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




<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B>UNITED STATES SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>WASHINGTON, DC 20549</B>
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 12pt"><B>FORM
20-F</B>
</DIV>


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

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    <TD width="88%">&nbsp;</TD>
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<TR valign="top">
    <TD align="center"><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>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><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="center"><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="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%"><B><B>For the fiscal year ended December&nbsp;31, 2006.</B>
</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><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="center"><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.</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%"><B><B>For the transition period from <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> to </B><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> .
</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><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="center"><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></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%"><B>Date
of event requiring this shell company
report&nbsp;&#95;&#95;&#95;&#95;&#95;.
</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>Commission
File Number 000-27811</B></DIV>

<DIV align="center" style="font-size: 18pt; 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: 12pt">Republic of Singapore<BR>
(Jurisdiction of incorporation or organization)</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt">60 Woodlands industrial Park D<BR>
Street 2, Singapore 738406<BR>
&#043;65-6362 2838<BR>
(Address of principal executive offices)</DIV>

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

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    <TD width="47%">&nbsp;</TD>
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<TR valign="bottom">
    <TD align="center" valign="top">Title of Each Class <BR>
American Depositary Shares, <BR>
each represented by ten Ordinary Shares
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Name of Each Exchange on Which Registered<BR>
NASDAQ Global Select Market</TD>
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<DIV align="center" style="font-size: 10pt; margin-top: 12pt">Securities registered or to be registered pursuant to Section&nbsp;12(g) of the Act:<BR>
None<BR>
(Title of class)</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt">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. 2,535,895,593 Ordinary Shares and
28,350 Convertible Redeemable Preference Shares as of December&nbsp;31, 2006.
</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;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;
Accelerated filer <FONT face="Wingdings">&#111;</FONT>&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; 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
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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<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="center">
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<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
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    <TD width="3%">&nbsp;</TD>
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<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#101"><B>Certain Definitions and Conventions </B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#102"><B>Presentation of Certain Financial Information </B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">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>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#103"><B>PART I</B></A></DIV></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>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#104"><B>ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS </B></A></DIV></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"><A href="#105"><B>ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE </B></A></DIV></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"><A href="#106"><B>ITEM 3. KEY INFORMATION</B></A></DIV></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"><A href="#107"><B>ITEM 4. INFORMATION ON OUR COMPANY </B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#108"><B>ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS </B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#109"><B>ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES </B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">64</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#110"><B>ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS </B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">78</TD>
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">

<TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#131"><B>ITEM
8. FINANCIAL INFORMATION</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#111"><B>ITEM 9. THE OFFER AND LISTING </B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">81</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#112"><B>ITEM 10. ADDITIONAL INFORMATION </B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">82</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#113"><B>ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK </B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">98</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#114"><B>ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES </B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100</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="#115"><B>PART II</B></A></DIV></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>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#116"><B>ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES </B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">101</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#117"><B>ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">101</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#118"><B>ITEM 15. CONTROLS AND PROCEDURES </B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">101</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#119"><B>ITEM 16.</B></A></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"><A href="#120"><B>A. AUDIT COMMITTEE FINANCIAL EXPERT</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102B</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#121"><B>B. CODE OF ETHICS</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102B</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#122"><B>C. PRINCIPAL ACCOUNTANT FEES AND SERVICES</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102B</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#123"><B>D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">103</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#124"><B>E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">103</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="#125"><B>PART III</B></A></DIV></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>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#126"><B>ITEM 17. FINANCIAL STATEMENTS</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">103</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#127"><B>ITEM 18. FINANCIAL STATEMENTS</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">103</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#128"><B>ITEM 19. EXHIBITS </B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104</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="#129"><B>SIGNATURES</B></A></DIV></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>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#130">Index
to Financial Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">F-1</TD>
    <TD>&nbsp;</TD>
</TR>
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<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92933exv2w2.htm">Ex-2.2 Specimen certificate for ordinary shares in respect of new issuances of shares issued on and after Jan 30, 2006.</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92933exv2w3.htm">Ex-2.3 Specimen certificate for ordinary shares transferred on and after Jan 30, 2006 in respect of shares issued before Jan 30, 2006.</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92933exv4w11w8.htm">Ex-4.11.8 Third Amended & Restated Amendment No.3 dated Nov 17, 2006.</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92933exv4w11w13.htm">Ex-4.11.13 Master IBM Joint Development Terms and Conditions dated Dec 15, 2006 for joint development projects with International Business Machines Corporation.</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92933exv4w11w14.htm">Ex-4.11.14 Participation Agreement dated Jan 1, 2007 by and between the company and International Business Machines Corporation.</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92933exv4w11w15.htm">Ex-4.11.15 Joint Development Project Agreement dated Dec 15, 2006 for 45nm Bulk-Industry Standard Semiconductor Process Technology.</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92933exv4w11w16.htm">Ex-4.11.16 Joint Development Project Agreement dated Dec 15, 2006 for 32nm Bulk-Industry Standard Semiconductor Process Technology.</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92933exv4w16w3.htm">Ex-4.16.3 Supplemental Agreement dated Jan 3, 2007 by and between Terra Investments Pte. Ltd.</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92933exv4w18w4.htm">Ex-4.18.4 Supplemental Agreement dated Jan 3, 2007 by and between Terra Investments Pte. Ltd.</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92933exv4w19w1.htm">Ex-4.19.1 Offer Letter dated Feb 16, 2006 from Jurong Town Corporation to Terra Investment Pte. Ltd.</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92933exv4w19w2.htm">Ex-4.19.2 Acceptance of Offer dated Feb 21, 2006 from the company to Terra Investments Pte. Ltd.</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92933exv4w19w3.htm">Ex-4.19.3 Acceptance of Offer dated Feb 24, 2006 from Terra Investments Pte. Ltd.</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92933exv12w1.htm">Ex-12.1 Certification of the President & 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="u92933exv12w2.htm">Ex-12.2 Certification of the Senior Vice President & 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="u92933exv13w1.htm">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="u92933exv13w2.htm">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="u92933exv15w1.htm">EX-15.1 Consent of KPMG</A></FONT></TD></TR>
</TABLE>
</DIV>

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

<P align="center" style="font-size: 10pt"><!-- Folio -->1<!-- /Folio -->
</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>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 per U.S. dollar as certified for customs purposes by the
Federal Reserve Bank of New York. The noon buying rate on January&nbsp;31, 2007 was S$1.5362 = $1.00.
</DIV>
<DIV align="left">
<A name="102"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><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. Our 49%-owned joint venture company,
Silicon Manufacturing Partners Pte Ltd, or SMP, a corporation incorporated under the laws of the
Republic of Singapore, is not consolidated under U.S. GAAP. We account for our 49% investment in
SMP using the equity method. SMP meets certain &#147;significance&#148; tests pursuant to Rule&nbsp;3-09 of
Regulation&nbsp;S-X. Accordingly, separate financial statements of SMP are required to be filed by us
and we intend to file an amendment to this annual report on Form&nbsp;20-F to include the separate
financial statements of SMP as soon as available but no later than June&nbsp;30, 2007. We have included
in this annual report on Form&nbsp;20-F information relating to our share of SMP revenue. The financial
statements of SMP are reported in U.S. dollars and presented in accordance with U.S. GAAP. In 2005,
SMP changed its fiscal year end to September&nbsp;30. The financial statements of SMP to be filed by
amendment to this annual report will consist of its audited annual financial statements as of and
for the year ended December&nbsp;31, 2004, its unaudited financial statements as of and for the twelve
months ended December&nbsp;31, 2005 (which period includes the nine months of SMP&#146;s fiscal year 2005 and
the first three months of SMP&#146;s fiscal year 2006) and audited financial statements as of and for
the twelve months ended December&nbsp;31, 2006 (which period includes the last nine months of SMP&#146;s
fiscal year 2006 and the first three months of SMP&#146;s fiscal year 2007).
</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 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"><!-- Folio -->2<!-- /Folio -->
</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="103"></A>
</DIV>

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

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

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS</B>
</DIV>

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

<DIV align="left">
<A name="105"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE</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 3. KEY INFORMATION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>A. SELECTED FINANCIAL DATA</B>

</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, 2002,
2003 and 2004 and the selected consolidated statements of operations data for the years ended
December&nbsp;31, 2002 and 2003 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, 2005 and 2006 and the
selected consolidated statements of operations data for each of the years in the three year period
ended December&nbsp;31, 2006 are derived from our audited consolidated financial statements included
elsewhere in this document which have been audited by KPMG, an independent registered public
accounting firm, whose report appearing elsewhere herein refers to
the adoption of the fair value method of accounting for stock-based
compensation as required by Statement of Financial Accounting
Standards No.&nbsp;123(R), <I>Share-Based Payments</I> effective
January&nbsp;1, 2006, and a change in the Company&#146;s method of
quantifying errors in 2006. 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="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="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>2002</B><SUP style="font-size: 85%; vertical-align: text-top">(16)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2003</B><SUP style="font-size: 85%; vertical-align: text-top">(16)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B><SUP style="font-size: 85%; vertical-align: text-top">(16)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B><SUP style="font-size: 85%; vertical-align: text-top">(16)</SUP></TD>
    <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>
</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">$</TD>
    <TD align="right">449,241</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</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>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,414,525</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">627,682</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">646,320</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">764,305</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">917,048</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,070,782</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>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</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">(178,441</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(94,409</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">167,826</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115,686</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">343,743</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">Other
revenue <SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,314</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,956</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,927</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,685</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,030</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>
    <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">77,565</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115,478</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">93,818</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">122,073</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">152,756</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">41,196</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,995</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,503</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55,007</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">43,899</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,540</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,951</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,025</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,558</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">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>
    <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">Other operating expenses
(income), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">23,415</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">2,292</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(139</TD>
    <TD nowrap>)<SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">14,202</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(6)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">13,766</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(8)</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">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">194,413</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">207,539</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">199,824</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">241,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">264,087</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"><!-- 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">Equity in income (loss)&nbsp;of
SMP</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,040</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income (loss), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,212</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,241</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">16,416</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(5)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,744</TD>
    <TD nowrap>)<SUP style="font-size: 85%; vertical-align: text-top">(7)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,689</TD>
    <TD nowrap>)<SUP style="font-size: 85%; vertical-align: text-top">(9)</SUP></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,591</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <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">(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>&nbsp;</TD>
    <TD align="right">(69,839</TD>
    <TD>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(87,950</TD>
    <TD nowrap>)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->3<!-- /Folio -->
</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="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="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>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>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</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 tax expense<SUP style="font-size: 85%; vertical-align: text-top">(10)</SUP></DIV></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>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(23,924</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">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>
    <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;before cumulative
effect of change in accounting policy</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66,754</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cumulative effect adjustment for change
in accounting
policy<SUP style="font-size: 85%; vertical-align: text-top">(11)</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">(6,421</TD>
    <TD>)</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">&#151;</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&#151;</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>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</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">(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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66,754</TD>
    <TD>&nbsp;</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 nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,196</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,476</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">$</TD>
    <TD align="right">(417,088</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</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>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">57,278</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic and diluted net earnings (loss)&nbsp;per
ordinary
share<SUP style="font-size: 85%; vertical-align: text-top">(12)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</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">$</TD>
    <TD align="right">(0.06</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.02</TD>
    <TD>&nbsp;</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 ordinary 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">1,799,106</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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,528,056</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">1,799,106</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">2,511,428</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,534,065</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic and diluted net earnings (loss) per ADS<SUP style="font-size: 85%; vertical-align: text-top">(12)</SUP></DIV></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>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.23</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</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">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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">252,806</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">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">251,143</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">253,407</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Other
Data</B><B><SUP style="font-size: 85%; vertical-align: text-top">(13)</SUP>:</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">1.76X</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">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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->4<!-- /Folio -->
</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="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="19" style="border-bottom: 1px solid #000000"><B>As of 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>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>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</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 align="center" colspan="3" nowrap><B>(in thousands)</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>
</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="right">$</TD>
    <TD align="right">1,210,925</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">905,472</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">539,399</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">819,856</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">718,982</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">(14)</SUP></DIV></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">165,537</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">549,441</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">568,469</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">3,333,463</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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,618,431</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</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">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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,329,908</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">250,663</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">246,174</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">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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,576,082</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ordinary share capital<SUP style="font-size: 85%; vertical-align: text-top">(15)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,682,465</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,678,661</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,682,638</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,682,050</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,704,215</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">1,785,459</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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,428,857</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: 0pt"><B>Notes:</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">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Other revenue consists of rental income and management fees.</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">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Included in the 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>

<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">(3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Included in the 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">(4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Included in the 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 from the sale of equipment to 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">(5)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD colspan="2">Other income, net, in 2004 related primarily to a
gain of $14.3&nbsp;million from the sale of technology to 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="3%" nowrap align="left">(6)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD colspan="2">Other operating expenses (income), net in 2005 included a fixed asset impairment charge
of $3.9&nbsp;million on assets held for sale.</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">(7)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD colspan="2">Other loss, net, in 2005 related primarily to 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 for and repurchase of any and all of our
$575.0&nbsp;million original principal amount
of 2.5% senior convertible notes due 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="3%" nowrap align="left">(8)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD colspan="2">Other operating expenses, net, in 2006 included losses of $6.1&nbsp;million resulting from
foreign currency fluctuations, partially
offset by a gain of $2.6&nbsp;million from the disposal of fixed assets from 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="3%" nowrap align="left">(9)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD colspan="2">Other loss, net, in 2006 related primarily to an other-than-temporary
impairment loss of $2.7&nbsp;million on securities classified as available-for-sale. Other loss, net, in 2006 also included net losses of $0.4&nbsp;million
relating to net losses of $1.4&nbsp;million resulting from changes in the fair value of a call option
transaction and net losses of $1.0&nbsp;million relating to time
value of our interest rate cap contracts which are excluded from the assessment of hedge
effectiveness, partially offset by net gains of $1.4&nbsp;million arising from the ineffective portion
of our derivative instruments and net gains of $0.6&nbsp;million resulting from changes in the fair
value of an interest rate swap prior to its designation as a hedging instrument.</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">(10)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD colspan="2">The pioneer status had the effect of increasing (decreasing)&nbsp;basic and diluted net earnings
per ordinary share or (increasing)&nbsp;decreasing basic and diluted net (loss)&nbsp;per ordinary
share by $(0.04), $(0.02), $(0.00), $(0.01) and $0.00 and increasing (decreasing)&nbsp;basic and
diluted net earnings per ADS or (increasing)&nbsp;decreasing basic and diluted net (loss)&nbsp;per ADS
by</TD>
</TR>

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


<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>$(0.36), $(0.15), $(0.02), $(0.11) and $0.02 for the years ended December&nbsp;31, 2002,
2003, 2004, 2005 and 2006, 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: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(11)</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&nbsp;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>

<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">(12)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For 2003, basic and diluted net loss per ordinary share prior to the cumulative effect
adjustment was $(0.11) and basic and diluted net loss per ADS prior to the cumulative effect
adjustment was $(1.14).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(13)</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 dividends consist of
accretion charges relating to our 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="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(14)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Working capital is calculated as the excess of current assets over current liabilities.</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">(15)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Until January&nbsp;30, 2006, ordinary shares of the Company had a par value of S$0.26. The
Singapore Companies (Amendment) Act 2005, which came into effect on January&nbsp;30, 2006,
abolished the concept of &#147;par value&#148; and &#147;authorized capital&#148;. Accordingly, the amounts
previously disclosed under &#147;ordinary shares&#148; and &#147;additional paid-in capital&#148; line items
have been combined as &#147;Ordinary Share Capital&#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="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(16)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Reclassifications and certain immaterial classification corrections have been made to prior years&#146;
financial statements to conform to classifications used in the current year. These include
reporting operating grant income as a reduction of the expenses that the grants are intended to
reimburse rather than as other income, reporting rental income and management fees as other revenue
rather than as other income, reporting depreciation of rental buildings as other operating expense
rather than as other expense and certain other immaterial reclassifications.</TD>
</TR>

</TABLE>
</DIV>

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

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


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. REASONS FOR THE OFFER AND USE OF PROCEEDS</B>
</DIV>

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


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


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 we may not be profitable in the future.</I></B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2002, 2003 and 2005, we incurred net losses of $417.1&nbsp;million, $291.2&nbsp;million and $159.6
million, respectively. In 2004 and for the year ended December&nbsp;31, 2006, we generated net income of
$6.6&nbsp;million and $66.8&nbsp;million, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2006, we had an accumulated deficit of $1,221.5&nbsp;million. We cannot
assure you that the accumulated deficit will not continue or increase in the future or that
we will remain profitable.
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We have a high level of debt. If </I></B><B>we are </B><B><I>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>
    <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>limit our ability to pursue our growth plan and technology upgrades or migrations;</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>require us to seek lenders&#146; consent prior to paying dividends on our ordinary 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="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 and other general corporate purposes. The term &#147;capital
expenditures&#148; means the amount we paid or will pay during a particular period for property,
plant and equipment;</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>limit our flexibility in planning for, or reacting to, changes in our business and the semiconductor industry; 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"><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: 6pt"><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 2004, 2005 and 2006, we made substantial capital expenditures of $686.3&nbsp;million,
$628.1&nbsp;million and $554.3&nbsp;million, respectively. We expect our total cash outflow for capital
expenditures in 2007 to be approximately $800&nbsp;million, including $65&nbsp;million of capital
expenditures in 2006 for our 90 nanometer, or nm, and below technologies which are expected to be paid in 2007. Capital expenditures planned for 2007
are primarily for increasing 65nm and below capacity. With the above capital
expenditures, Fab 7 is expected to have equipment (installed or available for installation) that is
equivalent to a capacity of 25,000 300 millimeter, or mm, wafers per month by December&nbsp;2007. We had
originally planned to equip Fab 7 with a full capacity of 30,000 300-mm wafers per month but have
revised this estimate to 39,000 300-mm wafers per month covering mainly 0.13 micron, or um, to 65nm
technology nodes. In addition, to further align our manufacturing capabilities with our technology
position, we are adding an additional phase for our Fab 7 expansion that will be focused on 65nm
and 45nm technologies. At completion, Fab 7 is expected to have a capacity of 45,000 300-mm wafers
per month and our total capital investment in Fab 7 is expected to be approximately between $4,200
million and $4,500&nbsp;million. As of December&nbsp;31, 2006, we have spent $1,638.6&nbsp;million equipping Fab
7. 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 $180&nbsp;million for research and
development in 2007.
</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 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 45,000 300-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: 6pt"><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>
    <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>optimize the technology mix of our semiconductor wafer production; and</TD>
</TR>



</TABLE>
</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="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>

<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. Our average capacity
utilization improved from 58% in 2003 to 77% in 2006 but fluctuated during this period as well. We
cannot assure you that market conditions will continue to improve or that the 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 </I></B><B>as </B><B><I>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, although our average
utilization rate improved to 80%, we experienced market weakness from the second half of June&nbsp;2004
which continued into the first half of 2005 as the industry worked through 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%. In 2006, our average
utilization rate was 77%. This was mainly due to higher utilization rate of 82% for each of the
first and second quarters of the year. During the second half of 2006, companies in the supply
chain, including our customers, experienced excess inventory and seasonally weaker than usual
market conditions. The inventory correction and weaker market impacted our utilization in the third
and fourth quarters of the year resulting in our utilization rates declining in those quarters to
74% and 70%, respectively. We cannot assure you that market conditions will improve in 2007 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
</DIV>


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

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 June&nbsp;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. We further expanded our joint
development efforts with IBM to include 45nm bulk CMOS process technology in December&nbsp;2004 and 32nm
bulk CMOS logic process technology in December&nbsp;2006. 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 depended on our joint development agreements with our technology partners for faster
introduction of 90nm and 65nm bulk CMOS process technologies and we continue to depend on our joint
development agreement with IBM for faster introduction of 45nm and 32nm bulk CMOS process
technologies. If we encounter problems in the successful implementation of our joint development
agreements with these technology 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
affected. &#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). Agere Systems Inc. announced in December&nbsp;2006 that it has entered into an
agreement to merge with LSI Logic Corporation under the LSI Logic name. In February&nbsp;2007, pursuant
to our joint venture agreement with Agere Systems Singapore Pte Ltd, or Agere Systems Singapore, a
subsidiary of Agere Systems Inc., relating to SMP, we received a written notice from Agere Systems
Singapore that a change of control of Agere Systems Singapore will occur upon the merger of Agere
Systems Inc. and LSI logic Corporation which is expected to close in the second quarter of 2007. We
are still evaluating our options under the joint venture agreement, including exercising our right
to require Agere Systems Singapore to sell to us the SMP shares held by Agere Systems Singapore.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 these technology alliances 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 72% of our total net revenue for both
2005 and 2006. Our top five customers collectively accounted for approximately 60% of our total net
revenue in 2006, compared with approximately 56% of our total net revenue in the previous year.
Our top three customers for 2006, in order of revenue contribution, were Broadcom, IBM and Advanced
Micro Devices, and each of them contributed more than 10% of our total net revenue in 2006. 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 sectors. We expect that we will continue to be
dependent for a significant portion of our revenue upon a relatively limited number of customers,
which 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. Customer concentration is more significant for our leading-edge process
technologies. We cannot assure you that revenue generated from these customers, individually or in
the aggregate, will reach or exceed historical levels in any future period. Loss or cancellation of
business from, significant changes in scheduled deliveries to, quality or 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
</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">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 collaborate 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 collaboration 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 generally 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 of the commencement of the manufacture of the product. The time required to manufacture a product depends on the complexity of such product, with the more advanced technology products generally requiring a longer cycle time. In addition, due to the
cyclical nature of the semiconductor industry, the length of time between our receipt of the purchase orders from our customers and the commencement date of the manufacture of the products 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 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 </I></B><B>success </B><B><I>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 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 tabs. 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, a
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 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>
    <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>pricing pressure from competitors in the foundry 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="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>
    <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>shifts by IDMs between internal and outsourced production;</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>changes in demand for products that incorporate semiconductors that we produce;</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>inventory and supply chain management of our customers;</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>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 receivable in a timely manner;</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>the occurrence of losses from a customer&#146;s inability to pay our accounts receivable from them;</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>the rescheduling or cancellation of large orders;</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>the rescheduling or cancellation of planned capital 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="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>
    <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>the return of wafers due to quality or reliability issues;</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>malfunction of our wafer production equipment;</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>unforeseen delays or interruptions in our plans for new fabrication facilities;</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>the timing and volume of orders relative to our available production 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="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>
    <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>environmental events or industrial accidents such as fires or explosions;</TD>
</TR>


</TABLE>
</DIV>
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</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="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>
    <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>our ability to continue with existing, and to enter into new technology and supply
alliances on mutually beneficial
terms;</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>actual capital expenditures exceeding planned capital 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="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>
    <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>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. We have filed and 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 may 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 until they are published or granted. Although we are not currently a
party to any material litigation involving patent infringement, the semiconductor industry is
characterized by frequent litigation regarding patent and other intellectual property rights. As is
typical in the semiconductor industry, we have from time to time received communications from third
parties asserting patents that cover certain of our technologies and alleging infringement of
certain intellectual property rights of others. We expect to receive similar communications in the
future. In the event any third party were to make a valid claim against us or our customers, we
could be required to:
</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>
    <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>pay substantial monetary damages;</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>seek to develop non-infringing technologies, which may not be feasible; 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="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 are subject to the risk of increased income taxes</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A large portion of our operations in Singapore is afforded lower tax rates from tax incentives
provided to attract and retain business. These tax incentives are subject to certain conditions
with which we expect to comply, such as achieving fixed amounts of capital expenditure and
headcount by certain dates. Our taxes could increase if we do not meet the incentive requirements,
or tax rates applicable to us in Singapore are otherwise increased.
</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We base our tax positions upon the anticipated results from tax authority examinations. Our
estimate of the potential outcome for any uncertain tax issues is highly judgmental. There can be
no assurance that the outcome from examinations will not have an adverse effect on our operating
results and financial condition.
</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 2006, we cannot
assure you that we will continue to be able to do so in the future at similar or reasonable premium
rates. 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 at similar or reasonable premium rates, 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<BR>
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. 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 generally 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
raw materials and supplies at acceptable prices. We obtain most of our raw materials and supplies,
including critical raw materials such as raw semiconductor wafers, from a limited number of
vendors. Some of these raw materials and supplies are available from a limited number of vendors in
limited quantity and their procurement may require a long lead time. We purchase most of our key
raw materials and supplies on a purchase order basis. We generally 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 raw 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 raw 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>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, from time to time, we may reject raw materials and supplies that do not meet our
specifications. 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 original equipment manufacturers and vendors that make
and sell the complex equipment and equipment spare parts that 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&nbsp;months, or even longer. In addition,
in the event of shortage of supply of equipment spare parts, we would need to qualify alternative
sources and/or equipment spare parts. Any delay in the delivery or increase in the cost or
availability of this equipment or equipment spare parts 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 Overview &#151; Equipment and Materials&#148; for
additional information regarding our relationships with our suppliers of materials and equipment.
</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>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 they are diced into
individual chips. We currently subcontract a significant number of orders for assembly, testing and
wafer bumping services 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, Amkor
Technology Singapore Pte. Ltd, and Amkor Technology Taiwan, Ltd, or collectively Amkor, and EEMS
Test Singapore Pte. Ltd., or EEMS. STATS ChipPAC, UTAC, ASE, Amkor and EEMS may, from time to time,
experience tester capacity constrain and production interruption due to, among other things,
technical problems occurring during the assembly, testing and wafer bumping processes. Because
STATS ChipPAC, UTAC, ASE, Amkor and EEMS 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. While we have, in the second half of 2006, qualified our
subcontractor, Amkor Technology Singapore Pte. Ltd.&#146;s, wafer bumping services in printing and
plating technology on our 90nm and 65nm process technology nodes, the availability of such wafer
bumping capabilities are limited and are still subject to qualification on our customers&#146; products.
If we are unable to gain access to such advanced packaging and wafer bumping services in a timely
manner, or if there is a shortage in the availability of such wafer bumping services, or if there
are delays in the qualification of such technology, or if there are disruptions in such services,
it would impact our ability to secure business for the more advanced technology nodes and 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>

<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 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 could be events that could delay
the project or
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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>
    <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>technological, capacity and other changes to our plans for new fabrication plants
necessitated by changes in
market conditions;</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>shortages and late delivery of building materials and facility equipment;</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>delays in the installation, commissioning and qualification of our facility equipment;</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>a long and intensive wet season that limits construction;</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>a shortage of foreign construction workers or a change in immigration laws
preventing such workers from
entering 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="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>
    <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>on-site construction problems such as industrial accidents, fires and structural collapse;</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>delays in securing the necessary governmental approvals and land lease;</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>delays arising from modifications in capacity expansion plans as a result of
uncertainty in economic conditions;
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"><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, and 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, 2006, 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: 6pt">&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 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 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. 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
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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, 2006, Temasek through its subsidiary Singapore Technologies
Semiconductors Pte Ltd, or ST Semiconductors, beneficially owned approximately 59.56% 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 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: 6pt"><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>

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

<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, Europe and Malaysia. 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>
    <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>changes in labor conditions;</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>longer payment cycles;</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>greater difficulty in collecting accounts receivable;</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>burdens and costs of compliance with a variety of foreign laws;</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>political and economic instability;</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>increases in duties and taxation;</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>imposition of restrictions on currency conversion or the transfer of funds;</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>limitations on imports or exports;</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>expropriation of private enterprises; 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"><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 and the
maintenance of foreign currency bank deposits, 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 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 2006. However, there can be no
assurances that we will not be a PFIC in 2007 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 2007 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,
</DIV>

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

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<DIV style="font-family: Helvetica,Arial,sans-serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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. may not be 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 take-over 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 (either on his
own or together with parties acting in concert with him) additional voting shares representing 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>

<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 be sold in the U.S. only 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, 2006, 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>
    <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>announcements of technological innovations;</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>changes in estimates of our performance or recommendations by financial analysts;</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>market conditions in the semiconductor industry and economy as a whole;</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>introduction of new services by us or our competitors;</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>changes in market valuations of other foundries and semiconductor companies;</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>announcements made by us or our competitors of significant acquisitions, strategic
partnerships or joint ventures;</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>problems in our advanced manufacturing facilities;</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>announcements made by our customers of their performance or financial results and of
their foundry alliances
and relationships;</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>market rumors or speculation about our business, operations, capital raising,
change in our controlling
shareholder or affairs;</TD>
</TR>


</TABLE>
</DIV>
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</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="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>
    <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>significant reduction or increase of shareholding by our controlling shareholder;</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>additions or departures of key personnel; 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"><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, 2006, there were 539 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$580.0&nbsp;billion, or $378.1&nbsp;billion (based on the noon buying rate as of December&nbsp;29, 2006 of
S$1.5338 to $1.00). For the year ended December&nbsp;31, 2006, the aggregate equity trading value on the
Singapore Exchange (including shares traded on the CLOB International trading system) was
approximately S$291.2&nbsp;billion or $189.9&nbsp;billion (based on the noon buying rate as of December&nbsp;29,
2006 of S$1.5338 to $1.00). The relatively small market capitalization of, and trading volume on,
the Main Board of the Singapore Exchange may cause the market 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>
    <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>voting instruction forms; 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"><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>

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

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

<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, statements relating 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>our business strategy;</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>our outlook for 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="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>
    <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>our plans to expand our production capacity for 90nm and smaller process geometry
technologies to meet the
anticipated needs of our customers;</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>our 2007 planned capital expenditures, research and
development expenditures, depreciation and amortization
and wafer capacity; 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"><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 demands from our major customers, excess inventory, life cycle, market
outlook and trends or specific products;</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>competition from other foundries;</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>unforeseen delays, interruptions, performance level and technology mix in our fabrication
facilities;</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>our progress on leading-edge products;</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>changes in capacity plans, changes in allocation and process technology mix, and the
unavailability of materials, equipment, manpower and expertise;</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>access to or delays in technological advances or our development of process technologies;</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>the successful implementation of our technology and supply alliances (including
our joint development
agreements with IBM, Infineon and Samsung);</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>the growth rate of fabless companies, the outsourcing strategy of IDMs and our
expectation that IDMs will utilize
foundry capacity more extensively;</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>demand and supply outlook in the semiconductor market and the economic conditions in
the United States as
well as globally;</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>the availability of financings and the terms thereof; 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"><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="107"></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="font-size: 10pt; margin-top: 6pt"><B>A. HISTORY AND DEVELOPMENT OF OUR COMPANY</B>
</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., 880N. McCarthy Blvd, Suite&nbsp;100, Milpitas,
California 95035, telephone &#043;1-408-941-1100.
</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">&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; C. 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 2004, 2005 and 2006 were comprised
mainly of the purchase of semiconductor equipment for the equipping of our fabs. Our capital
expenditures amounted to $686.3&nbsp;million in 2004, $628.1&nbsp;million in 2005 and $554.3&nbsp;million in 2006.
We expect our total cash outflow for capital expenditures in 2007 to be approximately $800&nbsp;million,
including $65&nbsp;million of capital expenditures in 2006 for our
90nm and below technologies which are expected to be paid in 2007.
Capital expenditures planned for 2007 are primarily for increasing 65nm and below capacity. 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;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the year 2006, 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 &#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: 12pt"><B>B. BUSINESS OVERVIEW</B>
</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 only 300-mm facility.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have service operations in ten locations and in nine 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;The semiconductor industry was historically 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 focus on design and marketing and utilize
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 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 can range from $3&nbsp;billion to $5&nbsp;billion, which is approximately six
times to ten times higher than the cost a decade ago. Today, only large and well-capitalized or
funded companies can support the substantial technology and investment
</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">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 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 providers that meet their manufacturing technology requirements. These foundry
providers 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). To attract customers,
semiconductor foundries are increasingly offering 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 are expected to provide a full range of semiconductor process
technologies. A semiconductor foundry will struggle economically if it relies 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 expected 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 providers 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 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 customers the flexibility to adapt quickly to new market opportunities.
</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;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 processes 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>

