146;s restructuring in 2005, Agilent Technologies Europe B.V.
has, in January&nbsp;2006, transferred its entire shareholding in the capital of CSP to Avago and, as
such, Avago has in January&nbsp;2006 replaced Agilent Technologies Europe B.V. as a 15% shareholder of
CSP and party to the joint venture agreement (see &#147;Item&nbsp;19. Exhibits &#151; 4.10.3&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>SMP</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We entered into a Joint Venture Agreement with Lucent Technologies Microelectronics Pte. Ltd.,
now known as Agere Systems Singapore, to form the SMP strategic alliance relating to the joint
ownership of Fab 5. In September&nbsp;2004, we entered into a Supplemental Agreement to the Joint
Venture Agreement to provide that SMP can pay dividends out of the profits of the venture
determined on a year to year basis rather than a cumulative basis as previously was the case. In
January&nbsp;2005, we entered into a Second Supplemental Agreement to the Joint Venture Agreement to
clarify a provision under the Joint Venture Agreement relating to billings in the event of
cumulative losses in SMP (see &#147;Item&nbsp;19. Exhibits &#151; Exhibit&nbsp;4.11.3&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As part of the SMP strategic alliance, we also entered into a License and Technology Transfer
Agreement with SMP and Lucent Technologies Microelectronics Pte. Ltd. This agreement has been
amended several times, with the last amendment made on July&nbsp;1, 2003 (see &#147;Item&nbsp;19. Exhibits &#151;
Exhibit&nbsp;4.11.10&#148;) to provide for additional process technologies to be transferred. For a summary
of this arrangement, see &#147;Item&nbsp;4. Information on Our Company &#151; B. Business Overview &#151; Strategic
Business and Technology Alliances &#151; Silicon Manufacturing Partners&#148;).
</DIV>

<P align="center" style="font-size: 10pt">88
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(c)&nbsp;Technology transfer, licenses, joint development and other related agreements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Agere Systems</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We entered into a Technology Transfer Agreement with Lucent Technologies Inc., now known as
Agere Systems Inc. in February&nbsp;1998 to transfer technology to one another. Under this Agreement,
Lucent and our company transferred to one another 0.25um process technology. The agreement has been
amended several times, with the last amendment made on March&nbsp;28, 2002 (see &#147;Item&nbsp;19. Exhibits &#151;
Exhibit&nbsp;4.12.4&#148;), for the purpose of updating the list of process technologies transferred to one
another.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also entered into a Patent License Agreement with Agere Systems Inc. in January&nbsp;1998 which
was amended in 2000. Under this Agreement, Agere Systems Inc. and our company granted to one
another a license to use certain of each other&#146;s patents and for us to provide wafer capacity to
Agere Systems Inc. in lieu of royalty payments for the use of Agere Systems Inc.&#146;s patents.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In September&nbsp;2002, we entered into a Letter Agreement with Agere Systems Inc. (see &#147;Item&nbsp;19.
Exhibits &#151; Exhibit&nbsp;4.12.7&#148;), where in exchange for our agreement to waive Agere Systems Inc.&#146;s
capacity shortfall fees under our manufacturing agreement with them, Agere Systems Inc. agreed to
treat our royalty obligations under the patent license agreement with Agere Systems Inc. as
satisfied until such time as Agere Systems Inc.&#146;s ownership interest in SMP 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 Systems Inc. continue to apply.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>IBM</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We entered into a Patent Cross-License Agreement with IBM dated January&nbsp;1, 2001 (see &#147;Item&nbsp;19.
Exhibits &#151; Exhibit&nbsp;4.14.1&#148;) . Under this agreement, IBM and our company granted to one another a
license to use certain of each other&#146;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 licenses granted to
each party (see &#147;Item&nbsp;19. Exhibits &#151; Exhibit&nbsp;4.14.2&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective as of November&nbsp;26, 2002, we entered into the following agreements with IBM: &#147;SF&#148;
Process Development and Cost Sharing Agreement (see &#147;Item&nbsp;19. Exhibits &#151; Exhibit&nbsp;4.14.3&#148;),
Copper/Related FEOL Technology License Agreement (see &#147;Item&nbsp;19. Exhibits &#151; Exhibit&nbsp;4.14.4&#148;) and
Refundable Cross Deposit Agreement (see &#147;Item&nbsp;19. Exhibits &#151; Exhibit&nbsp;4.14.12&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The &#147;SF&#148; Process Development and Cost Sharing Agreement provides for the development of 90nm
and 65nm logic processes on 300-mm silicon wafers. Effective as of March&nbsp;9, 2004, the &#147;SF&#148; Process
Development and Cost Sharing Agreement was amended and restated to address certain matters between
the parties pertaining to the &#147;SF&#148; Process 65nm/45nm Development and Cost Sharing Agreement which
the parties entered into together with Infineon and Samsung (see &#147;Item&nbsp;19. Exhibits &#151; Exhibit
4.14.7&#148;). The &#147;SF&#148; Process Development and Cost Sharing Agreement was further amended effective as
of November&nbsp;5, 2004 to expand the parties&#146; agreement with regard to design kit models for the
300-mm Wafer 90nm Bulk CMOS Process Development Project under the &#147;SF&#148; Process Development and Cost
Sharing Agreement, as previously amended and the coordination of related activities (see &#147;Item&nbsp;19.
Exhibits &#151; 4.14.8&#148;). On December&nbsp;15, 2004, the &#147;SF&#148; Process Development and Cost Sharing Agreement
was further amended to extend parties&#146; collaboration to include 45nm technologies (see Item&nbsp;19.
Exhibits &#151; Exhibit&nbsp;4.14.11&#148;). Effective as of June&nbsp;3, 2005, the &#147;SF&#148; Process Development and Cost
Sharing Agreement was further amended and restated to include development of design enablement for
certain other 90nm technologies as described in the agreement as well as to broaden the scope of
the license (see Item&nbsp;19. Exhibits &#151; Exhibit&nbsp;4.14.10&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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&#146;s facility. In addition, effective as of December&nbsp;19, 2003, a Supplemental Agreement to the
Refundable Cross Deposit Agreement was entered into to revise some of the terms relating to the
deposit and pricing of the goods sold by Chartered to IBM (see &#147;Item&nbsp;19. Exhibits &#151; Exhibit
4.14.13&#148;).
</DIV>

<P align="center" style="font-size: 10pt">89
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>IBM, Infineon and Samsung</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;5, 2004, we extended the &#147;SF&#148; Process 65nm/45nm Development and Cost Sharing
Agreement&#148; with IBM and Infineon to include Samsung (see &#147;Item&nbsp;19. Exhibits &#151; Exhibit&nbsp;4.15&#148;).
This agreement replaces and is in substitution of the &#147;SF&#148; Process 65nm/45nm Development and Cost
Sharing Agreement dated June&nbsp;26, 2003 by and amongst IBM, Infineon and Chartered. For more
information on this agreement with IBM, Infineon and Samsung, please see &#147;Item&nbsp;4. Information on
Our Company &#151; B. Business Overview &#151; Research and Development.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Motorola</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We entered into a Patent License Agreement with Motorola Inc., or Motorola, dated July&nbsp;1, 2003
(see &#147;Item&nbsp;19. Exhibits &#151; Exhibit&nbsp;4.16&#148;). Under this Agreement, Motorola and our company granted
to one another a license to use certain of each other&#146;s patents.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(d)&nbsp;Leases</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Please see &#147;Item&nbsp;4. Information On Our Company &#151; D. Property, Plant and Equipment &#151; Leases&#148;
for information on our leases.
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left"><B>D.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>EXCHANGE CONTROLS</B></TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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&#146; 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 &#147;Item
3. Key Information &#151; D. Risk Factors &#151; Risks Related to Our Securities and Our Trading Market &#151;
Your voting rights with respect to the ADSs are limited by the terms of the deposit agreement for
the ADSs&#148; regarding the practical limitations applicable to holders of our ADSs with respect to
voting rights.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Exchange rates</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="15"><B>Singapore Dollars Per US$1.00</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="15" style="border-bottom: 1px solid #000000"><B>Noon Buying Rate</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Fiscal Year Ended December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Average </B><SUP style="font-size: 85%; vertical-align: text-top"><B>(1)</B></SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Low</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Period End</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.7937</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.8540</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.7275</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.8470</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2002</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.7908</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.8525</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.7310</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.7352</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.7432</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.7838</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.6990</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.6990</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.6870</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.7291</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.6308</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.6319</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.6648</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.7058</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.6180</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.6628</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">90
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Singapore Dollars Per US$1.00</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>Noon Buying Rate</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Month</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Low</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">September&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.6935</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.6738</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">October&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.6959</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.6825</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">November&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.7058</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.6908</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">December&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.6906</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.6621</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;2006 </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.6521</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.6206</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">February&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.6353</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.6211</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left"><DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Note :</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The average of the daily noon buying rates on the last business day of each month during the
year.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left"><B>E.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>TAXATION</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Singapore Taxation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 &#147;securities&#148;) 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 Singapore 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 Singapore tax consequences applicable to all categories of
investors. Holders of the securities and prospective purchasers of the securities should consult
their own tax advisers as to the Singapore or other tax consequences of the purchase, ownership or
disposal of the securities including, in particular, the effect of any foreign, state or local tax
laws to which they are subject.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Income tax</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>General</I>. 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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
rate of 20% for the year of assessment 2005 and a rate of 20% with effect from the year of
assessment 2006 (or 15% in the case of interest, rental of movable equipment and in the case of
royalties, 15% and 10%, respectively, for the year of assessment 2005 and 10% for the year of
assessment 2006), subject to certain exceptions. We are obligated by law to withhold tax at the
source.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A corporation will be regarded as being resident in Singapore if the control and management of
its business is exercised in Singapore (for example, if the corporation&#146;s board of directors meets
and conducts the business of the corporation in Singapore). An individual is tax 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Dividend distributions</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends received in respect of the ordinary shares or ADSs by either a resident or
non-resident of Singapore are not subject to Singapore withholding tax.
</DIV>

<P align="center" style="font-size: 10pt">91
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Dividends paid out of Tax-Exempt Income or Income subject to Concessionary Tax Rates</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we pay dividends on the ordinary shares or ADSs out of income received that is exempt from
tax because of our pioneer status or out of our income received that is subject to tax at a
concessionary rate, if any, such dividends will be free from Singapore tax in the hands of the
holders of the ordinary shares and ADSs. Please see &#147;Item&nbsp;5. Operating and Financial Review and
Prospects &#151; Liquidity and Capital Resources &#151; Special Tax Status&#148; for a discussion of our tax
incentive status.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Dividends paid out of income subject to normal corporate taxation</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Imputation System</I>. Before January&nbsp;1, 2003 (and to a certain extent between January&nbsp;1, 2003 and
December&nbsp;31, 2007, pursuant to the transitional rules for the new one-tier corporate tax system
(see &#147;&#151; New one-tier corporate Tax System&#148; 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 (22% for the year of assessment 2004 and 20% with effect from the year of
assessment 2005) would be 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 (&#147;Franked
Dividends&#148;) 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).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 which does
not have a permanent establishment in Singapore and deductible expenses attributed to such dividend
income would normally not receive any tax refund from the Inland Revenue Authority of Singapore.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>New one-tier corporate Tax System</I>. A new one-tier corporate tax system became effective from
January&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;However, to enable companies to make use of their unutilized dividend franking credits as of
December&nbsp;31, 2002, there will be a five year transition period from January&nbsp;1, 2003 to December&nbsp;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 of December&nbsp;31, 2002.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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
&#147;&#151; Imputation System.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the period up to December&nbsp;31, 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 utilized
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 of December&nbsp;31, 2002 are fully utilized or until the transition period comes to an end,
whichever is earlier.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No comprehensive tax treaty currently exists between Singapore and the U.S.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Gains on Disposal of the Ordinary Shares or ADSs</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Singapore does not impose tax on capital gains. However, there are currently no specific laws
or regulations which address the characterization of capital gains; hence, 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
</DIV>

<P align="center" style="font-size: 10pt">92
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Authority of Singapore regards as the carrying on of a trade or business 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 or business (for example, one of dealing in
securities) in Singapore, in which case the disposal profits would be taxable as such profits would
be considered revenue in nature.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Stamp duty</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There is no stamp duty payable in respect of the issuance and holding of 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. However, stamp duty may be payable if the instrument of transfer
is executed outside Singapore and received in Singapore.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Estate duty</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 the ordinary shares
or ADSs held by the individual upon the individual&#146;s death.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 and ownership of such ordinary shares and/or ADSs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>U.S. Federal Taxation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 &#147;U.S. holder&#148; is a beneficial owner of
ordinary shares or ADSs who is included in at least one of the following categories:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="2%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="95%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">citizens or residents of the U.S. for U.S. federal income tax purposes,</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">corporations or other entities created or organized under the laws of the U.S. or of any
political subdivision thereof,</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">estates the income of which is subject to U.S. federal income taxation regardless of
source,</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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&nbsp;20, 1996,
has elected to continue to be treated as a U.S. person, or</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">persons otherwise subject to U.S. federal income taxation on their worldwide income
regardless of its source.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This summary deals only with ordinary shares and ADSs held as capital assets (within the
meaning of section 1221 of 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 &#147;straddle&#148; or &#147;conversion transaction&#148; or other integrated investment transaction for
tax purposes, persons whose &#147;functional currency&#148; 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, or 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.
</DIV>

<P align="center" style="font-size: 10pt">93
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Ownership of ADSs</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Dividends</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the passive foreign investment company rules discussed below, distributions of cash
or property (other than certain distributions of ordinary shares, if any) with respect to ADSs or
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 (as determined under U.S. federal income tax
principles). 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&#146;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&#146;s tax basis in the ordinary shares or ADSs and thereafter as capital gain.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;U.S. holders should be aware that dividends paid by our company generally will constitute
&#147;passive income&#148; or, in the case of certain U.S. holders, &#147;financial services income&#148; for purposes
of the foreign tax credit. Dividends paid by our company for taxable years beginning after December
31, 2006 will generally be &#147;passive category income&#148; or, in the case of certain U.S. holders,
&#147;general category income&#148; for purposes of the foreign tax credit.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends received by a non-corporate U.S. holder on the ordinary shares or ADSs for taxable
years of such holder beginning after December&nbsp;1, 2002 and before January&nbsp;1, 2009 may be taxed at
the lower applicable capital gains rate provided that (1)&nbsp;we are not a PFIC (as discussed below)
for either our taxable year in which the dividend was paid or the preceding taxable year, (2)&nbsp;our
ADSs or ordinary shares, as applicable, are readily tradable on an established securities market in
the U.S. and (3)&nbsp;certain holding period requirements are met. You should consult your own tax
advisors regarding the availability of the lower rate for dividends paid with respect to ADSs or
ordinary shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Sale or exchange of ordinary shares or ADSs</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the passive foreign investment company rules discussed below, a U.S. holder
generally will recognize capital 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&#146;s
tax basis in the ordinary shares or ADSs, as the case may be. Such gain or loss 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>PFIC rules</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A non-U.S. corporation will be classified as a PFIC for U.S. federal income tax purposes if
either (i)&nbsp;75% or more of its gross income for the taxable year is passive income, or (ii)&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We do not believe that we satisfied either of the tests for PFIC status in 2005. However,
there can be no assurances that we will not be a PFIC in 2006 or a later year. If, for example,
the &#147;passive income&#148; earned by us exceeds 75% or more of our &#147;gross income,&#148; we will be a PFIC
under the &#147;income test.&#148; In addition, it is also possible that we will be a PFIC under the &#147;asset
test.&#148; 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
</DIV>

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</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">PFIC in 2006 or in a later year. Passive income for PFIC purposes includes, among other
things, interest, dividends, royalties, rents and annuities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we were to be a PFIC at any time during a U.S. holder&#146;s holding period, such U.S. holder
would be required to either: (i)&nbsp;pay an interest charge together with tax calculated at maximum
ordinary income rates on &#147;excess distributions,&#148; which is defined to include gain on a sale or
other disposition of ordinary shares or ADSs, or (ii)&nbsp;so long as the ordinary shares or ADSs are
&#147;regularly traded&#148; 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&#146;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 &#147;mark to market&#148; 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Estate taxes</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Backup withholding tax and information reporting requirements</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. or with certain U.S. connections to a
U.S. holder that is not otherwise exempt, and a backup withholding tax may apply to such amounts if
such 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&#146;s U.S. federal
income tax liability, provided that the required information is furnished in a timely manner to the
IRS.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>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 advisor concerning
the tax consequences of your particular situation.</I>
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left"><B>F.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>DIVIDENDS AND PAYING AGENTS</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Not applicable.
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left"><B>G.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>STATEMENT BY EXPERTS</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Not applicable.
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left"><B>H.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>DOCUMENTS ON DISPLAY</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Publicly filed documents concerning our company can be obtained from the Public Reference
Section of the SEC, 100 F Street, N.E., Washington D.C. 20549, at prescribed rates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 so in order to make our reports available over
the Internet.
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left"><B>I.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SUBSIDIARY INFORMATION</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For more information on our subsidiaries, please see &#147;Item&nbsp;4. Information on Our Company &#151; C.
Organizational Structure.&#148;
</DIV>

<P align="center" style="font-size: 10pt">95
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">
<DIV align="left">
<A name="111"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="5%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 11.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Quantitative and qualitative disclosures about market risk</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 intended for hedging purposes and not for speculative
purposes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Interest rate risk</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are exposed to interest rate risk on our existing floating rate debt and on additional debt
financing that may periodically be 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our debt obligations are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="24%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="34"><B>As of December 31, 2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="34"><B>Expected Maturity Date</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="35" style="border-bottom: 1px solid #000000"><B>(In thousands, except interest rates)</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Average</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Fair</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Interest</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Thereafter</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Value</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Rate</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>LONG-TERM DEBT:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">U.S. dollar loans at floating rates<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">214,533</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">112,212</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">124,425</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">124,425</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">74,425</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">36,637</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">686,657</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">686,657</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5.1050</TD>
    <TD nowrap>%</TD>
</TR>
<TR>
    <TD nowrap>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Convertible Notes<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">97,155</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">97,155</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">111,485</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5.2500</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">5.75% senior notes due 2010<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">375,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">375,000</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(5)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">373,043</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5.7500</TD>
    <TD nowrap>%</TD>
</TR>
<TR>
    <TD nowrap>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">6.375% senior notes due 2015<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">250,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">250,000</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(5)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">248,420</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">6.3750</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">6.00% Amortizing bonds due 2010<SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,270</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,774</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,308</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,476</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,703</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,820</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">6.0000</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital lease obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,613</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,613</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,613</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,613</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,613</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,866</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63,931</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63,931</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">6.4976</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">325,571</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">126,599</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">139,346</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">139,913</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">465,514</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">322,503</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,519,446</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,530,356</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>As of</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>December 31, 2004</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>(In thousands)</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Fair Value</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>LONG-TERM DEBT :</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Singapore dollar loans at fixed rates<SUP style="font-size: 85%; vertical-align: text-top">(6)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">73,650</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">75,567</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">U.S. dollar loans at floating rates<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">589,066</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">589,066</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Convertible Notes<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">575,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">590,824</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other<SUP style="font-size: 85%; vertical-align: text-top">(5)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,986</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,235,730</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,255,457</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">96
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>As of December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>(In thousands)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>PAYABLES :</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">U.S Dollar</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">104,920</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">120,364</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Singapore Dollar</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,490</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,561</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Japanese Yen</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48,465</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,035</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,911</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,721</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">188,786</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">166,681</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left"><DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Notes:</B>
</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>In August&nbsp;2004, we entered into two interest rate cap contracts
related to the floating rate obligations associated with $100.0
million of one of the U.S. dollar loans, with the effect of
placing an upper limit on the cash flow and earnings exposure due
to market interest rate changes. The floating rate obligations
under this U.S. dollar loan are based on LIBOR rates and are
payable semi-annually which commenced March&nbsp;28, 2004. The
combination of the caps and the debt obligation results in a
maximum interest outflow equal to 2.75% which commenced March&nbsp;28,
2005. The notional amount on the interest rate cap is reduced by
$25.0&nbsp;million semi-annually and will mature on September&nbsp;28, 2006.
The fair value of the two interest rate cap contracts as of
December&nbsp;31, 2005 was $0.6&nbsp;million.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>In March&nbsp;2005, we entered into two additional interest rate cap
contracts related to the floating rate obligations associated with
$200.0&nbsp;million of the above-mentioned U.S. dollar loan, with the
effect of placing an upper limit on the cash flow and earnings
exposure due to market interest rate changes. The combination of
the two additional caps and the debt obligation results in a
maximum interest outflow equal to 3.60% which commenced September
28, 2005. The notional amount on the interest rate cap contracts
is reduced by $66.7&nbsp;million semi-annually and will mature on
September&nbsp;28, 2006. The fair value of the two interest rate cap
contracts as of December&nbsp;31, 2005 was $0.8&nbsp;million.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>The interest rate swap contracts, which were previously entered
into in respect of the fixed-rate obligations associated with the
Convertible Notes, were terminated in September&nbsp;2005 following
completion of the Tender Offer for the Convertible Notes.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Interest on the Senior Notes due 2010 is payable at the rate of
5.75% per annum and interest on the Senior Notes due 2015 is
payable at the rate of 6.375% per annum, in each case, on February
3 and August 3 of each year, beginning on February&nbsp;3, 2006.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>The Amortizing Bonds pay semi-annual cash payments of $5.5&nbsp;million
per payment, as a combination of principal and interest, on
February&nbsp;17 and August&nbsp;17 of each year, beginning on February&nbsp;17,
2006, and amortize to zero at maturity on August&nbsp;17, 2010.
Interest on the Amortizing Bonds is payable at the rate of 6.00%
per annum.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(5)</TD>
    <TD>&nbsp;</TD>
    <TD>As of December&nbsp;31, 2004, other long-term debt includes the
cumulative fair value change of the Convertible Notes due to
changes in interest rates since the date we entered into interest
rate swap contracts related to this debt. The interest rate swap
contracts were terminated following the completion of the Tender
Offer of the Convertible Notes in September&nbsp;2005.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(6)</TD>
    <TD>&nbsp;</TD>
    <TD>As of December&nbsp;31, 2004, we had entered into forward foreign
contracts related to a portion of these amounts to exchange the
related cash flows to U.S. dollars, and a cross currency swap to
convert cash flows under one of the Singapore dollar fixed-rate
loans to a U.S. dollar denominated fixed-rate. We repaid these
loans early in full in March&nbsp;2005, and the associated forward
foreign contracts and cross currency swap were also terminated in
March&nbsp;2005.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2005, 52.6% of our interest rate payment obligations bear fixed
interest rates. We have no cash flow and earnings exposure due to market interest rate changes for
our fixed debt obligations. 47.4% of our interest rate payment obligations bear floating interest
rates. We have cash flow and earnings exposure due to market interest rate changes for our floating
debt obligations. Based on our interest rate payment obligations as of December&nbsp;31, 2005, a 0.5%
increase in interest rates would increase our floating interest payments by 9.8% annually.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Foreign currency risk</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our foreign currency exposures give rise to market risk associated with exchange rate
movements of the U.S. dollar, which is our functional currency, against the Japanese yen, the
Singapore dollar and the Euro. Substantially all of our revenue was denominated in U.S. dollars
during 2005 and as a result, we had relatively little foreign currency exchange risk with respect
to any of our revenue. In 2005, approximately 20% of our cost of revenue was denominated in
Singapore dollars. In addition, approximately 55% of our capital expenditures were denominated in
U.S. dollars, approximately 13% were denominated in Euros, approximately 28% were denominated in
Japanese yen and approximately 4% were denominated in Singapore dollars.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To protect against reductions in value and the volatility of future cash flows caused by
changes in foreign exchange rates, from time to time, we utilize currency forward contracts to
minimize the impact of foreign currency fluctuations. We use these instruments as economic hedges
to minimize our exposure to specific currency risks related to equipment purchase commitments
denominated primarily in Japanese Yen and
</DIV>

<P align="center" style="font-size: 10pt">97
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Euros. In addition, we minimize our currency risk by purchasing certain raw materials and
equipment in U.S. dollars and borrowing in U.S. dollars. The table below provides information about
our derivative financial instruments and presents the information in U.S. dollar equivalents.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10"><B>As of December 31, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>As of December 31, 2004</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10"><B>Expected Maturity Date Of Notional Amounts</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>(in thousands)</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>(in thousands, except exchange rates)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Thereafter</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Fair Value</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Fair Value</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>FORWARD FOREIGN
EXCHANGE AGREEMENTS:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">(Receive Yen/Pay
US$) Contract Amount</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">30,024</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">30,024</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(208</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">69,210</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,520</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Average Contractual
Exchange Rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">114.36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">(Receive S$/Pay US$)
Contract Amount</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11,976</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11,976</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">47,842</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,760</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Average Contractual
Exchange Rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">(Receive Euros/Pay
US$) Contract Amount</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,102</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,102</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(107</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">26,760</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,857</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Average Contractual
Exchange Rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total Contract Amount</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">43,120</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">43,102</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(314</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">143,812</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,137</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10"><B>As of December 31, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10"><B>As of December 31, 2004</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>(in thousands, except percentages)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>(in thousands, except percentages)</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Carrying</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Percentage</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Carrying</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Percentage</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Hedged</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Hedged</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Hedged</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Hedged</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>NON-U.S. DOLLAR LIABILITIES:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Japanese Yen</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">20,035</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">20,035</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">48,465</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">48,465</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Singapore dollar</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,561</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,976</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,490</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,490</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,721</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,102</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,911</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,911</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign Currency Loan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Singapore dollar</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73,650</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73,650</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Future Interest Payable on Debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Singapore dollar</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,445</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,445</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">46,317</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">33,113</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">71</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">158,961</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">158,961</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left">
<A name="112"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="5%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 12.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES</B></TD>
</TR>
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Not applicable.
</DIV>

<DIV align="left">
<A name="113"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PART II</B>
</DIV>

<DIV align="left">
<A name="114"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="5%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 13.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES</B></TD>
</TR>
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">None.
</DIV>

<DIV align="left">
<A name="115"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="5%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 14.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS</B></TD>
</TR>
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Not applicable.
</DIV>



<DIV align="left">
<A name="116"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="5%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 15.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>CONTROLS AND PROCEDURES</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our company maintains disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our Company&#146;s Exchange Act reports is recorded, processed,
summarized and reported within the time periods specified in the SEC&#146;s rules and forms, and that
such information is accumulated and communicated to the company&#146;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
</DIV>

<P align="center" style="font-size: 10pt">98
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">evaluating the cost-benefit relationship of possible
controls and procedures. Also, our company has
investments in certain unconsolidated entities. As our company&#146;s ability to influence these
entities is limited only to certain management and operational aspects, our disclosure controls and
procedures with respect to such entities are necessarily limited compared to those we maintain with
respect to our consolidated subsidiaries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our company carried out an evaluation, under the supervision and with the participation of our
company&#146;s management, including our company&#146;s Chief Executive Officer and our company&#146;s Chief
Financial Officer, of the effectiveness of the design and operation of the company&#146;s disclosure
controls and procedures as of December&nbsp;31, 2005. Based on the foregoing, our company&#146;s Chief
Executive Officer and Chief Financial Officer concluded that our company&#146;s disclosure controls and
procedures were effective as of such date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There have been no significant changes in our company&#146;s internal controls or in other factors
that could significantly affect the internal controls subsequent to the date our company completed
its evaluation.
</DIV>
<DIV align="left">
<A name="117"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 16.</B>
</DIV>

<DIV align="left">
<A name="118"></A>
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left"><B>A.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>AUDIT COMMITTEE FINANCIAL EXPERT</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Audit Committee members are Messrs.&nbsp;Philip Tan Yuen Fah (chairman), Sum Soon Lim, Robert
E. La Blanc, Andre Borrel and Steven H. Hamblin (appointed as of January&nbsp;1, 2006). Please see &#147;Item
6. Directors, Senior Management and Employees&#148; for their experience and qualifications. Our Board
has determined that as of the date of filing, none of these individuals meet all of the criteria
required to be named an Audit Committee &#147;Financial Expert,&#148; as defined in the applicable rules of
the SEC. In view of the very specific criteria required to be satisfied in order to qualify as an
Audit Committee &#147;Financial Expert,&#148; the Board has not yet been able to identify the appropriate
person.
</DIV>
<DIV align="left">
<A name="119"></A>
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left"><B>B.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>CODE OF ETHICS</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our company has adopted a Code of Ethics that is applicable to all our directors, senior
management and employees. The Code of Ethics contains general guidelines for conducting the
business of our company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our company will make available a copy of the Code of Ethics to any person without charge, if
a written request is made to its Company Secretary at our company&#146;s registered address at 60
Woodlands Industrial Park D, Street 2, Singapore 738406.
</DIV>
<DIV align="left">
<A name="120"></A>
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left"><B>C.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>PRINCIPAL ACCOUNTANT FEES AND SERVICES</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Below are the fees billed in 2004 and 2005 by our auditors for professional services rendered
by our auditors for the said period.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Audit fees</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Audit-related fees</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Tax fees</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>All other fees</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Total</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="19"><B>(in $ thousands)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">473</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">95</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">219</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">485</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,272</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">788</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">206</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">233</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,303</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Audit-related fees</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Services provided relate to assurance and related services that are reasonably related to the
performance of the audit or review of our financial statements and which are not reported under
&#147;Audit fees,&#148; including consultations regarding the accounting or disclosure treatment of
transactions or events and/or the actual or potential impact of proposed rules, standards or
interpretations by regulatory or standard setting bodies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Tax fees</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Services provided primarily consist of routine corporate tax advisory services and compilation
of corporate tax returns.
</DIV>

<P align="center" style="font-size: 10pt">99
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>All other fees</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Services provided related to assistance with our compliance program pursuant to Section&nbsp;404 of
the Sarbanes-Oxley Act of 2002.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Audit Committee has established pre-approval policies and procedures for services to be
performed by our independent auditors. Under our pre-approval policies and procedures, our
independent auditors cannot perform services unless they are pre-approved by our Audit Committee.
In February&nbsp;2005, our Audit Committee pre-approved a list of services that could be rendered by the
independent auditors in 2005. In April&nbsp;2005, the Audit Committee pre-approved the provision of
certain executive income tax services by the independent auditors as the services were not in the
February&nbsp;2005 list of pre-approved services to be rendered by the independent auditors in 2005.
None of the services performed by our independent auditors were approved pursuant to paragraph
(c)(7)(i)(C) of Rule&nbsp;2-01 of Regulation&nbsp;S-X.
</DIV>
<DIV align="left">
<A name="121"></A>
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left"><B>D.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The current Nasdaq rules require that our Audit Committee be comprised solely of independent
directors. One of our Audit Committee members, Mr.&nbsp;Sum Soon Lim, does not qualify as an
independent director under the Nasdaq rules as he was until December&nbsp;31, 2005 a corporate advisor to Temasek and prior
to that, a corporate advisor to Singapore Technologies Pte Ltd (our then majority shareholder)
prior to the cessation of operations of Singapore Technologies Pte Ltd on December&nbsp;31, 2004 and
accepted compensation in excess of $60,000 during each of the last three fiscal years. We had
previously relied on an exemption from Nasdaq&#146;s corporate governance rules received from Nasdaq.
Nasdaq recently informed our company that the exemption is no longer applicable. Following
therefrom, we are relying on the Nasdaq rule which permits one non-independent director to be
appointed to the Audit Committee for a period of up to two years if the Board, under exceptional
and limited circumstances, determines that membership on the committee by that director is in the
best interests of the company and our shareholders. Our Board of Directors has determined that Mr.
Sum&#146;s membership on the Audit Committee is in the best interest of the company and our shareholders
as he has extensive experience and knowledge of the operations, finance and auditing procedures of
our company, having served on our Audit Committee longer than any other member on the committee.
Mr.&nbsp;Sum was appointed to our Board in February&nbsp;1994 and has served on our Audit Committee since
January&nbsp;1996, including as the Chairman of our Audit Committee from January&nbsp;1996 to August&nbsp;2002. Mr
Sum will be retiring from our Board and our Audit Committee at our 2006 Annual General Meeting in
April&nbsp;2006. Each of our Audit Committee members is an &#147;independent&#148; director, as such term is used
in Section&nbsp;10A-3(m)(3) of the Exchange Act.
</DIV>
<DIV align="left">
<A name="122"></A>
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left"><B>E.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS.</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">None.
</DIV>

<DIV align="left">
<A name="123"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PART III</B>
</DIV>

<DIV align="left">
<A name="124"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="5%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 17.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>FINANCIAL STATEMENTS</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">See Item&nbsp;18 for a list of financial statements filed under Item&nbsp;17.
</DIV>
<DIV align="left">
<A name="125"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="5%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 18.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>FINANCIAL STATEMENTS</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following financial statements are filed as part of this document, together with the
report of the independent auditors:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Chartered Semiconductor Manufacturing Ltd. Consolidated Financial Statements</B>
</DIV>


<DIV align="left" style="margin-left: 5%; text-indent: 3%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Report
of Independent Registered Public Accounting Firm</DIV>


<DIV align="left" style="margin-left: 5%; text-indent: 3%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Consolidated Balance Sheets as of December&nbsp;31, 2004 and 2005</DIV>


<DIV align="left" style="margin-left: 5%; text-indent: 3%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Consolidated Statements of Operations for the years ended December&nbsp;31, 2003, 2004 and 2005</DIV>


<P align="center" style="font-size: 10pt">100
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="margin-left: 5%; text-indent: 3%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Consolidated Statements of Comprehensive Income (Loss) for the years ended December&nbsp;31,
2003, 2004 and 2005</DIV>


<DIV align="left" style="margin-left: 5%; text-indent: 3%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Consolidated Statements of Shareholders&#146; Equity for the years ended December&nbsp;31, 2003, 2004
and 2005</DIV>


<DIV align="left" style="margin-left: 5%; text-indent: 3%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Consolidated Statements of Cash Flows for the years ended December&nbsp;31, 2003, 2004 and 2005</DIV>


<DIV align="left" style="margin-left: 5%; text-indent: 3%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Notes to Consolidated Financial Statements</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Silicon Manufacturing Partners Pte Ltd Financial Statements</B>
</DIV>


<DIV align="left" style="margin-left: 5%; text-indent: 3%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Report of Independent Registered Public Accounting Firm</DIV>


<DIV align="left" style="margin-left: 5%; text-indent: 3%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Balance Sheets as of December&nbsp;31, 2004 and September&nbsp;30, 2005</DIV>


<DIV align="left" style="margin-left: 5%; text-indent: 3%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Income Statements for the years
ended December&nbsp;31, 2003, 2004 and 2005</DIV>


<DIV align="left" style="margin-left: 8%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Statements of Shareholders&#146; Equity for the years
ended December&nbsp;31, 2003, 2004 and 2005</DIV>


<DIV align="left" style="margin-left: 5%; text-indent: 3%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Statements of Cash Flows for the years ended December&nbsp;31, 2003, 2004 and
2005</DIV>


<DIV align="left" style="margin-left: 5%; text-indent: 3%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Notes to the Financial Statements</DIV>


<P align="center" style="font-size: 10pt">101
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left">
<A name="126"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 19.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>EXHIBITS</B></TD>
</TR>
</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="85%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">1<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Memorandum and Articles of Association of the company.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2.1<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Specimen certificate for ordinary shares.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2.2 <SUP style="font-size: 85%; vertical-align: text-top">(28)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Specimen certificate for convertible redeemable preference shares.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2.3<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Deposit Agreement dated November&nbsp;4, 1999 by and among the
company, Citibank, N.A. and the holders and beneficial owners of
American Depositary Shares evidenced by American Depositary
Receipts issued thereunder (including as an exhibit, the form of
American Depositary Receipt).</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2.4<SUP style="font-size: 85%; vertical-align: text-top">(23)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Conversion Price Certificate dated August&nbsp;17, 2005 of the company.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Loan Agreements and Indentures</B></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.1.1<SUP style="font-size: 85%; vertical-align: text-top">(4) </SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Credit Agreement dated September&nbsp;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 &#147;CSP Second Phase Credit
Agreement&#148;).</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.1.2<SUP style="font-size: 85%; vertical-align: text-top">(7)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Supplemental Agreement dated September&nbsp;18, 2003 by and among
Chartered Silicon Partners Pte Ltd as Borrower, the banks on the
signature pages thereto, as Lenders, and ABN Amro Bank N.V.,
Singapore Branch, as Agent and Security Trustee relating to the
CSP Second Phase Credit Agreement.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.1.3<SUP style="font-size: 85%; vertical-align: text-top">(5)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Subordination Agreement dated June&nbsp;28, 2002 by and among the
company, 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.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.1.4<SUP style="font-size: 85%; vertical-align: text-top">(5)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Letter dated June&nbsp;26, 2002 from ABN Amro Bank N.V., Singapore
Branch to Chartered Silicon Partners Pte Ltd amending the CSP
Second Phase Credit Agreement by incorporating the Subordination
Agreement relating to the CSP Second Phase Credit Agreement.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.2<SUP style="font-size: 85%; vertical-align: text-top">(6)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Shareholders&#146; Undertaking dated December&nbsp;14, 2000 by and among
Chartered Silicon Partners Pte Ltd as Borrower, the company, EDB
Investments Pte Ltd, Agilent Technologies Europe B.V., as
Shareholders and ABN Amro Bank N.V., Singapore Branch as Security
Trustee.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.3.1<SUP style="font-size: 85%; vertical-align: text-top">(9)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Indenture dated as of April&nbsp;2, 2001 by and between the company
and Wells Fargo Bank Minnesota, National Association.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.3.2<SUP style="font-size: 85%; vertical-align: text-top">(9)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Supplemental Indenture dated as of April&nbsp;2, 2001 by and between
the company and Wells Fargo Bank Minnesota, National Association.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.3.3<SUP style="font-size: 85%; vertical-align: text-top">(24)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Second Supplemental Indenture dated August&nbsp;3, 2005 by and between
the company and The Bank of New York.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.3.4<SUP style="font-size: 85%; vertical-align: text-top">(24)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Third Supplemental Indenture dated August&nbsp;3, 2005 by and between
the company and The Bank of New York.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.3.5<SUP style="font-size: 85%; vertical-align: text-top">(25)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Fourth Supplemental Indenture dated August&nbsp;17, 2005 by and
between the company and The Bank of New York.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.4<SUP style="font-size: 85%; vertical-align: text-top">(25)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Master Agency Agreement dated August&nbsp;17, 2005 by and between the
company and The Bank of New York.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.5<SUP style="font-size: 85%; vertical-align: text-top">(21)(&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Facility Agreement dated December&nbsp;23, 2004 by and among the
company as Borrower, JPMorgan Chase Bank, N.A. as Lender,
Export-Import Bank of the United States and JPMorgan Chase Bank,
N.A as Facility Agent.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.6<SUP style="font-size: 85%; vertical-align: text-top">(21)(&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Facility Agreement dated December&nbsp;23, 2004 by and among the
company as Borrower, Sumitomo Mitsui Banking Corporation and
Oversea-Chinese Banking Corporation Limited as</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">102
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="85%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Lenders and Arrangers.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.7
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#60;deleted&#62;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.8<SUP style="font-size: 85%; vertical-align: text-top"> (21)(&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Facility Agreement dated December&nbsp;22, 2004 by and between the
company as Borrower and Bank of America as Lender.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.9<SUP style="font-size: 85%; vertical-align: text-top">(21)(&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Letter of Confirmation from Goldman Sachs International to the
company dated August&nbsp;12, 2004 supplementing the ISDA Master
Agreement (Multicurrency-Cross Border) dated August&nbsp;10, 2004 by
and between the company and Goldman Sachs International, as
counter-party together with the Schedule to the Master Agreement.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Strategic Alliances</B></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>CSP</B></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.10.1<SUP style="font-size: 85%; vertical-align: text-top">(10)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Deed of Accession and Ratification dated October&nbsp;22, 2001 by and
among the company, EDB Investments Pte Ltd, Agilent Technologies
Europe B.V. and Singapex Investments Pte Ltd relating to the
Joint Venture Agreement dated March&nbsp;13, 1997, as amended and
restated on October&nbsp;23, 2001(the &#147;Restated Joint Venture
Agreement&#148; dated October&nbsp;23, 2001).</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.10.2<SUP style="font-size: 85%; vertical-align: text-top">(10)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amendment Agreement No.&nbsp;1 dated January&nbsp;31, 2002 to Restated
Joint Venture Agreement dated October&nbsp;23, 2001.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.10.3<SUP style="font-size: 85%; vertical-align: text-top">(28)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Deed of Accession and Ratification dated January&nbsp;26, 2006 by and
among the company, EDB Investments Pte Ltd, Singapex Investments
Pte Ltd, Agilent Technologies Europe B.V. and Avago Technologies
General IP (Singapore) Pte. Ltd. relating to the Restated Joint
Venture Agreement dated October&nbsp;23, 2001 and as further amended
by an amendment (No.&nbsp;1) dated January&nbsp;31, 2002.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>SMP</B></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.11.1<SUP style="font-size: 85%; vertical-align: text-top">(2)(&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joint Venture Agreement dated December&nbsp;19, 1997 by and between
the company and Lucent Technologies Microelectronics Pte Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.11.2<SUP style="font-size: 85%; vertical-align: text-top">(20)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Supplemental Agreement dated September&nbsp;17, 2004 to the Joint
Venture Agreement dated December&nbsp;19, 1997 by and between the
company and Agere Systems Singapore Pte Ltd. (formerly known as
&#147;Lucent Technologies Microelectronics Pte. Ltd.&#148;).</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.11.3<SUP style="font-size: 85%; vertical-align: text-top">(26)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Second Supplemental Agreement dated January&nbsp;1, 2005 to the Joint
Venture Agreement dated December&nbsp;19, 1997 by and between the
company and Agere Systems Singapore Pte Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.11.4<SUP style="font-size: 85%; vertical-align: text-top">(2)(&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Assured Supply and Demand Agreement dated February&nbsp;17, 1998 by
and among the company, Silicon Manufacturing Partners Pte Ltd and
Lucent Technologies Microelectronics Pte Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.11.5<SUP style="font-size: 85%; vertical-align: text-top">(2)(&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Supplemental Assured Supply and Demand Agreement dated September
3, 1999 by and among the company, Silicon Manufacturing Partners
Pte Ltd and Lucent Technologies Microelectronics Pte. Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.11.6<SUP style="font-size: 85%; vertical-align: text-top">(2)(&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">License and Technology Transfer Agreement dated February&nbsp;17, 1998
by and among the company, Lucent Technologies Microelectronics
Pte. Ltd. and Silicon Manufacturing Partners Pte Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.11.7<SUP style="font-size: 85%; vertical-align: text-top">(13)(&#043;) </SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amendment Agreement (No.&nbsp;1) to License and Technology Transfer
Agreement dated July&nbsp;27, 2000 by and between the company, Lucent
Technologies Microelectronics Pte. Ltd. and Silicon Manufacturing
Partners Pte Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.11.8<SUP style="font-size: 85%; vertical-align: text-top">(11)(&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amendment Agreement (No.&nbsp;2) dated March&nbsp;22, 2001 to License and
Technology Transfer Agreement dated February&nbsp;17, 1998 by and
between the company, Agere Systems Singapore Pte Ltd (formerly
known as &#147;Lucent Technologies Microelectronics Pte. Ltd.&#148;) and
Silicon Manufacturing Partners Pte Ltd.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">103
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="85%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.11.9<SUP style="font-size: 85%; vertical-align: text-top">(12)(&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amendment Agreement (No.&nbsp;3) dated March&nbsp;28, 2002 to License and
Technology Transfer Agreement dated February&nbsp;17, 1998 by and
among the company, Agere Systems Singapore Pte Ltd (formerly
known as &#147;Lucent Technologies Microelectronics Pte. Ltd.&#148;) and
Silicon Manufacturing Partners Pte Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.11.10<SUP style="font-size: 85%; vertical-align: text-top">(7)(&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amendment Agreement (No.&nbsp;4) dated July&nbsp;1, 2003 to License and Technology Transfer
Agreement dated February&nbsp;17, 1998 by and among the company, Agere Systems Singapore Pte
Ltd (formerly known as &#147;Lucent Technologies Microelectronics Pte. Ltd.&#148;) and Silicon
Manufacturing Partners Pte Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Technology transfer, license, joint development and other related agreements</B></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Agere/Lucent</B></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.12.1<SUP style="font-size: 85%; vertical-align: text-top">(2)(&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Technology Transfer Agreement dated February&nbsp;17, 1998 by and between the company and
Lucent Technologies Inc.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.12.2<SUP style="font-size: 85%; vertical-align: text-top">(11)(&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amendment Agreement (No.&nbsp;1) dated July&nbsp;31, 2000 to Technology Transfer Agreement dated
February&nbsp;17, 1998 between Lucent Technologies Inc. and the company.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.12.3<SUP style="font-size: 85%; vertical-align: text-top">(11)(&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amendment Agreement (No.&nbsp;2) dated March&nbsp;20, 2001 to Technology Transfer Agreement dated
February&nbsp;17, 1998 between Agere Systems Inc. (formerly known as the &#147;Microelectronics
Group of Lucent Technologies Inc.&#148;) and the company.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.12.4<SUP style="font-size: 85%; vertical-align: text-top">(11)(&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amendment Agreement (No.&nbsp;3) dated March&nbsp;28, 2002 to Technology Transfer Agreement dated
February&nbsp;17, 1998 between Agere Systems Inc. (formerly known as the &#147;Microelectronics
Group of Lucent Technologies Inc.&#148;) and the company.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.12.5<SUP style="font-size: 85%; vertical-align: text-top">(2)(&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Patent License Agreement dated January&nbsp;1, 1998 by and between the company and Lucent
Technologies Inc.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.12.6<SUP style="font-size: 85%; vertical-align: text-top">(17)(&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Patent License Agreement Amendment dated August&nbsp;3, 2000 by and between the company and
Lucent Technologies Inc.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.12.7<SUP style="font-size: 85%; vertical-align: text-top">(13)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Letter Agreement dated September&nbsp;26, 2002 by and between the company and Agere Systems
Inc. amending the Patent License Agreement between the parties dated January&nbsp;1, 1998.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Toshiba</B></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.13<SUP style="font-size: 85%; vertical-align: text-top">(2)(&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Patent Cross License Agreement dated August&nbsp;12, 1999 by and between the company and
Toshiba Corporation.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>IBM</B></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.14.1<SUP style="font-size: 85%; vertical-align: text-top">(10)(&#043;&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Patent Cross-License Agreement dated January&nbsp;1, 2001 by and between the company and
International Business Machines Corporation.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.14.2<SUP style="font-size: 85%; vertical-align: text-top">(14)(&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amendment No.&nbsp;1 dated November&nbsp;26, 2002 to Patent License Agreement dated January&nbsp;1,
2001 by and between the company and International Business Machines Corporation.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.14.3<SUP style="font-size: 85%; vertical-align: text-top">(14)(&#043;&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#147;SF&#148; Process Development and Cost Sharing Agreement dated November&nbsp;26, 2002 by and
between the company and International Business Machines Corporation.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.14.4<SUP style="font-size: 85%; vertical-align: text-top">(14)(&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Copper / Related FEOL Technology License Agreement dated November&nbsp;26, 2002 by and
between the company and International Business Machines Corporation.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.14.5<SUP style="font-size: 85%; vertical-align: text-top">(26)(&#043;&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amendment No.&nbsp;1 dated January&nbsp;19, 2005 to the Copper / Related FEOL Technology License
Agreement dated November&nbsp;26, 2002 by and between the company and International Business
Machines Corporation.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">104
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="15%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.14.6<SUP style="font-size: 85%; vertical-align: text-top">(15)(&#043;&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amendment No.&nbsp;1 dated June&nbsp;26, 2003 to &#147;SF&#148; Process Development and Cost Sharing
Agreement dated November&nbsp;26, 2002 by and between the company and International Business
Machines Corporation.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.14.7<SUP style="font-size: 85%; vertical-align: text-top">(19)(&#043;&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amended and Restated Amendment No.&nbsp;2 dated March&nbsp;9, 2004 to the &#147;SF&#148; Process Development
and Cost Sharing Agreement dated November&nbsp;26, 2002 by and between the company and
International Business Machines Corporation.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.14.8<SUP style="font-size: 85%; vertical-align: text-top">(21)(&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amendment No.&nbsp;3 dated November&nbsp;5, 2004 to &#147;SF&#148; Process Development and Cost Sharing
Agreement dated November&nbsp;26, 2002 by and between the company and International Business
Machines Corporation.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.14.9<SUP style="font-size: 85%; vertical-align: text-top">(22)(&#043;&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amended and Restated Amendment No.3 dated June&nbsp;30, 2005 to &#147;SF&#148; Process Development and
Cost Sharing Agreement dated November&nbsp;26, 2002 by and between the company and
International Business Machines Corporation.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.14.10<SUP style="font-size: 85%; vertical-align: text-top">(27)(&#043;&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Second Amended and Restated Amendment No.3 dated June&nbsp;30, 2005 to &#147;SF&#148; Process
Development and Cost Sharing Agreement dated November&nbsp;26, 2002 by and between the
company and International Business Machines Corporation.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.14.11<SUP style="font-size: 85%; vertical-align: text-top">(21)(&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amendment No.&nbsp;4 dated December&nbsp;15, 2004 to &#147;SF&#148; Process Development and Cost Sharing
Agreement dated November&nbsp;26, 2002 by and between the company and International Business
Machines Corporation.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.14.12<SUP style="font-size: 85%; vertical-align: text-top">(14)(&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Refundable Cross Deposit Agreement dated November&nbsp;26, 2002 by and between the company
and International Business Machines Corporation.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.14.13<SUP style="font-size: 85%; vertical-align: text-top">(18)(&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">First Supplemental Agreement dated December&nbsp;19, 2003 to the Refundable Cross Deposit
Agreement dated November&nbsp;26, 2002 by and between the company and International Business
Machines Corporation.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>IBM, Infineon and Samsung</B></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.15<SUP style="font-size: 85%; vertical-align: text-top">(19)(&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#147;SF&#148; Process 65nm/45nm Development and Cost Sharing Agreement dated March&nbsp;5, 2004 by and
among the company, International Business Machines Corporation, Infineon Technologies AG
and Samsung Electronics Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Motorola</B></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.16<SUP style="font-size: 85%; vertical-align: text-top">(7)(&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Patent License Agreement dated July&nbsp;1, 2003 by and between the company and Motorola, Inc.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Property Agreements</B></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Fab 2</B></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.17<SUP style="font-size: 85%; vertical-align: text-top">(21)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sub-Lease dated October&nbsp;19, 2004 by and between Singapore Technologies Pte Ltd and
the company relating to Private Lots A12787 and A12787(a) Mukim No.&nbsp;13 Sembawang.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Fab 3</B></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.18.1<SUP style="font-size: 85%; vertical-align: text-top">(8)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sub-Lease dated February&nbsp;17, 1998 by and between the company and Silicon
Manufacturing Partners Pte Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.18.2<SUP style="font-size: 85%; vertical-align: text-top">(21)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sub-Lease dated October&nbsp;19, 2004 by and between Singapore Technologies Pte Ltd and
the company relating to Private Lot A12787(b) Mukim No.&nbsp;13.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Fabs 2 and 3 Site Slurry Treatment Plant</B></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.19.1<SUP style="font-size: 85%; vertical-align: text-top">(28)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Agreement for Sub-License and Sub-Lease (Private Lot A12787(k)) dated July&nbsp;8, 2005
by and between Singapore Technologies Pte Ltd and the company.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.19.2<SUP style="font-size: 85%; vertical-align: text-top">(28)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Novation Agreement dated July&nbsp;8, 2005 by and among Singapore Technologies Pte Ltd,
Terra</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">105
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="85%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Investments Pte. Ltd. and the company relating to the Agreement for
Sub-License and Sub-Lease (Private Lot A12787(k)) dated July&nbsp;8, 2005.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Fab 6</B></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.20.1<SUP style="font-size: 85%; vertical-align: text-top">(8)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Building Agreement relating to Private Lot A12787(d) Mukim No.&nbsp;13 Sembawang dated
September&nbsp;24, 1999 by and between Jurong Town Corporation and Singapore
Technologies Pte Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.20.2<SUP style="font-size: 85%; vertical-align: text-top">(8)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Agreement for Sub-License and Sub-Lease (Private Lot A12787(d)) dated September&nbsp;24,
1999 by and between Singapore Technologies Pte Ltd and Chartered Silicon Partners
Pte Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.20.3<SUP style="font-size: 85%; vertical-align: text-top">(21)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Novation Agreement dated December&nbsp;31, 2004 by and among Singapore Technologies Pte
Ltd, Terra Investments Pte. Ltd. and Chartered Silicon Partners Pte Ltd relating to
the Agreement for Sub-License and Sub-Lease (Private Lot A12787(d)) dated September
24, 1999.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Fab 7</B></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.21.1<SUP style="font-size: 85%; vertical-align: text-top">(16)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Agreement for Sub-License and Sub-Lease (Private Lot A12787(e)) dated July&nbsp;30, 2001
by and between Singapore Technologies Pte Ltd and the company.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.21.2<SUP style="font-size: 85%; vertical-align: text-top">(16)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Building Agreement relating to Private Lot A12787(e) Woodlands Industrial Park D,
G.S. No.&nbsp;3696K, Mukim No.&nbsp;13 dated July&nbsp;30, 2001 by and between Jurong Town
Corporation and Singapore Technologies Pte Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.21.3<SUP style="font-size: 85%; vertical-align: text-top">(21)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Novation Agreement dated December&nbsp;31, 2004 by and among Singapore Technologies Pte
Ltd, Terra Investments Pte. Ltd. and the company relating to the Agreement for
Sub-License and Sub-Lease (Private Lot A12787(e)) dated July&nbsp;30, 2001.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Related Party Agreements</B></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.22<SUP style="font-size: 85%; vertical-align: text-top">(14)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amended and Restated Turnkey Subcontract Agreement for Sort, Assembly and/or Final
Test Services dated October&nbsp;30, 2002 by and between the company and ST Assembly
Test Services Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.23<SUP style="font-size: 85%; vertical-align: text-top">(18)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mr. Chia Song Hwee&#146;s, President and Chief Executive Officer, Contract of Employment.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">8<SUP style="font-size: 85%; vertical-align: text-top">(14)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">List of the company&#146;s subsidiaries.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">12.1<SUP style="font-size: 85%; vertical-align: text-top">(28)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of the President and Chief Executive Officer pursuant to Section&nbsp;302
of the Sarbanes-Oxley Act of 2002.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">12.2<SUP style="font-size: 85%; vertical-align: text-top">(28)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of the Senior Vice President and Chief Financial Officer pursuant to
Section&nbsp;302 of the Sarbanes-Oxley Act of 2002.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">13.1<SUP style="font-size: 85%; vertical-align: text-top">(28)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of the President and Chief Executive Officer pursuant to 18 U.S.C
Section&nbsp;1350, as adopted pursuant to Section&nbsp;906 of the
Sarbanes-Oxley Act of 2002.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">13.2<SUP style="font-size: 85%; vertical-align: text-top">(28)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of the Senior Vice President and Chief Financial Officer pursuant to
18 U.S.C Section&nbsp;1350, as adopted pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act
of 2002.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">15.1<SUP style="font-size: 85%; vertical-align: text-top">(28)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consent of KPMG addressed to the Board of Directors and Shareholders of the company.</TD>
</TR>

<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">15.2<SUP style="font-size: 85%; vertical-align: text-top">(28)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consent of KPMG addressed to the
Board of Directors and Shareholders of Silicon Manufacturing Partners Pte Ltd.</TD>
</TR>


<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left"><DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 0pt"><B>Notes:</B>
</DIV>




<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Filed as an exhibit to our company&#146;s Registration Statement on Form F-1
(Registration No.&nbsp;333-88397), as filed with the Securities and Exchange Commission
on October&nbsp;4, 1999. The Memorandum and Articles of Association were first amended
by shareholders resolutions which were filed as an exhibit to our company&#146;s Current
Report on Form 6-K (File No.&nbsp;000-27811), as submitted with the Securities and
Exchange Commission on June&nbsp;29, 2001, and were as set forth in the proxy statement
for our company&#146;s annual general meeting in May&nbsp;2001 which was filed as an exhibit
to our company&#146;s Current Report on Form 6-K (File No.&nbsp;000-27811), as submitted with
the Securities and Exchange Commission on April&nbsp;18, 2001. The Memorandum and
Articles of Association were further amended by shareholders resolutions which were
filed as an exhibit to our company&#146;s Current Report on Form 6-K (File No.
000-27811), as  </TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">106
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>submitted with the Securities and Exchange Commission on August&nbsp;18,
2005, and were set forth in the proxy statement for our extraordinary general
meeting in August&nbsp;2005 which was filed as an exhibit to our company&#146;s Current
Report on Form 6-K (File No.&nbsp;000-27811), as submitted with the Securities and
Exchange Commission on July&nbsp;25, 2005. All such exhibits are incorporated herein by
reference.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Filed as an exhibit to our company&#146;s Amended Registration Statement on Form F-1/A,
as filed with the Securities and Exchange Commission on October&nbsp;25, 1999, which
exhibit is incorporated herein by reference.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Submitted as an exhibit to our company&#146;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.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>Submitted as an exhibit to our company&#146;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.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(5)</TD>
    <TD>&nbsp;</TD>
    <TD>Submitted as an exhibit to our company&#146;s Second Quarterly Report 2002 on Form 6-K
(File No.&nbsp;000-27811), as submitted with the Securities and Exchange Commission on
August&nbsp;14, 2002, which exhibit is incorporated herein by reference.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(6)</TD>
    <TD>&nbsp;</TD>
    <TD>Filed as an exhibit to our company&#146;s Annual Report on Form 20-F (File No.
000-27811), as filed with the Securities and Exchange Commission on March&nbsp;21, 2001,
which exhibit is incorporated herein by reference.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(7)</TD>
    <TD>&nbsp;</TD>
    <TD>Submitted as an exhibit to our company&#146;s Third Quarterly Report 2003 on Form 6-K
(File No.&nbsp;000-27811), as submitted with the Securities and Exchange Commission on
November&nbsp;13, 2003, which exhibit is incorporated herein by reference.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(8)</TD>
    <TD>&nbsp;</TD>
    <TD>Filed as an exhibit to our company&#146;s Registration Statement on Form F-1
(Registration No.&nbsp;333-88397), as filed with the Securities and Exchange Commission
on October&nbsp;4, 1999.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(9)</TD>
    <TD>&nbsp;</TD>
    <TD>Submitted as an exhibit to our company&#146;s Current Report on Form 6-K (File No.
000-27811), as submitted with the Securities and Exchange Commission on April&nbsp;4,
2001, which exhibit is incorporated herein by reference.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(10)</TD>
    <TD>&nbsp;</TD>
    <TD>Filed as an exhibit to our company&#146;s Annual Report on Form 20-F (File No.
000-27811), as filed with the Securities and Exchange Commission on March&nbsp;11, 2002,
which exhibit is incorporated herein by reference.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(11)</TD>
    <TD>&nbsp;</TD>
    <TD>Submitted as an exhibit to our company&#146;s First Quarterly Report 2001 on Form 6-K
(File No.&nbsp;000-27811), as submitted with the Securities and Exchange Commission on
May&nbsp;15, 2001, which exhibit is incorporated herein by reference.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(12)</TD>
    <TD>&nbsp;</TD>
    <TD>Submitted as an exhibit to our company&#146;s First Quarterly Report 2002 on Form 6-K
(File No.&nbsp;000-27811), as submitted with the Securities and Exchange Commission on
May&nbsp;14, 2002, which exhibit is incorporated herein by reference.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(13)</TD>
    <TD>&nbsp;</TD>
    <TD>Submitted as an exhibit to our company&#146;s Third Quarterly Report 2002 on Form 6-K
(File No.&nbsp;000-27811), as submitted with the Securities and Exchange Commission on
November&nbsp;14, 2002, which exhibit is incorporated herein by reference.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(14)</TD>
    <TD>&nbsp;</TD>
    <TD>Filed as an exhibit to our company&#146;s Annual Report on Form 20-F (File No.
000-27811), as filed with the Securities and Exchange Commission on March&nbsp;13, 2003,
which exhibit is incorporated herein by reference.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(15)</TD>
    <TD>&nbsp;</TD>
    <TD>Submitted as an exhibit to our company&#146;s Second Quarterly Report 2003 on Form 6-K
(File No.&nbsp;000-27811), as submitted with the Securities and Exchange Commission on
August&nbsp;13, 2003, which exhibit is incorporated herein by reference.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(16)</TD>
    <TD>&nbsp;</TD>
    <TD>Submitted as an exhibit to our company&#146;s Third Quarterly Report 2001 on Form 6-K
(File No.&nbsp;000-27811), as submitted with the Securities and Exchange Commission on
November&nbsp;14, 2001, which exhibit is incorporated herein by reference.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(17)</TD>
    <TD>&nbsp;</TD>
    <TD>Submitted as an exhibit to our company&#146;s Current Report on Form 6-K (File No.
000-27811), as submitted with the Securities and Exchange Commission on November
14, 2000, which exhibit is incorporated herein by reference.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(18)</TD>
    <TD>&nbsp;</TD>
    <TD>Filed as an exhibit to our company&#146;s Annual Report on Form 20-F (File No.
000-27811), as filed with the </TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">107
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Securities and Exchange Commission on March&nbsp;3, 2004,
which exhibit is incorporated herein by reference.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(19)</TD>
    <TD>&nbsp;</TD>
    <TD>Submitted as an exhibit to our company&#146;s First Quarterly Report 2004 on Form 6-K
(File No.&nbsp;000-27811), as submitted with the Securities and Exchange Commission on
May&nbsp;10, 2004, which exhibit is incorporated herein by reference.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(20)</TD>
    <TD>&nbsp;</TD>
    <TD>Submitted as an exhibit to our company&#146;s Third Quarterly Report 2004 on Form 6-K
(File No.&nbsp;000-27811), as submitted with the Securities and Exchange Commission on
November&nbsp;8, 2004, which exhibit is incorporated herein by reference.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(21)</TD>
    <TD>&nbsp;</TD>
    <TD>Filed as an exhibit to our company&#146;s Annual Report on Form 20-F (File No.
000-27811), as filed with the Securities and Exchange Commission on March&nbsp;7, 2005,
which exhibit is incorporated herein by reference.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(22)</TD>
    <TD>&nbsp;</TD>
    <TD>Submitted as an exhibit to our company&#146;s Second Quarterly Report 2005 on Form 6-K
(File No.&nbsp;000-27811), as submitted with the Securities and Exchange Commission on
July&nbsp;22, 2005, which exhibit is incorporated herein by reference.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(23)</TD>
    <TD>&nbsp;</TD>
    <TD>Submitted as an exhibit to our company&#146;s Current Report 2005 on Form 6-K (File No.
000-27811), as submitted with the Securities and Exchange Commission on August&nbsp;17,
2005, which exhibit is incorporated herein by reference.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(24)</TD>
    <TD>&nbsp;</TD>
    <TD>Submitted as an exhibit to our company&#146;s Current Report on Form 6-K (File No.
000-27811), as submitted with the Securities and Exchange Commission on August&nbsp;4,
2006, which exhibit is incorporated herein by reference.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(25)</TD>
    <TD>&nbsp;</TD>
    <TD>Submitted as an exhibit to our company&#146;s Current Report on Form 6-K (File No.
000-27811), as submitted with the Securities and Exchange Commission on August&nbsp;18,
2005, which exhibit is incorporated herein by reference.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(26)</TD>
    <TD>&nbsp;</TD>
    <TD>Submitted as an exhibit to our company&#146;s First Quarterly Report on Form 6-K (File
No.&nbsp;000-27811), as submitted with the Securities and Exchange Commission on May&nbsp;6,
2005, which exhibit is incorporated herein by reference.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(27)</TD>
    <TD>&nbsp;</TD>
    <TD>Submitted as an exhibit to our company&#146;s Third Quarterly Report 2005 on Form 6-K
(File No.&nbsp;000-27811), as submitted with the Securities and Exchange Commission on
November&nbsp;2, 2005, which exhibit is incorporated herein by reference.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(28)</TD>
    <TD>&nbsp;</TD>
    <TD>Filed herewith.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(&#043;)</TD>
    <TD>&nbsp;</TD>
    <TD>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.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(&#043;&#043;)</TD>
    <TD>&nbsp;</TD>
    <TD>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.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">108
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">





<DIV align="left">
<A name="127"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SIGNATURES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The company 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 1<SUP style="font-size: 85%; vertical-align: text-top">st</SUP>&nbsp;day of March&nbsp;2006.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left"><B>CHARTERED SEMICONDUCTOR MANUFACTURING<BR>LTD</B><BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ George Thomas
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">Name:&nbsp;&nbsp;</TD>
    <TD align="left" colspan="2">George Thomas&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">Title:&nbsp;&nbsp;</TD>
    <TD colspan="2" align="left">Senior Vice President and Chief Financial Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">This annual report has been signed by the following persons in the capacities indicated:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="35%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>SIGNATURE</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>TITLE</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>DATE</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->

<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ James A. Norling
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman of the Board
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">March&nbsp;1, 2006</TD>
</TR>
<TR style="font-size: 10pt">
    <TD valign="top" style="border-top: 1px solid #000000"><FONT style="font-variant: SMALL-CAPS">James A. Norling</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Chia Song Hwee
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
<FONT style="font-variant: SMALL-CAPS">Chia Song Hwee</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">President and Chief Executive<br>
Officer (principal executive officer)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">March&nbsp;1, 2006</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ George Thomas
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
<FONT style="font-variant: SMALL-CAPS">George Thomas</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Vice President and Chief<br>
Financial Officer (principal financial<br>
and accounting officer)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">March&nbsp;1, 2006</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Sum Soon Lim
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">March&nbsp;1, 2006</TD>
</TR>
<TR style="font-size: 10pt">
    <TD valign="top" style="border-top: 1px solid #000000"><FONT style="font-variant: SMALL-CAPS">Sum Soon Lim</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Robert E. La Blanc
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">March&nbsp;1, 2006</TD>
</TR>
<TR style="font-size: 10pt">
    <TD valign="top" style="border-top: 1px solid #000000">
<FONT style="font-variant: SMALL-CAPS">Robert E. La Blanc</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Andre Borrel
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">March&nbsp;1, 2006</TD>
</TR>
<TR style="font-size: 10pt">
    <TD valign="top" style="border-top: 1px solid #000000">
<FONT style="font-variant: SMALL-CAPS">Andre Borrel</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Charles E. Thompson
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">March&nbsp;1, 2006</TD>
</TR>
<TR style="font-size: 10pt">
    <TD valign="top" style="border-top: 1px solid #000000"><FONT style="font-variant: SMALL-CAPS">Charles E. Thompson</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Tsugio Makimoto
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">March&nbsp;1, 2006</TD>
</TR>
<TR style="font-size: 10pt">
    <TD valign="top" style="border-top: 1px solid #000000"><FONT style="font-variant: SMALL-CAPS">Tsugio Makimoto</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Tay Siew Choon
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">March&nbsp;1, 2006</TD>
</TR>
<TR style="font-size: 10pt">
    <TD valign="top" style="border-top: 1px solid #000000"><FONT style="font-variant: SMALL-CAPS">Tay Siew Choon</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Peter Seah Lim Huat
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">March&nbsp;1, 2006</TD>
</TR>
<TR style="font-size: 10pt">
    <TD valign="top" style="border-top: 1px solid #000000"><FONT style="font-variant: SMALL-CAPS">Peter Seah Lim Huat</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Philip Tan Yuen Fah
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">March&nbsp;1, 2006</TD>
</TR>
<TR style="font-size: 10pt">
    <TD valign="top" style="border-top: 1px solid #000000"><FONT style="font-variant: SMALL-CAPS">Philip tan yuen fah</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">109
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="36%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="36%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>SIGNATURE</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>TITLE</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>DATE</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Pasquale Pistorio
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">March&nbsp;1, 2006</TD>
</TR>
<TR style="font-size: 10pt">
    <TD valign="top" style="border-top: 1px solid #000000"><FONT style="font-variant: SMALL-CAPS">Pasquale Pistorio</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Steven H. Hamblin
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">March&nbsp;1, 2006</TD>
</TR>
<TR style="font-size: 10pt">
    <TD valign="top" style="border-top: 1px solid #000000"><FONT style="font-variant: SMALL-CAPS">Steven H. Hamblin</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">110
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD<BR>
AND SUBSIDIARIES</B>
</DIV>

<DIV align="left">
<A name="128"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>FINANCIAL STATEMENTS INDEX</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Page Number</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#300">Report of Independent Registered Public Accounting Firm</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#301">Consolidated Balance Sheets</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-2</TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#302">Consolidated Statements of Operations</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#303">Consolidated Statements of Comprehensive Income (Loss)</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-4</TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#304">Consolidated Statements of Shareholders&#146; Equity</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#305">Consolidated Statements of Cash Flows</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-6</TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#306">Notes to the Consolidated Financial Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-7</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="left">
<!-- /TOC -->
</DIV>

<DIV align="left">
<A name="300"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Board of Directors and Shareholders<BR>
Chartered Semiconductor Manufacturing Ltd:

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have audited the accompanying consolidated balance sheets of Chartered Semiconductor
Manufacturing Ltd and subsidiaries as of December&nbsp;31, 2004 and 2005, and the related consolidated
statements of operations, comprehensive income (loss), shareholders&#146; equity and cash flows for each
of the years in the three-year period ended December&nbsp;31, 2005. These consolidated financial
statements are the responsibility of the Company&#146;s management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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&nbsp;31, 2004 and 2005, and the results of their operations and their
cash flows for each of the years in the three-year period ended December&nbsp;31, 2005, in conformity
with U.S. generally accepted accounting principles.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As discussed in Note 24 to the consolidated financial statements, the Company changed its method of
accounting for asset retirement obligations in 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">KPMG<BR>
&nbsp;<BR>
<B>Singapore</B><BR>
March&nbsp;1, 2006
</DIV>


<P align="center" style="font-size: 10pt">F-1
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
<DIV align="left">
<A name="301"></A>
</DIV>
CONSOLIDATED BALANCE SHEETS &#151; in US Dollars<BR>
As of December&nbsp;31<BR>
In thousands (except per share data)</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>ASSETS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">539,399</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">819,856</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Marketable investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,181</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,467</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Receivables, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">143,148</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">184,897</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Inventories</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">72,159</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">134,240</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Prepaid expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,723</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,670</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,857</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">114,446</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">786,467</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,283,576</TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Marketable investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,851</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Investment in SMP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">93,765</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,384</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Technology licenses, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">121,953</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">106,612</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Property, plant and equipment, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,914,515</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,049,695</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other non-current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">128,461</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,027</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,090,012</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,517,294</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>LIABILITIES, CONVERTIBLE REDEEMABLE PREFERENCE SHARES AND SHAREHOLDERS&#146;
EQUITY</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">188,786</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">166,681</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income taxes payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,421</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,674</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current installments of long-term debt and capital lease obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">352,985</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">322,453</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58,529</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">216,445</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">623,721</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">733,253</TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term debt and capital lease obligations, excluding current installments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">882,745</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,169,034</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other non-current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77,915</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,970</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,584,381</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,920,257</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Convertible redeemable preference shares of $0.01 par value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Authorized: 30 shares in 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Issued and outstanding: 30 shares in 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Redemption value at maturity: $10,000 per share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">250,663</TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Share capital: ordinary shares of S$0.26 par value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Authorized: 3,076,923 shares in 2004 and 4,615,385 shares in 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Issued and outstanding: 2,509,238 shares in 2004 and 2,513,384 shares
in 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">445,531</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">446,181</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Additional paid-in capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,237,107</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,235,869</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accumulated deficit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,118,654</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,278,252</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accumulated other comprehensive loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(58,353</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(57,424</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,505,631</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,346,374</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Commitments and contingencies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total liabilities, convertible redeemable preference shares
and shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,090,012</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,517,294</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><I>See accompanying notes to consolidated financial statements.</I>
</DIV>


<P align="center" style="font-size: 10pt">F-2
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
<DIV align="left">
<A name="302"></A>
</DIV>
CONSOLIDATED STATEMENTS OF OPERATIONS &#151; in US Dollars<BR>
For the Years Ended December&nbsp;31<BR>
In thousands (except per share data)</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">551,911</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">932,131</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,032,734</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(648,330</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(769,318</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(917,048</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(96,419</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">162,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115,686</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">OPERATING EXPENSES</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Research and development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">124,057</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">118,281</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">122,073</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Sales and marketing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,748</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,751</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,181</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,762</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,850</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,756</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Fab start-up costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,219</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,199</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,697</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other operating expenses (income), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,001</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,994</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,938</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">201,785</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">214,087</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">229,645</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(298,204</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(51,274</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(113,959</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity in income of SMP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,194</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,563</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,486</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,186</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,299</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,442</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,168</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,530</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,625</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest expense and amortization of debt discount</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(42,222</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(30,093</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(69,839</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign exchange gain (loss), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(733</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,320</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(356</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;before income taxes and minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(282,611</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,345</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(146,601</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,671</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,774</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12,997</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;before minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(294,282</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,571</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(159,598</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interest in loss of CSP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,491</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)&nbsp;prior to cumulative effect adjustment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(284,791</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,571</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(159,598</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cumulative effect adjustment for change in accounting principle</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,421</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(291,212</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,571</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(159,598</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less: Accretion to redemption value of convertible redeemable
preference shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,196</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)&nbsp;available to common shareholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(291,212</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,571</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(162,794</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic and diluted net earnings (loss)&nbsp;per common share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Prior to cumulative effect adjustment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.11</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.06</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cumulative effect adjustment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.01</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net earnings (loss)&nbsp;per common share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.12</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.06</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic and diluted net earnings (loss)&nbsp;per ADS:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Prior to cumulative effect adjustment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1.14</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.65</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cumulative effect adjustment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.02</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net earnings (loss)&nbsp;per ADS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1.16</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.65</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Number of common shares used in computing:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Basic net earnings (loss)&nbsp;per common share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,502,294</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,508,376</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,511,428</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Effect of dilutive options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,566</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,149</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted net earnings (loss)&nbsp;per common share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,502,294</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,516,942</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,512,577</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Number of ADSs used in computing:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Basic net earnings (loss)&nbsp;per ADS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">250,229</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">250,838</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">251,143</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Effect of dilutive options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">856</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted net earnings (loss)&nbsp;per ADS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">250,229</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">251,694</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">251,258</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><I>See accompanying notes to consolidated financial statements.</I>
</DIV>