<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. In June&nbsp;2006, together
with IBM, Samsung and Infineon, we extended the Design Enablement Program to include 45nm bulk CMOS
process. In December&nbsp;2006, we extended our Design Enablement Program with IBM to include 32nm bulk
CMOS logic process and to further define our enablement joint development activities for 45nm bulk
CMOS logic process. Many EDA and intellectual property companies have supported and developed
solutions on Chartered&#146;s processes. 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;In October&nbsp;2006, we announced our strategic investment in Gateway Silicon Inc, or GSI, a
Taiwan-based company specializing in application specific integrated circuit and SOC design
services and intellectual property development and integration. We plan to collaborate with GSI in
developing and optimizing design services while leveraging GSI&#146;s expertise to enhance our portfolio
of value-added solutions, or VAS. The VAS offering is based on our proven CMOS process technologies
supported with cost-effective wafer fab production capacity. It provides our customers with
competitive solutions to develop their products timely in markets such as wireless, consumer, Radio
Frequency Identification, or RFID, security and industrial control systems market.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our supply chain automation started in April&nbsp;2004 when we launched our e-Business initiatives
with our customers. Since then, we have continued to enhance our automation initiatives to increase
the ability and ease of our customers to transact business online with us. In parallel, we have
also implemented and will continue to augment our automation capabilities with our subcontractors
and suppliers with the goal of providing increased seamless connectivity across the entire supply
chain.
</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 which is focused on improving
growth and profitability are:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Leverage improved technology position and improve revenue and margins</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The strengthening of our technology roadmap resulting from our joint development
agreements with IBM and our other technology partners and the expansion of our third party network
of pre-qualified EDA, intellectual property and design services solutions allows us to target a
leading-edge blue-chip customer base and further diversify our customer base. In addition, we are
also able to start offering leading-edge solutions to customers at a similar time frame as our
leading competitors and are therefore able to target more &#147;first source&#148; business than we were able
to in the past. We expect our improved technology position to improve our revenue growth and
margins.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Align manufacturing capacity with technology position, optimize capacity utilization and
improve cost structure</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We aim to optimize our capacity primarily by expanding capability for leading-edge
technologies, to align with our
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">technology position and maximize capacity utilization at mature technology nodes. To
maximize productivity and resource utilization across fabs and increase flexibility in
manufacturing, we adopt a &#147;borderless fab&#148; approach within our campus. This 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.
</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 new or additional applications. We
emphasize leveraging our capabilities in mixed-signal and RF CMOS processes with complete solutions
for our niche technologies for products such as smart cards, RFID, tags, display drivers and power
management for mobile products. Using mature technologies in older fabs will allow the company to
generate margins and cash flows to support the investment in the advanced technologies.
</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 90nm and smaller process geometry
technologies to meet the anticipated needs of our customers. We expect our leading-edge technology
capacity in 2007 to increase by over 80% compared to 2006 and to represent approximately 22% of our
total expected capacity in December&nbsp;2007. We believe that increasing our foundry capacity in 90nm
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 complete product support for customers</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 product support activities for customers 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 technology
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 2007 to 2010 and
65nm, 45nm and 32nm logic processes, including their generic, low power and high speed variants.
The roadmaps also cover 90nm and 65nm mixed signal and RF modules, and 0.22um 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 process are directed to the 45nm technology node.
Under our March&nbsp;2004 joint development agreement with IBM, Infineon and Samsung, we, together with
our technology partners, have developed 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 and in December&nbsp;2006, we expanded our joint development efforts with IBM to include 32nm
bulk CMOS logic process technology and to further define the terms of our joint development
activities for 45nm bulk CMOS logic process. We expect our reciprocal
</DIV>

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

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<DIV style="font-family: Helvetica,Arial,sans-serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">manufacturing arrangement with IBM 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
and other technology partners 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>

<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 EDA vendors and intellectual
property companies&#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
</DIV>

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

<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>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, 2006, 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. Fab 1, which was wholly-owned by our company, ceased operations at the
end of March&nbsp;2004 and some of its operations were moved to Fab 2. We do not have a Fab 4.
</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;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: 12pt"><B>Quarterly Shipment and Capacity</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="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; font-weight: bold" valign="bottom">
    <TD nowrap align="left">Data Including</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">1Q</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">2Q</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">3Q</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">4Q</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">1Q</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">2Q</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">3Q</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">4Q</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt; font-weight: bold" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Chartered&#146;s Share of SMP</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</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">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>
    <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">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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">349.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">355.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">337.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">322.9</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">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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">427.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">436.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">458.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">461.7</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">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>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">82</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">82</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">70</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->26<!-- /Folio -->
</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="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; font-weight: bold" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">1Q</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">2Q</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">3Q</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">4Q</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">1Q</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">2Q</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">3Q</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">4Q</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt; font-weight: bold" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Capacity by Fab</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</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">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>
    <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">Fab2</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">142.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">144.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">145.7</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">Fab3</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fab5<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fab6</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">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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">114.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">117.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">117.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fab7<SUP style="font-size: 85%; vertical-align: text-top">(2)</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">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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">93.0</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" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">427.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">436.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">458.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">461.7</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>
    <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">
<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 align="left" colspan="3"><b>Notes:</b></TD>
</TR>

</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(1)&nbsp;49% of total capacity, based on Chartered&#146;s equity ownership.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(2)&nbsp;Fab 7, our only 300-mm wafer facility, started commercial shipments in June&nbsp;2005.
</DIV>


<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 2,000,000 wafers (eight-inch equivalent)
for the full year 2007, compared to approximately 1,800,000 wafers (eight-inch equivalent) for the
full year 2006. We plan to increase our leading-edge capacity (90nm and smaller process geometry
technologies) in 2007 by over 80% as compared to 2006 and to represent approximately 22% of our
total expected wafer capacity in December&nbsp;2007. The following table reflects our wafer capacity
figures as of December&nbsp;31, 2006 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: 8pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="17%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt; font-weight: bold" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Fab 2</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Fab 3</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Fab 5(SMP)<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Fab 6(CSP)<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Fab 7</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="top">1995</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">1997</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">1999</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">2000</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">2005</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="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</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 nowrap><DIV style="margin-left:15px; text-indent:-15px">Estimated full
capacity<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">50,000 wafers per month</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">25,000 wafers per month</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">24,000 wafers per month</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">39,000 wafers per month</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>45,000 wafers per month<SUP style="font-size: 85%; vertical-align: text-top">(3)</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="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</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" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Wafer size</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Eight-inch</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Eight-inch</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Eight-inch</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Eight-inch</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Twelve-inch</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="top">(200-mm)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(200-mm)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(200-mm)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(200-mm)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(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="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</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><DIV style="margin-left:15px; text-indent:-15px">Process
technologies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">0.6 to 0.3um<SUP style="font-size: 85%; vertical-align: text-top">(4)</sup></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">0.35 to</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">0.25 to</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">0.25 to</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">0.13um and</TD>
</TR>
<TR valign="bottom">
    <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="left" valign="top">0.18um<SUP style="font-size: 85%; vertical-align: text-top">(4)</sup></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">0.13um<SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">0.11um<SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">smaller process</TD>
</TR>
<TR valign="bottom">
    <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="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">geometry</TD>
</TR>
<TR valign="bottom">
    <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="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">technologies including</TD>
</TR>
<TR valign="bottom">
    <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="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">90nm, 65nm and 45nm</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="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</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" style="background: #cceeff">
    <TD nowrap><DIV style="margin-left:15px; text-indent:-15px">Manufacturing
technologies<SUP style="font-size: 85%; vertical-align: text-top">(5)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Digital; Mixed</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Digital; Mixed</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Digital; RF CMOS;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">High performance,</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">High performance,</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="top" nowrap>Signal; RF CMOS; SRAM;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Signal; RF</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>BiCMOS; Mixed Signal;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>high-density CMOS; high</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>high-density CMOS;</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="top" nowrap>Flash Memory; HVCMOS;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>CMOS; SRAM</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">eSRAM</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>density SRAM Mixed</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Mixed Signal; SOI</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="top">EEPROM; DMOS; BiCMOS,</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Signal; RF CMOS</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">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">BiPolar; OTP;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</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" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">PowerMos</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</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><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="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</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><DIV style="margin-left:15px; text-indent:-15px">Clean room</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">109,000 sq.ft.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">81,000 sq.ft.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">96,540 sq. ft.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">126,000 sq. ft.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">232,000 sq. ft.</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Class-1 SMIF<SUP style="font-size: 85%; vertical-align: text-top">(6)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Class-1 SMIF<SUP style="font-size: 85%; vertical-align: text-top">(6)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Class-1 SMIF<SUP style="font-size: 85%; vertical-align: text-top">(6)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Class-1 SMIF<SUP style="font-size: 85%; vertical-align: text-top">(6)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Class-1 SMIF<SUP style="font-size: 85%; vertical-align: text-top">(6)</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 align="left" colspan="3"><b>Notes:</b></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="1%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>With respect to Fab 5 and Fab 6, the information includes capacity of our strategic partners.</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">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Estimated full capacity is the production output capability based on our current and
anticipated process technology mix, which may</TD>
</TR>

</TABLE>
</DIV>

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

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


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">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.
</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">(3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Equivalent to 101,250 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 45,000 300-mm
wafers per month, and this is expected to take a number of years and will be paced by customer
demand and industry conditions.</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">(4)</TD>
    <TD width="1%">&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>
    <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">(5)</TD>
    <TD width="1%">&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. SOI refers to Silicon-On-lnsulator. PowerMos refers to discrete metal oxide silicon transistor to control high power.</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">(6)</TD>
    <TD width="1%">&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>

<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="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; font-weight: bold" 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="11" style="border-bottom: 1px solid #000000">Year Ended December 31,</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt; font-weight: bold" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2002</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
</TR>
<TR style="font-size: 8pt; font-weight: bold" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="19">(in thousands)</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="right">445</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">722</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,035</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,052</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,365</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 9001:2000 standards. ISO 9001:2000 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 have also achieved ISO/TS&nbsp;16949:2002 (Technical Specification) certification since 2005 and have
met the yearly surveillance audit requirements. 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 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&nbsp;9001:2000 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 recognition of our manufacturing excellence and quality standards.
</DIV>


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

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


<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
June&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 to include 45nm bulk CMOS process technology. In December&nbsp;2006, we further extended our
cooperation with IBM with a new agreement for the joint development of 32nm bulk CMOS logic process
as well as for the expansion of our 45nm bulk CMOS logic process joint development activities. Our
joint development with IBM now spans four separate generations of technologies from 90nm, 65nm,
45nm, to 32nm. With IBM, we have jointly completed the development of
90nm and 65nm bulk CMOS process. The
development of 45nm bulk CMOS logic process and 32nm bulk CMOS logic process is currently being and
will be carried out at IBM&#146;s facilities at East Fishkill, New York. Each participating company to a
particular joint development activity with IBM will have the ability to implement the jointly
developed processes in its manufacturing facilities. Accordingly, Chartered has the ability to
implement the jointly developed 90nm and 65nm bulk CMOS process as well as the 45nm and 32nm bulk CMOS logic
process, when developed, in our manufacturing facility, Fab 7.
</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. The capacity
that we had reserved in IBM&#146;s 300-mm chip manufacturing facility in East Fishkill, New York, was
intended to support our customers&#146; capacity requirements while Fab 7 was not in the production
stage. As our Fab 7 has commenced production and we intend to fully equip Fab 7 to a capacity of
45,000 300-mm wafers per month, we believe that we will have sufficient capacity in Fab 7 to
support our customers&#146; capacity requirements for 300-mm wafers. Accordingly, in March&nbsp;2006, IBM and
our company reached an agreement pursuant to which IBM refunded the deposit that we had placed with
IBM for the purposes of reserving manufacturing capacity at IBM&#146;s facility at East Fishkill, New
York. As a result of the refund of deposit from IBM in April&nbsp;2006, IBM is no longer required to
reserve any capacity for us.
</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
and in June&nbsp;2006, the Design Enablement Program was further extended to include 45nm 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 EDA vendors and intellectual property
companies 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. In December&nbsp;2006, Chartered and
IBM agreed to expand the joint development of the design kits for 32nm bulk CMOS logic process and
to further expand the enablement activities for 45nm bulk CMOS logic process. 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 and our other technology partners.
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 and our other technology partners as well as
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 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, as well as its rights and obligations in
relation to, 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. Currently, Chartered, EDB Investments, Avago
</DIV>


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

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



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">and Singapex hold 51%, 26.5%, 15%, and 7.5% equity interests 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;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. The joint venture parties had previously agreed with Agilent
Technologies Europe B.V. in 2001 that the two directors appointed by Agilent Technologies Europe
B.V. would remain on CSP&#146;s Board of Directors even after it reduced its ownership in CSP to 15%,
except that they would not have voting rights. Avago is subject to the same arrangement and may
elect two directors as long as it owns at least 15% of CSP, although its directors have no voting
rights. 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 Microelectronics Pte. Ltd., now known as Agere Systems Singapore, relating to the
joint venture ownership of Fab 5. Agere Systems Inc. announced in December&nbsp;2006 that it has entered
into an agreement to merge with LSI Logic Corporation under the LSI Logic name. On February&nbsp;13,
2007, pursuant to our joint venture agreement with Agere Systems Singapore relating to SMP, we
received a written notice from Agere Systems Singapore that the merger of Agere Systems Inc. and
LSI logic Corporation, which is expected to close in the second quarter of 2007, will result in a
change of control of Agere Systems Singapore. Pursuant to the joint venture agreement, if we object
to such change of control, we may, within 30&nbsp;days after the notice from Agere Systems Singapore,
give notice in writing to Agere Systems Singapore to require Agere Systems Singapore to sell to us
all of SMP shares held by Agere Systems Singapore at fair market value, as defined in the joint
venture agreement. We are still evaluating our options under the joint venture agreement.
</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. 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
</DIV>


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

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



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


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We and Agere Systems Singapore contributed 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;We and Agere Systems Singapore have signed an assured supply and demand agreement with SMP.
The agreement was intended to ensure that all of the fixed costs of SMP are recovered by allocating
all of its wafer capacity to our company and Agere Systems Singapore in accordance with the
respective parties&#146; equity interest in SMP and each party would bear the fixed costs attributable
to its allocated capacity. In September&nbsp;2004, we and Agere Systems Singapore entered into an
agreement pursuant to which both parties agreed to annually reimburse any losses suffered by SMP
that are attributable to the respective parties. For the year ended December&nbsp;31, 2006, SMP did not
suffer any losses that were attributable to our company and accordingly no reimbursements were
payable by our company to SMP. There were also no such reimbursements payable to SMP by our company
in 2005 and 2004. To the extent that the number of wafers started for us are less than our
allocated capacity in the future, there is no assurance that there will be no reimbursements
payable to SMP by our company in respect of unrecovered fixed costs of SMP.
</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 located on the same premises as the rest of our
manufacturing facilities in Singapore. 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;The Supplemental Agreement to the Joint Venture Agreement entered into in September&nbsp;2004 also
provided that SMP could pay dividends out of the profits of the joint venture determined on a year
to year basis rather than on a cumulative basis as was the case previously. We received dividends
of $29.5&nbsp;million and $38.2&nbsp;million from SMP for the years ended December&nbsp;31, 2005 and December&nbsp;31,
2006, respectively. We did not receive any 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;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)&nbsp;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 October&nbsp;2005, SMP reorganized its paid-up share capital and authorized a return of a
portion to its shareholders in the form of cash, our entitlement being $20.4&nbsp;million, in a capital
reduction sanctioned by the High Court of Singapore. In October&nbsp;2006, the board of directors of SMP
agreed to further reduce the issued and paid-up capital of SMP from S$141,515,511 divided into
69,343,426 &#147;A&#148; ordinary shares and 72,172,085 &#147;B&#148; ordinary shares to S$74,159,103 divided into
69,343,426 &#147;A&#148; ordinary shares and 72,172,085 &#147;B&#148; ordinary shares. This second capital reduction
for SMP was approved by the High Court of Singapore on November&nbsp;9, 2006, and made effective
pursuant to the lodgment of the Order of Court with the Accounting and Corporate Regulatory
Authority of Singapore on November&nbsp;13, 2006. Our entitlement arising from the second return of
capital from SMP was $19.1&nbsp;million. In 2006, we received $16.9&nbsp;million
</DIV>


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

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



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">arising from both the first and the second returns of capital from SMP. The balance of our
entitlement from the second return of capital from SMP will be paid to us as and when payment is
declared by the SMP board of directors.
</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 150 different active customers in 2006. Our top
five customers in 2006 collectively accounted for approximately 60% of our total net revenue in
2006, compared with approximately 56% in the previous year. Our top three customers for 2006, in
order of revenue contribution, were Broadcom, IBM and Advanced Micro Devices, and each contributed
more than 10% of our total net revenue in 2006 compared with 2005 where Broadcom and IBM each
exceeded 10% of our total net 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 sectors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth our customers who have each exceeded 10% of our total net
revenue in 2006 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="5%">&nbsp;</TD>
    <TD width="65%">&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">
    <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">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Advanced Micro Devices
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Central processing units (&#147;CPUs&#148;) for computers.</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="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>
</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>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</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">68</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">75</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">77</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">9</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <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">1</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">3</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">19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Japan</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">3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">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 valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; 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">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="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>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>2006</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 align="right">$</TD>
    <TD align="right">631,150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">774,950</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,089,068</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">85,125</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91,844</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">129,619</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">3,392</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,995</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,716</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">179,206</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">123,449</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">134,261</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Japan</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,861</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 align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&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 align="right">$</TD>
    <TD align="right">932,131</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,032,734</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$1,414,525</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 align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&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;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; Shanghai, China; and Seoul, Korea.
</DIV>

<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: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Please refer to &#147;Item&nbsp;5. Operating and Financial Review and Prospects &#151; Results of Operations&#148;
for a breakdown of our revenues by market sector and by technology.
</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"><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 business. 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 process
and pre-contract customer design validation activities. 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: 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 2004, 2005 and 2006, our research and
development expenses, including our share of expenses related to the IBM joint-development
agreement, were $118.3&nbsp;million and $122.1&nbsp;million and $152.8&nbsp;million, respectively. Those expenses
represented 12.7%, 11.8% and 10.8% of our net revenue for the respective periods. As of December
31, 2005, we employed 370 professionals in our research and development department, 62 of whom have
PhDs. As of December&nbsp;31, 2006, we employed 508 professionals in our research and development
department, 91 of whom have PhDs. The increase in headcount in our research and development
department was primarily to enhance Chartered&#146;s capability in design services and customized
technology developments to expand our customer base.
</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 and beyond. 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
June&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.
</DIV>

<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 and in December&nbsp;2006, we further expanded our joint development efforts with IBM
to include 32nm bulk CMOS logic process technology and to further define the terms of our joint
development activities for 45nm bulk CMOS logic process technology. We believe the joint
development efforts with our technology partners 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 and other technology partners 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 grants from various agencies of the Government of
Singapore. The amounts under these grants relate to a portion of depreciation expenses arising
from our research and development related capital expenditures
and the training and staffing costs associated with some of our process technology development
programs. In 2004, 2005 and 2006, $19.0&nbsp;million, $7.5&nbsp;million and $1.9&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 and achievement of program milestones. The main condition attached to the grants is the completion of
the project to which the grant relates.
</DIV>


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




<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><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 equipment, 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. In addition, we also depend on the original equipment
manufacturers and other equipment suppliers for equipment spare parts to maintain and keep our
equipment in operation. In the event of disruption of supply or shortage of equipment spare parts,
we may need to qualify alternative sources or equipment spare parts which will take time and could
lead to a delay in our production.
</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.
The prices of semiconductor wafers, bulk gases and chemicals tend to be volatile. 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 raw materials on a purchase order basis. We generally do not
have long-term contracts with our vendors. For those materials that are wholly procured from one
source, we 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, 2006, we have filed in our company&#146;s history an aggregate of 2,252 patent
applications worldwide, (1,078 of which had been filed in the U.S.) and held an aggregate of 1,502
issued patents worldwide (804 of which are issued U.S. patents). Of the 1,078 aggregate
applications filed in the U.S., 804 had been issued as of December&nbsp;31, 2006 and 14 had been allowed
but not issued. Those 14 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 2,252 patent applications have been filed as of December&nbsp;31, 2006, these include not
only the patent applications filed in the 12&nbsp;months ended December&nbsp;31, 2006 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 2005 and 2006 were 146 and 129, respectively, and the
number of patents issued to us in 2005 and 2006 were 249 (of which 47 were issued U.S. patents) and
143 (of which 61 were issued U.S. patents), respectively.
</DIV>

<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 2025. All of the allowed and
pending patents will expire after 2026. 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 will 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,
</DIV>


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



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 only 300-mm
facility, Fab 7, which started commercial shipments in June&nbsp;2005, is expected to be certified in
2007. 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 business interruption losses arising from fire, natural disasters and certain other
risks up to their respective policy limits. We also maintain public liability insurance for claims
from third parties for bodily injury and property damage arising out of our business operations. In
addition, we also maintain product liability insurance for damages sustained by others for bodily
injury or property damage caused by our product(s). Some of our insurance coverage for SMP is under
Agere Systems, Inc.&#146;s global group insurance policies. The policies above are subject to terms,
conditions and exclusions as defined in the respective policies, which are customary in the
insurance market.
</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="font-size: 10pt; margin-top: 12pt"><B>C. ORGANIZATIONAL STRUCTURE</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2006, 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>


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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;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="64%">&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="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>Proportion of</B></TD>
    <TD>&nbsp;</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="2"><B>Ownership</B></TD>
    <TD>&nbsp;</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="2" style="border-bottom: 1px solid #000000"><B>Interest</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">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" nowrap>March 1997</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">51</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Chartered Semiconductor Manufacturing Incorporated</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">U.S.</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>June 1991</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100</TD>
    <TD nowrap>%</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" nowrap>October 2000</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: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" nowrap>August 2000</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Chartered Semiconductor Europe Limited</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>England and Wales</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>March 2001</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>D. PROPERTY, PLANT AND EQUIPMENT</B>
</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. We
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. We sold and transferred our 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;4.14 and Exhibit
4.15.2&#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 19. Exhibits &#151; Exhibit
4.16.1 and Exhibit&nbsp;4.16.2&#148;). In January&nbsp;2007, we entered into a supplemental agreement with Terra
to amend the terms of the rental payments (see &#147;Item&nbsp;19. Exhibits &#151; Exhibit&nbsp;4.16.3&#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;4.17.2 and Exhibit&nbsp;4.17.3&#148;).
</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
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;4.18.1 and Exhibit&nbsp;4.18.3&#148;). In
January&nbsp;2007, we entered into a supplemental agreement with Terra to amend the terms of the rental
payments (see &#147;Item&nbsp;19. Exhibits &#151; Exhibit&nbsp;4.18.4&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have in 2006 leased an additional plot of land from Terra which in turn leased the land
from JTC. The lease runs until 2030. We intend to use this additional plot of land primarily for
ancillary purposes to support our company&#146;s business operations. Our company has paid in full all
rental payments due for this lease (see &#147;Item&nbsp;19. Exhibits &#151; Exhibit&nbsp;4.19.1, Exhibit&nbsp;4.19.2 and
Exhibit&nbsp;4.19.3&#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>



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


<DIV align="left">
<A name="108"></A>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><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. The following also includes a discussion of our share of SMP revenue.
SMP meets certain &#147;significance&#148; tests pursuant to Rule&nbsp;3-09 of Regulation&nbsp;S-X. Accordingly,
separate financial statements of SMP are required to be filed by us and we intend to file an
amendment to this annual report on </I><I>Form 20-F</I><I> to include the separate financial statements of SMP as
soon as available but no later than June&nbsp;30, 2007. Further, 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&nbsp;3. Key Information </I>&#151; <I>D. Risk Factors&#148; above.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>EXECUTIVE 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 and 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 &#151; Fabs 2, 3, 5, 6 and 7, all of
which are located in Singapore. We have service operations in ten locations in nine countries in
North America, Europe and Asia. Our principal customers are located in the U.S., Taiwan, Japan and
Europe. We derive revenues 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;As a dedicated foundry, our financial performance largely depends on a number of factors
including timeliness in introducing technology and manufacturing solutions, ability to enter into
arrangements with diverse customers for high volume production of our wafers, utilization rate of
our capacity, and external factors such as pricing and general semiconductor market conditions and
industry cycles.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To enhance our position in technology and manufacturing solutions in the market place, we
collaborate with other companies in the industry to develop the required solutions including
process and manufacturing technologies, as well as electronic design automation and intellectual
property enablement. This collaborative model allows sharing of cost and risks while accelerating
our progress. A critical competence required in the foundry business is the ability to manufacture
wafers efficiently for a diverse number of customers for a diverse number of products and devices.
We strive to achieve this objective in our operations and serve multiple customers in the consumer,
computer and communications sectors of the market. However, we do not set limits for our exposure
in any specific sector mentioned above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Customers expect top-tier foundries to continuously invest in leading edge capacity to serve
their needs in a timely manner. The equipment used in a foundry&#146;s manufacturing facilities are
complex and sophisticated and require a high level of investment. We make ongoing capital
expenditure decisions based on an analysis of industry and market conditions, and opportunities and
expected demand from existing and prospective customers. Due to the high level of investments made
in equipment, a significant amount of our cost is fixed in nature in the form of depreciation.
Therefore, maintaining a high level of utilization of our manufacturing capacity is critical to
generating healthy financial performance.
</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"><B>Cyclicality of the Semiconductor industry</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, the worldwide semiconductor industry, in terms of
revenue, remained at similar levels between 2001 and 2002, and then grew by approximately 18%, 28%,
7% and 9% sequentially in 2003, 2004, 2005 and 2006, 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>


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




<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Substantial Capital Expenditures</B>
</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 strategy to position ourselves to serve market needs during the
market&#146;s growth phase. We invested $220.8&nbsp;million in capital expenditures in 2003, focused
primarily on 0.13um technologies. In 2004, 2005 and 2006, we invested $686.3&nbsp;million, $628.1
million and $554.3&nbsp;million, respectively, in capital expenditures. Capital expenditures in 2004
were primarily for our 0.13um and below technologies, while capital expenditures in 2005 and 2006
were primarily for our 90nm and below technologies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Pricing, Change in Product Mix and Technology Migration</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The pricing 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 typically 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. The prices for wafers of a given level of technology
and device complexity will generally decline over the product life cycle and foundries must
continue to migrate to increasingly sophisticated technologies or introduce value added solutions
to sustain the same level of profitability. Over the period from 2004 to 2006, our ASP per wafer
(eight-inch equivalent) increased by 2.4% from $1,012 in 2004 to $1,036 in 2005 and then increased
sequentially by 7.3% to $1,112 in 2006. The increase in our ASP was due primarily to a higher mix
of advanced technologies (we define our advanced technologies in 2006
as 0.13um and smaller
process geometry technologies) over the period which commanded higher selling prices. There is no
assurance that we will continue to see increases in ASP or that it will not decrease in the future.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Capacity Utilization Rates (based on total shipments and total capacity, both of which include
our share of SMP)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Largely as a result of the muted semiconductor industry growth in 2002 following the
severe downturn which started in 2001, our average utilization rate in 2002 was 37%, resulting in
significant net losses. As the semiconductor industry resumed growth, 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. 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. This, offset by the improving market
conditions and the ramp up of 90nm shipments in the second half of 2005, resulted in an average
capacity utilization of 70% for the year 2005. Our average capacity utilization increased from 70%
in 2005 to 77% in 2006, due primarily to higher utilization of 82% for both the first and second
quarters of 2006. During the second half of 2006 companies in the supply chain, including our
customers, experienced excess inventory and seasonally weaker than usual market conditions. The
inventory correction and weaker market impacted our utilization rate in the third and fourth
quarters of 2006 resulting in our utilization rates declining in those quarters to 74% and 70%,
respectively.
</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 2002 to 2006 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="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>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"><B>(2)</B></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"><B>(3)</B></SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Average capacity utilization <SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">37</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">58</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">80</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">70</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">77</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>


<DIV align="left" style="font-size: 10pt; margin-top: 0pt"><B>Notes:</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>Based on total shipments and total capacity, both of which include our share of SMP.</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">(2)</TD>
    <TD width="1%">&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>
    <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">(3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Fab 7 started commercial shipment in June&nbsp;2005.</TD>
</TR>

</TABLE>
</DIV>

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


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our revenues in 2006 grew 37% compared to 2005, significantly outpacing the worldwide
semiconductor industry growth of approximately 9%. We achieved this growth even though companies in
the supply chain, including our customers, experienced excess inventory and seasonally weaker than
usual market conditions during the second half of 2006. Our revenue growth was primarily driven by
the ramp up of our leading-edge 90nm revenue. Revenue from our
</DIV>


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



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">0.13um and smaller process geometry technologies, including 90nm, represented 57% of our total net
revenue and revenue from 90nm technologies alone contributed 29% of our total net revenue for 2006.
With our expanding business and corresponding revenue growth, we achieved a net income of $66.8&nbsp;million for 2006. We also achieved a lower breakeven utilization rate of around 70% in the fourth
quarter of 2006 compared to approximately 75% in the same period in 2005.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For 2006, capacity for our advanced technologies increased by approximately 66% while total
capacity increased by approximately 19% to 1.8&nbsp;million eight-inch equivalent wafers from 1.5
million eight-inch equivalent wafers in 2005. In 2006, we invested
$554.3&nbsp;million in capital
expenditures primarily for our 90nm and below technologies and incurred $152.8&nbsp;million research and
development expenses primarily for the 65nm and 45nm technology nodes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In March&nbsp;2006, we entered into a call option transaction, or 2006 Option, with Goldman Sachs
International, or GS, to replace the call option transaction that we had previously entered into
with GS in August&nbsp;2004 which expired on April&nbsp;2,
2006. Under the 2006 Option, GS may purchase up to 214.8&nbsp;million of our ordinary shares. If the
2006 Option is
exercised in full at the price of S$2.15 per share and physically settled, we would receive
approximately $300&nbsp;million
based on an exchange rate of $1.00 = S$1.54 that could be used for repayment of debt and general
corporate purposes.
See the &#147;&#151; Liquidity and Capital Resources &#151; Current and expected liquidity&#148; section below for more
details.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2006, we issued $300&nbsp;million principal amount of 6.25% senior notes due 2013 at a
price of 99.053% of the principal amount through a public offering. Proceeds from the offering were
used to repay $300&nbsp;million principal amount of existing bank loans.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>2007 OUTLOOK AND PLANS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The discussion under &#147;2007 Outlook and Plans&#148; contains forward-looking statements that involve
risks and uncertainties. Our actual results may differ significantly from those projected in these
forward-looking statements. Factors that might cause future results to differ significantly from
those projected in these 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&nbsp;3. Key Information &#151; D. Risk Factors&#148; above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>2007 Outlook</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The overall macro economic conditions look favorable as we enter 2007. According to the SIA,
the worldwide semiconductor industry is expected to grow by approximately 10% in 2007 compared to
2006, in terms of revenue, with generally healthy economic conditions in all of the world&#146;s major
semiconductor markets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>2007 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 2.0&nbsp;million wafers (eight-inch
equivalent) for the full year
2007, compared to approximately 1.8&nbsp;million wafers (eight-inch equivalent) for the full year 2006.
We plan to increase our
capacity for 90nm and smaller process geometry technologies in 2007 by over 80% as compared to 2006
and to
represent approximately 22% of our total expected wafer capacity in December&nbsp;2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>2007
Planned Capital Expenditures</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our total cash outflow for capital expenditures in 2007 is expected to be approximately $800
million, compared to $554&nbsp;million in 2006. The $800&nbsp;million capital expenditure figure includes $65
million of capital expenditures in 2006 for our 90nm and below
technologies which are expected to be paid in 2007. Capital expenditures
planned for 2007 are primarily for increasing 65nm and below capacity. With the above capital
expenditures, Fab 7 is expected to have equipment that are installed or available for installation
equivalent to a capacity of 25,000 300-mm wafers per month by December&nbsp;2007. We expect depreciation
and amortization for the year 2007 to be approximately $550&nbsp;million, compared to $504&nbsp;million in
2006.
</DIV>


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




<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>2007 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 $180&nbsp;million for research and development in 2007,
compared to $153&nbsp;million in 2006. The increased investment is intended to fund the development and
qualification of 45nm process technology on an accelerated schedule, including costs associated
with capital investment in leading-edge semiconductor tools.
</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 and related disclosures in the
accompanying notes in accordance with U.S. GAAP requires management to make judgments, 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 we believe to be reasonable under the present
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 twenty 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 salvage values. We amortize technology licenses using the straight-line
method over the shorter of the license period or the estimated useful life of the license, which on
weighted average is approximately six years. These lives represent our estimate of the periods that
we expect to derive economic benefits from the assets. In estimating these useful lives and 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, the significant factors
we consider include 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<I>, </I>our only 300-mm wafer fabrication facility, during the
second quarter of 2005, we have estimated salvage values that are higher than our historical
estimates for equipment when our other fabs began service. This is due primarily to the equipment
in Fab 7 being put into use at the early stages of the 90nm and below process technology life
cycles. 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 using more mature process
technologies where the equipment was generally put into use later in the process geometry
technology life cycle.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the third quarter of 2006, we revised the estimated salvage values of some of our 200-mm
equipment and machinery to reflect higher expected salvage values than we have historically
estimated. These equipment and machinery primarily support our advanced technologies where we are
observing higher salvage values in the equipment resale market. We believe a significant driver of
this is that we initially placed this equipment into use earlier in the process geometry technology
life cycle than we have done for other 200-mm equipment. This change will result in lower
depreciation over the remaining lives of the affected eight-inch process equipment and machinery.
The impact of this change was an improvement to our net income by $11.3
million in 2006, resulting in an improvement of both our basic and diluted net earnings per ADS by
$0.04 each in 2006. Basic and diluted net earnings per ordinary share in 2006 were $0.02 both
before and after the impact of this change.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 review long-lived 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 are required to make judgments and assumptions in identifying those
events or changes in circumstances that may trigger impairment. Some of the factors we consider
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="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A significant decrease in the market price of a long-lived asset group;<BR></TD>
</TR>

</TABLE>
</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="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A significant adverse change in the extent or manner in which a long-lived asset
group is being used or in its physical condition;</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>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A significant adverse change in legal factors or in the business climate that could
affect the value of a long-lived asset group, including an adverse action or assessment
by a regulator;</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>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>An accumulation of costs significantly in excess of the amount originally expected
for the acquisition or construction of a long-lived asset group;</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>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A current-period operating or cash flow loss combined with a history of operating or
cash flow losses or a projection or forecast that demonstrates continuing losses
associated with the use of a long-lived asset group; and</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>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A current expectation that, more likely than not, a long-lived asset group will be sold
or otherwise disposed of significantly before the end of its previously estimated useful
life.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We perform impairment tests for groups of long-lived assets at the lowest level of
identifiable independent cash flows. In determining the appropriate asset groupings we make
subjective judgments about 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 equipment. We have identified our
individual fabs to be the lowest level of identifiable independent cash flows for purposes of
performing impairment tests.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The determination of recoverability for long-lived assets held for use 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 which require
a considerable amount of judgment, If the sum of the undiscounted cash flows (excluding interest)
is less than the carrying value of the asset group, an impairment charge is recognized for the
amount by which the carrying value of the asset group 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;We also routinely review our long-lived assets that are held for sale for impairment in
comparison to their fair values less costs to sell. In calculating an impairment charge for assets
held for sale, significant judgment is required in estimating fair values and costs to sell.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2004 and 2005, we recorded impairment charges of $1.0&nbsp;million and $3.9&nbsp;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. We did not record an impairment
charge in 2006 on our long-lived assets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;However, if we had made different judgments and assumptions in making our estimates of future
cash flows of our assets held for use or fair values and costs to sell for 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 inventory carrying values are higher than 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. Some of the significant
</DIV>


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



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">factors we consider in estimating the net realizable value of our inventories include the
likelihood of changes in market and customer demand and expected changes in market prices for our
inventories.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Judgments, estimates and assumptions 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. While our estimates require us to make significant
judgments and assumptions about the expected net realizable values of our inventories, we believe
our estimates are reasonable as historically sales of inventories for which the actual net
realizable values were higher than estimated have not significantly impacted our gross profit.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2005 and 2006, we reduced carrying values of inventory by $30.1&nbsp;million and
$15.8&nbsp;million, respectively, to write down certain inventories, primarily work-in-progress, to
estimated net realizable value. These write-downs were recognized in
cost of revenue. Subsequent to such write-downs we sell or dispose of these inventories. In each of 2004, 2005 and 2006, we sold
some of our inventories that we had written down to their estimated net realizable value in the
previous year at prices which were higher than our previous estimate of the net realizable value.
Such sales improved our gross profit by approximately $1.4&nbsp;million, $0.7&nbsp;million and $1.8&nbsp;million
for 2004, 2005 and 2006, respectively.
</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 derive revenue primarily from fabricating semiconductor wafers and, to a lesser
extent, from providing associated subcontracted assembly and test services as well as
pre-fabricating services such as masks generation and engineering services. We enter into
arrangements with customers which typically include some or all of the above deliverables.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;When our arrangements include multiple deliverables, we first determine whether each
deliverable meets the separation criteria 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;. In general, a deliverable (or a group of deliverables) meets the separation
criteria if the deliverable has standalone value to the customer and if there is objective and
reliable evidence of the fair value of the remaining deliverables in the arrangement. Each
deliverable that meets the separation criteria is considered a &#147;separate unit of accounting.&#148; The
total arrangement consideration is then allocated to each separate unit of accounting based on
their relative fair values. Substantially all of our arrangements for the sale of semiconductor
wafers and related services consist of a single unit of accounting. The application of EITF 00-21
requires judgment as to whether the deliverables can be divided into more than one unit of
accounting and whether the separate units of accounting have value to the customer on a stand-alone
basis. Changes to how we determine these elements could affect the timing of revenue recognition.
</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 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, and, where applicable,
delivery has occurred. 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;To a lesser extent, we also derive other revenue relating to rental income and management fees
which is recognized when the contractual obligations have been performed, there is evidence of a
final arrangement, fees are fixed or determinable and collection of the revenue is reasonably
assured.
</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
consideration 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 (loss), 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>


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




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

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 as the manufacturing processes mature and higher sales credits and returns on
new processes. We have charged $4.8&nbsp;million, $18.3&nbsp;million and $6.3&nbsp;million to results of our
operations for sales credits and returns for 2004, 2005 and 2006, respectively. 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 have been 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;We manage the credit risk of collectibility of our accounts receivable through our
credit evaluation process, credit policies, and credit control and collection procedures. 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. 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. 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;A large portion of our operations in Singapore are afforded lower tax rates from tax
incentives provided to attract and retain business. These tax incentives expire over various
periods till September&nbsp;30, 2020 and are subject to certain conditions with which we expect to
comply, such as achieving fixed amounts of capital expenditure and headcount by certain dates. Our
taxes could increase if we do not meet the incentive requirements, or tax rates applicable to us in
such jurisdictions are otherwise increased.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We regularly assess the likelihood of adverse outcomes on our tax positions resulting from tax
authority examinations to determine the adequacy of our provision for income taxes. Our estimate of
the potential outcome for any uncertain tax issues is highly judgmental, and we believe we have
adequately provided for probable outcomes relating to uncertain tax matters. We adjust our
provision in light of changing facts and circumstances, such as the closing of a tax audit or the
refinement of an estimate. To the extent that the final tax outcome from examinations of these
matters is different than the amounts recorded, such differences will be recorded in the period in
which such determination is made and may be materially different from amounts recorded to date.
</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. A
valuation allowance reduces deferred tax assets to estimated realizable value based on estimates,
past performance and certain tax planning strategies, and our objective assessment of whether it is
more likely than not that we will be able to generate sufficient future taxable income to realize
the net deferred tax assets. A valuation allowance has been established for tax assets pertaining
to certain fabs (operating under tax incentives) in the amount of $322.4&nbsp;million and $273.8&nbsp;million
as of December&nbsp;31, 2005 and 2006, respectively. The valuation allowance will be maintained until
sufficient positive evidence exists to support reversal of the valuation allowance based upon
current and preceding years&#146; results of operations and anticipated future taxable income levels.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our judgment regarding future profitability may change due to future market conditions,
changes in Singapore or international tax laws and other factors, If these estimates and related
assumptions change in the future, we may be required to increase or decrease our valuation
allowance against deferred tax assets previously recognized, resulting in additional or lower
income tax expense.
</DIV>

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


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>SFAS No.&nbsp;123(R), Share-Based Payments</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2004, the FASB issued SFAS No.&nbsp;123(R), &#147;Share-Based Payments.&#148; SFAS No.&nbsp;123(R)
requires that the compensation cost relating to share-based payment transactions be recognized in
financial statements. That cost is to be measured based on the fair value of the equity or
liability instruments issued. SFAS No.&nbsp;123(R) replaced SFAS No.&nbsp;123, &#147;Accounting for Stock-Based
Compensation,&#148; and superseded APB Opinion No.&nbsp;25, or APB 25, &#147;Accounting for Stock Issued to
Employees.&#148; In March&nbsp;2005, the SEC issued Staff Accounting Bulletin No.&nbsp;107, on the interaction
between SFAS No.&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We adopted the provisions of SFAS No.&nbsp;123(R) on January&nbsp;1, 2006, the first day of our fiscal
year 2006, using the modified prospective application which provides for certain changes to the
method for valuing share-based compensation. Under the modified prospective application, prior
periods are not revised for comparative purposes. Under SFAS No.&nbsp;123(R), share-based compensation
cost is measured based on the estimated fair value of the award at the grant date and is recognized
as expense over the employee&#146;s requisite service period. Prior to adopting the provisions of SFAS
No.&nbsp;123(R), we measured share-based employee compensation cost in accordance with the intrinsic
value method of APB 25 and related interpretations. Intrinsic value is determined based on the
excess of fair market value of the stock subject to the option at the grant date and the option
exercise price. The total fair value-based compensation expense associated with prior awards that
were not vested at the adoption of SFAS No.&nbsp;123R was $9.8&nbsp;million which will be recorded in
earnings over a weighted average period of approximately three years. In 2006, we recorded a
compensation expense of $6.4&nbsp;million in earnings associated with such awards. The remaining $2.5
million, $0.7&nbsp;million and $0.2&nbsp;million of compensation expenses associated with such awards are
expected to be recorded in earnings in 2007, 2008 and 2009, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon
adoption of SFAS No.&nbsp;123(R), we continued to use the Black-Scholes option-pricing model
for valuation for share-based awards granted beginning January&nbsp;1, 2006, which was also previously
used for our pro forma information disclosures required under SFAS No.&nbsp;123. SFAS No.&nbsp;123(R)
requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent
reporting periods if actual forfeitures differ from those estimates. In our pro forma information
disclosures required under SFAS No.&nbsp;123 for the periods prior to 2006, we accounted for forfeitures
as they occurred. Refer to Note 17 of the consolidated financial statements for more details on our
share-based payments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Staff Accounting Bulletin No.&nbsp;108, or SAB 108, Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year Financial Statements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Refer to Note 1(c) of the consolidated financial statements for more details on the errors
adjusted upon the initial adoption of SAB 108. In addition to reporting a cumulative effect
adjustment upon initial adoption of SAB 108 as of January&nbsp;1, 2006, previously issued financial
statements in the first, second and third quarters of 2006 have also been corrected for immaterial
errors, resulting in an increase (decrease)&nbsp;to net income for these quarters by $(0.3) million,
$0.5&nbsp;million and $(0.5) million, respectively.
</DIV>

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


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See Note 1(c) of the consolidated financial statements for more details on other adjustments and
reclassifications.
</DIV>


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<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 our consolidated statements of operations 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="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>
</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>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>2006</B></TD>
</TR>

<!-- End Table Head -->
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<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>
</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:30px; 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" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cost of revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">82.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">88.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75.7</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:30px; text-indent:-15px">Gross profit</DIV></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">11.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24.3</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"><!-- 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:30px; text-indent:-15px">Other revenue</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">2.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.5</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>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; 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:45px; text-indent:-15px">Research and development</DIV></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">11.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Sales and marketing</DIV></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">4.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.7</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">3.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Fab start-up costs</DIV></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">2.2</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:45px; text-indent:-15px">Other operating expenses (income), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.0</TD>
    <TD nowrap>)</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>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; 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:30px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21.4</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">18.7</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>&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"><!-- 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:30px; text-indent:-15px">Equity in income of SMP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other income (loss), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.2</TD>
    <TD nowrap>)</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">1.2</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">3.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest expense and amortization of debt discount</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(6.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(6.2</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>&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"><!-- 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:30px; text-indent:-15px">Income (loss)&nbsp;before income taxes</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income tax expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.7</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>&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"><!-- 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:30px; text-indent:-15px">Net income (loss)</DIV></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>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">4.7</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: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">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.7</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>&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">Net income (loss)&nbsp;available to ordinary shareholders</DIV></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>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">4.0</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>&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="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>
</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>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>2006</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">51</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">35</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">30</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">30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31</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">15</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">37</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other *</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">5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">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 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="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>
</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>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>2006</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">68</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">75</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">77</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">9</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">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</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">3</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">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 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"><!-- Folio -->45<!-- /Folio -->
</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="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>
</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>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>2006</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>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">19</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">29</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">19</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">28</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">16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</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">Up to 0.25</DIV></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>
    <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">Up to 0.35</DIV></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>
    <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">Above 0.35</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">12</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">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">3</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 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>



<DIV align="left" style="font-size: 10pt; margin-top: 0pt"><B>Note:</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">*</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, 2005 and December&nbsp;31, 2006</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. As a dedicated foundry, our financial performance, including our revenue, largely depends
on a number of factors including timeliness in introducing technology and manufacturing solutions,
ability to enter into arrangements with diverse customers for high volume production of our wafers,
utilization rate of our capacity, and external factors such as pricing and general semiconductor
market conditions and industry cycles.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the first quarter of 2005, the semiconductor industry continued to work through the excess
inventories resulting from the market weakness experienced from the second half of 2004. 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 90nm
shipments. Our net revenue increased in the fourth quarter of 2005 as we capitalized on the growth
in revenue from our advanced technologies and also benefited from favorable market conditions. The
subsequent decrease in our revenue in the first quarter of 2006 compared to the fourth quarter of
2005 was not as significant as may have been expected considering the typical seasonality decrease
in the first quarter. Capacity utilization rates remained high at 82% for both the first and second
quarters of 2006. During the second half of 2006 companies in the supply chain, including our
customers, experienced excess inventory and a seasonally weaker than usual market conditions which
resulted in a decline in our utilization rates in the third and fourth quarters of 2006, which in
turn caused a sequential decrease in our revenue in those quarters. Despite this, net revenue
increased 37.0% from $1,032.7&nbsp;million in 2005 to $1,414.5&nbsp;million in 2006 due primarily to the
continued growth in revenue from our advanced technologies. Our revenue growth in 2006 compared to
2005 significantly outpaced the worldwide semiconductor industry growth of approximately 9%.
</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 advanced technologies, and revenue from
our 0.13um and smaller process geometry technologies increased by 86% between 2005 and 2006.
Revenue from these advanced technologies represented 42% of our total revenue in 2005 as compared
to 57% of our total revenue in 2006, of which 19% and 29% of our total revenue was attributable to
revenue from our 90nm technologies in 2005 and 2006, respectively. We started commercial shipment
of 90nm technologies in June&nbsp;2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shipments increased by 29.4% from 965,045 wafers (eight-inch equivalent) in 2005 to 1,248,554
wafers (eight-inch equivalent) in 2006. ASP increased by 7.3% from $1,036 per wafer (eight-inch
equivalent) in 2005 to $1,112 per wafer (eight-inch equivalent) in 2006, due primarily to a higher
mix of advanced technologies which command higher selling prices.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenue from the communications and the consumer sectors each represented 35% of our total
revenue, while revenue from the computer sector represented 25% of our total revenue in 2005. In
2006, the consumer sector was our highest revenue contributor and represented 37% of our total
revenue, while the computer and the communications sectors represented 31% and 30% of our total
revenue, respectively.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->46<!-- /Folio -->
</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;Revenue from the computer, consumer and communications sectors increased by 70%, 45% and 17%,
respectively, between 2005 and 2006. The increase in computer sector
revenue was due primarily to a
higher demand for workstations, personal computer and motherboard devices. The increase in consumer
sector revenue was due primarily to higher demand for set-top box and video game devices, while the
increase in communications sector revenue was due primarily to a higher demand for digital
subscriber line, or xDSL cards, partially offset by a lower demand for Local Area Network, or LAN,
switches/routers/hubs/cards and mobile phone handset devices.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenue from the Americas region continued to be the largest contributor to our total revenue,
increasing from 75% of our total revenue in 2005 to 77% of our total revenue in 2006, driven
primarily by revenue from the computer sector. Revenue from all other regions remained largely
unchanged in terms of their percentage contributions to our total revenue between 2005 and 2006.
Net revenue in dollar terms for 2006 was higher across all geographical regions compared to 2005,
except for net revenue for the Japan region which decreased by 9% between 2005 and 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our top three customers for 2005, in order of revenue contribution, were Broadcom, IBM and
Agilent Technologies, of which Broadcom and IBM contributed more than 10% of our total net revenue
in 2005. Broadcom and IBM continued to be our top two customers for 2006, in order of revenue
contribution, while Advanced Micro Devices replaced Agilent Technologies as a top three customer
for 2006. Each of our top three customers for 2006 contributed more than 10% of our total net
revenue in 2006.
</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 and
amortization of certain technology licenses. Cost of revenue increased by 16.8% from $917.0&nbsp;million
in 2005 to $1,070.8&nbsp;million in 2006 although our shipments increased by 29.4% in 2006 compared to
2005, as a large proportion of our cost of revenue is fixed in nature. Depreciation continued to be
a significant portion of our cost of revenue, comprising 47.6% and 40.7% of our cost of revenue in
2005 and 2006, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the third quarter of 2006, we changed the estimated salvage values in relation to certain
eight-inch equipment and machinery to reflect higher expected salvage values than we have
historically estimated. These equipment and machinery primarily support our advanced technologies.
The change in the estimated salvage values is a change in accounting
estimate that was applied prospectively
from July&nbsp;1, 2006. This change will result in lower depreciation
over the remaining lives of the affected eight-inch process equipment and machinery. The impact of
this change was a reduction to our cost of revenue of $11.3&nbsp;million in 2006.
</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. Cost per wafer shipped decreased by 8.7% from $921 (eight-inch
equivalent) in 2005 to $841 (eight-inch equivalent) in 2006, primarily as a result of an increase
in shipments by 29.4% between 2005 and 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our gross profit improved from $115.7&nbsp;million in 2005 to $343.7&nbsp;million in 2006, due primarily
to higher revenues resulting from significantly higher shipments and to a lesser extent, higher ASP
per wafer as a result of a higher mix of advanced technologies which command higher selling prices.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In each of 2005 and 2006, we sold some of our inventories that we had written down to their
estimated net realizable value in the previous year at prices which were higher than our previous
estimate of the net realizable value. Such sales improved our gross profit by approximately $0.7
million and $1.8&nbsp;million for 2005 and 2006, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
described in &#147;Item 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 2005 and 2006, there was no significant impact
on our cost of revenue arising from fluctuations in exchange rates.
</DIV>

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


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other revenue was $20.7&nbsp;million in 2005 compared to $21.0&nbsp;million in 2006, and relates to
rental income and management fees.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->47<!-- /Folio -->
</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"><B><I>Research and development expenses</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research and development, or R&#038;D, expenses consist primarily of our share of expenses related
to joint-development projects with IBM, Samsung and Infineon, payroll related costs for R&#038;D
personnel, depreciation of R&#038;D equipment and expenses related to
the development of design kits and
intellectual property solutions for design of integrated circuits. R&#038;D expenses increased by 25.1%
from $122.1&nbsp;million in 2005 to $152.8&nbsp;million in 2006 due primarily to higher development
activities related to the 65nm technology node, and to a lesser extent, higher activities related
to development of design kits and intellectual property solutions for advanced technologies in
2006. There was no significant change in R&#038;D expenses as a percentage of revenue which were 11.8%
and 10.8% in 2005 and 2006, respectively.
</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 pre-contract customer design
validation activities. EDA-related expenses and costs related to pre-contract customer design
validation activities relate to efforts to attract new customers and expand our penetration of
existing customers. Sales and marketing expenses increased by 29.4% from $42.5&nbsp;million in 2005 to
$55.0&nbsp;million in 2006 due primarily to higher payroll related expenses, and to a lesser extent,
higher amortization of EDA software due to an increase in EDA software acquisition and higher
expenses incurred for pre-contract customer design validation activities in 2006. The higher
payroll related expenses in 2006 were due primarily to an increase in headcount and an increase in
compensation cost relating to share-based payment transactions after adoption of SFAS No.&nbsp;123(R) on
January&nbsp;1, 2006. Sales and marketing expenses as a percentage of revenue remained at approximately
similar levels in 2005 and 2006 at 4.1% and 3.9%, respectively.
</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;General and administrative, or G&#038;A, expenses consist primarily of payroll related costs for
administrative personnel, consultancy, legal and professional fees and depreciation of equipment
used in G&#038;A activities. G&#038;A expenses increased by 6.3% from $40.0&nbsp;million in 2005 to $42.6&nbsp;million
in 2006 due primarily to higher payroll related expenses resulting primarily from an increase in
compensation cost relating to share-based payment transactions after adoption of SFAS No.&nbsp;123(R),
&#147;Share-Based Payments&#148; on January&nbsp;1, 2006. G&#038;A expenses as a percentage of revenue remained at
approximately similar levels in 2005 and 2006 being 3.9% and 3.0%, respectively.
</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, were $22.7&nbsp;million in 2005. No fab start-up costs
were recorded in 2006 as Fab 7 entered commercial production during the second quarter of 2005.
</DIV>

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


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other operating expenses, net, were $14.2&nbsp;million and $13.8&nbsp;million in 2005 and 2006,
respectively. Other operating expenses, net, in 2005 included a fixed asset impairment charge of
$3.9&nbsp;million on assets held for sale while there was no fixed asset impairment charge in 2006.
Other operating expenses, net, in 2006 included losses of $6.1&nbsp;million resulting from foreign
currency fluctuations, partially offset by a gain of $2.6&nbsp;million from the disposal of fixed assets
from Fab 1.
</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 $6.5&nbsp;million in 2005 compared to $36.0&nbsp;million in 2006, due
primarily to lower production costs and higher shipments in 2006. 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 2005, the equity in income of SMP was $6.5&nbsp;million compared to our total net loss of
$159.6&nbsp;million, while in 2006, the equity in income of SMP was $36.0&nbsp;million compared to our total
net income of $66.8&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following information summarizes our total business base revenue, which includes our share
of SMP revenue, in 2005 and 2006. 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
</DIV>

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

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

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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="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>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>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>(In millions)</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 (U.S. GAAP)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,032.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,414.5</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">$</TD>
    <TD align="right">99.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">112.1</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">$</TD>
    <TD align="right">1,131.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,526.6</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 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="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" 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="7" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2006</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</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</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>share</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>share</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>share</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 0px solid #000000">&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">965.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,051.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1 ,248.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,365.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><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">$</TD>
    <TD align="right">1,036</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,045</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,112</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,099</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: 0pt"><B>Note:</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">*</TD>
    <TD>&nbsp;</TD>
    <TD>Eight-inch equivalent wafers</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Other loss, net</I></B>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Other loss, net, in 2005 was $6.7&nbsp;million compared to $2.7&nbsp;million in 2006. Other loss, net, in
2005 related primarily to an expense of $7.0&nbsp;million related to the termination of hedging
transactions and other costs as a result of our cash tender offer for and repurchase of
approximately $478&nbsp;million of our then outstanding $575&nbsp;million 2.5% senior convertible notes
due 2006. Other loss, net, in 2006 related primarily to an
other-than-temporary impairment loss of $2.7 million on securities
classified as available-for-sale. Other loss, net, in 2006 also included net
losses of $0.4 million relating to net losses of $1.4 million resulting from changes
in the fair value of a call option transaction and
net losses of $1.0 million relating to time value of our interest rate cap contracts which
are excluded from the assessment of hedge effectiveness, partially offset by net
gains of $1.4 million arising from the ineffective portion of our derivative
instruments and net gains of $0.6 million resulting from changes in the fair
value of an interest rate swap prior to its designation as a hedging instrument. </DIV>


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


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest income increased by 55.8% from $28.6&nbsp;million in 2005 to $44.6&nbsp;million in 2006, due
primarily to higher interest rates, and to a lesser extent, higher average cash balances in 2006
compared to 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Interest expense and amortization of debt discount</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 increased by 25.9% from $69.8&nbsp;million in
2005 to $88.0&nbsp;million in 2006, due primarily to higher interest rates on outstanding floating
rate debt, and to a lesser extent, lower interest capitalization associated with lower capital
expenditures related to our 90nm and below technologies, partially offset by lower average
outstanding debt balances in 2006.
</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 2005, we recorded income
tax expense of $13.0 million
compared to $23.9&nbsp;million in 2006. The pioneer tax-exempt status for Fab 2 expired on June&nbsp;30,
2006 and income from our post-pioneer trade and development and expansion activities in Fab 2 is
taxed at a concessionary tax rate of 10% for a 5-year period beginning July&nbsp;1, 2006, as
discussed in the &#147;Special Tax Status&#148; section below. Both the change in Fab 2&#146;s tax rate and a
higher taxable net interest income contributed to the increase in income tax expense for 2006 as
compared to 2005.
</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
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->49<!-- /Folio -->
</DIV>

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

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">consolidated statements of operations. The effect of this on our results of operations was an
increase of $64.9&nbsp;million to our net loss in 2005 and a reduction of $12.8&nbsp;million to our net
income in 2006, for losses not allocated to the minority interest according to their proportionate
ownership.
</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;In the third quarter of 2005, 30,000 convertible redeemable preference shares were issued. We
accrete the carrying amounts of the convertible redeemable preference shares to their redemption
values at maturity and record such accretion using the effective interest method over the remaining
period until the maturity date on August&nbsp;17, 2010. Such accretion adjusts net income (loss)
available to ordinary shareholders. Accretion charges for 2005 and 2006 were $3.2&nbsp;million and $9.5
million, respectively. In the second quarter of 2006, 1,650 convertible redeemable preference
shares were converted into ordinary shares and the impact on the accretion charges arising from
such conversion was not material.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><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;Net
revenue increased 10.8% from $932.1&nbsp;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. 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 handset 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 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>


<P align="center" style="font-size: 10pt"><!-- Folio -->50<!-- /Folio -->
</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;Cost of revenue increased by 20.0% from $764.3&nbsp;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 51.2% 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 11.0% from
$830 (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 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 was 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 18.0% 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>Other revenue</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other revenue was $17.9&nbsp;million in 2004 compared to $20.7&nbsp;million in 2005 and relates
to rental income and management fees.
</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 increased by 30.1% from $93.8&nbsp;million in 2004 to $122.1&nbsp;million in 2005 due
primarily to lower recognition of research grants received for the reimbursement of R&#038;D expenses in
2005 compared to 2004. To a lesser extent, the increase in R&#038;D expenses was also due 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>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 increased by 11.9% from $38.0&nbsp;million in 2004 to $42.5&nbsp;million in
2005. The increase was due primarily to higher expenses resulting from expanded offering of EDA
tools provided and higher expenses incurred for pre-contract customer design validation 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 increased by 14.5% from $35.0&nbsp;million in 2004 to $40.0&nbsp;million in 2005. This was
due primarily to higher payroll-related expenses in 2005 and several transactions in 2004 which
reduced G&#038;A expenses 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 against which an allowance was previously made.
</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>

<P align="center" style="font-size: 10pt"><!-- Folio -->51<!-- /Folio -->
</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"><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 $0.1&nbsp;million in 2004 included the following:
</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 gain of $10.4&nbsp;million from the sale of equipment to CSMC; 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"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A gain of $4.9&nbsp;million resulting from resolution of a goods and services tax matter,</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;partially offset by:
</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>Fab 1 restructuring charges of $4.6&nbsp;million; 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"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>An impairment charge of $1.7&nbsp;million resulting from our migration to an enhanced manufacturing system.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other operating expenses, net, of $14.2&nbsp;million in 2005 included a fixed asset impairment
charge of $3.9&nbsp;million on assets held for sale resulting from decisions to rationalize capacity and
therefore to sell certain assets. Excluding these items, other operating expenses, net, in 2004 and
2005 remained at approximately similar levels.
</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 $159.6&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, 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="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>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>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="7"><B>(in millions)</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 (U.S. GAAP)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">932.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</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="right">$</TD>
    <TD align="right">170.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</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="right">$</TD>
    <TD align="right">1,102.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</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="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" 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="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</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</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>share</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>share</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>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><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>



<DIV align="left" style="font-size: 10pt; margin-top: 0pt"><B>Note:</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">*</TD>
    <TD>&nbsp;</TD>
    <TD>Eight-inch equivalent wafers</TD>
</TR>

</TABLE>



<P align="center" style="font-size: 10pt"><!-- Folio -->52<!-- /Folio -->
</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;Other income, net, in 2004 of $16.4&nbsp;million related primarily to a gain of $14.3&nbsp;million from
the sale of technology to CSMC. Other loss, net, in 2005 of $6.7&nbsp;million related primarily to an
expense of $7.0&nbsp;million related to the termination of hedging transactions and other costs as a
result of our cash tender offer for and repurchase of approximately $478&nbsp;million of our then
outstanding $575&nbsp;million 2.5% senior convertible notes due 2006.
</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 our advanced technologies.
</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 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 was a reduction of $55.8&nbsp;million to our net income in 2004 and an
increase of $64.9&nbsp;million to our net loss in 2005, for losses not allocated to the minority
interest according to their proportionate ownership.
</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;The convertible redeemable preference shares were issued in the third quarter of 2005. We are
required to accrete the carrying amounts of the convertible redeemable preference shares to their
redemption values at maturity and record such accretion using the effective interest method over
the remaining period until the maturity date on August&nbsp;17, 2010. Such accretion adjusts net income
(loss)&nbsp;available to ordinary shareholders. Accretion charges for 2005 were $3.2&nbsp;million. There were
no accretion charges for 2004.
</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, 2006.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reclassifications and certain immaterial
classification corrections have been made to prior periods' financial statements to conform to classifications used in
the current period. These include reporting operating grant income as a reduction of the expenses that the grants are intended
to reimburse rather than as other income, reporting rental income and management fees as other revenue rather than as other income,
reporting depreciation of rental buildings as other operating expense rather than as other expense and certain other immaterial
reclassifications. Certain immaterial corrections have also been made to the financial statements for each of the quarters in 2006
including recording the 2006 Option as a derivative rather than as equity, and certain other immaterial adjustments.</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->53<!-- /Folio -->
</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;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>