<P align="center" style="font-size: 10pt">F-3
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
<DIV align="left">
<A name="303"></A>
</DIV>
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) &#151; in US Dollars<BR>
For the Years Ended December&nbsp;31<BR>
In thousands</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(291,212</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,571</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(159,598</TD>
    <TD nowrap>)</TD>
</TR>
<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net unrealized gains (losses)&nbsp;on change in cash
flow hedging activity fair values</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(207</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">598</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Share of cash flow hedging activity gains of SMP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,298</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,945</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Reclassification of cash flow hedging activity
(gains)&nbsp;losses into earnings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,942</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">469</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Foreign currency translation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,716</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,721</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unrealised losses on available-for-sale securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(266</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,073</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,390</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other comprehensive income, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,112</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">528</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">929</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Comprehensive income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(287,100</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,099</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(158,669</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><I>See accompanying notes to consolidated financial statements.</I>
</DIV>


<P align="center" style="font-size: 10pt">F-4
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
<DIV align="left">
<A name="304"></A>
</DIV>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS&#146; EQUITY &#151; in US Dollars<BR>
In thousands</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Accumulated</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Total</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Additional</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Other</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Share</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Paid-in</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Accumulated</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Compre-</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>holders&#146;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Ordinary Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Capital</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Deficit</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>hensive Loss</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Equity</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>No.</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>$</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at January&nbsp;1, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,497,179</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">443,713</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,238,752</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(834,013</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(62,993</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,785,459</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(291,212</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(291,212</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,112</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,112</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Issuance of shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,301</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,240</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,753</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,993</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Employee stock compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non-employee stock
compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,801</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,801</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at December&nbsp;31, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,505,480</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">444,953</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,233,708</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,125,225</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(58,881</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,494,555</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,571</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,571</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">528</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">528</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Issuance of shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,758</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">578</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,423</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,001</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Employee stock compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non-employee stock
compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">173</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">173</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,800</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at December&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,509,238</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">445,531</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,237,107</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,118,654</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(58,353</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,505,631</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(159,598</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(159,598</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accretion to redemption
value of convertible
redeemable preference
shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,196</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,196</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">929</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">929</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Issuance of shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,146</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">650</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,737</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,387</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Employee stock compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non-employee stock
compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">220</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">220</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at December&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,513,384</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">446,181</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,235,869</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,278,252</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(57,424</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,346,374</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><I>See accompanying notes to consolidated financial statements.</I>
</DIV>


<P align="center" style="font-size: 10pt">F-5
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
<DIV align="left">
<A name="305"></A>
</DIV>
CONSOLIDATED STATEMENTS OF CASH FLOWS &#151; in US Dollars<BR>
For the years ended December&nbsp;31<BR>
In thousands</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>CASH FLOWS FROM OPERATING ACTIVITIES</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(291,212</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,571</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(159,598</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Adjustments to reconcile net income (loss)&nbsp;to net cash provided
by operating activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cumulative effect adjustment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,421</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Equity in income of SMP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(23,194</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(27,563</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,486</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash dividends received from SMP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,460</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">439,283</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">437,590</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">507,687</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Foreign exchange loss (gain), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(19</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">434</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Gain on disposal of property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,917</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,703</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,594</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cancellation of employee bonus award plan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(27,531</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Minority interest in loss of CSP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,491</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock-based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,547</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,035</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,050</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Change in assets and liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Receivables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(54,753</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,327</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(44,280</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Inventories</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(35,158</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(15,726</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(62,081</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Prepaid expenses and other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(946</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(180</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">853</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Payables and other liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,975</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(61,395</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">127,675</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income taxes payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,029</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,186</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,253</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48,083</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">331,684</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">404,374</TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>CASH FLOWS FROM INVESTING ACTIVITIES</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payments for property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(220,761</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(686,252</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(628,127</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payments for technology licenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(59,705</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(37,083</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,351</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchases of marketable investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(30,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(30,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD nowrap></TD>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Refundable deposits placed with a vendor</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(80,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(35,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from sale of property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,119</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,217</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,245</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from redemption and maturity of marketable investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Return of capital from SMP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,300</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD align="right" style="border-bottom: 1px solid #000000">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD align="right" style="border-bottom: 1px solid #000000">9,403</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD align="right" style="border-bottom: 1px solid #000000">(2,142</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash used in investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(384,347</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(732,715</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(571,075</TD>
    <TD nowrap>)</TD>
</TR>
<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>CASH FLOWS FROM FINANCING ACTIVITIES</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">125,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">318,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,128,592</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Repayments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(65,033</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(287,312</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(990,172</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Receipts of customer deposits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">450</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">81,300</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Refund of customer deposits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(32,123</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(22,035</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Issuance of ordinary shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,993</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,001</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,387</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Issuance of convertible redeemable preference shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">247,513</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,837</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,939</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">447,585</TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net increase (decrease)&nbsp;in cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(305,427</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(366,092</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">280,884</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of exchange rate changes on cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(26</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(427</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents at the beginning of the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,210,925</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">905,472</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">539,399</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents at the end of the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">905,472</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">539,399</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">819,856</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Supplemental Cash Flow Information</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest paid (net of amounts capitalized)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">26,407</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">18,215</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">77,510</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income taxes paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,291</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11,276</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,576</TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non-cash investing and financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity securities received from sale of technology and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11,708</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Property, plant and equipment acquired through capital lease</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">45,933</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Property, plant and equipment acquired on credit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">22,309</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">129,147</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">52,280</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><I>See accompanying notes to consolidated financial statements.</I>
</DIV>



<P align="center" style="font-size: 10pt">F-6
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES</B>
</DIV>

<DIV align="left">
<A name="306"></A>
</DIV>
<DIV align="center" style="font-size: 10pt"><B>NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS &#151; in US
Dollars<BR>
In thousands (except per share data)</B></DIV>



<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>1.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Background and Summary of Significant Accounting Policies</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(a)&nbsp;Business and Organization</I></B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company is one of the world&#146;s top dedicated semiconductor foundries 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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company was incorporated in Singapore in 1987. As of December&nbsp;31, 2005, Singapore
Technologies Semiconductors Pte Ltd (&#147;ST Semiconductors&#148;), a wholly owned subsidiary of
Temasek Holdings (Private) Limited (&#147;Temasek&#148;), owns a
majority of the shares of the Company. Temasek is a holding company through which corporate investments
of the Government of Singapore are held.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Chartered Silicon Partners Pte Ltd (&#147;CSP&#148;) was formed in March&nbsp;1997. The Company, EDB
Investments Pte Ltd, Agilent Technologies Europe B.V. (&#147;Agilent Europe&#148;) and Singapex
Investments Pte Ltd own a 51.0%, 26.5%, 15.0% and 7.5% equity interest in CSP, respectively.
As part of Agilent Technologies, Inc&#146;s restructuring in 2005, Agilent Europe transferred its
entire shareholding in CSP to Avago Technologies General IP (Singapore) Pte. Ltd. (&#147;Avago
Singapore&#148;) in January&nbsp;2006. The Company accounts for CSP as a consolidated subsidiary.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Silicon Manufacturing Partners Pte Ltd (&#147;SMP&#148;) was formed in January&nbsp;1998. Agere Systems
Singapore Pte Ltd (&#147;Agere&#148;) and the Company own a 51.0% and 49.0% equity interest in SMP,
respectively. The Company accounts for SMP using the equity method.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(b)&nbsp;Basis of Presentation</I></B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The consolidated financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America (&#147;US GAAP&#148;).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The consolidated financial statements reflect the accounts of Chartered Semiconductor
Manufacturing Ltd and its majority-owned subsidiaries. All significant intercompany accounts
and transactions have been eliminated in consolidation. Where losses applicable to the
minority interest in a subsidiary exceed the minority interest in the equity capital of the
subsidiary, such excess and any further losses applicable to the minority interest have been
charged to the Company&#146;s consolidated statements of operations, unless the minority interest
has a binding obligation, and is able, to make good the losses. When the subsidiary
subsequently reports profits, the profits applicable to the minority interest are taken to
the consolidated statements of operations until the minority interest&#146;s share of losses
previously taken to the consolidated statements of operations is fully recovered.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Due to cumulative losses, the obligation to the minority shareholders of CSP was reduced to
zero in the first quarter of 2003. Therefore none of CSP&#146;s losses from that point forward
have been allocated to the minority interest in the consolidated statements of operations.
The effect of this on the results of operations was losses not allocated to the minority
interest according to their proportionate ownership as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->

<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Losses not allocated to the minority
interest according to their
proportionate ownership</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">74,317</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">55,786</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">64,889</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The cumulative losses not allocated to the minority shareholders of CSP according to their
proportionate ownership as of December&nbsp;31, 2004 and 2005 are $130,103 and $194,992,
respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(c)&nbsp;Reclassifications</I></B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Certain reclassifications have been made in prior years&#146; financial statements to conform to
classifications used in the current year.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-7
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands (except per share data)</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(d)&nbsp;Use of Estimates</I></B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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. Estimates are
based on historical experience, current conditions and on various other assumptions that are
believed to be reasonable under the circumstances. Significant items subject to judgement and
such estimates include estimated useful lives and salvage values of long-lived assets, the
recoverability of the carrying value of long-lived assets, the realization of deferred income
tax assets, accounts receivable and inventories, the recognition and measurement of revenue
and sales credits and returns allowance, the fair value of stock-based employee compensation
awards and financial instruments. Actual results could differ from these estimates.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(e)&nbsp;Foreign Currency</I></B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The functional currency of the Company and its subsidiaries is the US dollar. Assets and
liabilities which are denominated in foreign currencies are translated into the functional
currency at the rates of exchange prevailing at the balance sheet date. Foreign currency
transactions are translated using the exchange rates prevailing at the date of transactions.
Foreign exchange gains or losses, resulting from the settlement of foreign currency
transactions and from the translation at financial year-end exchange rates of assets and
liabilities denominated in foreign currencies, are included in the line item &#147;foreign
exchange gain (loss), net&#148; in the consolidated statements of operations.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(f)&nbsp;Business and Credit Concentrations</I></B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company is a dedicated semiconductor foundry providing wafer fabrication services and
technologies. The worldwide semiconductor foundry industry is highly competitive. 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, electronic design
automation and tool support. The semiconductor industry has historically been highly
cyclical and, at various times, has experienced significant economic downturns characterized
by production overcapacity, reduced product demand and rapid erosion of selling prices.
Periods of overcapacity in the semiconductor industry have frequently followed periods of
increased demand. In addition, the markets for semiconductors are characterized by rapid
technological change, intense competition and fluctuations in end-user demand. As a result,
changes in the industry may adversely affect management&#146;s estimates and the Company&#146;s
results of operations and financial position.
</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Financial instruments that potentially subject the Company to concentrations of credit risk
consist principally of cash, investments, derivative financial instruments and receivables.
The five largest customers of the Company accounted for 41%, 52% and 56% of net revenue in
the years ended December&nbsp;31, 2003, 2004 and 2005, respectively. Total accounts receivable
from these customers was $49,521 and $92,668 at December&nbsp;31, 2004 and 2005, 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&#146;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 and credit control
and collection procedures.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company&#146;s cash and cash equivalents and term deposits are placed with major international
banks and financial institutions with specific minimum credit standards. Cash and cash
equivalents and term deposits with a particular bank accounted for 43% and 20% of total
balances at December&nbsp;31, 2004 and 2005, respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The amounts subject to credit risk related to derivative instruments are generally limited to
the amounts, if any, by which a counterparty&#146;s obligations exceed the obligations of the
Company with that counterparty. The risk management practices are further described in Note
19.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(g)&nbsp;Cash Equivalents</I></B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Cash equivalents consist of highly liquid investments that are readily convertible into cash
and have original maturities of three months or less.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-8
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands (except per share data)</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(h)&nbsp;Marketable Investments</I></B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company classifies its investments in marketable equity and debt securities as
&#147;available-for-sale&#148;, &#147;held to maturity&#148; or &#147;trading&#148; at the time of purchase in accordance
with the provisions of Statement of Financial Accounting Standards (&#147;SFAS&#148;) No.&nbsp;115,
&#147;Accounting for Certain Investments in Debt and Equity Securities&#148; (&#147;SFAS No.&nbsp;115&#148;). There
are no investments classified as trading or held-to-maturity as of December&nbsp;31, 2004 and
2005. There are no transfers between investment classifications in any of the periods
presented.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Available-for-sale securities are carried at fair value with unrealized gains and losses, net
of related tax, if any, reported as a component of other comprehensive income (loss)&nbsp;until
realized. Realized gains and losses from the sale of available-for-sale securities are
determined on a specific-identification basis. A decline in the market value of any
available-for-sale security below cost that is deemed to be other than temporary will result
in an impairment, which is charged to earnings.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(i)&nbsp;Derivative Instruments and Hedging Activities</I></B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In accordance with SFAS No.&nbsp;133, &#147;Accounting for Derivative Instruments and Certain Hedging
Activities&#148;, as amended, the Company records derivatives on the balance sheet as assets or
liabilities measured at fair value.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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 (&#147;fair-value&#148;
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 (&#147;cash-flow&#148; hedge), or a
foreign-currency fair-value or cash-flow hedge (&#147;foreign-currency&#148; hedge). The Company
formally documents all relationships between hedging instruments and hedged items, as well as
its risk-management objective and strategy for undertaking various hedge transactions at the
hedge&#146;s inception. This process includes linking all derivatives that are designated as
fair-value, cash-flow, or foreign-currency hedges to specific assets and liabilities on the
balance sheet or to specific firm commitments or forecasted transactions. The Company also
formally assesses, both at the hedge&#146;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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-9
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands (except per share data)</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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 no longer adjusts the hedged asset or liability
for changes in fair value. The adjustment of the carrying amount of the hedged asset or
liability is accounted for in the same manner as other components of the carrying amount
of that asset or liability. When hedge accounting is discontinued because the hedged
item no longer meets the definition of a firm commitment, the Company removes any asset
or liability that was recorded pursuant to recognition of the firm commitment from the
balance sheet and recognizes any gain or loss in earnings. When hedge accounting is
discontinued because it is probable that a forecasted transaction will not occur, gains
and losses that were accumulated in other comprehensive income are recognized
immediately in earnings. In all situations in which hedge accounting is discontinued,
the Company continues to carry the derivative at its fair value on the balance sheet,
and recognizes any changes in its fair value in earnings.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(j)&nbsp;Inventories</I></B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Inventories are stated at the lower of cost or market (net realizable value) and consist of
work in progress, raw materials and consumable supplies and spares. Cost is determined using
standard cost and an allocation of the cost variances arising in the period of production,
which approximates actual costs determined on the weighted average basis. Standard cost is
based on estimates of materials, labor and other costs incurred in each process step
associated with the manufacture of the Company&#146;s products. Labor and overhead costs are
allocated to each step in the wafer production process based on normal fab capacity
utilization, with costs arising from abnormal under-utilization of capacity expensed when
incurred.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(k)&nbsp;Technology Licenses</I></B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Technology license agreements are stated at cost and amortized on the straight-line basis
over the shorter of the expected technology life or the license period.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(l)&nbsp;Property, Plant and Equipment</I></B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Property, plant and equipment are recorded at cost and depreciated to their estimated salvage
values using the straight-line method over their estimated useful lives as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="25%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="66%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Buildings
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">20&nbsp;years (or, if shorter, the
remaining period of the lease of
the land on which the buildings
are erected)</TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Mechanical&nbsp;and&nbsp;electrical&nbsp;installations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">10&nbsp;years</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Equipment and machinery
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">5&nbsp;years</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Office and computer equipment
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">2 to 5&nbsp;years</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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&#146;s pooled borrowings. Repairs and replacements of a routine
nature are expensed, while those that extend the life of an asset are capitalized. Upon
retirement or disposal of assets, the cost and related accumulated depreciation are removed
from the consolidated balance sheets and any gain or loss is included in the consolidated
statements of operations.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Property, plant and equipment acquired through capital leases are capitalized at the lower of fair value or the present value of the minimum
lease payments at the inception of the lease. The minimum lease payments are allocated
between interest expense and reductions of the lease obligation so as to produce a constant
periodic rate of interest on the remaining balance of the lease obligation. Assets under
capital leases are depreciated over the shorter of their estimated useful lives or the lease
term.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-10
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands (except per share data)</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(m)&nbsp;Impairment of Long-Lived Assets and Intangible Assets</I></B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company reviews long-lived assets and intangible assets for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable.
Recoverability of long-lived asset groups to be held and used are measured by a comparison of
the carrying amount to the sum of the undiscounted cash flows expected to result from the use
and eventual disposition of the asset group. If an asset group is considered to be impaired,
the impairment loss is measured as the amount by which the carrying amounts of the long-lived
assets exceed their fair value. The Company does not have any intangible assets with
indefinite useful lives.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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 are considered held and used until disposed of. Long-lived assets to be abandoned
are disposed of when they cease to be used.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(n)&nbsp;Revenue Recognition</I></B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company enters into arrangements with customers which typically include, in addition to
fabricating semiconductor wafers, pre-fabricating services such as engineering services and
masks generation, and associated assembly and test services.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>When arrangements include multiple deliverables, the Company evaluates whether to divide the
deliverables into separate units of accounting using certain specified criteria. The total
arrangement consideration is allocated to each unit of accounting based on fair values in
accordance with the methodology in FASB Emerging Issues Task Force (&#147;EITF&#148;) Issue 00-21,
&#147;Accounting for Revenue Arrangements with Multiple Deliverables&#148;. Substantially all of the Company&#146;s arrangements for the sale
of semiconductor wafers and related services consist of a single unit of accounting.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Revenue for each unit of accounting is recognized when the contractual obligations have been
performed and, where applicable, delivery has occurred and title and risk of loss has passed
to the customer, there is evidence of a final arrangement as to the specific terms of the
agreed upon sales, selling prices to the customers are fixed or determinable and collection
of the revenue is reasonably assured. Generally this results in revenue recognition upon
shipment of wafers. Revenue represents the invoiced value of goods and services supplied
excluding goods and services tax, less allowances for estimated sales credits and returns.
The Company estimates allowances for sales credits and returns based on historical experience
and management&#146;s estimate of the level of future claims. Additionally, the Company accrues
for specific items at the time their existence is known and amounts are estimable.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Other arrangements include sale of equipment and contemporaneous licensing of intellectual
property. Arrangement consideration is allocated between equipment and licensing of
intellectual property using the residual method based on the fair value of equipment sold.
Estimates of fair value of equipment are based on the resale prices of similar equipment sold
on the used equipment market. Income from intellectual property is classified as a component
of other income, net, in the consolidated statement of operations as it is not considered as
a source of income from principal operations, and is recognized when the title and risk of
loss have passed to the customer or the license is delivered, there is evidence of a final
arrangement, fees are fixed or determinable, and collectibility is reasonably assured.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-11
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands (except per share data)</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(o)&nbsp;Grants</I></B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(p)&nbsp;Stock-Based Employee Compensation</I></B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company measures stock-based employee compensation cost for financial statement purposes
in accordance with the intrinsic method of Accounting Principles Board Opinion No.&nbsp;25,
&#147;Accounting for Stock Issued to Employees&#148; (&#147;APB 25&#148;) and related interpretations. Employee
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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Compensation cost for stock options granted to non-employees, primarily employees of SMP, are
measured in accordance with the fair-value method as the fair market value of the stock
options based upon an option pricing model. This cost is recognized over the period in which
the options vest in accordance with SFAS No.&nbsp;123, &#147;Accounting for Stock-Based Compensation&#148;,
as amended by SFAS No.&nbsp;148, &#147;Accounting for Stock-Based Compensation &#151; Transition and
Disclosure&#148;.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Had the Company determined employee compensation cost based on the fair value at the grant
date for its share options under SFAS No.&nbsp;123, as amended by SFAS No.&nbsp;148, the Company&#146;s net
income (loss)&nbsp;would have changed to the pro forma amounts indicated below:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock-based employee compensation cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">As reported (intrinsic method)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Pro forma (fair-value method)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">13,526</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">16,744</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,073</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)&nbsp;available to common shareholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">As reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(291,212</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,571</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(162,794</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(304,734</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(10,170</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(169,866</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic and diluted net earnings (loss)&nbsp;per common share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">As reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.12</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.06</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.12</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.00</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.07</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic and diluted net earnings (loss)&nbsp;per ADS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">As reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1.16</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.65</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1.22</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.04</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.68</TD>
    <TD nowrap>)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(q)&nbsp;Product warranties</I></B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company guarantees that products will meet the stated functionality as agreed to in each sales arrangement.
The Company provides for the estimated warranty costs under these guarantees based upon historical experience and
management&#146;s estimate of the level of future claims, and accrues for specific items at the time their existence
is known and the amounts are estimable. Expenses for warranty costs were not significant in any of the years presented.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(r)&nbsp;Fab Start-up Costs</I></B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company records costs related to start-up activities, including fab start-up costs, as
expenses when they are incurred. Such costs primarily include employee related expenses and
engineering activities associated with the start-up of a fab.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-12
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands (except per share data)</B>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(s)&nbsp;Deferred Loan Costs</I></B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Expenses associated with the issuance of long-term debt are capitalized and are amortized
over the terms of the respective arrangement, ranging from one to seven years, using the
effective interest rate method.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(t)&nbsp;Operating Leases</I></B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Rental on operating leases, including the effects of scheduled rent increases, lease incentives and rent holidays, are charged to expense on a straight-line basis over the
term of the lease. Contingent rentals are charged to expense when they are incurred.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(u)&nbsp;Income Taxes</I></B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(v)&nbsp;Net Income (Loss) Per Common Share</I></B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Basic net earnings (loss)&nbsp;per common share is computed by deducting from net income or adding
to net (loss)&nbsp;the accretion to redemption value of the convertible redeemable preference shares and using the weighted-average number of common shares outstanding. Diluted net
earnings (loss)&nbsp;per common share is computed by deducting from net income or adding to net
(loss)&nbsp;the accretion to redemption value of the convertible redeemable preference shares and
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 and convertible redeemable preference shares.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company excluded potentially dilutive securities for each period presented from its
diluted net earnings (loss)&nbsp;per common share computation because either the exercise price or
conversion price of the securities exceeded the average fair value of the Company&#146;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:</TD>
</TR>
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10"><B>Years ended December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Convertible debt and call options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">214,792</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">429,584</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">251,092</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104,223</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">98,468</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71,841</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Convertible redeemable preference shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">344,067</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The conversion price of convertible debt outstanding was S$4.7980 per share (equivalent to
approximately US$26.7701 per ADS) as of December&nbsp;31, 2005. The weighted average exercise
prices of options outstanding were $2.67, $2.36 and $2.04 as of December&nbsp;31, 2003, 2004 and
2005, respectively. The excluded stock options have per share exercise prices ranging from
$0.39 to $8.31, $0.63 to $8.31 and $0.69 to $8.31 for the years ended December&nbsp;31, 2003, 2004
and 2005, respectively. The exercise price of the call options was $0.93 per share as of
December&nbsp;31, 2005 and the conversion price of the convertible redeemable preference shares
was $0.8719 per share.</TD>
</TR>
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">F-13
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands (except per share data)</B>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>&nbsp;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(w)&nbsp;Recent Accounting Pronouncements</I></B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In March&nbsp;2005, the Financial Accounting Standards Board (&#147;FASB&#148;) issued FASB
Interpretation No.&nbsp;47, &#147;Accounting for Conditional Asset Retirement Obligations&#148; (&#147;FIN
47&#148;). FIN 47 clarifies that an entity must record a liability for a &#147;conditional&#148; asset
retirement obligation if the fair value of the obligation can be reasonably estimated.
The types of asset retirement obligations that are covered by this Interpretation are
those for which an entity has a legal obligation to perform an asset retirement
activity, however the timing and (or)&nbsp;method of settling the obligation are conditional
on a future event that may or may not be within the control of the entity. FIN 47 also
clarifies when an entity would have sufficient information to reasonably estimate the
fair value of an asset retirement obligation. FIN 47 is effective no later than the end
of fiscal years ending after December&nbsp;15, 2005. The initial adoption of FIN 47 did not
have an impact on the Company&#146;s financial condition and consolidated statements of
operations.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In December&nbsp;2004, the FASB published FAS 123(R), &#147;Share-Based Payments&#148;. FAS 123(R)
requires that the compensation cost relating to share-based payment transactions be
recognized in financial statements. That cost will be measured based on the fair value
of the equity or liability instruments issued. FAS 123(R) replaces FASB Statement No.
123, &#147;Accounting for Stock-Based Compensation&#148;, and supersedes APB Opinion No.&nbsp;25,
&#147;Accounting for Stock Issued to Employees&#148;. In March&nbsp;2005, the SEC issued Staff
Accounting Bulletin No.&nbsp;107, or SAB 107, on the interaction between FAS 123(R) and
certain SEC rules and regulations, and on SEC Staff&#146;s views regarding the valuation of
share-based payment arrangements for public companies. In April&nbsp;2005, the SEC approved a
new rule that permits companies to defer the effective date of FAS 123(R). The Company
has elected to adopt FAS 123(R) on January&nbsp;1, 2006.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company currently determines the fair value of stock-based compensation using a
Black-Scholes option-pricing model. The adoption of FAS 123(R) on January&nbsp;1, 2006 is expected to decrease the Company&#146;s net income in 2006 by as
much as $6,000. The pro forma amounts disclosed in Note 1(p) of the consolidated
financial statements are not necessarily indicative of the impact FAS 123(R) will have on the
Company&#146;s consolidated statements of operations.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>2.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Related Party Transactions</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(a)&nbsp;Temasek and affiliates</I></B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company is a majority owned subsidiary of ST Semiconductors, which is itself a
wholly-owned subsidiary of Temasek. Temasek is a holding company through which corporate
investments of the government of Singapore are held. The Company transacts business in the
normal course of its operations with Temasek and its affiliates as well as with other
companies and entities that are partially or wholly owned or controlled by the government of
Singapore.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company had the following significant transactions with related parties:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><I>Affiliates of Temasek</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Services purchased from STATS ChipPAC</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">13,541</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">19,104</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12,872</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Property, plant and equipment purchased</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,016</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Services purchased</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,398</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,178</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">883</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income received</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,689</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,853</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Management fees paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,384</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,739</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Sub-lease rental for leasehold land from JTC</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,482</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,460</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,416</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Rental for leasehold land from Ascendas</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">276</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">335</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">331</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Included in receivables from related parties and payables to related parties are amounts due
from or to affiliates of Temasek:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amounts due from affiliates of Temasek</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">281</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">217</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amounts due to affiliates of Temasek</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,135</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8,008</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-14
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands (except per share data)</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The balances with affiliates of Temasek are unsecured, interest free and repayable within
12&nbsp;months.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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 was built on land leased by the Company
from Ascendas Land (Singapore) Pte Ltd (&#147;Ascendas&#148;), a private company wholly-owned by Jurong
Town Corporation (&#147;JTC&#148;). JTC is a statutory board established by the Singapore government
to develop and manage industrial estates in Singapore. Following the cessation of Fab 1
operations in end March&nbsp;2004, the Company classified its
leasehold interest in Fab&nbsp;1 as held
for sale (see Note&nbsp;22).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Fabs 2, 3, 5 (occupied by SMP) and 6 (occupied by CSP) and Fab 2 and Fab 3 slurry treatment
plant occupy land leased by Terra Investments Pte Ltd (&#147;Terra&#148;) (a wholly-owned subsidiary of
Temasek) from JTC. The Company has entered into sub-leases for the underlying land for the
entire term of the leases between Terra and JTC, expiring between 2024 and 2030, with an
option, subject to certain conditions, to extend for another 30&nbsp;years.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Fab 7 occupies land also leased by Terra from JTC. The Company expects to enter into a
sub-lease with Terra for the underlying land, expiring in 2030, with an option, subject to
certain conditions, to extend for another 30&nbsp;years.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Rental rates on the long term leases are subject to revisions at periodic intervals in
accordance with the rental agreements, with such increases generally capped at 4% to 9% per
annum.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Rental expense for land leased from related parties for the years ended December&nbsp;31, 2003,
2004 and 2005 was $2,758, $2,795 and $2,747, respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Minimum future rental payments on non-cancellable operating leases of land from the related
parties above as of December&nbsp;31, 2005 are as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payable in year ending December&nbsp;31,</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,746</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,798</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,854</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,916</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,982</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Thereafter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,132</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">66,428</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As of December&nbsp;31, 2005, the Company has included above operating lease obligations in
respect of Fab 1 amounting to $4,100. In January&nbsp;2006, the Company has sold and transferred
its leasehold interest in Fab 1.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(b)&nbsp;SMP</I></B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company has a 49% equity interest in SMP that is accounted for using the equity method.
SMP&#146;s net operating results are not shared between the Company and SMP&#146;s majority
shareholder, Agere, 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 equity in income (loss)&nbsp;of SMP and the
share of retained post formation loss that is included in the Company&#146;s consolidated
statements of operations and consolidated balance sheets are different than the amount that
would be obtained by applying a 49% ownership percentage.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company and Agere have entered into an assured supply and demand agreement with SMP under
which each is billed for allocated wafer capacity if the wafers started for them are less
than their allocated capacity. No amounts were payable by the Company under this agreement
for 2003, 2004 and 2005, respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>During 2005, SMP&#146;s shareholders agreed to a reduction in wafer prices for Agere, related to the
wafer capacity allocated to Agere, to the minimum price allowed under the assured supply and demand
agreement. As each shareholder is entitled to the gross profits from sales to the customers that it
directs to SMP, the wafer price reduction did not affect the equity in income (loss) of SMP and the
share of retained post formation loss that is included in the Company&#146;s consolidated statements of
operations and consolidated balance sheets.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Singapore law allows dividends to be paid only out of profits of a company. The Company and
Agere have agreed that dividends will be paid out of the profits of SMP determined on a
year-to-year basis rather than a cumulative basis.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company bought $2,272, $1,641 and $218 of processed wafers from SMP for the years ended
December&nbsp;31, 2003, 2004 and 2005, respectively.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-15
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands (except per share data)</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company provides management and corporate support services including accounting,
financial, sales and marketing services to SMP and allocates a portion of its related costs
to SMP. Such charges to SMP amounted to $9,963, $9,622 and $8,811 in the years ended
December&nbsp;31, 2003, 2004 and 2005, respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>SMP leases its fab from the Company under a long-term lease agreement that expires in 2008.
The rental income from SMP for the years ended December&nbsp;31, 2003, 2004 and 2005 was $15,024,
$15,307 and $15,662, respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company bought plant and equipment of $3,350, $Nil and $11 from SMP during 2003, 2004 and
2005, respectively. The Company also sold plant and equipment of $14,218, $505 and $53 to
SMP during 2003, 2004 and 2005, respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Included in receivables from related parties and payables to related parties are amounts due
from or to SMP:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amounts due from SMP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,231</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11,827</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amounts due to SMP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">552</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">94</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The balances with SMP are unsecured, interest free and repayable within 12&nbsp;months.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>3.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Cash and Cash Equivalents</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Cash and cash equivalents consist of the following:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash at banks and on hand</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">87,485</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">393,083</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Short-term deposits with banks</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">451,914</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">426,773</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">539,399</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">819,856</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>4.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Marketable Investments</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>At December&nbsp;31, 2004</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unrealised</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unrealised</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Cost</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Gains</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Losses)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Fair Value</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><I>Current</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Available-for-sale securities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Term deposits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">15,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">15,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Equity securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,371</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">172</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,362</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,181</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">24,371</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">172</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,362</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">23,181</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><I>Non-current</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Available-for-sale securities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Term deposits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">15,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">15,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Self-referenced credit-linked deposits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">30,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(149</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">29,851</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">45,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(149</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">44,851</TD>
    <TD>&nbsp;</TD>
</TR>



<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The $30,000 self-referenced credit-linked deposit (&#147;CLD&#148;) was placed with a financial
institution in June&nbsp;2003. If a &#147;credit event&#148; (as defined in the CLD) occurred, which
included default in the payment of the Company&#146;s Convertible Notes or bankruptcy of the
Company, the principal would not be returned in full. Rather, the Company would receive the
market value of $30,000 face amount of the Company&#146;s Convertible Notes, less costs incurred
by the financial institution. The Company redeemed $25,000 and $5,000 of the CLD in March
2005 and April&nbsp;2005, respectively.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-16
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands (except per share data)</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>At December&nbsp;31, 2005</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unrealised</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unrealised</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Cost</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Gains</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Losses)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Fair Value</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><I>Current</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Available-for-sale securities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Term deposits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">15,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">15,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Equity securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,196</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,729</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,467</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 1px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 1px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 1px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 1px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">25,196</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,729</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">22,467</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table shows the gross unrealized losses and fair value of the Company&#146;s
available-for-sale equity securities with unrealized losses that are not deemed to be
other-than-temporarily impaired, aggregated by the length of time the securities have been in
a continuous unrealized loss position.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #ffffff"><B>At December 31, 2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #ffffff"><B>Less than 12 months</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #ffffff"><B>Greater than 12 months</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #ffffff"><B>Total</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unrealised</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unrealised</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unrealised</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Fair Value</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Losses)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Fair Value</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Losses)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Fair Value</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Losses)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Available-for-sale
securities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Equity securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,596</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,362</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,596</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,362</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #ffffff"><B>At December 31, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #ffffff"><B>Less than 12 months</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #ffffff"><B>Greater than 12 months</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #ffffff"><B>Total</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unrealised</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unrealised</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unrealised</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Fair Value</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Losses)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Fair Value</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Losses)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Fair Value</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Losses)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Available-for-sale
securities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Equity securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,123</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(115</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,344</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,614</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,467</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,729</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company&#146;s investments in available-for-sale equity securities consist primarily of
investments in common stock of two companies in the semiconductor industry. The fair value of
the investments was based on quoted share prices. The decline in common stock of these
companies was concurrent with an industry-wide inventory correction during late 2004 and
early 2005. The Company considered industry analyst reports on the outlook of the
semiconductor industry and the two companies and evaluated the near-term prospects of their
fair values recovering to their carrying values. Based on this evaluation and the Company&#146;s
ability and intent to hold the investments for a reasonable period of time sufficient for
this forecasted recovery of the fair value, the Company does not consider these investments
to be other-than-temporarily impaired at December&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">No realised gains or losses were recorded for the years ended December&nbsp;31, 2003, 2004 and 2005.
</div>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>5.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Receivables, Net</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Receivables consist of the following:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Trade receivables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">122,986</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">181,079</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Allowance for doubtful accounts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,178</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(991</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Allowance for sales credits and returns</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,537</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(13,901</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Trade receivables, net of allowances</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115,271</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">166,187</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Receivables from related parties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,512</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,044</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other receivables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,365</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,666</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">143,148</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">184,897</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Movement in the allowance for doubtful accounts is as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Beginning</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,460</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,083</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,178</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Utilized in year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,022</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(38</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Charge for the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">351</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,106</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">420</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Reversal of specific allowances due to collection</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(706</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(973</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(607</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ending</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,083</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,178</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">991</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Movement in the allowance for sales credits and returns is as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Beginning</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">10,687</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,556</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,537</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Utilized in year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,026</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,769</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,940</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Charge for the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,895</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,304</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ending</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,556</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,537</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">13,901</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">F-17
</DIV>



<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands (except per share data)</B>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>6.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Inventories</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Inventories consist of the following:</TD>
</TR>

</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->

<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Raw materials</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5,414</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,895</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Work-in-process</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,293</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">121,871</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Consumable supplies and spares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,452</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,474</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">72,159</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">134,240</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>7.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Other current assets</B></TD>
</TR>


<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Under the terms of the Exim Loan agreement, the Company is required to maintain on deposit
with the bank a compensating balance, restricted as to use, equal to the amount of principal,
interest and commitment fees payable at the next repayment date. At December&nbsp;31, 2005,
restricted cash included in other current assets amounted to $2,832.</TD>
</TR>


<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As of December&nbsp;31, 2005, the Company also has a refundable deposit placed with a vendor of $109,581 to secure
wafer capacity.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>8.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Investment in SMP</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The investment in SMP is discussed further in Note 2(b) and consists of the following:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>SMP</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">120,959</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">100,535</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Share of retained post-formation losses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(27,167</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(20,681</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Share of accumulated other comprehensive losses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(27</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dividends received</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(29,460</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">93,765</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">50,384</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In August&nbsp;2005, SMP&#146;s board of directors approved a change to SMP&#146;s fiscal year end from
December&nbsp;31 to September&nbsp;30 so as to coincide with the fiscal year end of Agere. The change in
SMP&#146;s fiscal year end does not affect how the Company accounts for its share of SMP&#146;s net
results.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In October&nbsp;2005, SMP reorganized its paid-up share capital and returned a portion to its
shareholders in the form of cash, the Company&#146;s entitlement being $20,424, in a capital reduction
sanctioned by the High Court of Singapore. During the year ended
December&nbsp;31, 2005, the Company has received $17,300 of this amount from SMP. The capital reduction through the extinguishment
of accumulated losses does not qualify as a quasi-reorganization under US GAAP.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Shown below is summarized financial information for SMP:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">85,597</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">71,101</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">132,258</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55,758</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">82</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(23,078</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(31,311</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">194,859</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">95,574</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">329,535</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">303,570</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">201,345</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,073</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,827</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,875</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,419</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,070</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">449</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">23,784</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">20,706</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,486</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-18
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands (except per share data)</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>9.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Technology Licenses, net</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Weighted average</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>amortization</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>period (years)</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Technology licenses, at cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">159,512</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">168,787</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accumulated amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(37,559</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(62,175</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Technology licenses, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">121,953</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">106,612</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Amortization charged to results of operations amounted to $14,383, $16,263 and $24,616 for
2003, 2004 and 2005, respectively. Estimated amortization for future periods is as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">30,911</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,867</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,338</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,263</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,233</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Thereafter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">106,612</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>10.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Property, plant and equipment, net</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Property, plant and equipment consist of the following:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cost</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Buildings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">192,230</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">269,276</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Mechanical and electrical installations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">426,975</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">612,340</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equipment and machinery</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,818,804</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,893,041</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Office and computer equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">96,058</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">144,834</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Assets under installation and construction</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">937,927</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">140,733</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,471,994</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5,060,224</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Accumulated depreciation and amortization</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,557,479</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,010,529</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Property, plant and equipment, net</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,914,515</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,049,695</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Depreciation was charged to consolidated statements of operations and amounted to $418,195,
$420,217 and $481,874 for the years ended December&nbsp;31, 2003, 2004 and 2005,
respectively. Buildings consist of wafer plants, including administrative offices,
built on land sub-leased to the Company, as discussed in Note 2.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Capitalized interest relating to property, plant and equipment amounted to $5,466, $15,177
and $19,032 in the years ended December&nbsp;31, 2003, 2004 and 2005, respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>At December&nbsp;31, 2005, total cost and accumulated amortization of assets under capital leases
was $45,933 and $2,886 respectively. Amortization of assets under capital leases, included
in depreciation expense, was $2,886 for the year ended December&nbsp;31, 2005.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-19
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands (except per share data)</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>11.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Payables</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Payables relate to the following:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Trade and accrued purchases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">54,952</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">106,299</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payables to related parties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,687</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,102</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fixed asset purchases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">129,147</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,280</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">188,786</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">166,681</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>12.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Other Current Liabilities</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accrued employee related expenses and bonuses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">22,657</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">24,619</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accrued interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,251</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,612</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customer deposits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58,410</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other accrued expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,318</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,857</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,303</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85,947</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">58,529</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">216,445</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company enters into capacity guarantee agreements with certain of its customers under which the customers are
required to maintain non-interest bearing deposits with the Company
to secure access to wafer capacity.
Such deposits are generally for periods exceeding one year and are refundable at the end of the agreed period of such allocated capacity, or in
certain cases, based on the cumulative wafers purchased from the
Company. Such deposits are initially recorded at the net present
value of payments due pursuant to their contractual terms. The
related discount, which is offset by an equal amount of deferred
revenue, is amortized to interest expense using the effective
interest rate method. Deferred revenue is amortized to income over
the term of the deposit using the straight-line method. Deposits are
classified based on maturity, except that the amounts are considered
current if it is probable that the deposits will be refunded within
one year.</TD>
</TR>



<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Included in other current liabilities at December&nbsp;31,
2005 is a prepayment from a customer for future purchases which also
secures access to wafer capacity. This amount will be used to off-set
trade receivables from that customer.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>13.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Income Taxes</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Income tax expense consists of the following:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">14,313</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,090</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">13,831</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred benefit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,642</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,316</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(834</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11,671</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,774</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12,997</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>All but an insignificant portion of pre-tax income (loss)&nbsp;and income tax expense is from
Singapore sources.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company has been granted pioneer status under the Economic Expansion Incentives (Relief
from Income Tax) Act (Chapter&nbsp;86) of Singapore for:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the manufacture of integrated circuits using submicron technology at
Fab 2 for a ten year period beginning July&nbsp;1, 1996;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the manufacture of integrated circuits using submicron technology at
Fab 3 for a ten year period beginning July&nbsp;1, 1999;</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-20
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands (except per share data)</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the wafer fabrication of Application Specific Integrated Circuits
(ASIC)&nbsp;and other advanced semiconductor devices at Fab 6 for a ten
year period beginning September&nbsp;1, 2003 (granted on November&nbsp;8, 2004);
and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the wafer fabrication of integrated circuits at Fab 7 for a fifteen
year period beginning October&nbsp;1, 2005 (granted on December&nbsp;30, 2005).</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Under the Economic Expansion Incentives (Relief from Income Tax) Act (Chapter&nbsp;86) of
Singapore, the Company has also been granted:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>post-pioneer enterprise status for the manufacture of integrated
circuits using submicron technology at Fab 2 for a five year period
beginning July&nbsp;1, 2006;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>development and expansion incentive status for the manufacture of
integrated circuits using submicron technology at Fab 3 for a five
year period beginning July&nbsp;1, 2009; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>development and expansion incentive status for the wafer fabrication
of ASICs and other advanced semiconductor devices at Fab 6 for a five
year period beginning September&nbsp;1, 2013.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>During the period for which pioneer status is effective, subject to compliance with certain
conditions, income from pioneer trade (that is, sale of qualifying integrated circuits) is
exempt from Singapore income tax. During the periods for which post-pioneer status and
development and expansion incentive status are effective, subject to compliance with certain
conditions, income from post-pioneer trade and development and expansion activities are taxed
at a concessionary rate of 10%. Without these exemptions from income tax or the concessionary
tax rate of 10%, the Company would be subject to income tax at the Singapore corporate income
tax rate of 22% for the year ended December&nbsp;31, 2003 and 20% for the years ended December&nbsp;31,
2004 and 2005.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Tax losses accumulated before the pioneer status period cannot be carried forward. Tax losses
accumulated in the pioneer status period may be carried forward and may be offset against
income from the same pioneer trade arising both during the pioneer status and after the
expiration of the pioneer status period, subject to compliance with certain conditions.
Accordingly, loss carryforwards are determined on a fab-by-fab basis. As of December&nbsp;31,
2005, the Company does not have any loss carryforwards.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company was granted development and expansion incentive status for wafer fabrication of
integrated circuits at Fab 1 for a five-year period beginning January&nbsp;1, 2001, subject to
compliance with certain conditions during that period. In February&nbsp;2003, the Company
announced its plan to consolidate the business of Fab 1 into Fab 2, and close Fab 1 during
2004. This closure would result in non-compliance with the conditions of the development and
expansion incentive status, and accordingly at that time the Company accrued additional taxes
payable for the period subsequent to January&nbsp;1, 2001 at the full corporate tax rate. During
2004, the relevant authority agreed to allow the development and expansion incentive status
through December&nbsp;31, 2004, although the conditions would not be met for the original
five-year period. Accordingly, the Company revised its accruals to the concessionary tax rate
of 10% resulting in a reduction in tax expense of $9,784 for the year ended December&nbsp;31,
2004.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Under Singapore tax law, tax depreciation of property, plant and equipment (referred to as
wear and tear allowances) is deductible only to the extent of taxable income before tax
depreciation. Unutilized wear and tear allowances can be carried forward to future tax years.
The Company has unutilized wear and tear allowance carryforwards of approximately $968,000
and $1,583,000 as of December&nbsp;31, 2004 and 2005, respectively. The deferred tax asset for
unutilized wear and tear allowances as of December&nbsp;31, 2005 has been recognized at a 20% tax
rate. The amount at December&nbsp;31, 2005 is higher than the amount at December&nbsp;31, 2004 due to
changes in estimates.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Loss carryforwards as well as unutilized wear and tear allowances are available indefinitely,
subject to 50% or more of the Company&#146;s equity staying with the same shareholders from the
incurrence of the tax loss to its utilization and in the case of wear and tear allowances, an
additional test that the same trade must be carried on.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As of December&nbsp;31, 2005, the Company no longer recognized a deferred tax asset for accrued
yield to maturity interest expense for the Company&#146;s Convertible Notes which is a non-pioneer
item (referred to as deferred interest) as there is no future interest income against which
this expense would be deductible.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-21
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands (except per share data)</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Income that is non-qualifying income under pioneer status, post-pioneer status or the
development and expansion incentive status 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 incentive status period and is referred to as non-pioneer
income. The income tax expense for the years ended December&nbsp;31, 2003, 2004 and 2005
represents primarily income tax payable on non-pioneer income, primarily interest income,
rental income and income from the sale of wafers using technologies that do not benefit from
the preferential tax treatment.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred tax assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unutilized wear and tear allowances</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">55,324</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">316,550</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,386</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,841</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,112</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other accrued expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,570</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,191</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77,121</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">331,853</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Valuation allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(68,205</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(322,413</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8,916</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,440</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred tax liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,316</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(802</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Intangible assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(796</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,000</TD>
    <TD nowrap>)</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,112</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,802</TD>
    <TD nowrap>)</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net deferred tax asset</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,804</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,638</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In assessing the realizability of deferred tax assets, management considers whether it is
more likely than not that some portion or all of the deferred tax assets will not be
realized. The ultimate realization of deferred tax assets is dependent upon the generation
of future taxable income during the periods in which those temporary differences become
deductible. Management considers the scheduled reversal of deferred tax liabilities,
projected future taxable income, and tax planning strategies in making this assessment.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The valuation allowance was $6,285 as of January&nbsp;1, 2003. During the years ended December
31, 2003, 2004 and 2005, the valuation allowance increased (decreased)&nbsp;by $75,718, $(13,798)
and $254,208 respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As of December&nbsp;31, 2004 and 2005, the Company recorded deferred tax assets of $55,324 and
$316,550, respectively, for its unutilized wear and tear allowances. Based upon the level of
historical taxable income specific to Fabs 3, 6 and 7, management believes it is more likely
than not that the Company will not realize the benefits of these deductible differences.
Accordingly, a valuation allowance of $55,324 and $316,550 was recorded as of December&nbsp;31,
2004 and 2005, respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As of December&nbsp;31, 2004 and 2005, the Company recorded deferred tax assets of $8,841 and
$7,112, respectively, for the remaining difference in the tax and book basis of property,
plant and equipment. Based upon the level of historical taxable income specific to Fabs 2 and
3, management believes it is more likely than not that the Company will not realize the
benefits of these deductible differences. Accordingly, a valuation allowance of $143 and
$2,921 was recorded as of December&nbsp;31, 2004 and 2005, respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As of December&nbsp;31, 2004 and 2005, the Company recorded deferred tax assets of $1,352 and
$4,776, respectively, for its industrial building allowance claim against rental income and
asset retirement obligations. Based upon the level of historical taxable income specific to
Fab 2 and non-pioneer income, management believes it is more likely than not that the Company
will realize the benefits of these deductible differences. Accordingly, no valuation
allowance was recorded as of December&nbsp;31, 2004 and 2005.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-22
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

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<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



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<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands (except per share data)</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A reconciliation of the expected tax (benefit)&nbsp;expense computed by applying statutory
rates to pre-tax income (loss)&nbsp;to the actual tax expense is as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax (benefit)&nbsp;expense computed at Singapore
statutory tax rate of 20% (22% in 2003, 20% in 2004 and
2005)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(62,174</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,269</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(29,320</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Permanent non-deductible expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,360</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,582</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,150</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of pioneer status, including losses and allowances
not recognized as deferred tax benefit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,480</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,263</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,561</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of post-pioneer status</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,642</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,263</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non-taxable increase (decrease)&nbsp;in equity method investment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,103</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,512</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,332</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of change in concessionary tax status</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,884</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exempt dividend income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,872</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">All other items, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,250</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,681</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,190</TD>
    <TD nowrap>)</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 1px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 1px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 1px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Actual income tax expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11,671</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,774</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12,997</TD>
    <TD>&nbsp;</TD>
</TR>


<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The pioneer status had the effect of increasing basic and diluted net earnings per share or
(decreasing)&nbsp;basic and diluted net (loss)&nbsp;per share by ($0.02), $0.00 and ($0.01) and
increasing basic and diluted net earnings per ADS or (decreasing)&nbsp;basic and diluted net
(loss)&nbsp;per ADS by ($0.15), $0.02 and ($0.11) for the years ended December&nbsp;31, 2003, 2004 and
2005, respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>14.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Long-term Debt and Obligations under Capital Leases</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Long-term debt consists of:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Singapore dollar loans at fixed rates of 4.0% to 4.25%</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">73,650</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">US dollar loans at floating rates:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">CSP Syndicated Loan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">589,066</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">214,533</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">SMBC/OCBC Term Loan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">300,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Exim Loan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">122,124</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Bank of America Term Loan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2.5% senior convertible notes due 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">575,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">97,155</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">5.75% senior notes due 2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">371,161</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">6.375% senior notes due 2015</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">246,540</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amortizing bonds due 2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,703</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,986</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(324</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,235,730</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,447,892</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less current installments of long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(352,985</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(319,634</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term debt, excluding current installments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">882,745</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,128,258</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Obligations under capital leases:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total minimum lease payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">63,931</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amount representing interest at rates of 6.2% to 7.0%</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(20,336</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Present value of minimum lease payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,595</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less current installments of capital lease obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,819</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Obligations under capital leases, excluding current installments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">40,776</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-23
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands (except per share data)</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><I>Current installments of:</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">352,985</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">319,634</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Capital lease obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,819</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">352,985</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">322,453</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><I>Non-current portion, excluding current installments:</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">882,745</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,128,258</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Capital lease obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,776</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">882,745</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,169,034</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Weighted Average</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Interest Rates</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Singapore dollar loans at fixed rates of 4% to 4.25%</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5.9129</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">US dollar loan at floating rates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">3.2375</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5.1050</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2.5% senior convertible notes due 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5.1440</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5.2500</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">5.75% senior notes due 2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5.7500</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">6.375% senior notes due 2015</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">6.3750</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amortizing Bonds due 2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">6.0000</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Singapore dollar fixed rate loans were from the Singapore Economic Development Board and
consisted of $58,450 due in September&nbsp;2005 and $15,200 due in March&nbsp;2006. The Company repaid
these loans early in full in March&nbsp;2005.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>CSP&#146;s U.S. dollar syndicated floating rate loan arranged by ABN Amro Bank N.V., Singapore
branch, Citibank, N.A., Singapore, Overseas Union Bank Limited (now known as United Overseas
Bank Limited), Sumitomo Mitsui Banking Corporation Ltd, Danske Bank A/S, Industrial and
Commercial Bank of China, Singapore branch and Commerzbank Aktiengesellschaft, Singapore
branch matures in September&nbsp;2006. This facility is for an amount of $820,000 which was fully
drawn down. The loan bears interest at 0.60% to 0.85% above the London Interbank Offering
Rate (&#147;LIBOR&#148;) rates for U.S. dollars deposits quoted by specified banks to the lender
(depending on certain criteria relating to wafer starts and debt/equity ratio). Interest is
payable semi-annually and principal is payable in six semi-annual installments which
commenced in March&nbsp;2004. The Company made partial early repayments of $123,933 and $80,000 in
May and December&nbsp;2005 respectively. 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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The SMBC/OCBC Term Loan is with Sumitomo Mitsui Banking Corporation, Oversea-Chinese Banking
Corporation, ABN AMRO Bank, United Overseas Bank, and Deutsche Bank for a maximum of
$300,000, which was fully drawn down in 2005. The loan bears interest at LIBOR plus 1.75%.
Interest is payable semi-annually and principal is payable in six semi-annual installments
commencing third quarter 2007.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Exim Loan is from J.P. Morgan, guaranteed by the Export-Import Bank of the United States,
for a maximum of $653,000. The loan is divided into two tranches, of which $122,124 has been
drawn down in 2005, and has an availability period of between two to four years. It may only
be used to finance the purchase of Fab 7 equipment from U.S. vendors and is drawn down in
accordance with the equipment purchases per the ramp schedule. The loan bears interest at
LIBOR plus 0.125%. Interest is payable semi-annually and each tranche is payable
semi-annually over five years.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Bank of America Term Loan is for a maximum of $50,000, which was fully drawn down in
2005. The loan bears interest at LIBOR plus 0.80%. Interest is payable semi-annually and
principal is repayable in full at maturity in 2007.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-24
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands (except per share data)</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The senior unsecured convertible notes mature on April&nbsp;2, 2006 (&#147;Convertible Notes&#148;). They
bear a coupon rate of 2.50% per annum and have a yield to maturity of 5.25% per annum. The
Company may redeem all or a portion of the Convertible Notes at any time on or after April&nbsp;2,
2003 at a price to yield of 5.25% per year on the redemption date if the Company&#146;s shares or
ADS&#146;s trade at 125% of the conversion price for a period of 20&nbsp;days in any consecutive 30
trading day period. The Convertible Notes are convertible into the Company&#146;s ordinary shares
or American Depository Shares (&#147;ADS&#148;).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The conversion price per ordinary share, adjusted for the Company&#146;s rights offering in 2002,
is S$4.7980 (equivalent to approximately US$26.7701 per ADS, based on the terms of the
convertible notes for a fixed exchange rate of US$1.00 = S$1.7923 and the ordinary share to
ADS ratio of 10:1).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In August&nbsp;2005, the Company commenced a cash tender offer (&#147;Tender Offer&#148;) for any and all of
its $575,000 original principal amount of the Convertible Notes outstanding. In September
2005, at the time of expiration of the Tender Offer, $477,845 original principal amount of the
Convertible Notes, representing approximately 83.1% of the Convertible Notes, were purchased.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In August&nbsp;2005, the Company issued $375,000 of 5.75% senior notes due 2010 (&#147;Senior Notes due
2010&#148;) and $250,000 of 6.375% senior notes due 2015 (&#147;Senior Notes due 2015&#148;). Both the Senior
Notes due 2010 and the Senior Notes due 2015 are collectively referred to as &#147;Senior Notes&#148;.
The Senior Notes due 2010 were issued at a price of 98.896% of the principal amount and the
Senior Notes due 2015 were issued at a price of 98.573% of the principal amount. Interest on
the Senior Notes due 2010 is payable at the rate of 5.75% per annum and interest on the Senior
Notes due 2015 is payable at the rate of 6.375% per annum, in each case, on February 3 and
August 3 of each year, beginning on February&nbsp;3, 2006. The Senior Notes due 2010 mature on
August&nbsp;3, 2010 and the Senior Notes due 2015 mature on August&nbsp;3, 2015. The Senior Notes
constitute senior, unsecured obligations of the Company.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In August&nbsp;2005, the Company completed its private placement of Units (&#147;Units
Private Placement&#148;). The Units comprise convertible redeemable preference shares of par value
$0.01 each (&#147;Preference Shares&#148;) and amortizing bonds due 2010 (&#147;Amortizing Bonds&#148;), with an
aggregate issue price of $300,000. The initial principal amount assigned to the Amortizing
Bonds was $46,703. Interest on the Amortizing Bonds is payable at the rate of 6.0% per annum
on the outstanding principal amount. The Amortizing Bonds pay semi-annual cash payments of
$5,475 per payment, as a combination of principal and interest, on February&nbsp;17 and August&nbsp;17
of each year, beginning on February&nbsp;17, 2006, and amortize to zero at maturity on August&nbsp;17,
2010. The Amortizing Bonds constitute senior, unsecured obligations of the Company. Refer to
Note 15 for details on the Preference Shares.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Other long-term debt includes the cumulative fair value change of the Convertible Notes due to
changes in interest rates from the date the Company entered into interest rate swap contracts
related to this debt until the date they were terminated. The Company designated these
derivative instruments as fair value hedges and carried the same at fair value. The interest
rate swap contracts were terminated following the completion of the Tender Offer of the
Convertible Notes in September&nbsp;2005. As of December&nbsp;31, 2005, other long-term debt includes
the unamortized portion of the cumulative fair value change during the period the swap
contracts were outstanding of the remaining $97,155 outstanding Convertible Notes.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-25
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands (except per share data)</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Annual maturities of long-term debt as of December&nbsp;31, 2005 are as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payable in year ending December&nbsp;31,</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">319,958</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">120,986</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">133,733</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">134,300</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">459,901</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Thereafter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">286,637</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,455,515</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 1px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>These amounts represent the expected repayments at each of the periods indicated and do not
include the unamortized debt discount relating to the senior notes. As of December&nbsp;31, 2005,
the face amounts of the senior notes due 2010 and the senior notes due 2015 were $371,161 and
$246,540, respectively, as the unamortized debt discount was reported as a direct reduction
to the face amounts of the senior notes.</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company has total unutilized banking facilities of $1,116,608 and $591,763 for short-term
advances, term loans and bankers&#146; guarantees as of December&nbsp;31, 2004 and 2005, respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company&#146;s loans and available credit facilities contain various financial, shareholding
and other restrictive covenants. Under the financial covenants, the Company is required to
maintain certain financial conditions and ratios such as consolidated net worth, EBITDA, total
debt to net worth ratio, and historical debt service coverage ratio. The Company is also
required to ensure that its consolidated net worth is not at any time less than $1,000,000 and
its total debt does not at any time exceed 180% of its total net worth. Under the
shareholding covenants, Temasek is required to own, directly or indirectly, a certain
percentage of the Company&#146;s outstanding shares or is required to be the Company&#146;s single
largest shareholder. In addition, some of the loans and available credit facilities also
impose other restrictive covenants such as restrictions from incurring further indebtedness,
creating security interests over assets, payment of dividends, disposal of assets and mergers
and corporate restructuring.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Future minimum lease payments under capital leases for equipment and machinery as of
December&nbsp;31, 2005 are as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payable in year ending December&nbsp;31,</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5,613</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,613</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,613</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,613</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,613</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Thereafter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,866</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total minimum lease payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>$</TD>
    <TD align="right">63,931</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>15.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Convertible Redeemable Preference Shares</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In August&nbsp;2005, as part of the Units Private Placement, the Company issued 30 Preference
Shares of par value $0.01 each.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The holders of the Preference Shares are not entitled to receive any dividends, regardless of
whether dividends are paid to the holders of the Company&#146;s ordinary shares (&#147;Ordinary
Shares&#148;). Holders of the Preference Shares may convert the Preference Shares into new
Ordinary Shares or, subject to certain limitations, American Depositary Shares (&#147;ADSs&#148;) at a
conversion price of $0.8719 per Ordinary Share at any time after 40&nbsp;days from the original
issuance of the Preference Shares and before the close of business on the 7<SUP style="font-size: 85%; vertical-align: text-top">th</SUP>
business day prior to maturity or early redemption.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Unless previously redeemed, converted or purchased and cancelled, the Company will redeem, out
of funds legally available for such payment, each Preference Share at maturity on August&nbsp;17,
2010 at a redemption price equal to $10,000 per Preference Share.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-26
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands (except per share data)</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Prior to maturity, the Company may redeem the Preference Shares at the early redemption
price:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>at any time, if at least 95% of the Preference Shares originally
issued have been converted, redeemed or purchased and cancelled;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>at any time after 2&nbsp;years after the date of issuance of the Preference
Shares, if the closing sale price of the Ordinary Shares for any 20
trading days in a specified 45 consecutive calendar day period is at
least 125% of the conversion price per Ordinary Share; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>at any time the Company is required to pay additional amounts as a
result of any change in or amendment to the laws or regulations of
Singapore or for certain other events.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If certain events occur before the close of business on the 7<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> business day prior
to maturity or early redemption, holders of the Preference Shares may under certain
circumstances require the Company to redeem all or any of the Preference Shares at the early
redemption price.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the event of early redemption, each Preference Share will be redeemed for cash at the
accreted amount approximating its carrying value, which is the original allocated issue price
accreted to its present value using the effective interest rate method calculation as
follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="7%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="87%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:30px; text-indent:-15px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><U>Elapsed days</U><BR>
1,800</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Allocated value * ($10,000/allocated value)</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Preference Shares rank, with respect to rights upon liquidation, winding up or
dissolution:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>junior to all the Company&#146;s existing and future debt obligations;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>junior to each class of the Company&#146;s shares the terms of which
provide that such class will rank senior to the Preference Shares;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>on a parity with any class of the Company&#146;s shares that has terms
which provide that such class will rank on a parity with the
Preference Shares; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>senior to the Company&#146;s Ordinary Shares (including those represented
by ADSs) and to any class of the Company&#146;s shares that has terms which
provide that such class will rank junior to the Preference Shares.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The initial carrying amounts of the Preference Shares were stated at their fair values as of
the date of issuance, net of the associated issuance costs. The carrying amounts of the
Preference Shares are accreted to their redemption values over the remaining period until the
maturity date on August&nbsp;17, 2010 using the effective interest method. Such accretion adjusts
net income (loss)&nbsp;available to common shareholders. Accretion charge for the year ended
December&nbsp;31, 2005 was $3,196.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>16.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Shareholders&#146; Equity</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Ordinary Share Capital</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Ordinary share capital consists of the following:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Issued and paid-up ordinary share capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">384,370</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">385,020</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital reduction</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,161</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,161</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>$</TD>
    <TD align="right">445,531</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>$</TD>
    <TD align="right">446,181</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-27
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands (except per share data)</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In November&nbsp;1992, the Company reorganized its ordinary paid-up share capital by the
extinguishment of accumulated losses of $61,161 against the ordinary 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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In August&nbsp;2004, the Company entered into a bilateral option transaction with Goldman Sachs
International as counter-party. Under the transaction, the Company has a choice of physical
or cash settlement. The counter-party may purchase 214,800 of the Company&#146;s ordinary shares
at $0.93 per share (approximately S$1.60 per share, based on an exchange rate of $1.00 =
S$1.71) and the Company will receive approximately $200,000. The number of ordinary shares
under the option transaction is equal to the number of shares that were originally planned
for issuance under the Convertible Notes. The option transaction, which is contractually
separate from the Convertible Notes, is exercisable by the counter-party from January&nbsp;2, 2005
and will expire on April&nbsp;2, 2006, matching the maturity date of
the Convertible Notes. As of December&nbsp;31, 2005, Goldman
Sachs International did not exercise its rights under the option transaction. The
option transaction also has a feature that allows the Company to elect for early termination
if the trading price of the Company&#146;s ordinary shares listed and quoted on the Singapore
Exchange rises and remains above $1.17 for a defined period of time. In such an event, the
Company may elect to settle in cash or physically by delivering its
ordinary shares. The trading price of the Company&#146;s ordinary
shares did not remain above $1.17 for the defined period of time
during the year ended December 31, 2005.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Additional Paid-in Capital</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Additional paid-in capital as of December&nbsp;31, 2004 and 2005 represents principally the excess
of proceeds received from issue of ordinary share capital (net of the costs of issue) over
the par value of ordinary shares issued, which under Singapore law must be credited to a
share premium account. The share premium may only be applied in paying up unissued ordinary shares to be issued to common 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 $2,207,783 and $2,209,520 as of December
31, 2004 and 2005, respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Accumulated Deficit</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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. Some of the Company&#146;s loan agreements
restrict the ability of the Company to pay dividends without prior approval from the lender.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Under the one-tier system with effect from January&nbsp;1, 2003, tax payable by the Company on its
non-pioneer chargeable income constitutes 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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>During the transitional period, the Company has up to December&nbsp;31, 2007 to utilize any
available balance under the old imputation system to pay a franked dividend to its
shareholders. The Company has approximately $54,000 of available balances under the old
imputation system both as of December&nbsp;31, 2004 and 2005.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Accumulated deficit includes $27,167 and $20,681 of post-formation losses of SMP as of
December&nbsp;31, 2004 and 2005, respectively.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-28
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands (except per share data)</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Accumulated Other Comprehensive Loss</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Accumulated other comprehensive loss consists of the following:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cumulative foreign currency translation loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">54,380</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">52,659</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net unrealised losses on available-for-sale securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,339</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,729</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net unrealized cash flow hedging activity losses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,634</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,036</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">58,353</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">57,424</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The foreign currency translation loss is not adjusted for income taxes as it arose from a
change in functional currency in prior years which is not tax deductible. The net unrealized cash flow hedging activity losses are not adjusted for income taxes because such
losses are expected to be realized during the pioneer status. No income tax benefit is
recognized for unrealized losses on available for sale securities.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>17.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Share Options and Incentive Plans</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(a)&nbsp;1999 Option Plan</I></B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Effective March&nbsp;1999, the Company adopted the Chartered Semiconductor Manufacturing Ltd Share
Option Plan 1999 (the &#147;1999 Option Plan&#148;) which provided for a maximum of 107,160 shares
(subject to adjustment under the plan) to be reserved for option grants. This amount was
increased to 197,160 shares in May&nbsp;2002. As a result of the Company&#146;s rights offering in
October&nbsp;2002, the shares available for future grants were increased by 30,488 shares. The
total shares provided under the 1999 Option Plan is hence 227,648 shares. The remaining shares available for future grants are 93,145 and 90,521 as of December&nbsp;31, 2004 and 2005,
respectively. Options granted under the plan may include non-statutory options as well as
incentive stock options intended to qualify under Section&nbsp;422 of the United States Internal
Revenue Code.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The plan is administered by a committee appointed by the Directors. Employees, outside
directors and consultants are eligible for the grant of options subject to certain exceptions
as provided in the 1999 Option Plan.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The exercise price of an incentive stock option is generally 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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As a result of the Company&#146;s rights offering which was completed in October&nbsp;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 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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Option periods do not exceed 10&nbsp;years from the date of grant. Upon leaving the employment of
the Company, outstanding options remain exercisable for a specified period.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-29
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands (except per share data)</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Information on options granted is as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Weighted</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Average</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>Options</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Price</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Outstanding at January&nbsp;1, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">99,693</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3.49</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,528</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.55</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expired</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.88</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(461</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.52</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Lapsed</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(24,533</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3.52</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Outstanding at December&nbsp;31, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104,223</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.67</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,905</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.93</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expired</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(919</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.65</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,074</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.46</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Lapsed</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,481</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.89</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Outstanding at December&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112,654</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.36</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,542</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.69</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expired</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,695</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6.90</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,798</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.54</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Lapsed</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,223</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.41</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Outstanding at December&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">113,480</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.04</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercisable at end of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65,267</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.88</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Weighted average fair values of options granted in 2003, 2004 and 2005 were $0.40, $0.63 and
$0.47 respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The following table summarizes information about fixed stock options outstanding at December
31, 2005.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10"><B>Options Outstanding</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Options Exercisable</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Weighted</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>average</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Weighted</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Weighted</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>


    <TD nowrap align="center" colspan="2"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>remaining</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>average</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>average</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>outstanding</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>contractual</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>exercisable</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>exercise</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Range of exercise prices</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>at 12/31/2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>life</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>price</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>12/31/2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>price</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">$0.39 to $1.00</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,397</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">7.8 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,020</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.67</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">$1.06 to $1.95</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,726</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">5.7 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.41</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,519</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.43</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">$2.14 to $2.44</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,586</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">4.8 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.33</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,957</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.32</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">$5.81</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">4.8 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5.81</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5.81</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">$8.31</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,467</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">4.3 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8.31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,467</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8.31</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">113,480</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65,267</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The options vest over one to five years and expire on dates ranging from March&nbsp;2006 to
November&nbsp;2015. The 1999 Option Plan is accounted for in accordance with fixed-plan
accounting under APB 25 and related interpretations. Total compensation expense recognized
for 2003, 2004 and 2005 totalled $4, $3 and $1 respectively.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-30
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands (except per share data)</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The fair values of the option grants are estimated using the Black-Scholes option
pricing model with the following assumptions used for grants in 2003, 2004 and 2005.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Risk free interest rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right">2.710% to</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right">2.97% to</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right">4.06% to</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right">4.450%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right">4.14%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right">4.64%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected volatility</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right">66.61% to</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right">61.94% to</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right">58.75% to</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right">70.16%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right">65.04%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right">61.04%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected lives</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right">5 to</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right">5 to</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right">5 to</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right">9 years</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right">8 years</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right">9 years</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dividend yield</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right">NA</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right">NA</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right">NA</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Options of 1,284, 595 and 406 shares of the Company were granted to employees of SMP in 2003,
2004 and 2005, respectively. SMP bears the stock-based compensation charge in respect of
these options.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(b)&nbsp;2001 Share Purchase Plans</I></B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As approved by the shareholders in May&nbsp;2001, the Company adopted the Chartered Semiconductor
Manufacturing Ltd Employee Share Purchase Plan 2001 (the &#147;Chartered Purchase Plan&#148;) and the
Share Purchase Plan 2001 for Employees of Silicon Manufacturing Partners Pte Ltd (the &#147;SMP
Purchase Plan&#148;), collectively &#147;the 2001 Plans&#148;, which provided 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&#146;s rights offering which was completed in
October&nbsp;2002.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The 2001 Plans permitted eligible employees to purchase shares through payroll deductions of
between 1&nbsp;percent to 10&nbsp;percent of an employee&#146;s compensation, including salaries, wages,
bonuses, incentive compensations, commissions, overtime pay and shift premiums. The offering
periods consisted 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 was 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 would in no event be less than the par value of each share. The 2001 Plans were
intended to qualify under Section&nbsp;423 of the United States Tax Code.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The 2001 Plans were administered by a committee appointed by the Directors. Approximately
2,700 shares were purchased at $0.56 (S$0.94) in 2004 under the 2001 Plans. As of February
2004, all shares available under the 2001 Plans had been issued and allotted and as a result,
the 2001 Plans were terminated.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(c)&nbsp;2004 Share Purchase Plans</I></B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As approved by the shareholders in April&nbsp;2004, the Company has adopted the Chartered
Semiconductor Manufacturing Ltd Employee Purchase Plan 2004 (&#147;Chartered ESPP 2004&#148;) and a new
share purchase plan for the employees of Silicon Manufacturing Partners Pte Ltd (&#147;SMP ESPP
2004&#148;), collectively &#147;ESPP 2004 Plans&#148;. The ESPP 2004 Plans provide for the issuance of a
maximum of 30,000 shares (subject to adjustment under the Plans).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The terms of the ESPP 2004 Plans and the 2001 Plans are similar except for the following
significant differences:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the ESPP 2004 Plans give the committee appointed by the Directors to administer the
plans (&#147;Committee&#148;) the right to stipulate that the purchase price for each Ordinary
Share purchased at the close of an offering period be determined by an alternative
method, which is to be prescribed by the Committee, if the Committee determines that the
existing method of determining the purchase price would cause the Company to incur any
stock-based compensation charge; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the ESPP 2004 Plans impose a limit of 3,000 Ordinary Shares per calendar year
(and a limit of 1,500
Ordinary Shares per offering period) on the number of Ordinary Shares available for
purchase by participants in the ESPP 2004 Plans. The ESPP 2004 Plans continue to
provide for two offering periods in a calendar year commencing on each March 1 and
September 1.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The 2004 Plans are administered by a committee appointed by the Directors. No shares were
issued under the 2004 Plans during the year ended 2004. 2,400 shares were issued at price
from $0.56 to $0.63 (S$0.92 to S$1.06) during the year ended 2005.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-31
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands (except per share data)</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>18.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Commitments and Contingencies</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(a)&nbsp;Commitments</I></B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company has the following capital commitments:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Contracts for capital expenditure</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">312,883</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">205,689</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Minimum future rental payments on non-cancellable operating leases, excluding amounts payable
to related parties disclosed in Note 2, as at December&nbsp;31, 2005, are as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payable in year ending December&nbsp;31,</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,239</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,495</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">624</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">278</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">201</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,837</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Rental expense, excluding amounts payable to related parties disclosed in Note 2, for the
years ended December&nbsp;31, 2003, 2004 and 2005 was $5,031, $5,473 and $5,660 respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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&#146;s patents. Under the terms of
the patent license agreement, the Company may provide wafer capacity in lieu of payment for
royalties. Such royalties under the patent license agreement are waived until such time as
the interest of the technology partner in SMP falls below 49%. In exchange the Company has
waived capacity shortfall obligations from the technology partner. The patent license
agreement continues for as long as the joint venture agreement between the parties remains.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company has entered into manufacturing agreements with several customers whereby the
Company has committed to make available production capacity to customers over the term of the
agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As discussed in Note 2, pursuant to the assured supply and demand agreement that the Company
and Agere signed with SMP, each partner is required to purchase a specified percentage of
SMP&#146;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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company has entered into agreements to purchase technology licenses, jointly perform
research and development, and swap capacity commitments. The future payment obligations under
these agreements at December&nbsp;31, 2004 and 2005 are $266,000 and $200,000 respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(b)&nbsp;Contingencies</I></B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company may from time to time be a party to claims that arise in the normal course of
business. These claims include allegations of infringement of intellectual property rights
of others as well as other claims of liability. In addition, the Company, on a case-by-case
basis, includes intellectual property indemnification provisions in the terms of sale and
technology licenses with third parties. The Company is also 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 consolidated statements of
operations.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-32
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands (except per share data)</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>19.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Derivative Instruments</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company has the following notional amounts of derivative instruments:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Forward foreign exchange contracts to hedge:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">- Singapore dollar transactions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">47,842</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11,976</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">- Plant and equipment purchases (mainly Japanese yen and
Euro)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">95,970</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,126</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cross currency swap</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,593</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Convertible notes interest rate swap</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">575,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest rate cap</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">183,333</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">864,405</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">226,435</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To protect against volatility of future cash flows caused by changes in exchange rates, the
Company may use currency forward contracts and currency swaps on anticipated transactions such
as operating costs and expenses and capital purchases. To manage interest rate risk, the
Company may enter into interest rate swap or cap agreements to modify the interest
characteristics of its outstanding debts.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Most of the Company&#146;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 payments. 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).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company uses derivative instruments to manage identified foreign currency risks resulting
from its Singapore dollar denominated debt and 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&#146;s hedges is negligible. Amounts included in other comprehensive income (loss)
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 (loss)&nbsp;related to hedges of
foreign currency purchase commitments are reclassified into earnings (foreign exchange gain
(loss)) when the asset related to the purchase commitment is depreciated.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In August&nbsp;2004, the Company entered into two interest rate cap contracts in respect of the
floating rate obligations associated with $100,000 of the CSP Syndicated Loan, with the
effect of placing an upper limit on the cash flow and earnings exposure due to market
interest rate changes. In March&nbsp;2005, the Company entered into two additional interest rate
cap contracts related to the floating rate obligations associated with $200,000 of the above
mentioned U.S dollar loan. Amounts included in other comprehensive income (loss)&nbsp;related to
hedges of the floating rate US dollar loan represent the intrinsic value of the interest rate
cap and are reclassified into earnings (interest expense) upon settlement.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-33
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands (except per share data)</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>During 2001, the Company entered into an interest rate swap contract to hedge fixed-rate
interest obligations associated with $200,000 of the Convertible Notes issued in April&nbsp;2001,
with the effect of swapping the fixed-rate coupon interest obligations to floating-rate
obligations based on LIBOR rates. The Company has designated this interest rate swap
contract as a fair-value hedge. In January&nbsp;2003, the Company entered into an additional swap
to incorporate hedging of the accreting portion of the Convertible Notes which was not
included in the original swap, thereby increasing the hedge effectiveness. In August&nbsp;2003,
the Company entered into an interest rate swap contract in respect of the fixed-rate coupon
interest obligations associated with the remaining $375,000 of the Convertible Notes issued
in April&nbsp;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. The swap incorporated hedging of the accreting portion
of the Convertible Notes. For the fair-value hedge transactions, changes in fair value of
the derivative and changes in the fair value of the item being hedged are recorded in
earnings as interest expense. Net realized gains (losses)&nbsp;arising from ineffectiveness of
fair value hedges were $1,516 and ($1,771) and ($5,246) in the years ended December&nbsp;31, 2003,
2004 and 2005, respectively. The interest rate swaps were terminated following the completion
of the tender offer of the Convertible Notes in September&nbsp;2005.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The estimated net amount of existing losses from cash flow hedges expected to be reclassified
into earnings within the next year is $285 and $543 as of December&nbsp;31, 2004 and 2005,
respectively. Net realized (gains) loss recognized from cash flow
hedges was ($2,942) and $469 for the
years ended December&nbsp;31, 2004 and 2005, respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The components of other comprehensive income (loss)&nbsp;related to derivative and hedging
activities consist of the following:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Beginning</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(4,235</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,634</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Reclassification of cash flow hedging activity
(gains)&nbsp;losses into earnings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,942</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">469</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Share of cash flow hedging activity gains of SMP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,945</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net unrealised gain (losses)&nbsp;on change in cash flow
hedging activity derivative fair values</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">598</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ending</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,634</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,036</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-34
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands (except per share data)</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>20.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Fair Values of Financial Instruments</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="14"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Carrying</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Estimated</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Carrying</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Estimated fair</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>fair value</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>value</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Asset/(Liability)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>$</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,235,730</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,255,457</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,447,892</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,466,425</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Forward foreign exchange contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,141</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,141</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Forward foreign exchange contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(344</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(344</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cross currency swap</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest rate swap</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(61,299</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(61,299</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest rate cap</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">456</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">456</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,394</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,394</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Cash and cash equivalents, related party receivables and
payables, accounts receivables and accounts payables.</I> The carrying amounts approximate fair
value in view of the short term nature of these balances.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>

<TD><I>Marketable investments.</I> Marketable investments are recorded at
fair values (see Note&nbsp;4). The fair value of term deposits is estimated by
obtaining quotes from brokers. The fair value of equity securities is based on market
prices quoted on the last business day of the fiscal year.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Long-term debt.</I> 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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Forward foreign exchange contracts. </I>The fair value is estimated by reference to market
quotations for forward contracts with similar terms, adjusted where necessary for maturity
differences.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Cross currency swap. </I>The fair value is estimated by obtaining quotes from brokers.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Interest rate swap. </I>The fair value is estimated by obtaining quotes from brokers.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Interest rate cap. </I>The fair value is estimated by obtaining quotes from brokers.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Limitations. </I>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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>21.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Operating Segment, Geographic and Major Customer Information</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Operating segments, as defined under SFAS No.&nbsp;131 &#147;Disclosure About Segments of an Enterprise
and Related Information&#148;, are components of an enterprise: (1)&nbsp;that engage in business
activities from which they may earn revenue and incur expenses, (2)&nbsp;has discrete financial
information, and (3)&nbsp;whose operating results are regularly reviewed by the chief operating
decision maker in deciding how to allocate resources and in assessing performance. Management
has determined that it does not have any operating segments because the chief operation
decision maker, which the Company has identified to be the Chief Executive Officer, does not regularly review financial operating results on a disaggregated basis for purposes of assessing performance and allocating resources. All of the Company&#146;s products are manufactured in Singapore.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-35
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands (except per share data)</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The following table presents a summary of revenues by country of domicile of customers
and long-lived assets by geographic region. The Company geographically categorizes a sale
based on the country in which the customer is headquartered.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10"><B>Years ended December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Revenues</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">USA</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">350,946</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">618,743</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">743,431</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Taiwan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92,245</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">161,420</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112,089</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">

    <TD><DIV style="margin-left:15px; text-indent:-15px">Japan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,799</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,258</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,496</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Singapore</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,862</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,392</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,995</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">81,059</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115,318</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">134,723</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">551,911</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">932,131</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,032,734</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Property, Plant and Equipment, net</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Singapore</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,913,945</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,048,913</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">570</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">782</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,914,515</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,049,695</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10"><B>Years ended December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Information by Major Customer:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customer A</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">15.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">20.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">22.3</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customer B</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customer C</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customer D</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV style="margin-top: 6pt">&nbsp;</DIV>


<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>less than 10% of net revenue for the year</TD>
</TR>

</TABLE>



<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>22.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Other Operating Expenses (Income)</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Other operating expenses (income)&nbsp;consist of:</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A gain of $27,531 in 2003 associated with the cancellation of an employee bonus award plan.
As a result of the cancellation, compensation accrued for past services under the bonus award
plan of $27,531 was eliminated by decreasing compensation expense in the period of
cancellation.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>An impairment charge of $8,986 in 2003 on certain machinery and equipment which were
classified as held for sale at December&nbsp;31, 2003. The impairment charge resulted from the
decision to rationalize capacity across the Company. The machinery and equipment were
expected to be sold on the open market within twelve months of classification as held for
sale. These assets were written down to the lower of their fair value, less costs to sell or
their net book value. At December&nbsp;31, 2004 some of this machinery and equipment remained
unsold and were reclassified to held for use. This machinery and equipment was measured
individually at the lower of its (a)&nbsp;carrying amount before being classified as held for
sale, adjusted for any depreciation expense that would have been recognized had the asset
been continuously classified as held for use, or (b)&nbsp;fair value at date of reclassification.
A write-down of $979 was recorded on this machinery and equipment
during 2004 and it was subsequently sold in 2005.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A gain of $15,257 in 2004 associated with the resolution of a goods and services tax matter
amounting to $4,900 and a gain of $10,357 resulting from an equipment disposition with CSMC
Technologies Corporation.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>An impairment charge of $1,705 in 2004 resulting from the migration to an enhanced
manufacturing system.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-36
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands (except per share data)</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A restructuring charge of $12,421, $4,558 and $Nil in December&nbsp;31, 2003, 2004 and 2005
respectively, relating to the closing of the Company&#146;s Fab 1, in accordance with SFAS No.
146, &#147;Accounting for Costs Associated with Exit or Disposal Activities&#148;. In February&nbsp;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 that business into Fab 2. The production in Fab 1 ceased at the end of March
2004. A summary of estimated and actual costs incurred is shown below. These amounts do not
include gain on disposition of fixed assets. Plant closure, customer assistance and related
expenses mainly relate to product qualification, prototyping, reticles, unhook and
decommissioning of equipment and other activities to be carried out for consolidating the Fab
1 business into Fab 2.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="66%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Cumulative</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>expense</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Total estimated costs</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>to date</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Employee termination benefits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,673</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Plant closure, customer assistance and related expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">9,000 to 12,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,306</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 1px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 1px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">17,000 to 20,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">16,979</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="14"><B>Year Ended December 31, 2004</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Beginning</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Ending</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>liability</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Current year</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>liability</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>balances</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>additions</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>paid</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>balances</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Employee termination benefits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,627</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,046</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,673</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Plant closure, customer
assistance and related
expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,339</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,512</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,851</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8,966</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,558</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">13,524</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>An impairment charge of $3,938 recorded in 2005 on certain
plant and equipments which were initially classified as held for
sale during the period ended June&nbsp;30, 2004. These assets were expected to be sold on the open market within
twelve months of classification as held for sale. However, during this period, the market
conditions that existed at June&nbsp;30, 2004 deteriorated and as a result, these assets
remained unsold. During that period, the Company actively solicited but did not receive any
offers it considered reasonable to purchase the assets. The assets were actively marketed at a price that
management considered reasonable given the change in market conditions, and the criteria under SFAS No.&nbsp;144,
&#147;Accounting for the Impairment or Disposal of Long-Lived
Assets&#148; were otherwise met. Accordingly,
as the assets remained unsold at the end of the initial twelve month period, the assets
continued to be classified as held for sale. These assets were
written down to $3,878 at December&nbsp;31, 2005, being their fair
value less costs to sell.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>23.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Other Income, net</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In 2004, other income, net included grant income of $29,476 and the
recognition of a gain of $14,330 from the sale of technology to CSMC
Technologies Corporation.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In 2005, other income, net included costs of $6,995 related to the termination
of hedging transactions and other costs as a result of the Tender
Offer for and repurchase of the Convertible
Notes.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>24.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Cumulative Effect Adjustment</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Effective January&nbsp;1, 2003, the Company adopted the provisions of SFAS No.&nbsp;143, &#147;Accounting for
Asset Retirement Obligations&#148;, which addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and associated asset
retirement costs. Accordingly, the Company recorded a liability of $13,223 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 original condition. The associated cost
was capitalized as an increase in &#147;property, plant and equipment&#148; of the same amount and will
be depreciated over the remaining useful lives of the facilities. The adoption of SFAS No.
143 as of January&nbsp;1, 2003, resulted in a cumulative effect loss of $6,421, after a reduction
in minority interest of $475. The cumulative effect loss represents the depreciation and
accretion expense that would have been recorded previously if SFAS No.&nbsp;143 had been in effect
in prior years. The proforma effect of retroactive application of SFAS No.&nbsp;143 in 2002 would
not have had a material impact on the net loss, net loss per share and net loss per ADS, as
reported.</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-37
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 12pt; margin-top: 18pt"><B>SILICON MANUFACTURING PARTNERS PTE LTD</B>
</DIV>


<DIV align="center" style="font-size: 12pt; margin-top: 18pt">Financial
Statements<BR>For the Years Ended December&nbsp;31, 2003, 2004 and 2005
</DIV>



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="left">
<!-- TOC -->
</DIV>

<DIV align="left">
<A name="tocpage"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SILICON MANUFACTURING PARTNERS PTE LTD</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>FINANCIAL STATEMENTS INDEX</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Page Number</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#307">Report of Independent Registered Public Accounting Firm</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-38</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#308">Balance Sheets</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-39</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#309">Income
Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-40</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#310">Statements of Comprehensive Income (Loss)</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-41</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#311">Statements of Shareholders&#146; Equity</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-42</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#312">Statements of Cash Flows</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-43</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#313">Notes to the Financial Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-44</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="left">
<!-- /TOC -->
</DIV>
<DIV align="left">
<A name="307"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Members of<BR>
Silicon Manufacturing Partners Pte Ltd:

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have audited the accompanying balance sheet of Silicon Manufacturing Partners Pte Ltd as of
December&nbsp;31, 2004, and the related statements of income, comprehensive income, shareholders&#146;
equity and cash flows for the year then ended. These financial statements are the responsibility
of the Company&#146;s management. Our responsibility is to express an opinion on these financial
statements based on our audit.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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&nbsp;31, 2004,
and the results of its operations and its cash flows for the year then ended, in conformity with
U.S. generally accepted accounting principles.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have not audited or reviewed the accompanying 2003 and 2005 financial statements and,
accordingly, do not express an opinion or any other form of assurance on them.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">KPMG

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Singapore<BR>
February&nbsp;4, 2005
</DIV>


<P align="center" style="font-size: 10pt">F-38
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SILICON MANUFACTURING PARTNERS PTE LTD</B>
</DIV>

<DIV align="left">
<A name="308"></A>
</DIV>
<DIV align="center" style="font-size: 10pt"><B>BALANCE SHEETS &#151; in US Dollars<BR>
In thousands (except per share data)</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December&nbsp;31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>ASSETS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">37,427</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">20,788</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Receivables, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,615</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,447</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Receivables from related parties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,328</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,633</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Inventories</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,913</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,003</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Prepaid expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD align="right" style="border-bottom: 1px solid #000000">2,314</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD align="right" style="border-bottom: 1px solid #000000">2,230</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85,597</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71,101</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Property, plant and equipment, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">132,258</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55,758</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other non-current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD align="right" style="border-bottom: 1px solid #000000">82</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD align="right" style="border-bottom: 1px solid #000000">34</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">217,937</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">126,893</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>LIABILITIES AND SHAREHOLDERS&#146; EQUITY</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,630</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">10,258</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payables to related parties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,356</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,691</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income taxes payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,548</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">272</TD>
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,544</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,090</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,078</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,311</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>



<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other non-current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,078</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,319</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Share capital: ordinary shares of S$1.00 par value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Authorized: 1,000,000 shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Issued and
outstanding: 425,000 shares in 2004 and 323,965 shares in 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">252,389</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">192,389</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accumulated deficit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(57,475</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(96,797</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accumulated other comprehensive loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(55</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(18</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">194,859</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">95,574</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Commitments and contingencies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total liabilities and shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">217,937</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">126,893</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">See accompanying notes to financial statements
</DIV>


<P align="center" style="font-size: 10pt">F-39
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SILICON MANUFACTURING PARTNERS PTE LTD</B>
</DIV>

<DIV align="left">
<A name="309"></A>
</DIV>
<DIV align="center" style="font-size: 10pt"><B>INCOME STATEMENTS &#151; in US Dollars<BR>
In thousands</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Year ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Year ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Year ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">329,535</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">303,570</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">201,345</TD>
    <TD nowrap></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(286,462</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(268,743</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(196,470</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,073</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,827</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">4,875</TD>
    <TD nowrap>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">OPERATING EXPENSES</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,054</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,757</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,426</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other operating income, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,400</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">654</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,757</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,426</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,419</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,070</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">449</TD>
    <TD nowrap>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income (loss), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,767</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income (expense), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(20,626</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,735</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,386</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign exchange gain (loss), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,257</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">203</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,059</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,771</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">1,838</TD>
    <TD nowrap>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(275</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(65</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(352</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">23,784</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">20,706</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">1,486</TD>
    <TD nowrap>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">See accompanying notes to financial statements
</DIV>


<P align="center" style="font-size: 10pt">F-40
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SILICON MANUFACTURING PARTNERS PTE LTD</B>
</DIV>

<DIV align="left">
<A name="310"></A>
</DIV>
<DIV align="center" style="font-size: 10pt"><B>STATEMENTS OF COMPREHENSIVE INCOME (LOSS) &#151; in US Dollars<BR>
In thousands</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Year ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Year ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Year ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">23,784</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">20,706</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">1,486</TD>
    <TD nowrap>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net unrealized gains on change in
cash flow hedging activity fair
values</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,812</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Reclassification of cash flow hedging
activity losses into earnings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,815</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,050</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">34,599</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">28,756</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">1,523</TD>
    <TD nowrap>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">See accompanying notes to financial statements
</DIV>


<P align="center" style="font-size: 10pt">F-41
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SILICON MANUFACTURING PARTNERS PTE LTD</B>
</DIV>

<DIV align="left">
<A name="311"></A>
</DIV>
<DIV align="center" style="font-size: 10pt"><B>STATEMENTS OF SHAREHOLDERS&#146; EQUITY &#151; in US Dollars<BR>
In thousands</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Accumulated</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Other</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Total Share</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Accumulated</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Compre-</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>holders&#146;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Ordinary Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Deficit</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>hensive Loss</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Equity</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>No.</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>$</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Year ended December&nbsp;31,
2003 (Unaudited)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at January&nbsp;1, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">425,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">252,389</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,543</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(18,920</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">222,926</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,784</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,784</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,815</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,815</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">First interim dividend
declared of $0.0011 per &#147;B&#148;
ordinary share less tax at
22%</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(234</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(234</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Second interim dividend
declared of $0.2515 per &#147;B&#148;
ordinary share, tax exempt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(54,508</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(54,508</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at December&nbsp;31, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">425,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">252,389</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(41,501</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,105</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">202,783</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Year ended December&nbsp;31, 2004</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at January&nbsp;1, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">425,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">252,389</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(41,501</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,105</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">202,783</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,706</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,706</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,050</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,050</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Third interim dividend paid
of $0.0308 per &#147;B&#148; ordinary
share, tax exempt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,680</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,680</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fourth interim dividend
paid of $0.1384 per &#147;B&#148;
ordinary share, tax exempt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(30,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(30,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at December&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">425,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">252,389</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(57,475</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(55</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">194,859</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Year
ended December&nbsp;31, 2005
(Unaudited)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at January&nbsp;1, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">425,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">252,389</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(57,475</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(55</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">194,859</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">1,486</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">1,486</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37</TD>
    <TD>&nbsp;</TD>

</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital
reduction</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">(101,035</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">(60,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">(60,000</TD>
    <TD nowrap>)</TD>

</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fourth interim dividend paid
of $0.0524 per &#147;B&#148;
ordinary share, tax
exempt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,348</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,348</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fourth interim dividend paid
of $0.0553 per &#147;A&#148;
ordinary share, tax
exempt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,523</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,523</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fifth interim dividend paid
of $0.0806 per &#147;A&#148;
ordinary share, tax
exempt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(16,786</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(16,786</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Sixth interim dividend paid
of $0.0055 per &#147;A&#148;
ordinary share, tax
exempt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,151</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,151</TD>
    <TD nowrap>)</TD>
</TR>


<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at
December&nbsp;31,
2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">323,965</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">192,389</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(96,797</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(18</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">95,574</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">See accompanying notes to financial statements
</DIV>


<P align="center" style="font-size: 10pt">F-42
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SILICON MANUFACTURING PARTNERS PTE LTD</B>
</DIV>

<DIV align="left">
<A name="312"></A>
</DIV>
<DIV align="center" style="font-size: 10pt"><B>STATEMENTS OF CASH FLOWS &#151; in US Dollars<BR>
In thousands</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Year ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Year ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Year ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December&nbsp;31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Operating Activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">23,784</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">20,706</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">1,486</TD>
    <TD nowrap>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Adjustments
to reconcile net income to net
cash provided by operating activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Depreciation of property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">160,015</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">137,415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,105</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Asset impairment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">178</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Gain on disposal of property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amortisation of deferred finance expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,680</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,597</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,773</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">183</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Change in assets and liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Receivables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,926</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,675</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,849</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Receivables and payables with related parties, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,776</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,757</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,470</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Inventories</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(14,011</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,214</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,910</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Prepaid expenses and other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(182</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">111</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">85</TD>
    <TD nowrap>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Payables and other current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">381</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,784</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,380</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income taxes payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">216</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">165</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,276</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">155,090</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">170,161</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">82,560</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Investing Activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from sale of property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,350</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payments for property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(14,159</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(19,797</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,902</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital
reduction</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD nowrap></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(51,500</TD>
    <TD nowrap>)</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash used in investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,809</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(19,743</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(58,391</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Financing Activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Debt repayments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(107,143</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(171,428</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dividends paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(20,234</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(71,188</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(40,808</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash used in financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(127,377</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(242,616</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(40,808</TD>
    <TD nowrap>)</TD>
</TR>
<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net increase (decrease)&nbsp;in cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,904</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(92,198</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">(16,639</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents at the beginning of the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112,721</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">129,625</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,427</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents at the end of the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">129,625</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">37,427</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">20,788</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Supplemental Cash Flow Information</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest paid (net of amounts capitalized)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,357</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,764</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income taxes paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,579</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">See accompanying notes to financial statements
</DIV>



<P align="center" style="font-size: 10pt">F-43
</DIV>


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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SILICON MANUFACTURING PARTNERS PTE LTD</B>
</DIV>

<DIV align="left">
<A name="313"></A>
</DIV>
<DIV align="center" style="font-size: 10pt"><B>NOTES TO THE FINANCIAL STATEMENTS &#151; in US Dollars</B></DIV>


<DIV align="center" style="font-size: 10pt"><B>In thousands</B></DIV>



<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 14pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>1</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Background and Summary of Significant Accounting Policies</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(a)&nbsp;Business and Organization</I></B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Silicon Manufacturing Partners Pte Ltd (the &#147;Company&#148;) is incorporated and domiciled in the
Republic of Singapore and has its registered office at 60 Woodlands Industrial Park D Street 2,
Singapore 738406.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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 Company is an independent foundry that fabricates
integrated circuits on silicon wafers for customers in the semiconductor industry.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The immediate and ultimate holding companies are Agere Systems Singapore Pte Ltd (&#147;Agere&#148;) and
Agere Systems Inc., which are incorporated in the Republic of Singapore and the United States of
America, respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In August&nbsp;2005, the Company&#146;s board of directors approved a change to the Company&#146;s fiscal year end
from December&nbsp;31 to September&nbsp;30 so as to coincide with the
fiscal year end of Agere as required by Singapore law. Under requirements of
<FONT style="white-space: nowrap;">S-X&nbsp;Rule&nbsp;3-09</FONT>, insofar as practicable, the financial statements of the Company should
be as of the same dates and for the same periods as the audited consolidated financial
statements of Chartered Semiconductor Manufacturing Ltd
(&#147;Chartered&#148;),
its minority shareholder, for purposes of Chartered&#146;s filing of
<FONT style="white-space: nowrap;">Form&nbsp;20-F</FONT>.
Accordingly, the Company is presenting financial statements for the twelve months
ended December&nbsp;31, 2005, (referred to as year ended
December&nbsp;31, 2005).</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(b)&nbsp;Accounting Principles</I></B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The financial statements have been prepared in accordance with accounting principles generally
accepted in the United States of America (&#147;US GAAP&#148;) consistently applied for all periods.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(c)&nbsp;Use of Estimates</I></B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The preparation of the 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. Significant items subject to such
estimates and judgements include the recoverability of the carrying value of long-lived assets, the
realizability of deferred income tax assets and inventories. Actual results could differ from these
estimates.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(d)&nbsp;Foreign Currency</I></B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The functional currency of the Company is the US dollar. Assets and liabilities which are
denominated in foreign currencies are translated into the functional currency at the rates of
exchange prevailing at the balance sheet date. Foreign currency transactions are translated using
the exchange rates prevailing at the date of transactions. Foreign exchange gains or losses,
resulting from the settlement of foreign currency transactions and from the translation at
financial year-end exchange rates of assets and liabilities denominated in foreign currencies, are
included in the line item &#147;foreign exchange gain (loss), net&#148; in the statements of operations.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-44
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SILICON MANUFACTURING PARTNERS PTE LTD<BR>
NOTES TO THE FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(e)&nbsp;Revenue Recognition</I></B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company enters into arrangements with customers which typically include, in addition to
fabricating semiconductors wafers, pre-fabricating services such as engineering services and masks
generation and associated assembly and test services.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>When arrangements include multiple deliverables, the Company evaluates whether to divide the
deliverables into separate units of accounting using certain specified criteria. The total
arrangement consideration is allocated to each unit of accounting based on fair values in
accordance with the methodology in FASB Emerging Issues Task Force (&#147;EITF&#148;) Issue 00-21,
&#147;Accounting for Revenue Arrangements with Multiple
Deliverables&#148;. Substantially all
of the Company&#146;s arrangements for the sale of semiconductor wafers and
related services consist of a single unit of accounting.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Revenue for each unit of accounting is recognized when the contractual obligations have been
performed and, where applicable, delivery has occurred and title and risk of loss has passed to the
customer, there is evidence of a final arrangement as to the specific terms of the agreed upon
sales, selling prices to the customers are fixed or determinable and collection of the revenue is
reasonably assured. Generally this results in revenue recognition upon shipment of wafers. Revenue
represents the invoiced value of goods and services supplied excluding goods and services tax, less
allowances for estimated sales credits and returns. The Company estimates allowances for sales
credits and returns based on historical experience and management&#146;s estimate of the level of future
claims. Additionally, the Company accrues for specific items at the time their existence is known
and amounts are estimable.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(f)&nbsp;Grants</I></B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Income-related government grants are subsidies of training 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.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(g)&nbsp;Income Taxes</I></B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-45
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SILICON MANUFACTURING PARTNERS PTE LTD<BR>
NOTES TO THE FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(h)&nbsp;Derivative Instruments and Hedging Activities</I></B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In accordance with Statement of Financial Accounting Standards (&#147;SFAS&#148;) No.&nbsp;133, &#147;Accounting
for Derivative Instruments and Certain Hedging Activities&#148;, as amended, the Company records
derivatives on the balance sheet as assets or liabilities measured at fair value.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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 (&#147;fair-value&#148; 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 (&#147;cash-flow&#148; hedge), or a foreign-currency fair-value or cash-flow
hedge (&#147;foreign-currency&#148; hedge). The Company formally documents all relationships between hedging
instruments and hedged items, as well as its risk-management objective and strategy for undertaking
various hedge transactions at the hedge&#146;s inception. This process includes linking all derivatives that are designated as
fair-value, cash flows, 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&#146;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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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 derivative 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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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 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.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-46
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SILICON MANUFACTURING PARTNERS PTE LTD<BR>
NOTES TO THE FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>When hedge accounting is discontinued because the hedged item no longer meets the definition
of a firm commitment, the Company removes any asset or liability that was recorded pursuant to recognition of the firm
commitment from the balance sheet and recognizes any gain or loss in earnings. When hedge
accounting is discontinued because it is probable that a forecasted transaction will not occur, gains and
losses that were accumulated in other comprehensive income are recognized immediately in earnings.
In all situations in which hedge accounting is discontinued, the Company continues to carry
the derivative at its fair value on the balance sheet, and recognizes any changes in its fair value
in earnings.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(i)&nbsp;Cash and Cash Equivalents</I></B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Cash equivalents consist of highly liquid investments that are readily convertible into cash
and have original maturities of three months or less.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(j)&nbsp;Inventories</I></B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Inventories are stated at the lower of cost or market (net realizable value) and consist of
work in progress, raw materials and consumable supplies and spares. Cost is determined using
standard cost and an allocation of the cost variances arising in the period of production, which
approximates actual costs determined on the weighted average basis. Standard cost is based on
estimates of materials, labor and other costs incurred in each process step associated with the
manufacture of the Company&#146;s products. Labor and overhead costs are allocated to each step in the
wafer production process based on normal fab capacity utilization, with costs arising from abnormal
under-utilization of capacity expensed when incurred.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(k)&nbsp;Property, Plant and Equipment</I></B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Property, plant and equipment are recorded at cost and depreciated to their estimated salvage
values using the straight-line method over their estimated useful lives as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="35%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Mechanical and electrical installations
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">10&nbsp;years</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Equipment and machinery
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">5&nbsp;years</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Office and computer equipment
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">2 to 5&nbsp;years</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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&#146;s pooled borrowings. Repairs and replacements of a routine nature are expensed, while those
that extend the life of an asset are capitalized. Upon retirement or disposal of assets, the cost
and related accumulated depreciation are removed from the balance sheet and any gain or loss is
included in the statement of operations.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-47
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SILICON MANUFACTURING PARTNERS PTE LTD<BR>
NOTES TO THE FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands</B>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(l)&nbsp;Impairment of Long-Lived Assets</I></B></TD>
</TR>
</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company reviews long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. Recoverability of
long-lived asset groups to be held and used are measured by a comparison of the carrying amount to
the sum of the undiscounted cash flows expected to result from the use and eventual disposition of
the asset group. If an asset group is considered to be impaired, the impairment loss is measured
as the amount by which the carrying amount of the long-lived assets exceed their fair value.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(m)&nbsp;Business and Credit Concentrations</I></B></TD>
</TR>
</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company is a dedicated semiconductor foundry providing wafer fabrication services and
technologies. The worldwide semiconductor foundry industry is highly competitive. 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, electronic design automation and tool support. The
semiconductor industry has historically been highly cyclical and, at various times, has experienced
significant economic downturns characterized by production overcapacity, reduced product demand
and rapid erosion of selling prices. Periods of overcapacity in the semiconductor industry have
frequently followed periods of increased demand. In addition, the markets for semiconductors are
characterized by rapid technological change, intense competition and fluctuations in end-user demand.
As a result, changes in the industry may adversely affect
management&#146;s estimates and the Company&#146;s
results of operations and financial position.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Financial instruments that potentially subject the Company to concentrations of credit risk
consist principally of cash, derivative financial instruments and receivables. The top three
customers of the Company from third parties accounted for 78%, 73%
and 77% of the Company&#146;s net
revenue from third parties in the years ended December&nbsp;31, 2003,
2004 and 2005, respectively. Total accounts receivable from these
customers was $9,532, $3,723 and $4,765 at
December&nbsp;31, 2003, 2004 and 2005, 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&#146;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 and credit control and collection procedures.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company&#146;s cash and cash equivalents are placed with major international banks and financial
institutions with specific minimum credit standards. Cash and cash equivalents with a particular
bank accounted for 67% and 68% of total balances at December&nbsp;31, 2004 and 2005,
respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The amounts subject to credit risk related to derivative instruments are generally limited to the
amounts, if any, by which a counterparty&#146;s obligations exceed the obligations of the Company with
that counterparty. The risk management practices are further
described in Note&nbsp;14.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(n)&nbsp;Product Warranties</I></B></TD>
</TR>
</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company guarantees that products will meet the stated functionality as agreed to in each sales
arrangement. The Company provides for the estimated warranty costs under these guarantees based upon
historical experience and management&#146;s estimate of the level of future claims, and accrues for
specific items at the time their existence is known and the amounts are estimable. Expenses for warranty costs
were not significant in any of the years presented.</TD>
</TR>
</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>(o)&nbsp;Recent Accounting Pronouncements</I></B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In March&nbsp;2005, the Financial Accounting Standards Board (&#147;FASB&#148;) issued FASB Interpretation
No.&nbsp;47, &#147;Accounting for Conditional Asset Retirement Obligations&#148; (&#147;FIN 47&#148;). FIN 47 clarifies
that an entity must record a liability for a &#147;conditional&#148; asset retirement obligation if the fair
value of the obligation can be reasonably estimated. The types of asset retirement obligations
that are covered by this Interpretation are those for which an entity has a legal obligation to
perform an asset retirement activity, however the timing and (or)&nbsp;method of settling the
obligation are conditional on a future event that may or may not be within the control of the
entity. FIN 47 also clarifies when an entity would have sufficient information to reasonably
estimate the fair value of an asset retirement obligation. FIN 47 is effective no later than the
end of fiscal years ending after December&nbsp;15, 2005. The initial adoption of FIN 47 did not have an
impact on the Company&#146;s financial condition and consolidated statements of operations.</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-48
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SILICON MANUFACTURING PARTNERS PTE LTD<BR>
NOTES TO THE FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 14pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>2</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Related Party Transactions</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Significant related party transactions</I></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Other than those disclosed elsewhere in these financial statements, there were the following
significant transactions with related parties on terms agreed between the parties:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Year ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Year ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Year ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Immediate Parent Company</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Recharge of employee related
and other expenses to the
Company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">117</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">82</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">640</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Sale of processed wafers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">191,493</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">162,927</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">96,800</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Purchase of wafers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,277</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Affiliates of Immediate Parent Company</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Recharge of employee related and
other expenses to the Company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,271</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,882</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,083</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Sale of processed wafers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,593</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,773</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,561</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Purchase of processed wafers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">856</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Purchase of property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">976</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Minority Shareholder</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Purchase of property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,703</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">462</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Payment of rental expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,024</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,307</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,662</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Recharge of employee related and other
expenses to the Company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,552</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,199</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,435</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Sale of processed wafers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,818</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,371</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">149</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Sale of property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,350</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Recharge of other expenses from the
Company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">195</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">499</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">302</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Affiliates of Minority Shareholder</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Purchase of property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,515</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Purchase of processed wafers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">447</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">180</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">155</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Recharge of other expenses to the Company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">215</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">217</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">161</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Sale of processed wafers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">454</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">270</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Recharge of other expenses from the
Company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">101</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">338</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">F-49
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SILICON MANUFACTURING PARTNERS PTE LTD<BR>
NOTES TO THE FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 14pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>2</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Related Party Transactions (Cont&#146;d)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The amounts due from related parties are:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amount due from immediate parent company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">17,698</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">15,234</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amount due from affiliates of immediate parent company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,048</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,304</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amount due from minority shareholder</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">582</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amount due from affiliates of minority shareholder</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">20,328</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">22,633</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The amounts due to related parties are:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amount due to immediate parent company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,528</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amount due to affiliates of immediate parent company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">336</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amount due to minority shareholder</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,850</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,729</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amount due to affiliates of minority shareholder</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">412</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">98</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,356</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">16,691</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 14pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>3</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Cash and Cash Equivalents</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Cash and cash equivalents consist of the following:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash at banks and on hand</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">13,421</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5,283</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Short-term deposits with banks</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,505</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">37,427</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">20,788</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-50
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SILICON MANUFACTURING PARTNERS PTE LTD<BR>
NOTES TO THE FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 14pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>4</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Receivables, net</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Receivables consist of the following:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Trade receivables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,081</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,897</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Allowance for sales credits and returns</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,505</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,537</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Trade receivables, net of allowances</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,576</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,360</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other receivables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">87</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,615</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,447</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Movements in the allowance for sales credits and returns are as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Beginning</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,055</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,505</TD>
    <TD nowrap></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Utilized in year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,086</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,142</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Charge for the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,536</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,174</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ending</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,505</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,537</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 14pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>5</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Inventories</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Inventories consist of the following:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Raw materials</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">522</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">967</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Work-in-process</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,168</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,996</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Consumable supplies and spares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">223</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">20,913</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">19,003</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-51
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SILICON MANUFACTURING PARTNERS PTE LTD<BR>
NOTES TO THE FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 14pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>6</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Property, Plant and Equipment</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Property, plant and equipment consist of the following:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cost</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Mechanical and electrical installations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,256</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,814</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equipment and machinery</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">796,821</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">801,946</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Office and computer equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,367</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,130</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Assets under installation and construction</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">482</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">834</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">811,926</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">817,724</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Accumulated depreciation</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">679,668</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">761,966</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Property, plant and equipment (net)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">132,258</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">55,758</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Depreciation was charged to statements of operations and amounted to $160,015, $137,415 and $84,105
for the years ended December&nbsp;31, 2003, 2004 and 2005, respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Capitalized interest relating to property, plant and equipment amounted to $237, $19 and $Nil in
the years ended December&nbsp;31, 2003, 2004 and 2005, respectively.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 14pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>7</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Payables</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Payables relate to the following:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Trade and accrued purchases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,456</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,291</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fixed assets purchases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">174</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">967</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,630</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">10,258</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-52
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SILICON MANUFACTURING PARTNERS PTE LTD<BR>
NOTES TO THE FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 14pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>8</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Other Current Liabilities</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accrued operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Employee bonuses and related expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,066</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,380</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">159</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">542</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,225</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,922</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">319</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">168</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,544</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,090</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 14pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>9</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Income Taxes</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Income tax expense consists of the following:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B></B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Year ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Year ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Year ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">257</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">165</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">304</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred expense (benefit)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(100</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">275</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">352</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company&#146;s pre-tax loss and income tax expense (benefit)&nbsp;is from Singapore sources.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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&nbsp;86 (&#147;the Income Tax Act&#148;), for the wafer
fabrication of integrated circuits effective from 1 May&nbsp;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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Without this exemption from income tax, the Company would be subject to income tax at the Singapore
corporate income tax rate of 20% for the years ended
December&nbsp;31, 2005 and 2004 and 22% for the year ended December&nbsp;31, 2003.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Tax losses accumulated before the pioneer status period cannot be carried forward. Tax losses
accumulated in the pioneer status period may be carried forward and may be offset against income
from the same pioneer trade arising both during the pioneer status and after the expiration of the
pioneer status period, subject to compliance with certain conditions. As of December&nbsp;31, 2005, the
Company does not have any loss carryforwards.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-53
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SILICON MANUFACTURING PARTNERS PTE LTD<BR>
NOTES TO THE FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Under Singapore tax law, tax depreciation of property, plant and equipment (referred to as
wear and tear allowances) is deductible only to the extent of taxable income before tax
depreciation. Unutilized wear and tear allowances are carried forward to future tax years. As of
December&nbsp;31, 2005, the Company has unutilized wear and tear allowance carryforwards of
approximately $32,652 and the amount is expected to be utilized within the pioneer tax-exempt
period, and accordingly has been recognized at a zero percent tax rate.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Loss carryforwards as well as unutilized wear and tear allowances from the end of pioneer status
period are available indefinitely, subject to 50% or more of the Company&#146;s equity staying with the
same shareholders from the incurrence of the tax loss to its utilization and in the case of wear
and tear allowances, an additional test that the same trade must be carried on.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Interest income is not exempt from taxation during the pioneer status period. The income tax
expense for the years ended December&nbsp;31, 2003, 2004 and 2005 primarily
represents income tax payable on non-pioneer interest income.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A reconciliation of the expected tax expense (benefit)&nbsp;computed by applying statutory rates to
pre-tax loss to the actual tax expense is as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Year ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Year ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Year ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense (benefit)
computed at Singapore statutory
tax rate of 20% (22% in 2003,
20% in 2004)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5,293</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,154</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">367</TD>
    <TD nowrap></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Permanent non-deductible expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(181</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">767</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Losses and wear and tear
allowances expected to be
utilized in the pioneer tax
exempt period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,972</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exempt pioneer profits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,837</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,856</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">(2,096</TD>
    <TD>)&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Actual income tax expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">275</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">352</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Included in other non-current assets are $82 and $34 of net deferred tax assets as of December&nbsp;31,
2004 and 2005 which primarily relate to the difference in the tax and book basis of
property, plant and equipment. 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. Deferred tax asset is also recognized for wear and tear allowances and tax losses carried
forward to the extent that it is more likely than not that the related tax benefits would be
realized through future taxable profits. As at December&nbsp;31, 2005, the Company has unutilized wear
and tear allowances of $32,652 which are expected to be utilized within the pioneer tax-exempt
period and accordingly have been recognized at a zero percent tax rate.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-54
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SILICON MANUFACTURING PARTNERS PTE LTD<BR>
NOTES TO THE FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands</B>
</DIV>



<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 14pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>10</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Share Capital</B></TD>
</TR>
</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Share capital consist of the following:</TD>
</TR>
</TABLE>
</DIV>






<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Issued and
paid-up share capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">252,389</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">84,040</TD>
    <TD nowrap></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital
reduction</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">108,349</TD>
    <TD nowrap>&nbsp;</TD>
</TR>



<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>

<TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom" style="background: #cceeff">

    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">252,389</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">192,389</TD>
    <TD nowrap>&nbsp;</TD>
</TR>


<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In October 2005, the Company reorganized its paid-up share capital
by the extinguishment of accumulated losses of $108,349 against paid-up
share capital and the return of a portion to its shareholders in the
form of cash amounting to $60,000 in a capital reduction sanctioned by the High Court
of Singapore. During the year ended December&nbsp;31, 2005, the Company
paid cash of $51,500 to its shareholders. The capital reduction through the
extinguishment of accumulated losses does not qualify as a quasi-reorganization
under US GAAP and accordingly has not been reflected in the financial statements.
</TD>
</TR>

</TABLE>
</DIV>







<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 14pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>11</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Accumulated Deficit</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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. Tax payable by the Company on its
non-pioneer chargeable income constitutes a final tax, and dividends are exempt from tax in the hands of its shareholders.</TD>
</TR>
</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 14pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>12</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Accumulated Other Comprehensive Loss</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Accumulated other comprehensive loss consists of the following:</TD>
</TR>

</TABLE>
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net unrealized cash flow hedging activity losses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(55</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(18</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The net unrealized cash flow hedging activity losses are not adjusted for income taxes
because such losses are expected to be realized during the pioneer status.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-55
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SILICON MANUFACTURING PARTNERS PTE LTD<BR>
NOTES TO THE FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 14pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>13</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Commitments and Contingencies</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Capital commitments</I></TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Contracted but not received</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,079</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,036</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Operating lease commitments</I></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company leases its fab from its minority shareholder under a lease agreement which expires in
2008. At balance sheet date, the Company had commitments for future minimum lease payments under
the non-cancellable operating leases as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payable in
the year ending December&nbsp;31,</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">15,661</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,653</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,913</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">35,227</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Contingencies</I></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company may from time to time be a party to claims that arise in the normal course of business.
These claims include allegations of infringement of intellectual property rights of others as well
as other claims of liability. In addition, the Company is subject to various taxes in the
different jurisdiction 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 statement of operations.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-56
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SILICON MANUFACTURING PARTNERS PTE LTD<BR>
NOTES TO THE FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 14pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>14</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Derivative Instruments</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company has the following notional amounts of derivative instruments:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December&nbsp;31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Forward foreign exchange contracts to
hedge plant and equipment purchases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,005      </TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To protect against volatility of future cash flows caused by changes in exchange rates, the Company
may use currency forward contracts and currency swaps on anticipated transactions such as operating
costs and expenses and capital purchases. To manage interest rate risk, the Company may enter into
interest rate cap agreements to modify the interest characteristics of its outstanding debts.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Most of the Company&#146;s derivatives are formally designated as cash flow 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 payments. 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).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company uses derivative instruments to manage identified foreign currency risks resulting from
its Singapore dollar denominated debt and its foreign currency denominated purchase commitments
which are denominated principally in Japanese yen and Euro. 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&#146;s hedges is negligible. Amounts included in other
comprehensive income (loss)&nbsp;related to hedges of foreign currency purchase commitments are
reclassified into earnings (foreign exchange gain (loss)) when the asset related to the purchase
commitment is depreciated.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The estimated net amount of existing losses from cash flow hedges expected to
be reclassified into earnings within the next year is $26 and $16 as
of December 31, 2004 and 2005, respectively. Net realized losses
recognized from cash flow hedges were $48 and $37 for the years ended December 31, 2004 and 2005, respectively.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-57
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SILICON MANUFACTURING PARTNERS PTE LTD<BR>
NOTES TO THE FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 14pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>14</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Derivative Instruments (Cont&#146;d)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The components of other comprehensive loss related to derivative and hedging activities
consist of the following:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December&nbsp;31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December&nbsp;31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Beginning</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8,105</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">55</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Reclassification of cash flow
hedging activity losses into
earnings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(48</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(37</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net unrealized gains on change
in cash flow hedging activity fair
values</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,002</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ending</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">55</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">18</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>By using derivative instruments to hedge exposures to changes in foreign currency 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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Market risk is the adverse effect on the value of a financial instrument that results from a change
in currency exchange rates. The Company assesses currency exchange cash flow risk by continually
identifying and monitoring changes in currency exchange rate exposures that may adversely impact
expected future cash flows and by evaluating hedging opportunities.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 14pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>15</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Fair Values of Financial Instruments</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>December&nbsp;31, 2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>December&nbsp;31, 2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Carrying</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Estimated</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Carrying</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Estimated</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>fair value</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>fair value</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Assets/(Liability)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Forward foreign exchange contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Cash and cash equivalents, amounts owing from and to immediate parent company, other related
companies and affiliated companies, accounts receivable and accounts payable.</I> The carrying amounts
approximate fair value in view of the short-term nature of these balances.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-58
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SILICON MANUFACTURING PARTNERS PTE LTD<BR>
NOTES TO THE FINANCIAL STATEMENTS &#151; in US Dollars<BR>
In thousands</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Forward foreign exchange contracts. </I>The fair value is estimated by reference to market
quotations for forward contracts with similar terms, adjusted where necessary for maturity
differences<I>.</I></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Limitations. </I>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.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 14pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left"><B>16</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Other Operating Expenses (Income), net</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Other operating expenses (income)&nbsp;consisted of:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A gain of $3,578 in 2003 associated with the cancellation of an employee bonus award plan. As a
result of the cancellation, compensation accrued for past services under the bonus award plan of
$3,578 was eliminated by decreasing compensation expense in the period of cancellation.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>An impairment charge of $178 in 2003 on certain property, plant and equipment which were identified
for sale as of December&nbsp;31, 2003. These assets were written down
to their estimated net selling prices. The estimated
selling prices were determined based on independent quotes from third party vendors.</TD>
</TR>
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-59
</DIV>