<P align="center" style="font-size: 10pt"><!-- Folio -->53A<!-- /Folio -->
</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>
    <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>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>
    <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>2006</B></TD>
    <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>2006</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">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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">355.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">364.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">355.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">339.1</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">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">279.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">262.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">276.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">260.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">271.4</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 nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</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">Gross profit (loss)</DIV></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">88.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">88.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">94.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67.7</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">Other Revenue</DIV></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">5.7</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">5.2</TD>
    <TD>&nbsp;</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">5.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.4</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 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" 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">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">35.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38.1</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">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">11.7</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">13.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.4</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">9.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.7</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">11.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.1</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">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>
    <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"><!-- 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:30px; text-indent:-15px">Other operating expenses
(income), net</DIV></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">6.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.4</TD>
    <TD>&nbsp;</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">1.7</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">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">64.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59.7</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">68.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67.3</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" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity in income (loss)&nbsp;of SMP</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.2</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">9.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income (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">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5.3</TD>
    <TD nowrap>)</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">(0.7</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.9</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">8.5</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">10.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <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">(7.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(14.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(22.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(25.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(24.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(22.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(22.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(17.9</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" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;before income taxes</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28.5</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">38.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense</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">3.1</TD>
    <TD>&nbsp;</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">1.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.5</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">11.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.9</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">Net income (loss)</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</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>&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.3</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><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 ordinary shareholders</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.6</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">24.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.8</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>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</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"><!-- Folio -->54<!-- /Folio -->
</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>
    <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>(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" 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>
    <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>2006</B></TD>
    <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>2006</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 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.</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">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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80.0</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">
    <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">(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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.0</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">Other Revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.9</TD>
    <TD>&nbsp;</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">1.4</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">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>&nbsp;</TD>
    <TD align="right">1.6</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 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" 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">15.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.2</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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.8</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">11.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.3</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">8.2</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">&#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>
</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:30px; text-indent:-15px">Sales and marketing</DIV></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">4.0</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">3.8</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">4.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.5</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">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">3.0</TD>
    <TD>&nbsp;</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">2.6</TD>
    <TD>&nbsp;</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">3.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><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>&nbsp;</TD>
    <TD align="right">1.5</TD>
    <TD>&nbsp;</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">0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.9</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">2.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.5</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 nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</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">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.9</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">Equity in income (loss)&nbsp;of SMP</DIV></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">0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.2</TD>
    <TD>&nbsp;</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">2.5</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">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income (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">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.1</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">3.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">(0.2</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 valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income</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">3.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.9</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">2.8</TD>
    <TD>&nbsp;</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">3.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.1</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">Interest expense and amortization of debt discount</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6.9</TD>
    <TD nowrap>)</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">(6.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5.3</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" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;before income taxes</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0</TD>
    <TD>&nbsp;</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">10.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense</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">1.6</TD>
    <TD>&nbsp;</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">0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.8</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">3.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</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" 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">(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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.2</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">7.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.5</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">
    <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">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.6</TD>
    <TD>&nbsp;</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">0.7</TD>
    <TD>&nbsp;</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">0.7</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" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)&nbsp;available to ordinary shareholders</DIV></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>
    <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">2.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">6.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.8</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>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</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;In the first quarter of 2005, the semiconductor industry continued to work through the excess inventories resulting
from the market weakness experienced from the second half of 2004. 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,
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->55<!-- /Folio -->
</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">respectively. The increase in revenue in the third quarter of 2005 was due mainly to the ramp
up of our 90nm shipments. Our net revenue increased in the fourth quarter of 2005 as we capitalized
on the growth in revenue from our advanced technologies and also benefited from favorable market
conditions. The decrease in our revenue in the first quarter of 2006 compared to the fourth quarter
of 2005 was not as significant as may have been expected considering the typical seasonality
decrease in the first quarter. Capacity utilization rates remained high at 82% for both the first
and second quarters of 2006. During the second half of 2006, companies in the supply chain,
including our customers, experienced excess inventory and seasonally weaker than usual market
conditions. This resulted in the sequential decrease in our net revenue in the third and fourth
quarters of 2006.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Gross profit (loss)</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other than the first quarter of 2005 in which we recorded a negative gross margin of
5.4%, we recorded a positive gross margin for the remaining quarters from the second quarter of
2005 to the fourth quarter of 2006. The improvement in the gross margin from the first quarter of
2005 to the second quarter of 2005 was due primarily to higher shipments in the second quarter of
2005 which caused a decrease in cost per wafer due to fixed costs being spread over a larger base
of shipments. The continued improvement in the gross margin sequentially in the third and the
fourth quarters of 2005 was due primarily to an increase in ASP per wafer. Gross margin in each
quarter from the fourth quarter of 2005 to the third quarter of 2006 remained at approximately
similar levels. The sequential decrease in gross margin in the fourth quarter of 2006 was due
primarily to higher cost per wafer resulting from lower production volumes over which fixed costs
were allocated and a less favorable mix in the production levels.
</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 remained at approximately similar levels in the first and second quarters of
2005. The sequential 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 activities related to development of design kits and intellectual
property solutions for design of integrated circuits. R&#038;D expenses remained at approximately
similar levels between the fourth quarter of 2005 and the first quarter of 2006. The sequential
increase in the second and third quarters of 2006 was due primarily to increased activities related
to the 65nm technology node, while the development activities related to the 65nm technology node
decreased in the fourth quarter of 2006 as we transitioned the development activities to the next
technology node, resulting in a sequential decrease in R&#038;D expenses from the third quarter of 2006
to the fourth quarter of 2006.
</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 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 subsequent to the second quarter 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;Other operating expenses, net, of $6.0&nbsp;million in the second quarter of 2005 included a
fixed asset impairment charge of $3.9&nbsp;million on assets held for
sale, while other operating
income, net, of $0.7&nbsp;million in the first quarter of 2006 included a gain of $2.6&nbsp;million from the
disposal of fixed assets from Fab 1. The increase in other operating expenses, net, in the second
quarter of 2006 to $8.4&nbsp;million related primarily to losses resulting from foreign currency
fluctuations. No significant changes in other operating expenses (income), net, were noted for the
subsequent quarters in 2006.
</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 (loss)&nbsp;of SMP can
have a material effect on our quarterly consolidated statements of operations. The equity in income
(loss)&nbsp;of SMP for the eight fiscal quarters ended December&nbsp;31, 2006 were significant amounts when
compared to the net income or net loss of the respective fiscal quarters during that period, except
for the second quarter of 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other than the first quarter of 2005 in which we recognized equity in loss of SMP of $9.0
million, we recognized equity in income of SMP for the remaining quarters from the second quarter
of 2005 to the fourth quarter of 2006. In the second quarter of 2005, we recognized equity in
income of SMP of $0.8&nbsp;million due primarily to higher revenue resulting primarily from higher
shipments. The sequential increase in equity in income of SMP in the third quarter of 2005 was due
primarily to lower production costs. Equity in income of SMP continued to increase sequentially in
the fourth quarter of 2005 due primarily to higher revenue resulting mainly from higher shipments.
Equity in income of SMP remained at approximately similar levels between the fourth quarter of 2005
and the first quarter of 2006 and decreased sequentially in the second quarter of 2006 due
primarily to lower revenue resulting primarily from lower shipments. The subsequent increase in
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->56<!-- /Folio -->
</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">equity in income of SMP in the third quarter of 2006 was due primarily to lower production costs,
while the sequential decrease in the fourth quarter of 2006 was due primarily to lower revenue
resulting from lower ASP per wafer and lower shipments.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following information summarizes our total business base revenue, which includes our share
of SMP revenue for the eight fiscal quarters ended December&nbsp;31,
2006. 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="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="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>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>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2006</b></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2006</b></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2006</b></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2006</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">$</TD>
    <TD align="right">181.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</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>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right"> 355.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">364.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">355.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">339.1</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">Chartered&#146;s share of
SMP revenue</DIV></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>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">30.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">28.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">27.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">24.6</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">Net revenue including
Chartered&#146;s share of
SMP</DIV></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>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">386.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">393.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">383.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">363.7</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="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="6" style="border-bottom: 1px solid #000000"><B>Mar 31, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Jun 30, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Sep 30, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Dec 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="2"><B>Excluding</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Including</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Excluding</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Including</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Excluding</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Including</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Excluding</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Including</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>Chartered&#146;s</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Chartered&#146;s</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Chartered&#146;s</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Chartered&#146;s</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Chartered&#146;s</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Chartered&#146;s</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Chartered&#146;s</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Chartered&#146;s</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>share of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>share of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>share of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>share of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>share of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>share of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>share of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>share of</B></TD>
    <TD>&nbsp;</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="2" style="border-bottom: 1px solid #000000"><B>SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>SMP</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shipments</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">(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="left">$</TD>
    <TD align="right">996</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,019</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">913</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">944</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,035</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,039</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,139</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,130</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="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="6" style="border-bottom: 1px solid #000000"><B>Mar 31 ,2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Jun 30, 2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Sep 30, 2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Dec 31, 2006</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>Excluding</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Including</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Excluding</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>including</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Excluding</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>including</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Excluding</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Including</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>Chartered&#146;s</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Chartered&#146;s</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Chartered&#146;s</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Chartered&#146;s</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Chartered&#146;s</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Chartered&#146;s</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Chartered&#146;s</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Chartered&#146;s</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>share of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>share of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>share of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>share of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>share of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>share of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>share of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>share of</B></TD>
    <TD>&nbsp;</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="2" style="border-bottom: 1px solid #000000"><B>SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>SMP</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shipments</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">(in thousands)*</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">318.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">349.4</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">355.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">307.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">337.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">295.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">322.9</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="left">$</TD>
    <TD align="right">1,089</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,080</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,089</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,082</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,136</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,120</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,135</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,115</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: 3pt"><B>Note:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">* Eight-inch equivalent wafers
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->57<!-- /Folio -->
</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;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 our cash tender
offer for and repurchase of approximately $478&nbsp;million of our then outstanding $575&nbsp;million 2.5%
senior convertible notes due 2006. In the first quarter of 2006, we entered into an interest rate
swap to economically swap the fixed-rate interest obligation associated with the 6.25% senior notes
due 2013 from a fixed-rate interest obligation to a floating-rate interest obligation and also entered into the 2006 Option with GS. Other income
(loss), net, in the first, second, third and fourth quarters of 2006 included gains (losses)
resulting from changes in the fair value of this interest rate swap prior to its designation as a
hedging instrument and changes in the fair value of the 2006 Option. Other loss, net, in the first
quarter of 2006 also included an impairment loss
of $2.7&nbsp;million on securities classified as available-for-sale.
</DIV>

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


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest income increased sequentially in each quarter from the first quarter of 2005 to the
second quarter of 2006 due to higher interest rates and higher average cash balances. The
sequential decrease in the third quarter of 2006 was due primarily to lower average cash balances,
partially offset by higher interest rates. Interest income continued to decrease in the fourth
quarter of 2006 due primarily to lower average cash balances.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Interest expense and amortization of debt discount</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 increased sequentially from the first quarter of
2005 to the third quarter of 2005 and remained at approximately similar levels in each quarter up
to the third quarter of 2006 and subsequently decreased in the fourth quarter of 2006. The
sequential increase in the second and third quarters of 2005 was due to lower interest
capitalization associated with capital expenditures related primarily for our 90nm and below
technologies, higher average outstanding debt balances and higher interest rates. The sequential
decrease in the fourth quarter of 2006 was due primarily to a recovery resulting from an approval
of a withholding tax waiver associated with interest payment of an existing loan and higher
interest capitalization associated with capital expenditures primarily related for our 90nm and
below technologies.
</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 convertible redeemable preference
shares, which were issued in the third quarter of 2005, to their redemption values at maturity and
record such accretion using the effective interest method over the remaining period until the
maturity date on August&nbsp;17, 2010. Such accretion adjusts net income (loss)&nbsp;available to ordinary
shareholders. In the second quarter of 2006, 1,650 convertible redeemable preference shares were
converted into ordinary shares and the impact on the accretion charges arising from such conversion
was not material.
</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, 2006, our principal sources of liquidity included $719.0&nbsp;million in cash
and cash equivalents, and $591.4&nbsp;million of unutilized banking facilities consisting of term loans
and bank credit lines. $200.0&nbsp;million of these unutilized banking facilities will expire on March
30, 2007 and there is no certainty that we will renew the facility related to this amount.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There
was no significant change in our working capital, which was $549.4&nbsp;million and $568.5
million as of December&nbsp;31, 2005 and December&nbsp;31, 2006, respectively. Working capital is calculated
as the excess of current assets over current liabilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In March&nbsp;2006, we entered into the 2006 Option with GS to replace the call option
transaction that we had previously entered into with GS in August&nbsp;2004 and that expired on April&nbsp;2,
2006. Under the 2006 Option, GS may purchase up to 214.8&nbsp;million of our ordinary shares at a price
of S$2.15 per share. If the 2006 Option is exercised in full at the price of S$2.15 per share and
physically settled, we would receive approximately $300&nbsp;million based on an exchange rate of $1.00
= S$1.54 that could be used for repayment of debt and general corporate purposes. The 2006 Option
contains early termination provisions, whereby we may choose to terminate the 2006 Option in whole
or in part, triggered by the closing price of our ordinary shares reaching and maintaining
specified levels for a defined period of time. Under the terms of the 2006 Option, we have the
right in all cases either to issue new ordinary shares to GS or to settle the transaction in cash.
If the 2006 Option is not exercised or terminated earlier, it will expire on March&nbsp;29, 2011.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->58<!-- /Folio -->
</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">The closing prices of our ordinary shares since we entered into the 2006 Option to the end of 2006
have not triggered the early termination provisions. As of December&nbsp;31, 2006, GS had also not
exercised its rights under the 2006 Option.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2006, we issued $300.0&nbsp;million of 6.25% senior notes due 2013. Following the issuance
of the 6.25% senior notes due 2013, the SMBC/OCBC Term Loan was repaid in full using the proceeds
from the issuance of the 6.25% senior notes due 2013 in 2006.
</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, 2007 is approximately $700
million. This is based on our cash and cash equivalents of $719&nbsp;million as of December&nbsp;31, 2006,
planned draw downs of our existing credit facilities of approximately $329&nbsp;million, expected cash
outflows for capital expenditures of approximately $800&nbsp;million primarily for increasing 65nm and
below capacity, and debt repayments of approximately $73&nbsp;million in 2007. Achieving our target cash
and cash equivalents balance also depends on our ability to generate operating cash flow in 2007
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 2007 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 bring Fab 7 to its estimated total capacity of 45,000 300-mm wafers per month. See
the &#147;&#151; Liquidity and Capital Resources &#151; Historic
investing cash flows and capital expenditures &#148;
section below for more details on our capital expenditures. 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. We believe the following
uncertainties exist regarding our liquidity:
</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>Ability to Increase Revenue </I>&#151; If our revenues and margins were to decline, our ability to
generate net cash from operating activities in a sufficient amount to meet our cash needs could be
adversely affected.</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>Renewal of credit facilities </I>&#151;There is no certainty that we will renew our credit facilities
which expire in 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="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Debt Ratings</I>&#151;Our ability to obtain external financing and the related cost of borrowing are
affected by our debt ratings.</TD>
</TR>

</TABLE>
</DIV>

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


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth the summary of our cash flows for the periods presented:
</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" 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>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>2006</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"><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">Net cash provided by operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">331,684</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">404,374</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">520,670</TD>
    <TD>&nbsp;</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>&nbsp;</TD>
    <TD align="right">732,715</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">568,243</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">419,905</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by (used in) financing activities</DIV></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">444,753</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(204,987</TD>
    <TD nowrap>)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


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


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by operating activities was $331.7&nbsp;million, $404.4&nbsp;million and $520.7
million in 2004, 2005 and 2006, respectively. 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. The $116.3&nbsp;million improvement in cash provided by operating activities
between 2005 and 2006 was due primarily due to higher collections as a result of higher sales and
higher dividend income from SMP, partially offset by higher payments to creditors and higher
interest payments on outstanding loans in 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2005, pre-payments of $40.0&nbsp;million were received from a customer for future purchases and to
secure 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-payments for future purchases in either 2004 or 2006. We
recorded revenue of $9.1&nbsp;million and $11.6&nbsp;million related to such arrangements with no related
cash inflows in 2005 and 2006, respectively. Net cash provided by operating activities in 2005 and
2006
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->59<!-- /Folio -->
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">also
included dividends received from SMP of $29.5&nbsp;million and $38.2&nbsp;million, respectively. No
dividends were received from SMP in 2004.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Historical
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 $732.7&nbsp;million,
$568.2&nbsp;million and $419.9&nbsp;million in
2004, 2005 and 2006, respectively. Investing activities consisted primarily of capital expenditures
totaling $686.3&nbsp;million, $628.1&nbsp;million and $554.3&nbsp;million in 2004, 2005 and 2006, respectively.
Capital expenditures in 2004 were primarily for our 0.13um and below technologies, while capital
expenditures in 2005 and 2006 were primarily for our 90nm and below technologies. Investing
activities in 2004 also included placement of a refundable deposit of $35.0&nbsp;million to secure wafer
capacity for one of our more advanced technologies while there were no such refundable deposits
placed in 2005. We received $111.7&nbsp;million in 2006 related to the refund of such deposits placed in
2004 and 2003.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In October&nbsp;2005, SMP reorganized its paid-up share capital and authorized a return of a
portion to its shareholders in the form of cash, our entitlement being $20.4&nbsp;million, in a capital
reduction sanctioned by the High Court of Singapore. In 2005, we received $17.3&nbsp;million arising
from the return of capital approved in 2005. In October&nbsp;2006, the board of directors of SMP
approved a second capital reduction, which was subsequently approved by the High Court of Singapore
and filed with the Accounting and Corporate Regulatory Authority of Singapore in November&nbsp;2006. Our
entitlement arising from the second return of capital from SMP was $19.1&nbsp;million. In 2006, we
received an additional $16.9&nbsp;million arising from both the first and the second return of capital
from SMP.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We expect our capital expenditures for 2007 to be approximately $800&nbsp;million, primarily for
increasing 65nm and below capacity. With the above capital expenditure, Fab 7 is expected to have
equipment (installed or available for installation) that is equivalent to a capacity of 25,000
300-mm wafers per month by December&nbsp;2007. In December&nbsp;2006, Fab 7 was equipped with a capacity of
15,000 300-mm wafers per month. We had originally planned Fab 7 to have a capacity of 30,000 300-mm
wafers per month when completed. We have now revised this estimate to 39,000 300-mm wafers per
month covering mainly 0.13um to 65nm technology nodes. In addition, to further align our
manufacturing capabilities with our technology position, we are adding an additional phase of
expansion for Fab 7 that will be focused on 65nm and 45nm technologies, to bring its total
capacity to 45,000 300-mm wafers per month. The revised capacity plan will take several years to
complete and depends on market conditions, customer demand, adoption of next generation
technologies and our financial plans. The total capital expenditure for the revised capacity plan
is expected to be approximately $4,200&nbsp;million to $4,500&nbsp;million, compared to our previous
expectation of approximately $2,700&nbsp;million to $3,000&nbsp;million for the originally planned capacity
of 30,000 300-mm wafers per month. As of December&nbsp;31, 2004, December&nbsp;31, 2005 and December&nbsp;31,
2006, we have spent an accumulated total of $637.9&nbsp;million, $1,201.9&nbsp;million and $1,638.6&nbsp;million,
respectively, on the equipping of Fab 7. As of December&nbsp;31, 2004, December&nbsp;31, 2005 and December
31, 2006, we had commitments on contracts for capital expenditures of $312.9&nbsp;million, $205.7
million and $525.2&nbsp;million, respectively.
</DIV>

<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>Historical 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 $34.9&nbsp;million
and $444.8&nbsp;million in 2004 and
2005, respectively, while net cash used in financing activities was
$205.0&nbsp;million in 2006. In
2004, we obtained a loan with competitive interest rates that was guaranteed by the Export-Import
Bank of the United States, or EXIM Guaranteed Loan, for a maximum of $653.1&nbsp;million for purposes of financing certain capital
expenditures purchased from U.S. vendors. In 2005 we issued the 5.75% senior notes due 2010, the
6.375% senior notes due 2015, the 6.00% amortizing bonds due 2010 and the convertible redeemable
preference shares. The borrowings from the 5.75% senior notes due 2010, the 6.375% senior notes due 2015 and
the 6.00% amortizing bonds due 2010 extended the maturity terms of our debt profile.
With a portion of the proceeds from these borrowings and the issuance of the convertible redeemable preference
shares, we also made
repayments of debt in 2005, including the repurchase of the 2.5% convertible notes due 2006 and the
related interest payments arising from our cash tender offer for the 2.5% convertible notes due
2006. In 2006, we replaced debt with short remaining terms to
maturity with debt that matures over a longer term. Such repayments of debt in 2006 included the SMBC/OCBC Term
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->60<!-- /Folio -->
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Loan which was fully repaid in 2006 using the proceeds from the issuance of the 6.25% senior
notes due 2013 in April&nbsp;2006, the 2.5% senior convertible notes due 2006 which matured and were
fully redeemed in April&nbsp;2006 and the CSP syndicated loan which matured and was fully repaid in
September&nbsp;2006. 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: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The restricted cash in 2005 and 2006 related to cash amounts reserved in a bank account and
restricted for the purpose of semi-annual principal and interest repayments of the EXIM Guaranteed Loan. The
increase in restricted cash in 2006 compared to 2005 was due primarily to the commencement of principal repayment
of the EXIM Guaranteed Loan in early 2007. There was no restricted cash in 2004 as we only
started to draw down the EXIM Guaranteed Loan in the first quarter of 2005.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Grants for research and development and training</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2004, 2005 and 2006 we received $19.0&nbsp;million, $7.5&nbsp;million and $1.9&nbsp;million,
respectively, in grants from various agencies of the Government of Singapore, which are included in
operating cash flows. The amounts under these grants relate to a portion of depreciation expenses arising
from our R&#038;D related capital expenditures and 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
and achievement of program milestones. The main condition attached to the grants is the completion
of the project to which the grant relates. Although the amount of grants we received from the
Government of Singapore in 2006 was significantly lower than in 2005, we expect that the amount of
such grants we may be eligible to receive to be higher in 2007. The grant income expected to be
received in 2007 relates primarily to funding for capital expenditures and for the training and
staffing costs associated with our 65nm process technology development programs to be incurred in
Singapore. See also &#147;Item&nbsp;4, Information on our Company &#151; B. Business Overview &#151; Research and
Development&#148; for further details.
</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 arrangements in 2006, as defined in Item
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>

<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, 2006, our total loans outstanding were $1,331.7&nbsp;million, comprising our
senior notes, amortizing bonds 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>2006</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">Floating rate loans:</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">Exim Guaranteed Loan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">324,277</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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">
    <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">38,433</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">371,904</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">6.25% senior notes due 2013</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">297,405</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">246,805</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,836</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">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,331,660</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 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.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->61<!-- /Folio -->
</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;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. If Temasek fails 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, 2006, 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>

<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, 2006:
</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>Payments due by period (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="2"><B>Less than</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>1 &#150; 3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>3 &#150; 5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>More than</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>1 year</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>years</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>years</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>5 years</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">$</TD>
    <TD align="right">1,714,885</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">197,965</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">283,580</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">602,791</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">630,549</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">124,194</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,323</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,646</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,646</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77,579</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>&nbsp;</TD>
    <TD align="right">33,766</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,766</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">Operating lease obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91,554</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,426</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,789</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,650</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68,689</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchase obligations under <SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP></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">Capital expenditures</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">525,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">525,200</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" 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">335,463</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">94,366</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">188,847</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,250</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">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69,928</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67,129</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,169</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">315</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">315</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">17,909</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">17,909</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"><!-- 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">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,912,899</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">934,175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">502,031</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">681,652</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">795,041</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>
<!-- 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 style="margin-top: 3pt">
<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>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 5.75% senior notes due 2010, the 6.25% senior notes due 2013 and the 6.375% senior notes due
2015 were issued at a price of 98.896%, 99.053% and 98.573%, respectively, of the principal amount.
As of December&nbsp;31, 2006, the carrying amounts of the 5.75% senior notes due 2010, the 6.25% senior
notes due 2013 and the 6.375% senior notes due 2015 were $371.9&nbsp;million, $297.4&nbsp;million and $246.8
million, respectively, as the unamortized debt discount was reported as a direct reduction to the
carrying amounts of the senior notes. The estimated interest repayments on floating-rate
obligations were calculated using the floating interest rates related to these obligations as of
December&nbsp;31, 2006. Actual payments 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>We have not included purchase obligations that have been recorded on our consolidated balance
sheet as of December&nbsp;31, 2006. These obligations amounted to $270.7&nbsp;million, $12.0&nbsp;million and
$213.4&nbsp;million for capital expenditures, technology agreements and other purchase obligations
primarily relating to operating expenses, respectively.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the second quarter of 2006, 1,650 out of the originally issued 30,000 preference shares
were converted into ordinary shares. Assuming no further conversion or any 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 remaining preference share at a redemption price equal to $10,000
per preference share. Refer to Note 15 of the consolidated financial statements for more details on
the preference shares.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->62<!-- /Folio -->
</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;We and Agere Systems Singapore have signed an assured supply and demand agreement with SMP.
The agreement was intended to ensure that all of the fixed costs of SMP are recovered by allocating
all of its wafer capacity to our company and Agere Systems Singapore in accordance with the
respective parties&#146; equity interest in SMP and each party would bear the fixed costs attributable
to its allocated capacity. In September&nbsp;2004, we and Agere Systems Singapore entered into an
agreement pursuant to which both parties agreed to annually reimburse any losses suffered by SMP
that are attributable to the respective parties. For the year ended December&nbsp;31, 2006, SMP did not
suffer any losses that were attributable to our company and accordingly no reimbursements were
payable by our company to SMP. There were also no such reimbursements payable to SMP by our company
in 2005 and 2004. To the extent that the number of wafers started for us is less than our allocated
capacity in the future, there is no assurance that there will be no reimbursements payable to SMP
by our company in respect of unrecovered fixed costs of SMP.
</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>

<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. The pioneer status expired on June&nbsp;30, 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="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>
    <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>the wafer fabrication of ASIC and other advanced semiconductor devices at Fab 6 for a
ten-year period beginning September&nbsp;1, 2003; 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"><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
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>
    <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>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="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 in which our pioneer status is effective, subject to our compliance with
certain conditions, income arising from our pioneer trade is exempted from Singapore income tax.
During the period in which our post-pioneer status or development and expansion incentive status is
effective, subject to our compliance with certain conditions, income arising from the post-pioneer
activities or development and expansion incentive activities is taxed at a concessionary rate of
10%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The profits arising from our pioneer trade which are tax-exempted 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. Holders of the ordinary shares will not be subject to
Singapore income tax on such dividends. Please see &#147;Item&nbsp;10. Additional Information &#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;Under
Singapore tax law, loss carryforwards and tax depreciation of property, plant and
equipment (hereinafter referred to as wear and tear allowances) are deductible to the extent of
income before loss carryforwards and wear and tear allowances. Unutilized losses and wear and tear
allowances can be carried forward indefinitely to set off against income in future tax years,
subject to our compliance with certain conditions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income arising from activities not covered under the pioneer status, post-pioneer status or
development and expansion incentive status (hereinafter referred to as non-qualifying income) is
taxed at the normal Singapore corporate tax rate of 20% for the year ended December&nbsp;31, 2006. Thus,
the income tax expense for the year ended December&nbsp;31, 2006 is primarily on non-qualifying income,
such as interest income, rental income and income from the sale of wafers manufactured by
technologies that are not granted preferential tax treatment.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->63<!-- /Folio -->
</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: 12pt"><B>Foreign Currency Risk</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See &#147;Item&nbsp;11, Quantitative and Qualitative Disclosures about Market Risk &#151; Foreign
currency risk.&#148;
</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 February&nbsp;2006, the FASB issued SFAS No.&nbsp;155, &#147;Accounting for Certain Hybrid Financial
instruments&#148;, which amends SFAS No.&nbsp;133, &#147;Accounting for Derivative Instruments and Hedging
Activities&#148; and SFAS No.&nbsp;140, &#147;Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities&#148;. SFAS No.&nbsp;155 provides guidance to simplify the accounting for
certain hybrid instruments by permitting fair value remeasurement for any hybrid financial
instrument that contains an embedded derivative, as well as clarifies that beneficial interests in
securitized financial assets are subject to SFAS No, 133. In addition, SFAS No.&nbsp;155 eliminates a
restriction on the passive derivative instruments that a qualifying special-purpose entity may hold
under SFAS No.&nbsp;140. SFAS No.&nbsp;155 is effective for all financial instruments acquired, issued or
subject to a new basis occurring after the beginning of an entity&#146;s first fiscal year that begins
after September&nbsp;15, 2006. The adoption of SFAS No.&nbsp;155 is not expected to have a material impact on
our consolidated financial position or consolidated statements of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June&nbsp;2006, the FASB ratified the consensus reached by the Emerging Issue Task Force, or
EITF, on Issue No.&nbsp;06-3, &#147;How Taxes Collected from Customers and Remitted to Governmental
Authorities Should Be Presented in the Income Statement (That Is, Gross versus Net Presentation)&#148;,
or EITF 06-3. EITF 06-3 states that a company should disclose its accounting policy regarding the
gross or net presentation of certain taxes. If taxes included in gross revenues are significant, a
company should disclose the amount of such taxes for each period for which an income statement is
presented (i.e., both interim and annual periods). Taxes within the scope of EITF 06-3 are those
that are imposed on and concurrent with a specific revenue-producing transaction, such as sales tax
or value-added tax. Taxes assessed on an entity&#146;s activities over a period of time, such as gross
receipts taxes, are not within the scope of the issue. The guidance in this consensus is effective
for the first interim reporting period beginning after December&nbsp;15, 2006, which is the first
quarter of our fiscal year 2007. The adoption of EITF 06-3 is not expected to have a material
impact on our consolidated statements of operations or financial position.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In July&nbsp;2006, the FASB issued FASB interpretation No.&nbsp;48, or FIN 48, &#147;Accounting for
Uncertainty in Income Taxes.&#148; This Interpretation clarifies the accounting for uncertainty in
income taxes recognized in an enterprise&#146;s financial statements in accordance with SFAS No.&nbsp;109,
Accounting for Income Taxes. This Interpretation prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. This Interpretation also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods, disclosure, and transition.
FIN 48 is effective for fiscal years beginning after December&nbsp;15, 2006. We do not expect any
material impact on our consolidated financial position or consolidated statements of operations
upon initial adoption of FIN 48.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In September&nbsp;2006, the FASB issued SFAS No.&nbsp;157, &#147;Fair Value Measurements.&#148; SFAS No.&nbsp;157
defines fair value, establishes a framework for measuring fair value in generally accepted
accounting principles and expands disclosures about fair value measurements. SFAS 157 does not
require any new fair value measurements and eliminates inconsistencies in guidance found in various
prior accounting pronouncements. SFAS No.&nbsp;157 emphasizes that fair value is a market-based
measurement, not an entity-specific measurement, and states that a fair value measurement should be
determined based on the assumptions that market participants would use in pricing the asset or
liability. SFAS No.&nbsp;157 is effective for financial statements issued for fiscal years beginning
after November&nbsp;15, 2007, and interim periods within those fiscal years. We are required to adopt
this Statement in the first quarter of our fiscal year 2008 and are currently assessing the impact
of adopting SFAS No.&nbsp;157 but do not believe the adoption of SFAS No.&nbsp;157 will have a material
impact on our consolidated financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In February&nbsp;2007, the FASB issued SFAS No.&nbsp;159, &#147;Fair Value Option for Financial Assets and
Financial Liabilities&#148;. Under SFAS No.&nbsp;159, entities will be permitted to measure various financial
instruments and certain other assets and liabilities at fair value on an instrument-by-instrument
basis (the fair value option). SFAS No.&nbsp;159 is effective for financial statements issued for fiscal
years beginning after Nov. 15, 2007. We are currently assessing the impact SFAS No.&nbsp;159 will have
on our consolidated financial position and consolidated statements of operations.
</DIV>
<DIV align="left">
<A name="109"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES</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>A.</B></TD>
    <TD width="1%">&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, 2007, the name, age and position of each
director and member of senior management of our company. The business address of our directors and
senior management is our principal office in Singapore.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->64<!-- /Folio -->
</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: 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="26%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="65%">&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">James A. Norling<SUP style="font-size: 85%; vertical-align: text-top">(1)(2)(4)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">64</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman of the Board</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Chia Song Hwee<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Andre Borrel<SUP style="font-size: 85%; vertical-align: text-top">(2)(3)(4)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">70</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Charles E. Thompson<SUP style="font-size: 85%; vertical-align: text-top">(2)(4)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">77</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Tsugio
Makimoto, PhD
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">69</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Tay
Siew Choon<SUP style="font-size: 85%; vertical-align: text-top">(1)(2)(4)</SUP>

</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">59</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Peter Seah Lim Huat<SUP style="font-size: 85%; vertical-align: text-top">(1)(2)(4)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">60</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Philip Tan Yuen Fah<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">62</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Pasquale Pistorio
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">71</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Steven H. Hamblin<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">58</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Maurizio Ghirga<SUP style="font-size: 85%; vertical-align: text-top">(3)(5)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">68</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD colspan="7" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD colspan="7" valign="top"><B><I>Senior Management</I></B></TD>
</TR>




<TR valign="bottom">
    <TD colspan="7" valign="top">&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">44</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">53</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">47</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">58</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">57</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">47</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">Roy
Kannan<SUP style="font-size: 85%; vertical-align: text-top">(6)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">54</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">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Leow Kim Keat
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice President, Customer Support Operations and
Supply Management Organization</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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">49</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice President, Human Resources</TD>
</TR>
<TR valign="bottom">
    <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">44</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice President, Strategy Resources</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Tony Tsai
</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">Vice President, Quality and Reliability Assurance</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>




<DIV style="margin-top: 3pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="2"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>

</TR>
<TR valign="top">

    <TD colspan="3"><DIV align="left"><DIV style="font-size: 3pt; margin-top: 13pt; width: 20%; border-bottom: 1px solid #000000">&nbsp;</DIV></DIV></TD>

</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</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>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. Mr.&nbsp;Andre Borrel ceased to be a member of the Audit Committee
on February&nbsp;1, 2007.</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 a Director to our Board of Directors on November&nbsp;2, 2006.</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;Roy Kannan will be leaving our company and his last day is on March&nbsp;9, 2007. Mr.
Tan Seng Chai will, with effect from March&nbsp;10, 2007, act as our interim Chief Information
Officer.</TD>
</TR>

</TABLE>
</DIV>


<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
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->65<!-- /Folio -->
</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">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>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. 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 Straco
Corporation Limited, Pan-United Corporation Ltd, TauRx Therapeutics Ltd and Civil Aviation
Authority of Singapore. 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>

<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 known as 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 also currently sits on the board of various companies including Guthrie GTS
Ltd and Singapore Food Industries Ltd. Mr.&nbsp;Tan was in the commerce and industry sector for 11&nbsp;years
prior to entering the banking and financial sector. He joined
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">the Overseas Union Bank in 1979 holding various senior positions and retired in 2002 as Executive
Vice President, Corporate Services. Mr.&nbsp;Tan holds a Bachelor of Accountancy from the University of
Singapore and a Bachelor of Laws from the University of Wolverhampton, UK. He also holds a
post-graduate diploma in Business Administration from the Manchester Business School, UK. He is a
Fellow of the Institute of Certified Public Accountants of Singapore, CPA (Australia), Chartered
Association of Certified Accountants, UK and an Associate of the Chartered Institute of Management
Accountants, UK.
</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. Mr.&nbsp;Hamblin is also a licensed CPA in the state of Texas.
</DIV>

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


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Maurizio Ghirga has served on our Board of Directors and as a member of the Audit Committee
since November&nbsp;2006. Mr.&nbsp;Ghirga brings to Chartered more than 40&nbsp;years of experience in the
electronics and oil industries. Mr.&nbsp;Ghirga held various senior positions with ESSO Italy and ESSO
Chemical Italy, both subsidiaries of EXXON Co. prior to joining SGS Microelectronics in 1983 as the
chief financial officer. After a merger of SGS Microelectronics and Thomson Semiconductors and the
formation of SGS-Thomson (now known as STMicroelectronics) in 1987, Mr.&nbsp;Ghirga was appointed as
the corporate vice president and chief financial officer. Mr&nbsp;Ghirga, in his capacity as chief
financial officer of ST Microelectronics, contributed to the initial public offering of ST
Microelectronics on the New York Stock Exchange in 1994. After his retirement in 2003, Mr.&nbsp;Ghirga
served as the senior advisor to the president of ST Microelectronics. From early 2005 to the middle
of 2006, Mr.&nbsp;Ghirga was the president and chief executive officer of Accent srl Design Technology
Services, a silicon-design joint venture company between ST Microelectronics and Cadence Design
Systems Inc. Mr.&nbsp;Ghirga holds degrees in economics and finance at the University of Genoa.
</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 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
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>