</BODY>
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CHARTERED SEMICONDUCTOR MANUFACTURING LTD.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 20-F
(Mark One)
o
Registration statement pursuant to Section 12(b) or 12(g) of the Securities Exchange Act
of 1934.
OR
þ
Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
For the fiscal year ended December 31, 2005.
OR
o
Transition Report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934. For the transition period from _____________ to _____________.
OR
o
Shell Company Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934.
Date of event requiring this shell company report .........................
Commission File Number 000-27811
CHARTERED SEMICONDUCTOR MANUFACTURING LTD.
(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:
Title of Each Class
None
Name of Each Exchange on Which Registered
Not Applicable
Securities registered or to be registered pursuant to Section 12(g) of the Act:
American Depositary Shares,
each represented by ten Ordinary Shares.
(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. 2,513,383,969 Ordinary Shares
and 30,000 Convertible Redeemable Preference Shares as of December 31, 2005.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405
of the Securities Act.
Yes
þ
No
o
If this report is an annual or transition report, indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes
o
No
þ
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
þ
No
o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in
Rule 12b-2 of the Securities Exchange Act of 1934. (Check one):
Large accelerated filer
þ
Accelerated filer
o
Non-accelerated filer
o
Indicate by check mark which financial statement item the registrant has elected to follow.
Item 17
o
Item 18
þ
If this is an annual report, indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934).
Yes
o
No
þ
TABLE OF CONTENTS
Certain Definitions and Conventions
Presentation of Certain Financial Information
PART I
ITEM 1.
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
3
ITEM 2.
OFFER STATISTICS AND EXPECTED TIMETABLE
3
ITEM 3.
KEY INFORMATION
3
ITEM 4.
INFORMATION ON OUR COMPANY
21
ITEM 5.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
38
ITEM 6.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
63
ITEM 7.
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
76
ITEM 8.
FINANCIAL INFORMATION
78
ITEM 9.
THE OFFER AND LISTING
79
ITEM 10.
ADDITIONAL INFORMATION
80
ITEM 11.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
96
ITEM 12.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
98
PART II
ITEM 13.
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
98
ITEM 14.
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
98
ITEM 15.
CONTROLS AND PROCEDURES
98
ITEM 16.
A.
AUDIT COMMITTEE FINANCIAL EXPERT
99
B.
CODE OF ETHICS
99
C.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
99
D.
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
100
E.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
100
PART III
ITEM 17.
FINANCIAL STATEMENTS
100
ITEM 18.
FINANCIAL STATEMENTS
100
ITEM 19.
EXHIBITS
102
SIGNATURES
Index to Financial Statements
EX-2.2 Specimen certificate for convertible redeemable preference shares.
EX-4.10.3 Deed of Accession and Ratification dated January 26, 2006 relating to the Restated Joint Venture Agreement dated October 23, 2001 and as further amended by an amendment (No. 1).
EX-4.19.1 Agreement for Sub-License and Sub-Lease (Private Lot A12787(k)) dated July 8, 2005 by and between Singapore Technologies Pte Ltd and the company.
EX-4.19.2 Novation Agreement dated July 8, 2005 by and among Singapore Technologies Pte Ltd, Terra Investments Pte. Ltd. and the company dated July 8, 2005.
EX-12.1 Certification of the President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
EX-12.2 Certification of the Senior Vice President and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
EX-13.1 Certification of the President and Chief Executive Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
EX-13.2 Certification of the Senior Vice President and Chief Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
EX-15.1 Consent of KPMG addressed to the Board of Directors and Shareholders of the company.
EX-15.2 Consent of KPMG addressed to the Board of Directors and Shareholders of Silicon Manufacturing Partners Pte Ltd.
1
Table of Contents
Certain Definitions and Conventions
In this document, unless otherwise indicated, all references to "Chartered," "our company,"
"we," "our" and "us" refer to Chartered Semiconductor Manufacturing Ltd., a limited liability
company formed in the Republic of Singapore, and its subsidiaries. When we refer to "Singapore
dollars" and "S$" in this document, we are referring to Singapore dollars, the legal currency of
Singapore. When we refer to "U.S. dollars," "dollars," "$" and "US$" in this document, we are
referring to United States dollars, the legal currency of the United States, and when we refer to
"
€
," we are referring to Euros.
When we refer to the "noon buying rate," we are referring to the noon buying rate in New York
for cable transfers in Singapore dollars as certified for customs purposes by the Federal Reserve
Bank of New York. The noon buying rate on January 31, 2006 was S$1.6219 = $1.00.
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. This document includes the financial
statements of our equity-method joint venture company, Silicon Manufacturing Partners Pte Ltd, or
SMP, which are reported in U.S. dollars and presented in accordance with U.S. GAAP. Up to the year
ended December 31, 2004, the financial statements of SMP were reported in U.S. dollars and were
prepared in accordance with Singapore Financial Reporting Standards, which vary in certain
significant respects from U.S. GAAP. In 2005, SMP changed its fiscal year end to September 30.
The share and per share data and American Depositary Share, or ADS, and per ADS data in this
document for the year 2002 and prior periods reflect a retroactive adjustment to give effect to our
eight-for-ten rights offering which we completed in October 2002, or the October 2002 Rights
Offering. The share price information contained in this document was derived from Bloomberg L.P.
Certain reclassifications have been made in prior years' financial information to conform to
classifications used in the current year.
2
Table of Contents
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
A.
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 in this document. The selected consolidated balance sheet data as of December 31, 2001,
2002 and 2003 and the selected consolidated statements of operations data for the years ended
December 31, 2001 and 2002 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 balance sheet data as of December 31, 2004 and 2005 and the
selected consolidated statements of operations data for each of the years in the three year period
ended December 31, 2005 are derived from our audited consolidated financial statements included
elsewhere in this document which have been audited by KPMG, independent registered public
accounting firm. Our consolidated financial statements are prepared in accordance with U.S. GAAP.
Year Ended December 31,
2001
2002
2003
2004
2005
(in thousands, except share and per share data and ratios)
Consolidated Statements
of Operations Data:
Net revenue
$
462,656
$
449,241
$
551,911
$
932,131
$
1,032,734
Cost of revenue
665,261
628,726
648,330
769,318
917,048
Gross profit (loss)
(202,605
)
(179,485
)
(96,419
)
162,813
115,686
Operating expenses:
Research and
Development
82,897
95,285
124,057
118,281
122,073
Fab start-up costs
13,329
8,338
9,219
33,199
22,697
Sales and marketing
38,659
41,182
38,748
37,751
42,181
General and
administrative
42,671
43,103
40,762
33,850
38,756
Other operating
expenses (income),
net
—
10,025
(1)
(11,001
)
(2)
(8,994
)
(3)
3,938
(5)
Total operating expenses
177,556
197,933
201,785
214,087
229,645
Operating income
(loss)
(380,161
)
(377,418
)
(298,204
)
(51,274
)
(113,959
)
Other income (expense):
Equity in income
(loss) of SMP
(92,683
)
(84,846
)
23,194
27,563
6,486
Other income, net
19,718
23,632
23,186
52,299
(4)
2,442
(6)
Interest income
46,225
16,637
12,168
11,530
28,625
Interest expense and
amortization of debt
discount
(39,652
)
(41,661
)
(42,222
)
(30,093
)
(69,839
)
Foreign exchange gain
(loss), net
4,216
(1,966
)
(733
)
1,320
(356
)
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Year Ended December 31,
2001
2002
2003
2004
2005
(in thousands, except share and per share data and ratios)
Income (loss) before
income taxes and
minority interest
(442,337
)
(465,622
)
(282,611
)
11,345
(146,601
)
Income tax expense
(7)
(14,244
)
(7,029
)
(11,671
)
(4,774
)
(12,997
)
Income (loss) before
minority interest
(456,581
)
(472,651
)
(294,282
)
6,571
(159,598
)
Minority interest in
loss of CSP
72,629
55,563
9,491
—
—
Net income (loss) prior
to cumulative effect
adjustment
(383,952
)
(417,088
)
(284,791
)
6,571
(159,598
)
Cumulative effect
adjustment for change
in accounting
principle
(8)
—
—
(6,421
)
—
—
Net income (loss)
(383,952
)
(417,088
)
(291,212
)
6,571
(159,598
)
Less: Accretion to redemption value
of convertible redeemable
preference shares
—
—
—
—
(3,196
)
Net Income (loss) available to
common shareholders
$
(383,952
)
$
(417,088
)
$
(291,212
)
$
6,571
$
(162,794
)
Basic and diluted net
earnings (loss) per common
share
(9)
$
(0.24
)
$
(0.23
)
$
(0.12
)
$
0.00
$
(0.06
)
Number of shares used in
computing net earnings
(loss) per common share:
Basic
1,588,969
1,799,106
2,502,294
2,508,376
2,511,428
Diluted
1,588,969
1,799,106
2,502,294
2,516,942
2,512,577
Basic and diluted net earnings
(loss) per ADS
(9)
$
(2.42
)
$
(2.32
)
$
(1.16
)
$
0.03
$
(0.65
)
Number of ADSs used in
computing net earnings
(loss) per ADS:
Basic
158,897
179,911
250,229
250,838
251,143
Diluted
158,897
179,911
250,229
251,694
251,258
Other
Data
(unaudited)
(10)
:
Ratio of earnings to combined fixed
charges
and preferred dividends
—
—
—
—
—
Deficiency of earnings
available to cover combined fixed
charges and preferred dividends
$
354,919
$
381,225
$
301,421
$
19,268
$
132,793
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As of December 31,
2001
2002
2003
2004
2005
(in thousands)
Consolidated Balance
Sheet Data:
Cash and cash
equivalents
$
1,041,616
$
1,210,925
$
905,472
$
539,399
$
819,856
Working capital
(11)
642,487
942,059
682,322
162,746
550,323
Total assets
3,144,342
3,333,463
3,021,027
3,090,012
3,517,294
Long-term obligations
980,368
1,154,815
1,049,837
960,660
1,187,004
Convertible redeemable
preference shares
—
—
—
—
250,663
Long-term obligations and
convertible redeemable
preference shares
980,368
1,154,815
1,049,837
960,660
1,437,667
Share capital
280,480
443,713
444,953
445,531
446,181
Total shareholders'
equity
1,582,632
1,785,459
1,494,555
1,505,631
1,346,374
Notes:
(1)
Included in 2002 other operating expenses (income), net line was a charge of $10.0
million associated with a restructuring charge on workforce re-sizing and a fixed asset
impairment charge.
(2)
Included in 2003 other operating expenses (income), net line were:
(a)
A gain of $27.5 million associated with the cancellation of our employee bonus
award plan;
(b)
A gain of $4.9 million resulting from equipment disposition;
(c)
An impairment charge of $9.0 million on certain machinery and equipment, as part
of our fab capacity rationalization; and
(d)
A restructuring charge of $12.4 million relating to the phase out of Fab 1.
(3)
Included in 2004 other operating expenses (income), net line were:
(a)
A gain of $10.4 million resulting from an equipment disposition with CSMC
Technologies Corporation, or CSMC;
(b)
A gain of $4.9 million associated with the resolution of a goods and services
tax matter;
(c)
A restructuring charge of $4.6 million relating to the closing of Fab 1; and
(d)
An impairment charge of $1.7 million resulting from the migration to an
enhanced manufacturing system.
(4)
Included in 2004 other income, net line was a gain of $14.3 million from the sale of
technology to CSMC and a grant income of $29.5 million.
(5)
Other operating expenses (income), net in 2005 relate to a fixed asset impairment
charge on assets held for sale.
(6)
Included in 2005 other income, net line was an expense of $7.0 million related to the
termination of
hedging transactions and other costs as a result of the cash tender offer, or Tender Offer,
for and repurchase of any and all of our $575.0 million original principal amount of 2.5%
senior convertible notes due 2006, or Convertible Notes. A more detailed discussion of the
Tender Offer can be found under "Item 5. Operating and Financial Review and Prospects —
Liquidity and Capital Resources."
(7)
The pioneer tax status of our fabs had the effect of increasing basic and diluted net
earnings per common share or decreasing basic and diluted net loss per common share by
$(0.05), $(0.04), $(0.02), $0.00 and $(0.01) and increasing basic and diluted net earnings
per ADS or by decreasing basic and diluted net loss per ADS by $(0.48), $(0.36), $(0.15),
$0.02 and $(0.11) for the years ended December 31, 2001, 2002, 2003, 2004 and 2005,
respectively.
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(8)
Effective January 1, 2003, we adopted the provisions of 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 long-lived assets and associated asset retirement costs. This resulted in a
cumulative effect loss of $6.4 million, after a reduction in minority interest of $0.5
million, for 2003. The cumulative effect loss represents the depreciation and accretion
expense that would have been recorded previously if SFAS No. 143 had been in effect in
prior years.
(9)
For 2003, basic and diluted net loss per common share prior to cumulative effect
adjustment was $(0.11) and basic and diluted net loss per ADS prior to cumulative effect
adjustment was $(1.14).
(10)
For purposes of calculating the ratio of earnings to combined fixed charges and
preferred dividends and the deficiency of earnings available to cover combined fixed
charges and preferred dividends, if any, earnings consists of income (loss) before income
taxes and minority interest, adjusted to remove equity in income (loss) of equity
affiliates and to add fixed charges, amortization of capitalized interest and distributed
income of equity affiliates, less interest capitalized. Fixed charges consist of interest
expensed, interest capitalized, amortization of capitalized expenses related to
indebtedness, plus an estimated interest portion of rental expenses on operating leases.
Preferred dividend consists of accretion charges relating to our convertible redeemable
preference shares.
(11)
Working capital is calculated as the excess of current assets over current liabilities.
B.
CAPITALIZATION AND INDEBTEDNESS
Not applicable.
C.
REASONS FOR THE OFFER AND USE OF PROCEEDS
Not applicable.
D.
RISK FACTORS
We wish to caution readers that the following important factors, and those important factors
described in other reports and documents submitted to, or filed with, the United States Securities
and Exchange Commission, or the SEC, among other factors, could affect our 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 us, or on our behalf.
Risks Related to Our Financial Condition
We have a history of losses and this may continue.
Since our inception in 1987, we have incurred significant net losses. This was true even in
years in which our revenue increased such as in 2002 to 2005. In 2001, 2002 and 2003, we
incurred net losses of $384.0 million, $417.1 million and $291.2 million, respectively. In
2004, we generated net income of $6.6 million. For the year ended December 31, 2005, we incurred a
net loss of $159.6 million.
As of December 31, 2005, we had an accumulated deficit of $1,278.3 million. We cannot assure
you that net losses will not continue or increase in the future or that we will become profitable.
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 such as financial, shareholding and other
restrictive covenants which are customary to loan documents could have important consequences to
our company. 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
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and other general corporate purposes. The term "capital expenditures" means
the amount we paid during a particular period for property, plant and equipment;
•
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 ASPs, or demand for our
semiconductor wafers are lower than expected.
We expect to incur substantial capital expenditures, research and development costs and fab
start-up costs in connection with our growth plans and may 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 and migrations. For
example, during the cyclical downturn in the semiconductor industry and the subsequent period of
recovery during 2002, 2003, 2004 and 2005, we made substantial capital expenditures of $419.5
million, $220.8 million, $686.3 million and $628.1 million, respectively. We expect our aggregate
capital expenditures in 2006 to be approximately $650 million, of which approximately $550 million
is expected to be used for capital expenditure for the development of capacities of 0.13 micron, or
um, and smaller process geometry technologies for our fabs. The remaining amounts are expected to
be utilized primarily for purchases of information systems and for adding more equipment in our
fabs running more mature technologies to maximize utilization corresponding to the anticipated
product mix. We estimate aggregate capital expenditures for phase 1 of our build-out of production
capacity in Fab 7 to 18,000 300 millimeter, or mm, wafers per month to be $1,700 million. The
targeted total capacity for phase 1 of Fab 7 has been increased by 20% from our previous plan of
15,000 300-mm wafers due to our expected improvement in productivity. As of December 31, 2005, we
have spent $1,201.9 million on the equipping of Fab 7 as part of its phase 1 ramp up, and as of
December 31, 2005, Fab 7 had a capacity of approximately 10,000 300-mm wafers per month. At
completion, Fab 7 is expected to have a capacity of 30,000 300-mm wafers per month and our total capital investment in Fab 7 is expected to be approximately
$2,700 million to $3,000 million. Our fab start-up costs, all related to Fab 7, decreased by 31.6%
from $33.2 million in 2004 to $22.7 million in 2005. For more details on the costs of equipping Fab
7, see "Item 5. Operating and Financial Review and Prospects — Liquidity and Capital Resources."
We anticipate that from time to time we also may expand and add equipment to increase the capacity
of our existing fabs, and this may require additional financing. We also expect to incur
approximately $150 million for research and development in 2006.
Our capital and research and development 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 these planned expenditures, as occurred in 2001,
2002, 2003 and 2005. 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 may require additional financing to fund our future growth plans and technology upgrades
and migrations, including to fund the capital expenditures to equip Fab 7 to its full planned
capacity of 30,000 300-mm wafers per month, which is expected to take a number of years and will be
paced by customer demand and industry conditions. 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 or
creditors.
Failure to maintain high capacity utilization, optimize the technology mix of our semiconductor
wafer production and continuously improve our device yields would seriously harm our prospects and
financial condition.
The key factors that affect our profit margin are our ability to:
•
maintain high capacity utilization;
•
optimize the technology mix of our semiconductor wafer production; and
•
continuously improve our device yields.
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The term "capacity utilization" means the actual number of semiconductor wafers we have
processed at a fabrication facility 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 SMP. Our capacity utilization affects our
operating results because a large percentage of our operating costs are fixed. For example, in
2001, 2002 and the first half of 2003, weak market demand and a worldwide overcapacity of
semiconductor wafer supply resulted in low utilization rates at our fabs. In 2004, our average
capacity utilization improved to 80% from 58% in 2003. This was primarily driven by the sequential
growth in shipments during the first two quarters of the year. However, we experienced market
weakness from the second half of 2004 due to excess inventories in the semiconductor companies and
the softening in certain end markets. Our average capacity utilization in 2005 declined to 70% as
we continued to experience market weakness in the first half of 2005 as the industry continued to
work through the excess inventories. The weakness of the first half of 2005 was partially offset in
the second half of 2005 primarily as a result of shipments of our 90 nanometer, or nm, process
geometry technologies and higher demand attributable to improving market conditions. We cannot
assure you that market conditions will continue to improve or that improved market conditions can
be sustained. If market conditions were to deteriorate we may not be able to sustain our capacity
utilization.
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. We are unable to control many of the factors which may
affect capacity utilization rates.
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
depreciation and other costs associated with an increase in capital expenditures needed to
manufacture such devices.
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 prices of our products.
If we are unable to maintain high capacity utilization, optimize the technology mix of our
wafer production or maintain and improve our device yields, we may not be able to achieve our
targeted profit margin, in which case our financial condition could be seriously harmed and the
market price of our securities could fall.
Risks Related to Our Operations
The cyclical nature of the semiconductor industry and the periodic overcapacity that results from
this, as well as any rapid change in the end markets we serve, 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 overcapacity, reduced
product demand and rapid erosion of ASPs.
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
overcapacity 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. For example, after experiencing average utilization rates around 100% in 2000, our average
utilization rates in 2002 and 2003 fell to 37% and 58%, respectively. In 2004, our average
utilization rate improved to 80%, driven primarily by the sequential growth in shipments during the
first two quarters of the year. However, we experienced market weakness from the second half of
June 2004 due to excess inventories in the semiconductor companies and the softening in certain end
markets. This weakness continued into the first half of 2005 as the industry continued to work
through the excess inventories. Although we experienced subsequent sequential quarterly increases
in our utilization rates from the second quarter of 2005, our average utilization rate in 2005
declined to 70% from 80% in 2004. While market conditions started to improve in the third quarter
of 2005, we cannot assure you that market conditions will continue to improve or that the improved
market conditions will be sustained in
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2006 and beyond. Future downturns in the semiconductor industry may also be severe and 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 our
internal research and development efforts and through alliances with leading semiconductor
companies, and we are dependent on these partners for this advancement. Our technology alliance
with International Business Machines, or IBM, began in November 2002 with a joint development
agreement to jointly develop and standardize on 90nm, and 65nm bulk complementary metal oxide
semiconductor, or CMOS, processes for foundry chip production on 300-mm silicon wafers. We extended
our IBM joint development agreement to include Infineon Technologies AG, or Infineon, in August
2003 and Samsung Electronics Co., Ltd, or Samsung, in March 2004 in the joint development of a
common advanced foundry manufacturing bulk CMOS process technology at 65nm, as well as variants of
that process modified for high performance and low power products. In December 2004, we expanded
our joint development efforts with IBM to include 45nm bulk CMOS process technology. For more
information on the joint development agreements with IBM, Infineon and Samsung, please see "Item 4.
Information on Our Company — B. Business Overview — Research and Development."
We depend on our joint development agreement with IBM for faster introduction of 90nm and 45nm
bulk CMOS process technologies and our March 2004 agreement with IBM, Infineon and Samsung for
faster introduction of 65nm bulk CMOS process technology. If we encounter problems in the
successful implementation of our joint development agreements with these partners, our strategy of
targeting "first-source" business and decreasing the time it takes us to bring the newest
technologies to market would be adversely effected. "First source" business refers to being
selected as the first manufacturing source for customers' new product innovations. We would also
have to incur additional costs to implement this strategy. If this were to happen, it 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, Inc. ceasing technology development for certain
technology nodes). For more information on these changes, please see "Item 4. Information on Our
Company — B. Business Overview — Strategic Business and Technology Alliances — Chartered Silicon
Partners." Although the changes in our technology partnerships 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, if we are unable to comply with any restrictions contained in our technology
alliance agreements, or if we are unable to enter into new technology alliances with other leading
semiconductor companies, we may not be able to continue providing our customers with leading- edge
process technologies, which could seriously harm our company.
We depend on a small number of customers for a significant portion of our revenue.
We have been largely dependent on a small number of customers for a substantial portion of our
business. Our top ten customers accounted for approximately 66% and 72% of our total net revenue in
2004 and 2005, respectively. Our top five customers in 2005, in order of revenue contribution, were
Broadcom, IBM, Agilent Technologies, MStar Semiconductor and MediaTek. Collectively, our top five
customers accounted for approximately 56% of our total net revenue in 2005, compared with
approximately 52% in the previous year. Broadcom and IBM's contribution to total net revenue each
exceeded 10% in 2005. As the end markets we serve are typically cyclical, our top customer profile
may change from period to period depending on the strength of various market segments. We expect
that we will continue to be dependent for a significant portion of our revenue upon a relatively
limited number of customers, which customers from time to time may be concentrated in particular
end markets, as a result of which we will be exposed to the volatility of those markets. Depending
on a relatively small number of customers can also subject us to concentration problems that can
negatively affect our fab utilization, which can in turn affect our revenue and results of
operations, such as was experienced in the fourth quarter of 2004. See "Item 5. Operating and
Financial Review and Prospects." Customer concentration is acute at our new Fab 7, where we are
ramping up production with a very narrow customer and product base initially, and where any reduction or
cancellation of orders would have a significant impact on the utilization of Fab 7. We cannot
assure you that revenue generated from these customers, individually or in aggregate, will reach or
exceed historical levels in any future period. Loss or cancellation of business from, significant
changes in scheduled deliveries to, quality or
9
Table of Contents
reliability issues raised by, or decreases in the prices of services sold to, any of these
customers could seriously harm our company.
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 to meet market demand or
produce such products at competitive prices. There is a risk that our competitors may adopt new
technology before 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.
A decrease in demand and average selling prices for end-use applications of semiconductor products
such as communications equipment, personal computers, computer peripherals and consumer products
may significantly decrease the demand for our services and may result in a decrease in our revenue
and gross profit margin.
A significant percentage of our 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 historical and continuing
trend of declining ASPs in these end markets places downward pressure on the prices of the
components that are used in such equipment. If the ASPs 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.
Our ability to successfully partner with electronic design automation, intellectual property and
design service providers 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 relationships with electronic design automation, or EDA, intellectual property and
design service providers. We work with these service providers to develop a design platform that is
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 and design service providers, 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, intellectual property and design service
providers and consequently, our ability to attract or serve customers, and thereby 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.
Our growth, technology capabilities, planned capacity expansion and our competitive position depend
on the success of our more advanced manufacturing facilities.
Our more advanced manufacturing facilities, especially our 300-mm wafer fab, is critically
important to the success of our company in a number of ways. As our more advanced manufacturing
facilities will contain our leading-edge manufacturing capacity, any problem in those facilities
may limit our ability to manufacture advanced semiconductor products. The process technologies that
we intend to use in these facilities arise from our joint development agreements with IBM and other
third parties, and any problems
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with implementing those agreements could have a material and adverse effect on our company. We
typically ramp up production at our more advanced manufacturing facilities with a very narrow
customer and product base initially. While we believe that this narrow customer base facilitates
ramping up production more quickly than we otherwise might be able to do, we also are exposed to a
greater risk of customer concentration at those facilities as a result. Any problems that arise
with these customer relationships or orders (or lack of demand for the ultimate end-products in
which the semiconductors we produce at these facilities are used) can be expected to have a
significantly negative impact on the utilization of these facilities, which could have a material
and adverse effect on our company.
We depend on our strategic business alliances relating to our fabs. Termination or modification of
these alliances could seriously harm our company.
We currently have two strategic business alliances relating to the operation of Fab 5 and Fab
6. Our equity-method joint venture company, SMP, which owns and operates Fab 5, is a joint venture
with Agere Systems Singapore Pte Ltd (formerly Lucent Technologies Microelectronics Pte. Ltd.), or
Agere Systems Singapore, a subsidiary of Agere Systems Inc. Our subsidiary, Chartered Silicon
Partners Pte Ltd, or CSP, which owns and operates Fab 6, is a joint venture with Avago Technologies
General IP (Singapore) Pte. Ltd., or Avago, (Avago having acquired all of the shares in CSP
previously held by Agilent Technologies Europe B.V. in January 2006), EDB Investments Pte Ltd, or
EDB Investments, and Singapex Investments Pte Ltd, or Singapex, an indirect wholly-owned subsidiary
of Temasek Holdings (Private) Limited, or Temasek.
Our alliances with these companies and their predecessors gave us access to select
leading-edge process technologies and moderated our development costs and capital expenditures in
the initial years in Fab 5 and Fab 6. We believe that our alliances with these companies provide us
with access to business on an ongoing basis. 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 — B. Business Overview
— Strategic Business and Technology Alliances — Chartered Silicon Partners" and "Item 4.
Information on Our Company — B. Business Overview — Strategic and Technology 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, United
Microelectronics Corporation, or UMC, and Semiconductor Manufacturing International Corporation, or
SMIC, 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, new entrants to the semiconductor foundry industry in
China, Malaysia and Korea 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. As a result, we expect that there will be a
significant increase in worldwide semiconductor capacity over the next few 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 products and
services. Any significant increase in competition may erode our profit margin 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, EDA and tool support. We
cannot assure you that we will be able to compete successfully in the future, including our ability
to obtain "first source" business, which could seriously harm our company.
Our operating results fluctuate from quarter to quarter, which makes it difficult to predict our
future performance.
Our revenue, 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
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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 IDMs between internal and outsourced production;
•
changes in demand for products that incorporate semiconductors we produce;
•
inventory and supply chain management of our customers;
•
the loss of a key customer or the postponement or reduction 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 losses from a customer's inability to pay our accounts receivables from them;
•
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;
•
unforeseen 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;
•
our ability to continue with existing, and to enter into new partnerships, technology
and supply alliances on mutually beneficial terms;
•
actual capital expenditures exceeding planned capital expenditures;
•
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 comparable securities, or fall.
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 and our intellectual property, as well as the
intellectual property of our customers. We seek to protect proprietary information and know-how
through the use of confidentiality and non-disclosure agreements and limited access to and
distribution of proprietary information. As of December 31, 2005, we had filed an aggregate of
2,146 patent applications worldwide, (1,002 of which had been filed in the U.S.) and held an
aggregate of 1,338 issued patents worldwide (743 of which were 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 will protect our intellectual property rights to the same extent as
the U.S. Additionally, we cannot assure you that our competitors will not develop, patent or gain
access to similar know-how and technology, or reverse engineer our processes, or that our
confidentiality and non-disclosure agreements upon which we rely to protect our trade secrets and
other proprietary information will be effective. The occurrence of any such events could seriously
harm our company. Please see "Item 4. Information on Our Company — B. Business — 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
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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 semiconductor products;
•
pay substantial monetary damages;
•
seek to develop non-infringing technologies, which may not be feasible; or
•
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 in order 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 may experience difficulty in obtaining insurance coverage without incurring increased costs.
While we have been able to obtain adequate insurance coverage in the past and while we did not
experience any significant increase in premium rates of insurance coverage for 2005, we cannot
assure you that we will continue to be able to do so in the future. For example, following the
terrorists attacks on September 11, 2001 in the U.S., the premiums we paid for the 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. 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 insured.
Risks Related to Manufacturing
We may experience difficulty in achieving acceptable device yields, product performance and product
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 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. Because certain of our manufacturing process technologies are concentrated in specific manufacturing facilities, any problem in one of these facilities may limit our ability to manufacture products using those process technologies. We may
also experience difficulty achieving acceptable device yields, product performance and product
delivery times in the future as a result of manufacturing problems, especially in our more advanced
manufacturing facilities. We may encounter problems in our manufacturing facilities, as a result
of, 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, which 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.
Some of these raw materials and supplies are available from a limited number of vendors in limited
quantity and their procurement may require a long lead time. We purchase most of our key materials
and supplies on a blanket purchase order basis. We typically do not have long-term contracts with
our vendors. 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 in obtaining quantities of raw materials that we need on a timely basis.
Further, where we only have one 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.
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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, which may in turn adversely
affect our revenue. 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 and complete qualification of some of this equipment could be as long as 15
months, or even longer. Any delay in the delivery or increase in the cost of this equipment 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 — B. Business —
Equipment and Materials" for additional information regarding our relationships with our suppliers
of materials and equipment.
We depend on assembly and test subcontractors for our semiconductor assembly and testing
requirements.
Semiconductor assembly and test operations are an integral part of the semiconductor
manufacturing process, and involve specialized equipment and technology. If our customers require
products which have been assembled and/or tested, we will need to depend on assembly and test
subcontractors to provide us with the assembly, test and wafer bumping services as we do not have
such in-house assembly and test capabilities and facilities. Wafer bumping is an advanced packaging
technique where "bumps" made of solder are formed on the wafers before being diced into individual
chips. We currently subcontract to STATS ChipPAC Ltd. (formerly ST Assembly Test Services Ltd), or
STATS ChipPAC, as well as to United Test and Assembly Center Limited, or UTAC, ASE Singapore Pte.
Ltd., ASE Test Limited and Advanced Semiconductor Engineering, Inc., or collectively ASE, a
significant amount of orders for assembly and testing services. STATS ChipPAC, UTAC and ASE may,
from time to time, experience production interruption due to, among other things, technical
problems occurring during the assembly and testing processes. Because STATS ChipPAC, UTAC and ASE
are our major providers of these services, any prolonged interruption in their operations 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 (or number of connections to the printed circuit board), the need for advanced packaging and
wafer bumping services may increase. The advanced packaging technology is new and there may be
initial problems resulting from this. Although we work with our vendors to qualify them on wafer
bumping in printing and plating technology, we cannot assure you that qualifications would be
successful or without delays or that we would have ready access to
limited capacity. There are
currently no appropriate 200-mm and 300-mm wafer bumping capabilities
in Singapore. Although one of our vendors, Amkor Technology, Inc., has
recently announced that its Singapore bump facility is expected to
commence operations in the second half of 2006 and will provide,
amongst others, wafer bump and wafer probe services to support
emerging applications on 300-mm wafers at the 90nm and 65nm
technology process nodes, we cannot assure you that such capabilities
will be available by the second half of 2006. 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 could seriously harm our
company.
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 fire. 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 could
seriously harm our company.
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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 modify our
manufacturing operations at significant costs to us. 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 found to be
responsible for the contamination. We maintain insurance policies to guard against certain types of
legal liability resulting from sudden, unintended and unexpected pollution causing damage to third
parties. Our insurance policies do not cover losses incurred in relation to the cleanup of our
properties if they are found to be contaminated 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 Related 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.
We depend on key personnel and due to the shortage of skilled labor in Singapore, we may have
difficulty attracting and retaining 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 growth plans, we are likely to need a greater number
of experienced engineers and other employees in the future. 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, 2005, 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.
We use share options and employee share purchase plans as compensation tools to attract and
retain our personnel. Recent changes to the accounting standards applicable to our company require
us to record share-based compensation charges as a result of those plans. If we were to terminate
these plans, or were to modify such plans with decreased benefits to employees or were to reduce
the share grants made under these plans to avoid or minimize an adverse impact on our financial
results, we may become uncompetitive from an employee compensation perspective and may not be able
to continue to attract and/or retain required personnel, which could seriously harm our company.
If we were to lose the services of any of our existing key personnel without adequate
replacements, or
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were unable to attract and retain 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 insurance to protect us against the loss of any
of our key personnel.
Risks Related to Covenants in Our Agreements
Many of our loans contain financial and other covenants which may restrict our operational and
financing activities in ways that restrict our growth or are otherwise not in the best interests of
our company or holders of our securities.
Many of our loans, including loans incurred by our subsidiary, CSP, contain various financial
and other restrictive covenants. Among other things, these covenants require the maintenance of
certain financial ratios (including total debt to net worth) and that Temasek owns, directly or
indirectly, at least a certain percentage of our outstanding shares or is our single largest
shareholder. The loans also require that we own, directly or indirectly, at least a certain
percentage of CSP's outstanding shares. These covenants may restrict our operational and financing
activities in ways that restrict our growth or are otherwise not in the best interests of our
company or holders of our securities. If we fail to comply with these covenants, we could be in
default under these loans and the lenders would have the right to accelerate our obligation to
repay the outstanding borrowings under these loans. Such default could also cause cross-defaults
under other loans which 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.
Risks Related to Investments in a Controlled Corporation
Temasek controls our company and its interests may conflict with the interests of our other
shareholders.
As of December 31, 2005, Temasek through its subsidiary, Singapore Technologies Semiconductors
Pte Ltd, or ST Semiconductors, beneficially owned approximately 60.09% of our outstanding ordinary
shares. Temasek's sole shareholder is the Minister for Finance
(Incorporated), a body corporate constituted under the Minister for
Finance (Incorporation) Act, Chapter 183 of Singapore. Accordingly,
Temasek is able to exercise control over many matters requiring approval by our shareholders,
including the election of directors and approval of significant corporate transactions.
We also have contractual and other business relationships with several of Temasek's affiliates
and may engage in material transactions with them from time to time. Although the Audit Committee
of our Board of Directors will review all material transactions between our company and Temasek and
such affiliates, circumstances may arise in which the interests of Temasek and such affiliates
could conflict with the interests of our other shareholders. Because Temasek, through its
subsidiary, ST Semiconductors, beneficially owns a significant portion of our ordinary shares, it
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 Temasek and/or 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 Temasek, Singapore Technologies Pte Ltd, or Singapore
Technologies, and their 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, 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
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years. 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.
Terrorist attacks or a war could adversely affect our business, results of operations and financial
condition.
Terrorist attacks, such as the attacks on September 11, 2001 in the U.S. and other acts of
violence or war, have the potential to have a direct impact on our customers. To the extent that
such attacks affect or involve the U.S. and any other places in which our customers' markets are
located or affect the countries where our operations are located, our business may be significantly
impacted.
In addition, terrorist attacks or another act of 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 could seriously harm our company.
Outbreak of an infectious disease or any other serious public health concerns in Asia (including
Singapore) and elsewhere could adversely impact our business, results of operations and financial
condition.
The outbreak of an infectious disease in Asia (including Singapore) and elsewhere, together
with any resulting restrictions on travel or quarantines imposed, could have a negative impact on
the economies, financial markets and business activities in countries in which our end markets are
located and thereby adversely impact our revenue. Examples are the outbreak in 2003 of Severe Acute
Respiratory Syndrome, or SARS, in East Asia and the outbreaks of Avian Influenza, or Bird Flu, in
2004 and 2005 in Asia and currently around the world. While we took precautionary measures in response
to the outbreak of SARS in 2003, we cannot assure you that any precautionary measures we may take
against SARS or any other infectious diseases in the future would be effective. A future outbreak
of an infectious disease or any other serious public health concern could seriously harm our
company.
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 values 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 increase our costs and capital expenditures, which could affect our
operating results and financial position.
Our 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, Euros and Singapore dollars. Although we hedge a portion of the
resulting net foreign exchange position through the use of forward exchange contracts, we are still
particularly affected by fluctuations in exchange rates between the U.S dollar and the above
mentioned currencies. Any significant fluctuation in exchange rates may lead to an increase in our
costs and capital expenditures, which could
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adversely affect our operating results and financial position.
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, under U.S. tax laws during 2005. However, there can be no
assurances that we will not be a PFIC in 2006 or in a later year. If 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 risk that we may be a PFIC in 2006 or in a later year. Passive
income for PFIC purposes includes, among other things, interest, dividends, royalties, rents and
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 ADS 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 — E. 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 shareholder 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 shareholder, Temasek, and its
affiliates.
It may be difficult for you to enforce any judgment obtained in the U.S. 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 for investors to effect service of process within the U.S. upon us
or any of these persons or to enforce in the U.S. any judgment obtained in the U.S. courts against
us or any of these persons, including judgments based upon the civil liability provisions of the
federal securities laws of the U.S. or any state or territory of the U.S.
Judgments of the U.S. courts based upon the civil liability provisions of the federal
securities laws of the U.S. are not enforceable in Singapore courts, and 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 Take-overs and Mergers contains certain provisions that may delay, deter
or prevent a future take-over 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 may be required to extend a take-over offer for our remaining voting shares in
accordance with the Singapore Code on Take-overs and Mergers. A take-over offer may also be
required to be made if a person holding (either on his own or together with parties acting in
concert with him) between 30% and 50% (both inclusive) of our voting shares acquires more than 1%
of our voting shares in any six-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.
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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 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. 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 our affiliates, including ST
Semiconductors, 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.
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 December 31, 2005, 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 $3.48 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$0.63 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;
•
problems in our advanced manufacturing facilities;
•
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, capital raising, change in
our controlling shareholder 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 the U.S. markets and may
cause the market price of our securities to fluctuate.
The Singapore Exchange Securities Trading Limited, or Singapore Exchange, is relatively small
and more volatile than stock exchanges in the U.S. and certain European countries. As of December
31, 2005, there were 492 companies listed on the Main Board of the Singapore Exchange and the
aggregate market capitalization of listed equity securities of these companies was approximately
S$422.0 billion or $254.0 billion (based on the noon buying rate as of December 30, 2005 of
S$1.6628 to $1.00). For the year ended December 31, 2005, the average daily equity trading value on
the Singapore Exchange (including shares traded on the CLOB International trading system) was
approximately S$200.8 billion or $121.0 billion (based on the noon buying rate as of December 30,
2005 of S$1.6628 to $1.00). The relatively small market capitalization of, and trading volume on,
the Main Board of the Singapore Exchange may cause the market
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price of securities of listed 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 October 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
This document contains forward-looking statements, as defined in the safe harbor provisions of
the U.S. Private Securities Litigation Reform Act of 1995. Examples of these forward-looking
statements include, without limitation:
•
statements relating to our business strategy;
•
our outlook for 2006;
•
our capacity utilization rate, production capacity and production capacity mix;
•
our plans to expand our production capacity for 0.13um and smaller process geometry
technologies to meet the anticipated needs of our customers;
•
our expectation that 0.13 um and smaller process geometry technologies, including 90nm,
will be a large contributor to our revenue in 2006;
•
our 2006 planned capital expenditures, research and development expenditures,
depreciation and
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amortization and wafer capacity; and
•
our sources of liquidity, cash flow, funding needs and financings;
These forward-looking statements 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:
•
changes in the market outlook and trends;
•
the growth rate of fabless companies and the outsourcing strategy of integrated device
manufacturers;
•
demand and supply outlook in the semiconductor market;
•
economic conditions in the United States as well as globally;
•
customer demands, unforeseen delays or interruptions in our plans for our fabrication facilities;
•
the performance level of and technology mix in our fabrication facilities;
•
our progress on leading-edge products;
•
access to or delays in technological advances or our development of process technologies;
•
the successful implementation of our partnership, technology and supply alliances
(including our joint development agreements with IBM, Infineon and Samsung);
•
changes in capacity allocation in process technology mix, changes in our capacity plans,
unavailability of materials, equipment, manpower, expertise and timely regulatory
approvals;
•
our expectation that IDMs will utilize foundry capacity more extensively;
•
the availability of financings and the terms thereof; and
•
terrorist attacks, acts of war, or the possibility of an outbreak of Bird Flu or any other infectious disease in Singapore as well as other parts of the world.
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 — D. Risk
Factors" and elsewhere in this document. 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
A.
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 on November 16, 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. Information pertaining to our company and
our SEC filings are available on our website, www.charteredsemi.com.
However, information contained
in our website 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
+1-408-941-1100.
In 1997, Chartered acquired equity interests in CSP and in SMP. For more information on this,
please refer to "— B. Business Overview — Strategic Business and Technology Alliances."
We have a 51% equity interest in our subsidiary, CSP, a Singapore company incorporated in
1997. For information on our other subsidiaries, please see "— B. Business Overview —
Organizational Structure."
Our principal capital expenditures for the fiscal years 2003, 2004 and 2005 were comprised
mainly of the purchase of semiconductor equipment for the equipping of our fabs. Our capital
expenditures amounted to $220.8 million in 2003, $686.3 million in 2004 and $628.1 million in 2005.
We expect our aggregate capital expenditures in 2006 to be approximately $650 million, of which
approximately $550 million is expected to be used for further development of capacities of 0.13um
and smaller process geometry technologies for our fabs. The remaining amounts are expected to be
utilized primarily for purchases of information systems and for adding more equipment in our fabs
running more mature technologies to maximize utilization
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corresponding to the anticipated product mix. For more details on the equipping costs of Fab
7, see "Item 5. Operating and Financial Review and Prospects — Liquidity and Capital Resources."
For the year 2005, our capital expenditures were financed mainly from borrowings under our
credit facilities and cash balances.
A more detailed discussion of credit facilities can
be found under "Item 5. Operating and Financial Review and Prospects — Liquidity and Capital
Resources."
B.
BUSINESS OVERVIEW
Overview
Chartered is one of the world's leading dedicated semiconductor foundries. We provide
comprehensive wafer fabrication services and technologies to semiconductor suppliers and systems
companies. We focus on providing foundry services to customers that serve high-growth,
technologically advanced applications for the communication, computer and consumer sectors.
We currently own, or have an interest in, five fabrication facilities — Fabs 2, 3, 5, 6 and
7, all of which are located in Singapore. Fab 7 is our company's first 300-mm facility. Fab 7
started commercial shipment in June 2005.
We have service operations in nine locations and in eight countries in North America, Europe
and Asia.
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 in relation to these applications 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
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 more 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 and systems companies.
The semiconductor industry generally experiences seasonality which is mainly driven by demand
fluctuations for the electronic products that use semiconductor integrated circuits. The sequential
growth of semiconductor revenue in the first quarter is typically weaker compared to that of other
quarters.
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 is approximately $3 billion, which is approximately six times higher
than the cost a decade ago. Today, only large and well-capitalized or funded 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
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manufacturing needs.
The Requirements of a Full-Service Foundry
As demand for foundry services has grown, many semiconductor suppliers are seeking highly
committed foundry partners that meet their manufacturing technology requirements. These partners
must be able to provide the following:
Systems Integration Expertise.
Business and consumer demand for convergent solutions that
perform multiple functions that classically were done by different individual devices has increased
dramatically. Fueling this demand has been growth in the merging of data communications,
telecommunications, wireless and consumer markets, which in turn has resulted in greater demand for
faster, more power efficient and denser semiconductors providing solutions for systems totally on a
single die called a system on chip, or SOC, which is more cost effective than producing multiple
devices. In addition, this system level integration requires semiconductor foundries to offer
processes that will easily integrate logic (processes data), memory (stores data) and analog mixed
signal (translates data and provides interface outside the system). The semiconductor foundries
must also provide and support access to third party intellectual property and design solutions to
aid customers, who have increasingly focused on system level expertise, in the design of, and time
to market for SOC solutions.
Leading-Edge
Process Technologies.
In order to provide their customers with
total systems solutions, semiconductor foundries must provide a full
range of semiconductor process technologies. A semiconductor foundry
will struggle economically if relying solely on mature technologies
and must also be capable of driving the implementation of reduced
geometries which are required for a continuing market convergence as
computer, communications and consumer functions morph onto a single
SOC. These advanced technologies require significant innovation in
material sciences in order to meet the increasing manufacturing
requirements of customers for cost efficient SOCs for their customers.
Comprehensive Prefabrication Services.
Because of increasing levels of product complexity and
customer demand, foundries are increasingly required to provide value-added services during the
prefabrication phase, such as providing access to EDA tools, design libraries, and intellectual
property and design services to ensure that customers' designs can be implemented on silicon for
commercial production.
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. Assurance of supply is critical to their success. These
relationships must also be 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 dedicated 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 along with providing semiconductor process for the
highest performance microprocessors in the world. We have proven expertise in mixed signal and
radio frequency complementary metal oxide silicon, or RF CMOS, enabling technologies essential to
the convergence of communication, computer and consumer applications.
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In order to augment our internal development efforts, we have entered into strategic business
alliances and technology alliances with leading semiconductor companies such as our technology
alliances with IBM, Infineon and Samsung and our strategic business alliance with Agere Systems in
SMP. For more details on these strategic business alliances and technology alliances, see "—
Strategic Business and Technology Alliances — Silicon Manufacturing Partners" and "— Research and
Development."
We have relationships with leading EDA, intellectual property and design services providers.
Through these relations, our customers are provided with a design methodology coupled with design
modules which have been tested and manufactured on silicon that will allow a faster time to market.
We offer design solutions for a variety of applications and process nodes, giving customers
valuable freedom of choice when it comes to EDA and intellectual property selection. Customers get
early access to design rules and other important manufacturing specifications so that they can be
incorporated into designs early. In June 2005, together with IBM and Samsung, we extended the
Chartered-IBM Cross-Foundry Design Enablement Program, or Design Enablement Program, launched in
March 2004 for 90nm bulk CMOS process, to include 65nm bulk CMOS process. Many EDA and intellectual
property companies have supported and developed solutions on Chartered's processes. Together with
IBM and Samsung, Chartered is expanding the number of new partners to assist our customers in
designing solutions in leading-edge 65nm process technology. Chartered will continue to expand our
design service network to improve our customers' access to more expertise allowing broader choices
and more flexibility for their chip development.
Having launched our e-Business initiatives with customers in April 2004, our systems are now
established and are being used by our customers to carry out many of their business interactions
with us online. We have also implemented several automated connections with our subcontractors and
other suppliers, thus enabling us to continue on the path to enhanced supply chain automation. For
more information on our e-Business initiative, please see "— Customer Service."
We believe that our customers value Chartered as a trusted, customer-oriented service provider
which adopts a collaborative approach to the foundry industry. All of our manufacturing operations
are located in Singapore, a politically and economically stable nation with laws that protect our
customers' proprietary technology.
Business Strategy
Our objective is to be a 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. Key elements of our strategy include:
Improve top-line growth by targeting first source business through our advanced technology while
continuing to serve the markets for mature technologies
Our ability to engage customers at increasingly advanced technologies, the strengthening of
our technology roadmap resulting from our joint development agreements with IBM, Infineon and
Samsung and the expansion of our third party network of pre-qualified EDA, intellectual property
and design services solutions, allows us to target substantially more "first source" business.
As mature technology products remain a growing and important part of Chartered's business, we
will also continue to focus on increasing our reach into mature markets. We emphasize on leveraging
our capabilities in mixed-signal and RF CMOS processes with complete solutions for our niche
technologies for products such as smart cards, Radio Frequency Identification, or RFID, tags,
display drivers and power management for mobile products.
Optimize our capacity base
We aim to optimize our capacity base by rapidly expanding capability for leading-edge
technologies, reducing excess capacity at mature technology nodes and adopting a "borderless fab"
approach. The "borderless fab" approach refers to the operation of our fabs in a manner where
wafers may be moved from one fab to another according to available manufacturing capacity and
manufacturing process technologies of our various fabs to meet production requirements. Our
"borderless fab" approach is targeted at improving asset utilization and increasing flexibility and
scalability across all our fabs.
Leading-edge Technologies.
As part of our plan to expand our capability for leading-edge
technologies, we intend to expand our production capacity for 0.13um and smaller process geometry
technologies to meet the anticipated needs of our customers. We expect our leading-edge technology
capacity per year to
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constitute approximately 35% of our total expected wafer capacity per year in 2006, compared
with 25% in 2005. We believe that increasing our foundry capacity in 0.13um and smaller process
geometry technologies will allow us to take advantage of the market opportunities opening up to
Chartered as a result of the technological progress we have made in recent years.
Mature Technologies.
We intend to utilize our capacity for mature technologies by leveraging
on our existing technologies, targeting strategic partnerships for volume production and working
towards establishing a manufacturing presence in China with appropriate partners to leverage on our
equipment, technology and expertise in mature processes.
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 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 products.
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 design enablement support we currently
make available to our customers, in conjunction with our partners, include a number of EDA design
tools, design libraries, third party intellectual property and process technologies that have been
validated for our manufacturing process. We also offer our customers turnkey services, which
typically include, in addition to fabricating semiconductor wafers, pre-fabrication services such
as engineering services and masks generation, and associated assembly and test services.
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
initial process specifications of the new process technologies being developed, and to be
developed, are provided by our technology roadmaps. The current roadmaps cover 2006 and 2007 and
90nm, 65nm and 45nm logic processes, including their generic, low power and high speed variants.
The roadmaps also cover 90nm mixed signal and RF modules, and 0.18um high voltage and eFLASH
(embedded FLASH memory, a memory based on an erasable and
programmable memory technology) processes.
The current development programs for logic are directed to the 65nm technology node. Under our
March 2004 joint development agreement with IBM, Infineon and Samsung, we are jointly developing
with our partners a common advanced foundry manufacturing process technology at 65nm, as well as
variants of that process modified for high performance and low power products. Please see "—
Research and Development" for more details on this joint development agreement.
In December 2004, we expanded our joint development efforts with IBM under our joint
development agreement entered into with IBM in November 2002 to include 45nm bulk CMOS process
technology. We expect this reciprocal manufacturing arrangement to enable us to achieve scale,
cycle time and cost efficiencies in 300-mm manufacturing, while also providing customers multiple
sources of supply. The strengthening of our technology roadmap resulting from our joint development
agreements with IBM, Infineon and Samsung provides us with faster access to leading-edge
technology. This faster technological development allows us to target substantially more "first
source" business.
In the case of 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 typically follows the introduction of the logic development
schedule. For RF CMOS, still more devices such as inductors and varactors must be developed,
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. Bipolar complementary metal oxide silicon, or BiCMOS, which integrates bipolar
transistors with the CMOS and selected modules from mixed signal and RF CMOS, comes to pilot
production later.
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The availability of logic, mixed-signal RF CMOS, BiCMOS, Silicon Germanium, or SiGe, and
embedded memories technologies enables us to provide process solutions essential to the convergence
of communication, computer 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, Inc., IBM and Infineon, we are better positioned to secure future
business with them.
Overview of Wafer Fabrication Services
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.
Pre-Fabrication Services
Circuit Design.
Producing a semiconductor device involves 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 40 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 intellectual property and design services that are proven and have been qualified for
our manufacturing processes. Our field 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
Wafer Manufacturing.
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 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 transistors' 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 semiconductor wafers,
which are used in a full range of end market applications, including communication, 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 communication, computer and consumer markets.
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•
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 that combine a number of functions, such as logic
and memory components. We manufacture stand-alone memory devices including EPROM, EEPROM,
SRAM and Flash memory and embedded memory including eSRAM, eEEPROM, and eFLASH memories.
For more information on what these mean, please see "— Manufacturing Facilities." Memory
devices are used in a range of products from computers and mobile phones to "smart" chip
cards.
Wafer Probe.
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.
Other Services
Assembly and Test.
After fabrication and wafer probe, the wafers are transferred to assembly
and test facilities. The assembly process 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, the
completed semiconductor device is either delivered to the customer or directly to its final
destination.
Although we are an independent foundry specializing in wafer fabrication, we offer our
customers the option to purchase from us turnkey services, which mean finished semiconductor
products that have been assembled and tested. When requested by our customers, we outsource
assembly and testing of the fabricated semiconductor devices. Alternatively, our customers may
directly arrange with assembly and test facilities for these services.
Manufacturing Facilities
As of December 31, 2005, we owned or had an interest in five fabs, all of which are located in
Singapore. Fabs 2, 3 and 7 are wholly-owned and operated by our company. Fab 5 is owned and
operated by SMP, our joint venture company with Agere Systems Singapore, a subsidiary of Agere
Systems Inc. Fab 6 is owned and operated by CSP, our joint venture company with Avago, EDB
Investments and Singapex, an indirect wholly-owned subsidiary of Temasek. Avago's shares in CSP
were previously owned by Agilent Technologies Europe B.V. As part of Agilent Technologies, Inc's
restructuring in 2005, Agilent Technologies Europe B.V. transferred its entire shareholding in CSP
to Avago in January 2006. Our Fab 1, which was wholly-owned by our company, ceased operations at
the end of March 2004. We do not have a Fab 4.
Production Capacity and Utilization
The following table reflects our capacity utilization in our fabs, including our share of SMP, for the periods indicated.
Quarterly Shipment and Capacity
(1)
Data
Including Chartered's Share of SMP
3Q 2004
4Q 2004
1Q 2005
2Q 2005
3Q 2005
4Q 2005
Thousand eight-inch equivalent wafers:
Total wafers shipped
287.1
200.8
186.2
224.5
295.2
345.8
Total capacity
322.5
327.0
317.0
346.5
401.4
435.9
Utilization
89
%
61
%
59
%
65
%
74
%
79
%
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Capacity by Fab
(1)
3Q 2004
4Q 2004
1Q 2005
2Q 2005
3Q 2005
4Q 2005
Thousand eight-inch equivalent wafers:
Fab 2
131.2
131.8
130.6
137.7
139.2
145.7
Fab 3
73.0
73.0
71.4
74.3
74.2
74.2
Fab 5
(2)
37.2
37.0
34.5
35.8
36.2
35.6
Fab 6
81.1
85.2
80.5
89.4
100.5
112.9
Fab 7
(3)
—
—
—
9.3
51.3
67.5
Total
322.5
327.0
317.0
346.5
401.4
435.9
Notes:
(1)
Fab 1 ceased operations at the end of March 2004, with some of its operations moved to Fab 2.
(2)
49% of total capacity, based on Chartered's equity ownership.
(3)
Fab 7, our first 300-mm wafer facility, started commercial shipments in June 2005.
Wafer Capacity
Our fab capacity plans have been updated consistent with our company's efforts to better align
manufacturing capability with our growing market opportunities in leading-edge technologies. We
expect to achieve total wafer capacity of approximately 1,800,000 wafers (eight-inch equivalent)
for the full year 2006, compared to 1,500,000 wafers (eight-inch equivalent) for the full year
2005. Leading-edge capacity (0.13um and smaller process geometry technologies) per year is planned
to increase from approximately 25% of our total wafer capacity per year in 2005 to approximately
35% of our total expected wafer capacity per year in 2006. The following table reflects our wafer
capacity figures as of December 31, 2005 for each of our fabs and the fab of our equity-method
joint venture company, SMP (Fab 5).
Fab 2
Fab 3
Fab 5 (SMP)
(1)
Fab 6 (CSP)
(1)
Fab 7
Production
commenced
1995
1997
1999
2000
2005
(2)
Estimated full
capacity
(3)
48,000 wafers
25,000 wafers
24,000 wafers
39,000 wafers
30,000 wafers
per month
per month
per month
per month
per month
(4)
Wafer size
Eight-inch
Eight-inch
Eight-inch
Eight-inch
Twelve-inch
(200-mm)
(200-mm)
(200-mm)
(200-mm)
(300-mm)
Process
technologies
0.6 to 0.3um
(5)
0.35 to
0.25 to
0.25 to
0.13um and
0.18um
(5)
0.13um
(5)
0.11um
(5)
smaller process
geometry
technologies
Manufacturing
technologies
(6)
Digital; Mixed
Digital; Mixed
Digital; RF
High
High
Signal; RF
Signal; RF
CMOS;
performance,
performance,
CMOS; SRAM;
CMOS; SRAM
BiCMOS;
high-density
high-density
Flash Memory;
Mixed Signal;
CMOS; high
CMOS; Mixed
HVCMOS;
eSRAM
density SRAM
Signal; SOI
EEPROM;
Mixed Signal; RF
DMOS;
CMOS
BiCMOS,
BiPolar; OTP
Clean room
109,000 sq. ft.
81,000 sq. ft.
96,540 sq. ft.
126,000 sq. ft.
181,000 sq. ft
Class-1 SMIF
(7)
Class-1 SMIF
(7)
Class-1 SMIF
(7)
Class-1 SMIF
(7)
Class-1 SMIF
(7)
Notes:
(1)
With respect to Fab 5 and Fab 6, the information includes capacity of our strategic partners.
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(2)
Commercial shipments started in June 2005.
(3)
Estimated full capacity is the production output capability based on our current and
anticipated process technology mix, which may vary. 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 67,500 eight-inch wafers per month. A conversion rate of 2.25 is utilized in
determining the number of eight-inch wafer equivalent to that of twelve-inch wafers. We are
taking a phased approach to the full equipping of Fab 7 to 30,000 300-mm wafers per month, and
this is expected to take a number of years and will be paced by customer demand and industry
conditions. As of December 31, 2005, Fab 7 has a capacity of approximately 10,000 300-mm
wafers per month.
(5)
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 process geometry technologies than those shown
above.
(6)
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.
EEPROMs are electrically erasable programmable read-only memory 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 complementary metal
oxide silicon. BiCMOS means bipolar complementary metal oxide silicon. HVCMOS refers to high
voltage complementary metal oxide silicon. DMOS refers to double diffused vertical MOSFET
(metal oxide semiconductor field effect transistor). OTP refers to one time programmable
memory.
(7)
Class 1 is a measurement of air cleanliness in which the amount of particles is controlled to
no more that one particle at 0.5um per cubic foot of air. SMIF means standard mechanical
interface.
All our production fabs generally operate 24 hours per day, seven days per week. The only
exceptions are when scheduled maintenance requires a facility shut-down, or in periods of weak
demand where we 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 shut-down 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 output of eight-inch equivalent
wafers of our fabs, including our share of SMP:
Year Ended December 31,
2001
2002
2003
2004
2005
(in thousands)
Total Output
398
445
722
1,035
1,052
Quality Assurance Programs
We have implemented systems to ensure that products manufactured at our facilities in
Singapore meet or exceed our customers' specifications on quality and reliability. Our in-house
laboratories are equipped with advanced analytical tools, providing the necessary equipment and
resources for our engineering and research and development 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 have been certified by the International Organization
for Standardization, or ISO, to meet ISO 9001 standards. ISO 9001 standards set forth the
requirements necessary to ensure the production of quality products and services, including
standards relating to management systems, management responsibility, resource management, product
realization, measurement, analysis and improvement.
We also achieved ISO/TS16949 (Technical Specification) certification in May 2005. ISO/TS
16949:2002, commonly referred to as TS2, was introduced by ISO in March 2002 and is currently
considered to be one of
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the most comprehensive quality standards in the industry. It defines the quality system
requirements for use in the automotive supply chain, which some of our products may go into, and
requires companies to emphasize meeting customer requirements, defect prevention, reduction of
variation and waste in the supply chain and to continually improve the effectiveness and efficiency
of business processes. The ISO/TS16949 and TS2 certifications involve stringent periodic third
party review and verification of our production processes and quality management systems. Our
customers often look to these certifications as a threshold indication of our quality control
standards.
Strategic Business and Technology Alliances
IBM, Infineon and Samsung
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, we agreed with IBM to jointly develop and standardize our 90nm
and 65nm bulk CMOS processes for foundry chip production on 300-mm silicon wafers. Together, we are
providing a common 90nm design manual and guidelines for the jointly developed process platform. To
assist foundry customers in designing with these technologies, we and IBM have agreed to work
together with third party providers of design enablement and open-standard formats to help
customers move their products more easily between us and IBM for production.
In August 2003, we extended the IBM joint development agreement to include Infineon and in
March 2004, the agreement was further extended to include Samsung. Under the expanded agreement,
IBM, Infineon, Samsung and Chartered are jointly developing a common advanced foundry manufacturing
bulk CMOS process technology at 65nm, as well as variants of that process modified for high
performance and low power products. In December 2004, we expanded our joint development efforts
with IBM under the IBM joint development agreement to include 45nm bulk CMOS process technology.
The Chartered-IBM joint development now spans three separate generations of technologies from 90nm,
65nm and 45nm. The development of both 65nm and 45nm bulk CMOS processes are being carried out at
IBM's facilities at East Fishkill, New York. Each of the four participating companies will have the
ability to implement the jointly developed 65nm processes in their respective manufacturing
facilities.
Our agreement with IBM includes a reciprocal manufacturing arrangement pursuant to which we
are able to offer our customers some capacity in IBM's 300-mm chip manufacturing facility in East
Fishkill, New York. In turn, IBM is able to utilize some capacity in our 300-mm Fab 7 to help meet
additional capacity requirements. In order to reserve such capacity, we and IBM placed deposits
with each other. Neither IBM nor we are required, however, to utilize this capacity. Beginning
April 2005, we started manufacturing selected 90nm SOI products for IBM.
Further, in June 2005, together with IBM and Samsung, we extended the Design Enablement
Program, launched in March 2004 for 90nm bulk CMOS processes, to include 65nm bulk CMOS processes.
Many of the leading EDA vendors and intellectual property companies have developed platform
solutions and we are working with IBM to bring new partners to the program. The Design Enablement
Program sets a platform for foundry compatibility, design portability and flexible sourcing between
our company and IBM at 90nm bulk CMOS processes and for our company, IBM and Samsung at 65nm bulk
CMOS processes. The Design Enablement Program facilitates designers in the development of
compatible design layout files that can be used interchangeably across manufacturing facilities at
our company, IBM and Samsung. We also continue to expand our design service partnership network to
improve our customers' access to more expertise, broader choices and greater flexibility for their
chip development.
Through our joint development program with IBM, Infineon and Samsung and our manufacturing
arrangement with IBM, we are seeking to achieve scale, cycle time and cost efficiencies in both
leading-edge process technology development and 300-mm manufacturing, while also providing
customers multiple sources of supply.
Chartered Silicon Partners
Our subsidiary, CSP, was established in March 1997 and is a joint venture with Avago, EDB
Investments and Singapex. Avago's shares in CSP was previously owned by Agilent Technologies
Europe B.V. As part of Agilent Technologies, Inc's restructuring in 2005, Agilent Technologies
Europe B.V. transferred its entire shareholding in CSP to Avago in January 2006 and consequently,
Avago has replaced Agilent Technologies Europe B.V. in January 2006 as a shareholder of CSP. In
addition, with effect from January 2006, Agilent Technologies Europe B.V. has transferred and/or
assigned all its rights and obligations under
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the joint venture agreement with our company, EDB Investments and Singapex to Avago.
Currently, Chartered, Avago, EDB Investments and Singapex hold 51%, 15%, 26.5% and 7.5% equity
interest in CSP, respectively.
CSP owns and operates Fab 6. U.S. GAAP generally requires consolidation of all majority owned
(greater than 50%) subsidiaries. CSP is a consolidated subsidiary. Due to the cumulative losses of
CSP, our obligations to the minority shareholders of CSP were reduced to zero in the first quarter
of 2003. Therefore, none of CSP's losses from that point forward have been allocated to the
minority interest in our consolidated statements of operations.
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.
From March 1997 until October 2001, Agilent Technologies Europe B.V. had a 30% equity interest
in CSP. In October 2001, Agilent Technologies Europe B.V. sold one-half of its 30% share in CSP to
Singapex and EDB Investments, in equal proportion, resulting in our company, EDB Investments,
Agilent Technologies Europe B.V. and Singapex owning 51%, 26.5%, 15% and 7.5% equity interest in
CSP, respectively. Although Agilent Technologies Europe B.V. had a two-year option from October
2002 to reacquire the ownership interest that was sold, Agilent Technologies Europe B.V. did not
exercise the option within the stipulated two-year period and consequently, the option lapsed in
October 2004.
The reduction in Agilent Technologies Europe B.V.'s ownership in CSP in 2001 also had an
impact on Agilent Technologies, Inc.'s obligation to purchase a minimum number of wafers per year
and rights to purchase a maximum number of wafers per year from CSP. This reduction automatically
resulted in a reduction in Agilent Technologies, Inc.'s maximum capacity entitlement and in the
financial obligation associated with its minimum wafer purchase commitment requirement. As Agilent
Technologies Europe B.V. did not exercise its option to reacquire the ownership interest, Agilent
Technologies, Inc.'s maximum capacity entitlement and minimum wafer purchase commitment requirement
remain unchanged.
With the reduction of Agilent Technologies Europe B.V.'s ownership in CSP in 2001, the
joint-venture parties also agreed that directors appointed by Agilent Technologies Europe B.V.
would no longer have voting rights, although they would still remain on CSP's Board of Directors
and retain all their other existing rights and obligations. In addition, with effect from October
2001, Agilent Technologies Europe B.V. ceased to be a member of CSP's management committee. CSP's
Board of Directors comprises eight directors. As long as we own more than 50% of CSP, we can elect
four of the directors. Avago, having acquired all of the shares in CSP previously held by Agilent
Technologies Europe B.V. in January 2006, 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.
We and Agilent Technologies, Inc. contributed the original process technologies needed by CSP.
These process technologies are licensed to CSP for its own use and CSP cannot sub-license them to
others. Agilent Technologies, Inc., CSP and ourselves also 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 they are not related to CSP. Agilent Technologies,
Inc. has ceased its technology development for technology nodes beyond 0.25um, and as such, Agilent
Technologies, Inc. has ceased to contribute any process technologies involving these technology
nodes to CSP and CSP has since then been relying solely on the process technologies contributed by
our company. As part of Agilent Technologies, Inc.'s sale of its Semiconductor Products Group to
Avago Technologies Limited, Agilent Technologies, Inc. has, with effect from December 2005,
transferred or assigned all its rights and obligations under the cross-licenses to Avago
Technologies General IP (Singapore) Pte. Ltd.
Pursuant to our joint venture agreement, the CSP alliance will continue 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
interests proposed to be transferred. Upon a serious, uncured default of the joint-venture
agreement, the non-defaulting parties have the right to purchase all of the defaulting party's
interest in CSP 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.
Silicon Manufacturing Partners
In December 1997, we entered into the SMP strategic business alliance with Lucent Technologies
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Microelectronics Pte. Ltd., now known as Agere Systems Singapore, relating to the joint
venture ownership of Fab 5.
Agere Systems Singapore has a 51% equity interest in SMP and we have a 49% equity interest.
SMP's Board of Directors comprises five directors, three of whom are elected by Agere Systems
Singapore and two of whom are elected by us. We nominate the chairman of the Board of Directors and
the general manager, while Agere Systems Singapore names the finance director.
Pursuant to our agreement, the SMP strategic business alliance continues indefinitely until it
is terminated by written notice by either party. Neither party may give notice of termination prior
to February 2006, and the termination of the alliance will take effect two years from the date of
any 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 any serious,
uncured breach by us of our agreement, Agere Systems Singapore has the right to sell all of its
interest in SMP to us at 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 any
serious, uncured breach by Agere Systems Singapore of our agreement, we have the right to purchase
all of its interest in SMP at 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.
We and Agere Systems Singapore contribute the original process technologies needed by SMP.
These process technologies are licensed to SMP for its own use and SMP cannot sub-license them to
others. The licensed technologies are categorized as restricted and unrestricted technologies. We
and Agere Systems Singapore also 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 these uses are not related to SMP. We do not cross-license the
restricted technologies to one another, which means that only SMP can use such restricted process
technologies and intellectual property.
Chartered and Agere Systems Singapore have signed an assured supply and demand agreement with
SMP. Under this agreement, each of Chartered and Agere Systems Singapore is billed for allocated
wafer capacity if the wafers started for production for them are less than their respective
allocated capacity. These billings, if any, do not change the equity in income (loss) of SMP that
we recognize in our consolidated statements of operations. For the year ended December 31, 2005,
the wafers started for our company were less than the allocated capacity; however, we and Agere
Systems Singapore have agreed that such billings for this period will be waived. There were also no
such billings made to us for the corresponding period in 2004. To the extent the wafers started for
us is less than our allocated capacity in the future, there is no assurance that the billings for
our allocated wafer capacity would continue to be waived.
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 these activities.
SMP owns and 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. With effect from October 2001, Agere Systems
Singapore and we 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 business
alliance agreement, we and Agere Systems Singapore do not share SMP's net results in the same ratio
as our equity holdings. 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 share of SMP's net results based on the gross sales to the
customers that we direct to SMP, after deducting our share of the overhead costs.
During
2005, we and Agere Systems Singapore agreed to a reduction in wafer
prices for Agere Systems Singapore, related to the wafer capacity
allocated to Agere Systems Singapore, to the minimum price allowed
under the assured supply and demand agreement. As each shareholder is
entitled to the gross profits from sales to the customers that it
directs to SMP, the wafer price reduction did not affect the equity
in income (loss) of SMP and the share of retained post formation loss
that is included in our consolidated statements of operations and
consolidated balance sheets.
In September 2004, we and Agere Systems Singapore entered into a Supplemental Agreement to the
Joint Venture Agreement to provide that SMP could pay dividends out of the profits of the venture
determined on a year to year basis rather than a cumulative basis as previously was the case. We
received dividends of $29.5 million from SMP for the year ended December 31, 2005. We did not
receive any
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dividend from SMP for the year ended December 31, 2004.
In September 2005, we and Agere Systems Singapore agreed to reduce the issued and paid up
share capital of SMP from S$425,000,000 divided into 208,250,000 "A" ordinary shares of S$1 each
and 216,750,000 "B" ordinary shares of $1 each, to S$141,515,511 divided into 69,343,426 "A"
ordinary shares and 72,172,085 "B" ordinary shares. The capital reduction for SMP was approved by
the High Court of Singapore on October 13, 2005. The portion to be returned to us in the form of cash was $20.4 million, of which we had received $17.3 million in 2005. The
capital reduction through the extinguishment of accumulated losses
does not qualify as a quasi-reorganization under U.S. GAAP and accordingly has not been reflected in our consolidated financial statements.
Customers and Markets
We manufactured semiconductors for over 100 different active customers in 2005. Our top five
customers in 2005, in order of revenue contribution, were Broadcom, IBM, Agilent Technologies,
MStar Semiconductor and MediaTek. Collectively, our top five customers accounted for approximately
56% of our total net revenue in 2005, compared with approximately 52% in the previous year.
Broadcom and IBM each exceeded 10% of our total net revenue in 2005 compared with 2004 where
Broadcom, Agilent Technologies and MediaTek each exceeded 10% of our
total revenue. As the end markets we serve are typically cyclical, our top customer profile may change
from period to period depending on the strength of various market segments.
The following table sets forth our top five customers for 2005 in order of revenue:
Customer
Representative Products or Applications
Broadcom
Local area network switches/routers, set-top boxes,
cable modems, ethernet transceivers, network
processors, bluetooth and High Definition TV
IBM
Video game devices
Agilent Technologies
Mobile phone handsets and computer peripherals
MStar Semiconductor
Computer peripherals and TVs
MediaTek
Optical storage
We categorize revenue geographically based on the country in which the customer is
headquartered. The following table sets forth the geographical distribution of our revenue for the
periods indicated:
By Percentage:
2003
2004
2005
Americas
64
%
68
%
75
%
Europe
13
9
9
Asia-Pacific
18
20
13
Japan
5
3
3
Total
100
%
100
%
100
%
By $ (in thousands):
2003
2004
2005
Americas
$
351,930
$
631,150
$
774,950
Europe
72,249
85,125
91,844
Asia-Pacific
— Singapore
2,862
3,392
8,995
— Others
100,071
179,206
123,449
Japan
24,799
33,258
33,496
Total
$
551,911
$
932,131
$
1,032,734
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 an additional office in Austin,
Texas. We also maintain customer support offices in Hsin-Chu, Taiwan; Yokohama, Japan; Paris,
France; London, United Kingdom; Munich, Germany and Shanghai, China.
Our customers generally do not place their purchase orders far in advance. As a result, we do
not typically operate with any significant backlog.
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We currently allocate a portion of our wafer manufacturing capacity to certain customers under
several types of agreements.
Customer Service
We focus on providing a high level of customer service in order to attract customers and
maintain their on-going 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 three 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 marketing, EDA, silicon
engineering, third party partner and customer service/logistical support. The 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 account manager works with a dedicated
customer service representative, along with marketing and customer engineering support teams at the
factory.
Significant enhancements to our Chartered On-Line Access System, or COLAS, have enabled
customers to do more of their business with us online. Chartered is very committed to implementing
system-to-system links with customers and other partners. These linkages will take the human
dependence out of the transactions, and provide for data to be sent from our systems to our
customers' systems (and vice versa) directly and securely. We started COLAS with logistics-related
data and have now added other types of data, such as commercial and engineering information, to
this automated information-interchange process. The result is that communication between us and our
partners happens closer to the time events occur.
Research and Development
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 2003 and 2004, we invested $124.1
million and $118.3 million, respectively, in research and development. Those investments
represented 22.5% and 12.7% of our net revenue for the respective periods. In 2005, our research
and development expenses, including our share of expenses related to the IBM joint-development
agreement, were $122.1 million, or 11.8% of our net revenue, for the year. As of December 31, 2004,
we employed 280 professionals in our research and development department, 49 of whom have PhDs. As
of December 31, 2005, we employed 370 professionals in our research and development department, 62
of whom have PhDs. The increase in headcount in our research and development department was
primarily to support internal development for process specific intellectual property, customized
design developments, increased design activities to address design-for-manufacturability, or DFM,
for advanced technologies and increased customer design support required for both our mature and
advanced technologies.
Our investment in research and development allows us to continue developing new and advanced
processes down to the 45nm 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.
In August 2003, we and IBM extended our joint development agreement to include Infineon and in
March 2004, the agreement was extended to include Samsung. The March 2004 agreement replaces and is
in substitution of our joint development agreement with IBM and Infineon. Under the March 2004
agreement, IBM, Infineon, Samsung and Chartered are jointly developing a common advanced foundry
manufacturing bulk CMOS process technology at 65nm, as well as variants of that process modified
for high performance and low power products. Additionally, the parties can extend the March 2004
agreement to include 45nm technology.
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In December 2004, we and IBM expanded our joint development efforts to include 45nm bulk CMOS
process technology. We expect this reciprocal manufacturing arrangement to enable us to achieve
scale, cycle time and cost efficiencies in both leading-edge process technology and 300-mm
manufacturing, while also providing customers multiple sources of supply. The strengthening of our
technology roadmap resulting from our joint development agreements with IBM, Infineon and Samsung
provides us with faster access to leading-edge technology. This faster technological development
allows us to target substantially more "first source" business.
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. In 2004 and 2005, $19.0 million and $7.5 million, respectively, of such grants were
disbursed to us. These grants are disbursed in connection with research and development carried out
in Singapore, based on the amount of expenditures incurred, achievement of program milestones and
certification of the costs incurred. The main condition attached to the grants is the completion of
the project to which the grant relates. As our 65nm and 45nm bulk CMOS processes are jointly
developed in IBM's East Fishkill, New York, facilities, the amount of grants we were eligible to
receive from the Government of Singapore was significantly lower in 2005, as compared with 2004
and we expect that the amount of grants we may be eligible to receive from the Government of
Singapore will also be lower in 2006, as compared with 2005.
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, implanters,
sputterers, chemical vapor deposition, chemical mechanical planarization equipment, and metrology
equipment. In periods of high market demand, the lead times from order to delivery and complete
qualification of some of these types of equipment can extend beyond 15 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
(including SOI wafers), chemicals, gases, targets, quartz, equipment spare parts and consumables
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. 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 typically 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 six months 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, 2005, we had filed an aggregate of 2,146 patent applications worldwide,
(1,002 of which had been filed in the U.S.) and held an aggregate of 1,338 issued patents worldwide
(743 of which are issued U.S. patents). Of the 1,002 aggregate applications filed in the U.S., 743
had been issued as of December 31, 2005 and 23 had been allowed but not issued. Those 23 allowed
patent applications will be issued if and when we pay the applicable issuance fee. (Note:
References in this paragraph to aggregate figures include not only the figures for the period
itself but figures for previous years as well. Accordingly, if an aggregate of 2,146 patent
applications have been filed as of December 31, 2005, these include not only the patent
applications filed in the 12 months ended December 31, 2005 but all patent applications previously
filed by our company.)
The number of patents filed by us in 2004 and 2005 were 90 and 133, respectively, and the
number of patents issued to us in 2004 and 2005 were 198 and 239, respectively.
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Our issued patents have expiration dates ranging from 2011 to 2024. All of the allowed and
pending patents will expire after 2025. 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 communication 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. Additionally, we market services in several
countries in Asia which may not protect our intellectual property rights to the same extent as the
U.S.
Competition
The worldwide semiconductor foundry industry is highly competitive. Our principal competitors
are TSMC, UMC and SMIC as well as the foundry operation services of some IDMs, such as IBM. IDMs
principally manufacture and sell their own proprietary semiconductor products, but may offer
foundry services. In addition to those well-established companies, there have been a number of new
entrants to the semiconductor foundry industry. In particular, foundries in China, Malaysia and
Korea 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. As a result, we expect that there will be a
significant increase in worldwide semiconductor capacity during the next few 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 EDA tool support.
Environmental Matters and Compliance
We have implemented an extensive environmental management system. Four of the fabrication
facilities which we currently own or have an interest in, namely Fabs 2, 3, 5 and 6, are third
party certified through an internationally recognized ISO 14001 certifying body and our first
300-mm facility, Fab 7, which started commercial shipments in June 2005, is expected to be
certified in 2006. 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 these
environmental 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.
Insurance
We maintain industrial all-risk insurance for our facilities, equipment and inventories. The
insurance for our 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 relevant policy.
We also maintain public
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liability insurance for losses to others arising from our business operations, including
liabilities arising from the actions of our employees, and carry insurance for business
interruption resulting from these types of events. In addition, we also maintain product liability
insurance for damages sustained by others for bodily injury or property damage caused by our
product(s) except for exclusions as defined in the relevant policy. Some of our insurance coverage
for SMP is under Agere Systems, Inc.'s global group insurance policies.
In addition, we also have various insurance policies in place which cover our employees,
including our key employees, for work-related and general claims, including hospitalization,
personal accidents, business travel and workman's compensation.
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.
C.
ORGANIZATIONAL STRUCTURE
As of December 31, 2005, Chartered is part of the Temasek group of companies. A description of
the Temasek group and Chartered's position within the group may be found at "Item 7. Major
Shareholders and Related Party Transactions — Related Party Transactions — The Temasek Group."
Currently, Chartered has five subsidiaries, the particulars of which are as follows:
Proportion of
Country of
Date of
Ownership
Name of Subsidiary
Incorporation
Incorporation
Interest
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
%
D.
PROPERTY, PLANT AND EQUIPMENT
Leases
All of our fabrication facilities and our corporate offices are located in Singapore. Our
company previously operated Fab 1, which ceased operations at the end of March 2004, on land leased
from Ascendas Land (Singapore) Pte Ltd, or Ascendas, 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. Our company has sold and transferred its leasehold interest
in respect of Fab 1 and the plant and equipment located in the property to Amkor Technology Pte Ltd
for a total consideration of $6.5 million. The transaction was completed in January 2006.
Fabs 2 and 3 and our corporate offices are located on land which we lease from Terra
Investments Pte. Ltd., or Terra, a wholly owned subsidiary of Temasek, which in turn leases the
land from JTC. These leases run until 2024 with conditional options to extend the leases for
another 30 years. The sub-leases for Fab 2 and Fab 3 require us to make rental payments to Terra at
rates equal to the rent paid by Terra to JTC for the subject land through 2024. The sub-leases are registered with the
Singapore Land Authority (see "Item 19. Exhibits — Exhibit 4.17 and Exhibit 4.18.2")
The site slurry treatment plant for Fabs 2 and 3 is also located on land which we lease from
Terra, which in turn leases the land from JTC. This lease runs until 2030 with a conditional option
to extend for another 30 years. We are required to make rental payments to Terra at rates equal to
the rent paid by Terra to JTC for the subject land through 2030 (see "Item 19. Exhibits — Exhibit
4.19.1 and Exhibit 4.19.2").
CSP leases the land on which Fab 6 is located from Terra, which in turn leases it from JTC.
The lease runs until 2027 with a conditional option to extend for an additional 30 years. CSP is
required to make rental payments to Terra at rates equal to the rent paid by Terra to JTC for the
subject land through 2027 (see "Item 19. Exhibits — Exhibit 4.20.2 and Exhibit 4.20.3").
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Fab 7 is located on land which we lease from Terra which in turn leases the land from JTC. The
lease runs until 2030 with a conditional option to extend for an additional 30 years. Our company
is required to make rental payments to Terra at rates equal to the rent paid by Terra to JTC for
the subject land through 2030 (see "Item 19. Exhibits — Exhibit 4.21.1 and Exhibit 4.21.3").
Production Capacity and Utilization
For information on our production capacity and utilization, including wafer capacity, please
see "— B. Business Overview — Manufacturing Facilities."
ITEM 4A. UNRESOLVED STAFF COMMENTS
Not applicable.
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 — D. Risk Factors" above.
INDUSTRY OVERVIEW
The semiconductor industry is highly cyclical. For example, according to the Semiconductor
Industry Association, or the SIA, in terms of revenue, the worldwide semiconductor industry
contracted by approximately 32% from 2000 to 2001, then grew by approximately 18% from 2002 to
2003, and by approximately 28% and 7% sequentially in 2004 and 2005, respectively. Fabs can take
several years to plan, construct and begin operations. Therefore, during periods of favorable
market conditions, semiconductor manufacturers, which include dedicated foundry service providers,
often begin building new fabs in response to anticipated demand growth for semiconductors. As these
new fabs commence operations, a significant amount of manufacturing capacity is made available to
the semiconductor market resulting from the steep initial ramp up of these fabs. In the absence of
growth in demand, or if growth occurs more slowly than anticipated, this sudden increase in supply
results in semiconductor manufacturing over capacity, which can lead to sharp drops in utilization
of semiconductor fabs and put pressure on wafer selling prices.
Semiconductor manufacturing is very capital intensive in nature. For example, even in the
midst of challenging economic conditions in 2002, we invested $419.5 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 invested $220.8 million in capital expenditures in 2003, focused primarily on leading-edge
technologies. In 2004 and 2005, we invested $686.3 million and $628.1 million, respectively, in
capital expenditures, primarily in equipping Fab 7 as part of its phase 1 ramp with the balance
mainly for capacity additions in Fab 6. A high percentage of the cost of operating a fab is fixed
and therefore increases or decreases in capacity utilization rates can have a significant effect on
profitability. The unit cost of a wafer generally decreases as fixed overhead charges, such as
depreciation expense on the facility and semiconductor manufacturing equipment, are allocated over
a larger number of wafers produced.
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. As the price of wafers vary
significantly with technology and device complexity, the mix of wafers produced affects revenue and
profitability. In general, the prices for wafers of a given level of technology and device
complexity will decline over the product life cycle and foundries must continue to migrate to
increasingly sophisticated technologies or introduce value added solutions to maintain the same
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level of profitability. This requires continuous capital investment and depends on other
factors, as discussed in "Item 3. Key Information — D. Risk Factors — Risks Related to Our
Financial Condition — Failure to maintain high capacity utilization, optimize the technology mix of
our semiconductor wafer production and continuously improve our device yields would seriously harm
our prospects and financial condition," "Item 3. Key
Information — D. Risk Factors — Risks
Related to Our Operations — We may not be able to compete successfully in our industry" and
elsewhere in this document.
Following a period of high utilization rates during the industry upturn in 1999 and 2000, the
industry contraction in 2001 was the most severe in its history. Largely as a result of this, our
average utilization rate in 2001 and 2002 was 35% and 37%, respectively, resulting in significant
net losses in those periods. As the semiconductor industry recovered, our average capacity
utilization improved to 58% in 2003. Driven primarily by sequential growth in shipments during the
first half of 2004, despite experiencing market weakness from the second half of June 2004, our
average capacity utilization improved further to 80% in 2004. Correspondingly, 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 and our net loss in 2003 decreased significantly from the
previous year, and we reported net income in 2004.
The market weakness, which we experienced from the second half of June 2004 due to excess
inventories in the semiconductor companies and the softening in certain end markets, continued into the first
half of 2005 as the industry continued to work through the excess inventories. Our average capacity
utilization was 59% in the first quarter of 2005 and improved to 65% in the second quarter of 2005,
due mainly to improving market conditions. As market conditions continued to be favorable and due
mainly to the ramp up of 90nm shipments from our new Fab 7 from the third quarter of 2005, we
recorded sequential growth in shipments in the last two quarters of 2005 and our average
utilization rate was 74% and 79%, respectively, with an overall average capacity utilization of 70%
for the year 2005.
Our average capacity utilization, based on eight-inch equivalent wafers, from 2001 to 2005 is
as follows:
2001
2002
2003
2004
(1)
2005
(2)
Average capacity utilization
35
%
37
%
58
%
80
%
70
%
Notes:
(1)
Fab 1 ceased operations at the end of March 2004, with some of its operations moved to Fab 2.
(2)
Fab 7 started commercial shipment in June 2005.
2005 OVERVIEW
General Overview
The market weakness that we experienced from the second half of June 2004 continued into the
first half of 2005 as the industry continued to work through the excess inventories. Net revenue in
the first quarter of 2005 was $181.4 million and increased sequentially by 7% to $194.0 million in
the second quarter of 2005 as we began to see a recovery in demand in that same quarter. In the
second quarter of 2005, we saw strength in the communications and computer sectors, partially
offset by weakness in the consumer sector.
We posted significant revenue growth in the third quarter of 2005 mainly due to the ramp up of
90nm shipments from our first 300mm fab, Fab 7, which commenced commercial production in the second
quarter of 2005. Our net revenue in the third quarter of 2005 increased by 50% sequentially to
$290.1 million, due primarily to significant growth in the consumer sector followed by the
communications sector.
In the fourth quarter of 2005, our net revenue further increased by 27% sequentially to $367.2
million as we capitalized on the growth in our leading-edge technologies and also benefited from
favorable market conditions. The revenue growth came mainly from the consumer sector, and to a
lesser extent, the computer sector. Within the consumer sector, our 90nm shipments, driven by the
initial volume build for a new product launch before year-end, provided the impetus for growth. We
achieved our target to bring down our breakeven utilization to 75% in the fourth quarter of 2005
and returned to profitability in that same quarter.
Leading-edge technologies (0.13um and smaller process geometry technologies)
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We continued to see increased adoption of our leading-edge technologies as revenue from our
0.13um and smaller process geometry technologies increased by 145% between 2004 and 2005. Revenue
from our 0.13um and smaller process geometry technologies, including 90nm, represented 42% of our
total net revenue and revenue from 90nm technologies alone contributed 19% of our total net revenue
for 2005. In the third quarter of 2005, revenue from our 0.13um and smaller process geometry
technologies crossed the $100 million mark in a quarter, contributing over 40% of our total net
revenue. Revenue from our 90nm technologies alone exceeded $100 million in the fourth quarter of
2005, contributing 31% of our total net revenue in just the second full quarter of ramp.
During 2005, we increased our capacity of 0.13um and smaller process geometry technologies by
approximately 118% while we increased our total capacity by approximately 16% to 1.5 million
eight-inch equivalent wafers from 1.3 million eight-inch equivalent wafers in 2004, due primarily
to the ramp up of Fab 7.
In 2005, we announced the following in relation to our efforts in leading-edge technology:
•
Extension of our joint development efforts with IBM to include 45nm bulk CMOS process
technology. The Chartered-IBM joint development now spans three separate generations of
technologies from 90nm, 65nm to 45nm; and
•
Availability of a comprehensive 65nm design manual and Simulation Program with
Integrated Circuit Emphasis, or SPICE, models and production of 65nm multi-project wafers
in the fourth quarter of 2005.
Customers
In November 2005, we announced a sourcing agreement with Infineon for the manufacture of 65nm
logic products. Under the agreement, we will manufacture low-power mobile-phone products, with
initial prototypes expected in the first quarter of 2006 and production scheduled to begin in the
fourth quarter of 2006. This announcement builds on the joint 65nm technology development efforts
between IBM, Chartered, Infineon and Samsung.
Additionally, we announced in September 2005 that we will manufacture for ATI Technologies,
Inc., or ATI, on our 0.13um low-power, all copper process, providing ATI with additional
manufacturing capacity for its IMAGEON 2240 media processor for high-volume camera phones.
Electronic Design Automation/Intellectual Property
We further expanded the common design enablement platform during 2005 and also announced a
common DFM initiative to develop a standard platform that brings greater process control, higher
model accuracy and increased manufacturing awareness. Together with IBM and Samsung, we extended
the Design Enablement Program, launched in March 2004 for 90nm bulk CMOS processes, to include 65nm
bulk CMOS processes. The Design Enablement Program sets a platform for foundry compatibility,
design portability and flexible sourcing between our company and IBM at 90nm bulk CMOS processes
and for our company, IBM and Samsung at 65nm bulk CMOS processes. The Design Enablement Program
facilitates designers in the development of compatible design layout files that can be used
interchangeably across manufacturing facilities at our company, IBM and Samsung and includes
participation by leading EDA and DFM tool suppliers.
Financing
During the third quarter of 2005, we raised a total of $925 million from a public
offering of senior notes and a private placement of units. The senior notes consisted of $375
million of 5.75% senior notes due 2010 and $250 million of 6.375% senior notes due 2015. The units
comprised convertible redeemable preference shares, or Preference Shares, of par value $0.01 each
and amortizing bonds due 2010, or Amortizing Bonds, totaling $300 million. Chartered also
successfully completed a cash tender offer, repurchasing approximately 83.1%, or $478 million, of
our outstanding $575 million 2.5% senior convertible notes due April 2006.
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2006 PLANS
Planned Capacity
We expect to achieve total wafer capacity of approximately 1.8 million wafers (eight-inch
equivalent) for the full year of 2006, compared to approximately 1.5 million wafers (eight-inch
equivalent) for the full year of 2005. As part of our plan to expand our capability for
leading-edge technologies, we intend to expand our production capacity for 0.13um and smaller
process geometry technologies from approximately 25% of our total yearly wafer capacity in 2005 to
approximately 35% of our planned yearly wafer capacity in 2006.
Planned Capital Expenditures
Our aggregate capital expenditures for 2006 is expected to be approximately $650 million, of
which approximately $550 million is expected to be utilized for capital expenditure in our 0.13um
and smaller process geometry technologies. The remaining amounts are expected to be utilized
primarily for purchases of information systems, and for adding equipment in our fabs running more
mature technologies to maximize utilization corresponding to the anticipated product mix. We expect
depreciation and amortization to be approximately $520 million in 2006.
Planned Research and Development Expenditures
We expect to incur approximately $150 million for research and development, or R&D, in 2006,
as we expect an increase in development activities related to the 65nm technology node and also in
our share of expenses related to the Chartered-IBM joint-development for the 45nm technology node.
Our investment in R&D allows us to continue developing new and advanced processes down to the 45nm
technology node.
CRITICAL ACCOUNTING POLICIES
The preparation of the consolidated financial statements in accordance with U.S. 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 revenue and expenses during the reporting period. Estimates are based
on historical experience, current conditions and on various other assumptions that are believed to
be reasonable under the circumstances. Actual results could differ from these estimates. We believe
the following critical accounting policies require us to make significant judgments and estimates
in the preparation of our consolidated financial statements:
Depreciation and Amortization of Long-lived Assets
Our results of operations are generally affected by the capital intensive nature of our
business. A large proportion of our cost of revenue is fixed in nature. The major components of our
fixed costs included in our cost of revenue relate to depreciation on property, plant and equipment
and amortization of technology license arrangements.
We depreciate wafer fab buildings over 20 years, mechanical and electrical installations in
the fabs over ten years, and equipment and machinery over five years using the straight-line method
to their estimated recoverable salvage values. We amortize technology licenses over the shorter of
the license period or the estimated useful life of the license, which on weighted average is
approximately six years, using the straight-line method. These lives represent our estimate of the
periods that we expect to derive economic benefits from the assets. In estimating these useful
lives and recoverable salvage values of our property, plant and equipment and technology licenses
and in determining whether subsequent revisions to the useful lives and salvage values are
necessary, we consider the likelihood of technological obsolescence arising from changes in
production techniques, technology, market demand and intended use. We routinely review the
remaining estimated useful lives and salvage values of our property, plant and equipment and our
technology licenses to determine if such lives and values should be adjusted.
In commencing depreciation of Fab 7, our first 300-mm wafer fabrication facility, during the
second quarter of 2005, we have estimated recoverable salvage values that are higher than our
historical estimates for equipment when our other fabs began service. This is due primarily to the
equipment being at the early introduction of the life cycle of this technology and thus we expect
the estimates of salvage values at the end of our use of the equipment to be higher than we have
historically expected in our other fabs. We have historically estimated that we would not have recoverable salvage values.
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There have been no significant changes to our estimates of useful lives or salvage values
during any of the last three years. However, actual useful lives and salvage values of our
long-lived assets may be shorter or longer and higher or lower, respectively, than our estimates.
If we had used different estimates of useful lives or salvage values of our long-lived assets, our
results might have been materially different.
Recoverability of Long-lived Assets
We also routinely review our long-lived assets that are held for disposal for impairment in
comparison to their fair values, and we review assets that are held and used, including technology
licenses, for impairment whenever events or changes in circumstances indicate that their carrying
amounts may not be recoverable. We perform impairment tests for groups of assets at the lowest
level of identifiable independent cash flows. In determining the appropriate asset groupings, we
must make subjective judgments in identifying the independent cash flows that can be related to
each asset group considering our foundry model and the degree of interchangeability of the various
components of our manufacturing capacity. We consider the degree to which each asset group's
revenue depends on the revenue-producing activities of one or more other asset groups and the
availability of financial information on such asset groups. In some cases, it is not practical to
identify the cash flows associated with a particular asset or group of assets due to the integrated
nature of our production process and the multi-technology capability of our process equipment. The
result of our analysis is that we have identified the lowest level of identifiable independent cash
flows as our individual fabs.
The determination of recoverability is based on an estimate of undiscounted cash flows
expected to result from the use of the asset group and its eventual disposition. The estimate of
cash flows is based upon, among other things, certain assumptions about expected future operating
performance, ASP, utilization rates and other factors. If the sum of the undiscounted cash flows
(excluding interest) is less than the carrying value, an impairment charge is recognized for the
amount that the carrying value of the asset exceeds its fair value based on the best information
available, including discounted cash flow analysis. However, due to the cyclical nature of our
industry and changes in our business strategy, market requirements or the needs of our customers,
we may not always be in a position to accurately anticipate declines in the utility of our
equipment or licenses until they occur.
In 2003, 2004 and 2005, we recorded impairment charges of $9.0 million, $1.0 million and $3.9
million, respectively, on assets held for sale resulting from decisions to rationalize capacity and
therefore to sell certain assets. In 2004, we also recorded an impairment charge of $1.7 million
resulting from the migration to an enhanced manufacturing system.
However, if we had made different estimates of our future cash flows or fair values of our
assets held for sale, we might have reached different conclusions regarding impairments, and our
results might therefore have been materially different.
Valuation of Inventory
Our inventories are stated at the lower of cost or market (net realizable value) and consist
of work-in-progress, raw materials and consumable supplies and spares.
Cost.
Cost is determined using standard cost and an allocation of the cost variances arising
in the period of production, which approximates actual costs determined on the weighted average
basis. We determine the standard cost of each wafer based on estimates of the materials, labor, and
other costs incurred in each process step associated with the manufacture of our products. We
allocate labor and overhead costs to each step in the wafer production process based on normal fab
capacity utilization, with costs arising from abnormal under-utilization of capacity expensed when
incurred. The unit cost of a wafer generally decreases as fixed overhead charges are allocated over
a larger number of units produced. Conversely, during periods of low utilization of capacity, the
unit cost of a wafer would generally increase.
Net Realizable Value.
We routinely review our inventories for their saleability and for
indications of obsolescence to determine if inventories should be recorded at net realizable value.
Net realizable value is the estimated selling price in the ordinary course of business less the
estimated costs necessary to make a sale. In estimating the net realizable value of our
inventories, we consider the likelihood of changes in market demand for our inventories.
Judgments and estimates regarding future selling prices, level of demand and indications of
obsolescence must be made and used in connection with evaluating whether such write-downs are
needed and in what amount.
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As of December 31, 2004 and 2005, we reduced carrying values of inventory by $30.2 million and
$32.7 million, respectively, to write-down certain inventories to estimated net realizable value.
Subsequent to these write-downs, we sold or disposed of certain portions of such inventories. The
amounts ultimately realized for the years ended December 31, 2004 and 2005 were at or near to the
net realizable value we had previously estimated for these inventories, resulting in no significant
impact to our gross margins in each of those years.
If we had made different estimates on allocation of costs to different process steps, normal
and abnormal capacity utilization, future demand for existing inventory, or inventory selling
prices, we might have reached different conclusions regarding inventory values, and therefore our
results might have been materially different.
Revenue Recognition
We enter into arrangements with customers which typically include, in addition to
fabricating semiconductor wafers, pre-fabricating services such as engineering services and masks
generation, and associated assembly and test services. We derive revenue primarily from fabricating
semiconductor wafers and, to a lesser extent, from providing associated subcontracted assembly and
test services and pre-fabricating services.
When our arrangements include multiple deliverables, we evaluate whether to divide the
deliverables into separate units of accounting using certain specified criteria. The total
arrangement consideration is allocated to each unit of accounting based on fair values in
accordance with the methodology in Financial Accounting Standards Board, or FASB, Emerging Issues Task Force, or EITF, Issue 00-21,
"Accounting for Revenue Arrangements with Multiple Deliverables". Substantially all of our
arrangements for the sale of
semiconductor wafers and related services consists of a single unit of accounting. If we
had made different judgments and estimates regarding the components of our multiple-element
arrangements or their fair values, our results might be materially different.
Revenue for each unit of accounting is recognized when the contractual obligations have been
performed and, where applicable, delivery has occurred and title and risk of loss has passed to the
customer, there is evidence of a final arrangement as to the specific terms of the agreed upon sales,
selling prices to the customers are fixed or determinable and collection of the revenue is
reasonably assured. Generally, this results in revenue recognition upon shipment of wafers.
Other arrangements include sale of equipment and contemporaneous licensing of intellectual
property. Arrangement consideration is allocated between equipment and licensing of
intellectual property using the residual method based on the fair value of equipment sold.
Estimates of fair value of equipment are based on the resale prices of similar equipment sold
on the used equipment market. However, if we had made different estimates of fair value of
equipment, the allocation of income between gain on asset sales and income from intellectual
property might have been materially different. Income from intellectual property is
classified as a component of other income, net, in our consolidated statement of operations
as it is not considered as a source of income from our principal operations, and is
recognized when the title and risk of loss have passed to the customer or the license is
delivered, there is evidence of a final arrangement, fees are fixed or determinable, and
collectibility is reasonably assured.
We also receive income-related grants to subsidize training and research and development
expenses. Income is recognized on these grants when we believe it is probable that expenditures
already incurred will constitute qualifying expenditures for purposes of reimbursement under the
grants that have been awarded. If we had made different estimates of the amount or timing of
qualifying expenditures, our results might be materially different.
Sales Credits and Returns Allowances
Our revenue per wafer is generally dependent upon the wafer yield. The process technology for
the manufacture of semiconductor wafers is highly complex and 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 sales
credits or returns. We make estimates of wafer yield and potential sales credits and returns and
provide for such credits and returns 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. We have charged $5.9 million, $4.8 million and $18.3 million to
results of our operations for sales credits and returns for 2003, 2004 and 2005, respectively.
Sales credits and returns as a percentage of gross revenue may fluctuate from year to year and not
necessarily follow the gross revenue trend due to specific claims in any particular period related
to certain new processes and variations in wafer yield. We typically experience lower sales credits
and returns
43
Table of Contents
as the manufacturing processes mature and higher sales credits and returns on new processes.
Our actual sales credits and returns have not historically been significantly different from our
estimates, and our method of estimating sales credits and returns and the significant assumptions
used have been consistently determined over the past three years.
Significant management judgments and estimates must be made and used in connection with
determining revenue per wafer and in establishing the sales credits and returns allowances in any
accounting period. Had we made different estimates of wafer yield or future sales credits and
returns, our results might be materially different.
Collectibility of Accounts Receivable
Similarly, we must make estimates of the collectibility of our accounts receivable. We believe
that we adequately manage our credit risk through our credit evaluation process, credit policies,
and credit control and collection procedures. We review our accounts receivable on a periodic basis
and make specific allowances when there is doubt as to the collectibility of individual receivable
balances. In evaluating the collectibility 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. Our actual uncollectible accounts have not historically been significantly
different from our estimates. However, if we had made different estimates of collectibility of
individual receivable balances, our results might have been materially different.
Income Taxes
The tax rates used in the calculation of our tax liabilities, deferred tax assets and
deferred tax liabilities, assumes that we will fulfill qualifying conditions of the special tax
incentive. Those conditions require us to achieve fixed amounts of capital expenditure and
headcount by certain dates. If we do not meet those conditions, we will need to adjust the recorded
tax liabilities, deferred tax assets and deferred tax liabilities and apply the applicable
prevailing corporate tax rates.
In addition, the calculation of our tax liabilities and deferred tax assets and liabilities
involves dealing with uncertainties in the application of complex tax regulations. We recognize
liabilities based on our estimate of whether, and the extent to which, tax payments are probable.
If we ultimately determine that payment of these amounts is unnecessary, we reverse the liability
during the period in which we determine that the liability is no longer necessary. We record an
additional charge in our provision for taxes in the period in which we determine that the recorded
tax liability is less than we expect the ultimate assessment to be. Resolution of the uncertainties
in a manner inconsistent with our expectations could have a material impact on our results of
operations.
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 unutilized wear and tear allowances. 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.
We have evaluated our deferred tax asset position and the need for a valuation allowance. The
assessment requires the exercise of judgment on the part of our management with respect to, among
other things, expected future taxable income, as well as past performance, and prudent and feasible
tax planning strategies. Our forecast of expected future taxable income is based on historical
taxable income and projections of future taxable income over the periods that the deferred tax
assets are deductible. We consider the need for a valuation
allowance where negative evidence, such as cumulative losses in recent years, creates
significant uncertainty about our ability to earn future taxable income sufficient to realize tax
benefits in future years and is difficult to overcome.
A valuation
allowance is established for unutilized wear and tear allowances and other deferred tax assets
where it is more likely than not that such allowances and deferred tax assets will not be realized. As a result of this assessment, we have
recorded valuation allowance of $68.2 million and $322.4 million as of December 31, 2004 and
2005,
respectively. This did not result in a significant impact to our consolidated statement of
operations due primarily to a corresponding decrease and increase in deferred tax assets recorded
as of December 31, 2004 and 2005, respectively.
Change in market conditions that differ materially from our current expectations and changes
in future tax laws in the Singapore and international jurisdictions may cause us to change our
judgments of future taxable income. These changes, if any, may require us to adjust our existing
tax valuation allowance higher or lower than the amount we currently have recorded; such adjustment
could have a material impact on the tax expense for the fiscal year in which these changes
occur.
44
Table of Contents
RESULTS OF OPERATIONS
The following table sets forth certain operating data as a percentage of net revenue for the
periods indicated:
Years ended December 31,
2003
2004
2005
Net revenue
100.0
%
100.0
%
100.0
%
Cost of revenue
117.5
82.5
88.8
Gross profit (loss)
(17.5
)
17.5
11.2
Operating expenses:
Research and development
22.5
12.7
11.8
Fab start-up costs
1.7
3.6
2.2
Sales and marketing
7.0
4.0
4.1
General and administrative
7.4
3.6
3.7
Other operating expenses (income), net
(2.0
)
(0.9
)
0.4
Total operating expenses
36.6
23.0
22.2
Operating loss
(54.1
)
(5.5
)
(11.0
)
Other income (expense):
Equity in income (loss) of SMP
4.2
3.0
0.6
Other income
4.3
5.6
0.2
Interest expense and amortization of debt discount, net
(5.5
)
(2.0
)
(4.0
)
Exchange gain (loss), net
(0.1
)
0.1
(0.0
)
Income (loss) before income taxes and minority interest
(51.2
)
1.2
(14.2
)
Income tax expense
(2.1
)
(0.5
)
(1.3
)
Income (loss) before minority interest
(53.3
)
0.7
(15.5
)
Minority interest in loss of CSP
1.7
—
—
Net income (loss) prior to cumulative effect adjustment
(51.6
)
0.7
(15.5
)
Cumulative effect adjustment for change in accounting
principle
(1.2
)
—
—
Net income (loss)
(52.8
)%
0.7
%
(15.5
)%
Less: Accretion to redemption value of convertible
redeemable preference shares
—
—
(0.3
)%
Net income (loss) available to common shareholders
(52.8
)%
0.7
%
(15.8
)%
The following table sets forth a breakdown of revenue by market sector for the periods
indicated:
Years ended December 31,
2003
2004
2005
Communications
46
%
51
%
35
%
Computer
33
30
25
Consumer
17
15
35
Other *
4
4
5
Total
100
%
100
%
100
%
The following table sets forth a breakdown of revenue by geographical region for the
periods indicated:
Years ended December 31,
2003
2004
2005
Americas
64
%
68
%
75
%
Europe
13
9
9
Asia-Pacific
18
20
13
Japan
5
3
3
Total
100
%
100
%
100
%
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The following table sets forth a breakdown of revenue by technology (um) for the periods
indicated:
Years ended December 31,
2003
2004
2005
0.09 and below
—
%
—
%
19
%
Up to 0.13
9
19
23
Up to 0.18
15
16
10
Up to 0.25
21
19
10
Up to 0.35
30
29
23
Above 0.35
25
17
12
Other *
—
—
3
Total
100
%
100
%
100
%
Note:
*
Includes revenue from generation of customers' mask sets
Years ended December 31, 2004 and December 31, 2005
Net revenue
We derive revenue primarily from fabricating semiconductor wafers and, to a lesser extent,
under some arrangements with our customers, from providing associated subcontracted assembly and
test services as well as pre-fabrication services such as masks generation and engineering
services. Net revenue increased 10.8% from $932.1 million in 2004 to $1,032.7 million in 2005. The
semiconductor industry recovery, which began to accelerate in the second half of 2003, continued
into the first half of 2004. However, we experienced market weakness from the second half of June
2004 due to excess inventories in the semiconductor companies and softening in certain end markets.
This weakness continued into the first half of 2005 as the industry continued to work through the
excess inventories. We began to see a recovery in demand in the second quarter of 2005 as revenue
increased sequentially by 7.0% from the first quarter of 2005 to the second quarter of 2005. Our
revenue continued to increase sequentially by 49.5% and 26.6% in the third and fourth quarters of
2005, respectively. The increase in revenue in the third quarter of 2005 was due mainly to the ramp
up of 90nm shipments from our new Fab 7. Our net revenue increased in the fourth quarter of 2005
as we capitalized on the growth in our leading-edge technologies and also benefited from favorable
market conditions.
Our customers continued to make increased use of our leading-edge technologies, and revenue
from our 0.13um and smaller process geometry technologies increased by 145% between 2004 and 2005.
Revenue from these leading-edge technologies represented 19% of our total revenue in 2004 as
compared to 42% of our total revenue in 2005. Out of our total revenue in 2005, 19% was
attributable to revenue from our 90nm technologies, driven by 90nm shipments in the second half of
2005.
Shipments increased 4.8% from 921,014 wafers (eight-inch equivalent) in 2004 to 965,045 wafers
(eight-inch equivalent) in 2005. ASP increased slightly from $1,012 per wafer (eight-inch
equivalent) to $1,036 per wafer (eight-inch equivalent) over the same period.
In 2004, the communications sector, which represented 51% of our total revenue, was our
highest revenue contributor, followed by the computer sector at 30% of our total revenue. In 2005,
each of the communications and the consumer sectors represented 35% of our total revenue, while the
computer sector represented 25% of our total revenue.
Due primarily to a significant decrease in demand for mobile phone handsets devices, and to a
lesser extent, a decrease in demand for cable modems partially offset by an increase in demand for
digital subscriber line devices, communications sector revenue decreased by 24% between 2004 and
2005. Concurrently, computer sector revenue also decreased, but to a lesser extent, by 8% between
2004 and 2005, due primarily to a decrease in demand for optical storage devices, partially offset
by an increase in demand for personal computer peripherals, workstations and personal computer
motherboard devices.
On the other hand, revenue from the consumer sector, which represented 15% of our total
revenue in 2004, increased by 159% to account for 35% of our total revenue in 2005. This increase
was due primarily to a significant increase in demand for video game devices, and to a lesser
extent, an increase in demand
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Table of Contents
for MP3/CD/MD audio player/recorders devices and set-top box devices, partially offset by a
decrease in demand for DVD player/recorders devices.
As a result of customer mix changes, net revenue by geographical region increased by 22%, 11%,
11% in the Americas, Japan and Europe regions, respectively, in 2005 as compared to 2004. The Asia
Pacific region recorded a decline of 28% over the same period. The Americas continued to be our
largest contributor to revenue, representing 75% of our total revenue in 2005, an increase from 68%
of our total revenue in 2004.
Cost of revenue and gross profit
Cost of revenue includes depreciation expense, attributed overheads, cost of labor and
materials, subcontracted expenses for assembly and test services, masks generation costs, as well
as amortization of certain technology licenses. Cost of revenue increased by 19.2% from $769.3
million in 2004 to $917.0 million in 2005 as compared to a 4.8% increase in shipments due primarily
to increased depreciation and other manufacturing costs associated with the addition of new
capacity in 2005. A large proportion of our cost of revenue is fixed in nature and depreciation
continued to be a significant portion of our cost of revenue, comprising 50.8% and 47.6% of the
cost of revenue in 2004 and 2005, respectively.
The unit cost of a wafer generally decreases as fixed overhead charges, such as depreciation
expense on the facility and semiconductor manufacturing equipment, are allocated over a larger
number of wafers produced. Conversely, the unit cost of a wafer generally increases when a smaller
number of wafers are produced. However, when cost of revenue increases at a faster rate compared to
the increase in number of wafers produced, the unit cost of a wafer generally increases. Although
shipments increased by 4.8% between 2004 and 2005, cost per wafer shipped increased by 10.3% from
$835 (eight-inch equivalent) in 2004 to $921 (eight-inch equivalent) in 2005. This was due
primarily to our cost of revenue increasing at a higher rate than the increase in shipments,
arising from increased depreciation and other manufacturing costs associated with the addition of
new capacity in 2005.
As described in "Item 3. Key Information — D. Risk Factors — Risks Related to
Investment in a Corporation with International Operations — Exchange rate fluctuations may
increase our costs and capital expenditures, which could affect our operating results and financial
position," exchange rate fluctuations may increase our costs. However in 2004 and 2005, there is no
significant impact on our cost of revenue arising from fluctuations in exchange rates.
Our gross profit deteriorated from 17.5% of net revenue in 2004 to 11.2% of net revenue in
2005, due primarily to a lower utilization rate and increased depreciation and other manufacturing
costs associated with the addition of new capacity in 2005.
Research and development expenses
R&D expenses consist primarily of our share of expenses related to the Chartered-IBM
joint-development (on 90nm and 65nm technology node processes), salaries and benefits for R&D
personnel and depreciation of R&D equipment. R&D expenses increased by 3.2% from $118.3 million in
2004 to $122.1 million in 2005 due primarily to increased design services activities and higher
development activities related to our 65nm technology node, partially offset by lower R&D
expenditures related to 0.13um technologies as we completed our 0.13um technology development
program.
Fab start-up costs
Fab start-up costs, all related to Fab 7, decreased by 31.6% from $33.2 million in 2004 to
$22.7 million in 2005. From the first quarter of 2004, the ramp up activity level had increased in
support of our efforts to begin commercial shipments. Fab start-up costs decreased in the
second quarter of 2005 as Fab 7 entered commercial production during that quarter. No fab start-up
costs were recorded in the second half of 2005.
Sales and marketing expenses
Sales and marketing expenses consist primarily of payroll related costs for sales and
marketing personnel, EDA-related expenses and costs related to customer prototyping activities.
EDA-related expenses and costs related to customer prototyping activities represent some of our
sales and marketing efforts to attract new customers and expand our penetration on existing
customers. Sales and marketing expenses increased by 11.7% from $37.8 million in 2004 to $42.2
million in 2005. The increase was due primarily to higher expenses resulting from expanded offering
of EDA tools provided to assist customers in their design activities and higher financial support
for customer prototyping activities.
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Table of Contents
General and administrative expenses
General and administrative, or G&A, expenses consist primarily of salaries and benefits for
administrative personnel, consultancy, legal and professional fees and depreciation of
non-production equipment. G&A expenses increased by 14.5% from $33.9 million in 2004 to $38.8
million in 2005. This was due primarily to higher payroll-related expenses in 2005 and several
transactions in 2004 including a gain of $3.0 million associated with the resolution of
contingencies related to a technology license agreement and a gain of $1.1 million associated with
the resolution of a supplier advance that was considered doubtful of recovery.
Other operating expenses (income), net
Other operating income, net, of $9.0 million in 2004 related primarily to a gain of $10.4
million resulting from an equipment disposition with CSMC and resolution of a goods and services
tax matter of $4.9 million, partially offset by Fab 1 restructuring charges of $4.6 million and an
impairment charge of $1.7 million resulting from the migration to an enhanced manufacturing system.
Other operating expenses, net, of $3.9 million in 2005 related to a fixed asset impairment charge
on assets held for sale resulting from decisions to rationalize capacity and therefore to sell
certain assets. Further details are disclosed in Note 22 of the consolidated financial statements.
Equity in income of SMP
Equity in income of SMP was $27.6 million in 2004 compared to $6.5 million in 2005, due
primarily to significantly lower revenue in 2005 arising from demand weakness in certain end
markets. As with the results of our majority-owned fabs, the equity in income of SMP can have a
material effect on our results of operations. In 2004, the equity in income of SMP was $27.6
million compared to our net income of $6.6 million. The equity in income of SMP was $6.5 million in
2005 compared to our net loss of $159.7 million.
We have provided, for the two fiscal years ended December 31, 2005, the following information
on our total business base revenue, which includes our share of SMP revenue. Chartered's share of
SMP revenue and net revenue, including Chartered's share of SMP presented in the following table,
are non-U.S. GAAP financial measures. We have included this information because SMP can have a
material effect on our consolidated statements of operations and we believe that it is useful to
provide information on our share of SMP revenue in proportion to our total business base revenue.
However, SMP is a minority-owned joint venture company that is not consolidated under U.S. GAAP. We
account for our 49.0% investment in SMP using the equity-method. Under the strategic alliance
agreement with Agere Systems Singapore, 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 share of SMP's net results based on the gross profits from sales to
the customers that we direct to SMP, after deducting our share of the overhead costs. The following
table provides a reconciliation showing comparable data based on net revenue determined in
accordance with U.S. GAAP, which do not include our share of SMP:
2004
2005
(in millions)
Net revenue (U.S. GAAP)
$
932.1
$
1,032.7
Chartered's share of SMP revenue
$
170.8
$
99.2
Net revenue including Chartered's share of SMP
$
1,102.9
$
1,131.9
Additionally, the following table provides information that indicates the effect of SMP's
operations on some of our non-U.S. GAAP performance indicators:
2004
2005
Excluding
Including
Excluding
Including
Chartered's share
Chartered's share
Chartered's share
Chartered's share
of SMP
of SMP
of SMP
of SMP
Shipments (in thousands)*
921.0
1,035.5
965.0
1,051.8
ASP per wafer
$
1,012
$
1,065
$
1,036
$
1,045
Note:
*
Eight-inch equivalent wafers
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Table of Contents
Other income, net
Other income, net, in 2004 included the recognition of a gain of $14.3 million from the sale
of technology to CSMC, grant income of $29.5 million, of which $16.1 million arose from the closure
of a pending grant claim associated with a previously terminated joint technology development
agreement, and a gain of $2.8 million related to an intellectual property licensing agreement.
Other income, net, in 2005 included an expense of $7.0 million related to the termination of
hedging transactions and other costs as a result of the Tender Offer for and repurchase of our
Convertible Notes. Due primarily to the above, other income, net, decreased by 95.3% from $52.3
million in 2004 to $2.4 million in 2005.
Interest expense and amortization of debt discount, net
Interest expense and amortization of debt discount, net, increased by 122.0% from $18.6
million in 2004 to $41.2 million in 2005, due primarily to higher interest expense resulting from
higher interest rates and higher outstanding debt balances, partially offset by higher interest
income, and to a lesser extent, higher interest capitalization associated with capital expenditures
related to Fab 7 and Fab 6. See the "— Liquidity and Capital Resources — Current and expected
liquidity" section below for details of the borrowings we had obtained during the periods
indicated.
Income tax expense
We currently pay tax on (1) interest income, (2) rental income, (3) sales of wafers using
technologies that do not benefit from preferential tax treatment and (4) other income not
specifically exempted from income tax. In 2004, we recorded income tax expense of $4.8 million on
an income before income taxes of $11.3 million, including a reversal of $9.8 million of accrued
taxes resulting from the resolution of certain matters related to the closure of Fab 1. In 2005, we
recorded income tax expense of $13.0 million on a loss before income taxes of $146.6 million. The
increase in the effective tax expense in 2005 was due primarily to higher taxable net interest
income.
Minority interest in CSP
Due to cumulative losses, our obligations to the minority shareholders of CSP were reduced to
zero in the first quarter of 2003. Therefore none of CSP's losses from that point forward have been
allocated to the minority interest in our consolidated statements of operations. The effect of this
on our results of operations for 2004 and 2005 was losses not allocated to the minority interest
according to their proportionate ownership of $55.8 million and $64.9 million, respectively, and
this reduced net income (loss) in the same amounts indicated for the respective periods.
Accretion to redemption value of convertible redeemable preference shares
We are required to accrete the carrying amounts of the preference shares to their redemption
values at maturity and record such accretion over the remaining period until the maturity date on
August 17, 2010 using the effective interest method. Such accretion adjusts net income (loss)
available to common shareholders. Accretion charges for 2005 were $3.2 million. There were no
accretion charges for 2004. Refer to Note 15 of the consolidated financial statements for more
details on the preference shares.
Years ended December 31, 2003 and December 31, 2004
Net revenue
Net revenue was $932.1 million in 2004, up 68.9% compared to $551.9 million in 2003. The
semiconductor industry recovery began to accelerate in the second half of 2003 and continued into
the first half of 2004. However, we experienced market weakness from the second half of June 2004
due to excess inventories in the semiconductor companies and the softening in certain end markets
and we experienced a sequential revenue decline of 25.9% in the fourth quarter of 2004. The demand
weakness was concentrated in our 0.18um and 0.25um capacity and attributed to five of our larger
customers, even though our engagements with these customers are in diverse end markets. Despite a
weaker fourth quarter in 2004, we registered year-over-year revenue growth of 68.9% in 2004. This
growth was primarily the result of higher demand. Shipments in 2004 were 921,014 wafers (eight-inch
equivalent), an increase of 52.0% compared to 606,039 wafers (eight-inch equivalent) in 2003, due
to higher demand. ASP increased by 11.1% to $1,012
49
Table of Contents
per wafer (eight-inch equivalent) from $911 per wafer (eight-inch equivalent) over the same
period, due primarily to richer product and customer mix.
In 2003, the communications sector, which represented 46% of our total revenue, was our
highest revenue contributor, followed by the computer sector at 33% of our total revenue. Due
primarily to a significant increase in demand from mobile phone handset and LAN switches/routers
customers, communications sector revenue increased by 88% between 2003 and 2004. Concurrently,
computer sector revenue increased by 50% over the same period mainly due to significant increases
in revenue of the optical storage and personal computer peripherals markets, arising primarily from
a significant increase in shipments to these markets. As a result, communications and computer
sector revenue represented 51% and 30%, respectively, of our total revenue in 2004.
Net revenue by geographical region increased by 79%, 77%, 34% and 18% in the Americas, Asia
Pacific, Japan and Europe regions, respectively, in 2004 as compared to 2003. This was driven
primarily by increased shipments to all geographical regions in 2004. The Americas continued to be
our largest contributor to revenue, representing 68% of our total revenue in 2004, an increase from
64% of our total revenue in 2003.
Fab 1 ceased operations at the end of March 2004, having successfully transitioned a
significant portion of ongoing business to Fab 2. Our first quarter of 2004 revenue benefited
approximately $10 million from end-of-life and safety stock purchases by Fab 1 customers.
Cost of revenue and gross profit (loss)
Cost of revenue increased by 18.7% from $648.3 million in 2003 to $769.3 million in 2004
despite a 52.0% increase in volumes. Depreciation continued to be a significant portion of our cost
of revenue, comprising 58.6% and 50.8% of our cost of revenue in 2003 and 2004, respectively.
The unit
cost of a wafer generally decreases as fixed overhead charges, such as depreciation
expense on the facility and semiconductor manufacturing equipment, are allocated over a larger
number of units produced. Cost per wafer shipped decreased by 22.0% from $1,070 in 2003 to $835 in
2004 due to higher volumes and to a lesser extent, cost savings and avoidance from our cost
reduction programs. As described in "Item 3. Key Information — D. Risk Factors — Risks Related to
Investment in a Corporation with International Operations — Exchange rate fluctuations may
increase our costs and capital expenditures, which could affect our operating results and financial
position," exchange rate fluctuations may increase our costs. However in 2003 and 2004, there is no
significant impact on our cost of revenue arising from fluctuations in exchange rates. In 2003, as a percentage of net revenue, we recorded a gross loss of 17.5% of
net revenue. Due primarily to significantly higher revenue, we recorded a gross profit of 17.5% of
net revenue in 2004.
Research and development expenses
R&D expenses decreased by 4.7%, from $124.1 million in 2003 to $118.3 million in 2004, due
primarily to lower R&D expenditures related to 0.13um process.
Fab start-up costs
Fab start-up costs, all related to Fab 7, increased by 260.1% from $9.2 million in 2003 to
$33.2 million in 2004, as the activity level increased in support of our plan to begin commercial
production by mid-2005. We began equipment move-in at Fab 7, our first 300-mm fab, at the end of
March 2004. Fab 7 achieved functional 0.13um 300-mm wafers within five months of equipment move-in,
and launched engineering 300-mm wafers for both our 0.11um process and the Chartered-IBM 90nm
platform in 2004.
Sales and marketing expenses
Sales and marketing expenses decreased by 2.6% from $38.7 million in 2003 to $37.8 million
in 2004. The decrease was due primarily to lower financial support for customer prototyping
activities.
General and administrative expenses
G&A expenses decreased by 17.0% from $40.8 million in 2003 to $33.9 million in 2004. This is
due primarily to a gain of $3.0 million associated with the resolution of contingencies related to
a technology license agreement and a gain of $1.1 million associated with the resolution of a
supplier advance that was previously considered doubtful of recovery and a decrease in payroll
related expenses.
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Table of Contents
Other operating expenses (income), net
Other operating income, net, of $9.0 million in 2004 related primarily to a gain of $10.4
million resulting from an equipment disposition with CSMC and resolution of a goods and services
tax matter of $4.9 million, partially offset by Fab 1 restructuring charges of $4.6 million and an
impairment charge of $1.7 million resulting from the migration to an enhanced manufacturing system.
Fab 1 ceased operations at the end of March 2004, as planned. A summary of estimated and actual
restructuring and related costs incurred arising from the shutdown of Fab 1 is disclosed in Note 22
of the consolidated financial statements.
Other operating income, net, of $11.0 million in 2003 related to the following items:
•
A gain of $27.5 million associated with the cancellation of our employee bonus award plan.
•
A gain of $4.9 million resulting from equipment disposition.
Partially offset by:
•
A restructuring charge of $12.4 million relating to the phase out of Fab 1.
•
An impairment charge of $9.0 million on certain machinery and equipment that were
classified as held for sale on December 31, 2003, as part of our fab capacity
rationalization.
Further details are disclosed in Note 22 of the consolidated financial statements.
Equity in income (loss) of SMP
Equity in income of SMP was $23.2 million in 2003 compared to an income of $27.6 million in
2004, due primarily to lower depreciation charge and no interest cost in the second half of 2004 as
a result of early repayment of bank loans by SMP. As with the results of our majority-owned fabs,
the equity in income or loss of SMP can have a material effect on our consolidated statements of
operations. In 2003, the equity in income of SMP was $23.2 million compared to our net loss of
$291.2 million. The equity in income of SMP was $27.6 million in 2004 compared to our net income of
$6.6 million.
We have provided, for the two fiscal years ended December 31, 2004, the following information
on our total business base revenue, which includes our share of SMP revenue. Chartered's share of
SMP revenue and net revenue, including Chartered's share of SMP presented in the following table,
are non-U.S. GAAP financial measures. We have included this information because SMP can have a
material effect on our consolidated statements of operations and we believe that it is useful to
provide information on our share of SMP revenue in proportion to our total business base revenue.
However, SMP is a minority-owned joint venture company that is not consolidated under U.S. GAAP. We
account for our 49.0% investment in SMP using the equity method. Under the strategic alliance
agreement with Agere, 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 share of SMP's net results based on the gross profits from sales to the customers that we
direct to SMP, after deducting our share of the overhead costs.
The following table provides a reconciliation showing comparable data based on net revenue
determined in accordance with U.S. GAAP, which do not include our share of SMP:
2003
2004
(in millions)
Net revenue (U.S. GAAP)
$
551.9
$
932.1
Chartered's share of SMP revenue
$
175.8
$
170.8
Net revenue including Chartered's share of SMP
$
727.7
$
1,102.9
51
Table of Contents
Additionally, the following table provides information that indicates the effect of SMP's
operations on some of our non-U.S. GAAP performance indicators:
2003
2004
Excluding
Including
Excluding
Including
Chartered's share
Chartered's share
Chartered's share
Chartered's share
of SMP
of SMP
of SMP
of SMP
Shipments (in thousands)*
606.0
722.2
921.0
1,035.5
ASP per wafer
$
911
$
1,008
$
1,012
$
1,065
Note:
*
Eight-inch equivalent wafers
Other income, net
Other income, net, increased by 125.6% from $23.2 million in 2003 to $52.3 million in 2004,
due primarily to the recognition of a gain of $14.3 million from the sale of technology to CSMC
as well as from higher grant income, in particular from the recognition of income of $16.1 million
arising from the closure of a pending grant claim associated with a previously terminated joint
technology development agreement.
Interest expense and amortization of debt discount, net
Interest expense and amortization of debt discount, net, decreased by 38.2% from $30.1 million
in 2003 to $18.6 million in 2004, due primarily to higher interest capitalization associated with
the capital expenditures related to Fab 7 and Fab 6.
Income tax expense
In 2003 and 2004, we paid tax on interest income, rental income and other income not
specifically exempted from income tax. Each of our existing fabs 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. Income taxes decreased from $11.7 million in 2003 to $4.8
million in 2004. The decrease was due primarily to reversal of $9.8 million of accrued taxes
resulting from the resolution of certain matters related to the closure of Fab 1, partially offset
by a $3.6 million tax on income on the sale of technology to CSMC.
Minority interest in CSP
None of the losses in CSP were allocated to the minority interest in 2004, compared to $9.5
million in 2003. Due to cumulative losses, our obligations to the minority shareholders of CSP were
reduced to zero in the first quarter of 2003. Therefore, none of CSP's losses from that point
forward have been allocated to the minority interest in our consolidated statements of operations.
The result of this on our consolidated statements of operations was losses not allocated to the
minority interest according to their proportionate ownership of $74.3 million and $55.8 million for
2003 and 2004, respectively, and this reduced net (loss) income in the same amounts indicated for
the respective periods.
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, 2005. 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 consolidated statements 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. See "Item 3. Key Information — D. Risk Factors — Risks Related to Our Operations
— Our operating results fluctuate from quarter to quarter, which makes it difficult to predict our
future performance."
52
Table of Contents
Quarter ended
(in millions $)
Mar 31,
Jun 30,
Sep 30,
Dec 31,
Mar 31,
Jun 30,
Sep 30,
Dec 31,
2004
2004
2004
2004
2005
2005
2005
2005
Consolidated Statements of
Operations Data:
Net revenue
228.4
255.8
257.3
190.6
181.4
194.0
290.1
367.2
Cost of revenue
183.8
195.8
199.8
189.9
191.1
193.6
253.1
279.3
Gross profit (loss)
44.6
60.0
57.5
0.7
(9.7
)
0.4
37.0
87.9
Operating expenses
Research and development
29.9
32.3
27.7
28.5
27.3
27.7
31.7
35.3
Fab start-up costs
3.6
8.1
11.6
9.9
14.8
7.9
—
—
Sales and marketing
8.7
10.2
9.9
8.9
10.5
10.1
11.4
10.2
General and administrative
6.3
10.4
9.1
8.0
9.3
10.6
9.2
9.7
Other operating expenses
(income), net
3.1
2.4
(4.5
)
(10.0
)
—
3.9
—
—
Total operating expenses
51.6
63.4
53.8
45.3
61.9
60.2
52.3
55.2
Operating income (loss)
(7.0
)
(3.4
)
3.7
(44.6
)
(71.6
)
(59.8
)
(15.3
)
32.7
Other income (expense):
Equity in income (loss) of SMP
11.4
10.4
16.1
(10.4
)
(9.0
)
0.8
4.2
10.5
Other income (loss), net
7.7
17.0
2.8
24.8
2.5
3.0
(4.9
)
1.9
Interest expense and
amortization of debt
discount, net
(7.7
)
(6.0
)
(3.6
)
(1.2
)
(2.5
)
(8.7
)
(14.0
)
(16.1
)
Exchange gain (loss), net
0.0
0.3
(0.3
)
1.3
(0.5
)
0.7
0.5
(1.1
)
Income (loss) before income taxes
4.4
18.3
18.7
(30.1
)
(81.1
)
(64.0
)
(29.5
)
27.9
Income tax benefit (expense)
(2.5
)
(3.0
)
(2.5
)
3.3
(3.4
)
(3.1
)
(5.0
)
(1.4
)
Net income (loss)
1.9
15.3
16.2
(26.8
)
(84.5
)
(67.1
)
(34.5
)
26.5
Less: Accretion to redemption value
of convertible redeemable
preference shares
—
—
—
—
—
—
(0.8
)
(2.4
)
Net income (loss) available to
common shareholders
1.9
15.3
16.2
(26.8
)
(84.5
)
(67.1
)
(35.3
)
24.1
53
Table of Contents
Quarter ended
(as a percentage of net revenue)
Mar 31,
Jun 30,
Sep 30,
Dec 31,
Mar 31,
Jun 30,
Sep 30,
Dec 31,
2004
2004
2004
2004
2005
2005
2005
2005
Consolidated Statements of
Operations Data:
Net revenue
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
Cost of revenue
80.5
76.6
77.6
99.6
105.4
99.8
87.2
76.0
Gross profit (loss)
19.5
23.4
22.4
0.4
(5.4
)
0.2
12.8
24.0
Operating expenses
Research and development
13.1
12.6
10.8
14.9
15.1
14.3
10.9
9.6
Fab start-up costs
1.6
3.2
4.5
5.2
8.1
4.0
—
—
Sales and marketing
3.8
3.9
3.8
4.7
5.8
5.2
3.9
2.8
General and administrative
2.7
4.1
3.5
4.2
5.1
5.5
3.2
2.7
Other operating expenses
(income), net
1.4
1.0
(1.7
)
(5.2
)
—
2.0
—
—
Total operating expenses
22.6
24.8
20.9
23.8
34.1
31.0
18.0
15.1
Operating income (loss)
(3.1
)
(1.4
)
1.5
(23.4
)
(39.5
)
(30.8
)
(5.2
)
8.9
Other income (expense):
Equity in income (loss)
of SMP
5.0
4.1
6.2
(5.5
)
(5.0
)
0.4
1.4
2.9
Other income (loss), net
3.4
6.7
1.1
13.0
1.4
1.5
(1.7
)
0.5
Interest expense and
amortization of debt
discount, net
(3.4
)
(2.3
)
(1.4
)
(0.6
)
(1.4
)
(4.4
)
(4.9
)
(4.4
)
Exchange gain (loss), net
(0.0
)
0.1
(0.1
)
0.7
(0.2
)
0.3
0.2
(0.3
)
Income (loss) before income
taxes
1.9
7.2
7.3
(15.8
)
(44.7
)
(33.0
)
(10.2
)
7.6
Income tax benefit (expense)
(1.1
)
(1.2
)
(1.0
)
1.7
(1.9
)
(1.6
)
(1.7
)
(0.4
)
Net income (loss)
0.8
6.0
6.3
(14.1
)
(46.6
)
(34.6
)
(11.9
)
7.2
Less: Accretion to
redemption value of
convertible redeemable
preference shares
—
—
—
—
—
—
(0.3
)
(0.6
)
Net income (loss) available
to common shareholders
0.8
%
6.0
%
6.3
%
(14.1
)%
(46.6
)%
(34.6
)%
(12.2
)%
6.6
%
Net revenue
The global recovery in the semiconductor industry, which began to accelerate in the second
half of 2003, continued through the first half of 2004. As a result, net revenue increased
sequentially from the first quarter of 2004 to the second quarter of 2004. However, we experienced
market weakness from the second half of June 2004 due to excess inventories in the semiconductor companies and softening in certain end markets. This weakness continued into the first half of 2005 as the
industry continued to work through the excess inventories. This resulted in a sequentially flat
third quarter of 2004 followed by a sequential decline of 25.9% and 4.9% in net revenue for the
fourth quarter of 2004 and the first quarter of 2005, respectively.
We began to see a recovery in demand in the second quarter of 2005 as revenue increased
sequentially by 7.0% from the first quarter of 2005 to the second quarter of 2005. Our revenue
continued to increase sequentially by 49.5% and 26.6% in the third and fourth quarters of 2005,
respectively. The increase in revenue in the third quarter of 2005 was due mainly to the ramp up of
our new Fab 7 90nm shipments. Our
54
Table of Contents
net revenue increased in the fourth quarter of 2005 as we capitalized on the growth in our
leading-edge technologies and also benefited from favorable market conditions.
Gross margin
The unit cost of a wafer generally decreases as fixed overhead charges, such as depreciation
expense on the facility and semiconductor manufacturing equipment, are allocated over a larger
number of units produced. Gross margin improved from the first quarter of 2004 to the second
quarter of 2004, due primarily to sequential increases in quarterly net revenue. In the third
quarter of 2004, gross margin was down 4.1% sequentially from $60.0 million, or 23.4%, of revenue
in the second quarter of 2004, due primarily to increased costs associated with addition of new
capacity and lower utilization rate. Gross margin declined further by 98.7% sequentially in the
fourth quarter of 2004 due primarily to lower revenue as overall market demand fell, partially
offset by sale amounting to $1.6 million of certain inventories for which we had previously written
down to an estimated net realizable value of zero in the third quarter of 2004. Such sale improved
our gross margin by approximately $1.6 million in the fourth quarter of 2004.
We recorded a negative gross margin of 5.4% for the first quarter of 2005 as revenue continued
to decline further from the fourth quarter of 2004. We began to see a recovery in demand in the
second quarter of 2005 and gross margin improved to a positive 0.2%. The revenue growth in the
third and fourth quarters of 2005 resulted in the further improvement of our gross margin in the
third and fourth quarters of 2005 to 12.8% and 24.0%, respectively.
Research and development expenses
The sequential increase of R&D expenses in the second quarter of 2004 was due primarily to an
increase in EDA development costs. R&D expenses decreased sequentially in the third quarter of 2004
due primarily to a reduction in R&D activities related to 0.13um technologies and remained at
approximately similar levels in the fourth quarter of 2004 and through to the second quarter of
2005. The increase in the third quarter of 2005 is due primarily to increased activity level at the
65nm technology node, while the sequential increase in the fourth quarter of 2005 was due primarily
to increased design services activities.
Fab start-up costs
Fab start-up costs, all related to Fab 7, increased sequentially from the first quarter of
2004 to the third quarter of 2004, as we began equipment move-in in the first quarter of 2004. Fab
7 started pilot production at the end of 2004 and fab start-up costs increased sequentially in the
first quarter of 2005 as the activity level increased in support of our efforts to begin commercial
shipments. Fab start-up costs decreased in the second quarter of 2005 as Fab 7 entered commercial
production during the second quarter of 2005. No fab start-up costs were recorded in the second
half of 2005.
Other operating expenses (income), net
In 2004, we recorded a total of $4.6 million in restructuring charges related to Fab 1, mainly
incurred in the first quarter of 2004 when the operations of Fab 1 ceased. Other operating
expenses, net, in the second quarter of 2004 related primarily to an impairment charge of $1.7
million resulting from the migration to an enhanced manufacturing system. In the third quarter of
2004, we recorded an income of $4.9 million related to resolution of a goods and services tax
matter. In the fourth quarter of 2004, we recorded a gain of $10.4 million resulting from an
equipment disposition with CSMC. Other operating expenses of $3.9 million in the second quarter of
2005 related to a fixed asset impairment charge on assets held for sale. We did not incur any other
operating expenses (income), net, in the first, third and fourth quarters of 2005.
Equity in income (loss) of SMP
As with the results of our majority-owned fabs, the equity in income or loss of SMP can have a
material effect on our quarterly consolidated statements of operations. We recognized equity in
income of SMP in each of the quarters for the period from the first quarter of 2004 to the third
quarter of 2004, due primarily to growing SMP revenue over that period. However, due primarily to
significantly lower demand in the fourth quarter of 2004 and the first quarter of 2005, we recorded
equity in loss of SMP of $10.4 million and $9.0 million, respectively. In the second quarter of
2005, we recognized equity in income of SMP of $0.8 million due primarily to higher revenue. The
sequential increase in equity in income of SMP in the third quarter of 2005 was due primarily to
lower depreciation expense recorded by SMP. Equity in income of SMP continued to increase
sequentially in the fourth quarter of 2005 due primarily to higher revenue. The equity in income
55
Table of Contents
or loss of SMP for the eight fiscal quarters ended December 31, 2005 were significant amounts
when compared to the net income or net loss of the respective fiscal quarters during that period.
We have provided, for the eight fiscal quarters ended December 31, 2005, the following
information on our total business base revenue, which includes our share of SMP revenue.
Chartered's share of SMP revenue and net revenue, including Chartered's share of SMP presented in
the following table, are non-U.S. GAAP financial measures. We have included this information
because SMP can have a material effect on our consolidated statements of operations and we believe
that it is useful to provide information on our share of SMP revenue in proportion to our total
business base revenue. However, SMP is a minority-owned joint venture company that is not
consolidated under U.S. GAAP. We account for our 49.0% investment in SMP using the equity-method.
Under the strategic alliance agreement with Agere Systems Singapore, 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 share of SMP's net results based on the
gross profits from sales to the customers that we direct to SMP, after deducting our share of the
overhead costs. The following table provides a reconciliation showing comparable data based on net
revenue determined in accordance with U.S. GAAP, which do not include our share of SMP:
Mar 31,
Jun 30,
Sep 30,
Dec 31,
Mar 31,
Jun 30,
Sep 30,
Dec 31,
2004
2004
2004
2004
2005
2005
2005
2005
(in millions)
Net revenue (U.S. GAAP)
$
228.4
$
255.8
$
257.3
$
190.6
$
181.4
$
194.0
$
290.1
$
367.2
Chartered's share of
SMP revenue
$
55.3
$
52.3
$
49.2
$
14.1
$
14.7
$
25.9
$
26.4
$
32.2
Net revenue including
Chartered's share of
SMP
$
283.7
$
308.1
$
306.5
$
204.7
$
196.1
$
219.9
$
316.5
$
399.4
Additionally, the following tables provide information that indicates the effect of SMP's
operations on some of our non-U.S. GAAP performance indicators:
Mar 31, 2004
Jun 30, 2004
Sep 30, 2004
Dec 31, 2004
Excluding
Including
Excluding
Including
Excluding
Including
Excluding
Including
Chartered's
Chartered's
Chartered's
Chartered's
Chartered's
Chartered's
Chartered's
Chartered's
share of
share of
share of
share of
share of
share of
share of
share of
Quarter ended
SMP
SMP
SMP
SMP
SMP
SMP
SMP
SMP
Shipments (in
thousands)*
232.8
268.4
244.0
279.2
252.4
287.1
191.8
200.8
ASP per wafer
$
981
$
1,057
$
1,048
$
1,103
$
1,019
$
1,068
$
994
$
1,019
Note:
*
Eight-inch equivalent wafers
Mar 31, 2005
Jun 30, 2005
Sep 30, 2005
Dec 31, 2005
Excluding
Including
Excluding
Including
Excluding
Including
Excluding
Including
Chartered's
Chartered's
Chartered's
Chartered's
Chartered's
Chartered's
Chartered's
Chartered's
share of
share of
share of
share of
share of
share of
share of
share of
Quarter ended
SMP
SMP
SMP
SMP
SMP
SMP
SMP
SMP
Shipments (in
thousands)*
175.8
186.2
203.8
224.5
270.7
295.2
314.8
345.8
ASP per wafer
$
996
$
1,019
$
913
$
944
$
1,035
$
1,039
$
1,139
$
1,130
Note:
*
Eight-inch equivalent wafers
56
Table of Contents
Other income (loss), net
We recognized rental income in each of the eight fiscal quarters ended December 31, 2005 and
R&D and training grant income in each of the fiscal quarters from the first quarter of 2004 to the
third quarter of 2005. We also recognized a gain of $2.8 million related to an intellectual
property licensing agreement in the first quarter of 2004. In the second quarter of 2004, we
recognized higher grant income, in particular from the recognition of an income of $16.1 million
arising from the closure of a pending grant claim associated with a previously terminated joint
technology development agreement. Other income in the fourth quarter of 2004 included a gain of
$14.3 million related to the sale of technology to CSMC and training grant income of $8.4 million.
Other loss, net, in the third quarter of 2005 was due primarily to an expense of $7.0 million
related to the termination of hedging transactions and other costs as a result of the Tender Offer
for and repurchase of our Convertible Notes.
Interest expense and amortization of debt discount, net
Interest expense and amortization of debt discount, net, remained at approximately similar
levels from the first quarter of 2004 to the second quarter of 2004. Interest expense and
amortization of debt discount, net, declined sequentially by 30.6% in the third quarter of 2004 and
decreased further by 25.6% in the fourth quarter of 2004. These decreases were due primarily to
higher interest capitalization associated with the capital expenditure related to Fab 7 and Fab 6.
We started to record sequential quarterly increases in interest expense and amortization of
debt discount, net, from the first quarter of 2005 to the third quarter of 2005, due primarily to
higher interest expense resulting from higher outstanding debt balances and higher interest rates,
partially offset by higher interest income. The sequential increase in interest expense and
amortization of debt discount, net, in the fourth quarter of 2005 was due primarily to higher
interest expense on capital lease obligations.
Accretion to redemption value of convertible redeemable preference shares
We are required to accrete the carrying amounts of the preference shares, which were issued in
the third quarter of 2005, to their redemption values at maturity and record such accretion over
the remaining period until the maturity date on August 17, 2010 using the effective interest
method. Such accretion adjusts net income (loss) available to common shareholders. Accretion
charges for the third and fourth quarters of 2005 were $0.8 million and $2.4 million, respectively.
There were no accretion charges prior to the third quarter of 2005. Refer to Note 15 of the
consolidated financial statements for more details on the preference shares.
LIQUIDITY AND CAPITAL RESOURCES
Current and expected liquidity
As of December 31, 2005, our principal sources of liquidity included $819.9 million in cash
and cash equivalents, and $591.8 million of unutilized banking facilities consisting of term loans,
short-term advances and bankers' guarantees.
In August 2005, mainly to repurchase our Convertible Notes, we raised an aggregate of $925.0
million from a public offering of $625.0 million of senior notes and a private placement of $300.0
million of units. We used the remaining proceeds from the offerings in excess of the amount used to
repurchase our Convertible Notes for working capital purposes. The units comprise preference shares
of par value $0.01 each and Amortizing Bonds, with an aggregate issue price of $300.0 million. See
"— Outstanding indebtedness" below for further details on the senior notes and the Amortizing
Bonds.
In August 2005, we also commenced the Tender Offer for our Convertible Notes. As of the
expiration of the Tender Offer in September 2005, $477.8 million original principal amount of our
Convertible Notes, representing approximately 83.1% of our Convertible Notes, were validly tendered
for purchase and not withdrawn and we accepted these Convertible Notes, or Accepted Notes, for
purchase. The purchase price for the Accepted Notes was $1,140 for each $1,000 of original
principal amount of Convertible Notes plus the pro rata portion of the 2.5% per year semi-annual
interest payment accrued and unpaid up to, but excluding the settlement date of the Tender Offer.
The aggregate purchase price for the Accepted Notes was $549.7 million. Following the completion of
the Tender Offer, $97.2 million original principal amount of our Convertible Notes remained
outstanding as of December 31, 2005. The interest rate swap contracts, which were previously
entered into in respect of the fixed-rate obligations associated with the Convertible Notes, were
terminated in September 2005, and we recorded an expense of $7.0 million related to the
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Table of Contents
termination of these hedging transactions and other costs as a result of the Tender Offer for
and repurchase of our Convertible Notes.
Working capital, which is calculated as the excess of current assets over current liabilities,
was $162.7 million as of December 31, 2004. Our working
capital increased to $550.3 million as of
December 31, 2005. This resulted primarily from our cash and cash equivalents balance increasing
from $539.4 million as of December 31, 2004 to $819.9 million as of December 31, 2005, due mainly
to the remaining proceeds from the senior notes and units offerings in excess of the amount used to
repurchase our Convertible Notes in 2005.
Our target cash and cash equivalents balance as of December 31, 2006 is approximately $700
million. This is based on our cash and cash equivalents of $820 million as of December 31, 2005,
planned draw downs of approximately $300 million of our existing credit facilities, estimated net
receipts of capacity deposits of approximately $140 million, expected cash outflows for capital
expenditures of approximately $650 million and debt repayments of approximately $320 million in
2006. Our target cash and cash equivalents balance also depends on our ability to generate
operating cash flow in 2006 and will depend largely on our operations and other factors, as
discussed in "Item 3. Key Information — D. Risk Factors — Risks Related To Our Operations — Our
operating results fluctuate from quarter to quarter, which makes it difficult to predict our future
performance" and elsewhere in this document.
Based on our current level of operations, we believe that our cash on hand, planned use of existing
credit facilities, credit terms with our vendors, and projected cash flows from operations will be
sufficient to meet our 2006 capital and research and development expenditures and working capital
needs. Depending on the pace of our future growth and technology
upgrades and migration, we may require additional financing from time to time, including for purposes of funding the capital
expenditure to equip Fab 7 to its full planned capacity of
30,000 300-mm wafers per month. The completion of Fab 7 is expected to take a number of years and will be paced by customer
demand and industry conditions. Our total capital investment in
Fab 7 at completion is expected to be
approximately $2,700 million to $3,000 million.
We believe in maintaining maximum flexibility when it comes to financing our business. We
regularly evaluate our current and future financing needs and may take advantage of favorable
market conditions to raise additional financing.
There can be no assurance that our business will generate and continue to generate sufficient cash
flow to fund our liquidity needs in the future, or 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.
Historic operating cash flows
In 2003, 2004 and 2005, net cash provided by operating activities was $48.1 million, $331.7
million and $404.4 million respectively. The $283.6 million improvement in cash provided by
operating activities in 2004 as compared to 2003 was primarily a result of higher revenues in 2004.
In addition, we had higher collections from SMP. These improvements were partially offset by higher
payments on our payables and other current liabilities.
The $72.7 million increase in cash flow from operating activities in 2005 as compared to 2004
was due primarily to higher collections as a result of higher sales. Cash flows from operating
activities in 2005 include receipt of a pre-payment of $40.0 million from a customer for future
purchases which also secures access to wafer capacity, of which a fixed amount per wafer will be
recorded by us as additional revenue for every qualifying wafer purchased by the customer, with no
future related cash inflows. There was no receipt of pre-payment for future purchases in 2004. Cash
flow from operating activities in 2005 also included dividends of $29.5 million from SMP, compared
to zero dividends in 2004.
Historic investing cash flows and capital expenditures
Net cash used in investing activities was $384.3 million, $732.7 million and $571.1 million in
2003, 2004 and 2005 respectively. Investing activities consisted primarily of capital expenditures
totaling $220.8 million, $686.3 million and $628.1 million in 2003, 2004 and 2005 respectively.
Capital expenditures in 2003 related mainly to capacity additions in Fab 6. Capital expenditures in
2004 and 2005 related mainly to the equipping of Fab 7 as part of its phase 1 ramp and capacity
additions in Fab 6.
Investing activities in 2003 also included placement of a refundable deposit to secure wafer