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

<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
2002. 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. 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 was featured in more than 80 technical publications. Dr.&nbsp;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 our 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 University
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 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>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. Mr.&nbsp;Roy Kannan will be leaving our company and his last day is
on March&nbsp;9, 2007.
</DIV>


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


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Leow Kim Keat was appointed vice president, customer support operations and supply
management organization (SMO)&nbsp;in November&nbsp;2006. Previously vice president of customer support
operations, Mr.&nbsp;Leow took on the added role of SMO leadership in November&nbsp;2006, overseeing the
company&#146;s relationships with vendors and turnkey partners. Meanwhile, Mr.&nbsp;Leow continues to lead
the customer support operations, as he has since February&nbsp;2002, with responsibilities for corporate
factory planning, industrial engineering, factory capacity; business planning and planning systems
as well as tapeout operations and pricing. Mr.&nbsp;Leow has over 21&nbsp;years of experience in
semiconductor manufacturing, including more than 14&nbsp;years with Chartered. Prior to Chartered, Mr.
Leow spent over seven years at Texas Instruments Singapore where he held various manufacturing
positions. Mr.&nbsp;Leow holds a Bachelor of Science from the National University of Singapore and a
Graduate Diploma in Business Administration from the Singapore Institute of Management.
</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.
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&nbsp;2003. He joined our company in April&nbsp;1996 as a human resource manager. Mr.&nbsp;Tan has more than
17&nbsp;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 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="font-size: 10pt; margin-top: 12pt"><I>Tony Tsai</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tony Tsai has served as our Vice President, Quality and Reliability Assurance since
October&nbsp;2006. Mr.&nbsp;Tsai is responsible for our quality and reliability assurance operations. Mr.
Tsai has over 30&nbsp;years of experience in driving quality in manufacturing operations. Before joining
Chartered, he spent more than 10&nbsp;years with Powerchip Semiconductor Corporation, where he last held
the position of chief quality officer. Prior to that, Mr.&nbsp;Tsai was head of reliability and quality
assurance operations at Motorola Taiwan. He also held quality control and assurance positions in
Bourns (Electronics) Taiwan and Precision Monolithic Incorporation, an analog integrated circuit
testing company which has since been bought over by Analog Devices Inc. Mr.&nbsp;Tsai holds a Bachelor
of Electronics Engineering from Tamkang University, Taiwan, and an Executive Master of Business
Administration from the National Chiao Tung University, Taiwan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. COMPENSATION OF DIRECTORS AND SENIOR MANAGEMENT</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our company&#146;s total compensation framework is aimed to link our employees&#146; compensation
to annual overall business and personal performance targets, and create sustained wealth for the
shareholders. To ensure competitiveness, we consistently benchmark our total compensation plan with
relevant market practices to attract and retain talents in the tight market human capital
environment in the semiconductor industry.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our compensation mix consists of annual base salary, short-term incentives, long-term
incentives and other benefits. We provide competitive annual base salary to our employees.
Short-term incentives are paid in the form of variable cash bonuses on a quarterly and annual
basis. Employees are rewarded for meeting short- term company financial targets. The short-term
incentives are also based on overall individual performance and behavioral ratings.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The long-term incentives comprise deferred retention plans for critical resources and
share-based compensation plan. Deferred retention plans refer to compensation schemes where
monetary rewards are granted to employees who are our critical resources but the payments are
deferred over a period of time. We currently have three share-based compensation plans, namely our
Share Option Plan 1999, or the 1999 Option Plan, our Chartered Employee Share Purchase Plan, or
Chartered ESPP 2004, and the Share Purchase Plan for employees of SMP, or SMP ESPP 2004. The
objective of the share-based compensation plans is to reward key employees for achieving long-term
company targets and to create employee share ownership. Participation in the share-based
compensation plan depends on the individual responsibility, performance level and contributions to
the business. Other benefits provided to employees include leave, medical, group insurance and
other employee welfare benefits, which we believe are comparable to industry practices. We also
regularly organize activities for employees and their families to enhance their work-life balance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our overall compensation philosophy is to ensure competitive annual base salary and benefits
to our employees, with variable components tied to delivery of company financial results, and
individual performance and contributions to the business.
</DIV>

<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 to work towards achieving the company&#146;s annual and long-term performance goals, the ERCC
has introduced, and may from time to time introduce, compensation schemes such as performance
bonus, executive incentive plans and share-based compensation plans. At the 2007 shareholders&#146;
annual general meeting, we intend to propose the adoption of two new share-based compensation
plans, namely, the Restricted Share Unit Plan 2007 and the Performance Share Unit Plan 2007 for
shareholders&#146; approval. More details will be provided in the proxy statement for the annual general
meeting to be distributed to the shareholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During 2006, we granted options to purchase 4,750,000 ordinary shares to our directors and
senior management. These options were granted under our Option Plan 1999. The exercise price of
these options is S$1.21. The expiration dates of these options range from August&nbsp;25, 2011 to August
26, 2016, 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.
</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, 2005 and 2006 were approximately $5.2&nbsp;million and $6.0&nbsp;million, respectively. The increase is
mainly due to the increase in retainer fees payable to directors and the variable bonus awarded to
the senior management (including amounts paid to or accrued for our Chief Executive Officer and
President and our top five senior executives) in view of the goals attained and performance of our
company in 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also provide our directors and our senior management with customary director or senior
management insurance, as appropriate. Our President and Chief Executive Officer does not have a
guaranteed minimum annual bonus.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We provide a table below setting out the compensation paid or proposed to be paid to our
directors for services rendered during the fiscal year ended December&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also provide below a table setting out the aggregate compensation paid or proposed to be
paid to our Chief Executive Officer and President and our top five senior executives for services
rendered during the fiscal year ended December&nbsp;31, 2006. The table also sets out the names of the
top five senior executives, their compensation categorized in the bands of $200,000 and a breakdown
in percentage terms of the remuneration earned through base salary, variable or performance-related
bonuses, benefits in kind and share options granted.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Compensation table for directors for services rendered in the year ended December&nbsp;31, 2006
</DIV>
<DIV align="center">
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    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&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>Options</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&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="3"><B>Director&#146;s</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Granted</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Price</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="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">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Bonus</B><SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></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">(3)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Fees</B><SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Total</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>in 2006</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>S$</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Exercise Period</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="19"><B>(US$ in thousands, except options data)</B></TD>
    <TD nowrap align="center" colspan="12">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<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">490</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">469</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">149</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">1,108</TD>
    <TD>&nbsp;</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">1.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center">25/08/2007 to 25/08/2016</TD>
</TR>
<TR valign="bottom">
    <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">108</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">108</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">120,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">25/08/2007 to 25/08/2011</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">&#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">66</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">25/08/2007 to 25/08/2011</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">&#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">57</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">25/08/2007 to 25/08/2011</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">&#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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">25/08/2007 to 25/08/2011</TD>
</TR>
<TR valign="bottom">
    <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">45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">25/08/2007 to 25/08/2011</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>&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">51</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">95,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">25/08/2007 to 25/08/2011</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">&#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">49</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">95,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">25/08/2007 to 25/08/2011</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>&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">51</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">25/08/2007 to 25/08/2011</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">(5)</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">61</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">25/08/2007 to 25/08/2011</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">(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">18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18</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 align="left">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</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">(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">23</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">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Maurizio
Ghirga<SUP style="font-size: 85%; vertical-align: text-top">(5)</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">12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</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 align="left">&#151;</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>&nbsp;</TD>
    <TD align="right" style="border-top: 0px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 0px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 0px double #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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <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>Total as of December
31, 2006</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">490</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">469</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">149</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">591</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,699</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <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>&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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <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>Total as of December
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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <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>&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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <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 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 colspan="3"><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>Base salary (inclusive of employers&#146; Central Provident Fund, or CPF).<BR></TD>
</TR>

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

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Bonus paid in February&nbsp;2007 for services rendered in 2006, inclusive of employer CPF contribution.</TD>
</TR>

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

<TR valign="top">
    <TD nowrap align="left">(3)</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">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>Shareholders&#146; approval will be sought at our annual general meeting to be held in April&nbsp;2007
for the payment of our directors&#146; fees
of approximately $591,000 for the fiscal year ended December&nbsp;31, 2006.</TD>
</TR>

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

<TR valign="top">
    <TD nowrap align="left">(5)</TD>
    <TD>&nbsp;</TD>
    <TD>Messrs.&nbsp;Steven H. Hamblin and Maurizio Ghirga were appointed as our Directors in January
2006 and November&nbsp;2006,
respectively.</TD>
</TR>

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

<TR valign="top">
    <TD nowrap align="left">(6)</TD>
    <TD>&nbsp;</TD>
    <TD>Messrs Sum Soon Lim and Robert E. La Blanc. retired from our Board of Directors in April&nbsp;2006.</TD>
</TR>

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

<TR valign="top">
    <TD nowrap align="left">(7)</TD>
    <TD>&nbsp;</TD>
    <TD>For disclosure purposes, all payments in Singapore dollars
are converted to United States dollars based on the exchange rate of
S$1.5418&nbsp;=&nbsp;US$1.00 as of December&nbsp;31, 2006.</TD>
</TR>

</TABLE>



<P align="center" style="font-size: 10pt"><!-- Folio -->71<!-- /Folio -->
</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;Compensation table for Chief Executive Officer and President and top five senior
executives for services rendered in the year ended December&nbsp;31, 2006.
</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="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&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>Total Options</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="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></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></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Total</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Granted in 2006</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"  style="border-bottom: 1px solid #000000"><B>Exercise Price</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Exercise Period</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: 0px solid #000000"><B>(1)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000"><B>(2)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000"><B>(3)</B></TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" style="border-bottom: 0px solid #000000"></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3" style="border-bottom: 0px solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(4)</B></TD>

    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000"><B>S$</B></TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="27" style="border-bottom: 1px solid #000000"><B>(US$ in thousands, except options data)</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>Above US$900,000</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>
</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">490</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">469</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">149</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,108</TD>
    <TD>&nbsp;</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">1.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center">25/08/2007 to 25/08/2016</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">44</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">42</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">14</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <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>US$700,000
&#150;US$899,000</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>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Nil</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"><!-- 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"><B>US$500,000 &#150; US$699,000</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>
</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" style="background: #cceeff">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Aggregate of top five senior
executives</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,694</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">613</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">716</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,023</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,100,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">25/08/2007 to 25/08/2016</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Average per person</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">339</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">123</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">143</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">605</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <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">Ang Kay Chai</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">65</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">26</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">9</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>&nbsp;</TD>
    <TD align="right">400,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">25/08/2007 to 25/08/2016</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">George Thomas</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">56</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">22</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">22</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>&nbsp;</TD>
    <TD align="right">400,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">25/08/2007 to 25/08/2016</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Hsia Liang Choo</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">50</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">13</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">37</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>&nbsp;</TD>
    <TD align="right">400,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">25/08/2007 to 25/08/2016</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Michael J Rekuc</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">58</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">16</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">26</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>&nbsp;</TD>
    <TD align="right">400,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">25/08/2007 to 25/08/2016</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Yang Simon Shi-Ning</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">53</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">25</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">22</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>&nbsp;</TD>
    <TD align="right">500,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">25/08/2007 to 25/08/2016</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 colspan="3"><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>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>Bonus paid in February&nbsp;2007 for services rendered in 2006, inclusive of employer CPF
contribution.</TD>
</TR>

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

<TR valign="top">
    <TD nowrap align="left">(3)</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">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>In number of ordinary shares.</TD>
</TR>

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

<TR valign="top">
    <TD nowrap align="left">(5)</TD>
    <TD>&nbsp;</TD>
    <TD>For disclosure purposes, all payments in Singapore dollars
are converted to United States dollars based on the exchange rate of
S$1.5418&nbsp;=&nbsp;US$1.00 as of December&nbsp;31, 2006.</TD>
</TR>

</TABLE>



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


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><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
11 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 subject to
notice provisions. None of our directors receive benefits upon termination of their appointment in
their capacity as directors. Messrs.&nbsp;Sum Soon Lim and Robert E. La Blanc retired at our annual
general meeting of shareholders in April&nbsp;2006 and did not seek re-election. Messrs.&nbsp;Steven H.
Hamblin and Maurizio Ghirga were appointed to our Board of Directors on January&nbsp;1, 2006 and
November&nbsp;2, 2006, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2006, Temasek, through its subsidiary, ST Semiconductors, beneficially
owned approximately 59.56% 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
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->72<!-- /Folio -->
</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">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="3%" nowrap align="right"><B>&#149;</B></TD>
    <TD width="3%">&nbsp;</TD>
    <TD>the requirement that a majority of Board members must be independent;</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="right"><B>&#149;</B></TD>
    <TD width="3%">&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>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right"><B>&#149;</B></TD>
    <TD width="3%">&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 Board of Directors held five meetings during the fiscal year ended December&nbsp;31, 2006,
including four regularly scheduled meetings and one special meeting. 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</B> <B>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, 2006.
</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 three 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 recommendations of our
independent auditors and the response of our company&#146;s management to both the internal and external
audits. The Audit Committee met four times in 2006 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 our 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), Steven H.
Hamblin and Maurizio Ghirga (appointed as of November&nbsp;2, 2006). The Audit Committee held nine
meetings during the fiscal year ended December&nbsp;31, 2006. Mr.&nbsp;Andre Borrel ceased to be a member of
the Audit Committee on February&nbsp;1, 2007.
</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 plans 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 and Tay Siew Choon. The ERCC held five meetings during the fiscal year
ended December&nbsp;31, 2006.
</DIV>

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



</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->73<!-- /Folio -->
</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="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>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The members of the NC are Messrs.&nbsp;James A. Norling (chairman), Peter Seah Lim Huat, Andre
Borrel, Charles E. Thompson and Tay Siew Choon. The NC held four meetings during the fiscal year
ended December&nbsp;31, 2006.
</DIV>

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


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2006, our total staff strength (including employees of our
subsidiary, CSP) was 4,681 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="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>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 0px solid #000000"><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>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>2006</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">1,410</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,677</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,856</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">900</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">880</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,011</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">572</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">638</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">724</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">253</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">370</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">508</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">471</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">508</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">582</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">3,606</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,073</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,681</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>&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="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>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 0px solid #000000"><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>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>2006</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">3,479</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,932</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,540</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">87</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">103</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">16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</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">23</TD>
    <TD>&nbsp;</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>
</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">3,606</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,073</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,681</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>&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, 2006, we had a total of 629 temporary employees. The average number of
temporary employees in 2006 based on the number of temporary employees at the end of each month end
was 700 per month.
</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;
E. 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>

<P align="center" style="font-size: 10pt"><!-- Folio -->74<!-- /Folio -->
</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: 12pt"><B>E. SHARE OWNERSHIP FOR DIRECTORS AND SENIOR MANAGEMENT</B>
</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, 2006, based on an aggregate of 2,535,895,593
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="61%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&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="2"><B>No. of Ordinary</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>Shares Beneficially</B></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="2" style="border-bottom: 1px solid #000000"><B>Owned<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></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">James A. Norling</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-right: 1px solid #000000">1,596,804</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" style="border-right: 1px solid #000000">6,227,128</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" style="border-right: 1px solid #000000">312,947</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" style="border-right: 1px solid #000000">285,054</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" style="border-right: 1px solid #000000">228,304</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tay Siew Choon</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">461,326</TD>
    <TD nowrap>&#62; Please see note (2)</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>&nbsp;</TD>
    <TD align="right" style="border-right: 1px solid #000000">301,887</TD>
    <TD>&nbsp;&nbsp;&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>&nbsp;</TD>
    <TD align="right" style="border-right: 1px solid #000000">170,000</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>&nbsp;</TD>
    <TD align="right" style="border-right: 1px solid #000000">2,560,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Steven H. Hamblin</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-right: 1px solid #000000">10,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Maurizio Ghirga</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-right: 1px solid #000000">0</TD>
    <TD>&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>&nbsp;</TD>
    <TD align="right" style="border-right: 1px solid #000000">21,173,271</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 colspan="2"><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>Gives effect to the ordinary shares issuable within 60&nbsp;days from December&nbsp;31, 2006 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, 2006.</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, 2006.
</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>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Directors</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>As of December 31, 2006</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">3.46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap 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">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">
    <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">
    <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>&nbsp;</TD>
    <TD align="right">110,000</TD>
    <TD>&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">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">120,000</TD>
    <TD nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">25/08/2007 to 25/08/2011</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">Chia Song Hwee</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" style="background: #cceeff">
    <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" style="background: #cceeff">
    <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" style="background: #cceeff">
    <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" style="background: #cceeff">
    <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" style="background: #cceeff">
    <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" style="background: #cceeff">
    <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" style="background: #cceeff">
    <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>&nbsp;</TD>
    <TD align="right">1,000,000</TD>
    <TD>&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>
<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">1,000,000</TD>
    <TD nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">25/08/2007 to 25/08/2016</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->75<!-- /Folio -->
</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="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>
</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, 2006</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">
    <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">3.46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap 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">
    <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">
    <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>&nbsp;</TD>
    <TD align="right">60,000</TD>
    <TD>&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">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">70,000</TD>
    <TD nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">25/08/2007 to 25/08/2011</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">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">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" 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">
    <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">
    <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">1.16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">26/08/2006 to 26/08/2010</TD>
</TR>
<TR valign="bottom" 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">70,000</TD>
    <TD nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">25/08/2007 to 25/08/2011</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">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">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">
    <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">
    <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>&nbsp;</TD>
    <TD align="right">60,000</TD>
    <TD>&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">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">70,000</TD>
    <TD nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">25/08/2007 to 25/08/2011</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">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" 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">
    <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">
    <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">1.16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">26/08/2006 to 26/08/2010</TD>
</TR>
<TR valign="bottom" 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">95,000</TD>
    <TD nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">25/08/2007 to 25/08/2011</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">Tay Siew Choon</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">
    <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">
    <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">
    <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">1.16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">26/08/2006 to 26/08/2010</TD>
</TR>
<TR valign="bottom" 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">70,000</TD>
    <TD nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">25/08/2007 to 25/08/2011</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" 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">1.16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">26/08/2006 to 26/08/2010</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">95,000</TD>
    <TD nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">25/08/2007 to 25/08/2011</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>&nbsp;</TD>
    <TD align="right">60,000</TD>
    <TD>&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">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">70,000</TD>
    <TD nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">25/08/2007 to 25/08/2011</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">Steven H. Hamblin</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">70,000</TD>
    <TD nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">25/08/2007 to 25/08/2011</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 colspan="3"><B>Note:</B></TD>
</TR>

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

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Options that were granted in 2006.</TD>
</TR>

</TABLE>



<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>


<P align="center" style="font-size: 10pt"><!-- Folio -->76<!-- /Folio -->
</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">

<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>
    <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>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, 2006, options to purchase 119,842,980 ordinary shares were issued and
outstanding under our 1999 Option Plan, of which options to purchase 28,659,419 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 February&nbsp;22, 2007
to October&nbsp;3, 2016.
</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 April&nbsp;2004, we adopted 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. The Chartered ESPP 2004 was established as part of our overall employee
compensation policy to put our company and SMP in a competitive position as an employer. The
Chartered ESPP 2004 and the SMP 2004 are on substantially similar terms except that the Chartered
ESPP 2004 is intended to qualify under Section&nbsp;423 of the Code while the SMP ESPP 2004 is not
intended to qualify under Section&nbsp;423 of the Code.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Chartered ESPP 2004 and SMP ESPP 2004 are administered by the ERCC. Subject to certain
restrictions, our employees are eligible to participate in the Chartered ESPP 2004 and certain
employees of SMP are eligible to participate in the SMP 2004. Eligible employees who elect to
participate in the Chartered ESPP 2004 or the SMP ESPP 2004 may designate up to 10% of their
respective monthly compensation towards the purchase of our company&#146;s shares. Prior to March&nbsp;2005,
the purchase price of our company&#146;s shares under Chartered ESPP 2004 and SMP ESPP 2004 prior to the
offering cycle commencing March&nbsp;1, 2005 was at a price representing the lower of (a)&nbsp;a 15% discount
from the fair market value of the ordinary shares on the last trading day in such offering period,
or (b)&nbsp;a 15% discount of the fair market value of the ordinary shares on the last trading day
before the commencement of such offering period. The ERCC however may alter the method of
determining the purchase price payable by the participants in order to reduce or eliminate any
share based compensation charge which our company may incur with respect to the Chartered ESPP 2004
or SMP ESPP 2004. With effect from March&nbsp;1, 2005, the purchase price of our company&#146;s shares under
Chartered ESPP 2004 and SMP ESPP 2004 was increased to a price representing 95% of the fair market
value of the ordinary shares applied to our company&#146;s average share price on the last trading day
of the offer period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The aggregate number of ordinary shares that are available for purchase under the
Chartered ESPP 2004 and the SMP ESPP 2004 taken together is 30,000,000 ordinary shares with a
limit of 3,000,000 ordinary shares per calendar year. A total of 1,155,720 ordinary shares were
issued in 2006 under the Chartered ESPP 2004 and the SMP ESPP 2004.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->77<!-- /Folio -->
</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 Board has the right to amend, suspend or terminate the Chartered ESPP 2004 or the
SMP ESPP 2004 at any time and without notice. Shareholders&#146; approval will be required, however, to
change the maximum aggregate number of ordinary shares to be issued under the plans, except for a
change in the number of ordinary shares due to a share dividend, a subdivision or consolidation of
ordinary shares, or other change in our capital structure. In addition, shareholders&#146; approval will
be required to change the eligibility requirements for participation in the Chartered ESPP 2004 or
the SMP ESPP 2004, and for any other amendment of the plans to the extent required by applicable
law or regulation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Equity Compensation Plan Information as of December&nbsp;31, 2006</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="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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>(b)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><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" colspan="3"><B>Weighted-</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of Securities</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>(a)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>average</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Remaining Available</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of Securities</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise Price of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>for Future Issuance</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>to be Issued upon</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Outstanding</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>under Equity</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Options,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Compensation Plans</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Outstanding Options,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Warrants and</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><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" colspan="3" style="border-bottom: 1px solid #000000"><B>Warrants and Rights</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Rights</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" 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>&nbsp;</TD>
    <TD align="right">119,842,980</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.89</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">108,223,143</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity compensation plans not
approved by shareholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">N.A.*</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">N.A.*</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="center">N.A.*</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">119,842,980</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.89</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">108,223,143</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 colspan="3"><B>Note:</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="110"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS</B>
</DIV>

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

</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 January&nbsp;31, 2007 based on an aggregate of 2,536,172,438 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="left" style="border-bottom: 1px solid #000000"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholders Holding 5% or More</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>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</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,510,324,883</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">59.55</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 colspan="3"><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>The number of ordinary shares listed in this table includes ordinary shares held
directly or 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 1,510,324,883 ordinary shares beneficially owned by Temasek consists of the 1,510,324,883
ordinary shares held by ST
Semiconductors out of which 215,000,000 ordinary shares are subject to the terms of a securities
lending agreement entered into
by ST Semiconductors with a certain financial institution. ST Semiconductors is a wholly-owned
subsidiary of Temasek. Temasek
may therefore be deemed to beneficially own the shares owned by ST Semiconductors.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
of January&nbsp;31, 2007, 669,129 of our ordinary shares, representing 0.03% of our
outstanding ordinary shares, were held by a total of 108 holders of record with addresses in the
U.S. As of the same date, 8,274,110 of our ADSs (representing 82,741,100 ordinary shares),
representing 3.26% of our outstanding ordinary shares, were held by a total of 10 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
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->78<!-- /Folio -->
</DIV>

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



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">number of beneficial holders or where the beneficial holders are resident. All holders of our
ordinary shares are entitled to the same voting rights.
</DIV>


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


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><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, 2006, Temasek, through its subsidiary, ST
Semiconductors, beneficially owned approximately 59.56% 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
Sean Lim Huat is a member of the Temasek Advisory Panel.
</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. See Note
2(a) to the consolidated financial statements.
</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, Singapore Technologies Pte Ltd, or 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 in our company were
transferred to Temasek.
</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 2004 was $2.9&nbsp;million. Singapore Technologies also provided us with a short-term credit
facility. Since December&nbsp;31, 2004, these activities have been 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 and 2006, 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. Effective from 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 2004, management fees with Singapore Technologies amounted to $2.7&nbsp;million. There were no
management fees payable to Singapore Technologies in 2005 and 2006 as our service agreement with
Singapore Technologies was terminated effective from 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 $7.1&nbsp;million in
2004. There were no such reimbursements in 2005 and 2006.
</DIV>

<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 2006, 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 $19.1&nbsp;million, $12.9&nbsp;million and $10.6&nbsp;million in 2004, 2005
and 2006, respectively, for
</DIV>


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



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">services rendered in those years. We also paid other affiliates of Temasek $2.2&nbsp;million, $0.9
million and $0.5&nbsp;million in 2004, 2005 and 2006, respectively, for services rendered in those
years. We purchased $0.4&nbsp;million, $4.0&nbsp;million and $1.8&nbsp;million in assets from affiliates of
Temasek in 2004, 2005 and 2006, 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, 2004,
2005 and 2006 were approximately $2.8&nbsp;million, $2.7&nbsp;million and $3.3&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="font-size: 10pt; margin-top: 12pt"><B>C. INTERESTS OF EXPERTS AND COUNSEL</B>
</DIV>


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

</DIV>

<DIV align="left">
<A name="131"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 8. FINANCIAL INFORMATION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION</B>

</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>


<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 2006. 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;403 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
</DIV>


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

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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, 2006, we are not involved in any legal or arbitration
proceedings that we believe would be significantly harmful to our company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. SIGNIFICANT CHANGES</B>
</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="111"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 9. THE OFFER AND LISTING</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><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
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 align="left" style="font-size: 10pt; margin-top: 12pt"><B>(a)&nbsp;Annual high and low market prices</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="3%">&nbsp;</TD>
    <TD width="59%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 0px solid #000000"><B>Nasdaq</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <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">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">January 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" style="background: #cceeff">

    <TD>&nbsp;</TD>
    <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">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">January 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>
<TR valign="bottom" style="background: #cceeff">
        <TD>&nbsp;</TD>

<TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;1,
through December&nbsp;31, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">11.81</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6.70</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="3%">&nbsp;</TD>
    <TD width="59%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 0px solid #000000"><B>Singapore Exchange</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;1, through
December 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">
    <TD>&nbsp;</TD>
    <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" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <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">
    <TD>&nbsp;</TD>
    <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>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;1, through
December&nbsp;31, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.84</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.03</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(b)&nbsp;&nbsp;Quarterly high and low market prices</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="3%">&nbsp;</TD>
    <TD width="59%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 0px solid #000000"><B>Nasdaq</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <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>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">July 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>&nbsp;</TD>
    <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>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">January 1, through March&nbsp;31, 2006 </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">9.67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7.60</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">April&nbsp;1, through June&nbsp;30, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">11.81</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">8.16</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">July&nbsp;1, through September&nbsp;30, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">8.84</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6.70</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD>&nbsp;</TD>
<TD><DIV style="margin-left:15px; text-indent:-15px">October&nbsp;1, through December&nbsp;31, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">9.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7.29</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="3%">&nbsp;</TD>
    <TD width="59%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 0px solid #000000"><B>Singapore Exchange</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">April 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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">July 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>&nbsp;</TD>

<TD><DIV style="margin-left:15px; text-indent:-15px">October&nbsp;1, through December 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>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;1, through March&nbsp;31, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">S$1.57</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.26</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">April 1, through June&nbsp;30, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.84</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.29</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">July 1, through September&nbsp;30, 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$1.03</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">October&nbsp;1, through December&nbsp;31, 2006
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">S$1.40</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">S$1.15</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->81<!-- /Folio -->
</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"><B>(c)&nbsp;&nbsp;Monthly high and low market prices</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="3%">&nbsp;</TD>
    <TD width="59%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 0px solid #000000"><B>Nasdaq</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">September 1,
through September&nbsp;30, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">$&nbsp;&nbsp;8.04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">$7.41</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">October 1, through October&nbsp;31, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">$&nbsp;&nbsp;7.89</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">$7.29</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>

<TD><DIV style="margin-left:15px; text-indent:-15px">November&nbsp;1, through November&nbsp;30, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">$&nbsp;&nbsp;9.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">$7.60</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>

<TD><DIV style="margin-left:15px; text-indent:-15px">December&nbsp;1, through December&nbsp;31, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">$&nbsp;&nbsp;9.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">$7.99</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>

<TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;1, through January&nbsp;31, 2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">$&nbsp;&nbsp;8.99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">$8.08</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD>&nbsp;</TD>

<TD><DIV style="margin-left:15px; text-indent:-15px">February&nbsp;1,
through February&nbsp;28, 2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">$10.48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">$9.22</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="3%">&nbsp;</TD>
    <TD width="59%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 0px solid #000000"><B>Singapore Exchange</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">September 1, through September&nbsp;30, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.19</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">October 1,
through October&nbsp;31, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.15</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">November 1,
through November&nbsp;30, 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$1.17</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">December 1, through December&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$1.25</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">January 1,
through January&nbsp;31, 2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">S$1.22</TD>
</TR>

<TR valign="bottom">
    <TD>&nbsp;</TD>

<TD><DIV style="margin-left:15px; text-indent:-15px">February&nbsp;1,
through February&nbsp;28, 2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.61</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S$1.40</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, 2007 was $9.82&nbsp;per ADS. The last reported sale price of the ordinary shares as quoted on the Singapore Exchange
on February&nbsp;28, 2007 was S$1.46 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="112"></A>
</DIV>

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


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


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


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>B. OUR MEMORANDUM AND ARTICLES OF ASSOCIATION</B>
</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;). The Companies (Amendment) Act 2005 of Singapore,
or the Companies (Amendment) Act, which came into operation on January&nbsp;30, 2006 introduced several
changes to the company law regime which included the abolishment of the concepts of par value,
authorized capital, share premium and the issue of shares at a discount. In addition, the Companies
(Amendment) Act also introduced new provisions on share repurchases and treasury shares. Under
these new provisions, a company can now repurchase shares out of share capital, as well as from
profits so long as the company is solvent. Ordinary shares which are the subject of a share
repurchase by a company can be held by that company as treasury shares instead of being cancelled.
The right to attend and vote at meetings and the right to dividends or other distributions will be
suspended for so long as the repurchased shares are held as treasury shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our company intends to propose changes to our Articles of Association at our next annual
general meeting to be held on April&nbsp;24, 2007 to address the above key changes introduced by the
Companies (Amendment) Act as well as to streamline and rationalize certain other existing
provisions in our Articles of Association.
</DIV>

<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>

<P align="center" style="font-size: 10pt"><!-- Folio -->82<!-- /Folio -->
</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">&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, 2006, there were 2,535,895,593 ordinary shares and 28,350
preference shares issued and allotted by our company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to the Companies (Amendment) Act becoming effective on 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 $0.01 each.
As of January&nbsp;30, 2006, with the abolishment of the concept of &#147;par value&#148; and &#147;authorized
capital&#148;, 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>


<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>


<P align="center" style="font-size: 10pt"><!-- Folio -->83<!-- /Folio -->
</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"><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>
    <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>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>
    <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>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>
    <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>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 genera! 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Preference shareholders are entitled to attend, speak and vote at any class meeting of the
preference shareholders, in person or by proxy, but they are not entitled to attend, speak or vote
at our general meetings. However, the preference shareholders are only entitled to attend and vote
(but not speak) at those general 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 as defined in our Articles of Association for such preference
share were the date 48 hours preceding the date of such class meeting or general meeting. A proxy
need not be a shareholder.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->84<!-- /Folio -->
</DIV>

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

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

<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<BR>
&nbsp;<BR>
If we determine that, as a result 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="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>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" 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>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" 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,</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">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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.</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>Clean-up call</TD>
</TR>

</TABLE>
</DIV>
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</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="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>
    <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>Optional call 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="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: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The early redemption price and the closing sale price are 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 in certain specified circumstances.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Singapore law contains certain restrictions on 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>
    <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>ending on the date falling seven business days prior to the earlier 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="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>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" 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>

<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 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. If a person acquires 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 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 (either on his
own or together with parties acting in concert with him) additional voting shares representing more
than 1% of our voting shares in any six-
</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">month period, he must, except with the consent of the Singapore Securities Industry Council,
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 offerer or parties acting in concert
with the offerer 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 offerer 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 take-over 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. 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>

<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 totai 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 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>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>
    <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>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>