capacity for one of our more advanced technologies and payments for technology licenses and for
purchase of marketable investments. Investing activities in 2004 also included placement of a
refundable deposit to secure wafer capacity for one of our more advanced technologies and payments
for technology licenses and for the purchase of marketable investments, partially offset by
proceeds from sale of property, plant and equipment and from the redemption and maturity of
marketable instruments. Investing activities in 2005 also included proceeds from the redemption and
maturity of marketable instruments and the return of capital from
SMP.
We are taking a phased approach to the full equipping of Fab 7 to 30,000 300-mm wafers per
month, which is expected to take a number of years and will be paced by customer demand and
industry conditions. Our aggregate capital expenditures for 2006 is expected to be approximately
$650 million, of which approximately $550 million is expected to be utilized for capital
expenditures for the further expansion of capacities of 0.13um and smaller process geometry
technologies for our fabs. The remaining amounts are expected to be utilized primarily for
purchases of information systems, and for adding equipment in our fabs running more mature
technologies to maximize utilization corresponding to the anticipated product mix. We estimate
aggregate capital expenditures for phase 1 of our build-out of production capacity in Fab 7 to
18,000 300-mm wafers per month to be $1,700 million. The total capacity for phase 1 has been
increased by 20% from our previous plan of 15,000 300-mm wafers due to our expected improvement in
productivity. As of December 31, 2003, December 31, 2004 and December 31, 2005, we have spent an
accumulated total of $227.1 million, $637.9 million and $1,201.9 million, respectively, on the
equipping of Fab 7 as part of its phase 1 ramp, where Fab 7 had a wafer capacity of approximately
10,000 300-mm wafers per month as of December 31, 2005. At completion, which is expected to give
Fab 7 a capacity of 30,000 300-mm wafers per month, our total capital investment in Fab 7 is
expected to be approximately $2,700 million to $3,000 million. As of December 31, 2003, December
31, 2004 and December 31, 2005, we had commitments on contracts for capital expenditures of $398.3
million, $312.9 million and $205.7 million, respectively.
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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 and the importance of economies of scale, which we
expect to result in significant capital expenditure requirements. Factors that 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 as discussed in "Item 3. Key
Information — D. Risk Factors" and elsewhere in this document.
Historic financing cash flows
Net cash provided by financing activities was $30.8 million, $34.9 million and $447.6 million
in 2003, 2004 and 2005 respectively. Net cash provided by financing activities in 2003 and 2004
reflected primarily the net impact of borrowings and repayments of debt during those periods. Net
cash of $447.6 million was provided by financing activities in 2005, consisting primarily of the
drawdown of loan facilities, the issuance of the senior notes, Amortizing Bonds and preference
shares, and receipts of customer deposits to secure wafer capacity for one of our more advanced
technologies, partially offset by repayments of debt, including the repurchase of a significant
portion of our Convertible Notes arising from the Tender Offer of the Convertible Notes. See the
"— Outstanding indebtedness" below for details of the borrowings we obtained during the periods
indicated.
Research and development and training grants
In 2004 and 2005 we received $19.0 million and $7.5 million, respectively, in research grants
from various agencies of the Government of Singapore, which are included in operating cash flows.
These grants provide funding for a portion of our R&D related capital expenditures and for the
training and staffing costs associated with some of our process technology development programs.
The grants are disbursed to us in connection with research and development carried out in
Singapore, based on the amount of expenditures incurred, achievement of program milestones and
certification of the costs incurred. The main condition attached to the grants is the completion of
the project to which the grant relates. As our 65nm and 45nm bulk CMOS processes are jointly
developed in IBM's East Fishkill, New York, facilities, the amount of grants we received from the
Government of Singapore in 2005 was significantly lower than in 2004 and we expect that the amount
of such grants we may be eligible to receive from the Government of Singapore will be significantly
lower in 2006, as compared with 2005.
Off-balance sheet arrangements
We
were not a party to any off-balance sheet arrangement in 2005, as
defined in Item 303(a)(4)(ii) of SEC Regulation S-K. We do
not currently have any relationships with unconsolidated entities or
financial partnerships, such as entities often referred to as
structured finance or special purpose entities, which might be
established for the purpose of facilitating off-balance sheet
arrangements or other contractually narrow or limited purposes.
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Outstanding indebtedness
As of December 31, 2005, our total loans outstanding were $1,447.9 million, comprising our
Amortizing Bonds, senior notes, Convertible Notes and other U.S. dollar loans as follows:
As of
December 31,
2005
(In thousands)
2.5% senior convertible notes due 2006
$
97,155
U.S. dollar loans at floating rates:
CSP Syndicated Loan
214,533
SMBC/OCBC Term Loan
300,000
Exim Loan
122,124
Bank of America Term Loan
50,000
5.75% senior notes due 2010
371,161
6.375% senior notes due 2015
246,540
6.00% Amortizing bonds due 2010
46,703
Other
(324
)
Total
$
1,447,892
Refer to Note 14 of the consolidated financial statements for more details on our outstanding loans.
Loan Covenant Compliance
Some of our outstanding loans and unutilized banking facilities available to us, including
loans to our subsidiary, CSP, contain various financial, shareholding and other restrictive
covenants that are customary to loan documents.
Under the financial covenants, we are required to maintain certain financial conditions and/or
ratios such as consolidated net worth, a total debt to net worth ratio and a historical debt
service coverage ratio. We are required to ensure that our consolidated net worth will not at any
time be less than $1,000 million and our total debt will not at any time exceed 180% of our total
net worth. In 2002, we negotiated and effected an increase in CSP's net worth by converting
inter-company amounts payable by CSP to us into a shareholders' loan to CSP, or the Chartered Loan.
The Chartered Loan was made to enable CSP to satisfy its total debt-to-net worth ratio under the
CSP loan agreement. The amount of the Chartered Loan to CSP is increased from time to time by
converting additional inter-company amounts payable by CSP in order to enable CSP to satisfy the
total debt-to-net worth ratio. The amounts under the Chartered Loan are subordinated to the amounts
due from CSP to its other lenders.
Under the shareholding covenants of some of our loans, Temasek is required to own, directly or
indirectly, a certain percentage of our outstanding shares, or is required to be our single largest
shareholder. These covenants also require that we own, directly or indirectly, at least a certain
percentage of CSP's outstanding shares. If Temasek or we fail to comply with these covenants, we
could be in default under these loans and the lenders would have the right to require us to repay
or accelerate our obligation to repay the outstanding borrowings under these loan documents. In
some cases, a default could also cause cross-defaults under other loans and could seriously harm
us. In addition, the outstanding loans and unutilized banking facilities available to us impose
other restrictive covenants that are customary to loan documents, such as restrictions on incurring
further indebtedness, creating security interests over our assets, payments of dividends, disposals
of assets, and mergers and other corporate restructurings.
As of December 31, 2005, we believe we were in compliance with the various financial,
shareholding and other restrictive covenants in our loan documents. If we fail to comply with any
of the loan covenants, we could be in default under the loan documents and the lenders would have
the right to require us to repay or accelerate our obligation to repay the outstanding borrowings
under the loan documents. In some cases, a default could also cause cross-defaults under other
loans and could seriously harm us.
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Contractual Obligations
The following table sets forth the payments due related to specific contractual obligations as
of December 31, 2005:
Expected Payment Date
(in thousands)
2006
2007
2008
2009
2010
Thereafter
Total
Long-term debt including principal and
interest
(1)
$
402,400
$
207,976
$
209,859
$
197,637
$
503,651
$
370,049
$
1,891,572
Capital lease obligations including
principal and interest
5,613
5,613
5,613
5,613
5,613
35,866
63,931
Capacity deposits
(2)
60,174
—
—
—
—
—
60,174
Operating lease obligations
(3)
6,985
4,293
3,478
3,194
3,183
52,132
73,265
Purchase obligations
(4)
under:
Capital expenditures
173,535
32,154
—
—
—
—
205,689
Technology agreements
80,775
74,350
38,250
3,250
3,250
—
199,875
Other
108,889
188
188
188
158
473
110,084
Other long-term liabilities
—
800
—
—
—
16,561
17,361
Total
$
838,371
$
325,374
$
257,388
$
209,882
$
515,855
$
475,081
$
2,621,951
Notes:
(1)
These amounts represent the expected principal and interest repayments at each of the periods
indicated and do not include the unamortized debt discount relating to the senior notes. The
senior notes due 2010 were issued at a price of 98.896% of the principal amount and the senior
notes due 2015 were issued at a price of 98.573% of the principal amount. As of December 31,
2005, the face amounts of the senior notes due 2010 and the senior notes due 2015 were $371.2
million and $246.5 million, respectively, as the unamortized debt discount was reported as a
direct reduction to the face amounts of the senior notes. The estimated interest repayments on
floating-rate obligations were calculated using the prevailing floating interest rates related
to these obligations as of December 31, 2005. Actual outcome could differ from these
estimates.
(2)
This amount relates to our contractual obligation to refund deposits placed with us to secure wafer capacity for one of our
more advanced technologies.
(3)
As of December 31, 2005, we have included in the above table operating lease obligations in
respect of Fab 1 amounting to $4.1 million. In January 2006, we have sold and transferred our
leasehold interest in Fab 1 for a total consideration of $6.5 million.
(4)
We have not included purchase obligations that have been recorded on our consolidated balance
sheet as of December 31, 2005. These obligations amounted to $78.0 million, $10.2 million and
$227.2 million for capital expenditures, technology agreements and other purchase obligations
primarily relating to operating expenses, respectively.
Assuming no conversion or redemption of the preference shares until the maturity date on
August 17, 2010, we will redeem, out of funds legally available for such payment, each preference
share at a redemption price equal to $10,000 per preference share amounting to $300.0 million at
maturity. Refer to Note 15 of the consolidated financial statements for more details on the
preference shares.
Chartered and Agere Systems Singapore have signed an assured supply and demand agreement with
SMP. Under this agreement, each of Chartered and Agere Systems Singapore is billed for allocated
wafer capacity if the wafers started for production for them are less than their respective
allocated capacity. These billings, if any, do not change the equity in income (loss) of SMP that
we recognize in our consolidated statements of operations. In 2005, the wafers started for us were
less than our allocated capacity, however all parties to the agreement have agreed that such
billings will not be made to us. There were also no such billings made to us for the corresponding
periods in 2004 and 2003. To the extent the wafers started for us is less than our allocated
capacity in the future, there is no assurance that the billings for our allocated wafer capacity
would continue to be waived.
We have disclosed the expected timing of payment of obligations and the amounts to be paid
based on current information. Timing of payments and actual amounts paid may be different depending
on the time of receipt of goods or services or changes to agreed-upon amounts or events for some
obligations.
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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;
•
the wafer fabrication of Application Specific Integrated Circuits, or ASIC, and other
advanced semiconductor devices at Fab 6 for a ten-year period beginning September 1, 2003;
and
•
the wafer fabrication of integrated circuits at Fab 7 for a fifteen year period
beginning October 1, 2005.
Under the Economic Expansion Incentives (Relief from Income Tax) Act (Chapter 86) of
Singapore, we have also been granted:
•
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 incentive 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 incentive status for the wafer fabrication of ASICs and other
advanced semiconductor devices at Fab 6 for a five-year period beginning September 1, 2013.
During the period for which our pioneer status is effective, subject to our compliance with
certain conditions, income from our pioneer trade (that is, manufacture and sale of integrated
circuits) is exempt from Singapore income tax. During the periods for which our post-pioneer
status and development and expansion incentive 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 our pioneer trade or our post-pioneer trade and
development and expansion activities which have been taxed at a concessionary rate of 10% 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 4. Information on Our Company — E. Taxation —
Singapore Taxation — Dividends paid out of Tax-Exempt Income or Income subject to Concessionary
Tax Rates" for information regarding the taxation of such 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. 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 that
is currently 20% for the year ended December 31, 2005.
Other income, which is outside the definition of pioneer status, post-pioneer enterprise
status or the development and expansion incentive status, 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 incentive status period. The income tax expense for the
year ended December 31, 2005 represents primarily income tax payable on non-pioneer income,
principally interest income, rental income and income from the sale of wafers using technologies
that do not benefit from the preferential tax treatment.
RECENT ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED
In December 2004,
the FASB published FASB Statement, or FAS, 123(R), "Share-Based Payments."
FAS 123(R) requires that the compensation cost relating to share-based
payment transactions be recognized in financial statements. That cost will
be measured based on the fair value of the equity or liability instruments
issued. FAS 123(R) replaces FASB Statement No. 123, "Accounting for
Stock-Based Compensation," and supersedes APB Opinion No. 25, "Accounting
for Stock Issued to Employees." In March 2005, the SEC issued Staff
Accounting Bulletin No. 107, or SAB 107, on the interaction between FAS
123(R) and certain SEC rules and regulations, and on SEC Staff's views
regarding the valuation of share-based payment arrangements for public
companies. In April 2005, the SEC approved a new rule that permits
companies to defer the effective date of FAS 123(R). We
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have elected to
adopt FAS 123(R) on January 1, 2006.
We currently determine the fair value of stock-based compensation using a
Black-Scholes option-pricing model. The adoption of FAS 123(R) and its
related FASB Staff Positions, or FSPs, as described below, on January 1, 2006 is expected to
decrease our net income in 2006 by as much as $6 million. The pro forma
amounts disclosed in Note 1(p) of the consolidated financial statements
are not necessarily indicative of the impact FAS 123(R) and its related
FSPs will have on our consolidated statements of operations.
In May 2005, the
FASB issued FSP EITF 00-19-1 to clarify the guidance in EITF 00-19, "Accounting for
Derivative Financial Instruments Indexed to, and Potentially Settled in, a
Company's Own Stock." The FSP clarifies that a requirement to deliver
registered shares will not, in and of itself, result in liability
classification for freestanding financial instruments that were originally
issued as employee compensation (for example, an employee stock option).
The FSP indicates that this clarification is consistent with the FASB's
intent in issuing FAS 123(R). The FSP goes into effect the same day that a
company implements FAS 123(R). We have elected to adopt FAS 123(R) on
January 1, 2006 so accordingly, this FSP goes into effect on January 1,
2006.
In August 2005, the FASB issued FSP No. FASB 123(R)-1, which deferred the
requirement of FAS 123(R), that freestanding financial instruments issued
as employee compensation would be subject to the recognition and
measurement requirements of other generally accepted accounting principles
when the rights conveyed by the instrument no longer depend on employment.
Thus, a freestanding financial instrument (e.g., a stock option) that was
issued to an employee in exchange for past or future employee services and
that is subject to FAS 123(R) will continue to be subject to the
recognition and measurement provisions of FAS 123(R) throughout the life
of the instrument, unless its terms are modified when the holder is no
longer an employee. The FSP goes into effect the same day that a company
implements FAS 123(R). We have elected to adopt FAS 123(R) on January 1,
2006 so accordingly, this FSP goes into effect on January 1, 2006.
In October 2005, the FASB issued FSP No. FAS 123(R)-2, which provided a
practical accommodation for determining the grant date of a share-based
payment award. The final FSP is a change from the informal view expressed
by the FASB staff in August 2005 that communication of the terms to the
recipient would be necessary to establish a grant date. The FSP provides a
company more latitude by allowing it a relatively short time period after
the award is approved to communicate the award's terms to the recipient.
The FSP goes into effect the same day that a company implements FAS
123(R). We have elected to adopt FAS 123(R) on January 1, 2006 so
accordingly, this FSP goes into effect on January 1, 2006.
In November 2005, the FASB issued FSP No. FAS 123(R)-3, "Transition
Election Related to Accounting for the Tax Effects of Share-Based Payment
Awards." The FSP provided companies with the option to use a "short-cut"
method for calculating their pool of windfall tax benefits under FAS 123(R). The "short-cut"
method is significantly less complex than the detailed calculation
currently required by FAS 123(R)'s "long-form" method and provides relief
to companies that do not have the records or resources to perform the
"long-form" calculation. The guidance in this FSP is effective after
November 10, 2005. We have elected to adopt FAS 123(R) on January 1, 2006
so accordingly, this FSP goes into effect on January 1, 2006.
ITEM 6.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A.
DIRECTORS AND SENIOR MANAGEMENT
The following table sets forth, as of January 31, 2006, the name, age and position of each
director and member of senior management of our company.
Board of Directors
Name
Age
Position
James A. Norling
(1)(2)(4)
63
Chairman of the Board
Chia Song Hwee
(1)
43
Director
Sum Soon Lim
(2)(3)(4)
62
Director
Robert E. La Blanc
(3)
71
Director
Andre Borrel
(2)(3)(4)
69
Director
Charles E. Thompson
(2)(4)
76
Director
Tsugio Makimoto, PhD
68
Director
Tay Siew Choon
(1)(2)(4)
58
Director
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Name
Age
Position
Peter Seah Lim Huat
(1)(2)(4)
59
Director
Philip Tan Yuen Fah
(3)
61
Director
Pasquale Pistorio
70
Director
Steven H. Hamblin
(3)(5)
57
Director
Senior Management
Name
Age
Position
Chia Song Hwee
43
President and Chief Executive Officer
George Thomas
52
Senior Vice President and Chief Financial Officer
Ang Kay Chai
46
Senior Vice President, Fab Operations
Hsia Liang Choo, PhD
57
Senior Vice President, Technology Development
Michael J. Rekuc
56
Senior Vice President, Worldwide Sales and Marketing
Simon
Yang, PhD
46
Senior Vice President and Chief Technology Officer
Ang Tang Yong
48
Vice President, Fab Support Operations
Roy Kannan
53
Vice President and Chief Information Officer
Seungil Kim
53
Vice President, Quality and Reliability Assurance
Ng Seng Huwi
48
Vice President, Human Resources
Tan Seng Chai
43
Vice President, Strategy Resources
Notes:
(1)
Member of the Executive Committee.
(2)
Member of the Executive Resource and Compensation Committee, or the ERCC.
(3)
Member of the Audit Committee.
(4)
Member of the Nominating Committee.
(5)
Appointed as Director to our Board of Directors on January 1, 2006.
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 Chief Executive Officer 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 Sector 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 Bachelor of Science and a Master's degree in Electrical Engineering from
the University of Illinois.
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 member of CPA Australia.
Sum Soon Lim
Sum Soon Lim has served on our Board of Directors since February 1994. He was a corporate
advisor to Temasek Holdings (Private) Limited from September 2002 to December 31, 2005. Prior to
the cessation of operations of Singapore Technologies Pte Ltd on December 31, 2004, Mr. Sum was
also a corporate advisor to Singapore Technologies Pte Ltd. Mr. Sum had worked with the Singapore
Economic
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Development Board, DBS Bank, J.P. Morgan Inc., Overseas Union Bank Ltd and Nuri Holdings (S)
Pte Ltd, a private investment holding company. He was also a member of the Securities Industry
Council from January 1, 1998 to December 31, 2005. Mr. Sum currently also sits on the board of
various companies, including Singapore Health Services Pte Ltd, Singapore Technologies Telemedia
Pte Ltd and Singapore Press Holdings Ltd. He is also a Commissioner in P.T. Indosat Tbk. Mr. Sum
received his Bachelor of Science (Honors) in Production Engineering from the University of
Nottingham, England.
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 Master of Business Administration 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.
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 Board of Directors, 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's 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.
Tsugio Makimoto, PhD
Dr. Tsugio Makimoto has served on our Board of Directors since September 1999 and has more
than 40 years of working experience in the semiconductor industry. He is currently a consultant in
the field of electronics after retiring from Sony Corporation, or Sony, in May 2005. He joined Sony
in 2000 as Corporate Senior Executive Vice President, followed by Corporate Advisor in 2001. 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 was an auditor of Hitachi
Chemical Corporation from 2000 to 2003. Dr. Makimoto is currently the Chairman of PDF Solutions
(Japan) KK. He was nominated a Fellow of the Institute of Electrical and Electronics Engineers,
Inc. in 1997. Dr. Makimoto was also a visiting professor at Toyo University (1999-2001).
Tay Siew Choon
Tay Siew Choon has served on our Board of Directors since July 2001. Mr. Tay was formerly a
corporate advisor to Singapore Technologies Pte Ltd which ceased operations on December 31, 2004.
Prior to that, he was Managing Director and Chief Operating Officer in Singapore Technologies Pte
Ltd. From 1998 to 2000, Mr. Tay 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 STATS
ChipPAC Ltd (formerly ST Assembly Test Services Ltd), SNP-LeeFung Holdings Limited, Straco
Corporation Limited and Pan-United Corporation Ltd. He is currently Chairman of SNP Corporation Ltd
and Deputy Chairman of Green Dot Capital Pte Ltd, a wholly owned subsidiary of Temasek Holdings
(Private) Limited. Mr. Tay received his Bachelor of Engineering (Electrical) (Honors) from Auckland
University and his Masters of Science in Systems Engineering from the former University of
Singapore (now National University of Singapore).
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Peter Seah Lim Huat
Peter Seah has served on our Board of Directors since January 2002. Mr. Seah is currently a
member of the Temasek Advisory Panel. Prior to the cessation of operations of Singapore
Technologies Pte Ltd on December 31, 2004, Mr. Seah was the President and Chief Executive Officer
of Singapore Technologies Pte Ltd. Before joining Singapore Technologies Pte Ltd, he was a banker
for 32 years, 22 of which were with the Overseas Union Bank Ltd and before that with Citibank. He
retired from his position as Vice Chairman and Chief Executive Officer at Overseas Union Bank Ltd
in September 2001. Mr. Seah currently sits on the board of various companies including SembCorp
Industries Ltd, CapitaLand Ltd, ST Engineering Ltd and STATS ChipPAC Ltd (formerly ST Assembly Test
Services Ltd). Mr. Seah graduated from the former University of Singapore in 1968 with an honors
degree in Business Administration. For his public service, he was awarded the Public Service Medal
(1995) as well as the Public Service Star (1999) by the Singapore Government.
Philip Tan Yuen Fah
Philip Tan has served on our Board of Directors and as our Chairman of the Audit Committee
since October 2003. He is currently an independent consultant and also sits on the board of
companies such as Overseas Union Insurance Ltd and Singapore Food Industries Ltd. Mr. Tan is a
veteran in the banking and financial industry. He retired in 2002 from Overseas Union Bank Ltd
after holding various positions since joining the bank in 1979. Mr. Tan holds a Bachelor of
Accountancy from the University of Singapore and a Bachelor of Law from the University of
Wolverhampton, UK. In addition, Mr. Tan also holds a graduate diploma in Business Administration
from the Manchester Business School, UK. He is a Certified Public Accountant and a member of the
Accounting Standards Committee of the Institute of Certified Public Accountants of Singapore. He is
also a Chartered Management Accountant of the Chartered Institute of Management Accountants of UK
and a Fellow of CPA Australia.
Pasquale Pistorio
Pasquale Pistorio has served on our Board of Directors since May 2005 and is currently the
Honorary Chairman of STMicroelectronics. Mr. Pistorio brings to Chartered more than 38 years of
industry leadership experience. Mr. Pistorio is known for his business acumen, his contributions to
Europe's microelectronics industry, and his strong advocacy of environmental protection and
corporate social responsibility. Among his numerous accolades, Mr. Pistorio received the "Lifetime
Achievement Award" from Reed Electronics Group in 2003, was named first place in the "Top 25 Movers
and Shakers" ranking by Time magazine in 2002, and was voted among the top 50 "Stars of Europe" by
Business Week magazine. Mr. Pistorio's greatest achievement was the integration of SGS Group with
Thomson Semiconducteurs in 1987 to form SGS-THOMSON Microelectronics, which was renamed
STMicroelectronics in 1998. Mr. Pistorio served as STMicroelectronics' president and Chief
Executive Officer from 1998 until his retirement in March 2005, during which STMicroelectronics
grew to become one of the world's top semiconductor companies. Mr. Pistorio holds a degree in
electronics from the Polytechnic of Turin, Italy.
Steven H. Hamblin
Steven H. Hamblin has served on our Board of Directors and as a member of the Audit Committee
since January 2006. He is currently an independent consultant and also sits on the Board of STATS
ChipPAC Ltd, which is also dual listed on the Singapore Exchange and NASDAQ. Mr. Hamblin brings to
Chartered more than 30 years of experience in the electronics industry. From 1984 to 1996, Mr.
Hamblin held various senior positions in Compaq Computer Corporation, or Compaq, including Vice
President of Systems Division Operations, Vice President of Finance and Manufacturing Strategy, and
Vice President and General Manager of the Asia/Pacific Division. Prior to joining Compaq, Mr.
Hamblin held various financial controller positions with Texas Instruments and General Instrument.
Mr. Hamblin holds a Bachelor of Science degree in Civil Engineering from the University of
Missouri, Columbia and a Master of Science degree in Industrial Administration from Carnegie-Mellon
University.
George Thomas
George Thomas has served as our Senior Vice President and Chief Financial Officer since March
2005 and oversees our company's finance, investor relations and legal functions. He also served as
our Vice President and Chief Financial Officer since August 2002 and Vice President of Finance
since September 2000. 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 in 1978. From June 1983 to April 2000, he held
various positions at Schlumberger's
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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 and the Board of Directors of Silicon
Manufacturing Partners Pte Ltd as an alternate director since July 2003. 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.
Ang Kay Chai
Ang Kay Chai has served as our Senior Vice President, Fab Operations, since September 2002 and
is currently the General Manager of Chartered Silicon Partners Pte Ltd. Mr. Ang is responsible for
the manufacturing strategy and operational excellence across all of Chartered's fabs. 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 start-up, transfer of 0.25um and 0.18um technology and development of foundry-compatible
process capabilities. Prior to that, Mr. Ang spent nine years at Chartered where he led the initial
conception, development and ramp 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.
Hsia Liang Choo, PhD
Dr. Hsia Liang Choo has served as our Senior Vice President, Technology Development, since
June 2005. He is responsible for Chartered's technology development organization and directing our
company's efforts toward technology leadership in the foundry industry. From October 2000 to May
2005, Dr. Hsia served as our Vice President of Advanced Module Development and led Chartered's
collaborative development efforts at 90nm and 65nm. Dr. Hsia draws on nearly 25 years of experience
in semiconductor technology development. Prior to joining Chartered, Dr. Hsia was director of
technology development at United Microelectronics Corporation in Taiwan. He also spent over a
decade with IBM as an advisory scientist in various divisions. Dr. Hsia was awarded 25 US patents
with 16 more pending, and his work has been featured in more than 80 technical publications. Dr.
Hsia holds a doctorate degree in physics from Ohio State University.
Michael J. Rekuc
Michael J. Rekuc has served as our Senior Vice President, Worldwide Sales and Marketing, since
August 2003. He has the overall responsibility for global sales, marketing and services, customer
support and regional business operations. From January 1999 to July 2003, Mr. Rekuc served as
President of our Americas operations. Mr. Rekuc has over 30 years of electronics and semiconductor
industry experience. From 1976 until joining Chartered in January 1999, Mr. Rekuc held sales,
management and director positions in the semiconductor product sector of Motorola Inc. His last few
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 personal
computers, computing and peripherals. Mr. Rekuc holds a BSEE from Lawrence Institute of Technology.
Simon Yang, PhD
Dr. Simon Yang has served as our Senior Vice President and Chief Technology Officer since
October 2005. Dr. Yang is responsible for developing and driving strategic programs in support of
Chartered's corporate objectives and long-term strategic direction. Dr. Yang brings more than 18
years of experience in the semiconductor industry. He previously held key positions in technology
development and advanced fab operations. Dr. Yang was a senior vice president for logic technology
development and manufacturing at Semiconductor Manufacturing International Corporation (SMIC) and
prior to that, a director of logic device and process integration at Intel. Prior to joining
Chartered, he was president and Chief Executive Officer of Ciwest, a semiconductor start-up based
in China. Dr. Yang has been awarded 12 U.S. patents and is the author or co-author of more than 30
technical papers. Dr. Yang holds a bachelor's degree in electrical engineering from Shanghai
University of Science and Technology, and a master's degree in physics and doctorate degree in
materials engineering from Rensselaer Polytechnic Institute in Troy, New York.
Ang Tang Yong
Ang Tang Yong has served as our Vice President, Fab Support Operations since July 2002 and has
overall responsibility for facilities and supply management. Mr. Ang first joined our company in
1993 as
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Facilities Director and during the next seven years served consecutively as Vice President and
Operations Manager of our Fab 1, General Manager of Silicon Manufacturing Partners Pte Ltd, and as
General Manager of Chartered Silicon Partners Pte Ltd. Mr. Ang has more than 20 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.
Roy Kannan
Roy Kannan has served as our Vice President and Chief Information Officer, or CIO, since
September 2003. Mr. Kannan is responsible for our global information technology organization and
for driving our company's strategic initiative to extend a virtual business systems network for
supporting the business systems network for supporting the business requirements of customers,
partners, suppliers and employees. He joined us from the RGM group, a multi-divisional
conglomerate, where he was the CIO. His responsibilities included the revamp of our company's data,
voice, network and security infrastructure, as well as the management of information systems, or
IS, operations and data centers. During Mr. Kannan's more than 20 years of experience in the IS
industry, he has held senior positions at leading IS solutions companies such as Compaq, Mastek,
Digital Equipment and Patni. Mr. Kannan holds a Bachelor of Chemical Engineering from the Indian
Institute of Technology, Madras, and a post-graduate diploma in management from the Indian
Institute of Management, Ahmedabad.
Seungil Kim
Seungil Kim has served as our Vice President, Quality and Reliability Assurance, or QRA, since
March 2005. Mr. Kim is responsible for Chartered's quality control and reliability assurance
management initiatives, for continually enhancing our company's global standards of quality
excellence in operational and business best practices across its fabrication facilities and
regional offices worldwide. Mr. Kim brings more than 20 years of experience in the semiconductor
industry, and has held management positions in QRA, sales and marketing, and fab operations. Before
joining Chartered, he was senior advisor of QRA with United Microelectronics Corporation in Taiwan.
Prior to that, Mr. Kim spent 15 years with Hynix Semiconductor in the United States and Korea. His
last position was president and Chief Executive Officer of Hynix Semiconductor Manufacturing
America and was responsible for the region's activities, including manufacturing, QRA, engineering
and facilities management. Previously in Korea, he served as senior vice president of Hynix
Semiconductor Manufacturing Division and vice president of corporate quality and reliability
division. He started his career with IBM Corporation in East Fishkill, New York, as a senior
associate engineer responsible for semiconductor product quality assurance testing. Mr. Kim holds a
bachelor's degree in electrical engineering from Illinois Institute of Technology, Chicago.
Ng Seng Huwi
Ng Seng Huwi has served as our Vice President, Human Resources, since July 2003. Mr. Ng is
responsible for the overall development and implementation of policies and processes in our
company's human resources management system. Mr. Ng brings with him extensive work experience in a
number of large multi-national companies. He joined us from Praxair Inc., where he was vice
president of Asia Human Resources with responsibilities that included ensuring organizational
effectiveness, improving productivity and managing performance. During his 24-year professional
career, Mr. Ng has lived and worked around the world, holding a variety of human resources,
engineering and operations positions in global companies, including Schlumberger, Unilever and ICI.
Mr. Ng holds a Bachelor of Engineering (Honors) from the University of Aberdeen in Scotland and an
MBA from the University of Sheffield, England.
Tan Seng Chai
Tan Seng Chai has served as our Vice President, Strategy Resources, since July 2003. Mr. Tan
has overall responsibility for the coordination of Chartered's long-term strategic initiatives and
serves as the liaison with the management team, as well as the external communication teams. Prior
to his appointment, Mr. Tan served as our Vice President, Human Resources from July 1999 to July
2003. He joined our company in April 1996 as a human resource manager. Mr. Tan has more than 17
years of experience in the semiconductor industry. He began his career at National Semiconductor
Manufacturer Pte Ltd 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 Technology Ltd's Senior Manager, Human Resource. Mr. Tan holds a Bachelor
of Engineering (Honors) from the National
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University of Singapore in 1987 and a Master of Science (Industrial and System Engineering)
from the National University of Singapore in 1991.
B.
COMPENSATION OF DIRECTORS AND SENIOR MANAGEMENT
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 years ended December
31, 2004 and 2005 were approximately $3.4 million and $5.2 million, respectively.
The increase in the aggregate compensation in 2005 was mainly due to the addition of two new
staff members to our senior management team, namely Messrs. Seungil Kim and Simon Yang who joined
us as Vice President of QRA and Senior Vice President, Chief Technology Officer, respectively and a
payment in lieu of notice as well as an ex-gratia payment to Dr. Sun Shih Chung, our Senior Vice
President of Technology Development who left our company during 2005. It also included a variable
bonus of $0.6 million for the senior management which was declared by the ERCC in February 2006 as
recognition for the achievement of key strategic milestones in 2005. No other bonus was paid to
our senior management. Our President and Chief Executive Officer does not have a guaranteed minimum
annual bonus
.
The table below sets out the compensation paid or proposed to be paid to our directors for
services rendered during the fiscal year ended December 31, 2005:
Salary
(1)
Bonus
Others
(2)
Director's Fees
(3)
Total
(in $ thousands)
James A. Norling
—
—
—
87
87
Lim Ming Seong
(4)
—
—
—
14
14
Chia Song Hwee
406
194
(5)
35
—
635
Sum Soon Lim
—
—
—
40
40
Robert E. La Blanc
—
—
—
50
50
Andre Borrel
—
—
—
56
56
Charles E. Thompson
—
—
—
46
46
Tsugio Makimoto
—
—
—
40
40
Tay Siew Choon
—
—
—
34
34
Peter Seah Lim Huat
—
—
—
40
40
Philip Tan Yuen Fah
—
—
—
41
41
Pasquale Pistorio
(6)
—
—
—
15
15
Total as of December 31, 2005
406
194
35
463
1,098
Total as of December 31, 2004
416
—
29
460
905
Notes:
(1)
Base salary (inclusive of employers' Central Provident Fund, or CPF).
(2)
Allowances (inclusive of employers' CPF) and others.
(3)
Shareholders' approval will be sought at our annual general meeting to be held in April 2006
for the payment of our directors' fees of approximately $462,334 for the fiscal year ended
December 31, 2005.
(4)
Mr. Lim Ming Seong retired in April 2005.
(5)
Bonus to be paid in 2006, inclusive of employer CPF contribution and converted to US$ based
on average buying rate on January 25, 2006 of S$1.6219 = $1.00.
(6)
Mr. Pasquale Pistorio was appointed a Director to our Board of Directors in May 2005.
During 2005, we also granted options to purchase 1,700,000 ordinary shares to our
directors and senior management. These options were granted under our 1999 Option Plan. The
exercise price of these options was S$1.16. The expiration dates of these options range from August
26, 2010 to August 26, 2015, subject to annual vesting requirements. See "Item 6. Directors, Senior
Management and Employees — E. Share ownership for Directors and Senior Management" for further
details. We also provide our directors and our senior management with customary director or senior
management insurance, as appropriate.
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To drive growth and profitability of the company and to motivate our senior management and
employees work towards achieving the company's annual and long-term performance goals, the ERCC has
and may, from time to time, introduce compensation schemes such as performance bonus, executive
incentive plans and stock-based compensation plans.
C.
BOARD PRACTICES
BOARD COMPOSITION
Our Articles of Association set the minimum number of directors at two. We currently have 12
directors. A portion of our directors (including our President and Chief Executive Officer) retire
by rotation and are re-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. Our contracts with our directors (and also our
senior management) do not have fixed expiry dates but can be terminated by either party through
notice provisions. None of our directors receive benefits upon termination of their appointment in
their capacity as directors. Mr. Lim Ming Seong, our Deputy Chairman of the Board, retired at our
annual general meeting of shareholders in April 2005 and did not seek re-election. Mr. Pasquale
Pistorio was appointed to our Board of Directors on May 31, 2005 and Mr. Steven H. Hamblin was
appointed to our Board of Directors on January 1, 2006. Messrs. Sum Soon Lim and Robert La Blanc
will be retiring at our annual general meeting of shareholders to be held on April 26, 2006 and
neither will be seeking re-election and re-appointment.
As of December 31, 2005, Temasek, through its subsidiary, ST Semiconductors, beneficially
owned approximately 60.09% of our outstanding ordinary shares. As such, it is able to control
actions over many matters requiring approval by our shareholders, including the election of
directors.
Under Nasdaq rules, companies that satisfy the definition of a "Controlled Company" may be
exempt from certain regulatory requirements. The regulatory requirements which a "Controlled
Company" is exempt from include:
•
the requirement that a majority of Board members must be independent;
•
the requirement that the compensation committee must be comprised solely of independent
directors, or that compensation of our senior management must be made by a majority of the
independent directors on the full Board; and
•
the requirement that the nomination committee must be comprised solely of independent
directors or that nominations must be made by a majority of the independent directors on
the full Board.
A "Controlled Company" is defined as a company of which more than 50% of the voting power is
held by an individual, group or another company. As Temasek through its subsidiary owns more than
50% of our outstanding ordinary shares, our company falls under the definition of "Controlled
Company" and our Board has resolved to rely on the exemption for a "Controlled Company" as provided
under the Nasdaq rules. However, our Board may from time to time review this decision.
The current Nasdaq rules require that our Audit Committee be comprised solely of independent
directors. One of our Audit Committee members, Mr. Sum Soon Lim, does not qualify as an
independent director under the Nasdaq rules as he was until December 31, 2005 a corporate advisor to Temasek and prior
to that, a corporate advisor to Singapore Technologies Pte Ltd (our then majority shareholder)
prior to the cessation of operations of Singapore Technologies Pte Ltd on December 31, 2004 and
accepted compensation in excess of $60,000 during each of the last three fiscal years. We had
previously relied on an exemption from Nasdaq's corporate governance rules received from Nasdaq.
Nasdaq recently informed our company that the exemption is no longer applicable. Following
therefrom, we are relying on the Nasdaq rule which permits one non-independent director to be
appointed to the Audit Committee for a period of up to two years if the Board, under exceptional
and limited circumstances, determines that membership on the committee by that director is in the
best interests of the company and our shareholders. Our Board of Directors has determined that Mr.
Sum's membership on the Audit Committee is in the best interest of the company and our shareholders
as he has extensive experience and knowledge of the operations, finance and auditing procedures of
our company, having served on our Audit Committee longer than any other member on the committee.
Mr. Sum was appointed to our Board in February 1994 and has served on our Audit Committee since
January 1996, including as the Chairman of our Audit Committee from January 1996
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to August 2002. Mr Sum will be retiring from our Board and our Audit Committee at our 2006 Annual
General Meeting in April 2006. Each of our Audit Committee members is an "independent" director, as
such term is used in Section 10A-3(m)(3) of the Securities Exchange Act of 1934, or the Exchange Act.
The Board of Directors held six meetings during the fiscal year ended December 31, 2005,
including four regularly scheduled meetings and two special meetings. The Board of Directors also
held meetings without senior management in regular sessions which are generally held immediately
after a regularly scheduled Board meeting.
Committees of the Board of Directors
Executive Committee
The Executive Committee of our Board of Directors was established to enable our Board to
delegate some of its powers and functions regarding the governing of the affairs of our company and
our 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. James A. Norling (chairman), Peter Seah Lim Huat, Tay Siew Choon and Chia Song Hwee.
The Executive Committee held one meeting during the fiscal year ended December 31, 2005.
Audit Committee
The Audit Committee of our Board of Directors consists of five members. 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 Temasek group. In December 2004, the Audit Committee
adopted a Whistleblower Program to encourage ethical conduct and facilitate disclosures. In
addition, the Audit Committee has also established a Business Ethics and Review Committee to
implement and administer our company's policies on ethical conduct and to receive, retain,
investigate and act on complaints and concerns of employees regarding violations of our company's
human resource policies addressing employee business practices and code of ethics.
The members of the Audit Committee are Messrs. Philip Tan Yuen Fah (chairman), Sum Soon Lim,
Robert E. La Blanc, Andre Borrel and Steven H. Hamblin (appointed as of January 1, 2006). The Audit
Committee held eight meetings during the fiscal year ended December 31, 2005.
Executive Resource and Compensation Committee
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. 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 talented executives.
The members of the ERCC are Messrs. Peter Seah Lim Huat (chairman), James A. Norling, Andre
Borrel, Charles E. Thompson, Sum Soon Lim and Tay Siew Choon. The ERCC held five meetings during
the fiscal year ended December 31, 2005.
Nominating Committee
The Nominating Committee, or the NC, of our Board of Directors was established primarily to
support and advise our company in ensuring that the Board of our company is comprised of
individuals who are best able to discharge their responsibilities as directors having regard to the
law and the highest standards of governance. The NC is responsible for recommending suitable
candidates to the Board for election as directors of our company focusing, in particular, on
candidates who can add value to the management through their contributions in the relevant
strategic business areas and who collectively will result in a strong and diverse board.
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The members of the NC in the fiscal year ended December 31, 2005 were Messrs. Peter Seah Lim
Huat (chairman), James A. Norling, Andre Borrel, Charles E. Thompson, Sum Soon Lim and Tay Siew
Choon. With effect from January 2006, the members of the NC are Messrs. James A. Norling
(chairman), Peter Seah Lim Huat, Andre Borrel, Charles E. Thompson, Sum Soon Lim and Tay Siew
Choon. The NC held four meetings during the fiscal year ended December 31, 2005.
D.
EMPLOYEES
As of December 31, 2005, our total staff strength (including employees of our subsidiary, CSP)
was 4,073 employees. The following tables sets forth the total number of employees as of the dates
indicated by functional responsibility and by geographical locations.
As of December 31,
Functions
2003
2004
2005
Engineering (Modules, Yield Engineering, Process
Integration, Product Engineering, Joint Venture
Technology, Metrology)
1,186
1,410
1,677
Manufacturing Operations
890
900
880
Manufacturing Support
591
572
638
Research and Development
225
253
370
Administration, Marketing and Finance
391
471
508
Total
3,283
3,606
4,073
As of December 31,
Geographical Locations
2003
2004
2005
Singapore
3,161
3,479
3,932
Americas
84
87
104
Europe
17
17
16
Asia-Pacific (other than Singapore)
21
23
21
Total
3,283
3,606
4,073
As
of December 31, 2005, we had a total of 773 temporary employees.
The average number of temporary employees in 2005 based on the number
of temporary employees at the end of each month end was 588 per month.
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. The consolidation process was
completed as scheduled and Fab 1 ceased operations at the end of March 2004. As a result of our
consolidation of business, we redeployed 126 of our Fab 1 employees to work at our other Fabs and
released the remaining 363 employees. In connection with the ramp up and commencement of production
of Fab 7, we redeployed certain of our employees from our other Fabs to work at Fab 7 and also
hired new employees. As of December 31, 2005, Fab 7 had 634 employees, a majority of whom comprise
new hires.
Our employees are not covered by any collective bargaining agreements and are not members of a
union. We have not experienced any strikes or work stoppages by our employees. We consider our
relationship with our employees to be good.
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. Employees of SMP,
our 49% owned affiliate, are eligible to receive option grants under our company's employee share
option plan subject to certain exceptions as provided in the plan. In addition, employees of SMP
also participate in an employee share purchase plan with terms substantially similar to the share
purchase plan for our employees. Please see "Item 6. Directors, Senior Management and Employees —
D. Share Ownership for Directors and Senior Management — Employee Benefit Plans" for a discussion
of our share option plan and our share purchase plan.
E.
SHARE OWNERSHIP FOR DIRECTORS AND SENIOR MANAGEMENT
The following table sets forth certain information with respect to the beneficial ownership of
our ordinary shares including ordinary shares held directly or in the form of ADSs for each of our
directors and our president and chief executive officer and all of our directors and senior
management as a group as of December 31, 2005, based on an aggregate of 2,513,383,969 ordinary
shares outstanding as of such date.
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No. of Ordinary
Shares
Directors
Beneficially Owned
(1)
James A. Norling
1,662,631
ö
Chia Song Hwee
4,870,857
÷
Sum Soon Lim
716,166
÷
Robert E. La Blanc
302,470
÷
Andre Borrel
393,608
÷
Charles E. Thompson
312,966
÷
Tsugio Makimoto
256,216
÷
Tay Siew Choon
454,073
ñ
Please see
Peter Seah Lim Huat
240,330
÷
Note (2) below.
Philip Tan Yuen Fah
85,000
÷
Pasquale Pistorio
250,000
÷
All directors and senior management
(3)
as a group (21 persons))
16,786,939
ø
Notes:
(1)
Gives effect to the ordinary shares issuable within 60 days from December 31, 2005 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. Except for 36,000 shares
held by James A. Norling and 132,070 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.
(2)
Less than 1% of our outstanding ordinary shares as of December 31, 2005.
(3)
None of our directors or senior management individually owns 1% or more of our outstanding
ordinary shares.
Share Options for Directors
The following table contains information pertaining to share options held by directors as of
December 31, 2005.
Directors
As of December 31, 2005
Exercise Price S$
Exercise Period
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
50,000
0.72
28/02/2004 to 28/02/2008
60,000
1.10
29/08/2004 to 29/08/2008
110,000
1.70
27/02/2005 to 27/02/2009
110,000
*
1.16
26/08/2006 to 26/08/2010
Chia Song Hwee
10,467
1.18
28/10/1997 to 28/10/2006
20,935
1.00
28/11/1998 to 28/11/2007
61,704
0.80
30/11/1998 to 29/11/2008
26,444
0.80
30/04/1999 to 29/04/2009
234,439
2.86
29/10/1999 to 29/10/2009
70,331
2.86
29/04/2000 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
300,000
0.72
28/02/2004 to 28/02/2013
700,000
1.10
29/08/2004 to 29/08/2013
1,000,000
1.70
27/02/2005 to 27/02/2014
220,000
1.02
30/07/2004 to 30/07/2014
1,000,000
*
1.16
26/08/2006 to 26/08/2015
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Directors
As of December 31, 2005
Exercise Price S$
Exercise Period
Sum Soon Lim
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
25,000
0.72
28/02/2004 to 28/02/2008
35,000
1.10
29/08/2004 to 29/08/2008
60,000
1.70
27/02/2005 to 27/02/2009
60,000
*
1.16
26/08/2006 to 26/08/2010
Robert E. La Blanc
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
25,000
0.72
28/02/2004 to 28/02/2008
35,000
1.10
29/08/2004 to 29/08/2008
60,000
1.70
27/02/2005 to 27/02/2009
60,000
*
1.16
26/08/2006 to 26/08/2010
Andre Borrel
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
40,000
0.72
28/02/2004 to 28/02/2008
45,000
1.10
29/08/2004 to 29/08/2008
85,000
1.70
27/02/2005 to 27/02/2009
60,000
*
1.16
26/08/2006 to 26/08/2010
Charles E. Thompson
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
25,000
0.72
28/02/2004 to 28/02/2008
35,000
1.10
29/08/2004 to 29/08/2008
60,000
1.70
27/02/2005 to 27/02/2009
60,000
*
1.16
26/08/2006 to 26/08/2010
Tsugio Makimoto
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
25,000
0.72
28/02/2004 to 28/02/2008
35,000
1.10
29/08/2004 to 29/08/2008
60,000
1.70
27/02/2005 to 27/02/2009
60,000
*
1.16
26/08/2006 to 26/08/2010
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
40,000
0.72
28/02/2004 to 28/02/2008
45,000
1.10
29/08/2004 to 29/08/2008
85,000
1.70
27/02/2005 to 27/02/2009
85,000
*
1.16
26/08/2006 to 26/08/2010
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
25,000
0.72
28/02/2004 to 28/02/2008
35,000
1.10
29/08/2004 to 29/08/2008
60,000
1.70
27/02/2005 to 27/02/2009
60,000
*
1.16
26/08/2006 to 26/08/2010
Philip Tan Yuen Fah
85,000
1.70
27/02/2005 to 27/02/2009
85,000
*
1.16
26/08/2006 to 26/08/2010
Pasquale Pistorio
60,000
*
1.16
26/08/2006 to 26/08/2010
Note:
* Options that were granted in 2005.
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Employee Benefit Plans
Share Option Plan 1999
On March 30, 1999, we adopted our Share Option Plan 1999, which we refer to as the 1999 Option
Plan. The purpose of the plan is to put our company in a competitive position as an employer.
Options granted under the 1999 Option Plan may be non-statutory options or incentive stock options
intended to qualify under Section 422 of the U.S. Internal Revenue Code of 1986, as amended, or the
Code.
The 1999 Option Plan is administered by the ERCC. Our employees, employees of SMP, our outside
directors and consultants are eligible to receive option grants subject to certain exceptions as
provided in the 1999 Option Plan. 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 an
ordinary 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 ordinary shares that may be issued under the 1999 Option Plan and
under any other share incentive and option schemes or agreements may not exceed 227,647,883
ordinary shares, as adjusted from 197,160,000 to give effect to the October 2002 Rights Offering.
If an outstanding option expires for any reason or is cancelled or otherwise terminated, the
ordinary 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
an ordinary 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 Option Plan may be fully or partially
accelerated under certain circumstances such as a change in control of our company, as defined in
the 1999 Option Plan.
Each grant under the 1999 Option Plan is evidenced by a share option agreement and the term of
options granted may not exceed ten years from the date of grant. If the optionee's service with us
is terminated, the optionee's outstanding options, to the extent then exercisable, remain
exercisable for a 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.
As of December 31, 2005, options to purchase 113,480,367 ordinary shares were issued and
outstanding under our 1999 Option Plan, of which options to purchase 24,955,223 ordinary shares
were held by our directors and senior management. The exercise prices of all outstanding options
range from S$0.69 to S$14.24 and the expiration dates of all options range from March 28, 2006 to
November 23, 2015.
The 1999 Option Plan will terminate automatically on January 28, 2009, ten years after the
date on which the Board adopted the 1999 Option Plan. The ERCC may amend, suspend or terminate the
1999 Option Plan at any time and for any reason, provided that any amendment which increases the
number of shares available for issuance under the 1999 Option 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.
Employee Share Purchase Plans
In May 2001, we implemented a Chartered Employee Share Purchase Plan 2001, which we refer to
as the Chartered ESPP 2001, and a Share Purchase Plan for Employees of SMP, which we refer to as
the SMP ESPP 2001. The purpose of the plans was to put our respective companies in a competitive
position as an employer. Employees purchase shares from our respective companies through payroll
deductions.
The aggregate number of shares that were available for purchase under the Chartered ESPP 2001
and the SMP ESPP 2001, was an aggregate number of 11,721,955 shares.
All available shares under the Chartered ESPP 2001 and the SMP ESPP 2001 were issued and
allotted
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by the end of February 2004, and as a result, both the Chartered ESPP 2001 and the SMP ESPP
2001 were terminated.
Our Chartered Employee Share Purchase Plan, which we refer to as the Chartered ESPP 2004, and
Share Purchase Plan for employees of SMP, which we refer to as the SMP ESPP 2004, were approved by
shareholders at our 2004 Annual General Meeting. The aggregate number of ordinary shares that are
available for purchase under the Chartered ESPP 2004 and the SMP ESPP 2004, is 30,000,000 ordinary
shares with a limit of 3,000,000 ordinary shares per calendar year (and a limit of 1,500,000
ordinary shares per offering period). A total of 2,347,810 ordinary shares were issued in 2005
under the Chartered ESPP 2004 and the SMP ESPP 2004.
Equity Compensation Plan Information as of December 31, 2005
(c)
Number of Securities
(a)
Remaining Available
Number of Securities
(b)
for Future Issuance
to be Issued upon
Weighted-average
under Equity
Exercise of
Exercise Price of
Compensation Plans
Outstanding Options,
Outstanding Options,
(Excluding Securities
Plan Category
Warrants and Rights
Warrants and Rights
in Column (a))
Equity compensation plans approved
by shareholders
113,480,367
$2.04
90,521,003
Equity compensation plans not
approved by shareholders
N.A.*
N.A.*
N.A.*
Total
113,480,367
$2.04
90,521,003
Note:
*
Chartered does not have any equity compensation plans which have not been approved by shareholders.
ITEM 7.
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A.
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
December 31, 2005 based on an aggregate of 2,513,383,969 ordinary shares outstanding as of such
date:
Ordinary Shares
(1)
Beneficially Owned
(2)
Shareholders Holding 5% or More
Number
Percentage
Temasek
Holdings (Private) Limited
(3)
1,511,831,883
60.15
%
Notes:
(1)
The number of ordinary shares listed in this table includes ordinary shares held 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)
The 1,511,831,883 ordinary shares beneficially owned by
Temasek includes (a) the 1,295,324,883 ordinary shares held by
ST Semiconductors; (b) the 215,000,000 ordinary shares subject
to the terms of a securities lending agreement entered into by ST
Semiconductors with a certain financial institution and (c) the
1,507,000 ordinary shares held by other companies within the Temasek
group. ST Semiconductors is a wholly-owned subsidiary of Temasek. Temasek may therefore be deemed to
beneficially own the shares owned by ST Semiconductors, because it is the parent company of ST
Semiconductors.
As of December 31, 2005, 719,606 of our ordinary shares, representing 0.03% of our
outstanding ordinary shares, were held by a total of 109 holders of record with addresses in the
U.S. As of the same date, 4,772,080 of our ADSs (representing 47,720,800 ordinary shares),
representing 1.90% of our outstanding ordinary shares, were held by a total of 12 registered
holders of record with addresses in and outside of 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.
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B.
RELATED PARTY TRANSACTIONS
The Temasek Group
As of December 31, 2005, Temasek, through its wholly-owned subsidiary, ST Semiconductors,
beneficially owned approximately 60.09% of our outstanding ordinary shares. As a result, Temasek is
able to control actions over many matters requiring approval by our shareholders, including the
election of directors and approval of significant corporate transactions. Temasek is owned by the
Minister for Finance (Incorporated) of Singapore and is an Asia investment company with investments
in a range of industries, which include telecommunications and media, financial services, property,
transportation and logistics, energy and resources, infrastructure, engineering and technology, as
well as pharmaceuticals and biosciences. Mr. Peter Seah Lim Huat is a member of the Temasek
Advisory Panel and Mr. Sum Soon Lim was a corporate advisor to Temasek until December 31, 2005.
Prior to December 31, 2004, Singapore Technologies (then a subsidiary of Temasek) was our
substantial shareholder and was a holding company for a group of companies. On December 31, 2004,
Temasek, as part of the rationalization plan to manage Temasek's capital structure more
efficiently, acquired all of Singapore Technologies' interest in our company and pursuant to such
restructuring, Singapore Technologies' holdings were transferred to Temasek.
We also have contractual and other business relationships with several of Temasek's affiliates
and we may also engage in material transactions with several of Temasek's affiliates from time to
time. Consequently, conflicts of interest may arise between us in certain circumstances.
Financial Support Provided by Singapore Technologies
Prior to December 31, 2004, we had contracted with Singapore Technologies a majority of our
forward purchases of foreign exchange and from time to time, we had also advanced funds to or
borrowed funds from Singapore Technologies at interest rates comparable to rates offered by
commercial banks in Singapore. We also participated with Singapore Technologies and/or its
affiliates in a pooled cash management arrangement managed by a bank where cash balances were
pooled and daily cash surpluses or shortfalls were allowed, on a short-term basis, to be lent to or
borrowed from other Singapore Technologies affiliates participating in the arrangement at
prevailing interbank rates. In addition, we had also placed short-term deposits with Singapore
Technologies and/or its affiliates having maturities of less than three months. The interest income
received in 2003 and 2004 was $6.7 million and $2.9 million, respectively. Singapore Technologies
also provided us with a short-term credit facility. Since December 31, 2004, these activities have
discontinued.
As of December 31, 2004, $28.1 million of our debt was guaranteed by Singapore Technologies
and as of December 31, 2005, none of our debt was guaranteed by Singapore Technologies.
Corporate Services Provided by Singapore Technologies
Prior to December 31, 2004, we had a service agreement with Singapore Technologies pursuant to
which it provided us with management and corporate support services such as treasury, cash
management, internal audit, training and executive resources, information technology, bank
guarantees and provision of standby credit facilities. In return for those services, support and
benefits, we paid Singapore Technologies an annual management fee based on a service based fee
arrangement. The management fee was itemized to allow us to compare them with similar services
provided by unrelated third parties. In addition, we reimbursed Singapore Technologies for the
third-party costs and expenses it incurred on our behalf. Since December 31, 2004, the service
agreement with Singapore Technologies was terminated and we now perform these services internally
or directly contract with other service providers.
In 2003 and 2004, management fees with Singapore Technologies amounted to $3.4 million and
$2.7 million, respectively. There were no management fees payable to Singapore Technologies in 2005
as our service agreement with Singapore Technologies was terminated since December 31, 2004. We
also reimbursed Singapore Technologies for costs and expenses incurred on our behalf, principally
certain of our payroll expenses paid through Singapore Technologies. Such reimbursements totaled
$8.5 million and $7.1 million in 2003 and 2004, respectively. There were no such reimbursements in
2005.
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Other Transactions
In 2005, we transacted business with affiliates of Temasek in the normal course of our
respective businesses.
We paid STATS ChipPAC $13.5 million, $19.1 million and $12.9 million in 2003, 2004 and 2005
respectively, for services rendered in those years. We also paid other affiliates of Temasek $1.4
million, $2.2 million and $0.9 million in 2003, 2004 and 2005, respectively, for services rendered
in those years. We purchased $0.2 million, $0.4 million and $4.0 million in assets from affiliates
of Temasek in 2003, 2004 and 2005, respectively. These transactions were in the normal course of
business.
Our company previously operated Fab 1, which ceased operations at the end of March 2004, on
land leased from Ascendas. Our company has sold and transferred its leasehold interest in respect
of Fab 1 and the plant and equipment located in the property to Amkor Technology Pte Ltd for a
total consideration of $6.5 million. The transaction was completed in January 2006.
Fabs 2 and 3 and our corporate offices are located on land which we lease from Terra which in
turn leases the land from JTC. These leases run until 2024 with conditional options to extend for
another 30 years. The sub-leases for Fab 2 and Fab 3 require us to make rental payments to Terra at
rates equal to the rent paid by Terra to JTC for the subject land through 2024.
The site slurry treatment plant for fabs 2 and 3 is also located on land which we lease from
Terra, which in turn leases the land from JTC. This lease runs until 2030 with a conditional option
to extend for another 30 years. Our company is required to make rental payments to Terra at rates
equal to the rent paid by Terra to JTC for the subject land through 2030.
CSP leases the land on which Fab 6 is located from Terra, which in turn leases it from JTC.
The lease runs until 2027 with a conditional option to extend for an additional 30 years. CSP is
required to make rental payments to Terra at rates equal to the rent paid by Terra to JTC for the
subject land through 2027.
Fab 7 is located on land which we lease from Terra which in turn leases the land from JTC. The
JTC lease runs until 2030 with a conditional option to extend for an additional 30 years. Our
company is required to make rental payments to Terra at rates equal to the rent paid by Terra to
JTC for the subject land through 2030.
Lease payments in respect of the leases described above for the years ended December 31, 2003,
2004 and 2005 were approximately $2.8 million, $2.8 million and $2.7 million, respectively.
We also engaged in transactions with other companies directly or indirectly controlled by
Temasek in the ordinary course of business. These transactions, such as phone services from
Singapore Telecommunications and airline tickets from Singapore Airlines, are on customary terms
and conditions and are generally not subject to review by the Audit Committee.
C.
INTERESTS OF EXPERTS AND COUNSEL
Not applicable.
ITEM 8.
FINANCIAL INFORMATION
A.
CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
Please see "Item 18. Financial Statements" for a list of financial statements filed under Item 17.
Export Sales
Please see "Item 4. Information On Our Company — B. Business Overview — Customers and Markets."
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Dividend Policy
In December 1995 and January 1997, we paid a cash dividend on our ordinary shares in an amount
equivalent to $87,000 and $93,000, respectively, for the purpose of qualifying our ordinary shares
as "trustee stock" eligible for investment by account holders of the CPF, 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 2005. 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, or 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 prior consent of the lender. We currently intend to
retain future earnings, if any, to finance expansion of our business.
Legal Proceedings
As of December 31, 2005, we are not involved in any legal proceedings that we believe would be
significantly harmful to our company.
B.
SIGNIFICANT CHANGES
There have been no significant subsequent events following the close of the last financial
year up to the date of this document that are known to us and require disclosure in this document
for which disclosure was not made in this document.
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 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 below reflect the
adjustment due to the October 2002 Rights Offering.
(a)
Annual high and low market prices
Nasdaq
High
Low
January 1, through December 31, 2001
$
32.37
$
14.72
January 1, through December 31, 2002
$
27.10
$
3.94
January 1, through December 31, 2003
$
11.00
$
3.48
January 1, through December 31, 2004
$
11.35
$
5.76
January 1, through December 31, 2005
$
9.01
$
5.52
Singapore Exchange
High
Low
January 1, through December 31, 2001
S$5.46
S$2.59
January 1, through December 31, 2002
S$4.81
S$0.71
January 1, through December 31, 2003
S$1.93
S$0.63
January 1, through December 31, 2004
S$1.89
S$0.92
January 1, through December 31, 2005
S$1.44
S$0.92
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(b)
Quarterly high and low market prices
Nasdaq
High
Low
January 1, through March 31, 2004
$
11.35
$
8.50
April 1, through June 30, 2004
$
10.55
$
7.54
July 1, through September 30, 2004
$
8.13
$
5.80
October 1, through December 31, 2004
$
6.65
$
5.76
January 1, through March 31, 2005
$
7.37
$
5.62
April 1, through June 30, 2005
$
8.21
$
5.56
July 1, through September 30, 2005
$
9.01
$
6.58
October 1, through December 31, 2005
$
7.90
$
5.52
Singapore Exchange
High
Low
January 1, through March 31, 2004
S$1.89
S$1.49
April 1, through June 30, 2004
S$1.76
S$1.33
July 1, through September 30, 2004
S$1.40
S$1.01
October 1, through December 31, 2004
S$1.11
S$0.92
January 1, through March 31, 2005
S$1.20
S$0.92
April 1, through June 30, 2005
S$1.35
S$0.93
July 1, through September 30, 2005
S$1.44
S$1.10
October 1, through December 31, 2005
S$1.34
S$0.95
(c)
Monthly high and low market prices
Nasdaq
High
Low
September 1, through September 30, 2005
$
7.16
$
6.58
October 1, through October 31, 2005
$
6.88
$
5.52
November 1, through November 30, 2005
$
7.51
$
6.26
December 1, through December 31, 2005
$
7.90
$
6.94
January 1, through January 31, 2006
$
8.52
$
7.60
February 1,
through February 28, 2006
$
8.60
$
8.09
Singapore Exchange
High
Low
September 1, through September 30, 2005
S$1.21
S$1.12
October 1, through October 31, 2005
S$1.16
S$0.95
November 1, through November 30, 2005
S$1.24
S$1.07
December 1, through December 31, 2005
S$1.34
S$1.16
January 1, through January 31, 2006
S$1.40
S$1.26
February 1,
through February 28, 2006
S$1.39
S$1.33
The
last reported sale price of the ADSs as quoted on Nasdaq on
February 28, 2006 was
$8.16 per ADS. The last reported sale price of the ordinary shares as quoted on the Singapore
Exchange on February 28, 2006 was S$1.35 per ordinary share.
Please see "Item 3. Key Information — D. 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
A.
SHARE CAPITAL
Not applicable.
B.
OUR MEMORANDUM AND ARTICLES OF ASSOCIATION
A summary of various provisions in our Memorandum and Articles of Association is provided
below. This summary is qualified in its entirety by reference to our Memorandum and Articles of
Association (see "Item 19. Exhibits — Exhibit 1").
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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 the quorum at a Board of Directors' meeting in relation to a resolution in which he is
not entitled to vote.
The ordinary remuneration of our Directors is determined by our shareholders in general
meeting. Our Directors determine the payment of extra remuneration 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 remuneration of a President or Chief Executive Officer.
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 as a Director of our company unless an
ordinary resolution is passed at our company's annual general meeting to appoint such person as a
Director.
Shares
We have two classes of shares — ordinary shares and convertible redeemable preference shares,
or preference shares. As of December 31, 2005, there are 2,513,383,969 ordinary shares and 30,000
preference shares issued and allotted by our company.
Until January 30, 2006, our company's ordinary shares had a par value of S$0.26 and each
preference share had a par value of US$0.01 each. The Companies (Amendment) Act 2005, or Companies
Amendment Act, which came into effect on January 30, 2006, abolished the concept of "par value" and
"authorized capital." As such, as of January 30, 2006, the shares of our company have no par or
nominal value.
New ordinary shares
New ordinary shares may only be issued with the prior approval in a general meeting of
shareholders of our ordinary shares, or ordinary 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 ordinary 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 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 ordinary 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 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
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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 the applicant pays a fee which will not exceed S$2
and furnishes any evidence and indemnity that our Board of Directors may require.
Convertible redeemable preference shares
Pursuant to a special resolution of our ordinary shareholders obtained on August 17, 2005, we
amended our Articles of Association to facilitate the issuance of preference shares. The preference
shares rank, with respect to rights upon liquidation, winding up or dissolution as follows:
•
junior to all our existing and future debt obligations;
•
junior to each class of our shares the terms of which provide that such class will rank
senior to the preference shares as regards repayment of amounts paid up or credited as paid
up on such class of shares;
•
on a parity with any class of our shares that has terms which provide that such class
will rank on a parity with the preference shares as regards repayment of amounts paid up or
credited as paid up on such class of shares; and
•
senior to our ordinary shares (including those represented by ADSs) and to any class of
our shares that has terms which provide that such class will rank junior to the preference shares
as regards payment of amounts paid up or credited as paid up on such class of shares.
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% of the total voting rights of all ordinary shareholders request in
writing that such a meeting be held. In addition, two or more ordinary shareholders holding not
less than 10% 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% 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. 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.
Voting rights
An ordinary shareholder is entitled to attend, speak and vote at any general meeting, in
person or by proxy. A proxy need not be a shareholder. A person who holds ordinary shares through
the book-entry clearance system maintained by The Central Depository (Pte) Limited, or CDP, is
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 33
1
/
3
%
of our issued and fully paid up 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
ordinary shareholder present in person and each proxy shall have one vote, and on a poll, every
ordinary 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 ordinary shareholder present in person or by proxy and entitled to vote.
Holders of our preference shares, or preference shareholders, are entitled to receive copies
of our reports, accounts, circulars and notes of general meetings sent to our ordinary
shareholders. Preference shareholders are entitled to attend, speak and vote at any class meeting
of the preference shareholders, in
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person or by proxy, but they are not entitled to attend, speak or vote at our general
meetings. A proxy need not be a shareholder. However, the preference shareholders are only entitled
to attend and vote (but not speak) at those meetings, in person or by proxy, where at least one of
the proposed resolutions is either in respect of amending the rights of the preference shareholders
or in respect of our winding-up and such vote is restricted to those resolutions that pertain to
the election of the chairman of such meeting, amendment of the rights of the preference
shareholders, to our winding-up or any motion for adjournment of such meeting. Under our Articles
of Association, at class meetings of the preference shareholders or general meetings where the
preference shareholders are entitled to attend and vote, on a show of hands, every preference
shareholder present in person and each proxy shall have one vote, and on a poll, every preference
shareholder present in person or by proxy shall have one vote for each ordinary share into which
each preference share held by such preference shareholder would have been converted if the
Conversion Date for such preference share were the date 48 hours preceding the date of such class
meeting or general meeting.
Dividends
We may, by ordinary resolution of our ordinary shareholders, 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. Our Board of Directors may also declare
interim dividends without seeking shareholder approval. All dividends are paid pro rata among the
ordinary shareholders in proportion to the amount paid up on each ordinary shareholder's ordinary
shares, unless the rights attaching to an issue of any ordinary share provide 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 an ordinary 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.
Our preference shareholders are not entitled to receive any dividends, regardless of whether
dividends are paid to our ordinary shareholders.
Bonus and rights issue
Our Board of Directors may, with the approval of our ordinary shareholders at a general
meeting, capitalize any reserves or profits (including profit or monies carried and standing to any
reserve 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 ordinary shareholders in proportion to their shareholdings. Such
rights are subject to any conditions attached to such issue and the regulations of any stock
exchanges on which we are listed.
Liquidation or other return of capital
Preference shareholders, upon our liquidation will be entitled to payment, out of our assets
available for distribution to our shareholders (ordinary or otherwise), of $10,000 per preference
share. After payment in full of the liquidation preference, preference shareholders will not be
entitled to any further participation in any distribution of our assets. If, upon our liquidation,
the amounts payable with respect to preference shares and all other shares that have terms which
provide that such shares will rank on a parity with the preference shares are not paid in full,
preference shareholders and the holders of such parity shares will share equally and ratably in any
distribution of our assets in proportion to the full liquidation preference to which each such
holder is entitled.
If our company liquidates or in the event of any other return of capital, holders of ordinary
shares will be entitled to participate in the distribution of any surplus assets (including after
paying the preference share liquidation preference) in proportion to their shareholdings.
Redemption of preference shares
Under our Articles of Association, we are required to redeem, out of funds legally available
for such redemption, each preference share on the maturity date, which is August 17, 2010, at the
redemption amount in accordance with all applicable law and the provisions of our Articles of
Association, unless earlier redeemed, converted or purchased and cancelled by our company. In
addition, we may at any time prior to the maturity date redeem the preference shares at the early
redemption price under the following circumstances:
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•
Tax call
If we determine that, as a result of:
•
any change in or amendment to the laws or regulations of Singapore or any authority
of or in Singapore having power to tax, or rulings promulgated under any such laws or
regulations by any authority of or in Singapore having power to tax, or
•
any change in the general application or official or judicial interpretation of any
such laws, regulations or rulings, or
•
any change in the application or official or judicial interpretation of, or any
execution or amendment to, any treaty or treaties affecting taxation to which Singapore
is a party, which change, execution or amendment, in each case, becomes effective on
or after August 17, 2005, the date on which the preference shares are first allotted
and issued, we will be required to pay additional amounts with respect to the
preference shares (notwithstanding the foregoing, we may not redeem those preference
shares, the holders of which have irrevocably waived their rights to such additional
amounts at least seven business days prior to such redemption),
we will have the option to redeem in whole, but not in part, the outstanding preference
shares at the early redemption price.
•
Clean-up call
If at least 95% of the preference shares originally issued have been converted, redeemed or
purchased and cancelled, we will have the option to redeem in whole, but not in part, the
outstanding preference shares at the early redemption price.
•
Optional call redemption
We may, at any time on or after August 17, 2007, redeem the preference shares in whole or in
part at any time, at the early redemption price, if the closing sale price of our ordinary
shares on the Singapore Exchange for any 20 trading days (translated in U.S. dollars at the
U.S. dollar / Singapore dollar noon buying rate in New York on each such day, as certified
for customs purposes by the Federal Reserve Bank of New York) in any 45 consecutive calendar
day period ending not more than five business days prior to the date on which notice of such
redemption is given, is at least 125% of the conversion price per ordinary share, in each
case as adjusted through, and effective on, such notice date.
The early redemption price and the closing sale price is defined in our Articles of
Association.
In addition, if a specified fundamental change event occurs before the close of business on
the seventh business day prior to maturity or early redemption, the preference shareholders may
under certain circumstances require our company to redeem all or any of the preference shares at
the early redemption price per preference share.
Our preference shareholders will not have the right to require our company to redeem any
preference shares if a fundamental change occurs as defined in Article 4A.8(2)(b), (c) and (d) of
our Articles of Association.
Singapore law restricts our ability to redeem our preference shares, as described in our
Articles of Association.
Conversion rights of Preference Shareholders
Our preference shareholders may convert all or any of the preference shares that they hold
into either ordinary shares or ADSs during hours as may be agreed between our company and the
appointed conversion agent on any business day during the conversion period:
•
commencing on September 26, 2005; and
•
ending on the date falling seven business days prior to the earlier of:
•
in the case of any preference share called for redemption, the date fixed for such
redemption unless our company shall default in making the redemption payment, provided
that in no event shall any such conversion right extend beyond the maturity date; or
•
the maturity date.
The conversion price will be a price expressed in U.S. dollars per ordinary share. The
initial conversion price per ordinary share will be determined by multiplying (1) the sum of the
conversion premium, 20%, plus 100%, by (2) the reference share price (converted to U.S. dollars).
The reference share price is defined in our Articles of Association. The conversion price is
subject to adjustments in certain circumstances prescribed in our Articles of Association.
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Limitations on rights to hold or vote shares
Except as described in "— Voting Rights" above, there are no limitations imposed
under our Articles of Association on the rights of ordinary shareholders who are non-resident in
Singapore to hold or exercise voting rights attached to ordinary shares.
Provisions discriminating against any existing or prospective holder of shares
There are no provisions under 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.
Take-overs
The Singapore Code on Take-overs and Mergers, or 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 take-over 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, may be required to extend a take-over 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 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 shareholdings 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.
Subject to certain exceptions, a take-over offer must be in cash or 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.
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.
Indemnity
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 or 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 our
Directors and officers against any liability which by law would otherwise attach to them in respect
of any negligence, default, breach of duty or breach of trust of which they may be guilty in
relation to our company.
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Substantial shareholdings
The Companies Act and the Securities and Futures Act, Chapter 289 of Singapore require the
substantial shareholders of our company to give notice to our company and the Singapore Exchange,
including particulars of their interest and the circumstances by reason of which they have such
interest, within two business days of their becoming substantial shareholders of our company and of
any change in the percentage level of their interest.
Under the Companies Act, a person has a substantial shareholding in our company if he has an
interest (or interests) in one or more voting shares in our company and the total votes attached to
that share, or those shares, is not less than 5% of the total votes attached to all the voting
shares in our company.
"Percentage level", in relation to a substantial shareholder, means the percentage figure
ascertained by expressing the total votes attached to our voting shares in which the substantial
shareholder has an interest or interests immediately before or (as the case may be) immediately
after the relevant time as a percentage of the total votes attached to all the voting shares in our
company, and, if it is not a whole number, rounding that figure down to the next whole number.
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 our company, as they think fit to remedy any of the
following situations:
•
if the affairs of our company are being conducted or the powers of our 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
•
if our company takes an action, or threatens to take an action, or our shareholders pass
a resolution, or propose to pass a resolution, which unfairly discriminates against, or is
otherwise prejudicial to, one or more of our 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 courts 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
our share capital;
•
provide that the Memorandum or Articles of Association be amended; or
•
provide that our company be wound up.
C.
MATERIAL CONTRACTS
The following is a summary of each contract that is material to us and which was entered into
by us in the last two years. These agreements are also listed in "Item 19 — Exhibits."
(a) Loan and financing agreements
CSP Loan Agreements
CSP entered into a loan agreement with a syndicate of banks and ABN Amro Bank N.V., Singapore
Branch, as agent in September 2000 for an amount of up to $820 million. We refer to this loan
agreement as the CSP Second Phase Credit Agreement. On September 18, 2003, CSP entered into a
Supplemental Agreement to the Second Phase Credit Agreement to extend the availability period of
the loan for a further one year period (see "Item 19. Exhibits — Exhibit 4.1.2").
In 2002, we sought 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
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Second Phase Credit Agreement. Such increase in CSP's net worth was effected by converting
amounts payable by CSP to us into a loan from us to CSP, which we refer to as the Chartered Loan.
In obtaining the consents, the CSP Second Phase Credit Agreement was amended to provide for
the subordination of the amount of the Chartered Loan to the amounts due by CSP to its other
lenders. For a copy of the Letter Agreement incorporating the Subordination Agreement (see "Item
19. Exhibits — Exhibit 4.1.4,") and for a copy of the Subordination Agreement (see "Item 19.
Exhibits — Exhibit 4.1.3.")
Chartered Loan Agreements
EXIM Loan
On December 23, 2004, we entered into a facility agreement as borrower with JPMorgan Chase
Bank, N.A, or JP Morgan, as lender, Export-Import Bank of the United States, or Exim, and JP Morgan
as facility agent (see "Item 19. Exhibits  —  Exhibit 4.5"). Pursuant to this agreement,
we secured a $653 million term loan facility from JP Morgan, guaranteed by Exim. The facility is
divided into two tranches, has an availability period of between two to four years, and each
tranche will be repaid over a period of five years.
SMBC/OCBC Term Loan
On December 23, 2004, we entered into a facility agreement as borrower with Sumitomo Mitsui
Banking Corporation, or SMBC, and Oversea-Chinese Banking Corporation Limited, or OCBC, as lenders
and arrangers, pursuant to which the lenders have agreed to provide us with a $200 million term
loan facility (with a $100 million green-shoe option) (see "Item 19. Exhibits  —  Exhibit
4.6"). The $100 million green-shoe option was subsequently subscribed by ABN AMRO Bank, United
Overseas Bank and Deutsche Bank. As of December 31, 2005, the entire $300 million loan facility,
which includes the $100 million green-shoe option, has been fully drawn down. The repayment period
will commence from the end of the 30
th
month from the date of the first draw down, and
the amount drawn down is to be repaid in six equal semi-annual installments.
BOA Term Loan
On December 22, 2004, we entered into a facility agreement as borrower with Bank of America,
or BOA as lender, pursuant to which BOA has agreed to provide us with a $50 million term loan
facility (see "Item 19. Exhibits  —  Exhibit 4.8"). The facility has an availability
period of three months from the date of the facility agreement, and is repayable as a lump sum
repayment 36 months after the date of the facility agreement.
Goldman Sachs International
In August 2004, we entered into a bilateral option transaction with Goldman Sachs
International, as counter-party, to pro-actively manage our Convertible Notes due April 2, 2006
(see "Item 19. Exhibits — Exhibit 4.9"). Under the transaction, we have a choice of physical or
cash settlement. Goldman Sachs International may purchase 214,800,000 of our ordinary shares at $0.93 per share and
the option to purchase these shares is exercisable by Goldman Sachs International from January 2,
2005 and will expire on April 2, 2006, matching the maturity date of the Convertible Notes. As of
December 31, 2005, Goldman Sachs International had not exercise its rights under the option
transaction.
5.75% senior notes due 2010 and 6.375% senior notes due 2015
In July 2005, we issued $375 million of 5.75% senior notes due 2010 and $250 million of 6.375%
senior notes due 2015. These senior notes are our unsecured, senior and unsubordinated
obligations. The senior notes, however, will be effectively subordinated to the indebtedness and
other liabilities of our subsidiaries and joint ventures and any of our secured obligations with
respect to assets that secure such obligations. The 5.75% senior notes due 2010 will mature on
August 3, 2010, with interest at the rate of 5.75% per annum
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payable semi-annually on February 3 and August 3 of each year, commencing February 3, 2006.
The 6.375% senior notes due 2016 will mature on August 3, 2015, with interest at the rate of 6.375%
per annum payable semi-annually on February 3, and August 3 of each year, commencing on February 3,
2006. We will pay 100% of the principal amount of the senior notes, together with any accrued and
unpaid interest, on their respective maturity dates.
In the event we determine that, as a result of any change in or amendment to the laws or
regulations of Singapore, we have been or will be required to pay additional amounts, we may, at
our option, redeem each series of these senior notes at a redemption price equal to the principal
amount, plus any accrued and unpaid interest to the redemption date.
Upon the occurrence of specified change of control events, holders of these senior notes may
require us to repurchase all or any part of their senior notes at a repayment price equal to 101%
of the principal amount, plus any accrued and unpaid interest at the time of the repayment.
Subject to certain exceptions, we and our material subsidiaries are restricted in creating or
permitting the subsistence of any security interest upon any property or assets to secure the
repayment of, or any guarantee or indemnity in respect of, any indebtedness.
(b) Strategic business alliances
CSP
Our subsidiary, CSP, is a joint venture established in March 1997 among Chartered, EDB
Investments, Agilent Technologies Europe B.V. (previously Hewlett-Packard Europe B.V.), and Singapex. As of December 31, 2005, the equity interests of CSP was held as
follows: Chartered (51%), EDB Investments (26.5%), Agilent Technologies Europe B.V. (15%) and
Singapex (7.5%).
As part of Agilent Technologies Inc.'s strategy that led to Agilent Technologies Europe B.V.
reducing its ownership in CSP from 30% to 15% in October 2001, Agilent Technologies Europe B.V.
relinquished the voting rights of its nominees on the Board of Directors of CSP. The parties
entered into Amendment Agreement No. 1 dated January 31, 2002 to the Restated Joint Venture
Agreement dated October 23, 2001 to effect such change.
As part of Agilent Technologies, Inc's restructuring in 2005, Agilent Technologies Europe B.V.
has, in January 2006, transferred its entire shareholding in the capital of CSP to Avago and, as
such, Avago has in January 2006 replaced Agilent Technologies Europe B.V. as a 15% shareholder of
CSP and party to the joint venture agreement (see "Item 19. Exhibits — 4.10.3").
SMP
We entered into a Joint Venture Agreement with Lucent Technologies Microelectronics Pte. Ltd.,
now known as Agere Systems Singapore, to form the SMP strategic alliance relating to the joint
ownership of Fab 5. In September 2004, we entered into a Supplemental Agreement to the Joint
Venture Agreement to provide that SMP can pay dividends out of the profits of the venture
determined on a year to year basis rather than a cumulative basis as previously was the case. In
January 2005, we entered into a Second Supplemental Agreement to the Joint Venture Agreement to
clarify a provision under the Joint Venture Agreement relating to billings in the event of
cumulative losses in SMP (see "Item 19. Exhibits — Exhibit 4.11.3").
As part of the SMP strategic alliance, we also entered into a License and Technology Transfer
Agreement with SMP and Lucent Technologies Microelectronics Pte. Ltd. This agreement has been
amended several times, with the last amendment made on July 1, 2003 (see "Item 19. Exhibits —
Exhibit 4.11.10") to provide for additional process technologies to be transferred. For a summary
of this arrangement, see "Item 4. Information on Our Company — B. Business Overview — Strategic
Business and Technology Alliances — Silicon Manufacturing Partners").
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(c) Technology transfer, licenses, joint development and other related agreements
Agere Systems
We entered into a Technology Transfer Agreement with Lucent Technologies Inc., now known as
Agere Systems Inc. in February 1998 to transfer technology to one another. Under this Agreement,
Lucent and our company transferred to one another 0.25um process technology. The agreement has been
amended several times, with the last amendment made on March 28, 2002 (see "Item 19. Exhibits —
Exhibit 4.12.4"), for the purpose of updating the list of process technologies transferred to one
another.
We also entered into a Patent License Agreement with Agere Systems Inc. in January 1998 which
was amended in 2000. Under this Agreement, Agere Systems Inc. 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 Systems Inc. in lieu of royalty payments for the use of Agere Systems Inc.'s patents.
In September 2002, we entered into a Letter Agreement with Agere Systems Inc. (see "Item 19.
Exhibits — Exhibit 4.12.7"), where in exchange for our agreement to waive Agere Systems Inc.'s
capacity shortfall fees under our manufacturing agreement with them, Agere Systems Inc. agreed to
treat our royalty obligations under the patent license agreement with Agere Systems Inc. as
satisfied until such time as Agere Systems Inc.'s ownership interest in SMP 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 Systems Inc. continue to apply.
IBM
We entered into a Patent Cross-License Agreement with IBM dated January 1, 2001 (see "Item 19.
Exhibits — Exhibit 4.14.1") . 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 licenses granted to
each party (see "Item 19. Exhibits — Exhibit 4.14.2").
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 4.14.3"),
Copper/Related FEOL Technology License Agreement (see "Item 19. Exhibits — Exhibit 4.14.4") and
Refundable Cross Deposit Agreement (see "Item 19. Exhibits — Exhibit 4.14.12").
The "SF" Process Development and Cost Sharing Agreement provides for the development of 90nm
and 65nm logic processes on 300-mm silicon wafers. Effective as of March 9, 2004, the "SF" Process
Development and Cost Sharing Agreement was amended and restated to address certain matters between
the parties pertaining to the "SF" Process 65nm/45nm Development and Cost Sharing Agreement which
the parties entered into together with Infineon and Samsung (see "Item 19. Exhibits — Exhibit
4.14.7"). The "SF" Process Development and Cost Sharing Agreement was further amended effective as
of November 5, 2004 to expand the parties' agreement with regard to design kit models for the
300-mm Wafer 90nm Bulk CMOS Process Development Project under the "SF" Process Development and Cost
Sharing Agreement, as previously amended and the coordination of related activities (see "Item 19.
Exhibits — 4.14.8"). On December 15, 2004, the "SF" Process Development and Cost Sharing Agreement
was further amended to extend parties' collaboration to include 45nm technologies (see Item 19.
Exhibits — Exhibit 4.14.11"). Effective as of June 3, 2005, the "SF" Process Development and Cost
Sharing Agreement was further amended and restated to include development of design enablement for
certain other 90nm technologies as described in the agreement as well as to broaden the scope of
the license (see Item 19. Exhibits — Exhibit 4.14.10").
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. In addition, effective as of December 19, 2003, a Supplemental Agreement to the
Refundable Cross Deposit Agreement was entered into to revise some of the terms relating to the
deposit and pricing of the goods sold by Chartered to IBM (see "Item 19. Exhibits — Exhibit
4.14.13").
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IBM, Infineon and Samsung
As of March 5, 2004, we extended the "SF" Process 65nm/45nm Development and Cost Sharing
Agreement" with IBM and Infineon to include Samsung (see "Item 19. Exhibits — Exhibit 4.15").
This agreement replaces and is in substitution of the "SF" Process 65nm/45nm Development and Cost
Sharing Agreement dated June 26, 2003 by and amongst IBM, Infineon and Chartered. For more
information on this agreement with IBM, Infineon and Samsung, please see "Item 4. Information on
Our Company — B. Business Overview — Research and Development."
Motorola
We entered into a Patent License Agreement with Motorola Inc., or Motorola, dated July 1, 2003
(see "Item 19. Exhibits — Exhibit 4.16"). Under this Agreement, Motorola and our company granted
to one another a license to use certain of each other's patents.
(d) Leases
Please see "Item 4. Information On Our Company — D. Property, Plant and Equipment — Leases"
for information on our leases.
D.
EXCHANGE CONTROLS
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 — D. Risk Factors — Risks Related to Our Securities and Our Trading Market —
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.
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.
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.
Singapore Dollars Per US$1.00
Noon Buying Rate
Fiscal Year Ended December 31,
Average
(1)
High
Low
Period End
2001
1.7937
1.8540
1.7275
1.8470
2002
1.7908
1.8525
1.7310
1.7352
2003
1.7432
1.7838
1.6990
1.6990
2004
1.6870
1.7291
1.6308
1.6319
2005
1.6648
1.7058
1.6180
1.6628
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Singapore Dollars Per US$1.00
Noon Buying Rate
Month
High
Low
September 2005
1.6935
1.6738
October 2005
1.6959
1.6825
November 2005
1.7058
1.6908
December 2005
1.6906
1.6621
January 2006
1.6521
1.6206
February 2006
1.6353
1.6211
Note :
(1)
The average of the daily noon buying rates on the last business day of each month during the
year.
E.
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 Singapore 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 Singapore tax consequences applicable to all categories of
investors. Holders of the securities and prospective purchasers of the securities should consult
their own tax advisers as to the Singapore or other tax consequences of the purchase, ownership or
disposal of the securities including, in particular, the effect of any foreign, state or local tax
laws to which they are subject.
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
rate of 20% for the year of assessment 2005 and a rate of 20% with effect from the year of
assessment 2006 (or 15% in the case of interest, rental of movable equipment and in the case of
royalties, 15% and 10%, respectively, for the year of assessment 2005 and 10% for the year of
assessment 2006), subject to certain exceptions. We are obligated by law to withhold tax at the
source.
A corporation will be regarded as being resident in Singapore if the control and management of
its business is exercised in Singapore (for example, if the corporation's board of directors meets
and conducts the business of the corporation in Singapore). An individual is tax 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 received in respect of the ordinary shares or ADSs by either a resident or
non-resident of Singapore are not subject to Singapore withholding tax.
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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 income received that is exempt from
tax because of our pioneer status or out of our income received that is subject to tax at a
concessionary rate, if any, such dividends will be free from Singapore tax in the hands of the
holders of the ordinary shares and ADSs. Please see "Item 5. Operating and Financial Review and
Prospects — Liquidity and Capital Resources — Special Tax Status" for a discussion of our tax
incentive status.
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 (22% for the year of assessment 2004 and 20% with effect from the year of
assessment 2005) would be 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 which does
not have a permanent establishment in Singapore and deductible expenses attributed to such dividend
income would 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 of
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 of 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 December 31, 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 utilized
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 of December 31, 2002 are fully utilized or until the transition period comes to an end,
whichever is earlier.
No comprehensive 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, there are currently no specific laws
or regulations which address the characterization of capital gains; hence, 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
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Authority of Singapore regards as the carrying on of a trade or business 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 or business (for example, one of dealing in
securities) in Singapore, in which case the disposal profits would be taxable as such profits would
be considered revenue in nature.
Stamp duty
There is no stamp duty payable in respect of the issuance and holding of 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. However, stamp duty may be payable if the instrument of transfer
is executed outside Singapore and received in Singapore.
Estate duty
In the case of an individual who is not domiciled in Singapore, Singapore estate duty is
imposed on the value of 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 the 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 and ownership of such ordinary shares and/or ADSs.
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 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, or 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.
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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
Subject to the passive foreign investment company rules discussed below, distributions of cash
or property (other than certain distributions of ordinary shares, if any) with respect to ADSs or
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 (as determined under U.S. federal income tax
principles). 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.
U.S. holders should be aware that dividends paid by our company generally will constitute
"passive income" or, in the case of certain U.S. holders, "financial services income" for purposes
of the foreign tax credit. Dividends paid by our company for taxable years beginning after December
31, 2006 will generally be "passive category income" or, in the case of certain U.S. holders,
"general category 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.
Dividends received by a non-corporate U.S. holder on the ordinary shares or ADSs for taxable
years of such holder beginning after December 1, 2002 and before January 1, 2009 may be taxed at
the lower applicable capital gains rate provided that (1) we are not a PFIC (as discussed below)
for either our taxable year in which the dividend was paid or the preceding taxable year, (2) our
ADSs or ordinary shares, as applicable, are readily tradable on an established securities market in
the U.S. and (3) certain holding period requirements are met. You should consult your own tax
advisors regarding the availability of the lower rate for dividends paid with respect to ADSs or
ordinary shares.
Sale or exchange of ordinary shares or ADSs
Subject to the passive foreign investment company rules discussed below, a U.S. holder
generally will recognize capital 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 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 2005. However,
there can be no assurances that we will not be a PFIC in 2006 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
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PFIC in 2006 or in a later year. Passive income for PFIC purposes includes, among other
things, interest, dividends, royalties, rents and annuities.
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
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. or with certain U.S. connections to a
U.S. holder that is not otherwise exempt, and a backup withholding tax may apply to such amounts if
such 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
IRS.
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 advisor concerning
the tax consequences of your particular situation.
F.
DIVIDENDS AND PAYING AGENTS
Not applicable.
G.
STATEMENT BY EXPERTS
Not applicable.
H.
DOCUMENTS ON DISPLAY
Publicly filed documents concerning our company can be obtained from the Public Reference
Section of the SEC, 100 F Street, N.E., 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 so in order to make our reports available over
the Internet.
I.
SUBSIDIARY INFORMATION
For more information on our subsidiaries, please see "Item 4. Information on Our Company — C.
Organizational Structure."
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ITEM 11.
QUANTITATIVE 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 intended for hedging purposes and not for speculative
purposes.
Interest rate risk
We are exposed to interest rate risk on our existing floating rate debt and on additional debt
financing that may periodically be 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.
Our debt obligations are as follows:
As of December 31, 2005
Expected Maturity Date
(In thousands, except interest rates)
Weighted
Average
Fair
Interest
2006
2007
2008
2009
2010
Thereafter
Total
Value
Rate
LONG-TERM DEBT:
U.S. dollar loans at floating rates
(1)
$
214,533
$
112,212
$
124,425
$
124,425
$
74,425
$
36,637
$
686,657
$
686,657
5.1050
%
Convertible Notes
(2)
97,155
—
—
—
—
—
97,155
111,485
5.2500
%
5.75% senior notes due 2010
(3)
—
—
—
—
375,000
—
375,000
(5)
373,043
5.7500
%
6.375% senior notes due 2015
(3)
—
—
—
—
—
250,000
250,000
(5)
248,420
6.3750
%
6.00% Amortizing bonds due 2010
(4)
8,270
8,774
9,308
9,875
10,476
—
46,703
46,820
6.0000
%
Capital lease obligations
5,613
5,613
5,613
5,613
5,613
35,866
63,931
63,931
6.4976
%
Total
$
325,571
$
126,599
$
139,346
$
139,913
$
465,514
$
322,503
$
1,519,446
$
1,530,356
As of
December 31, 2004
(In thousands)
Total
Fair Value
LONG-TERM DEBT :
Singapore dollar loans at fixed rates
(6)
$
73,650
$
75,567
U.S. dollar loans at floating rates
(1)
589,066
589,066
Convertible Notes
(2)
575,000
590,824
Other
(5)
(1,986
)
—
Total
$
1,235,730
$
1,255,457
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As of December 31,
2004
2005
(In thousands)
PAYABLES :
U.S Dollar
$
104,920
$
120,364
Singapore Dollar
17,490
20,561
Japanese Yen
48,465
20,035
Others
17,911
5,721
Total payable
$
188,786
$
166,681
Notes:
(1)
In August 2004, we entered into two interest rate cap contracts
related to the floating rate obligations associated with $100.0
million of one of the U.S. dollar loans, with the effect of
placing an upper limit on the cash flow and earnings exposure due
to market interest rate changes. The floating rate obligations
under this U.S. dollar loan are based on LIBOR rates and are
payable semi-annually which commenced March 28, 2004. The
combination of the caps and the debt obligation results in a
maximum interest outflow equal to 2.75% which commenced March 28,
2005. The notional amount on the interest rate cap is reduced by
$25.0 million semi-annually and will mature on September 28, 2006.
The fair value of the two interest rate cap contracts as of
December 31, 2005 was $0.6 million.
In March 2005, we entered into two additional interest rate cap
contracts related to the floating rate obligations associated with
$200.0 million of the above-mentioned U.S. dollar loan, with the
effect of placing an upper limit on the cash flow and earnings
exposure due to market interest rate changes. The combination of
the two additional caps and the debt obligation results in a
maximum interest outflow equal to 3.60% which commenced September
28, 2005. The notional amount on the interest rate cap contracts
is reduced by $66.7 million semi-annually and will mature on
September 28, 2006. The fair value of the two interest rate cap
contracts as of December 31, 2005 was $0.8 million.
(2)
The interest rate swap contracts, which were previously entered
into in respect of the fixed-rate obligations associated with the
Convertible Notes, were terminated in September 2005 following
completion of the Tender Offer for the Convertible Notes.
(3)
Interest on the Senior Notes due 2010 is payable at the rate of
5.75% per annum and interest on the Senior Notes due 2015 is
payable at the rate of 6.375% per annum, in each case, on February
3 and August 3 of each year, beginning on February 3, 2006.
(4)
The Amortizing Bonds pay semi-annual cash payments of $5.5 million
per payment, as a combination of principal and interest, on
February 17 and August 17 of each year, beginning on February 17,
2006, and amortize to zero at maturity on August 17, 2010.
Interest on the Amortizing Bonds is payable at the rate of 6.00%
per annum.
(5)
As of December 31, 2004, other long-term debt includes the
cumulative fair value change of the Convertible Notes due to
changes in interest rates since the date we entered into interest
rate swap contracts related to this debt. The interest rate swap
contracts were terminated following the completion of the Tender
Offer of the Convertible Notes in September 2005.
(6)
As of December 31, 2004, we had entered into forward foreign
contracts related to a portion of these amounts to exchange the
related cash flows to U.S. dollars, and a cross currency swap to
convert cash flows under one of the Singapore dollar fixed-rate
loans to a U.S. dollar denominated fixed-rate. We repaid these
loans early in full in March 2005, and the associated forward
foreign contracts and cross currency swap were also terminated in
March 2005.
As of December 31, 2005, 52.6% of our interest rate payment obligations bear fixed
interest rates. We have no cash flow and earnings exposure due to market interest rate changes for
our fixed debt obligations. 47.4% of our interest rate payment obligations bear floating interest
rates. We have cash flow and earnings exposure due to market interest rate changes for our floating
debt obligations. Based on our interest rate payment obligations as of December 31, 2005, a 0.5%
increase in interest rates would increase our floating interest payments by 9.8% annually.
Foreign currency risk
Our foreign currency exposures give rise to market risk associated with exchange rate
movements of the U.S. dollar, which is our functional currency, against the Japanese yen, the
Singapore dollar and the Euro. Substantially all of our revenue was denominated in U.S. dollars
during 2005 and as a result, we had relatively little foreign currency exchange risk with respect
to any of our revenue. In 2005, approximately 20% of our cost of revenue was denominated in
Singapore dollars. In addition, approximately 55% of our capital expenditures were denominated in
U.S. dollars, approximately 13% were denominated in Euros, approximately 28% were denominated in
Japanese yen and approximately 4% were denominated in Singapore dollars.
To protect against reductions in value and the volatility of future cash flows caused by
changes in foreign exchange rates, from time to time, we utilize currency forward contracts to
minimize the impact of foreign currency fluctuations. We use these instruments as economic hedges
to minimize our exposure to specific currency risks related to equipment purchase commitments
denominated primarily in Japanese Yen and
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Euros. In addition, we minimize our currency risk by purchasing certain raw materials and
equipment in U.S. dollars and borrowing in U.S. dollars. The table below provides information about
our derivative financial instruments and presents the information in U.S. dollar equivalents.
As of December 31, 2005
As of December 31, 2004
Expected Maturity Date Of Notional Amounts
(in thousands)
(in thousands, except exchange rates)
2006
Thereafter
Total
Fair Value
Total
Fair Value
FORWARD FOREIGN
EXCHANGE AGREEMENTS:
(Receive Yen/Pay
US$) Contract Amount
$
30,024
—
$
30,024
$
(208
)
$
69,210
$
2,520
Average Contractual
Exchange Rate
114.36
—
(Receive S$/Pay US$)
Contract Amount
$
11,976
—
$
11,976
$
1
$
47,842
$
1,760
Average Contractual
Exchange Rate
1.67
—
(Receive Euros/Pay
US$) Contract Amount
$
1,102
—
$
1,102
$
(107
)
$
26,760
$
2,857
Average Contractual
Exchange Rate
1.32
—
Total Contract Amount
$
43,120
—
$
43,102
$
(314
)
$
143,812
$
7,137
As of December 31, 2005
As of December 31, 2004
(in thousands, except percentages)
(in thousands, except percentages)
Carrying
Amount
Percentage
Carrying
Amount
Percentage
Amount
Hedged
Hedged
Amount
Hedged
Hedged
NON-U.S. DOLLAR LIABILITIES:
Payables
Japanese Yen
$
20,035
$
20,035
100
%
$
48,465
$
48,465
100
%
Singapore dollar
20,561
11,976
58
17,490
17,490
100
Others
5,721
1,102
19
17,911
17,911
100
Foreign Currency Loan
Singapore dollar
—
—
—
73,650
73,650
100
Future Interest Payable on Debt
Singapore dollar
—
—
—
1,445
1,445
100
Total
$
46,317
$
33,113
71
%
$
158,961
$
158,961
100
%
ITEM 12.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not applicable.
PART II
ITEM 13.
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
None.
ITEM 14.
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
Not applicable.
ITEM 15.
CONTROLS AND PROCEDURES
Our company maintains disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our 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
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Table of Contents
evaluating the cost-benefit relationship of possible
controls and procedures. Also, our company has
investments in certain unconsolidated entities. As our company's ability to influence these
entities is limited only to certain management and operational aspects, our disclosure controls and
procedures with respect to such entities are necessarily limited compared to those we maintain with
respect to our consolidated subsidiaries.
Our company carried out an evaluation, under the supervision and with the participation of our
company's management, including our company's Chief Executive Officer and our company's Chief
Financial Officer, of the effectiveness of the design and operation of the company's disclosure
controls and procedures as of December 31, 2005. Based on the foregoing, our company's Chief
Executive Officer and Chief Financial Officer concluded that our company's disclosure controls and
procedures were effective as of such date.
There have been no significant changes in our company's internal controls or in other factors
that could significantly affect the internal controls subsequent to the date our company completed
its evaluation.
ITEM 16.
A.
AUDIT COMMITTEE FINANCIAL EXPERT
Our Audit Committee members are Messrs. Philip Tan Yuen Fah (chairman), Sum Soon Lim, Robert
E. La Blanc, Andre Borrel and Steven H. Hamblin (appointed as of January 1, 2006). Please see "Item
6. Directors, Senior Management and Employees" for their experience and qualifications. Our Board
has determined that as of the date of filing, none of these individuals meet all of the criteria
required to be named an Audit Committee "Financial Expert," as defined in the applicable rules of
the SEC. In view of the very specific criteria required to be satisfied in order to qualify as an
Audit Committee "Financial Expert," the Board has not yet been able to identify the appropriate
person.
B.
CODE OF ETHICS
Our company has adopted a Code of Ethics that is applicable to all our directors, senior
management and employees. The Code of Ethics contains general guidelines for conducting the
business of our company.
Our company will make available a copy of the Code of Ethics to any person without charge, if
a written request is made to its Company Secretary at our company's registered address at 60
Woodlands Industrial Park D, Street 2, Singapore 738406.
C.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Below are the fees billed in 2004 and 2005 by our auditors for professional services rendered
by our auditors for the said period.
Audit fees
Audit-related fees
Tax fees
All other fees
Total
(in $ thousands)
2004
473
95
219
485
1,272
2005
788
76
206
233
1,303
Audit-related fees
Services provided relate to assurance and related services that are reasonably related to the
performance of the audit or review of our financial statements and which are not reported under
"Audit fees," including consultations regarding the accounting or disclosure treatment of
transactions or events and/or the actual or potential impact of proposed rules, standards or
interpretations by regulatory or standard setting bodies.
Tax fees
Services provided primarily consist of routine corporate tax advisory services and compilation
of corporate tax returns.
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All other fees
Services provided related to assistance with our compliance program pursuant to Section 404 of
the Sarbanes-Oxley Act of 2002.
Our Audit Committee has established pre-approval policies and procedures for services to be
performed by our independent auditors. Under our pre-approval policies and procedures, our
independent auditors cannot perform services unless they are pre-approved by our Audit Committee.
In February 2005, our Audit Committee pre-approved a list of services that could be rendered by the
independent auditors in 2005. In April 2005, the Audit Committee pre-approved the provision of
certain executive income tax services by the independent auditors as the services were not in the
February 2005 list of pre-approved services to be rendered by the independent auditors in 2005.
None of the services performed by our independent auditors were approved pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
D.
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
The current Nasdaq rules require that our Audit Committee be comprised solely of independent
directors. One of our Audit Committee members, Mr. Sum Soon Lim, does not qualify as an
independent director under the Nasdaq rules as he was until December 31, 2005 a corporate advisor to Temasek and prior
to that, a corporate advisor to Singapore Technologies Pte Ltd (our then majority shareholder)
prior to the cessation of operations of Singapore Technologies Pte Ltd on December 31, 2004 and
accepted compensation in excess of $60,000 during each of the last three fiscal years. We had
previously relied on an exemption from Nasdaq's corporate governance rules received from Nasdaq.
Nasdaq recently informed our company that the exemption is no longer applicable. Following
therefrom, we are relying on the Nasdaq rule which permits one non-independent director to be
appointed to the Audit Committee for a period of up to two years if the Board, under exceptional
and limited circumstances, determines that membership on the committee by that director is in the
best interests of the company and our shareholders. Our Board of Directors has determined that Mr.
Sum's membership on the Audit Committee is in the best interest of the company and our shareholders
as he has extensive experience and knowledge of the operations, finance and auditing procedures of
our company, having served on our Audit Committee longer than any other member on the committee.
Mr. Sum was appointed to our Board in February 1994 and has served on our Audit Committee since
January 1996, including as the Chairman of our Audit Committee from January 1996 to August 2002. Mr
Sum will be retiring from our Board and our Audit Committee at our 2006 Annual General Meeting in
April 2006. Each of our Audit Committee members is an "independent" director, as such term is used
in Section 10A-3(m)(3) of the Exchange Act.
E.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS.
None.
PART III
ITEM 17.
FINANCIAL STATEMENTS
See Item 18 for a list of financial statements filed under Item 17.
ITEM 18.
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
Report
of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2004 and 2005
Consolidated Statements of Operations for the years ended December 31, 2003, 2004 and 2005
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Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31,
2003, 2004 and 2005
Consolidated Statements of Shareholders' Equity for the years ended December 31, 2003, 2004
and 2005
Consolidated Statements of Cash Flows for the years ended December 31, 2003, 2004 and 2005
Notes to Consolidated Financial Statements
Silicon Manufacturing Partners Pte Ltd Financial Statements
Report of Independent Registered Public Accounting Firm
Balance Sheets as of December 31, 2004 and September 30, 2005
Income Statements for the years
ended December 31, 2003, 2004 and 2005
Statements of Shareholders' Equity for the years
ended December 31, 2003, 2004 and 2005
Statements of Cash Flows for the years ended December 31, 2003, 2004 and
2005
Notes to the Financial Statements
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Table of Contents
ITEM 19.
EXHIBITS
1
(1)
Memorandum and Articles of Association of the company.
2.1
(2)
Specimen certificate for ordinary shares.
2.2
(28)
Specimen certificate for convertible redeemable preference shares.
2.3
(3)
Deposit Agreement dated November 4, 1999 by and among the
company, Citibank, N.A. and the holders and beneficial owners of
American Depositary Shares evidenced by American Depositary
Receipts issued thereunder (including as an exhibit, the form of
American Depositary Receipt).
2.4
(23)
Conversion Price Certificate dated August 17, 2005 of the company.
Loan Agreements and Indentures
4.1.1
(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").
4.1.2
(7)
Supplemental Agreement dated September 18, 2003 by and among
Chartered Silicon Partners Pte Ltd as Borrower, the banks on the
signature pages thereto, as Lenders, and ABN Amro Bank N.V.,
Singapore Branch, as Agent and Security Trustee relating to the
CSP Second Phase Credit Agreement.
4.1.3
(5)
Subordination Agreement dated June 28, 2002 by and among the
company, 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.
4.1.4
(5)
Letter dated June 26, 2002 from ABN Amro Bank N.V., Singapore
Branch to Chartered Silicon Partners Pte Ltd amending the CSP
Second Phase Credit Agreement by incorporating the Subordination
Agreement relating to the CSP Second Phase Credit Agreement.
4.2
(6)
Shareholders' Undertaking dated December 14, 2000 by and among
Chartered Silicon Partners Pte Ltd as Borrower, the company, EDB
Investments Pte Ltd, Agilent Technologies Europe B.V., as
Shareholders and ABN Amro Bank N.V., Singapore Branch as Security
Trustee.
4.3.1
(9)
Indenture dated as of April 2, 2001 by and between the company
and Wells Fargo Bank Minnesota, National Association.
4.3.2
(9)
Supplemental Indenture dated as of April 2, 2001 by and between
the company and Wells Fargo Bank Minnesota, National Association.
4.3.3
(24)
Second Supplemental Indenture dated August 3, 2005 by and between
the company and The Bank of New York.
4.3.4
(24)
Third Supplemental Indenture dated August 3, 2005 by and between
the company and The Bank of New York.
4.3.5
(25)
Fourth Supplemental Indenture dated August 17, 2005 by and
between the company and The Bank of New York.
4.4
(25)
Master Agency Agreement dated August 17, 2005 by and between the
company and The Bank of New York.
4.5
(21)(+)
Facility Agreement dated December 23, 2004 by and among the
company as Borrower, JPMorgan Chase Bank, N.A. as Lender,
Export-Import Bank of the United States and JPMorgan Chase Bank,
N.A as Facility Agent.
4.6
(21)(+)
Facility Agreement dated December 23, 2004 by and among the
company as Borrower, Sumitomo Mitsui Banking Corporation and
Oversea-Chinese Banking Corporation Limited as
102
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Lenders and Arrangers.
4.7
<deleted>
4.8
(21)(+)
Facility Agreement dated December 22, 2004 by and between the
company as Borrower and Bank of America as Lender.
4.9
(21)(+)
Letter of Confirmation from Goldman Sachs International to the
company dated August 12, 2004 supplementing the ISDA Master
Agreement (Multicurrency-Cross Border) dated August 10, 2004 by
and between the company and Goldman Sachs International, as
counter-party together with the Schedule to the Master Agreement.
Strategic Alliances
CSP
4.10.1
(10)
Deed of Accession and Ratification dated October 22, 2001 by and
among the company, EDB Investments Pte Ltd, Agilent Technologies
Europe B.V. and Singapex Investments Pte Ltd relating to the
Joint Venture Agreement dated March 13, 1997, as amended and
restated on October 23, 2001(the "Restated Joint Venture
Agreement" dated October 23, 2001).
4.10.2
(10)
Amendment Agreement No. 1 dated January 31, 2002 to Restated
Joint Venture Agreement dated October 23, 2001.
4.10.3
(28)
Deed of Accession and Ratification dated January 26, 2006 by and
among the company, EDB Investments Pte Ltd, Singapex Investments
Pte Ltd, Agilent Technologies Europe B.V. and Avago Technologies
General IP (Singapore) Pte. Ltd. relating to the Restated Joint
Venture Agreement dated October 23, 2001 and as further amended
by an amendment (No. 1) dated January 31, 2002.
SMP
4.11.1
(2)(+)
Joint Venture Agreement dated December 19, 1997 by and between
the company and Lucent Technologies Microelectronics Pte Ltd.
4.11.2
(20)
Supplemental Agreement dated September 17, 2004 to the Joint
Venture Agreement dated December 19, 1997 by and between the
company and Agere Systems Singapore Pte Ltd. (formerly known as
"Lucent Technologies Microelectronics Pte. Ltd.").
4.11.3
(26)
Second Supplemental Agreement dated January 1, 2005 to the Joint
Venture Agreement dated December 19, 1997 by and between the
company and Agere Systems Singapore Pte Ltd.
4.11.4
(2)(+)
Assured Supply and Demand Agreement dated February 17, 1998 by
and among the company, Silicon Manufacturing Partners Pte Ltd and
Lucent Technologies Microelectronics Pte Ltd.
4.11.5
(2)(+)
Supplemental Assured Supply and Demand Agreement dated September
3, 1999 by and among the company, Silicon Manufacturing Partners
Pte Ltd and Lucent Technologies Microelectronics Pte. Ltd.
4.11.6
(2)(+)
License and Technology Transfer Agreement dated February 17, 1998
by and among the company, Lucent Technologies Microelectronics
Pte. Ltd. and Silicon Manufacturing Partners Pte Ltd.
4.11.7
(13)(+)
Amendment Agreement (No. 1) to License and Technology Transfer
Agreement dated July 27, 2000 by and between the company, Lucent
Technologies Microelectronics Pte. Ltd. and Silicon Manufacturing
Partners Pte Ltd.
4.11.8
(11)(+)
Amendment Agreement (No. 2) dated March 22, 2001 to License and
Technology Transfer Agreement dated February 17, 1998 by and
between the company, Agere Systems Singapore Pte Ltd (formerly
known as "Lucent Technologies Microelectronics Pte. Ltd.") and
Silicon Manufacturing Partners Pte Ltd.
103
Table of Contents
4.11.9
(12)(+)
Amendment Agreement (No. 3) dated March 28, 2002 to License and
Technology Transfer Agreement dated February 17, 1998 by and
among the company, Agere Systems Singapore Pte Ltd (formerly
known as "Lucent Technologies Microelectronics Pte. Ltd.") and
Silicon Manufacturing Partners Pte Ltd.
4.11.10
(7)(+)
Amendment Agreement (No. 4) dated July 1, 2003 to License and Technology Transfer
Agreement dated February 17, 1998 by and among the company, Agere Systems Singapore Pte
Ltd (formerly known as "Lucent Technologies Microelectronics Pte. Ltd.") and Silicon
Manufacturing Partners Pte Ltd.
Technology transfer, license, joint development and other related agreements
Agere/Lucent
4.12.1
(2)(+)
Technology Transfer Agreement dated February 17, 1998 by and between the company and
Lucent Technologies Inc.
4.12.2
(11)(+)
Amendment Agreement (No. 1) dated July 31, 2000 to Technology Transfer Agreement dated
February 17, 1998 between Lucent Technologies Inc. and the company.
4.12.3
(11)(+)
Amendment Agreement (No. 2) dated March 20, 2001 to Technology Transfer Agreement dated
February 17, 1998 between Agere Systems Inc. (formerly known as the "Microelectronics
Group of Lucent Technologies Inc.") and the company.
4.12.4
(11)(+)
Amendment Agreement (No. 3) dated March 28, 2002 to Technology Transfer Agreement dated
February 17, 1998 between Agere Systems Inc. (formerly known as the "Microelectronics
Group of Lucent Technologies Inc.") and the company.
4.12.5
(2)(+)
Patent License Agreement dated January 1, 1998 by and between the company and Lucent
Technologies Inc.
4.12.6
(17)(+)
Patent License Agreement Amendment dated August 3, 2000 by and between the company and
Lucent Technologies Inc.
4.12.7
(13)
Letter Agreement dated September 26, 2002 by and between the company and Agere Systems
Inc. amending the Patent License Agreement between the parties dated January 1, 1998.
Toshiba
4.13
(2)(+)
Patent Cross License Agreement dated August 12, 1999 by and between the company and
Toshiba Corporation.
IBM
4.14.1
(10)(++)
Patent Cross-License Agreement dated January 1, 2001 by and between the company and
International Business Machines Corporation.
4.14.2
(14)(+)
Amendment No. 1 dated November 26, 2002 to Patent License Agreement dated January 1,
2001 by and between the company and International Business Machines Corporation.
4.14.3
(14)(++)
"SF" Process Development and Cost Sharing Agreement dated November 26, 2002 by and
between the company and International Business Machines Corporation.
4.14.4
(14)(+)
Copper / Related FEOL Technology License Agreement dated November 26, 2002 by and
between the company and International Business Machines Corporation.
4.14.5
(26)(++)
Amendment No. 1 dated January 19, 2005 to the Copper / Related FEOL Technology License
Agreement dated November 26, 2002 by and between the company and International Business
Machines Corporation.
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Table of Contents
4.14.6
(15)(++)
Amendment No. 1 dated June 26, 2003 to "SF" Process Development and Cost Sharing
Agreement dated November 26, 2002 by and between the company and International Business
Machines Corporation.
4.14.7
(19)(++)
Amended and Restated Amendment No. 2 dated March 9, 2004 to the "SF" Process Development
and Cost Sharing Agreement dated November 26, 2002 by and between the company and
International Business Machines Corporation.
4.14.8
(21)(+)
Amendment No. 3 dated November 5, 2004 to "SF" Process Development and Cost Sharing
Agreement dated November 26, 2002 by and between the company and International Business
Machines Corporation.
4.14.9
(22)(++)
Amended and Restated Amendment No.3 dated June 30, 2005 to "SF" Process Development and
Cost Sharing Agreement dated November 26, 2002 by and between the company and
International Business Machines Corporation.
4.14.10
(27)(++)
Second Amended and Restated Amendment No.3 dated June 30, 2005 to "SF" Process
Development and Cost Sharing Agreement dated November 26, 2002 by and between the
company and International Business Machines Corporation.
4.14.11
(21)(+)
Amendment No. 4 dated December 15, 2004 to "SF" Process Development and Cost Sharing
Agreement dated November 26, 2002 by and between the company and International Business
Machines Corporation.
4.14.12
(14)(+)
Refundable Cross Deposit Agreement dated November 26, 2002 by and between the company
and International Business Machines Corporation.
4.14.13
(18)(+)
First Supplemental Agreement dated December 19, 2003 to the Refundable Cross Deposit
Agreement dated November 26, 2002 by and between the company and International Business
Machines Corporation.
IBM, Infineon and Samsung
4.15
(19)(+)
"SF" Process 65nm/45nm Development and Cost Sharing Agreement dated March 5, 2004 by and
among the company, International Business Machines Corporation, Infineon Technologies AG
and Samsung Electronics Co., Ltd.
Motorola
4.16
(7)(+)
Patent License Agreement dated July 1, 2003 by and between the company and Motorola, Inc.
Property Agreements
Fab 2
4.17
(21)
Sub-Lease dated October 19, 2004 by and between Singapore Technologies Pte Ltd and
the company relating to Private Lots A12787 and A12787(a) Mukim No. 13 Sembawang.
Fab 3
4.18.1
(8)
Sub-Lease dated February 17, 1998 by and between the company and Silicon
Manufacturing Partners Pte Ltd.
4.18.2
(21)
Sub-Lease dated October 19, 2004 by and between Singapore Technologies Pte Ltd and
the company relating to Private Lot A12787(b) Mukim No. 13.
Fabs 2 and 3 Site Slurry Treatment Plant
4.19.1
(28)
Agreement for Sub-License and Sub-Lease (Private Lot A12787(k)) dated July 8, 2005
by and between Singapore Technologies Pte Ltd and the company.
4.19.2
(28)
Novation Agreement dated July 8, 2005 by and among Singapore Technologies Pte Ltd,
Terra
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Table of Contents
Investments Pte. Ltd. and the company relating to the Agreement for
Sub-License and Sub-Lease (Private Lot A12787(k)) dated July 8, 2005.
Fab 6
4.20.1
(8)
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.
4.20.2
(8)
Agreement for Sub-License and Sub-Lease (Private Lot A12787(d)) dated September 24,
1999 by and between Singapore Technologies Pte Ltd and Chartered Silicon Partners
Pte Ltd.
4.20.3
(21)
Novation Agreement dated December 31, 2004 by and among Singapore Technologies Pte
Ltd, Terra Investments Pte. Ltd. and Chartered Silicon Partners Pte Ltd relating to
the Agreement for Sub-License and Sub-Lease (Private Lot A12787(d)) dated September
24, 1999.
Fab 7
4.21.1
(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 company.
4.21.2
(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.
4.21.3
(21)
Novation Agreement dated December 31, 2004 by and among Singapore Technologies Pte
Ltd, Terra Investments Pte. Ltd. and the company relating to the Agreement for
Sub-License and Sub-Lease (Private Lot A12787(e)) dated July 30, 2001.
Related Party Agreements
4.22
(14)
Amended and Restated Turnkey Subcontract Agreement for Sort, Assembly and/or Final
Test Services dated October 30, 2002 by and between the company and ST Assembly
Test Services Ltd.
4.23
(18)
Mr. Chia Song Hwee's, President and Chief Executive Officer, Contract of Employment.
8
(14)
List of the company's subsidiaries.
12.1
(28)
Certification of the President and Chief Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
12.2
(28)
Certification of the Senior Vice President and Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
13.1
(28)
Certification of the President and Chief Executive Officer pursuant to 18 U.S.C
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
13.2
(28)
Certification of the Senior Vice President and Chief Financial Officer pursuant to
18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
15.1
(28)
Consent of KPMG addressed to the Board of Directors and Shareholders of the company.
15.2
(28)
Consent of KPMG addressed to the
Board of Directors and Shareholders of Silicon Manufacturing Partners Pte Ltd.
Notes:
(1)
Filed as an exhibit to our company's Registration Statement on Form F-1
(Registration No. 333-88397), as filed with the Securities and Exchange Commission
on October 4, 1999. The Memorandum and Articles of Association were first amended
by shareholders resolutions which were 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 our company's annual general meeting in May 2001 which was filed as an exhibit
to our company's Current Report on Form 6-K (File No. 000-27811), as submitted with
the Securities and Exchange Commission on April 18, 2001. The Memorandum and
Articles of Association were further amended by shareholders resolutions which were
filed as an exhibit to our company's Current Report on Form 6-K (File No.
000-27811), as
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submitted with the Securities and Exchange Commission on August 18,
2005, and were set forth in the proxy statement for our extraordinary general
meeting in August 2005 which was filed as an exhibit to our company's Current
Report on Form 6-K (File No. 000-27811), as submitted with the Securities and
Exchange Commission on July 25, 2005. All such 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)
Submitted as an exhibit to our company's Current Report on Form 6-K (File No.
000-27811), as submitted with the Securities and Exchange Commission on November
23, 1999, which exhibit is incorporated herein by reference.
(4)
Submitted as an exhibit to our company's 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.
(5)
Submitted 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)
Submitted as an exhibit to our company's Third Quarterly Report 2003 on Form 6-K
(File No. 000-27811), as submitted with the Securities and Exchange Commission on
November 13, 2003, which exhibit is incorporated herein by reference.
(8)
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.
(9)
Submitted as an exhibit to our company's Current Report on Form 6-K (File No.
000-27811), as submitted with the Securities and Exchange Commission on April 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)
Submitted as an exhibit to our company's First Quarterly Report 2001 on Form 6-K
(File No. 000-27811), as submitted with the Securities and Exchange Commission on
May 15, 2001, which exhibit is incorporated herein by reference.
(12)
Submitted as an exhibit to our company's First Quarterly Report 2002 on Form 6-K
(File No. 000-27811), as submitted with the Securities and Exchange Commission on
May 14, 2002, which exhibit is incorporated herein by reference.
(13)
Submitted as an exhibit to our company's Third Quarterly Report 2002 on Form 6-K
(File No. 000-27811), as submitted with the Securities and Exchange Commission on
November 14, 2002, which exhibit is incorporated herein by reference.
(14)
Filed as an exhibit to our company's Annual Report on Form 20-F (File No.
000-27811), as filed with the Securities and Exchange Commission on March 13, 2003,
which exhibit is incorporated herein by reference.
(15)
Submitted as an exhibit to our company's Second Quarterly Report 2003 on Form 6-K
(File No. 000-27811), as submitted with the Securities and Exchange Commission on
August 13, 2003, which exhibit is incorporated herein by reference.
(16)
Submitted as an exhibit to our company's Third Quarterly Report 2001 on Form 6-K
(File No. 000-27811), as submitted with the Securities and Exchange Commission on
November 14, 2001, which exhibit is incorporated herein by reference.
(17)
Submitted as an exhibit to our company's Current Report on Form 6-K (File No.
000-27811), as submitted with the Securities and Exchange Commission on November
14, 2000, which exhibit is incorporated herein by reference.
(18)
Filed as an exhibit to our company's Annual Report on Form 20-F (File No.
000-27811), as filed with the
107
Table of Contents
Securities and Exchange Commission on March 3, 2004,
which exhibit is incorporated herein by reference.
(19)
Submitted as an exhibit to our company's First Quarterly Report 2004 on Form 6-K
(File No. 000-27811), as submitted with the Securities and Exchange Commission on
May 10, 2004, which exhibit is incorporated herein by reference.
(20)
Submitted as an exhibit to our company's Third Quarterly Report 2004 on Form 6-K
(File No. 000-27811), as submitted with the Securities and Exchange Commission on
November 8, 2004, which exhibit is incorporated herein by reference.
(21)
Filed as an exhibit to our company's Annual Report on Form 20-F (File No.
000-27811), as filed with the Securities and Exchange Commission on March 7, 2005,
which exhibit is incorporated herein by reference.
(22)
Submitted as an exhibit to our company's Second Quarterly Report 2005 on Form 6-K
(File No. 000-27811), as submitted with the Securities and Exchange Commission on
July 22, 2005, which exhibit is incorporated herein by reference.
(23)
Submitted as an exhibit to our company's Current Report 2005 on Form 6-K (File No.
000-27811), as submitted with the Securities and Exchange Commission on August 17,
2005, which exhibit is incorporated herein by reference.
(24)
Submitted as an exhibit to our company's Current Report on Form 6-K (File No.
000-27811), as submitted with the Securities and Exchange Commission on August 4,
2006, which exhibit is incorporated herein by reference.
(25)
Submitted as an exhibit to our company's Current Report on Form 6-K (File No.
000-27811), as submitted with the Securities and Exchange Commission on August 18,
2005, which exhibit is incorporated herein by reference.
(26)
Submitted as an exhibit to our company's First Quarterly Report on Form 6-K (File
No. 000-27811), as submitted with the Securities and Exchange Commission on May 6,
2005, which exhibit is incorporated herein by reference.
(27)
Submitted as an exhibit to our company's Third Quarterly Report 2005 on Form 6-K
(File No. 000-27811), as submitted with the Securities and Exchange Commission on
November 2, 2005, which exhibit is incorporated herein by reference.
(28)
Filed herewith.
(+)
Certain portions of this exhibit have been omitted pursuant to a confidential
treatment order of the Securities and Exchange Commission. The omitted portions
have been separately filed with the Commission.
(++)
Certain portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omitted portions have been separately filed with the Commission.
108
Table of Contents
SIGNATURES
The company 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 1
st
day of March 2006.
CHARTERED SEMICONDUCTOR MANUFACTURING
LTD
By:
/s/ George Thomas
Name:
George Thomas
Title:
Senior Vice President and Chief Financial Officer
This annual report has been signed by the following persons in the capacities indicated:
SIGNATURE
TITLE
DATE
/s/ James A. Norling
Chairman of the Board
March 1, 2006
James A. Norling
/s/ Chia Song Hwee
Chia Song Hwee
President and Chief Executive
Officer (principal executive officer)
March 1, 2006
/s/ George Thomas
George Thomas
Senior Vice President and Chief
Financial Officer (principal financial
and accounting officer)
March 1, 2006
/s/ Sum Soon Lim
Director
March 1, 2006
Sum Soon Lim
/s/ Robert E. La Blanc
Director
March 1, 2006
Robert E. La Blanc
/s/ Andre Borrel
Director
March 1, 2006
Andre Borrel
/s/ Charles E. Thompson
Director
March 1, 2006
Charles E. Thompson
/s/ Tsugio Makimoto
Director
March 1, 2006
Tsugio Makimoto
/s/ Tay Siew Choon
Director
March 1, 2006
Tay Siew Choon
/s/ Peter Seah Lim Huat
Director
March 1, 2006
Peter Seah Lim Huat
/s/ Philip Tan Yuen Fah
Director
March 1, 2006
Philip tan yuen fah
109
Table of Contents
SIGNATURE
TITLE
DATE
/s/ Pasquale Pistorio
Director
March 1, 2006
Pasquale Pistorio
/s/ Steven H. Hamblin
Director
March 1, 2006
Steven H. Hamblin
110
Table of Contents
CHARTERED SEMICONDUCTOR MANUFACTURING LTD
AND SUBSIDIARIES
FINANCIAL STATEMENTS INDEX
Page Number
Report of Independent Registered Public Accounting Firm
F-1
Consolidated Balance Sheets
F-2
Consolidated Statements of Operations
F-3
Consolidated Statements of Comprehensive Income (Loss)
F-4
Consolidated Statements of Shareholders' Equity
F-5
Consolidated Statements of Cash Flows
F-6
Notes to the Consolidated Financial Statements
F-7
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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, 2004 and 2005, and the related consolidated
statements of operations, comprehensive income (loss), shareholders' equity and cash flows for each
of the years in the three-year period ended December 31, 2005. 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 the standards of the Public Company Accounting Oversight
Board (United States). 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 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, 2004 and 2005, and the results of their operations and their
cash flows for each of the years in the three-year period ended December 31, 2005, in conformity
with U.S. generally accepted accounting principles.
As discussed in Note 24 to the consolidated financial statements, the Company changed its method of
accounting for asset retirement obligations in 2003.
KPMG
Singapore
March 1, 2006
F-1
Table of Contents
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS — in US Dollars
As of December 31
In thousands (except per share data)
2004
2005
ASSETS
Cash and cash equivalents
$
539,399
$
819,856
Marketable investments
23,181
22,467
Receivables, net
143,148
184,897
Inventories
72,159
134,240
Prepaid expenses
6,723
7,670
Other current assets
1,857
114,446
Total current assets
786,467
1,283,576
Marketable investments
44,851
—
Investment in SMP
93,765
50,384
Technology licenses, net
121,953
106,612
Property, plant and equipment, net
1,914,515
2,049,695
Other non-current assets
128,461
27,027
Total assets
$
3,090,012
$
3,517,294
LIABILITIES, CONVERTIBLE REDEEMABLE PREFERENCE SHARES AND SHAREHOLDERS'
EQUITY
Payables
$
188,786
$
166,681
Income taxes payable
23,421
27,674
Current installments of long-term debt and capital lease obligations
352,985
322,453
Other current liabilities
58,529
216,445
Total current liabilities
623,721
733,253
Long-term debt and capital lease obligations, excluding current installments
882,745
1,169,034
Other non-current liabilities
77,915
17,970
Total liabilities
1,584,381
1,920,257
Convertible redeemable preference shares of $0.01 par value
Authorized: 30 shares in 2005
Issued and outstanding: 30 shares in 2005
Redemption value at maturity: $10,000 per share
—
250,663
Share capital: ordinary shares of S$0.26 par value
Authorized: 3,076,923 shares in 2004 and 4,615,385 shares in 2005
Issued and outstanding: 2,509,238 shares in 2004 and 2,513,384 shares
in 2005
445,531
446,181
Additional paid-in capital
2,237,107
2,235,869
Accumulated deficit
(1,118,654
)
(1,278,252
)
Accumulated other comprehensive loss
(58,353
)
(57,424
)
Total shareholders' equity
$
1,505,631
$
1,346,374
Commitments and contingencies
Total liabilities, convertible redeemable preference shares
and shareholders' equity
$
3,090,012
$
3,517,294
See accompanying notes to consolidated financial statements.
F-2
Table of Contents
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS — in US Dollars
For the Years Ended December 31
In thousands (except per share data)
2003
2004
2005
Net revenue
$
551,911
$
932,131
$
1,032,734
Cost of revenue
(648,330
)
(769,318
)
(917,048
)
Gross profit (loss)
(96,419
)
162,813
115,686
OPERATING EXPENSES
Research and development
124,057
118,281
122,073
Sales and marketing
38,748
37,751
42,181
General and administrative
40,762
33,850
38,756
Fab start-up costs
9,219
33,199
22,697
Other operating expenses (income), net
(11,001
)
(8,994
)
3,938
Total operating expenses
201,785
214,087
229,645
Operating loss
(298,204
)
(51,274
)
(113,959
)
Equity in income of SMP
23,194
27,563
6,486
Other income, net
23,186
52,299
2,442
Interest income
12,168
11,530
28,625
Interest expense and amortization of debt discount
(42,222
)
(30,093
)
(69,839
)
Foreign exchange gain (loss), net
(733
)
1,320
(356
)
Income (loss) before income taxes and minority interest
(282,611
)
11,345
(146,601
)
Income tax expense
(11,671
)
(4,774
)
(12,997
)
Income (loss) before minority interest
(294,282
)
6,571
(159,598
)
Minority interest in loss of CSP
9,491
—
—
Net income (loss) prior to cumulative effect adjustment
(284,791
)
6,571
(159,598
)
Cumulative effect adjustment for change in accounting principle
(6,421
)
—
—
Net income (loss)
(291,212
)
6,571
(159,598
)
Less: Accretion to redemption value of convertible redeemable
preference shares
—
—
(3,196
)
Net income (loss) available to common shareholders
$
(291,212
)
$
6,571
$
(162,794
)
Basic and diluted net earnings (loss) per common share:
Prior to cumulative effect adjustment
$
(0.11
)
$
0.00
$
(0.06
)
Cumulative effect adjustment
(0.01
)
—
—
Net earnings (loss) per common share
$
(0.12
)
$
0.00
$
(0.06
)
Basic and diluted net earnings (loss) per ADS:
Prior to cumulative effect adjustment
$
(1.14
)
$
0.03
$
(0.65
)
Cumulative effect adjustment
(0.02
)
—
—
Net earnings (loss) per ADS
$
(1.16
)
$
0.03
$
(0.65
)
Number of common shares used in computing:
Basic net earnings (loss) per common share
2,502,294
2,508,376
2,511,428
Effect of dilutive options
—
8,566
1,149
Diluted net earnings (loss) per common share
2,502,294
2,516,942
2,512,577
Number of ADSs used in computing:
Basic net earnings (loss) per ADS
250,229
250,838
251,143
Effect of dilutive options
—
856
115
Diluted net earnings (loss) per ADS
250,229
251,694
251,258
See accompanying notes to consolidated financial statements.
F-3
Table of Contents
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) — in US Dollars
For the Years Ended December 31
In thousands
2003
2004
2005
Net income (loss)
$
(291,212
)
$
6,571
$
(159,598
)
Net unrealized gains (losses) on change in cash
flow hedging activity fair values
(207
)
598
112
Share of cash flow hedging activity gains of SMP
5,298
3,945
17
Reclassification of cash flow hedging activity
(gains) losses into earnings
1,003
(2,942
)
469
Foreign currency translation
(1,716
)
—
1,721
Unrealised losses on available-for-sale securities
(266
)
(1,073
)
(1,390
)
Other comprehensive income, net
4,112
528
929
Comprehensive income (loss)
$
(287,100
)
$
7,099
$
(158,669
)
See accompanying notes to consolidated financial statements.
F-4
Table of Contents
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY — in US Dollars
In thousands
Accumulated
Total
Additional
Other
Share
Paid-in
Accumulated
Compre-
holders'
Ordinary Shares
Capital
Deficit
hensive Loss
Equity
No.
$
$
$
$
$
Balance at January 1, 2003
2,497,179
443,713
2,238,752
(834,013
)
(62,993
)
1,785,459
Net loss
—
—
—
(291,212
)
—
(291,212
)
Other comprehensive income
—
—
—
—
4,112
4,112
Issuance of shares
8,301
1,240
1,753
—
—
2,993
Employee stock compensation
—
—
4
—
—
4
Non-employee stock
compensation
—
—
(6,801
)
—
—
(6,801
)
Balance at December 31, 2003
2,505,480
444,953
2,233,708
(1,125,225
)
(58,881
)
1,494,555
Net income
—
—
—
6,571
—
6,571
Other comprehensive income
—
—
—
—
528
528
Issuance of shares
3,758
578
1,423
—
—
2,001
Employee stock compensation
—
—
3
—
—
3
Non-employee stock
compensation
—
—
173
—
—
173
Others
—
—
1,800
—
—
1,800
Balance at December 31, 2004
2,509,238
445,531
2,237,107
(1,118,654
)
(58,353
)
1,505,631
Net loss
—
—
—
(159,598
)
—
(159,598
)
Accretion to redemption
value of convertible
redeemable preference
shares
—
—
(3,196
)
—
—
(3,196
)
Other comprehensive income
—
—
—
—
929
929
Issuance of shares
4,146
650
1,737
—
—
2,387
Employee stock compensation
—
—
1
—
—
1
Non-employee stock
compensation
—
—
220
—
—
220
Balance at December 31, 2005
2,513,384
446,181
2,235,869
(1,278,252
)
(57,424
)
1,346,374
See accompanying notes to consolidated financial statements.
F-5
Table of Contents
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS — in US Dollars
For the years ended December 31
In thousands
2003
2004
2005
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)
$
(291,212
)
$
6,571
$
(159,598
)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Cumulative effect adjustment
6,421
—
—
Equity in income of SMP
(23,194
)
(27,563
)
(6,486
)
Cash dividends received from SMP
—
—
29,460
Depreciation and amortization
439,283
437,590
507,687
Foreign exchange loss (gain), net
26
(19
)
434
Gain on disposal of property, plant and equipment
(5,917
)
(11,703
)
(1,594
)
Cancellation of employee bonus award plan
(27,531
)
—
—
Minority interest in loss of CSP
(9,491
)
—
—
Stock-based compensation
4
3
1
Others
5,547
(7,035
)
8,050
Change in assets and liabilities:
Receivables
(54,753
)
16,327
(44,280
)
Inventories
(35,158
)
(15,726
)
(62,081
)
Prepaid expenses and other current assets
(946
)
(180
)
853
Payables and other liabilities
36,975
(61,395
)
127,675
Income taxes payable
8,029
(5,186
)
4,253
Net cash provided by operating activities
48,083
331,684
404,374
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant and equipment
(220,761
)
(686,252
)
(628,127
)
Payments for technology licenses
(59,705
)
(37,083
)
(9,351
)
Purchases of marketable investments
(30,000
)
(30,000
)
—
Refundable deposits placed with a vendor
(80,000
)
(35,000
)
—
Proceeds from sale of property, plant and equipment
6,119
31,217
6,245
Proceeds from redemption and maturity of marketable investments
—
15,000
45,000
Return of capital from SMP
—
—
17,300
Others
—
9,403
(2,142
)
Net cash used in investing activities
(384,347
)
(732,715
)
(571,075
)
CASH FLOWS FROM FINANCING ACTIVITIES
Debt
Borrowings
125,000
318,000
1,128,592
Repayments
(65,033
)
(287,312
)
(990,172
)
Receipts of customer deposits
—
450
81,300
Refund of customer deposits
(32,123
)
—
(22,035
)
Issuance of ordinary shares
2,993
2,001
2,387
Issuance of convertible redeemable preference shares
—
—
247,513
Others
—
1,800
—
Net cash provided by financing activities
30,837
34,939
447,585
Net increase (decrease) in cash and cash equivalents
(305,427
)
(366,092
)
280,884
Effect of exchange rate changes on cash and cash equivalents
(26
)
19
(427
)
Cash and cash equivalents at the beginning of the year
1,210,925
905,472
539,399
Cash and cash equivalents at the end of the year
$
905,472
$
539,399
$
819,856
Supplemental Cash Flow Information
Interest paid (net of amounts capitalized)
$
26,407
$
18,215
$
77,510
Income taxes paid
$
6,291
$
11,276
$
9,576
Non-cash investing and financing activities
Equity securities received from sale of technology and equipment
$
—
$
11,708
$
—
Property, plant and equipment acquired through capital lease
$
—
$
—
$
45,933
Property, plant and equipment acquired on credit
$
22,309
$
129,147
$
52,280
See accompanying notes to consolidated financial statements.
F-6
Table of Contents
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS — in US
Dollars
In thousands (except per share data)
1.
Background and Summary of Significant Accounting Policies
(a) Business and Organization
The Company is one of the world's top dedicated semiconductor foundries 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 was incorporated in Singapore in 1987. As of December 31, 2005, Singapore
Technologies Semiconductors Pte Ltd ("ST Semiconductors"), a wholly owned subsidiary of
Temasek Holdings (Private) Limited ("Temasek"), owns a
majority of the shares of the Company. Temasek is a holding company through which corporate investments
of the Government of Singapore are held.
Chartered Silicon Partners Pte Ltd ("CSP") was formed in March 1997. The Company, EDB
Investments Pte Ltd, Agilent Technologies Europe B.V. ("Agilent Europe") and Singapex
Investments Pte Ltd own a 51.0%, 26.5%, 15.0% and 7.5% equity interest in CSP, respectively.
As part of Agilent Technologies, Inc's restructuring in 2005, Agilent Europe transferred its
entire shareholding in CSP to Avago Technologies General IP (Singapore) Pte. Ltd. ("Avago
Singapore") in January 2006. The Company accounts for CSP as a consolidated subsidiary.
Silicon Manufacturing Partners Pte Ltd ("SMP") was formed in January 1998. Agere Systems
Singapore Pte Ltd ("Agere") and the Company own a 51.0% and 49.0% equity interest in SMP,
respectively. The Company accounts for SMP using the equity method.
(b) Basis of Presentation
The consolidated financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America ("US GAAP").
The consolidated financial statements reflect the accounts of Chartered Semiconductor
Manufacturing Ltd and its majority-owned subsidiaries. All significant intercompany accounts
and transactions have been eliminated in consolidation. Where losses applicable to the
minority interest in a subsidiary exceed the minority interest in the equity capital of the
subsidiary, such excess and any further losses applicable to the minority interest have been
charged to the Company's consolidated statements of operations, unless the minority interest
has a binding obligation, and is able, to make good the losses. When the subsidiary
subsequently reports profits, the profits applicable to the minority interest are taken to
the consolidated statements of operations until the minority interest's share of losses
previously taken to the consolidated statements of operations is fully recovered.
Due to cumulative losses, the obligation to the minority shareholders of CSP was reduced to
zero in the first quarter of 2003. Therefore none of CSP's losses from that point forward
have been allocated to the minority interest in the consolidated statements of operations.
The effect of this on the results of operations was losses not allocated to the minority
interest according to their proportionate ownership as follows:
2003
2004
2005
Losses not allocated to the minority
interest according to their
proportionate ownership
$
74,317
$
55,786
$
64,889
The cumulative losses not allocated to the minority shareholders of CSP according to their
proportionate ownership as of December 31, 2004 and 2005 are $130,103 and $194,992,
respectively.
(c) Reclassifications
Certain reclassifications have been made in prior years' financial statements to conform to
classifications used in the current year.
F-7
Table of Contents
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. Estimates are
based on historical experience, current conditions and on various other assumptions that are
believed to be reasonable under the circumstances. Significant items subject to judgement and
such estimates include estimated useful lives and salvage values of long-lived assets, the
recoverability of the carrying value of long-lived assets, the realization of deferred income
tax assets, accounts receivable and inventories, the recognition and measurement of revenue
and sales credits and returns allowance, the fair value of stock-based employee compensation
awards and financial instruments. Actual results could differ from these estimates.
(e) Foreign Currency
The functional currency of the Company and its subsidiaries is the US dollar. Assets and
liabilities which are denominated in foreign currencies are translated into the functional
currency at the rates of exchange prevailing at the balance sheet date. Foreign currency
transactions are translated using the exchange rates prevailing at the date of transactions.
Foreign exchange gains or losses, resulting from the settlement of foreign currency
transactions and from the translation at financial year-end exchange rates of assets and
liabilities denominated in foreign currencies, are included in the line item "foreign
exchange gain (loss), net" in the consolidated statements of operations.
(f) Business and Credit Concentrations
The Company is a dedicated semiconductor foundry providing wafer fabrication services and
technologies. The worldwide semiconductor foundry industry is highly competitive. 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, electronic design
automation and tool support. The semiconductor industry has historically been highly
cyclical and, at various times, has experienced significant economic downturns characterized
by production overcapacity, reduced product demand and rapid erosion of selling prices.
Periods of overcapacity in the semiconductor industry have frequently followed periods of
increased demand. In addition, the markets for semiconductors are characterized by rapid
technological change, intense competition and fluctuations in end-user demand. As a result,
changes in the industry may adversely affect management's estimates and the Company's
results of operations and financial position.
Financial instruments that potentially subject the Company to concentrations of credit risk
consist principally of cash, investments, derivative financial instruments and receivables.
The five largest customers of the Company accounted for 41%, 52% and 56% of net revenue in
the years ended December 31, 2003, 2004 and 2005, respectively. Total accounts receivable
from these customers was $49,521 and $92,668 at December 31, 2004 and 2005, 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 and credit control
and collection procedures.
The Company's cash and cash equivalents and term deposits are placed with major international
banks and financial institutions with specific minimum credit standards. Cash and cash
equivalents and term deposits with a particular bank accounted for 43% and 20% of total
balances at December 31, 2004 and 2005, respectively.
The amounts subject to credit risk related to derivative instruments are generally limited to
the amounts, if any, by which a counterparty's obligations exceed the obligations of the
Company with that counterparty. The risk management practices are further described in Note
19.
(g) Cash Equivalents
Cash equivalents consist of highly liquid investments that are readily convertible into cash
and have original maturities of three months or less.
F-8
Table of Contents
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — in US Dollars
In thousands (except per share data)
(h) Marketable Investments
The Company classifies its investments in marketable equity and debt securities as
"available-for-sale", "held to maturity" or "trading" at the time of purchase in accordance
with the provisions of Statement of Financial Accounting Standards ("SFAS") No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" ("SFAS No. 115"). There
are no investments classified as trading or held-to-maturity as of December 31, 2004 and
2005. There are no transfers between investment classifications in any of the periods
presented.
Available-for-sale securities are carried at fair value with unrealized gains and losses, net
of related tax, if any, reported as a component of other comprehensive income (loss) until
realized. Realized gains and losses from the sale of available-for-sale securities are
determined on a specific-identification basis. A decline in the market value of any
available-for-sale security below cost that is deemed to be other than temporary will result
in an impairment, which is charged to earnings.
(i) Derivative Instruments and Hedging Activities
In accordance with SFAS No. 133, "Accounting for Derivative Instruments and Certain Hedging
Activities", as amended, the Company records derivatives on the balance sheet as assets or
liabilities measured at fair value.
On the date a derivative contract is entered into, the Company will consider if the
derivative instrument is part of a hedging relationship. 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 at the
hedge's inception. This process includes linking all derivatives that are designated as
fair-value, cash-flow, or foreign-currency hedges to specific assets and liabilities on the
balance sheet or to specific firm commitments or forecasted transactions. The Company also
formally assesses, both at the hedge's inception and on an ongoing basis, whether the
derivatives that are used in hedging transactions are highly effective in offsetting changes
in fair values or cash flows of hedged items.
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.
F-9
Table of Contents
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — in US Dollars
In thousands (except per share data)
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 no longer adjusts the hedged asset or liability
for changes in fair value. The adjustment of the carrying amount of the hedged asset or
liability is accounted for in the same manner as other components of the carrying amount
of that asset or liability. When hedge accounting is discontinued because the hedged
item no longer meets the definition of a firm commitment, the Company removes any asset
or liability that was recorded pursuant to recognition of the firm commitment from the
balance sheet and recognizes any gain or loss in earnings. When hedge accounting is
discontinued because it is probable that a forecasted transaction will not occur, gains
and losses that were accumulated in other comprehensive income are recognized
immediately in earnings. In all situations in which hedge accounting is discontinued,
the Company continues to carry the derivative at its fair value on the balance sheet,
and recognizes any changes in its fair value in earnings.
(j) Inventories
Inventories are stated at the lower of cost or market (net realizable value) and consist of
work in progress, raw materials and consumable supplies and spares. Cost is determined using
standard cost and an allocation of the cost variances arising in the period of production,
which approximates actual costs determined on the weighted average basis. Standard cost is
based on estimates of materials, labor and other costs incurred in each process step
associated with the manufacture of the Company's products. Labor and overhead costs are
allocated to each step in the wafer production process based on normal fab capacity
utilization, with costs arising from abnormal under-utilization of capacity expensed when
incurred.
(k) Technology Licenses
Technology license agreements are stated at cost and amortized 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 recorded at cost and depreciated to their estimated salvage
values using the straight-line method over their estimated useful lives as follows:
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
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. Upon
retirement or disposal of assets, the cost and related accumulated depreciation are removed
from the consolidated balance sheets and any gain or loss is included in the consolidated
statements of operations.
Property, plant and equipment acquired through capital leases are capitalized at the lower of fair value or the present value of the minimum
lease payments at the inception of the lease. The minimum lease payments are allocated
between interest expense and reductions of the lease obligation so as to produce a constant
periodic rate of interest on the remaining balance of the lease obligation. Assets under
capital leases are depreciated over the shorter of their estimated useful lives or the lease
term.
F-10
Table of Contents
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 intangible assets for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable.
Recoverability of long-lived asset groups to be held and used are measured by a comparison of
the carrying amount to the sum of the undiscounted cash flows expected to result from the use
and eventual disposition of the asset group. If an asset group is considered to be impaired,
the impairment loss is measured as the amount by which the carrying amounts of the long-lived
assets exceed their fair value. The Company does not have any intangible assets with
indefinite useful lives.
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 are considered held and used until disposed of. Long-lived assets to be abandoned
are disposed of when they cease to be used.
(n) Revenue Recognition
The Company enters into arrangements with customers which typically include, in addition to
fabricating semiconductor wafers, pre-fabricating services such as engineering services and
masks generation, and associated assembly and test services.
When arrangements include multiple deliverables, the Company evaluates whether to divide the
deliverables into separate units of accounting using certain specified criteria. The total
arrangement consideration is allocated to each unit of accounting based on fair values in
accordance with the methodology in FASB Emerging Issues Task Force ("EITF") Issue 00-21,
"Accounting for Revenue Arrangements with Multiple Deliverables". Substantially all of the Company's arrangements for the sale
of semiconductor wafers and related services consist of a single unit of accounting.
Revenue for each unit of accounting is recognized when the contractual obligations have been
performed and, where applicable, delivery has occurred and title and risk of loss has passed
to the customer, there is evidence of a final arrangement as to the specific terms of the
agreed upon sales, selling prices to the customers are fixed or determinable and collection
of the revenue is reasonably assured. Generally this results in revenue recognition upon
shipment of wafers. Revenue represents the invoiced value of goods and services supplied
excluding goods and services tax, less allowances for estimated sales credits and returns.
The Company estimates allowances for sales credits and returns based on historical experience
and management's estimate of the level of future claims. Additionally, the Company accrues
for specific items at the time their existence is known and amounts are estimable.
Other arrangements include sale of equipment and contemporaneous licensing of intellectual
property. Arrangement consideration is allocated between equipment and licensing of
intellectual property using the residual method based on the fair value of equipment sold.
Estimates of fair value of equipment are based on the resale prices of similar equipment sold
on the used equipment market. Income from intellectual property is classified as a component
of other income, net, in the consolidated statement of operations as it is not considered as
a source of income from principal operations, and is recognized when the title and risk of
loss have passed to the customer or the license is delivered, there is evidence of a final
arrangement, fees are fixed or determinable, and collectibility is reasonably assured.
F-11
Table of Contents
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — in US Dollars
In thousands (except per share data)
(o) 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.
(p) 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 related interpretations. Employee
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, primarily employees of SMP, are
measured in accordance with the fair-value method as the fair market value of the stock
options based upon an option pricing model. This cost is recognized over the period in which
the options vest in accordance with SFAS No. 123, "Accounting for Stock-Based Compensation",
as amended by SFAS No. 148, "Accounting for Stock-Based Compensation — Transition and
Disclosure".
Had the Company determined employee compensation cost based on the fair value at the grant
date for its share options under SFAS No. 123, as amended by SFAS No. 148, the Company's net
income (loss) would have changed to the pro forma amounts indicated below:
2003
2004
2005
Stock-based employee compensation cost
As reported (intrinsic method)
$
4
$
3
$
1
Pro forma (fair-value method)
$
13,526
$
16,744
$
7,073
Net income (loss) available to common shareholders
As reported
$
(291,212
)
$
6,571
$
(162,794
)
Pro forma
$
(304,734
)
$
(10,170
)
$
(169,866
)
Basic and diluted net earnings (loss) per common share
As reported
$
(0.12
)
$
0.00
$
(0.06
)
Pro forma
$
(0.12
)
$
(0.00
)
$
(0.07
)
Basic and diluted net earnings (loss) per ADS
As reported
$
(1.16
)
$
0.03
$
(0.65
)
Pro forma
$
(1.22
)
$
(0.04
)
$
(0.68
)
(q) Product warranties
The Company guarantees that products will meet the stated functionality as agreed to in each sales arrangement.
The Company provides for the estimated warranty costs under these guarantees based upon historical experience and
management's estimate of the level of future claims, and accrues for specific items at the time their existence
is known and the amounts are estimable. Expenses for warranty costs were not significant in any of the years presented.
(r) Fab Start-up Costs
The Company records costs related to start-up activities, including fab start-up costs, as
expenses when they are incurred. Such costs primarily include employee related expenses and
engineering activities associated with the start-up of a fab.
F-12
Table of Contents
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — in US Dollars
In thousands (except per share data)
(s) Deferred Loan Costs
Expenses associated with the issuance of long-term debt are capitalized and are amortized
over the terms of the respective arrangement, ranging from one to seven years, using the
effective interest rate method.
(t) Operating Leases
Rental on operating leases, including the effects of scheduled rent increases, lease incentives and rent holidays, are charged to expense on a straight-line basis over the
term of the lease. Contingent rentals are charged to expense when they are incurred.
(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 Common Share
Basic net earnings (loss) per common share is computed by deducting from net income or adding
to net (loss) the accretion to redemption value of the convertible redeemable preference shares and using the weighted-average number of common shares outstanding. Diluted net
earnings (loss) per common share is computed by deducting from net income or adding to net
(loss) the accretion to redemption value of the convertible redeemable preference shares and
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 and convertible redeemable preference shares.
The Company excluded potentially dilutive securities for each period presented from its
diluted net earnings (loss) per common share computation because either the exercise price or
conversion 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:
Years ended December 31,
2003
2004
2005
Convertible debt and call options
214,792
429,584
251,092
Stock options
104,223
98,468
71,841
Convertible redeemable preference shares
—
—
344,067
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, 2005. The weighted average exercise
prices of options outstanding were $2.67, $2.36 and $2.04 as of December 31, 2003, 2004 and
2005, respectively. The excluded stock options have per share exercise prices ranging from
$0.39 to $8.31, $0.63 to $8.31 and $0.69 to $8.31 for the years ended December 31, 2003, 2004
and 2005, respectively. The exercise price of the call options was $0.93 per share as of
December 31, 2005 and the conversion price of the convertible redeemable preference shares
was $0.8719 per share.
F-13
Table of Contents
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — in US Dollars
In thousands (except per share data)
(w) Recent Accounting Pronouncements
In March 2005, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 47, "Accounting for Conditional Asset Retirement Obligations" ("FIN
47"). FIN 47 clarifies that an entity must record a liability for a "conditional" asset
retirement obligation if the fair value of the obligation can be reasonably estimated.
The types of asset retirement obligations that are covered by this Interpretation are
those for which an entity has a legal obligation to perform an asset retirement
activity, however the timing and (or) method of settling the obligation are conditional
on a future event that may or may not be within the control of the entity. FIN 47 also
clarifies when an entity would have sufficient information to reasonably estimate the
fair value of an asset retirement obligation. FIN 47 is effective no later than the end
of fiscal years ending after December 15, 2005. The initial adoption of FIN 47 did not
have an impact on the Company's financial condition and consolidated statements of
operations.
In December 2004, the FASB published FAS 123(R), "Share-Based Payments". FAS 123(R)
requires that the compensation cost relating to share-based payment transactions be
recognized in financial statements. That cost will be measured based on the fair value
of the equity or liability instruments issued. FAS 123(R) replaces FASB Statement No.
123, "Accounting for Stock-Based Compensation", and supersedes APB Opinion No. 25,
"Accounting for Stock Issued to Employees". In March 2005, the SEC issued Staff
Accounting Bulletin No. 107, or SAB 107, on the interaction between FAS 123(R) and
certain SEC rules and regulations, and on SEC Staff's views regarding the valuation of
share-based payment arrangements for public companies. In April 2005, the SEC approved a
new rule that permits companies to defer the effective date of FAS 123(R). The Company
has elected to adopt FAS 123(R) on January 1, 2006.
The Company currently determines the fair value of stock-based compensation using a
Black-Scholes option-pricing model. The adoption of FAS 123(R) on January 1, 2006 is expected to decrease the Company's net income in 2006 by as
much as $6,000. The pro forma amounts disclosed in Note 1(p) of the consolidated
financial statements are not necessarily indicative of the impact FAS 123(R) will have on the
Company's consolidated statements of operations.
2.
Related Party Transactions
(a) Temasek and affiliates
The Company is a majority owned subsidiary of ST Semiconductors, which is itself a
wholly-owned subsidiary of Temasek. Temasek is a holding company through which corporate
investments of the government of Singapore are held. The Company transacts business in the
normal course of its operations with Temasek and its affiliates as well as with other
companies and entities that are partially or wholly owned or controlled by the government of
Singapore.
The Company had the following significant transactions with related parties:
2003
2004
2005
Affiliates of Temasek
Services purchased from STATS ChipPAC
$
13,541
$
19,104
$
12,872
Property, plant and equipment purchased
175
415
4,016
Services purchased
1,398
2,178
883
Interest income received
6,689
2,853
—
Management fees paid
3,384
2,739
—
Sub-lease rental for leasehold land from JTC
2,482
2,460
2,416
Rental for leasehold land from Ascendas
276
335
331
Included in receivables from related parties and payables to related parties are amounts due
from or to affiliates of Temasek:
December 31,
2004
2005
Amounts due from affiliates of Temasek
$
281
$
217
Amounts due to affiliates of Temasek
$
4,135
$
8,008
F-14
Table of Contents
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — in US Dollars
In thousands (except per share data)
The balances with affiliates of Temasek are unsecured, interest free and repayable within
12 months.
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 was built on land leased by the Company
from Ascendas Land (Singapore) Pte Ltd ("Ascendas"), a private company wholly-owned by Jurong
Town Corporation ("JTC"). JTC is a statutory board established by the Singapore government
to develop and manage industrial estates in Singapore. Following the cessation of Fab 1
operations in end March 2004, the Company classified its
leasehold interest in Fab 1 as held
for sale (see Note 22).
Fabs 2, 3, 5 (occupied by SMP) and 6 (occupied by CSP) and Fab 2 and Fab 3 slurry treatment
plant occupy land leased by Terra Investments Pte Ltd ("Terra") (a wholly-owned subsidiary of
Temasek) from JTC. The Company has entered into sub-leases for the underlying land for the
entire term of the leases between Terra and JTC, expiring between 2024 and 2030, with an
option, subject to certain conditions, to extend for another 30 years.
Fab 7 occupies land also leased by Terra from JTC. The Company expects to enter into a
sub-lease with Terra for the underlying land, expiring in 2030, with an option, subject to
certain conditions, to extend for another 30 years.
Rental rates on the long term leases are subject to revisions at periodic intervals in
accordance with the rental agreements, with such increases generally capped at 4% to 9% per
annum.
Rental expense for land leased from related parties for the years ended December 31, 2003,
2004 and 2005 was $2,758, $2,795 and $2,747, respectively.
Minimum future rental payments on non-cancellable operating leases of land from the related
parties above as of December 31, 2005 are as follows:
Payable in year ending December 31,
2006
$
2,746
2007
2,798
2008
2,854
2009
2,916
2010
2,982
Thereafter
52,132
$
66,428
As of December 31, 2005, the Company has included above operating lease obligations in
respect of Fab 1 amounting to $4,100. In January 2006, the Company has sold and transferred
its leasehold interest in Fab 1.
(b) SMP
The Company has a 49% equity interest in SMP that is accounted for using the equity method.
SMP's net operating results are not shared between the Company and SMP's majority
shareholder, Agere, 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 equity in income (loss) of SMP and the
share of retained post formation loss that is included in the Company's consolidated
statements of operations and consolidated balance sheets are different than the amount that
would be obtained by applying a 49% ownership percentage.
The Company and Agere have entered into an assured supply and demand agreement with SMP under
which each is billed for allocated wafer capacity if the wafers started for them are less
than their allocated capacity. No amounts were payable by the Company under this agreement
for 2003, 2004 and 2005, respectively.
During 2005, SMP's shareholders agreed to a reduction in wafer prices for Agere, related to the
wafer capacity allocated to Agere, to the minimum price allowed under the assured supply and demand
agreement. As each shareholder is entitled to the gross profits from sales to the customers that it
directs to SMP, the wafer price reduction did not affect the equity in income (loss) of SMP and the
share of retained post formation loss that is included in the Company's consolidated statements of
operations and consolidated balance sheets.
Singapore law allows dividends to be paid only out of profits of a company. The Company and
Agere have agreed that dividends will be paid out of the profits of SMP determined on a
year-to-year basis rather than a cumulative basis.
The Company bought $2,272, $1,641 and $218 of processed wafers from SMP for the years ended
December 31, 2003, 2004 and 2005, respectively.
F-15
Table of Contents
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — in US Dollars
In thousands (except per share data)
The Company provides management and corporate support services including accounting,
financial, sales and marketing services to SMP and allocates a portion of its related costs
to SMP. Such charges to SMP amounted to $9,963, $9,622 and $8,811 in the years ended
December 31, 2003, 2004 and 2005, respectively.
SMP leases its fab from the Company under a long-term lease agreement that expires in 2008.
The rental income from SMP for the years ended December 31, 2003, 2004 and 2005 was $15,024,
$15,307 and $15,662, respectively.
The Company bought plant and equipment of $3,350, $Nil and $11 from SMP during 2003, 2004 and
2005, respectively. The Company also sold plant and equipment of $14,218, $505 and $53 to
SMP during 2003, 2004 and 2005, respectively.
Included in receivables from related parties and payables to related parties are amounts due
from or to SMP:
December 31,
2004
2005
Amounts due from SMP
$
9,231
$
11,827
Amounts due to SMP
$
552
$
94
The balances with SMP are unsecured, interest free and repayable within 12 months.
3.
Cash and Cash Equivalents
Cash and cash equivalents consist of the following:
December 31,
2004
2005
Cash at banks and on hand
$
87,485
$
393,083
Short-term deposits with banks
451,914
426,773
$
539,399
$
819,856
4.
Marketable Investments
At December 31, 2004
Unrealised
Unrealised
Cost
Gains
(Losses)
Fair Value
Current
Available-for-sale securities:
Term deposits
$
15,000
$
—
$
—
$
15,000
Equity securities
9,371
172
(1,362
)
8,181
$
24,371
$
172
$
(1,362
)
$
23,181
Non-current