</TABLE>
</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="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 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%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>direct or prohibit any act or cancel or vary any transaction or resolution;</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>regulate the conduct of our affairs in the future;</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>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>
    <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>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>
    <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>provide that the Memorandum or Articles of Association be amended; 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="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>provide that our company be wound up.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. MATERIAL CONTRACTS</B>
</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 or was material to
us during the last two years.
</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.
</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 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The CSP syndicated loan matured and was fully repaid in
September&nbsp;2006.
</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
Guaranteed 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, as guarantor
and JP Morgan as facility agent (see &#147;item 19. Exhibits &#151; Exhibit&nbsp;4.3&#148;). Pursuant to this
agreement, we secured a $653&nbsp;million term loan facility from JP Morgan, guaranteed by Exim. This
facility may only be used to finance the purchase of equipment from U.S. vendors for our company&#146;s
Fab 7 facility and may be drawn down only in accordance with the equipment purchases which follow
an agreed ramp schedule. 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. This
facility bears interest at LiBOR plus 0.125% and interest is payable semi-annually.
</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 agreed to provide us with a $200&nbsp;million term
loan facility (with a $100&nbsp;million green-shoe option). The $100&nbsp;million green-shoe option was
subsequently subscribed by ABN AMRO Bank, United Overseas Bank and Deutsche Bank.In 2005, the
entire $300&nbsp;million loan facility, which included the $100&nbsp;million green-shoe option, was fully
drawn down. The repayment period was to 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 was to be repaid in six equal semi-annual
installments. This facility was fully repaid in April&nbsp;2006 using the proceeds from the issuance of
the 6.25% senior notes due 2013 as described below.
</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"><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;4.4&#148;). The facility bears interest at LIBOR plus 0.80%
and interest is payable semi-annually. The purpose of the facility is to fund our company&#146;s capital
expenditure and for our company&#146;s general corporate purposes. 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. This $50&nbsp;million loan facility was
fully drawn down in March&nbsp;2005.
</DIV>

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


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We entered into a facility agreement with SMBC as arranger and Sumitomo Mitsui Banking
Corporation, Singapore Branch, as Agent, on March&nbsp;3, 2006 (see &#147;Item&nbsp;19. Exhibits &#151; Exhibit&nbsp;4.6&#148;).
This facility agreement is in relation to a $150&nbsp;million revolving credit facility with a greenshoe
option to increase to $250&nbsp;million and is a renewal of the facility agreement dated December&nbsp;23,
2004 (described above) which has expired. This facility bears interest at a floating rate determined by reference to LIBOR, payable
on the last day of each interest period selected by us. The amounts borrowed under this facility
are to be applied towards repaying our company&#146;s existing borrowings or our working capital
requirements. This facility agreement provides for the termination of the facility on March&nbsp;30,
2007 with an option for parties to extend the term for a further period of 364&nbsp;days subject to
certain conditions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June&nbsp;30, 2006, we entered into a syndication agreement with SMBC as arranger, Sumitomo
Mitsui Banking Corporation, Singapore Branch as original lender, and with Bayerische Hypo-und
Vereinsbank AG, WestLB and Societe Generale as new lenders , pursuant to which SMBC transferred
US$50&nbsp;million of its commitment under the facility agreement dated March&nbsp;3, 2006 to Bayerische
Hypo-und Vereinsbank AG, WestLB and Societe Generale (&#147;Syndicated Lenders&#148;). As a result of this
syndication, SMBC has a commitment of US$150&nbsp;million and the Syndicated Lenders have an aggregate
commitment of US$50&nbsp;million under the facility agreement dated
March&nbsp;3, 2006 (see &#147;Item 19.
Exhibits &#151; Exhibit&nbsp;4.6.1&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Equity Call Option</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 Goidman Sachs
International, as counter-party, to pro-actively manage our convertible notes due April&nbsp;2, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In March&nbsp;2006, we replaced the bilateral option transaction with Goldman Sachs International
which we had entered into in August&nbsp;2004 and which was due to expire on April&nbsp;2, 2006 with a new
call option transaction (&#147;2006 Option&#148;) (see &#147;Item&nbsp;19. Exhibits &#151; Exhibit&nbsp;4.5&#148;) for the same number
of our ordinary shares. Under the 2006 Option transaction, we have a choice of physical or cash
settlement. Goldman Sachs International may purchase 214,800,000 of our ordinary shares at S$2.15
per share and the option to purchase these shares is exercisable by Goldman Sachs International
from March&nbsp;29, 2006 and will expire on March&nbsp;29, 2011.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the first year of the 2006 Option, we have the right to terminate the 2006 Option early in
whole or in part on the first occasion that the closing price of our ordinary shares equals or
exceeds S$1.75 on each of any 20 business days in any consecutive 30 business day period. If we
elect to do so and elect to settle the portion of the 2006 Option being terminated early by
delivering shares, Goldman Sachs International will have the right but not the obligation during
the following 30 business days to buy from us such number of our ordinary shares up to the amount
terminated early at S$1.60 per share. In respect of any portion not terminated early under those
circumstances or if we do not terminate any part of the 2006 Option early, then the 2006 Option (or
the relevant part) will continue under its terms.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the second year of the 2006 Option, we have the right to terminate the 2006 Option early in
whole or in part if the closing price of our ordinary shares is equal to or exceeds S$2.6875 on
each of any 20 business days in any consecutive 30 business day
period. If we elect to exercise
this right of termination, Goldman Sachs International will be required to buy from us such number
of ordinary shares relating to the terminated portion of the 2006 Option at S$2.15 per share.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The closing prices of our ordinary shares since we entered into the 2006 Option to the end of
2006 did not trigger the early termination provisions. As of December&nbsp;31, 2006, Goldman Sachs
International had not exercised its rights under the 2006 Option.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"> <B>5.75%
<I>senior notes due 2010 and </I></B><I><B>6.375%</B> </I><B><I>senior notes
due </I></B><I><B>2015</B></I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 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, are effectively subordinated to the indebtedness and other liabilities
of our subsidiaries and joint ventures and any of our secured
</DIV>


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



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 payable semi-annually
on February 3 and August 3 of each year, commencing February&nbsp;3, 2006. The 6.375% senior notes due
2015 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 ail 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><I>Convertible Redeemable Preference Shares and 6% Amortizing Bonds due 2010</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In July&nbsp;2005, we issued 30,000 units which comprised of 30,000 non-voting convertible
redeemable preferred shares due 2010 (&#147;preference shares&#148;) and $46.7&nbsp;million of 6.00% amortizing
bonds due 2010 (&#147;Amortizing Bonds&#148;). The units were each priced at $10,000 and they raised an
aggregate amount of $300&nbsp;million, which was allocated to the preference shares and the Amortizing
Bonds based on their relative fair values. The preference shares and Amortizing Bonds are legally
separable instruments. The Amortizing Bonds are our unsecured, senior and unsubordinated
obligations. The Amortizing Bonds, however, are 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. Principal in semi-annual installments are payable on
the Amortizing Bonds on February&nbsp;17 and August&nbsp;17 of each year, commencing on February&nbsp;17, 2006,
with the final principal installment to be paid at maturity on August&nbsp;17, 2010. Interest at the
rate of 6.00% per annum is payable semi-annually on February&nbsp;17 and August&nbsp;17 of each year,
commencing February&nbsp;17, 2006. We will redeem the Amortizing Bonds at 100% of the then outstanding
principal amount, together with any accrued and unpaid interest, on the maturity date.
</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 the Amortizing Bonds at a redemption price equal to the outstanding 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 Amortizing
Bonds may require us to repay in cash their Amortizing Bonds 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 from
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: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Please see &#147;Item&nbsp;10. Additional Information &#151; B. Our Memorandum and Articles of Association&#148;
for information on our preference shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>6.25% </B><B><I>senior notes due 2013</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2006, we issued $300&nbsp;million of 6.25% senior notes due 2013. These senior notes are
our unsecured, senior and unsubordinated obligations. The senior notes, however, are 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 6.25%
senior notes due 2013 will mature on April&nbsp;4, 2013, with interest at the rate of 6.25% per annum
payable semi-annually on April 4 and October 4 of each year, commencing October&nbsp;4, 2006. We will
pay 100% of the principal amount of the senior notes, together with any accrued and unpaid
interest, on the maturity date.
</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 the 6.25% senior notes at a redemption price equal to the principal amount, plus
any accrued and unpaid interest to the redemption date.
</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;Upon the occurrence of specified change of control events, holders of these 6.25% 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) Strategic business
alliances</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>CSP</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, 2006, the equity interests of CSP were 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 19. Exhibits &#151; Exhibit 4.7.3&#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 19. Exhibits &#151; Exhibit&nbsp;4.8.3&#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;4.8.10&#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>

<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 19. Exhibits &#151;
Exhibit&nbsp;4.9.4&#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>

<P align="center" style="font-size: 10pt"><!-- Folio -->91<!-- /Folio -->
</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 September&nbsp;2002, we entered into a Letter Agreement with Agere Systems Inc. (see
&#147;Item 19. Exhibits &#151; Exhibit&nbsp;4.9.7&#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;4.11.1&#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&nbsp;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;4.11.2&#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 19. Exhibits &#151; Exhibit&nbsp;4.11.3&#148;),
Copper/Related FEOL Technology License Agreement (see &#147;Item&nbsp;19. Exhibits &#151; Exhibit&nbsp;4.11.4&#148;) and
Refundable Cross Deposit Agreement (see &#147;Item&nbsp;19. Exhibits &#151; Exhibit&nbsp;4.11.10&#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. The &#147;SF&#148; Process Development and Cost Sharing
Agreement was amended on several occasions to, among other things, 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 on March&nbsp;5, 2004 (see &#147;Item&nbsp;19.
Exhibits &#151; Exhibit&nbsp;4.11.7&#148;), to extend parties&#146; collaboration to include 45nm process technologies
(see Item&nbsp;19. Exhibits &#151; Exhibit&nbsp;4.11.9&#148;), and to expand parties&#146; agreement with regard to the
design kit models as well as to include development of design enablement for certain other 90nm
technologies as described in the agreement and to broaden the scope of the license grant (see &#147;Item
19. Exhibits &#151; Exhibit&nbsp;4.11.8&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2006, IBM and our company agreed, subject to the necessary consents of Infineon
and Samsung, to use a new contract structure to continue our existing development work for 45nm
bulk CMOS process technology and 45nm bulk CMOS enablement as well to define the framework for
future joint development activities. The new contract structure comprises the Master IBM Joint
Development Terms and Conditions for joint development projects with IBM (see &#147;Item&nbsp;19. Exhibits &#151;
Exhibit&nbsp;4.11.13&#148;) and project agreements which will provide the terms and conditions specific to
individual joint development project activities. In December&nbsp;2006, we entered into project
agreements with IBM for the joint development of 32nm bulk CMOS logic process technology (see &#147;Item
19. Exhibits &#151; Exhibit&nbsp;4.11.16) and to further define the terms of the joint development activities
for 45nm bulk CMOS logic process (see &#147;Item&nbsp;19. Exhibits &#151; Exhibit&nbsp;4.11.15&#148;). As part of the new
contract structure, IBM and our company also entered into a Participation Agreement (see &#147;Item&nbsp;19.
Exhibits &#151; Exhibit&nbsp;4.11.14&#148;) to address additional matters agreed between our companies.
</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 This Refundable Cross Deposit Agreement was further amended and supplemented by
way of a Supplemental Agreement and a Letter Agreement effective as of December&nbsp;19, 2003 and March
15, 2006, respectively, (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&nbsp;4.11.11 and Exhibit&nbsp;4.11.12&#148;).
</DIV>

<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
4.12&#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
1, 2003 (see &#147;Item&nbsp;19. Exhibits &#151; Exhibit&nbsp;4.13&#148;). Under this Agreement, Motorola and our company
granted to one another a license to use certain of each other&#146;s patents.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->92<!-- /Folio -->
</DIV>

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




<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><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 align="left" style="font-size: 10pt; margin-top: 12pt"><B>D.&nbsp; EXCHANGE CONTROLS</B>
</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&nbsp;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="14"><B>Singapore Dollar Per
US$1.00</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="14" style="border-bottom: 1px solid #000000"><B>Noon
Buying Rate</B></TD>
    <TD>&nbsp;</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="2" style="border-bottom: 1px solid #000000"><B>Average</B> <SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Low</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Period
End</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">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">
    <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" style="background: #cceeff">
    <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">
    <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>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.5804</TD>
    <TD>&nbsp;</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">1.5338</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.5338</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 Dolllars 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 valign="top"><DIV style="margin-left:0px; text-indent:-0px">September&nbsp;2006
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.5900</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.5676</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">October&nbsp;2006
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.5904</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.5575</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">November&nbsp;2006
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.5662</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.5373</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">December&nbsp;2006
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.5456</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.5338</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">January&nbsp;2007
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.5428</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.5316</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">February&nbsp;2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.5424</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.5258</TD>
    <TD nowrap 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 nowrap align="left" colspan="3"><B>Note :</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>The average of the daily noon buying rates on the last business day
of each month during the year.</TD>
</TR>

</TABLE>



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


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


<P align="center" style="font-size: 10pt"><!-- Folio -->93<!-- /Folio -->
</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">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 off 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 i<I>s </I>subject to income tax on
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 tax treaties and certain exceptions, non-residents
who derive certain types of income from Singapore are subject to a withholding tax on that income
currently at a rate of 20% for the year ended December&nbsp;31, 2006 (or 15% in the case of interest and
rental of movable equipment; and 10% in the case of royalties). We are obligated by law to withhold
tax when making such payments to a non-resident. No comprehensive tax treaty currently exists
between Singapore and the U.S.
</DIV>

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

<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; 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 normal corporate
income tax rate (which is currently 20%) 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. In this way, the tax we paid would have been available to our shareholders as a tax
credit to offset their tax liabilities on their overall income (including the gross amount of
dividends) subject to Singapore income tax.
</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 the net dividends received
by a non-resident holder of ordinary shares or ADSs. Further, a non-resident shareholder who does
not have deductible expenses attributed to such dividend income would not be able to claim 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>One-Tier Corporate Tax System. </I>The one-tier corporate tax system (&#147;one-tier system&#148;) 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 Singapore, in the hands of a shareholder of ordinary shares or ADSs, regardless of whether the shareholder is a company or an individual and whether or not the
shareholder is a
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Singapore tax resident. Accordingly, under the one-tier 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, companies with unutilized dividend franking credits as of December&nbsp;31, 2002, are
given a five year transitional period from January&nbsp;1, 2003 to December&nbsp;31, 2007 to remain on the
imputation system for the purposes of paying Franked Dividends.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We do not presently intend to migrate to the one-tier system until our dividend franking
credits as of December&nbsp;31, 2002 are fully utilized or until the transitional period comes to an
end, whichever is earlier. Accordingly, for so long as we have not moved to the one-tier system,
shareholders may continue to receive dividends with credits attached as described above under"&#151;
Imputation System.&#148; In this regard, tax vouchers issued by us, if any, will distinguish between
franked dividends and normal tax exempt dividends. The latter comprise dividends paid out of income
that has been exempt from tax, or income net of tax payable at a concessionary tax rate, approved
deduction or approved further deduction of expenses; or foreign tax credit allowed. Once we have
fully utilized our dividend franking credits (that is, we are required to move to the one-tier
system) or elected to move to the one-tier system at an earlier date, tax vouchers issued by us, if
any, will distinguish between normal tax exempt dividends and exempt dividends under the one-tier
system.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Tax on capital gains</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. There are currently no specific laws
or regulations which address the characterization of capital gains. Hence, gains or profits
arising from the ordinary shares or ADSs may be construed to be of an income nature and subject to
tax if they arise from activities which the Inland Revenue Authority of Singapore regards as the
carrying on of a trade or business in Singapore.
</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 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>citizens or residents of the U.S. for U.S. federal income tax purposes,</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>corporations or other entities created or organized under the laws of the U.S. or
of any political subdivision
thereof,</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>estates the income of which is subject to U.S. federal income taxation regardless of source, 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="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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.</TD>
</TR>

</TABLE>
</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="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>

<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 at that time.
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 before January&nbsp;1, 2011 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
</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">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 2006. However,
there can be no assurance that we will not be a PFIC in 2007 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 risk that we may be a PFIC in 2007 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 Global Select
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 (certified
on IRS Form W-9) 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 align="left" style="font-size: 10pt; margin-top: 12pt"><B>F. DIVIDENDS AND PAYING AGENTS</B>
</DIV>

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


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

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


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

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

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>I. SUBSIDIARY INFORMATION</B>
</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>
<DIV align="left">
<A name="113"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">
<B>ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK </B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">
<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 is derived primarily from the changes in
interest rates, foreign exchange rates and the price of our ordinary shares. To mitigate these risks, we utilize derivative
financial instruments and natural hedging by maintaining foreign currency bank deposits, 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 floating rate 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. To manage interest rate risk, we may utilize
interest rate derivative instruments to modify the interest characteristics of our outstanding
debts. The market risk associated with such interest rate contracts is managed by establishing
and monitoring parameters that limit the types and degree of market risk that may be undertaken.
We assess interest rate cash flow risk by continually identifying and monitoring changes in
interest rate exposures that may adversely impact expected future cash flows and by evaluating
hedging opportunities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The tables below provide information about our derivative financial instruments and other
financial instruments that are sensitive to changes in interest rates, including interest rate
contracts and long-term debt. For long-term debt, the table presents principal cash flows and related weighted average interest rates
by expected maturity dates. For interest rate contracts, the tables present notional amounts and
weighted average interest rates by expected (contractual)&nbsp;maturity dates. Notional amounts are
used to calculate the contractual payments to be exchanged under the contract. Weighted average
floating rates are based on prevailing floating interest rates related to the outstanding
obligations as of December&nbsp;31, 2006.
</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="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; font-weight: bold" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="30">As of December 31, 2006</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt; font-weight: bold" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="30">Expected Maturity Date</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt; font-weight: bold" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="30" style="border-bottom: 1px solid #000000">(In thousands, except interest rates)</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt; font-weight: bold" 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">Fair</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt; font-weight: bold" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2011</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Thereafter</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Total</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Value</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:</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"><!-- 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">Floating rate
debt (US$)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">114,855</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">64,855</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">64,855</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">64,855</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">64,857</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">374,277</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">373,905</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Weighted
average
interest
rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5.95</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5.73</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5.73</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5.73</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5.73</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5.80</TD>
    <TD nowrap>%<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fixed rate debt
(US$)<SUP style="font-size: 85%; vertical-align: text-top">(2)</sup></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8,774</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,308</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">385,476</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">550,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">963,433</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">962,140</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:30px; text-indent:-15px">Weighted
average
interest
rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">6.00</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">6.00</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">6.00</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5.76</TD>
    <TD nowrap>%</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">6.31</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">6.08</TD>

<TD nowrap>%<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></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">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">123,629</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">74,163</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">74,730</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">450,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">64,855</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">550,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,337,710</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,336,045</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->98<!-- /Folio -->
</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>
    <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; font-weight: bold" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="30">As of December 31, 2006</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt; font-weight: bold" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="30">Expected Maturity Date</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt; font-weight: bold" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="30" style="border-bottom: 1px solid #000000">(In thousands, except interest rates)</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt; font-weight: bold" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Thereafter</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Total</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Fair Value</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">INTEREST <FONT style="font-variant: SMALL-CAPS">RATE DERIVATIVES</font></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">Interest rate swap<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>:</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">Fixed to Floating (US$)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">300,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">300,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,109</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Average pay rate
</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 colspan="3" align="center">LIBOR plus</TD>
    <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">&nbsp;</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 nowrap align="left">&nbsp;</TD>
    <TD align="right">0.93</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 valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Average receive rate</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"><I>&#151;</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.25</TD>
    <TD nowrap><I>%</I></TD>
    <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 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; font-weight: bold" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">As of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt; font-weight: bold" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">December 31, 2005</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt; font-weight: bold" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">(In Thousands)</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt; font-weight: bold" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Total</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Fair Value</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</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">Floating rate debt<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></DIV></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>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fixed rate debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">768,858</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">779,768</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">$</TD>
    <TD align="right">1,455,515</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,466,425</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">INTEREST RATE DERIVATIVES</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest rate cap contracts<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">183,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,394</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>

<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" colspan="3"><B>Note:</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>Average interest rate under &#147;Total&#148; are the weighted average interest rates of loans
outstanding as of December&nbsp;31, 2006.</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 SMBC/OCBC Term Loan, which bears floating interest at LIBOR plus 1.75% as of December&nbsp;31,
2005, was fully repaid using
the proceeds from the issuance of the 6.25% senior notes due 2013 in 2006. We entered
into an interest rate swap to
economically swap the fixed-rate interest obligation associated with the 6.25% senior notes due
2013 from a fixed-rate interest
obligation to a floating-rate interest obligation based on LIBOR for U.S. dollars plus 0.93%.</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 entered into four interest rate cap contracts related to the
floating rate obligations associated with
$300.0&nbsp;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. These interest rate cap contracts matured in September&nbsp;2006.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2006, after taking into account the economic effect of hedging
instruments, 49.5% and 50.5% of our interest rate payment obligations are at fixed rates and
floating rates, respectively. We do not have cash flow and earnings exposure due to market interest
rate changes for our fixed rate debt obligations, however we do have cash flow and earnings
exposure due to market interest rate changes for our floating rate debt obligations. Based on our
interest payment obligations as of December&nbsp;31, 2006, a 0.5% increase in interest rates would
increase our floating rate interest payments by 8.3% 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 reporting and 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 2006 and as a result, we had relatively little foreign currency exchange
risk with respect to our revenue. In 2005, approximately 78% and 20% of our cost of revenue was
denominated in U.S. dollars and Singapore dollars, respectively. This did not significantly change
in 2006 where approximately 76% and 22% of our cost of revenue was denominated in U.S. dollars and
Singapore dollars, respectively. Approximately 55% of our 2005 capital expenditures were denominated
in U.S. dollars, approximately 13% were denominated in Euro, approximately 28% were denominated in
Japanese yen and approximately 4% were
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->99<!-- /Folio -->
</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">denominated
in Singapore dollars. In 2006, approximately 59% of our capital expenditures
were denominated in U.S. dollars, approximately 16% were denominated in Euro, approximately 20%
were denominated in Japanese yen and approximately 5% were denominated in Singapore dollars.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other
than a portion of our cash and cash equivalents, payables, and capital lease
obligations, our financial assets and liabilities are primarily denominated in U.S. dollars. As of
December&nbsp;31, 2005, 96% of our cash and cash equivalents were denominated in U.S. dollars, with the
remaining cash and cash equivalents denominated in Japanese yen, Singapore dollars and Euro. As of
December&nbsp;31, 2006, 90% and 8% of our cash and cash equivalents were denominated in U.S. dollars
and Singapore dollars, respectively, with the remaining cash and cash equivalents denominated in
Japanese yen and Euro. For our payables, 12% were denominated in Japanese yen and Singapore
dollars each while 3% were denominated in Euro in 2005. In 2006, 17%, 6%, and 9% of our payables
were denominated in Japanese yen, Singapore dollars and Euro, respectively. 100% of our capital
lease obligations were denominated in Singapore dollars in 2005 and 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We minimize our currency risk by purchasing certain raw materials and equipment in U.S.
dollars and borrowing in U.S. dollars. In addition, 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. 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 Euros. We do not use currency forward contracts to hedge 100% of our
foreign currency denominated firm commitments. Other than currency forward contracts, we also
utilize natural hedging by maintaining foreign currency bank deposits and utilizing these for
settlement of foreign currency liabilities. As of December&nbsp;31, 2005, we had $5.9&nbsp;million, $10.8
million and $16.1&nbsp;million in U.S. dollar equivalents of bank deposits denominated in Japanese yen,
Singapore dollars and Euro, respectively. As of December&nbsp;31, 2006, we had $4.0&nbsp;million, $54.6&nbsp;million
and $6.3&nbsp;million in U.S. dollar equivalents of cash and cash equivalents denominated in Japanese
yen, Singapore dollars and Euro, respectively. Our Singapore dollar cash balance is used primarily
to naturally hedge our capital lease obligations and expenses denominated in Singapore dollars
while our Euro and Japanese yen cash balances are used primarily for capital expenditure payments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The table below provides information about our foreign currency forward contracts 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; font-weight: bold" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="15">As of December 31, 2006</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt; font-weight: bold" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="15">Expected
Maturity Date of Notional Amounts</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">As of December 31, 2005</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt; font-weight: bold" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="15" style="border-bottom: 1px solid #000000">(In
thousands, except exchange rates)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">(In thousands)</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt; font-weight: bold" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Thereafter</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Total</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Fair Value</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Total</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Fair Value</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">FORWARD FOREIGN
EXCHANGE AGREEMENTS:</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$)</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">Contract Amount</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">51,264</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">51,264</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,724</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</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>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Average Contractual
Exchange Rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">114.43</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" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">(Receive S$/Pay US$)</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">Contract Amount</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8,997</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8,997</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">41</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</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>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Average Contractual
Exchange Rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.54</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$)</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">Contract Amount</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11,997</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11,997</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,102</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(107</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Average Contractual Exchange
Rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total Contract Amount</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">72,258</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">72,258</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,633</TD>
    <TD nowrap>)</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>
</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>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, we also entered into purchase contracts for which payments are denominated in
currencies other than the functional currency or the local currency of the parties to
the contracts or,
in some cases, their parent company where the parent company provides the majority of resources
required under the contract on behalf of the subsidiary who is party
to the contract. Therefore these contracts contain embedded foreign currency derivatives. The
outstanding notional amounts of these purchase contracts as of December&nbsp;31, 2006 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="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Denominated in Japanese yen (in thousands)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">743,349</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Denominated in Euro (in thousands)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29</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 fair values of these embedded foreign currency derivatives as of December&nbsp;31, 2006 are $0.3
million.
</DIV>



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


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In March&nbsp;2006, we entered into the 2006 Option with GS to replace the call option transaction
that we had previously entered into with GS in August&nbsp;2004 and that expired on April&nbsp;2, 2006. Under
the 2006 Option, GS may purchase up to 214.8&nbsp;million of our ordinary shares at a price of S$2.15
per share. If the 2006 Option is exercised in full at the price of S$2.15 per share and physically
settled, we would receive approximately $300&nbsp;million based on an exchange rate of $1.00 = S$1.54
that could be used for repayment of debt and general corporate purposes. The 2006 Option contains
early termination provisions, whereby we may choose to terminate the 2006 Option in whole or in
part, triggered by the closing price of our ordinary shares reaching and maintaining specified
levels for a defined period of time. Under the terms of the 2006 Option, we have the right in all
cases either to issue new ordinary shares to GS or to settle the transaction in cash. If the 2006
Option is not exercised or terminated earlier, it will expire on March&nbsp;29, 2011. The 2006 Option
which we entered into with GS is a derivative instrument that is dual indexed to our ordinary share price and
currency exchange rates. As a result we are exposed to both price fluctuations of our ordinary shares
as well as exchange rate movements of the U.S. dollar, which is our
reporting and functional currency, against the Singapore dollar. The fair value of the 2006 Option as of December&nbsp;31, 2006 is $7.5&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A hypothetical 10% increase (decrease)&nbsp;to the last closing price of our ordinary shares as of
December&nbsp;31, 2006 of S$1.28 using the exchange rate as of that date would result in an increase (a
reduction) of approximately $3.1&nbsp;million and $(2.7) million in the fair value of the 2006 Option,
which would decrease (increase)&nbsp;our earnings by $3.1&nbsp;million and $(2.7) million, respectively.
</DIV>

<DIV align="left">
<A name="114"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES</B>
</DIV>

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


<P align="center" style="font-size: 10pt"><!-- Folio -->100<!-- /Folio -->
</DIV>

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



<DIV align="left">
<A name="115"></A>
</DIV>

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

<DIV align="left">
<A name="116"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">None.
</DIV>

<DIV align="left">
<A name="117"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS</B>
</DIV>

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

<DIV align="left">
<A name="118"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 15. CONTROLS AND PROCEDURES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Evaluation of Disclosure Controls and Procedures</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
required by Rules&nbsp;13a-15 and 15d-15 under the Securities Exchange Act of 1934, as
amended, or the Exchange Act, management has evaluated, with the participation of our Chief
Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and
procedures as of the end of the period covered by this report. Disclosure controls and procedures
refer to controls and other procedures designed to ensure that information required to be
disclosed in the reports we file or submit under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the rules and forms of the SEC.
Disclosure controls and procedures include, without limitation, controls and procedures designed
to ensure that information required to be disclosed by us in our reports that we file or submit
under the Exchange Act is accumulated and communicated to management, including our Chief
Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding
our required disclosure. In designing and evaluating our disclosure controls and procedures,
management recognizes 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
was required to apply its judgment in evaluating and implementing 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;Based on the foregoing, our Chief Executive Officer and Chief Financial Officer have
concluded that, as of December&nbsp;31, 2006, the end of the period covered by this report, our
disclosure controls and procedures were effective.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Management&#146;s Report on Internal Control Over Financial Reporting</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management is responsible for establishing and maintaining adequate internal control over
financial reporting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Internal control over financial reporting refers to a process designed by, or under the
supervision of, our Chief Executive Officer and Chief Financial Officer and effected by our Board
of Directors, management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles and includes those policies
and procedures that:
</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>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and
dispositions of our assets;</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>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that our receipts
and expenditures are
being made only in accordance with authorizations of our management and members of our board of directors; 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="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of our assets that could have a material effect on our financial
statements.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Internal control over financial reporting cannot provide absolute assurance of achieving
financial reporting objectives because of its inherent limitations. Internal control over
financial reporting is a process that involves human diligence and compliance and is subject to
lapses in judgment and breakdowns resulting from human failures. Internal control over financial
reporting also can be circumvented by collusion or improper override. Because of such limitations,
there is a risk that material misstatements may not be prevented or detected on a timely basis by
internal control over financial
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->101<!-- /Folio -->
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">reporting. However, these inherent limitations are known features of the financial reporting
process, and it is possible to design into the process safeguards to reduce, though not
eliminate, this risk.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management evaluated the effectiveness of our internal control over financial reporting
as of December&nbsp;31, 2006 using the framework set forth in the report of the Treadway
Commission&#146;s Committee of Sponsoring Organizations (COSO), &#147;Internal Control &#151; Integrated
Framework.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on the foregoing, management has concluded that our internal control over financial
reporting was effective as of December&nbsp;31, 2006. Our company&#146;s independent registered public accounting firm, KPMG, has issued a report on our company&#146;s assessment of our internal control over financial reporting which is set forth below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Changes in Internal Control over Financial Reporting</B>

</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management has evaluated, with the participation of our Chief Executive Officer and Chief
Financial Officer, whether any changes in our internal control over financial reporting that
occurred during our last fiscal year have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting. Based on the evaluation we
conducted, management has concluded that no such changes have occurred.
</div>


<P align="center" style="font-size: 10pt"><!-- Folio -->102<!-- /Folio -->
</DIV>

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


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">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 management&#146;s assessment, included in the accompanying Management&#146;s Report on Internal Control Over Financial Reporting<I>, </I>that Chartered Semiconductor
Manufacturing Ltd maintained effective internal control over financial reporting as of December&nbsp;31,
2006, based on criteria established in Internal Control &#151; Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). Chartered Semiconductor
Manufacturing Ltd&#146;s management is responsible for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness of internal control over financial
reporting. Our responsibility is to express an opinion on management&#146;s assessment and an opinion on
the effectiveness of the Company&#146;s internal control over financial reporting 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 effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, evaluating management&#146;s assessment, testing and evaluating the
design and operating effectiveness of internal control, and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis
for our opinion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A company&#146;s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. A
company&#146;s internal control over financial reporting includes those policies and procedures that (1)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2)&nbsp;provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of management and directors of the company;
and (3)&nbsp;provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company&#146;s assets that could have a material effect on the
financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In our opinion, management&#146;s assessment that Chartered Semiconductor Manufacturing Ltd maintained
effective internal control over financial reporting as of December&nbsp;31, 2006, is fairly stated, in
all material respects, based on criteria established in Internal Control &#151; Integrated Framework
issued by COSO. Also, in our opinion, Chartered Semiconductor Manufacturing Ltd maintained, in all
material respects, effective internal control over financial reporting as of December&nbsp;31, 2006, based on criteria established in Internal Control &#151; Integrated Framework issued
by COSO.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the consolidated balance sheets of Chartered Semiconductor Manufacturing Ltd
as of December&nbsp;31, 2005 and 2006, 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, 2006, and our report dated
March&nbsp;9, 2007 expressed an
unqualified opinion on those consolidated financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt">/s/ KPMG
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Singapore<BR>
March 9, 2007</DIV>


<P align="center" style="font-size: 10pt">102A
</DIV>
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<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="left">
<A name="119"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 16.</B>
</DIV>