Available-for-sale securities:
Term deposits
$
15,000
$
—
$
—
$
15,000
Self-referenced credit-linked deposits
30,000
—
(149
)
29,851
$
45,000
$
—
$
(149
)
$
44,851
The $30,000 self-referenced credit-linked deposit ("CLD") was placed with a financial
institution in June 2003. If a "credit event" (as defined in the CLD) occurred, which
included default in the payment of the Company's Convertible Notes or bankruptcy of the
Company, the principal would not be returned in full. Rather, the Company would receive the
market value of $30,000 face amount of the Company's Convertible Notes, less costs incurred
by the financial institution. The Company redeemed $25,000 and $5,000 of the CLD in March
2005 and April 2005, respectively.
F-16
Table of Contents
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — in US Dollars
In thousands (except per share data)
At December 31, 2005
Unrealised
Unrealised
Cost
Gains
(Losses)
Fair Value
Current
Available-for-sale securities:
Term deposits
$
15,000
$
—
$
—
$
15,000
Equity securities
10,196
—
(2,729
)
7,467
$
25,196
$
—
$
(2,729
)
$
22,467
The following table shows the gross unrealized losses and fair value of the Company's
available-for-sale equity securities with unrealized losses that are not deemed to be
other-than-temporarily impaired, aggregated by the length of time the securities have been in
a continuous unrealized loss position.
At December 31, 2004
Less than 12 months
Greater than 12 months
Total
Unrealised
Unrealised
Unrealised
Fair Value
(Losses)
Fair Value
(Losses)
Fair Value
(Losses)
Available-for-sale
securities:
Equity securities
$
7,596
$
(1,362
)
$
—
$
—
$
7,596
$
(1,362
)
At December 31, 2005
Less than 12 months
Greater than 12 months
Total
Unrealised
Unrealised
Unrealised
Fair Value
(Losses)
Fair Value
(Losses)
Fair Value
(Losses)
Available-for-sale
securities:
Equity securities
$
1,123
$
(115
)
$
6,344
$
(2,614
)
$
7,467
$
(2,729
)
The Company's investments in available-for-sale equity securities consist primarily of
investments in common stock of two companies in the semiconductor industry. The fair value of
the investments was based on quoted share prices. The decline in common stock of these
companies was concurrent with an industry-wide inventory correction during late 2004 and
early 2005. The Company considered industry analyst reports on the outlook of the
semiconductor industry and the two companies and evaluated the near-term prospects of their
fair values recovering to their carrying values. Based on this evaluation and the Company's
ability and intent to hold the investments for a reasonable period of time sufficient for
this forecasted recovery of the fair value, the Company does not consider these investments
to be other-than-temporarily impaired at December 31, 2005.
No realised gains or losses were recorded for the years ended December 31, 2003, 2004 and 2005.
5.
Receivables, Net
Receivables consist of the following:
December 31,
2004
2005
Trade receivables
$
122,986
$
181,079
Allowance for doubtful accounts
(1,178
)
(991
)
Allowance for sales credits and returns
(6,537
)
(13,901
)
Trade receivables, net of allowances
115,271
166,187
Receivables from related parties
9,512
12,044
Other receivables
18,365
6,666
$
143,148
$
184,897
Movement in the allowance for doubtful accounts is as follows:
2003
2004
2005
Beginning
$
2,460
$
1,083
$
1,178
Utilized in year
(1,022
)
(38
)
—
Charge for the year
351
1,106
420
Reversal of specific allowances due to collection
(706
)
(973
)
(607
)
Ending
$
1,083
$
1,178
$
991
Movement in the allowance for sales credits and returns is as follows:
2003
2004
2005
Beginning
$
10,687
$
9,556
$
6,537
Utilized in year
(7,026
)
(7,769
)
(10,940
)
Charge for the year
5,895
4,750
18,304
Ending
$
9,556
$
6,537
$
13,901
F-17
Table of Contents
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:
December 31,
2004
2005
Raw materials
$
5,414
$
6,895
Work-in-process
60,293
121,871
Consumable supplies and spares
6,452
5,474
$
72,159
$
134,240
7.
Other current assets
Under the terms of the Exim Loan agreement, the Company is required to maintain on deposit
with the bank a compensating balance, restricted as to use, equal to the amount of principal,
interest and commitment fees payable at the next repayment date. At December 31, 2005,
restricted cash included in other current assets amounted to $2,832.
As of December 31, 2005, the Company also has a refundable deposit placed with a vendor of $109,581 to secure
wafer capacity.
8.
Investment in SMP
The investment in SMP is discussed further in Note 2(b) and consists of the following:
December 31,
2004
2005
SMP
Cost
$
120,959
$
100,535
Share of retained post-formation losses
(27,167
)
(20,681
)
Share of accumulated other comprehensive losses
(27
)
(10
)
Dividends received
—
(29,460
)
$
93,765
$
50,384
In August 2005, SMP's board of directors approved a change to SMP's fiscal year end from
December 31 to September 30 so as to coincide with the fiscal year end of Agere. The change in
SMP's fiscal year end does not affect how the Company accounts for its share of SMP's net
results.
In October 2005, SMP reorganized its paid-up share capital and returned a portion to its
shareholders in the form of cash, the Company's entitlement being $20,424, in a capital reduction
sanctioned by the High Court of Singapore. During the year ended
December 31, 2005, the Company has received $17,300 of this amount from SMP. The capital reduction through the extinguishment
of accumulated losses does not qualify as a quasi-reorganization under US GAAP.
Shown below is summarized financial information for SMP:
December 31,
2004
2005
Current assets
$
85,597
$
71,101
Property, plant and equipment
132,258
55,758
Other assets
82
34
Current liabilities
(23,078
)
(31,311
)
Other liabilities
—
(8
)
Shareholders' equity
$
194,859
$
95,574
2003
2004
2005
Net revenue
$
329,535
$
303,570
$
201,345
Gross profit
43,073
34,827
4,875
Operating income
42,419
30,070
449
Net income
$
23,784
$
20,706
$
1,486
F-18
Table of Contents
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — in US Dollars
In thousands (except per share data)
9.
Technology Licenses, net
Weighted average
amortization
period (years)
December 31,
December 31,
2004
2005
2004
2005
Technology licenses, at cost
$
159,512
$
168,787
7
6
Accumulated amortization
(37,559
)
(62,175
)
Technology licenses, net
$
121,953
$
106,612
Amortization charged to results of operations amounted to $14,383, $16,263 and $24,616 for
2003, 2004 and 2005, respectively. Estimated amortization for future periods is as follows:
2006
$
30,911
2007
29,867
2008
28,338
2009
13,263
2010
4,233
Thereafter
—
$
106,612
10.
Property, plant and equipment, net
Property, plant and equipment consist of the following:
December 31,
2004
2005
Cost
Buildings
$
192,230
$
269,276
Mechanical and electrical installations
426,975
612,340
Equipment and machinery
2,818,804
3,893,041
Office and computer equipment
96,058
144,834
Assets under installation and construction
937,927
140,733
Total cost
$
4,471,994
$
5,060,224
Accumulated depreciation and amortization
$
2,557,479
$
3,010,529
Property, plant and equipment, net
$
1,914,515
$
2,049,695
Depreciation was charged to consolidated statements of operations and amounted to $418,195,
$420,217 and $481,874 for the years ended December 31, 2003, 2004 and 2005,
respectively. Buildings consist of wafer plants, including administrative offices,
built on land sub-leased to the Company, as discussed in Note 2.
Capitalized interest relating to property, plant and equipment amounted to $5,466, $15,177
and $19,032 in the years ended December 31, 2003, 2004 and 2005, respectively.
At December 31, 2005, total cost and accumulated amortization of assets under capital leases
was $45,933 and $2,886 respectively. Amortization of assets under capital leases, included
in depreciation expense, was $2,886 for the year ended December 31, 2005.
F-19
Table of Contents
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — in US Dollars
In thousands (except per share data)
11.
Payables
Payables relate to the following:
December 31,
2004
2005
Trade and accrued purchases
$
54,952
$
106,299
Payables to related parties
4,687
8,102
Fixed asset purchases
129,147
52,280
$
188,786
$
166,681
12.
Other Current Liabilities
December 31,
2004
2005
Accrued employee related expenses and bonuses
$
22,657
$
24,619
Accrued interest
5,251
41,612
Customer deposits
—
58,410
Other accrued expenses
3,318
5,857
Other current liabilities
27,303
85,947
$
58,529
$
216,445
The Company enters into capacity guarantee agreements with certain of its customers under which the customers are
required to maintain non-interest bearing deposits with the Company
to secure access to wafer capacity.
Such deposits are generally for periods exceeding one year and are refundable at the end of the agreed period of such allocated capacity, or in
certain cases, based on the cumulative wafers purchased from the
Company. Such deposits are initially recorded at the net present
value of payments due pursuant to their contractual terms. The
related discount, which is offset by an equal amount of deferred
revenue, is amortized to interest expense using the effective
interest rate method. Deferred revenue is amortized to income over
the term of the deposit using the straight-line method. Deposits are
classified based on maturity, except that the amounts are considered
current if it is probable that the deposits will be refunded within
one year.
Included in other current liabilities at December 31,
2005 is a prepayment from a customer for future purchases which also
secures access to wafer capacity. This amount will be used to off-set
trade receivables from that customer.
13.
Income Taxes
Income tax expense consists of the following:
2003
2004
2005
Current expense
$
14,313
$
6,090
$
13,831
Deferred benefit
(2,642
)
(1,316
)
(834
)
Total
$
11,671
$
4,774
$
12,997
All but an insignificant portion of pre-tax income (loss) and income tax expense is from
Singapore sources.
The Company has 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;
F-20
Table of Contents
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — in US Dollars
In thousands (except per share data)
•
the wafer fabrication of Application Specific Integrated Circuits
(ASIC) and other advanced semiconductor devices at Fab 6 for a ten
year period beginning September 1, 2003 (granted on November 8, 2004);
and
•
the wafer fabrication of integrated circuits at Fab 7 for a fifteen
year period beginning October 1, 2005 (granted on December 30, 2005).
Under the Economic Expansion Incentives (Relief from Income Tax) Act (Chapter 86) of
Singapore, the Company has also been granted:
•
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 incentive 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 incentive status for the wafer fabrication
of ASICs and other advanced semiconductor devices at Fab 6 for a five
year period beginning September 1, 2013.
During the period for which pioneer status is effective, subject to compliance with certain
conditions, income from pioneer trade (that is, sale of qualifying integrated circuits) is
exempt from Singapore income tax. During the periods for which post-pioneer status and
development and expansion incentive status are effective, subject to compliance with certain
conditions, income from post-pioneer trade and development and expansion activities are taxed
at a concessionary rate of 10%. Without these exemptions from income tax or the concessionary
tax rate of 10%, the Company would be subject to income tax at the Singapore corporate income
tax rate of 22% for the year ended December 31, 2003 and 20% for the years ended December 31,
2004 and 2005.
Tax losses accumulated before the pioneer status period cannot be carried forward. Tax losses
accumulated in the pioneer status period may be carried forward and may be offset against
income from the same pioneer trade arising both during the pioneer status and after the
expiration of the pioneer status period, subject to compliance with certain conditions.
Accordingly, loss carryforwards are determined on a fab-by-fab basis. As of December 31,
2005, the Company does not have any loss carryforwards.
The Company was granted development and expansion incentive status for wafer fabrication of
integrated circuits at Fab 1 for a five-year period beginning January 1, 2001, subject to
compliance with certain conditions during that period. In February 2003, the Company
announced its plan to consolidate the business of Fab 1 into Fab 2, and close Fab 1 during
2004. This closure would result in non-compliance with the conditions of the development and
expansion incentive status, and accordingly at that time the Company accrued additional taxes
payable for the period subsequent to January 1, 2001 at the full corporate tax rate. During
2004, the relevant authority agreed to allow the development and expansion incentive status
through December 31, 2004, although the conditions would not be met for the original
five-year period. Accordingly, the Company revised its accruals to the concessionary tax rate
of 10% resulting in a reduction in tax expense of $9,784 for the year ended December 31,
2004.
Under Singapore tax law, tax depreciation of property, plant and equipment (referred to as
wear and tear allowances) is deductible only to the extent of taxable income before tax
depreciation. Unutilized wear and tear allowances can be carried forward to future tax years.
The Company has unutilized wear and tear allowance carryforwards of approximately $968,000
and $1,583,000 as of December 31, 2004 and 2005, respectively. The deferred tax asset for
unutilized wear and tear allowances as of December 31, 2005 has been recognized at a 20% tax
rate. The amount at December 31, 2005 is higher than the amount at December 31, 2004 due to
changes in estimates.
Loss carryforwards as well as unutilized wear and tear allowances are available indefinitely,
subject to 50% or more of the Company's equity staying with the same shareholders from the
incurrence of the tax loss to its utilization and in the case of wear and tear allowances, an
additional test that the same trade must be carried on.
As of December 31, 2005, the Company no longer recognized a deferred tax asset for accrued
yield to maturity interest expense for the Company's Convertible Notes which is a non-pioneer
item (referred to as deferred interest) as there is no future interest income against which
this expense would be deductible.
F-21
Table of Contents
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — in US Dollars
In thousands (except per share data)
Income that is non-qualifying income under pioneer status, post-pioneer status or the
development and expansion incentive status 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 incentive status period and is referred to as non-pioneer
income. The income tax expense for the years ended December 31, 2003, 2004 and 2005
represents primarily income tax payable on non-pioneer income, primarily interest income,
rental income and income from the sale of wafers using technologies that do not benefit from
the preferential tax treatment.
December 31,
2004
2005
Deferred tax assets
Unutilized wear and tear allowances
$
55,324
$
316,550
Deferred interest
11,386
—
Property, plant and equipment
8,841
7,112
Other accrued expenses
1,570
8,191
77,121
331,853
Valuation allowance
(68,205
)
(322,413
)
$
8,916
$
9,440
Deferred tax liabilities
Property, plant and equipment
$
(1,316
)
$
(802
)
Intangible assets
(796
)
(1,000
)
$
(2,112
)
$
(1,802
)
Net deferred tax asset
$
6,804
$
7,638
In assessing the realizability of deferred tax assets, management considers whether it is
more likely than not that some portion or all of the deferred tax assets will not be
realized. The ultimate realization of deferred tax assets is dependent upon the generation
of future taxable income during the periods in which those temporary differences become
deductible. Management considers the scheduled reversal of deferred tax liabilities,
projected future taxable income, and tax planning strategies in making this assessment.
The valuation allowance was $6,285 as of January 1, 2003. During the years ended December
31, 2003, 2004 and 2005, the valuation allowance increased (decreased) by $75,718, $(13,798)
and $254,208 respectively.
As of December 31, 2004 and 2005, the Company recorded deferred tax assets of $55,324 and
$316,550, respectively, for its unutilized wear and tear allowances. Based upon the level of
historical taxable income specific to Fabs 3, 6 and 7, management believes it is more likely
than not that the Company will not realize the benefits of these deductible differences.
Accordingly, a valuation allowance of $55,324 and $316,550 was recorded as of December 31,
2004 and 2005, respectively.
As of December 31, 2004 and 2005, the Company recorded deferred tax assets of $8,841 and
$7,112, respectively, for the remaining difference in the tax and book basis of property,
plant and equipment. Based upon the level of historical taxable income specific to Fabs 2 and
3, management believes it is more likely than not that the Company will not realize the
benefits of these deductible differences. Accordingly, a valuation allowance of $143 and
$2,921 was recorded as of December 31, 2004 and 2005, respectively.
As of December 31, 2004 and 2005, the Company recorded deferred tax assets of $1,352 and
$4,776, respectively, for its industrial building allowance claim against rental income and
asset retirement obligations. Based upon the level of historical taxable income specific to
Fab 2 and non-pioneer income, management believes it is more likely than not that the Company
will realize the benefits of these deductible differences. Accordingly, no valuation
allowance was recorded as of December 31, 2004 and 2005.
F-22
Table of Contents
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — in US Dollars
In thousands (except per share data)
A reconciliation of the expected tax (benefit) expense computed by applying statutory
rates to pre-tax income (loss) to the actual tax expense is as follows:
December 31,
2003
2004
2005
Income tax (benefit) expense computed at Singapore
statutory tax rate of 20% (22% in 2003, 20% in 2004 and
2005)
$
(62,174
)
$
2,269
$
(29,320
)
Permanent non-deductible expenses
44,360
12,582
23,150
Effect of pioneer status, including losses and allowances
not recognized as deferred tax benefit
38,480
6,263
27,561
Effect of post-pioneer status
(2,642
)
(2,263
)
—
Non-taxable increase (decrease) in equity method investment
(5,103
)
(5,512
)
(1,332
)
Effect of change in concessionary tax status
—
(6,884
)
—
Exempt dividend income
—
—
(5,872
)
All other items, net
(1,250
)
(1,681
)
(1,190
)
Actual income tax expense
$
11,671
$
4,774
$
12,997
The pioneer status had the effect of increasing basic and diluted net earnings per share or
(decreasing) basic and diluted net (loss) per share by ($0.02), $0.00 and ($0.01) and
increasing basic and diluted net earnings per ADS or (decreasing) basic and diluted net
(loss) per ADS by ($0.15), $0.02 and ($0.11) for the years ended December 31, 2003, 2004 and
2005, respectively.
14.
Long-term Debt and Obligations under Capital Leases
Long-term debt consists of:
December 31,
2004
2005
Singapore dollar loans at fixed rates of 4.0% to 4.25%
$
73,650
$
—
US dollar loans at floating rates:
CSP Syndicated Loan
589,066
214,533
SMBC/OCBC Term Loan
—
300,000
Exim Loan
—
122,124
Bank of America Term Loan
—
50,000
2.5% senior convertible notes due 2006
575,000
97,155
5.75% senior notes due 2010
—
371,161
6.375% senior notes due 2015
—
246,540
Amortizing bonds due 2010
—
46,703
Other
(1,986
)
(324
)
1,235,730
1,447,892
Less current installments of long-term debt
(352,985
)
(319,634
)
Long-term debt, excluding current installments
$
882,745
$
1,128,258
Obligations under capital leases:
2004
2005
Total minimum lease payments
$
—
$
63,931
Amount representing interest at rates of 6.2% to 7.0%
—
(20,336
)
Present value of minimum lease payments
—
43,595
Less current installments of capital lease obligations
—
(2,819
)
Obligations under capital leases, excluding current installments
$
—
$
40,776
F-23
Table of Contents
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — in US Dollars
In thousands (except per share data)
2004
2005
Current installments of:
Long-term debt
$
352,985
$
319,634
Capital lease obligations
—
2,819
$
352,985
$
322,453
Non-current portion, excluding current installments:
Long-term debt
$
882,745
$
1,128,258
Capital lease obligations
—
40,776
$
882,745
$
1,169,034
Weighted Average
Interest Rates
December 31,
2004
2005
Singapore dollar loans at fixed rates of 4% to 4.25%
5.9129
%
—
US dollar loan at floating rates
3.2375
%
5.1050
%
2.5% senior convertible notes due 2006
5.1440
%
5.2500
%
5.75% senior notes due 2010
—
5.7500
%
6.375% senior notes due 2015
—
6.3750
%
Amortizing Bonds due 2010
—
6.0000
%
The Singapore dollar fixed rate loans were from the Singapore Economic Development Board and
consisted of $58,450 due in September 2005 and $15,200 due in March 2006. The Company repaid
these loans early in full in March 2005.
CSP's U.S. dollar syndicated floating rate loan arranged by ABN Amro Bank N.V., Singapore
branch, Citibank, N.A., Singapore, Overseas Union Bank Limited (now known as United Overseas
Bank Limited), Sumitomo Mitsui Banking Corporation Ltd, Danske Bank A/S, Industrial and
Commercial Bank of China, Singapore branch and Commerzbank Aktiengesellschaft, Singapore
branch matures in September 2006. This facility is for an amount of $820,000 which was fully
drawn down. The loan bears interest at 0.60% to 0.85% above the London Interbank Offering
Rate ("LIBOR") rates for U.S. dollars deposits quoted by specified banks to the lender
(depending on certain criteria relating to wafer starts and debt/equity ratio). Interest is
payable semi-annually and principal is payable in six semi-annual installments which
commenced in March 2004. The Company made partial early repayments of $123,933 and $80,000 in
May and December 2005 respectively. 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.
The SMBC/OCBC Term Loan is with Sumitomo Mitsui Banking Corporation, Oversea-Chinese Banking
Corporation, ABN AMRO Bank, United Overseas Bank, and Deutsche Bank for a maximum of
$300,000, which was fully drawn down in 2005. The loan bears interest at LIBOR plus 1.75%.
Interest is payable semi-annually and principal is payable in six semi-annual installments
commencing third quarter 2007.
The Exim Loan is from J.P. Morgan, guaranteed by the Export-Import Bank of the United States,
for a maximum of $653,000. The loan is divided into two tranches, of which $122,124 has been
drawn down in 2005, and has an availability period of between two to four years. It may only
be used to finance the purchase of Fab 7 equipment from U.S. vendors and is drawn down in
accordance with the equipment purchases per the ramp schedule. The loan bears interest at
LIBOR plus 0.125%. Interest is payable semi-annually and each tranche is payable
semi-annually over five years.
The Bank of America Term Loan is for a maximum of $50,000, which was fully drawn down in
2005. The loan bears interest at LIBOR plus 0.80%. Interest is payable semi-annually and
principal is repayable in full at maturity in 2007.
F-24
Table of Contents
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — in US Dollars
In thousands (except per share data)
The senior unsecured convertible notes mature on April 2, 2006 ("Convertible Notes"). They
bear a coupon rate of 2.50% per annum and have a yield to maturity of 5.25% per annum. 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. The Convertible Notes are convertible into the Company's ordinary shares
or American Depository Shares ("ADS").
The conversion price per ordinary share, adjusted for the Company's rights offering in 2002,
is S$4.7980 (equivalent to approximately US$26.7701 per ADS, based on the terms of the
convertible notes for a fixed exchange rate of US$1.00 = S$1.7923 and the ordinary share to
ADS ratio of 10:1).
In August 2005, the Company commenced a cash tender offer ("Tender Offer") for any and all of
its $575,000 original principal amount of the Convertible Notes outstanding. In September
2005, at the time of expiration of the Tender Offer, $477,845 original principal amount of the
Convertible Notes, representing approximately 83.1% of the Convertible Notes, were purchased.
In August 2005, the Company issued $375,000 of 5.75% senior notes due 2010 ("Senior Notes due
2010") and $250,000 of 6.375% senior notes due 2015 ("Senior Notes due 2015"). Both the Senior
Notes due 2010 and the Senior Notes due 2015 are collectively referred to as "Senior Notes".
The Senior Notes due 2010 were issued at a price of 98.896% of the principal amount and the
Senior Notes due 2015 were issued at a price of 98.573% of the principal amount. Interest on
the Senior Notes due 2010 is payable at the rate of 5.75% per annum and interest on the Senior
Notes due 2015 is payable at the rate of 6.375% per annum, in each case, on February 3 and
August 3 of each year, beginning on February 3, 2006. The Senior Notes due 2010 mature on
August 3, 2010 and the Senior Notes due 2015 mature on August 3, 2015. The Senior Notes
constitute senior, unsecured obligations of the Company.
In August 2005, the Company completed its private placement of Units ("Units
Private Placement"). The Units comprise convertible redeemable preference shares of par value
$0.01 each ("Preference Shares") and amortizing bonds due 2010 ("Amortizing Bonds"), with an
aggregate issue price of $300,000. The initial principal amount assigned to the Amortizing
Bonds was $46,703. Interest on the Amortizing Bonds is payable at the rate of 6.0% per annum
on the outstanding principal amount. The Amortizing Bonds pay semi-annual cash payments of
$5,475 per payment, as a combination of principal and interest, on February 17 and August 17
of each year, beginning on February 17, 2006, and amortize to zero at maturity on August 17,
2010. The Amortizing Bonds constitute senior, unsecured obligations of the Company. Refer to
Note 15 for details on the Preference Shares.
Other long-term debt includes the cumulative fair value change of the Convertible Notes due to
changes in interest rates from the date the Company entered into interest rate swap contracts
related to this debt until the date they were terminated. The Company designated these
derivative instruments as fair value hedges and carried the same at fair value. The interest
rate swap contracts were terminated following the completion of the Tender Offer of the
Convertible Notes in September 2005. As of December 31, 2005, other long-term debt includes
the unamortized portion of the cumulative fair value change during the period the swap
contracts were outstanding of the remaining $97,155 outstanding Convertible Notes.
F-25
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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, 2005 are as follows:
Payable in year ending December 31,
2006
$
319,958
2007
120,986
2008
133,733
2009
134,300
2010
459,901
Thereafter
286,637
$
1,455,515
These amounts represent the expected repayments at each of the periods indicated and do not
include the unamortized debt discount relating to the senior notes. As of December 31, 2005,
the face amounts of the senior notes due 2010 and the senior notes due 2015 were $371,161 and
$246,540, respectively, as the unamortized debt discount was reported as a direct reduction
to the face amounts of the senior notes.
The Company has total unutilized banking facilities of $1,116,608 and $591,763 for short-term
advances, term loans and bankers' guarantees as of December 31, 2004 and 2005, respectively.
The Company's loans and available credit facilities contain various financial, shareholding
and other restrictive covenants. Under the financial covenants, the Company is required to
maintain certain financial conditions and ratios such as consolidated net worth, EBITDA, total
debt to net worth ratio, and historical debt service coverage ratio. The Company is also
required to ensure that its consolidated net worth is not at any time less than $1,000,000 and
its total debt does not at any time exceed 180% of its total net worth. Under the
shareholding covenants, Temasek is required to own, directly or indirectly, a certain
percentage of the Company's outstanding shares or is required to be the Company's single
largest shareholder. In addition, some of the loans and available credit facilities also
impose other restrictive covenants such as restrictions from incurring further indebtedness,
creating security interests over assets, payment of dividends, disposal of assets and mergers
and corporate restructuring.
Future minimum lease payments under capital leases for equipment and machinery as of
December 31, 2005 are as follows:
Payable in year ending December 31,
2006
$
5,613
2007
5,613
2008
5,613
2009
5,613
2010
5,613
Thereafter
35,866
Total minimum lease payments
$
63,931
15.
Convertible Redeemable Preference Shares
In August 2005, as part of the Units Private Placement, the Company issued 30 Preference
Shares of par value $0.01 each.
The holders of the Preference Shares are not entitled to receive any dividends, regardless of
whether dividends are paid to the holders of the Company's ordinary shares ("Ordinary
Shares"). Holders of the Preference Shares may convert the Preference Shares into new
Ordinary Shares or, subject to certain limitations, American Depositary Shares ("ADSs") at a
conversion price of $0.8719 per Ordinary Share at any time after 40 days from the original
issuance of the Preference Shares and before the close of business on the 7
th
business day prior to maturity or early redemption.
Unless previously redeemed, converted or purchased and cancelled, the Company will redeem, out
of funds legally available for such payment, each Preference Share at maturity on August 17,
2010 at a redemption price equal to $10,000 per Preference Share.
F-26
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CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — in US Dollars
In thousands (except per share data)
Prior to maturity, the Company may redeem the Preference Shares at the early redemption
price:
•
at any time, if at least 95% of the Preference Shares originally
issued have been converted, redeemed or purchased and cancelled;
•
at any time after 2 years after the date of issuance of the Preference
Shares, if the closing sale price of the Ordinary Shares for any 20
trading days in a specified 45 consecutive calendar day period is at
least 125% of the conversion price per Ordinary Share; or
•
at any time the Company is required to pay additional amounts as a
result of any change in or amendment to the laws or regulations of
Singapore or for certain other events.
If certain events occur before the close of business on the 7
th
business day prior
to maturity or early redemption, holders of the Preference Shares may under certain
circumstances require the Company to redeem all or any of the Preference Shares at the early
redemption price.
In the event of early redemption, each Preference Share will be redeemed for cash at the
accreted amount approximating its carrying value, which is the original allocated issue price
accreted to its present value using the effective interest rate method calculation as
follows:
Elapsed days
1,800
Allocated value * ($10,000/allocated value)
The Preference Shares rank, with respect to rights upon liquidation, winding up or
dissolution:
•
junior to all the Company's existing and future debt obligations;
•
junior to each class of the Company's shares the terms of which
provide that such class will rank senior to the Preference Shares;
•
on a parity with any class of the Company's shares that has terms
which provide that such class will rank on a parity with the
Preference Shares; and
•
senior to the Company's Ordinary Shares (including those represented
by ADSs) and to any class of the Company's shares that has terms which
provide that such class will rank junior to the Preference Shares.
The initial carrying amounts of the Preference Shares were stated at their fair values as of
the date of issuance, net of the associated issuance costs. The carrying amounts of the
Preference Shares are accreted to their redemption values over the remaining period until the
maturity date on August 17, 2010 using the effective interest method. Such accretion adjusts
net income (loss) available to common shareholders. Accretion charge for the year ended
December 31, 2005 was $3,196.
16.
Shareholders' Equity
Ordinary Share Capital
Ordinary share capital consists of the following:
December 31,
2004
2005
Issued and paid-up ordinary share capital
$
384,370
$
385,020
Capital reduction
61,161
61,161
$
445,531
$
446,181
F-27
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CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — in US Dollars
In thousands (except per share data)
In November 1992, the Company reorganized its ordinary paid-up share capital by the
extinguishment of accumulated losses of $61,161 against the ordinary 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 August 2004, the Company entered into a bilateral option transaction with Goldman Sachs
International as counter-party. Under the transaction, the Company has a choice of physical
or cash settlement. The counter-party may purchase 214,800 of the Company's ordinary shares
at $0.93 per share (approximately S$1.60 per share, based on an exchange rate of $1.00 =
S$1.71) and the Company will receive approximately $200,000. The number of ordinary shares
under the option transaction is equal to the number of shares that were originally planned
for issuance under the Convertible Notes. The option transaction, which is contractually
separate from the Convertible Notes, is exercisable by the counter-party from January 2, 2005
and will expire on April 2, 2006, matching the maturity date of
the Convertible Notes. As of December 31, 2005, Goldman
Sachs International did not exercise its rights under the option transaction. The
option transaction also has a feature that allows the Company to elect for early termination
if the trading price of the Company's ordinary shares listed and quoted on the Singapore
Exchange rises and remains above $1.17 for a defined period of time. In such an event, the
Company may elect to settle in cash or physically by delivering its
ordinary shares. The trading price of the Company's ordinary
shares did not remain above $1.17 for the defined period of time
during the year ended December 31, 2005.
Additional Paid-in Capital
Additional paid-in capital as of December 31, 2004 and 2005 represents principally the excess
of proceeds received from issue of ordinary share capital (net of the costs of issue) over
the par value of ordinary shares issued, which under Singapore law must be credited to a
share premium account. The share premium may only be applied in paying up unissued ordinary shares to be issued to common 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 $2,207,783 and $2,209,520 as of December
31, 2004 and 2005, respectively.
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. Some of the Company's loan agreements
restrict the ability of the Company to pay dividends without prior approval from the lender.
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 one-tier system with effect from January 1, 2003, tax payable by the Company on its
non-pioneer chargeable income constitutes 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. The Company has approximately $54,000 of available balances under the old
imputation system both as of December 31, 2004 and 2005.
Accumulated deficit includes $27,167 and $20,681 of post-formation losses of SMP as of
December 31, 2004 and 2005, respectively.
F-28
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CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — in US Dollars
In thousands (except per share data)
Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss consists of the following:
December 31,
2004
2005
Cumulative foreign currency translation loss
$
54,380
$
52,659
Net unrealised losses on available-for-sale securities
1,339
2,729
Net unrealized cash flow hedging activity losses
2,634
2,036
$
58,353
$
57,424
The foreign currency translation loss is not adjusted for income taxes as it arose from a
change in functional currency in prior years which is not tax deductible. The net unrealized cash flow hedging activity losses are not adjusted for income taxes because such
losses are expected to be realized during the pioneer status. No income tax benefit is
recognized for unrealized losses on available for sale securities.
17.
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
increased to 197,160 shares in May 2002. As a result of the Company's rights offering in
October 2002, the shares available for future grants were increased by 30,488 shares. The
total shares provided under the 1999 Option Plan is hence 227,648 shares. The remaining shares available for future grants are 93,145 and 90,521 as of December 31, 2004 and 2005,
respectively. Options granted under the plan may include non-statutory options as well as
incentive stock options intended to qualify under Section 422 of the United States Internal
Revenue Code.
The plan is administered by a committee appointed by the Directors. Employees, outside
directors and consultants are eligible for the grant of options subject to certain exceptions
as provided in the 1999 Option Plan.
The exercise price of an incentive stock option is generally 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 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.
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.
F-29
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CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — in US Dollars
In thousands (except per share data)
Information on options granted is as follows:
Weighted
Average
Exercise
Options
Price
Outstanding at January 1, 2003
99,693
$
3.49
Granted
29,528
$
0.55
Expired
(4
)
$
0.88
Exercised
(461
)
$
0.52
Lapsed
(24,533
)
$
3.52
Outstanding at December 31, 2003
104,223
$
2.67
Granted
20,905
$
0.93
Expired
(919
)
$
1.65
Exercised
(1,074
)
$
0.46
Lapsed
(10,481
)
$
2.89
Outstanding at December 31, 2004
112,654
$
2.36
Granted
15,542
$
0.69
Expired
(2,695
)
$
6.90
Exercised
(1,798
)
$
0.54
Lapsed
(10,223
)
$
2.41
Outstanding at December 31, 2005
113,480
$
2.04
Exercisable at end of year
65,267
$
2.88
Weighted average fair values of options granted in 2003, 2004 and 2005 were $0.40, $0.63 and
$0.47 respectively.
The following table summarizes information about fixed stock options outstanding at December
31, 2005.
Options Outstanding
Options Exercisable
Weighted
average
Weighted
Weighted
Number
remaining
average
Number
average
outstanding
contractual
exercise
exercisable
exercise
Range of exercise prices
at 12/31/2005
life
price
12/31/2005
price
$0.39 to $1.00
57,397
7.8 years
$
0.71
19,020
$
0.67
$1.06 to $1.95
21,726
5.7 years
$
1.41
14,519
$
1.43
$2.14 to $2.44
16,586
4.8 years
$
2.33
13,957
$
2.32
$5.81
10,304
4.8 years
$
5.81
10,304
$
5.81
$8.31
7,467
4.3 years
$
8.31
7,467
$
8.31
113,480
65,267
The options vest over one to five years and expire on dates ranging from March 2006 to
November 2015. The 1999 Option Plan is accounted for in accordance with fixed-plan
accounting under APB 25 and related interpretations. Total compensation expense recognized
for 2003, 2004 and 2005 totalled $4, $3 and $1 respectively.
F-30
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CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — in US Dollars
In thousands (except per share data)
The fair values of the option grants are estimated using the Black-Scholes option
pricing model with the following assumptions used for grants in 2003, 2004 and 2005.
2003
2004
2005
Risk free interest rate
2.710% to
2.97% to
4.06% to
4.450%
4.14%
4.64%
Expected volatility
66.61% to
61.94% to
58.75% to
70.16%
65.04%
61.04%
Expected lives
5 to
5 to
5 to
9 years
8 years
9 years
Dividend yield
NA
NA
NA
Options of 1,284, 595 and 406 shares of the Company were granted to employees of SMP in 2003,
2004 and 2005, respectively. SMP bears the stock-based compensation charge in respect of
these options.
(b) 2001 Share Purchase Plans
As approved by the shareholders in May 2001, the Company 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 2001 Plans", which provided 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.
The 2001 Plans permitted 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 consisted 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 was 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 would in no event be less than the par value of each share. The 2001 Plans were
intended to qualify under Section 423 of the United States Tax Code.
The 2001 Plans were administered by a committee appointed by the Directors. Approximately
2,700 shares were purchased at $0.56 (S$0.94) in 2004 under the 2001 Plans. As of February
2004, all shares available under the 2001 Plans had been issued and allotted and as a result,
the 2001 Plans were terminated.
(c) 2004 Share Purchase Plans
As approved by the shareholders in April 2004, the Company has adopted the Chartered
Semiconductor Manufacturing Ltd Employee Purchase Plan 2004 ("Chartered ESPP 2004") and a new
share purchase plan for the employees of Silicon Manufacturing Partners Pte Ltd ("SMP ESPP
2004"), collectively "ESPP 2004 Plans". The ESPP 2004 Plans provide for the issuance of a
maximum of 30,000 shares (subject to adjustment under the Plans).
The terms of the ESPP 2004 Plans and the 2001 Plans are similar except for the following
significant differences:
(i)
the ESPP 2004 Plans give the committee appointed by the Directors to administer the
plans ("Committee") the right to stipulate that the purchase price for each Ordinary
Share purchased at the close of an offering period be determined by an alternative
method, which is to be prescribed by the Committee, if the Committee determines that the
existing method of determining the purchase price would cause the Company to incur any
stock-based compensation charge; and
(ii)
the ESPP 2004 Plans impose a limit of 3,000 Ordinary Shares per calendar year
(and a limit of 1,500
Ordinary Shares per offering period) on the number of Ordinary Shares available for
purchase by participants in the ESPP 2004 Plans. The ESPP 2004 Plans continue to
provide for two offering periods in a calendar year commencing on each March 1 and
September 1.
The 2004 Plans are administered by a committee appointed by the Directors. No shares were
issued under the 2004 Plans during the year ended 2004. 2,400 shares were issued at price
from $0.56 to $0.63 (S$0.92 to S$1.06) during the year ended 2005.
F-31
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CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — in US Dollars
In thousands (except per share data)
18.
Commitments and Contingencies
(a) Commitments
The Company has the following capital commitments:
December 31,
2004
2005
Contracts for capital expenditure
$
312,883
$
205,689
Minimum future rental payments on non-cancellable operating leases, excluding amounts payable
to related parties disclosed in Note 2, as at December 31, 2005, are as follows:
Payable in year ending December 31,
2006
$
4,239
2007
1,495
2008
624
2009
278
2010
201
$
6,837
Rental expense, excluding amounts payable to related parties disclosed in Note 2, for the
years ended December 31, 2003, 2004 and 2005 was $5,031, $5,473 and $5,660 respectively.
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. Such royalties under the patent license agreement are waived until such time as
the interest of the technology partner in SMP falls below 49%. In exchange the Company has
waived capacity shortfall obligations from the technology partner. The patent license
agreement continues for as long as the joint venture agreement between the parties remains.
The Company has entered into manufacturing agreements with several customers whereby the
Company has committed to make available production capacity to customers over the term of the
agreement.
As discussed in Note 2, pursuant to the assured supply and demand agreement that the Company
and Agere signed with SMP, each partner is required to purchase a specified percentage of
SMP'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.
The Company has entered into agreements to purchase technology licenses, jointly perform
research and development, and swap capacity commitments. The future payment obligations under
these agreements at December 31, 2004 and 2005 are $266,000 and $200,000 respectively.
(b) Contingencies
The Company may from time to time be a party to claims that arise in the normal course of
business. These claims include allegations of infringement of intellectual property rights
of others as well as other claims of liability. In addition, the Company, on a case-by-case
basis, includes intellectual property indemnification provisions in the terms of sale and
technology licenses with third parties. The Company is also 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 consolidated statements of
operations.
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CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — in US Dollars
In thousands (except per share data)
19.
Derivative Instruments
The Company has the following notional amounts of derivative instruments:
December 31,
2004
2005
Forward foreign exchange contracts to hedge:
- Singapore dollar transactions
$
47,842
$
11,976
- Plant and equipment purchases (mainly Japanese yen and
Euro)
95,970
31,126
Cross currency swap
45,593
—
Convertible notes interest rate swap
575,000
—
Interest rate cap
100,000
183,333
$
864,405
$
226,435
To protect against volatility of future cash flows caused by changes in exchange rates, the
Company may use currency forward contracts and currency swaps on anticipated transactions such
as operating costs and expenses and capital purchases. To manage interest rate risk, the
Company may enter into interest rate swap or cap agreements to modify the interest
characteristics of its outstanding debts.
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 payments. 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).
The Company uses derivative instruments to manage identified foreign currency risks resulting
from its Singapore dollar denominated debt and 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 (loss)
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 (loss) related to hedges of
foreign currency purchase commitments are reclassified into earnings (foreign exchange gain
(loss)) when the asset related to the purchase commitment is depreciated.
In August 2004, the Company entered into two interest rate cap contracts in respect of the
floating rate obligations associated with $100,000 of the CSP Syndicated Loan, with the
effect of placing an upper limit on the cash flow and earnings exposure due to market
interest rate changes. In March 2005, the Company entered into two additional interest rate
cap contracts related to the floating rate obligations associated with $200,000 of the above
mentioned U.S dollar loan. Amounts included in other comprehensive income (loss) related to
hedges of the floating rate US dollar loan represent the intrinsic value of the interest rate
cap and are reclassified into earnings (interest expense) upon settlement.
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CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — in US Dollars
In thousands (except per share data)
During 2001, the Company entered into an interest rate swap contract to hedge fixed-rate
interest obligations associated with $200,000 of the Convertible Notes issued in April 2001,
with the effect of swapping the fixed-rate coupon interest obligations to floating-rate
obligations based on LIBOR rates. The Company has designated this interest rate swap
contract as a fair-value hedge. In January 2003, the Company entered into an additional swap
to incorporate hedging of the accreting portion of the Convertible Notes which was not
included in the original swap, thereby increasing the hedge effectiveness. In August 2003,
the Company entered into an interest rate swap contract in respect of the fixed-rate coupon
interest obligations associated with the remaining $375,000 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. The swap incorporated hedging of the accreting portion
of the Convertible Notes. For the fair-value hedge transactions, changes in fair value of
the derivative and changes in the fair value of the item being hedged are recorded in
earnings as interest expense. Net realized gains (losses) arising from ineffectiveness of
fair value hedges were $1,516 and ($1,771) and ($5,246) in the years ended December 31, 2003,
2004 and 2005, respectively. The interest rate swaps were terminated following the completion
of the tender offer of the Convertible Notes in September 2005.
The estimated net amount of existing losses from cash flow hedges expected to be reclassified
into earnings within the next year is $285 and $543 as of December 31, 2004 and 2005,
respectively. Net realized (gains) loss recognized from cash flow
hedges was ($2,942) and $469 for the
years ended December 31, 2004 and 2005, respectively.
The components of other comprehensive income (loss) related to derivative and hedging
activities consist of the following:
December 31,
2004
2005
Beginning
$
(4,235
)
$
(2,634
)
Reclassification of cash flow hedging activity
(gains) losses into earnings
(2,942
)
469
Share of cash flow hedging activity gains of SMP
3,945
17
Net unrealised gain (losses) on change in cash flow
hedging activity derivative fair values
598
112
Ending
$
(2,634
)
$
(2,036
)
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.
F-34
Table of Contents
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — in US Dollars
In thousands (except per share data)
20.
Fair Values of Financial Instruments
December 31,
2004
2005
Carrying
Estimated
Carrying
Estimated fair
amount
fair value
amount
value
Asset/(Liability)
$
$
$
$
Long term debt
(1,235,730
)
(1,255,457
)
(1,447,892
)
(1,466,425
)
Forward foreign exchange contracts
7,141
7,141
29
29
Forward foreign exchange contracts
(4
)
(4
)
(344
)
(344
)
Cross currency swap
(5
)
(5
)
—
—
Interest rate swap
(61,299
)
(61,299
)
—
—
Interest rate cap
456
456
1,394
1,394
Cash and cash equivalents, related party receivables and
payables, accounts receivables and accounts payables.
The carrying amounts approximate fair
value in view of the short term nature of these balances.
Marketable investments.
Marketable investments are recorded at
fair values (see Note 4). The fair value of term deposits is estimated by
obtaining quotes from brokers. The fair value of equity securities is based on market
prices quoted on the last business day of the fiscal year.
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.
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.
Interest rate cap.
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.
21.
Operating Segment, Geographic and Major Customer Information
Operating segments, as defined under SFAS No. 131 "Disclosure About Segments of an Enterprise
and Related Information", are components of an enterprise: (1) that engage in business
activities from which they may earn revenue and incur expenses, (2) has discrete financial
information, and (3) whose operating results are regularly reviewed by the chief operating
decision maker in deciding how to allocate resources and in assessing performance. Management
has determined that it does not have any operating segments because the chief operation
decision maker, which the Company has identified to be the Chief Executive Officer, does not regularly review financial operating results on a disaggregated basis for purposes of assessing performance and allocating resources. All of the Company's products are manufactured in Singapore.
F-35
Table of Contents
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — in US Dollars
In thousands (except per share data)
The following table presents a summary of revenues by country of domicile of customers
and long-lived assets by geographic region. The Company geographically categorizes a sale
based on the country in which the customer is headquartered.
Years ended December 31,
2003
2004
2005
Revenues
USA
$
350,946
$
618,743
$
743,431
Taiwan
92,245
161,420
112,089
Japan
24,799
33,258
33,496
Singapore
2,862
3,392
8,995
Others
81,059
115,318
134,723
$
551,911
$
932,131
$
1,032,734
December 31,
2004
2005
Property, Plant and Equipment, net
Singapore
$
1,913,945
$
2,048,913
Others
570
782
$
1,914,515
$
2,049,695
Years ended December 31,
2003
2004
2005
Information by Major Customer:
Customer A
15.1
%
20.7
%
22.3
%
Customer B
—
—
19.3
Customer C
*
13.4
*
Customer D
*
10.1
*
*
less than 10% of net revenue for the year
22.
Other Operating Expenses (Income)
Other operating expenses (income) consist of:
A gain of $27,531 in 2003 associated with the cancellation of an employee bonus award plan.
As a result of the cancellation, compensation accrued for past services under the bonus award
plan of $27,531 was eliminated by decreasing compensation expense in the period of
cancellation.
An impairment charge of $8,986 in 2003 on certain machinery and equipment which were
classified as held for sale at December 31, 2003. The impairment charge resulted from the
decision to rationalize capacity across the Company. The machinery and equipment were
expected to be sold on the open market within twelve months of classification as held for
sale. These assets were written down to the lower of their fair value, less costs to sell or
their net book value. At December 31, 2004 some of this machinery and equipment remained
unsold and were reclassified to held for use. This machinery and equipment was measured
individually at the lower of its (a) carrying amount before being classified as held for
sale, adjusted for any depreciation expense that would have been recognized had the asset
been continuously classified as held for use, or (b) fair value at date of reclassification.
A write-down of $979 was recorded on this machinery and equipment
during 2004 and it was subsequently sold in 2005.
A gain of $15,257 in 2004 associated with the resolution of a goods and services tax matter
amounting to $4,900 and a gain of $10,357 resulting from an equipment disposition with CSMC
Technologies Corporation.
An impairment charge of $1,705 in 2004 resulting from the migration to an enhanced
manufacturing system.
F-36
Table of Contents
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — in US Dollars
In thousands (except per share data)
A restructuring charge of $12,421, $4,558 and $Nil in December 31, 2003, 2004 and 2005
respectively, relating to the closing of the Company's Fab 1, in accordance with SFAS No.
146, "Accounting for Costs Associated with Exit or Disposal Activities". In February 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 that business into Fab 2. The production in Fab 1 ceased at the end of March
2004. A summary of estimated and actual costs incurred is shown below. These amounts do not
include gain on disposition of fixed assets. Plant closure, customer assistance and related
expenses mainly relate to product qualification, prototyping, reticles, unhook and
decommissioning of equipment and other activities to be carried out for consolidating the Fab
1 business into Fab 2.
Cumulative
expense
Total estimated costs
to date
Employee termination benefits
$
8,000
$
7,673
Plant closure, customer assistance and related expenses
9,000 to 12,000
9,306
Total
$
17,000 to 20,000
$
16,979
Year Ended December 31, 2004
Beginning
Ending
liability
Current year
Amount
liability
balances
additions
paid
balances
Employee termination benefits
$
6,627
$
1,046
$
7,673
$
—
Plant closure, customer
assistance and related
expenses
2,339
3,512
5,851
—
Total
$
8,966
$
4,558
$
13,524
$
—
An impairment charge of $3,938 recorded in 2005 on certain
plant and equipments which were initially classified as held for
sale during the period ended June 30, 2004. These assets were expected to be sold on the open market within
twelve months of classification as held for sale. However, during this period, the market
conditions that existed at June 30, 2004 deteriorated and as a result, these assets
remained unsold. During that period, the Company actively solicited but did not receive any
offers it considered reasonable to purchase the assets. The assets were actively marketed at a price that
management considered reasonable given the change in market conditions, and the criteria under SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived
Assets" were otherwise met. Accordingly,
as the assets remained unsold at the end of the initial twelve month period, the assets
continued to be classified as held for sale. These assets were
written down to $3,878 at December 31, 2005, being their fair
value less costs to sell.
23.
Other Income, net
In 2004, other income, net included grant income of $29,476 and the
recognition of a gain of $14,330 from the sale of technology to CSMC
Technologies Corporation.
In 2005, other income, net included costs of $6,995 related to the termination
of hedging transactions and other costs as a result of the Tender
Offer for and repurchase of the Convertible
Notes.
24.
Cumulative Effect Adjustment
Effective January 1, 2003, the Company adopted the provisions of 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. Accordingly, the Company recorded a liability of $13,223 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 original condition. The associated cost
was capitalized as an increase in "property, plant and equipment" of the same amount and will
be depreciated over the remaining useful lives of the facilities. The adoption of SFAS No.
143 as of January 1, 2003, resulted in a cumulative effect loss of $6,421, after a reduction
in minority interest of $475. The cumulative effect loss represents the depreciation and
accretion expense that would have been recorded previously if SFAS No. 143 had been in effect
in prior years. The proforma effect of retroactive application of SFAS No. 143 in 2002 would
not have had a material impact on the net loss, net loss per share and net loss per ADS, as
reported.
F-37
Table of Contents
SILICON MANUFACTURING PARTNERS PTE LTD
Financial
Statements
For the Years Ended December 31, 2003, 2004 and 2005
Table of Contents
SILICON MANUFACTURING PARTNERS PTE LTD
FINANCIAL STATEMENTS INDEX
Page Number
Report of Independent Registered Public Accounting Firm
F-38
Balance Sheets
F-39
Income
Statements
F-40
Statements of Comprehensive Income (Loss)
F-41
Statements of Shareholders' Equity
F-42
Statements of Cash Flows
F-43
Notes to the Financial Statements
F-44
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Members of
Silicon Manufacturing Partners Pte Ltd:
We have audited the accompanying balance sheet of Silicon Manufacturing Partners Pte Ltd as of
December 31, 2004, and the related statements of income, comprehensive income, shareholders'
equity and cash flows for the year then ended. 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 audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides 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, 2004,
and the results of its operations and its cash flows for the year then ended, in conformity with
U.S. generally accepted accounting principles.
We have not audited or reviewed the accompanying 2003 and 2005 financial statements and,
accordingly, do not express an opinion or any other form of assurance on them.
KPMG
Singapore
February 4, 2005
F-38
Table of Contents
SILICON MANUFACTURING PARTNERS PTE LTD
BALANCE SHEETS — in US Dollars
In thousands (except per share data)
December 31,
December 31,
2004
2005
(Unaudited)
ASSETS
Cash and cash equivalents
$
37,427
$
20,788
Receivables, net
4,615
6,447
Receivables from related parties
20,328
22,633
Inventories
20,913
19,003
Prepaid expenses
2,314
2,230
Total current assets
85,597
71,101
Property, plant and equipment, net
132,258
55,758
Other non-current assets
82
34
Total assets
$
217,937
$
126,893
LIABILITIES AND SHAREHOLDERS' EQUITY
Payables
$
7,630
$
10,258
Payables to related parties
9,356
16,691
Income taxes payable
1,548
272
Other current liabilities
4,544
4,090
Total current liabilities
23,078
31,311
Other non-current liabilities
—
8
Total liabilities
23,078
31,319
Share capital: ordinary shares of S$1.00 par value
Authorized: 1,000,000 shares
Issued and
outstanding: 425,000 shares in 2004 and 323,965 shares in 2005
252,389
192,389
Accumulated deficit
(57,475
)
(96,797
)
Accumulated other comprehensive loss
(55
)
(18
)
Total shareholders' equity
$
194,859
$
95,574
Commitments and contingencies
Total liabilities and shareholders' equity
$
217,937
$
126,893
See accompanying notes to financial statements
F-39
Table of Contents
SILICON MANUFACTURING PARTNERS PTE LTD
INCOME STATEMENTS — in US Dollars
In thousands
Year ended
Year ended
Year ended
December 31,
December 31,
December 31,
2003
2004
2005
(Unaudited)
(Unaudited)
Net revenue
$
329,535
$
303,570
$
201,345
Cost of revenue
(286,462
)
(268,743
)
(196,470
)
Gross profit
43,073
34,827
4,875
OPERATING EXPENSES
General and administrative
4,054
4,757
4,426
Other operating income, net
(3,400
)
—
—
Total operating expenses
654
4,757
4,426
Operating profit
42,419
30,070
449
Other income (loss), net
9
(1,767
)
8
Interest income (expense), net
(20,626
)
(7,735
)
1,386
Foreign exchange gain (loss), net
2,257
203
(5
)
Income before income taxes
24,059
20,771
1,838
Income tax expense
(275
)
(65
)
(352
)
Net income
$
23,784
$
20,706
$
1,486
See accompanying notes to financial statements
F-40
Table of Contents
SILICON MANUFACTURING PARTNERS PTE LTD
STATEMENTS OF COMPREHENSIVE INCOME (LOSS) — in US Dollars
In thousands
Year ended
Year ended
Year ended
December 31,
December 31,
December 31,
2003
2004
2005
(Unaudited)
(Unaudited)
Net income
$
23,784
$
20,706
$
1,486
Net unrealized gains on change in
cash flow hedging activity fair
values
10,812
8,002
—
Reclassification of cash flow hedging
activity losses into earnings
3
48
37
Other comprehensive income
10,815
8,050
37
Comprehensive income
$
34,599
$
28,756
$
1,523
See accompanying notes to financial statements
F-41
Table of Contents
SILICON MANUFACTURING PARTNERS PTE LTD
STATEMENTS OF SHAREHOLDERS' EQUITY — in US Dollars
In thousands
Accumulated
Other
Total Share
Accumulated
Compre-
holders'
Ordinary Shares
Deficit
hensive Loss
Equity
No.
$
$
$
$
Year ended December 31,
2003 (Unaudited)
Balance at January 1, 2003
425,000
252,389
(10,543
)
(18,920
)
222,926
Net income
—
—
23,784
—
23,784
Other comprehensive income
—
—
—
10,815
10,815
First interim dividend
declared of $0.0011 per "B"
ordinary share less tax at
22%
—
—
(234
)
—
(234
)
Second interim dividend
declared of $0.2515 per "B"
ordinary share, tax exempt
—
—
(54,508
)
—
(54,508
)
Balance at December 31, 2003
425,000
252,389
(41,501
)
(8,105
)
202,783
Year ended December 31, 2004
Balance at January 1, 2004
425,000
252,389
(41,501
)
(8,105
)
202,783
Net income
—
—
20,706
—
20,706
Other comprehensive income
—
—
—
8,050
8,050
Third interim dividend paid
of $0.0308 per "B" ordinary
share, tax exempt
—
—
(6,680
)
—
(6,680
)
Fourth interim dividend
paid of $0.1384 per "B"
ordinary share, tax exempt
—
—
(30,000
)
—
(30,000
)
Balance at December 31, 2004
425,000
252,389
(57,475
)
(55
)
194,859
Year
ended December 31, 2005
(Unaudited)
Balance at January 1, 2005
425,000
252,389
(57,475
)
(55
)
194,859
Net income
—
—
1,486
—
1,486
Other comprehensive income
—
—
—
37
37
Capital
reduction
(101,035
)
(60,000
)
—
—
(60,000
)
Fourth interim dividend paid
of $0.0524 per "B"
ordinary share, tax
exempt
—
—
(11,348
)
—
(11,348
)
Fourth interim dividend paid
of $0.0553 per "A"
ordinary share, tax
exempt
—
—
(11,523
)
—
(11,523
)
Fifth interim dividend paid
of $0.0806 per "A"
ordinary share, tax
exempt
—
—
(16,786
)
—
(16,786
)
Sixth interim dividend paid
of $0.0055 per "A"
ordinary share, tax
exempt
—
—
(1,151
)
—
(1,151
)
Balance at
December 31,
2005
323,965
192,389
(96,797
)
(18
)
95,574
See accompanying notes to financial statements
F-42
Table of Contents
SILICON MANUFACTURING PARTNERS PTE LTD
STATEMENTS OF CASH FLOWS — in US Dollars
In thousands
Year ended
Year ended
Year ended
December 31,
December 31,
December 31,
2003
2004
2005
(Unaudited)
(Unaudited)
Operating Activities
Net income
$
23,784
$
20,706
$
1,486
Adjustments
to reconcile net income to net
cash provided by operating activities:
Depreciation of property, plant and equipment
160,015
137,415
84,105
Asset impairment
178
—
—
Gain on disposal of property, plant and equipment
—
(5
)
—
Amortisation of deferred finance expenses
1,008
1,680
—
Others
(2,597
)
(2,773
)
183
Change in assets and liabilities:
Receivables
(5,926
)
9,675
(1,849
)
Receivables and payables with related parties, net
(7,776
)
1,757
(3,470
)
Inventories
(14,011
)
10,214
1,910
Prepaid expenses and other current assets
(182
)
111
85
Payables and other current liabilities
381
(8,784
)
1,380
Income taxes payable
216
165
(1,276
)
Net cash provided by operating activities
155,090
170,161
82,560
Investing Activities
Proceeds from sale of property, plant and equipment
3,350
54
11
Payments for property, plant and equipment
(14,159
)
(19,797
)
(6,902
)
Capital
reduction
—
—
(51,500
)
Net cash used in investing activities
(10,809
)
(19,743
)
(58,391
)
Financing Activities
Debt repayments
(107,143
)
(171,428
)
—
Dividends paid
(20,234
)
(71,188
)
(40,808
)
Net cash used in financing activities
(127,377
)
(242,616
)
(40,808
)
Net increase (decrease) in cash and cash equivalents
16,904
(92,198
)
(16,639
)
Cash and cash equivalents at the beginning of the year
112,721
129,625
37,427
Cash and cash equivalents at the end of the year
$
129,625
$
37,427
$
20,788
Supplemental Cash Flow Information
Interest paid (net of amounts capitalized)
21,357
7,764
—
Income taxes paid
59
—
1,579
See accompanying notes to financial statements
F-43
Table of Contents
SILICON MANUFACTURING PARTNERS PTE LTD
NOTES TO THE FINANCIAL STATEMENTS — in US Dollars
In thousands
1
Background and Summary of Significant Accounting Policies
(a) Business and Organization
Silicon Manufacturing Partners Pte Ltd (the "Company") is incorporated and domiciled in the
Republic of Singapore and has its registered office at 60 Woodlands Industrial Park D 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 Company is an independent foundry that fabricates
integrated circuits on silicon wafers for customers in the semiconductor industry.
The immediate and ultimate holding companies are Agere Systems Singapore Pte Ltd ("Agere") and
Agere Systems Inc., which are incorporated in the Republic of Singapore and the United States of
America, respectively.
In August 2005, the Company's board of directors approved a change to the Company's fiscal year end
from December 31 to September 30 so as to coincide with the
fiscal year end of Agere as required by Singapore law. Under requirements of
S-X Rule 3-09
, insofar as practicable, the financial statements of the Company should
be as of the same dates and for the same periods as the audited consolidated financial
statements of Chartered Semiconductor Manufacturing Ltd
("Chartered"),
its minority shareholder, for purposes of Chartered's filing of
Form 20-F
.
Accordingly, the Company is presenting financial statements for the twelve months
ended December 31, 2005, (referred to as year ended
December 31, 2005).
(b) Accounting Principles
The 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.
(c) Use of Estimates
The preparation of the 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. Significant items subject to such
estimates and judgements include the recoverability of the carrying value of long-lived assets, the
realizability of deferred income tax assets and inventories. Actual results could differ from these
estimates.
(d) Foreign Currency
The functional currency of the Company is the US dollar. Assets and liabilities which are
denominated in foreign currencies are translated into the functional currency at the rates of
exchange prevailing at the balance sheet date. Foreign currency transactions are translated using
the exchange rates prevailing at the date of transactions. Foreign exchange gains or losses,
resulting from the settlement of foreign currency transactions and from the translation at
financial year-end exchange rates of assets and liabilities denominated in foreign currencies, are
included in the line item "foreign exchange gain (loss), net" in the statements of operations.
F-44
Table of Contents
SILICON MANUFACTURING PARTNERS PTE LTD
NOTES TO THE FINANCIAL STATEMENTS — in US Dollars
In thousands
(e) Revenue Recognition
The Company enters into arrangements with customers which typically include, in addition to
fabricating semiconductors wafers, pre-fabricating services such as engineering services and masks
generation and associated assembly and test services.
When arrangements include multiple deliverables, the Company evaluates whether to divide the
deliverables into separate units of accounting using certain specified criteria. The total
arrangement consideration is allocated to each unit of accounting based on fair values in
accordance with the methodology in FASB Emerging Issues Task Force ("EITF") Issue 00-21,
"Accounting for Revenue Arrangements with Multiple
Deliverables". Substantially all
of the Company's arrangements for the sale of semiconductor wafers and
related services consist of a single unit of accounting.
Revenue for each unit of accounting is recognized when the contractual obligations have been
performed and, where applicable, delivery has occurred and title and risk of loss has passed to the
customer, there is evidence of a final arrangement as to the specific terms of the agreed upon
sales, selling prices to the customers are fixed or determinable and collection of the revenue is
reasonably assured. Generally this results in revenue recognition upon shipment of wafers. Revenue
represents the invoiced value of goods and services supplied excluding goods and services tax, less
allowances for estimated sales credits and returns. The Company estimates allowances for sales
credits and returns based on historical experience and management's estimate of the level of future
claims. Additionally, the Company accrues for specific items at the time their existence is known
and amounts are estimable.
(f) Grants
Income-related government grants are subsidies of training 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.
(g) Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and
liabilities are recognized for the future tax consequences attributable to differences between the
carrying amounts of existing assets and liabilities in the financial statements and their
respective tax bases, and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable income in the years
in which those temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in income in the period
that includes the enactment date. A valuation allowance is recorded for loss carryforwards and
other deferred tax assets where it is more likely than not that such loss carryforwards and
deferred tax assets will not be realized.
F-45
Table of Contents
SILICON MANUFACTURING PARTNERS PTE LTD
NOTES TO THE FINANCIAL STATEMENTS — in US Dollars
In thousands
(h) Derivative Instruments and Hedging Activities
In accordance with Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting
for Derivative Instruments and Certain Hedging Activities", as amended, the Company records
derivatives on the balance sheet as assets or liabilities measured at fair value.
On the date a derivative contract is entered into, the Company will consider if the
derivative instrument is part of a hedging relationship. 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 at the hedge's inception. This process includes linking all derivatives that are designated as
fair-value, cash flows, 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 derivative 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 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.
F-46
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SILICON MANUFACTURING PARTNERS PTE LTD
NOTES TO THE FINANCIAL STATEMENTS — in US Dollars
In thousands
When hedge accounting is discontinued because the hedged item no longer meets the definition
of a firm commitment, the Company removes any asset or liability that was recorded pursuant to recognition of the firm
commitment from the balance sheet and recognizes any gain or loss in earnings. When hedge
accounting is discontinued because it is probable that a forecasted transaction will not occur, gains and
losses that were accumulated in other comprehensive income are recognized immediately in earnings.
In all situations in which hedge accounting is discontinued, the Company continues to carry
the derivative at its fair value on the balance sheet, and recognizes any changes in its fair value
in earnings.
(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 or market (net realizable value) and consist of
work in progress, raw materials and consumable supplies and spares. Cost is determined using
standard cost and an allocation of the cost variances arising in the period of production, which
approximates actual costs determined on the weighted average basis. Standard cost is based on
estimates of materials, labor and other costs incurred in each process step associated with the
manufacture of the Company's products. Labor and overhead costs are allocated to each step in the
wafer production process based on normal fab capacity utilization, with costs arising from abnormal
under-utilization of capacity expensed when incurred.
(k) Property, Plant and Equipment
Property, plant and equipment are recorded at cost and depreciated to their estimated salvage
values using the straight-line method over their estimated useful lives as follows:
Mechanical and electrical installations
—
10 years
Equipment and machinery
—
5 years
Office and computer equipment
—
2 to 5 years
The Company capitalizes interest with respect to major assets under installation and construction
until such assets are ready for use. Interest capitalized is based on the average cost of the
Company's pooled borrowings. Repairs and replacements of a routine nature are expensed, while those
that extend the life of an asset are capitalized. Upon retirement or disposal of assets, the cost
and related accumulated depreciation are removed from the balance sheet and any gain or loss is
included in the statement of operations.
F-47
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SILICON MANUFACTURING PARTNERS PTE LTD
NOTES TO THE FINANCIAL STATEMENTS — in US Dollars
In thousands
(l) Impairment of Long-Lived Assets
The Company reviews long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. Recoverability of
long-lived asset groups to be held and used are measured by a comparison of the carrying amount to
the sum of the undiscounted cash flows expected to result from the use and eventual disposition of
the asset group. If an asset group is considered to be impaired, the impairment loss is measured
as the amount by which the carrying amount of the long-lived assets exceed their fair value.
Long-lived assets to be disposed of by sale are measured at the lower of their carrying amounts or
fair value less cost to sell, and depreciation is ceased. Long-lived assets to be abandoned will
be considered held and used until disposed of.
(m) Business and Credit Concentrations
The Company is a dedicated semiconductor foundry providing wafer fabrication services and
technologies. The worldwide semiconductor foundry industry is highly competitive. 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, electronic design automation and tool support. The
semiconductor industry has historically been highly cyclical and, at various times, has experienced
significant economic downturns characterized by production overcapacity, reduced product demand
and rapid erosion of selling prices. Periods of overcapacity in the semiconductor industry have
frequently followed periods of increased demand. In addition, the markets for semiconductors are
characterized by rapid technological change, intense competition and fluctuations in end-user demand.
As a result, changes in the industry may adversely affect
management's estimates and the Company's
results of operations and financial position.
Financial instruments that potentially subject the Company to concentrations of credit risk
consist principally of cash, derivative financial instruments and receivables. The top three
customers of the Company from third parties accounted for 78%, 73%
and 77% of the Company's net
revenue from third parties in the years ended December 31, 2003,
2004 and 2005, respectively. Total accounts receivable from these
customers was $9,532, $3,723 and $4,765 at
December 31, 2003, 2004 and 2005, 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 and credit control and collection procedures.
The Company's cash and cash equivalents are placed with major international banks and financial
institutions with specific minimum credit standards. Cash and cash equivalents with a particular
bank accounted for 67% and 68% of total balances at December 31, 2004 and 2005,
respectively.
The amounts subject to credit risk related to derivative instruments are generally limited to the
amounts, if any, by which a counterparty's obligations exceed the obligations of the Company with
that counterparty. The risk management practices are further
described in Note 14.
(n) Product Warranties
The Company guarantees that products will meet the stated functionality as agreed to in each sales
arrangement. The Company provides for the estimated warranty costs under these guarantees based upon
historical experience and management's estimate of the level of future claims, and accrues for
specific items at the time their existence is known and the amounts are estimable. Expenses for warranty costs
were not significant in any of the years presented.
(o) Recent Accounting Pronouncements
In March 2005, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation
No. 47, "Accounting for Conditional Asset Retirement Obligations" ("FIN 47"). FIN 47 clarifies
that an entity must record a liability for a "conditional" asset retirement obligation if the fair
value of the obligation can be reasonably estimated. The types of asset retirement obligations
that are covered by this Interpretation are those for which an entity has a legal obligation to
perform an asset retirement activity, however the timing and (or) method of settling the
obligation are conditional on a future event that may or may not be within the control of the
entity. FIN 47 also clarifies when an entity would have sufficient information to reasonably
estimate the fair value of an asset retirement obligation. FIN 47 is effective no later than the
end of fiscal years ending after December 15, 2005. The initial adoption of FIN 47 did not have an
impact on the Company's financial condition and consolidated statements of operations.
F-48
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SILICON MANUFACTURING PARTNERS PTE LTD
NOTES TO THE FINANCIAL STATEMENTS — in US Dollars
In thousands
2
Related Party Transactions
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.
Other than those disclosed elsewhere in these financial statements, there were the following
significant transactions with related parties on terms agreed between the parties:
Year ended
Year ended
Year ended
December 31,
December 31,
December 31,
2003
2004
2005
(Unaudited)
(Unaudited)
Immediate Parent Company
Recharge of employee related
and other expenses to the
Company
$
117
$
82
$
640
Sale of processed wafers
191,493
162,927
96,800
Purchase of wafers
2,277
—
—
Affiliates of Immediate Parent Company
Recharge of employee related and
other expenses to the Company
2,271
3,882
3,083
Sale of processed wafers
3,593
12,773
31,561
Purchase of processed wafers
—
—
856
Purchase of property, plant and equipment
—
—
976
Minority Shareholder
Purchase of property, plant and equipment
12,703
462
—
Payment of rental expense
15,024
15,307
15,662
Recharge of employee related and other
expenses to the Company
46,552
33,199
36,435
Sale of processed wafers
1,818
1,371
149
Sale of property, plant and equipment
3,350
—
11
Recharge of other expenses from the
Company
195
499
302
Affiliates of Minority Shareholder
Purchase of property, plant and equipment
1,515
43
53
Purchase of processed wafers
447
180
155
Recharge of other expenses to the Company
215
217
161
Sale of processed wafers
454
270
68
Recharge of other expenses from the
Company
101
—
24
Interest income
338
—
—
F-49
Table of Contents
SILICON MANUFACTURING PARTNERS PTE LTD
NOTES TO THE FINANCIAL STATEMENTS — in US Dollars
In thousands
2
Related Party Transactions (Cont'd)
The amounts due from related parties are:
December 31,
December 31,
2004
2005
(Unaudited)
Amount due from immediate parent company
$
17,698
$
15,234
Amount due from affiliates of immediate parent company
2,048
7,304
Amount due from minority shareholder
582
65
Amount due from affiliates of minority shareholder
—
30
$
20,328
$
22,633
The amounts due to related parties are:
December 31,
December 31,
2004
2005
(Unaudited)
Amount due to immediate parent company
$
31
$
4,528
Amount due to affiliates of immediate parent company
63
336
Amount due to minority shareholder
8,850
11,729
Amount due to affiliates of minority shareholder
412
98
$
9,356
$
16,691
3
Cash and Cash Equivalents
Cash and cash equivalents consist of the following:
December 31,
December 31,
2004
2005
(Unaudited)
Cash at banks and on hand
$
13,421
$
5,283
Short-term deposits with banks
24,006
15,505
$
37,427
$
20,788
F-50
Table of Contents
SILICON MANUFACTURING PARTNERS PTE LTD
NOTES TO THE FINANCIAL STATEMENTS — in US Dollars
In thousands
4
Receivables, net
Receivables consist of the following:
December 31,
December 31,
2004
2005
(Unaudited)
Trade receivables
$
6,081
$
7,897
Allowance for sales credits and returns
(1,505
)
(1,537
)
Trade receivables, net of allowances
4,576
6,360
Other receivables
39
87
$
4,615
$
6,447
Movements in the allowance for sales credits and returns are as follows:
December 31,
December 31,
2004
2005
(Unaudited)
Beginning
$
3,055
$
1,505
Utilized in year
(4,086
)
(2,142
)
Charge for the year
2,536
2,174
Ending
$
1,505
$
1,537
5
Inventories
Inventories consist of the following:
December 31,
December 31,
2004
2005
(Unaudited)
Raw materials
$
522
$
967
Work-in-process
20,168
17,996
Consumable supplies and spares
223
40
$
20,913
$
19,003
F-51
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SILICON MANUFACTURING PARTNERS PTE LTD
NOTES TO THE FINANCIAL STATEMENTS — in US Dollars
In thousands
6
Property, Plant and Equipment
Property, plant and equipment consist of the following:
December 31,
December 31,
2004
2005
(Unaudited)
Cost
Mechanical and electrical installations
$
4,256
$
4,814
Equipment and machinery
796,821
801,946
Office and computer equipment
10,367
10,130
Assets under installation and construction
482
834
Total cost
$
811,926
$
817,724
Accumulated depreciation
$
679,668
$
761,966
Property, plant and equipment (net)
$
132,258
$
55,758
Depreciation was charged to statements of operations and amounted to $160,015, $137,415 and $84,105
for the years ended December 31, 2003, 2004 and 2005, respectively.
Capitalized interest relating to property, plant and equipment amounted to $237, $19 and $Nil in
the years ended December 31, 2003, 2004 and 2005, respectively.
7
Payables
Payables relate to the following:
December 31,
December 31,
2004
2005
(Unaudited)
Trade and accrued purchases
$
7,456
$
9,291
Fixed assets purchases
174
967
$
7,630
$
10,258
F-52
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SILICON MANUFACTURING PARTNERS PTE LTD
NOTES TO THE FINANCIAL STATEMENTS — in US Dollars
In thousands
8
Other Current Liabilities
December 31,
December 31,
2004
2005
(Unaudited)
Accrued operating expenses
Employee bonuses and related expenses
$
4,066
$
3,380
Others
159
542
4,225
3,922
Other current liabilities
319
168
$
4,544
$
4,090
9
Income Taxes
Income tax expense consists of the following:
Year ended
Year ended
Year ended
December 31,
December 31,
December 31,
2003
2004
2005
(Unaudited)
(Unaudited)
Current expense
$
257
$
165
$
304
Deferred expense (benefit)
18
(100
)
48
Total
$
275
$
65
$
352
The Company's pre-tax loss and income tax expense (benefit) is from Singapore sources.
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 wafer
fabrication of integrated circuits effective from 1 May 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.
Without this exemption from income tax, the Company would be subject to income tax at the Singapore
corporate income tax rate of 20% for the years ended
December 31, 2005 and 2004 and 22% for the year ended December 31, 2003.
Tax losses accumulated before the pioneer status period cannot be carried forward. Tax losses
accumulated in the pioneer status period may be carried forward and may be offset against income
from the same pioneer trade arising both during the pioneer status and after the expiration of the
pioneer status period, subject to compliance with certain conditions. As of December 31, 2005, the
Company does not have any loss carryforwards.
F-53
Table of Contents
SILICON MANUFACTURING PARTNERS PTE LTD
NOTES TO THE FINANCIAL STATEMENTS — in US Dollars
In thousands
Under Singapore tax law, tax depreciation of property, plant and equipment (referred to as
wear and tear allowances) is deductible only to the extent of taxable income before tax
depreciation. Unutilized wear and tear allowances are carried forward to future tax years. As of
December 31, 2005, the Company has unutilized wear and tear allowance carryforwards of
approximately $32,652 and the amount is expected to be utilized within the pioneer tax-exempt
period, and accordingly has been recognized at a zero percent tax rate.
Loss carryforwards as well as unutilized wear and tear allowances from the end of pioneer status
period are available indefinitely, subject to 50% or more of the Company's equity staying with the
same shareholders from the incurrence of the tax loss to its utilization and in the case of wear
and tear allowances, an additional test that the same trade must be carried on.
Interest income is not exempt from taxation during the pioneer status period. The income tax
expense for the years ended December 31, 2003, 2004 and 2005 primarily
represents income tax payable on non-pioneer interest income.
A reconciliation of the expected tax expense (benefit) computed by applying statutory rates to
pre-tax loss to the actual tax expense is as follows:
Year ended
Year ended
Year ended
December 31,
December 31,
December 31,
2003
2004
2005
(Unaudited)
(Unaudited)
Income tax expense (benefit)
computed at Singapore statutory
tax rate of 20% (22% in 2003,
20% in 2004)
$
5,293
$
4,154
$
367
Permanent non-deductible expenses
(181
)
767
53
Losses and wear and tear
allowances expected to be
utilized in the pioneer tax
exempt period
—
—
1,972
Exempt pioneer profits
(4,837
)
(4,856
)
(2,096
)
Others
—
—
56
Actual income tax expense
$
275
$
65
$
352
Included in other non-current assets are $82 and $34 of net deferred tax assets as of December 31,
2004 and 2005 which primarily relate to the difference in the tax and book basis of
property, plant and equipment. 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. Deferred tax asset is also recognized for wear and tear allowances and tax losses carried
forward to the extent that it is more likely than not that the related tax benefits would be
realized through future taxable profits. As at December 31, 2005, the Company has unutilized wear
and tear allowances of $32,652 which are expected to be utilized within the pioneer tax-exempt
period and accordingly have been recognized at a zero percent tax rate.
F-54
Table of Contents
SILICON MANUFACTURING PARTNERS PTE LTD
NOTES TO THE FINANCIAL STATEMENTS — in US Dollars
In thousands
10
Share Capital
Share capital consist of the following:
December 31,
December 31,
2004
2005
(Unaudited)
Issued and
paid-up share capital
$
252,389
$
84,040
Capital
reduction
—
108,349
$
252,389
$
192,389
In October 2005, the Company reorganized its paid-up share capital
by the extinguishment of accumulated losses of $108,349 against paid-up
share capital and the return of a portion to its shareholders in the
form of cash amounting to $60,000 in a capital reduction sanctioned by the High Court
of Singapore. During the year ended December 31, 2005, the Company
paid cash of $51,500 to its shareholders. The capital reduction through the
extinguishment of accumulated losses does not qualify as a quasi-reorganization
under US GAAP and accordingly has not been reflected in the financial statements.
11
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. Tax payable by the Company on its
non-pioneer chargeable income constitutes a final tax, and dividends are exempt from tax in the hands of its shareholders.
12
Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss consists of the following:
December 31,
December 31,
2004
2005
(Unaudited)
Net unrealized cash flow hedging activity losses
$
(55
)
$
(18
)
The net unrealized cash flow hedging activity losses are not adjusted for income taxes
because such losses are expected to be realized during the pioneer status.
F-55
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SILICON MANUFACTURING PARTNERS PTE LTD
NOTES TO THE FINANCIAL STATEMENTS — in US Dollars
In thousands
13
Commitments and Contingencies
Capital commitments
December 31,
December 31,
2004
2005
(Unaudited)
Contracted but not received
$
1,079
$
2,036
Operating lease commitments
The Company leases its fab from its minority shareholder under a lease agreement which expires in
2008. At balance sheet date, the Company had commitments for future minimum lease payments under
the non-cancellable operating leases as follows:
December 31,
2005
(Unaudited)
Payable in
the year ending December 31,
2006
$
15,661
2007
15,653
2008
3,913
$
35,227
Contingencies
The Company may from time to time be a party to claims that arise in the normal course of business.
These claims include allegations of infringement of intellectual property rights of others as well
as other claims of liability. In addition, the Company is subject to various taxes in the
different jurisdiction 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 statement of operations.
F-56
Table of Contents
SILICON MANUFACTURING PARTNERS PTE LTD
NOTES TO THE FINANCIAL STATEMENTS — in US Dollars
In thousands
14
Derivative Instruments
The Company has the following notional amounts of derivative instruments:
December 31,
December 31,
2004
2005
(Unaudited)
Forward foreign exchange contracts to
hedge plant and equipment purchases
$
(2,005
)
$
—
To protect against volatility of future cash flows caused by changes in exchange rates, the Company
may use currency forward contracts and currency swaps on anticipated transactions such as operating
costs and expenses and capital purchases. To manage interest rate risk, the Company may enter into
interest rate cap agreements to modify the interest characteristics of its outstanding debts.
Most of the Company's derivatives are formally designated as cash flow 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 payments. 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).
The Company uses derivative instruments to manage identified foreign currency risks resulting from
its Singapore dollar denominated debt and its foreign currency denominated purchase commitments
which are denominated principally in Japanese yen and Euro. 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 (loss) related to hedges of foreign currency purchase commitments are
reclassified into earnings (foreign exchange gain (loss)) when the asset related to the purchase
commitment is depreciated.
The estimated net amount of existing losses from cash flow hedges expected to
be reclassified into earnings within the next year is $26 and $16 as
of December 31, 2004 and 2005, respectively. Net realized losses
recognized from cash flow hedges were $48 and $37 for the years ended December 31, 2004 and 2005, respectively.
F-57
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SILICON MANUFACTURING PARTNERS PTE LTD
NOTES TO THE FINANCIAL STATEMENTS — in US Dollars
In thousands
14
Derivative Instruments (Cont'd)
The components of other comprehensive loss related to derivative and hedging activities
consist of the following:
December 31,
December 31,
2004
2005
(Unaudited)
Beginning
$
8,105
$
55
Reclassification of cash flow
hedging activity losses into
earnings
(48
)
(37
)
Net unrealized gains on change
in cash flow hedging activity fair
values
(8,002
)
—
Ending
$
55
$
18
By using derivative instruments to hedge exposures to changes in foreign currency 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 currency exchange rates. The Company assesses currency exchange cash flow risk by continually
identifying and monitoring changes in currency exchange rate exposures that may adversely impact
expected future cash flows and by evaluating hedging opportunities.
15
Fair Values of Financial Instruments
December 31, 2004
December 31, 2005
(Unaudited)
Carrying
Estimated
Carrying
Estimated
amount
fair value
amount
fair value
Assets/(Liability)
Forward foreign exchange contracts
$
11
$
11
$
—
$
—
Cash and cash equivalents, amounts owing from and to immediate parent company, other related
companies and affiliated companies, accounts receivable and accounts payable.
The carrying amounts
approximate fair value in view of the short-term nature of these balances.
F-58
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SILICON MANUFACTURING PARTNERS PTE LTD
NOTES TO THE FINANCIAL STATEMENTS — in US Dollars
In thousands
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
.
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.
16
Other Operating Expenses (Income), net
Other operating expenses (income) consisted of:
A gain of $3,578 in 2003 associated with the cancellation of an employee bonus award plan. As a
result of the cancellation, compensation accrued for past services under the bonus award plan of
$3,578 was eliminated by decreasing compensation expense in the period of cancellation.
An impairment charge of $178 in 2003 on certain property, plant and equipment which were identified
for sale as of December 31, 2003. These assets were written down
to their estimated net selling prices. The estimated
selling prices were determined based on independent quotes from third party vendors.
F-59