<DIV align="left">
<A name="120"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>A. AUDIT COMMITTEE FINANCIAL EXPERT</B>
</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), Steven H. Hamblin
and Maurizio Ghirga (appointed as of November&nbsp;2, 2006). Mr.&nbsp;Andre Borrel ceased to be a member of
the Audit Committee on February&nbsp;1, 2007. Please see &#147;Item 6. Directors, Senior Management and
Employees&#148; for their experience and qualifications. Our Board has determined that Messrs.&nbsp;Steven
H. Hamblin and Maurizio Ghirga 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.
</DIV>
<DIV align="left">
<A name="121"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. CODE OF ETHICS</B>
</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="122"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. PRINCIPAL ACCOUNTANT FEES AND SERVICES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Below are the fees billed in 2005 and 2006 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">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>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,257</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,434</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">102B<!-- Folio --><!-- /Folio -->
</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 process documentation 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 October&nbsp;2005 and November&nbsp;2006, our Audit Committee pre-approved a list of services that could
be rendered by the independent auditors in 2006 and 2007, respectively. In January&nbsp;2007, our Audit
Committee pre-approved the personal income tax services that could be rendered to certain employees
by the independent auditors in 2007. 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="123"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES</B>
</DIV>

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

<DIV align="left">
<A name="124"></A>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">None.
</DIV>

<DIV align="left">
<A name="125"></A>
</DIV>

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

<DIV align="left">
<A name="126"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 17. FINANCIAL STATEMENTS</B>
</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="127"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 18. FINANCIAL STATEMENTS</B>
</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="font-size: 10pt; margin-top: 6pt; margin-left: 2%">Report
of Independent Registered Public Accounting Firm
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">Consolidated Balance Sheets as of December&nbsp;31, 2005 and 2006
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">Consolidated Statements of Operations for the years ended December&nbsp;31, 2004, 2005 and 2006
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">Consolidated
Statements of Comprehensive Income (Loss) for the years ended December&nbsp;31, 2004,
2005 and 2006
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">Consolidated Statements of Shareholders&#146; Equity for the years ended December&nbsp;31, 2004, 2005 and 2006
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">Consolidated Statements of Cash Flows for the years ended December&nbsp;31, 2004, 2005 and 2006
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">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="font-size: 10pt; margin-top: 6pt; margin-left: 2%">SMP, our 49.0%-owned equity-method joint venture company, meets certain &#147;significance&#148; tests
pursuant to Rule&nbsp;3-09 of Regulation&nbsp;S-X. Accordingly, separate financial statements of SMP
are required to be filed by us and we intend to file an amendment to this annual report on
Form 20-F to include the separate financial statements of SMP as soon as available but no
later than June&nbsp;30, 2007.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->103<!-- /Folio -->
</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">
<A name="128"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 19. EXHIBITS</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="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="88%">&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 issued prior to January&nbsp;30, 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>
</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">(27)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Specimen certificate for ordinary shares in respect of new issuances of shares issued on and
after January&nbsp;30, 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>
</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">(27)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Specimen certificate for ordinary shares transferred on and after January&nbsp;30, 2006 in respect of
shares issued before January&nbsp;30, 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>
</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">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">2.5<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">2.6<SUP style="font-size: 85%; vertical-align: text-top">(19)</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">(6)</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">4.1.2<SUP style="font-size: 85%; vertical-align: text-top">(20)</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">4.1.3<SUP style="font-size: 85%; vertical-align: text-top">(20)</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">4.1.4<SUP style="font-size: 85%; vertical-align: text-top">(21)</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">4.1.5<SUP style="font-size: 85%; vertical-align: text-top">(24)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Fifth Supplemental Indenture dated April&nbsp;4, 2006 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">4.2<SUP style="font-size: 85%; vertical-align: text-top">(21)</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">4.3<SUP style="font-size: 85%; vertical-align: text-top">(18)(&#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 as guarantor 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">4.4<SUP style="font-size: 85%; vertical-align: text-top">(18)(&#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">4.5<SUP style="font-size: 85%; vertical-align: text-top">(25)(&#043;&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Letter of Confirmation from Goldman Sachs International to the company dated March&nbsp;29,
2006 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">4.6<SUP style="font-size: 85%; vertical-align: text-top">(25)(&#043;&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Facility Agreement dated March&nbsp;3, 2006 by and between the company as
Borrower and
Sumitomo Mitsui Banking Corporation as Arranger and Sumitomo Mitsui Banking
Corporation, Singapore Branch as Agent.</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">4.6.1<SUP style="font-size: 85%; vertical-align: text-top">(26)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Syndication Agreement dated June&nbsp;30, 2006 relating to the Facility Agreement dated March&nbsp;3,
2006 by and between the company as Borrower and Sumitomo Mitsui Banking Corporation
as Arranger and Sumitomo Mitsui Banking Corporation, Singapore Branch as Agent.</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>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->104<!-- /Folio -->
</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="2%">&nbsp;</TD>
    <TD width="88%">&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>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">4.7.1<SUP style="font-size: 85%; vertical-align: text-top">(7)</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
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">4.7.2<SUP style="font-size: 85%; vertical-align: text-top">(7)</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">4.7.3<SUP style="font-size: 85%; vertical-align: text-top">(23)</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.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">4.8.1<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">4.8.2<SUP style="font-size: 85%; vertical-align: text-top">(17)</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">4.8.3<SUP style="font-size: 85%; vertical-align: text-top">(22)</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">4.8.4<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">4.8.5<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&nbsp;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">4.8.6<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">4.8.7<SUP style="font-size: 85%; vertical-align: text-top">(10)(&#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">4.8.8<SUP style="font-size: 85%; vertical-align: text-top">(8)(&#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>
<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">4.8.9<SUP style="font-size: 85%; vertical-align: text-top">(9)(&#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">4.8.10<SUP style="font-size: 85%; vertical-align: text-top">(4)(&#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>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->105<!-- /Folio -->
</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="2%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.9.1<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">4.9.2<SUP style="font-size: 85%; vertical-align: text-top">(8)(&#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">4.9.3<SUP style="font-size: 85%; vertical-align: text-top">(8)(&#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">4.9.4<SUP style="font-size: 85%; vertical-align: text-top">(8)(&#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">4.9.5<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">4.9.6<SUP style="font-size: 85%; vertical-align: text-top">(14)(&#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">4.9.7<SUP style="font-size: 85%; vertical-align: text-top">(10)</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
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">4.10<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">4.11.1<SUP style="font-size: 85%; vertical-align: text-top">(7)(&#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">4.11.2<SUP style="font-size: 85%; vertical-align: text-top">(11)(&#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">4.11.3<SUP style="font-size: 85%; vertical-align: text-top">(11)(&#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">4.11.4<SUP style="font-size: 85%; vertical-align: text-top">(11)(&#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">4.11<I>.</I>5<SUP style="font-size: 85%; vertical-align: text-top">(22)(&#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>
<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">(12)(&#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">4.11.7<SUP style="font-size: 85%; vertical-align: text-top">(16)(&#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">4.11.8<SUP style="font-size: 85%; vertical-align: text-top">(27)(&#043;&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Third Amended and Restated Amendment No.3 dated November&nbsp;17, 2006 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">4.11.9<SUP style="font-size: 85%; vertical-align: text-top">(18)(&#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 Scaring
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"><!-- Folio -->106<!-- /Folio -->
</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="2%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.11.10<SUP style="font-size: 85%; vertical-align: text-top">(11)(&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Refundable Cross Deposit Agreement dated November
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" nowrap><DIV style="margin-left:0px; text-indent:-0px">4.11.11<SUP style="font-size: 85%; vertical-align: text-top">(15)(&#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" nowrap><DIV style="margin-left:0px; text-indent:-0px">4.11.12<SUP style="font-size: 85%; vertical-align: text-top">(25)(&#043;&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Letter Agreement dated March&nbsp;27, 2006 to vary the terms of the
Refundable Cross Deposit Agreement dated November&nbsp;26, 2002, as amended and supplemented, 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" nowrap><DIV style="margin-left:0px; text-indent:-0px">4.11.13<SUP style="font-size: 85%; vertical-align: text-top">(27)(&#043;&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Master IBM Joint Development Terms and Conditions dated
December&nbsp;15, 2006 for joint development projects with 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" nowrap><DIV style="margin-left:0px; text-indent:-0px">4.11.14<SUP style="font-size: 85%; vertical-align: text-top">(27)(&#043;&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Participation Agreement dated January&nbsp;1, 2007 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" nowrap><DIV style="margin-left:0px; text-indent:-0px">4.11.15<SUP style="font-size: 85%; vertical-align: text-top">(27)(&#043;&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joint Development Project Agreement
dated December&nbsp;15, 2006 for 45nm Bulk-Industry
Standard Semiconductor Process Technology 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" nowrap><DIV style="margin-left:0px; text-indent:-0px">4.11.16<SUP style="font-size: 85%; vertical-align: text-top">{27)(&#043;&#043;)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joint Development Project Agreement
dated December&nbsp;15, 2006 for 32nm Bulk-Industry
Standard Semiconductor Process Technology 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">4.12<SUP style="font-size: 85%; vertical-align: text-top">(16)(&#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, A.G. 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">4.13<SUP style="font-size: 85%; vertical-align: text-top">(4)(&#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">4.14<SUP style="font-size: 85%; vertical-align: text-top">(18)</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>Fabs 3 and 5</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">4.15.1<SUP style="font-size: 85%; vertical-align: text-top">(5)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sub-Lease Agreement 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">4.15.2<SUP style="font-size: 85%; vertical-align: text-top">(18)</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">4.16.1<SUP style="font-size: 85%; vertical-align: text-top">(23)</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">4.16.2<SUP style="font-size: 85%; vertical-align: text-top">(23)</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
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">4.16.3<SUP style="font-size: 85%; vertical-align: text-top">(27)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Supplemental Agreement dated January&nbsp;3, 2007 by and between Terra Investments
Pte. Ltd. and the company relating to the Agreement for Sub-License and Sub-Lease (Private Lot<BR></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->107<!-- /Folio -->
</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="2%">&nbsp;</TD>
    <TD width="88%">&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">A12787(k) now known as A1964508) 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">4.17.1<SUP style="font-size: 85%; vertical-align: text-top">(5)</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">4.17.2<SUP style="font-size: 85%; vertical-align: text-top">(5)</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">4.17.3<SUP style="font-size: 85%; vertical-align: text-top">(18)</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&nbsp;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">4.18.1<SUP style="font-size: 85%; vertical-align: text-top">(13)</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">4.18.2<SUP style="font-size: 85%; vertical-align: text-top">(13)</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.
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">4.18.3<SUP style="font-size: 85%; vertical-align: text-top">(18)</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">4.18.4<SUP style="font-size: 85%; vertical-align: text-top">(27)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Supplemental Agreement dated
January&nbsp;3, 2007 by and between Terra Investments Pte. Ltd.
and the company relating to the Agreement for Sub-License and Sub-Lease
(Private Lot A12787(e) now known as A1964507) dated July&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">4.19.1<SUP style="font-size: 85%; vertical-align: text-top">(27)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Offer Letter dated February&nbsp;16, 2006 from Jurong Town Corporation to Terra Investments Pte.
Ltd. for the lease of land known as Private Lot A1964510 at Plot 6 Woodlands
Industrial Park D in Woodlands Wafer Fab Park.</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">(27)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acceptance of Offer dated February&nbsp;21, 2006 from the company to Terra Investments Pte Ltd.
relating to Private Lot A1964510 at Plot 6 Woodlands Industrial Park D in Woodlands Wafer Fab Park.</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">4.19.3<SUP style="font-size: 85%; vertical-align: text-top">(27)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acceptance of Offer dated February&nbsp;24, 2006 from Terra Investments Pte. Ltd. to Jurong Town
Corporation relating to Private Lot A1964510 at Plot 6 Woodlands Industrial
Park D in Woodlands Wafer Fab Park.</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">4.20<SUP style="font-size: 85%; vertical-align: text-top">(11)</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">4.21<SUP style="font-size: 85%; vertical-align: text-top">(15)</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">(11)</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">(27)</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">(27)</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">(27)</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,</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->108<!-- /Folio -->
</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="2%">&nbsp;</TD>
    <TD width="88%">&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">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">(27)</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">(27)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consent of KPMG.</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: 3pt"><B>Notes:</B>
</DIV>


<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; margin-top: 3pt">
<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.&nbsp;000-27811), as
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
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.&nbsp;000-27811), as submitted
with the Securities and Exchange Commission on November&nbsp;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 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">(5)</TD>
    <TD>&nbsp;</TD>
    <TD>Filed as an exhibit to our company&#146;s Registration Statement on Form F-1 (Registration No.
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">(6)</TD>
    <TD>&nbsp;</TD>
    <TD>Submitted 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;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">(7)</TD>
    <TD>&nbsp;</TD>
    <TD>Filed as an exhibit to our company&#146;s Annual Report on Form 20-F (File No.&nbsp;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">(8)</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">(9)</TD>
    <TD>&nbsp;</TD>
    <TD>Submitted as an exhibit to our company&#146;s First Quarterly Report 2002 on Form 6-K (File No.
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">(10)</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">(11)</TD>
    <TD>&nbsp;</TD>
    <TD>Filed as an exhibit to our company&#146;s Annual Report on Form 20-F (File No.&nbsp;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">(12)</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">(13)</TD>
    <TD>&nbsp;</TD>
    <TD>Submitted as an exhibit to our company&#146;s Third Quarterly Report 2001 on Form 6-K (File No.
000-27811),
as submitted with the Securities and Exchange Commission on November&nbsp;14, 2001, which
exhibit is</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->109<!-- /Folio -->
</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">





<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>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>Submitted 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 November&nbsp;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">(15)</TD>
    <TD>&nbsp;</TD>
    <TD>Filed as an exhibit to our company&#146;s Annual Report on Form 20-F (File No.&nbsp;000-27811), as
filed with the
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">(16)</TD>
    <TD>&nbsp;</TD>
    <TD>Submitted as an exhibit to our company&#146;s First Quarterly Report 2004 on Form 6-K (File No.
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">(17)</TD>
    <TD>&nbsp;</TD>
    <TD>Submitted as an exhibit to our company&#146;s Third Quarterly Report 2004 on Form 6-K (File No.
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">(18)</TD>
    <TD>&nbsp;</TD>
    <TD>Filed as an exhibit to our company&#146;s Annual Report on Form 20-F (File No.&nbsp;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">(19)</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">(20)</TD>
    <TD>&nbsp;</TD>
    <TD>Submitted 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 August&nbsp;4, 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">(21)</TD>
    <TD>&nbsp;</TD>
    <TD>Submitted 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 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">(22)</TD>
    <TD>&nbsp;</TD>
    <TD>Submitted as an exhibit to our company&#146;s First Quarterly Report on Form 6-K (File No.
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">(23)</TD>
    <TD>&nbsp;</TD>
    <TD>Filed as an exhibit to our company&#146;s Annual Report on Form 20-F (File No.&nbsp;000-27811), as filed
with the
Securities and Exchange Commission on March&nbsp;1, 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">(24)</TD>
    <TD>&nbsp;</TD>
    <TD>Submitted 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;5, 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 First Quarterly Report on Form 6-K (File No.&nbsp;000-27811), as
submitted with the Securities and Exchange Commission on May&nbsp;10, 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">(26)</TD>
    <TD>&nbsp;</TD>
    <TD>Submitted 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 August&nbsp;9, 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">(27)</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"><!-- Folio -->110<!-- /Folio -->
</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="129"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><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 15<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> day of March&nbsp;2007.
</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="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>CHARTERED SEMICONDUCTOR MANUFACTURING LTD</B></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&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">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&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">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ George Thomas</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <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" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">Name: George Thomas</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">Title: Senior Vice President and Chief Financial Officer</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<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="30%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="2%">&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>
<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 Head -->
<!-- Begin Table Body -->
<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;15, 2007</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="1" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</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"><FONT style="font-variant: SMALL-CAPS">James </FONT>A. <FONT style="font-variant: SMALL-CAPS">Norling</FONT></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"><!-- 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></TD>
    <TD>&nbsp;</TD>
    <TD rowspan="3" align="left" valign="top">President and Chief Executive
Officer<br> (principal
executive officer)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">March&nbsp;15, 2007</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="1" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&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"><FONT style="font-variant: SMALL-CAPS">Chia Song Hwee </FONT></DIV></TD>
    <TD>&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/ George Thomas
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD rowspan="3" align="left" valign="top">Senior Vice President and Chief
Financial Officer
(principal financial and accounting officer)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">March&nbsp;15, 2007</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="1" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&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"><FONT style="font-variant: SMALL-CAPS">George Thomas </FONT></DIV></TD>
    <TD>&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;15, 2007</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="1" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</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"><FONT style="font-variant: SMALL-CAPS">Andre Borrel </FONT></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"><!-- 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;15, 2007</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="1" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</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"><FONT style="font-variant: SMALL-CAPS">Charles </FONT>E. <FONT style="font-variant: SMALL-CAPS">Thompson </FONT></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"><!-- 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;15, 2007</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="1" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</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"><FONT style="font-variant: SMALL-CAPS">Tsugio Makimoto </FONT></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"><!-- 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;15, 2007</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="1" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</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"><FONT style="font-variant: SMALL-CAPS">Tay Siew Choon </FONT></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"><!-- 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;15, 2007</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="1" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</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"><FONT style="font-variant: SMALL-CAPS">Peter Seah Lim Huat </FONT></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"><!-- Folio -->111<!-- /Folio -->
</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="30%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="2%">&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>

<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 Head -->
<!-- Begin Table Body -->
<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;15, 2007</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="1" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</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"><FONT style="font-variant: SMALL-CAPS">Philip Tan Yuen Fah </FONT></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"><!-- 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;15, 2007</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="1" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</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"><FONT style="font-variant: SMALL-CAPS">Pasquale Pistorio </FONT></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"><!-- 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;15, 2007</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="1" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</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"><FONT style="font-variant: SMALL-CAPS">Steven </FONT>H. <FONT style="font-variant: SMALL-CAPS">Hamblin</FONT></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"><!-- 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/ Maurizio Ghirga
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">March&nbsp;15, 2007</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="1" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</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"><FONT style="font-variant: SMALL-CAPS">Maurizio Ghirga</FONT></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"><!-- Folio -->112<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</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>CHARTERED SEMICONDUCTOR MANUFACTURING LTD<BR>
AND SUBSIDIARIES</B>
</DIV>

<DIV align="left">
<A name="130"></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="85%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Page Number</B></TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#300">Report of Independent Registered Public Accounting Firm
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">F-1</TD>
</TR>

<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#301">Consolidated Balance Sheets
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">F-2</TD>
</TR>

<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#302">Consolidated Statements of Operations
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">F-3</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#303">Consolidated Statements of Comprehensive Income (Loss)
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">F-4</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#304">Consolidated Statements of Shareholders&#146; Equity
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">F-5</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#305">Consolidated Statements of Cash Flows
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">F-6</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#306">Notes to the Consolidated Financial Statements
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">F-7</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left">
<!-- /TOC -->
</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">
<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, 2005 and 2006, 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, 2006. 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, 2005 and 2006, and the results of their operations and their
cash flows for each of the years in the three-year period ended December&nbsp;31, 2006, in conformity
with U.S. generally accepted accounting principles.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As
described in Note&nbsp;1(q) and Note&nbsp;17 to the consolidated
financial statements, effective January&nbsp;1, 2006, the Company
adopted the fair value method of accounting for stock-based
compensation as required by Statement of Financial Accounting
Standards No.&nbsp;123(R), <I>Share-Based Payments</I>. As described in
Note&nbsp;1(c) to the consolidated financial statements, the
Company changed its method of quantifying errors in 2006.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the effectiveness of Chartered Semiconductor Manufacturing Ltd&#146;s internal
control over financial reporting as of December&nbsp;31, 2006, based on criteria established in Internal
Control &#151; Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO), and our report dated March&nbsp;9, 2007 expressed an unqualified opinion on
management&#146;s assessment of, and the effective operation of, internal control over financial
reporting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt">KPMG
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Singapore<BR>
March&nbsp;9, 2007
</DIV>



<P align="center" style="font-size: 10pt"><I>F-1</I>
</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="301"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 0pt"><B>CONSOLIDATED
BALANCE SHEETS &#151; in US Dollars</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 0pt"><B>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>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2006</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">$</TD>
    <TD align="right">819,856</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">718,982</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Restricted cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,832</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,063</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,467</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,283</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">180,764</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">243,361</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Inventories</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">134,240</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">157,047</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Prepaid expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,670</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,978</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">129,865</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,247</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 current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,282,694</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,181,961</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">Investment in SMP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54,517</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,044</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">106,612</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,991</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">2,049,695</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,273,119</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">23,776</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,316</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">$</TD>
    <TD align="right">3,517,294</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,618,431</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, 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">$</TD>
    <TD align="right">166,681</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">302,004</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">27,674</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,280</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">322,453</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">127,627</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">216,445</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150,581</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">733,253</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">613,492</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">Long-term debt and capital lease obligations, excluding current installments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,169,034</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,280,972</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">17,970</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48,936</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">1,920,257</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,943,400</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">Convertible redeemable preference 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">Authorized: 30 shares in 2005 and 2006</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 and 28 shares in 2006</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">250,663</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">246,174</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">Ordinary share capital</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: 4,615,385 shares in 2005 and 2006</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: 2,513,384 shares in 2005 and 2,535,896 shares
in 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,682,050</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,704,215</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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">(1,278,252</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,221,527</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <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">(57,424</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(53,831</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:45px; text-indent:-15px">Total shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,346,374</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,428,857</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Commitments and contingencies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total liabilities, convertible redeemable preference shares and
shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,517,294</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,618,431</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: 6pt"><I>See accompanying notes to consolidated financial statements.</I>
</DIV>


<P align="center" style="font-size: 10pt"><I>F-2</I>
</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="302"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 0pt"><B>CONSOLIDATED
STATEMENTS OF OPERATIONS &#151; in US Dollars</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 0pt"><B>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>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>2006</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">$</TD>
    <TD align="right">932,131</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,032,734</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,414,525</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">(764,305</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(917,048</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,070,782</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">167,826</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115,686</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">343,743</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">Other revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,927</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,685</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,030</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">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">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Research and development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">93,818</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">122,073</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">152,756</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">37,995</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,503</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55,007</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">34,951</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,025</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,558</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">33,199</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,697</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">Other operating expenses (income), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(139</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,202</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,766</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:45px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">199,824</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">241,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">264,087</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">Equity in income of SMP</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,040</TD>
    <TD>&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">16,416</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,744</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,689</TD>
    <TD nowrap>)</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">11,530</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,625</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,591</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">(30,093</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(69,839</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(87,950</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 (loss)&nbsp;before income taxes</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90,678</TD>
    <TD>&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>&nbsp;</TD>
    <TD align="right">4,774</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,997</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,924</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 income (loss)</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66,754</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" 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">3,196</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,476</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 income (loss)&nbsp;available to ordinary shareholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,571</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(162,794</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">57,278</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 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 net earnings (loss)&nbsp;per ordinary share</DIV></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>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.02</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Diluted net earnings (loss)&nbsp;per ordinary share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.06</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.02</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 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 net earnings (loss)&nbsp;per ADS</DIV></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>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.23</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Diluted net earnings (loss)&nbsp;per ADS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.65</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.23</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 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">Number of ordinary 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">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Basic net earnings (loss)&nbsp;per ordinary share</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,528,056</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Effect of dilutive options</DIV></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">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,009</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:30px; text-indent:-15px">Diluted net earnings (loss)&nbsp;per ordinary share</DIV></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">2,511,428</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,534,065</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 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">Number of ADS 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">
    <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">250,838</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">251,143</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">252,806</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Effect of dilutive options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">856</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">601</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:30px; text-indent:-15px">Diluted net earnings (loss)&nbsp;per ADS</DIV></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">251,143</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">253,407</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: 6pt"><I>See accompanying notes to consolidated financial statements.</I>
</DIV>


<P align="center" style="font-size: 10pt"><I>F-3</I>
</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="303"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 0pt"><B>CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME (LOSS) &#151; in US Dollars</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 0pt"><B>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>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>2006</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 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>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">66,754</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:30px; text-indent:-15px">Net unrealized gains (losses)&nbsp;on change in cash flow hedging 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>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,362</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Share of cash flow hedging 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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Reclassification of cash flow hedging (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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">133</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>&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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">568</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unrealized losses on available-for-sale securities</DIV></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>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Reclassification of losses on available-for-sale securities into earnings</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">2,350</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, net</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,687</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 (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,099</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(158,669</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">68,441</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: 6pt"><I>See accompanying notes to consolidated financial statements.</I>
</DIV>


<P align="center" style="font-size: 10pt"><I>F-4</I>
</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="304"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 0pt"><B>CONSOLIDATED
STATEMENTS OF SHAREHOLDERS&#146; EQUITY &#151; in US Dollars</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 0pt"><B>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="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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&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>Accumulated</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Total</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 nowrap align="center" colspan="3"><B>Other</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Share</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Ordinary Share</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Accumulated</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Compre-</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>holders&#146;</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 #ffffff"><B>Capital</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Deficit</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>hensive Loss</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Equity</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>No.</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>$</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>
</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">2,505,480</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,678,661</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,125,225</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&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 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">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">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">2,001</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">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">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">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>&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">
    <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">2,682,638</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,118,654</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&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 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">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 nowrap align="right">&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="right">&nbsp;</TD>
    <TD align="right">(159,598</TD>
    <TD nowrap>)</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">929</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">929</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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 nowrap align="right">&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="right">&nbsp;</TD>
    <TD align="right">(3,196</TD>
    <TD nowrap>)</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">2,387</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">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">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>&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: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">2,682,050</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,278,252</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&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 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">Cumulative effect
adjustment for change in
accounting policy (adoption
of SAB 108)</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">8,114</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(10,029</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,906</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9</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>
    <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">Balance at January&nbsp;1, 2006,
as adjusted</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">2,690,164</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,288,281</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(55,518</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,346,365</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">66,754</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">66,754</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">1,687</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,687</TD>
    <TD>&nbsp;</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 nowrap align="right">&nbsp;</TD>
    <TD align="right">(9,476</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="right">&nbsp;</TD>
    <TD align="right">(9,476</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Issuance of shares arising
from conversion of
convertible redeemable
preference shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,924</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,965</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">13,965</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">3,588</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,357</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">2,357</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Employee share-based
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">7,376</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">7,376</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non-employee share-based
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">117</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">117</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 nowrap align="right">&nbsp;</TD>
    <TD align="right">(288</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="right">&nbsp;</TD>
    <TD align="right">(288</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>
    <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">Balance at December&nbsp;31, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,535,896</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,704,215</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,221,527</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(53,831</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,428,857</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="center" style="font-size: 10pt; margin-top: 6pt"><I>See accompanying notes to consolidated financial statements.</I>
</DIV>


<P align="center" style="font-size: 10pt"><I>F-5</I>
</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="305"></A>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 0pt"><B>CONSOLIDATED
STATEMENTS OF CASH FLOWS &#151; in US Dollars</B>
</DIV>
<DIV align="center" style="font-size: 10pt; margin-top: 0pt"><B>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>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>2006</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>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 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>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">66,754</TD>
    <TD>&nbsp;</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">Equity in income of SMP</DIV></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>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(36,040</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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">29,460</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,178</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Depreciation and amortization</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">503,789</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Foreign exchange (gain)&nbsp;loss, net</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,946</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 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>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,822</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">(Gain) loss on derivatives</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,270</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,993</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,391</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Impairment loss on 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">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,698</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Share-based compensation</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">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,376</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Gain on sale of technology and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,708</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">Others, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,106</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,615</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,417</TD>
    <TD nowrap>)</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>&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>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(61,687</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">(15,726</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(62,081</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(21,193</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">(180</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">853</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,716</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Payables and other liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(49,346</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">136,347</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,355</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 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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,058</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">331,684</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">404,374</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">520,670</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>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">(686,252</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(628,127</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(554,292</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">(37,083</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,351</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,667</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchases of term deposits</DIV></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>&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">Refundable deposits placed with vendors</DIV></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>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(15,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Refund of deposits placed with a vendor</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">111,656</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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">31,217</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,245</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,975</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from redemption, maturity and disposal of marketable securities and term
deposits</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,998</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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">17,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,913</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">9,403</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">690</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(488</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">(732,715</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(568,243</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(419,905</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>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" style="background: #cceeff">
    <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">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Borrowings</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">492,915</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Repayments</DIV></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>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(635,010</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital 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">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,845</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Receipts of refundable customer deposits</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,183</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>&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>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(72,108</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">2,001</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,387</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,357</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">247,513</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">Increase in
cash restricted for debt repayment</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">(2,832</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(40,231</TD>
    <TD nowrap>)</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">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">5,752</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 cash provided by (used in) financing activities</DIV></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">444,753</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(204,987</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">Effect of exchange rate changes on cash and cash equivalents</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,348</TD>
    <TD>&nbsp;</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">(366,073</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">280,457</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(100,874</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <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">905,472</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">539,399</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</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: 1px solid #000000">&nbsp;</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">Cash and cash equivalents at the end of the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">539,399</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">819,856</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">718,982</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 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">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" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest paid (net of amounts capitalized)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">18,215</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">77,510</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">85,585</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income taxes paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11,276</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,576</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">15,434</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">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">
    <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">$</TD>
    <TD align="right">11,708</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Property, plant and equipment acquired through capital lease</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">45,933</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">31,998</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Property, plant and equipment acquired on credit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">129,147</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">52,280</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">193,742</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Issuance of ordinary shares arising from conversion of convertible redeemable
preference shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</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">13,965</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Property, plant and equipment contributed by landlord</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">858</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><I>See accompanying notes to consolidated financial statements.</I>
</DIV>



<P align="center" style="font-size: 10pt"><I>F-6</I>
</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; margin-top: 0pt"><B>NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; in US Dollars</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 0pt"><B>In thousands (except per share data)</B>
</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="3%" 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: 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="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B><I>(a)</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>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="3%" 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 nine 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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company was incorporated in Singapore in 1987. As of December&nbsp;31, 2006, 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="3%" 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, Avago Technologies General IP (Singapore) Pte Ltd (&#147;Avago Singapore&#148;)
(previously Agilent Europe B.V. who transferred its entire shareholding in CSP to Avago
Singapore in 2006) and Singapex Investments Pte Ltd own a 51.0%, 26.5%, 15.0% and 7.5% equity
interest in CSP, respectively. 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="3%" 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>

</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="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B><I>(b)</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Basis of Presentation</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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The consolidated financial statements have been prepared in accordance with United States of
America generally accepted accounting principles (&#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="3%" 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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Due to cumulative losses, the obligation of 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:</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="4%">&nbsp;</TD>
    <TD width="46%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&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 nowrap align="center"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>2006</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->

<TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD align="left" valign="top"><DIV style="margin-left:15px; text-indent:-15px">Losses not allocated to the
minority shareholders of CSP according to their proportionate
ownership</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">$55,786</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">$64,889</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">$12,831</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 cumulative losses not allocated to the minority shareholders of CSP according to their
proportionate ownership as of December&nbsp;31, 2005 and 2006 are $194,992 and $207,823,
respectively.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><I>F-7</I>
</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>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: 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="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B><I>(c)</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Accounting Changes, Reclassifications and Adjustments</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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Cumulative Effect Adjustment &#151; SAB 108</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>In September&nbsp;2006, the Securities and Exchange Commission (&#147;SEC&#148;) issued Staff Accounting
Bulletin No.&nbsp;108 (&#147;SAB 108&#148;), &#147;Considering the Effects of Prior Year Misstatements when
Quantifying Misstatements in Current Year Financial Statements&#148; which requires companies to
evaluate the materiality of identified unadjusted errors on each financial statement and
related financial statement disclosure using both the rollover approach and the iron curtain
approach (&#147;dual approach&#148;). The rollover approach quantifies misstatements based on the
amount of the error originating in the current year statement of operations whereas the iron
curtain approach quantifies misstatements based on the effects of correcting the
misstatement existing in the balance sheet at the end of the current year, irrespective of
the misstatement&#146;s year(s) of origin. Financial statements would require adjustment when
either approach results in quantifying a misstatement that is material. The Company adopted
SAB 108 effective 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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As a transition accommodation SAB 108 permits a cumulative effect adjustment, without
restatement of previously issued financial statements, to be used for errors that are
determined to be immaterial pursuant to the Company&#146;s previous method of quantification of
unadjusted errors but are determined to be material under the dual approach. Prior to the
adoption of SAB 108, the Company had quantified unadjusted errors under the rollover
approach and had assessed these unadjusted errors to be immaterial &#151; individually and in
the aggregate. Upon initial adoption of SAB 108 for the fiscal year 2006, the Company
quantified unadjusted errors under the dual approach and assessed that these unadjusted
errors are material. As such, the Company elected to report a cumulative effect adjustment
as of January&nbsp;1, 2006 for those unadjusted errors quantified as of January&nbsp;1, 2006. The
impact to the Company&#146;s beginning accumulated deficit was an increase of $10,029.</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>Accrued rent. </I>The Company did not recognize rental expense for its operating leases on land
using the required straight-line method during the years 1994 to 2004 and began using the
straight-line method prospectively in 2005 following a clarification issued by the SEC in
2005 related to the accounting for leases. The misstatements were determined to be
immaterial to each period based on the prior method of assessing materiality. As a result,
rental expense was cumulatively understated by $20,449 at January&nbsp;1, 2006. The Company
recorded a $20,449 increase in the liability for accrued rent as of January&nbsp;1, 2006 with a
corresponding increase to accumulated deficit to correct this misstatement.</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>Accrued purchase order cancellation penalties</I>. The Company incorrectly recorded certain loss
contingency accruals for purchase order cancellation penalties during 2000 and 2001. These
did not qualify for recognition as a liability in the balance sheet as it was not probable
that the penalties would be imposed. The misstatements were determined to be immaterial to
each period based on the prior method of assessing materiality. As a result, accrued
operating expenses were overstated by $9,962 at January&nbsp;1, 2006. The Company recorded a
$9,962 decrease in the liability for accrued purchase order cancellation penalties as of
January&nbsp;1, 2006 with a corresponding decrease to accumulated deficit to correct these
misstatements.</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>Stock compensation charge</I>. The Company had certain computation errors in its stock
compensation charge in the years 2000 to 2005 which include incorrect basis used for options
issued to non-employees and incorrect measurement dates for certain awards. These
misstatements were determined to be immaterial to each period based on the prior method of
assessing materiality and the circumstances giving rise to the misstatements have been
corrected in 2006. As a result, ordinary share capital was understated by $8,114 at January
1, 2006. The Company recorded a $8,114 increase in ordinary share capital as of January&nbsp;1,
2006 with a corresponding increase to accumulated deficit to correct these misstatements.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><I>F-8</I>
</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>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><I>Income taxes payable</I>. The Company overprovided for income taxes arising out of certain
incorrect data used in its tax provision calculations for years 2001 to 2005. The
misstatements were determined to be immaterial to each period based on the prior method of
assessing materiality. As a result, income taxes payable was overstated by $3,062 at January
1, 2006. The Company recorded a $3,062 reduction to income taxes payable as of January&nbsp;1,
2006 with a corresponding decrease to accumulated deficit to correct these misstatements.</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>Accrued research and development costs. </I>The Company over-accrued certain amounts in 2001 for
research and development costs payable to a research partner arising from the data used in
the calculations being incorrect. The misstatements were determined to be immaterial to each
period based on the prior method of assessing materiality. As a result, accrued expenses
were overstated by $1,787 at January&nbsp;1, 2006. The Company recorded a $1,787 decrease in
accrued research and development costs as of January&nbsp;1, 2006 with a corresponding decrease
to accumulated deficit to correct these misstatements.</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>Inventory carrying value. </I>The Company wrote down the carrying value of certain aged
inventory although the cost basis was realizable. The misstatements were determined to be
immaterial to each period based on the prior method of assessing materiality. As a result,
inventories were understated by $1,572 at January&nbsp;1, 2006. The Company recorded a $1,572
increase to inventories as of January&nbsp;1, 2006 with a corresponding decrease to accumulated
deficit to correct these misstatements.</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>Debt issuance costs. </I>The Company used certain incorrect assumptions in applying the interest
method to amortize debt issuance costs in 2005. The misstatements were determined to be
immaterial to each period based on the prior method of assessing materiality. As a result,
debt issuance costs were understated by $1,194 at January&nbsp;1, 2006. The Company recorded a
$1,194 decrease to deferred debt issuance costs as of January&nbsp;1, 2006 with a corresponding
increase to accumulated deficit to correct these misstatements.</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>Insurance receivable. </I>The Company did not recognize an asset in 2004 and 2005 for amounts
that were receivable from an insurance company based on experience to date under an
insurance contract. The misstatements were determined to be immaterial to each period based
on the prior method of assessing materiality. As a result, other receivables were
understated by $908 at January&nbsp;1, 2006. The Company recorded a $908 increase in other
receivables as of January&nbsp;1, 2006 with a corresponding decrease to accumulated deficit to
correct these misstatements.</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>Management fees receivable. </I>The Company historically recognized certain management fees
based on billings instead of accruing at the time services were rendered. The misstatements
were determined to be immaterial to each period based on the prior method of assessing
materiality. As a result, management fees receivable was understated by $775 at January&nbsp;1,
2006. The Company recorded a $775 increase in management fees receivable as of January&nbsp;1,
2006 with a corresponding decrease to accumulated deficit to correct these misstatements.</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>Research and development cost sharing fees. </I>The Company recognized certain research and
development cost sharing fees in 2005 on a payment basis rather than when the expenses were
incurred. The misstatements were determined to be immaterial to each period based on the
prior method of assessing materiality. As a result, accrued research and development cost
sharing fees were understated by $550 at January&nbsp;1, 2006. The Company recorded a $550
increase in the liability for accrued research and development cost sharing fees as of
January&nbsp;1, 2006 with a corresponding increase to accumulated deficit to correct these
misstatements.</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>Deferred payroll-related expenses. </I>The Company recognized certain payroll related expenses
on a payment basis rather than amortizing such prepaid expenses over the requisite service
period during 2004 and 2005. The misstatements were determined to be immaterial to each
period based on the prior method of assessing materiality. As a result, deferred payroll
related expenses were understated by $546 at January&nbsp;1, 2006. The Company recorded a $546
increase in asset for deferred payroll related expenses as of January&nbsp;1, 2006 with a
corresponding decrease to accumulated deficit to correct these misstatements.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><I>F-9</I>
</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>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><I>Advances to suppliers</I>. The exchange rate fluctuations between the date of advance payments
made in foreign currencies for equipment and the date of delivery of the equipment were
deferred in other comprehensive loss rather than recorded as a component of property, plant
and equipment during 2004 and 2005. The misstatements were determined to be immaterial to
each period based on the prior method of assessing materiality. As a result, other
comprehensive loss was overstated by $1,906 and property, plant and equipment, net was
understated by $1,396 at January&nbsp;1, 2006. The Company recorded a $1,906 decrease in other
comprehensive loss and a $1,396 increase in property, plant and equipment, net as of January
1, 2006 with a corresponding net increase of $510 to accumulated deficit to correct these
misstatements.</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>Deferred grant income. </I>The Company incorrectly calculated the amount of grant to be refunded
to the grantor and hence the amount of grant income to be recognized during 2003 to 2005.
The misstatements were determined to be immaterial to each period based on the prior method
of assessing materiality. As a result, deferred grant income was understated by $475 at
January&nbsp;1, 2006. The Company recorded a $475 increase in deferred grant income as of January
1, 2006 with a corresponding decrease to accumulated deficit to correct these misstatements.</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>Translation of income taxes payable. </I>The Company historically did not translate foreign
currency denominated income taxes payable using the current exchange rate. The misstatements
were determined to be immaterial to each period based on the prior method of assessing
materiality. As a result, income taxes payable were understated by $430 at January&nbsp;1, 2006.
The Company recorded a $430 increase in income taxes payable as of January&nbsp;1, 2006 with a
corresponding increase to accumulated deficit to correct these misstatements.</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>Withholding taxes receivable. </I>The Company did not recognize an asset in 2005 for refundable
withholding taxes that were receivable from a tax authority. The misstatements were
determined to be immaterial to each period based on the prior method of assessing
materiality. As a result, withholding taxes receivable were understated by $164 at January
1, 2006. The Company recorded a $164 increase in withholding taxes receivable as of January
1, 2006 with a corresponding decrease to accumulated deficit to correct these misstatements.</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>Provision for income taxes (deferred and current). </I>As a result of the misstatements
described above, provision for income taxes was misstated by $1,967 at January&nbsp;1, 2006. The
Company recorded an increase in deferred tax assets, valuation allowance and income taxes
payable in the amounts of $3,993, $1,846 and $180, respectively, as of January&nbsp;1, 2006 with
a corresponding (decrease)&nbsp;increase to accumulated deficit to correct these misstatements.</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&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><B>Other Adjustments and Reclassifications</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>Reclassifications and certain immaterial classification corrections have been made to prior years&#146; financial statements to conform to classifications
used in the current year. These include reporting operating grant income as a reduction of the expenses that the grants are intended to reimburse rather than
as other income, reporting rental income and management fees as other revenue rather than as other income, reporting depreciation of rental buildings as other operating
expenses rather than as other expense and certain other immaterial reclassifications.</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>Until January&nbsp;30, 2006, ordinary shares of the Company had a par value of S$0.26. The
Singapore Companies (Amendment) Act 2005, which came into effect on January&nbsp;30, 2006,
abolished the concept of &#147;par value&#148; and &#147;authorized capital.&#148; Accordingly, the amounts
previously disclosed under &#147;ordinary shares&#148; and &#147;additional paid-in capital&#148; line items
have been combined as &#147;Ordinary Share Capital.&#148;</TD>
</TR>

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

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



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</DIV>



<P align="center" style="font-size: 10pt"><I>F-11</I>
</DIV>

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<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: 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="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B><I>(d)</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The preparation of the consolidated financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and
the reported revenues and expenses during the reporting period. Estimates are based on
historical experience, current conditions and on various other assumptions that are believed
to be reasonable under the circumstances. Significant items subject to judgment and 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, valuation of accounts receivable and inventories, the recognition and
measurement of revenue and sales credits and returns allowance, and the fair value of
share-based employee compensation awards and financial instruments. Actual results could
differ from these estimates.</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>During 2006, the Company changed the estimated salvage values in relation to certain
eight-inch process equipment and machinery to reflect higher expected salvage values than
the Company had historically estimated. The change in the estimated salvage values is a
change in accounting estimate that was applied prospectively from July&nbsp;1, 2006. This change
will result in lower depreciation over the remaining lives of the affected eight-inch
process equipment and machinery. The impact of this change was an improvement to the
Company&#146;s net income by $11,289 for the year ended December&nbsp;31, 2006, resulting in an
improvement of basic and diluted net earnings per American Depository Shares (&#147;ADS&#148;) by
$0.04 for the year ended December&nbsp;31, 2006. Basic and diluted net earnings per ordinary
share for the year ended December&nbsp;31, 2006 were $0.02 and $0.02, respectively, both before
and after the impact of this change.</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="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B><I>(e)</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>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="3%" 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;Other
operating expenses, net&#148; in the consolidated statements of operations.</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="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B><I>(f)</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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. The market for semiconductors
is characterized by rapid technological change, intense competition and fluctuations in
end-user demand. The Company depends, and will continue to depend, for a significant
portion of its revenue on a relatively limited number of customers who from time to time
may be concentrated in particular end markets. Customer concentration is more significant
for the Company&#146;s leading-edge process technologies. The five largest customers of the
Company accounted for 52%, 56% and 60% of net revenue in the years ended December&nbsp;31, 2004,
2005 and 2006, respectively. Total accounts receivable from these customers was $92,668
and $166,297 at December&nbsp;31, 2005 and 2006, respectively. The Company&#146;s top customer
profile may change from period to period depending on the strength of various market
sectors.</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 obtains most of its raw materials and supplies, including critical raw materials
such as raw semiconductor wafers, from a limited number of vendors. Some of these raw
materials and supplies are available from a limited number of vendors in limited quantities
and their procurement may require a long lead time. In certain instances, the Company only
has one qualified supplier for raw materials and supplies.</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 also depends on a limited number of original equipment manufacturers and vendors
that make and sell certain complex equipment and equipment spare parts that the Company uses
in its manufacturing processes. In the event of shortage of supply of equipment spare parts,
the Company would need to qualify alternative sources and/or equipment spare parts.</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>Financial instruments that potentially subject the Company to concentrations of credit risk
consist principally of cash, investments, derivative financial instruments and receivables.
The Company mitigates the concentration of its credit risk in trade receivables through its
credit evaluation process, credit policies and credit control and collection procedures.</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 cash and cash equivalents are placed with major international banks and
financial institutions. Cash and cash equivalents deposited with a single counterparty bank
accounted for 20% of total balances at December&nbsp;31, 2005 and 2006.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><I>F-12</I>
</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>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 amounts related to derivative instruments which are subject to credit risk 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 Company&#146;s hedging practices are
further described in Note 19.</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="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B><I>(g)</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>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="3%" 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: 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="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B><I>(h)</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Marketable Securities</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="3%" 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;. There are no investments
classified as trading or held-to-maturity as of December&nbsp;31, 2005 and 2006. There have been
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="3%" 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)
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 included in the line item &#147;Other income (loss), net&#148; in the
consolidated statement of operations.</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="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B><I>(i)</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Accounts Receivable</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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company reviews its accounts receivable on a periodic basis and makes specific
allowances when there is doubt as to the collectibility of individual receivable balances.
In evaluating the collectibility of individual receivable balances, the Company considers
the age of the balance, the customer&#146;s historical payment history, their current
credit-worthiness and current economic trends.</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="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B><I>(j)</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Inventories consist of work in progress, raw materials and consumable supplies and spares
and are stated at the lower of cost or market (net realizable value). 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>
<P align="center" style="font-size: 10pt"><I>F-13</I>
</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: 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="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B><I>(k)</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>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="3%" 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="3%" 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. Once a hedging relationship is
established, the Company designates the derivative as either a hedge of the fair value of a
recognized asset or liability or of an unrecognized firm commitment (&#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="3%" 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>

<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 discontinues hedge accounting prospectively when it determines
that a derivative is no longer effective in offsetting changes in the fair value or cash
flows of the hedged item, the derivative expires or is sold, terminated, or exercised, the
derivative is de-designated as a hedging instrument because it is unlikely that a forecasted
transaction will occur, a hedged firm commitment no longer meets the definition of a firm
commitment, or management determines that designation of the derivative as a hedging
instrument is no longer appropriate. When hedge accounting is discontinued because it is
determined that the derivative no longer qualifies as an effective fair-value hedge, the
Company no longer adjusts the hedged asset or liability for changes in fair value. The
adjustment of the carrying amount of the hedged asset or liability is accounted for in the
same manner as other components of the carrying amount of that asset or liability. When
hedge accounting is discontinued because the hedged item no longer meets the definition of a
firm commitment, the Company removes any asset or liability that was recorded pursuant to
recognition of the firm commitment from the balance sheet and recognizes any gain or loss in
earnings. When hedge accounting is discontinued because it is probable that a forecasted
transaction will not occur, gains and losses that were accumulated in other comprehensive
income 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: 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="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B><I>(l)</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Technology Licenses</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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Technology license agreements are stated at cost and amortized on a straight-line basis over
the shorter of the expected technology life or the license period.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><I>F-14</I>
</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: 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="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B><I>(m)</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>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="3%" 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="4%">&nbsp;</TD>
    <TD width="41%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD align="left" valign="top">Buildings</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">20 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><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD align="left" valign="top">Mechanical and electrical installations</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">10 years</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD align="left" valign="top">Equipment and machinery</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">5 years</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD align="left" valign="top">Office and computer equipment</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">2 to 5 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="3%" 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="3%" 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>

<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="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B><I>(n)</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Impairment of Long-Lived Assets and Intangible 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="3%" 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="3%" 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 they are disposed of, which is the point at
which they cease to be used.</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="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B><I>(o)</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company derives revenue primarily from fabricating semiconductor wafers and, to a
lesser extent, from providing associated subcontracted assembly and test services as well as
pre-fabricating services such as masks generation and engineering services. The Company
enters into arrangements with customers which typically include some or all of the above
deliverables.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><I>F-15</I>
</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>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>When arrangements include multiple deliverables, the Company first determines whether
each deliverable meets the separation criteria in FASB Emerging Issues Task Force (&#147;EITF&#148;)
Issue 00-21, &#147;Accounting for Revenue Arrangements with Multiple Deliverables&#148;. In general,
a deliverable (or a group of deliverables) meets the separation criteria if the deliverable
has standalone value to the customer and if there is objective and reliable evidence of the
fair value of the remaining deliverables in the arrangement. Each deliverable that meets the
separation criteria is considered a separate &#147;unit of accounting.&#148; The total arrangement
consideration is then allocated to each unit of accounting based on their relative fair
values. 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="3%" 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 title and risk of loss has passed to the customer, there is evidence of a
final arrangement as to the specific terms of the agreed upon sales, selling prices to the
customers are fixed or determinable, collection of the revenue is reasonably assured, and,
where applicable, delivery has occurred. Generally this results in revenue recognition upon
shipment of wafers. Revenue represents the invoiced value of goods and services supplied
excluding goods and services tax, less allowances for estimated sales credits and returns.
The Company estimates allowances for sales credits and returns based on historical
experience and management&#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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company also derives other revenue relating to rental income and management fees
which is recognized when the contractual obligations have been performed, there is evidence
of a final arrangement, fees are fixed or determinable and collection of the revenue is
reasonably assured. Generally, revenue from rental is recognized over the lease period and
management fee revenue is recognized when services are rendered. These are recorded in the
line item &#147;Other revenue&#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="3%" 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 &#147;Other income (loss), net&#148; in the consolidated statements 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>

<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="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B><I>(p)</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Government 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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Income-related government grants are subsidies of expenses incurred. Income-related
grants are credited to the related expenses when expenditures already incurred constitute
qualifying expenditures for purposes of reimbursement under the grants.</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>Asset-related government grants consist of grants for the purchase of equipment.
Asset-related grants are credited to the related expenses on a straight-line basis over the
estimated useful lives of the relevant assets or the qualifying period of the relevant grant
projects, depending on the conditions of the grants.</TD>
</TR>

</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><I>F-16</I>
</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: 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="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B><I>(q)</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Share-Based Compensation</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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company adopted the provisions of SFAS No.&nbsp;123(R), &#147;Share-Based Payments&#148; on January&nbsp;1,
2006, the first day of the Company&#146;s fiscal year 2006. Under SFAS No.&nbsp;123(R), share-based
compensation cost related to employee grants is measured based on the estimated fair value of
the award at the grant date and is recognized as expense over the employee&#146;s requisite
service period. Share-based compensation cost related to non-employees, primarily granted to
employees of SMP, is accounted for utilizing the measurement guidance of EITF 96-18
&#147;Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring, or
in Conjunction with Selling, Goods or Services&#148;. The Company adopted the provisions of SFAS
No.&nbsp;123(R) using the modified prospective application. Under the modified prospective
application, prior periods are not revised for comparative purposes. The provisions of SFAS
No.&nbsp;123(R) apply to new awards, unvested awards that are outstanding on the effective date,
and to subsequent modification or cancellation of awards. Share-based compensation cost for
new awards granted to employees is recognized on a straight-line basis over the vesting
period. Share-based compensation cost for unvested awards that are outstanding at the date of
adoption and awards for non-employees continues to be recognized in accordance with FASB
Interpretation No.&nbsp;28 (&#147;FIN 28&#148;), &#147;Accounting for Stock Appreciation Rights and Other
Variable Stock Option Award Plans&#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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Prior to adopting the provisions of SFAS No.&nbsp;123(R), the Company measured stock-based
employee compensation cost for financial statement purposes in accordance with the intrinsic
value 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 was 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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company uses the Black-Scholes option-pricing model for valuation of share-based awards
granted on or after January&nbsp;1, 2006, which was also previously used for the Company&#146;s pro
forma information disclosures required under SFAS No.&nbsp;123,
&#147;Accounting for Stock-Based Compensation&#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="3%" 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, &#147;Accounting for Stock-Based
Compensation&nbsp;&#151;&nbsp;Transition and Disclosure&#148;, the Company&#146;s net
income (loss)&nbsp;would have changed to the pro forma amounts indicated below for the years ended
December&nbsp;31, 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="4%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 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>&nbsp;</TD>
    <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>&nbsp;</TD>
    <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>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">As reported (intrinsic method)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">Pro forma (fair-value method)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">21,406</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,431</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)&nbsp;available to ordinary 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>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">As reported</DIV></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>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">Pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(14,832</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(172,224</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic and diluted net earnings (loss)&nbsp;per ordinary 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>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">As reported</DIV></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>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">Pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.01</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.07</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <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>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">As reported</DIV></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>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">Pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.06</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.69</TD>
    <TD nowrap>)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><I>F-17</I>
</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: 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="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B><I>(r)</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>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="3%" 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: 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="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B><I>(s)</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Fab Start-up Costs</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="3%" 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>

<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="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B><I>(t)</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Deferred Loan Costs</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="3%" 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 using the effective interest rate
method.</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="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B><I>(u)</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Operating Leases</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="3%" 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>

</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="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B><I>(v)</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>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="3%" 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 deferred tax assets where it is more likely than not that they will not be
realized.</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="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B><I>(w)</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Net Earnings (Loss) Per Ordinary Share</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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Basic net earnings (loss)&nbsp;per ordinary 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 over the weighted average number of ordinary shares outstanding. Diluted
net earnings (loss)&nbsp;per ordinary 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
over the weighted average number of ordinary shares outstanding plus dilutive potential
ordinary shares from the assumed exercise of options outstanding during the period, if any,
using the treasury stock method and other potentially dilutive securities outstanding, such
as convertible redeemable preference shares.
</TD>
</TR>
</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><I>F-18</I>
</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">&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 ordinary share computation because either the exercise price
or conversion price of the securities exceeded the average fair value of the Company&#146;s share
price or when the accretion to redemption value of convertible securities per ordinary share obtainable on conversion exceeds basic net earnings per ordinary share,
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="4%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 nowrap align="center" colspan="10" style="border-bottom: 1px solid #ffffff"><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>&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>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Convertible debt</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">36,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Employee stock options</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">96,479</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Call options with Goldman Sachs International</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">214,792</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">214,792</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <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">344,067</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">325,144</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 conversion price of convertible debt during the period outstanding was S$4.7980 per share
(equivalent to approximately US$26.7701 per ADS). The weighted average exercise prices of
employee stock options outstanding were $2.36, $2.04 and $1.89 as of December&nbsp;31, 2004, 2005
and 2006, respectively. The call options have a per share exercise
price of S$1.60 as of
December&nbsp;31, 2006. The conversion price of the convertible redeemable preference shares is
$0.8719 per share.</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="3%" nowrap align="left"><B>2.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Related Parties</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="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B><I>(a)</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Temasek and affiliates</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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company is a majority owned subsidiary of ST Semiconductors, which is 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="3%" 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="4%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 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>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Services purchased from STATS ChipPAC</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">19,104</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12,872</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">10,625</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <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">415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,016</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,762</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Services purchased</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">531</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income received</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Management fees paid</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Sub-lease rental billed for leasehold land from JTC</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,170</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Rental billed for leasehold land from Ascendas</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">108</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><I>F-19</I>
</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">&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="4%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 nowrap align="center" colspan="6" style="border-bottom: 1px solid #ffffff"><B>December 31,</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="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amounts due from affiliates of Temasek</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">217</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amounts due to affiliates of Temasek</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8,008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,763</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 balances with affiliates of Temasek are unsecured, interest free and repayable within 12
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="3%" 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. The Jurong Town Corporation (&#147;JTC&#148;) is a
statutory board established by the Singapore government to develop and manage industrial
estates in 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 JTC. Following the
cessation of Fab 1 operations in March&nbsp;2004, the Company classified its leasehold interest in
Fab 1 as held for sale. The sale was completed in January&nbsp;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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Fabs 2, 3, 5 (occupied by SMP), 6 (occupied by CSP) and 7 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 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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company has in 2006 leased an additional plot of land from Terra which in turn leased the
land from JTC. The lease runs until 2030. The Company intends to use this additional plot of
land primarily for ancillary purposes to support the Company&#146;s business 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="3%" 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 between 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="3%" 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, 2004,
2005 and 2006 was $2,795, $2,747 and $2,768, 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>Minimum future rental payments on non-cancellable operating leases of land from the above
related parties as of December&nbsp;31, 2006 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="4%">&nbsp;</TD>
    <TD width="84%">&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>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,616</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,762</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,923</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,097</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">2011</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,287</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">Thereafter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67,861</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">82,546</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>


<P align="center" style="font-size: 10pt"><I>F-20</I>
</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: 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="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B><I>(b)</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>SMP</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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company has a 49% ownership 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 gain (loss)&nbsp;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. The difference in the equity
income of SMP recorded as compared to a 49% ratio is an increase of $17,417, $5,758 and
$18,380 for the years ended December&nbsp;31, 2004, 2005 and 2006. The share of retained
post-formation results recorded was a deficit of $20,681 as compared to a surplus of $17,363
using the 49% ratio and a surplus recorded of $15,359 as compared to a surplus of $35,023
using the 49% ratio as of December&nbsp;31, 2005 and 2006, 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>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="3%" 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 the intention was to ensure that all of the fixed costs of SMP are recovered by
allocating all of its wafer capacity to the Company and Agere in accordance with the
respective parties&#146; equity interest in SMP and each party will bear the fixed costs
attributable to its allocated capacity. These billings, if any, do not change the equity in
income (loss)&nbsp;of SMP that the Company recognizes in its consolidated statements of
operations. No amounts were payable by the Company under this agreement for 2004, 2005 and
2006, 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>In 2004, the Company and Agere entered into an agreement pursuant to which the Company and
Agere agreed to annually reimburse any losses suffered by SMP that are attributable to the
respective parties. SMP did not suffer any loss that was attributable to the Company in 2004,
2005 and 2006 and accordingly no reimbursements were payable by the Company to SMP under this
agreement for these 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="3%" 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)&nbsp;of SMP and the share of retained post-formation gain (loss)&nbsp;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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company purchased $1,641, $218 and $75 of processed wafers from SMP for the years ended
December&nbsp;31, 2004, 2005 and 2006, 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 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 $9,622, $8,811 and $9,480 in the years ended
December&nbsp;31, 2004, 2005 and 2006, 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 bought plant and equipment of $Nil, $11 and $Nil from SMP during 2004, 2005 and
2006, respectively. The Company also sold plant and equipment of $505, $53 and $Nil to SMP
during 2004, 2005 and 2006, 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>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, 2004, 2005 and 2006 was $15,307,
$15,662 and $15,958, respectively.
</TD>
</TR>
</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><I>F-21</I>
</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">&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="4%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 nowrap align="center" colspan="6" style="border-bottom: 1px solid #ffffff"><B>December 31,</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="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amounts due from SMP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,694</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8,724</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amounts due to SMP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">94</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">819</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 balances with SMP are unsecured, interest free and repayable within 12&nbsp;months.</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="4%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 nowrap align="left"><B>Investment in SMP</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #ffffff"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&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>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost (net of return of capital)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">104,668</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">88,324</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Share of retained post-formation (losses)&nbsp;gains</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(20,681</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,359</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <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">(10</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dividends received</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(29,460</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(67,638</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">54,517</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">36,044</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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 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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In October&nbsp;2005, SMP reorganized its paid-up share capital and authorized a return of 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. In 2005, the Company received
$17,300 arising from the return of capital approved in 2005. In October&nbsp;2006, the board of
directors of SMP approved a second capital reduction which was subsequently approved by the
High Court of Singapore and filed with the Accounting and Corporate Regulatory Authority of
Singapore in November&nbsp;2006. The Company&#146;s entitlement arising from the second return of
capital from SMP was $19,061. In 2006, the Company received an additional $16,913 arising from
both the first and the second return of capital from SMP.</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>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="4%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 nowrap align="center" colspan="6" style="border-bottom: 1px solid #ffffff"><B>December 31,</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="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">71,101</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">72,063</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55,758</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,972</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <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">(31,311</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(40,616</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(19</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shareholders&#146; deficit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">95,574</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">53,455</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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="4%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 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>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenue</DIV></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>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">197,932</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,010</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating income</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,885</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></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">1,486</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,040</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><I>F-22</I>
</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: 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="3%" nowrap align="left"><B>3.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Cash and Cash Equivalents and Restricted Cash</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="4%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 nowrap align="center" colspan="6" style="border-bottom: 1px solid #ffffff"><B>December 31,</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="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash at
banks, money market funds and cash on hand</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">393,083</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">362,120</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <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">426,773</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">356,862</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">819,856</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">718,982</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>Short-term deposits with banks consist of fixed deposits with original maturities of
90&nbsp;days or less.</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>Under the terms of the Exim Guaranteed Loan agreement which is described in Note 14, the
Company is required to maintain on deposit with the lender 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 and 2006, restricted cash amounted to $2,832 and $43,063
respectively, and consists of interest-bearing money market funds.</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="3%" nowrap align="left"><B>4.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Marketable Securities</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><B>At December 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="4%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 nowrap align="center" colspan="2"><B>Unrealized</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unrealized</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 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" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">Equity securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">10,196</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</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">7,467</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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><B>At December 31, 2006</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="4%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 nowrap align="center" colspan="2"><B>Unrealized</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unrealized</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 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" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">Equity securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,673</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(390</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,283</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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: 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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>No realized gains or losses were recorded for the years ended December&nbsp;31, 2004 and 2005.
Proceeds from sale of available-for-sale securities were $5,990 in 2006. Gross realized gains
from sale of available-for-sale securities were $348 in 2006. The Company also recorded losses
amounting to $2,698 as a result of an other-than-temporary impairment assessment in 2006.
</TD>
</TR>
</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><I>F-23</I>
</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">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The following table shows the fair value and gross unrealized losses recorded in accumulated
other comprehensive income (loss)&nbsp;of the Company&#146;s available-for-sale equity securities,
aggregated by the length of time the securities have been in a continuous unrealized loss
position.</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="4%">&nbsp;</TD>
    <TD width="24%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 nowrap align="left"><B>At December 31,</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 nowrap align="left" style="border-bottom: 1px solid #ffffff"><DIV style="margin-left:30px; text-indent:-15px"><B>2005</B></DIV></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>
    <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>
    <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>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unrealized</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>Unrealized</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>Unrealized</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="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>&nbsp;</TD>
    <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>&nbsp;</TD>
    <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>&nbsp;</TD>
    <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">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="4%">&nbsp;</TD>
    <TD width="24%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 nowrap align="left"><B>At December 31,</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 nowrap align="left" style="border-bottom: 1px solid #ffffff"><DIV style="margin-left:30px; text-indent:-15px"><B>2006</B></DIV></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>
    <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>
    <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>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unrealized</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>Unrealized</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>Unrealized</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="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>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">Equity securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,283</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(390</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">$</TD>
    <TD align="right">2,283</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(390</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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 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&#146;s investments in available-for-sale equity securities at December&nbsp;31, 2005 and
2006 consist of investments in the common stock of two companies in the semiconductor
industry, both of which are in an unrealized loss position as at the respective balance sheet
dates. The fair value of the investments was based on quoted share prices at the balance sheet
date. When determining whether the investments were other-than-temporarily impaired, the
Company considered industry analyst reports on the outlook of the semiconductor industry and
the two companies, the length of time that market value has been less than cost, the financial
condition and near term prospects of the issuers 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. Based on this evaluation, the Company does not consider these investments to be
other-than-temporarily impaired at December&nbsp;31, 2005 and 2006.</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>5.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Receivables, 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="4%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 nowrap align="center" colspan="6" style="border-bottom: 1px solid #ffffff"><B>December 31,</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="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Trade receivables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">181,079</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">230,590</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <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">(991</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,149</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <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">(13,901</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,827</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <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">166,187</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">222,614</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Receivables from related parties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,911</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,732</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other receivables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,666</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,015</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">180,764</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">243,361</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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"><I>F-24</I>
</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: 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="3%" 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="4%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 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>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Beginning</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 valign="bottom">
    <TD>&nbsp;</TD>
    <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">(38</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">(4</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Charge for the year</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">466</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <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">(973</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(607</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(304</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ending</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,178</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">991</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,149</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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: 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="3%" 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="4%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 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>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Beginning</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">$</TD>
    <TD align="right">13,901</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Utilized in year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,769</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,940</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(13,353</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Charge for the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,279</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ending</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,537</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">13,901</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,827</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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: 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="3%" nowrap align="left"><B>6.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Inventories</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="4%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 nowrap align="center" colspan="6" style="border-bottom: 1px solid #ffffff"><B>December 31,</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="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Raw materials</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,895</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">13,306</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Work-in-progress</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">121,871</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">137,214</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Consumable supplies and spares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,474</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,527</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">134,240</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">157,047</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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: 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="3%" 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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As of December&nbsp;31, 2005, the Company had a refundable deposit placed with a vendor of $109,581
to secure wafer capacity. The deposit was fully refunded during 2006.</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="3%" nowrap align="left"><B>8.</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="4%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 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>&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>&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>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #ffffff"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #ffffff"><B>December 31,</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="center" colspan="2"><B>2005</B></TD>
    <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>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Technology licenses, at cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">168,787</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">178,043</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <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">(62,175</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(93,052</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>&nbsp;</TD>
    <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 #ffffff">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #ffffff">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Technology licenses, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">106,612</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">84,991</TD>
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <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>


<P align="center" style="font-size: 10pt"><I>F-25</I>
</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: 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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Amortization amounted to $16,263, $24,616 and $30,877 for 2004, 2005 and 2006, 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="4%">&nbsp;</TD>
    <TD width="84%">&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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">31,563</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,950</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,369</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,834</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">2011</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">240</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Thereafter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">84,991</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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: 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="3%" nowrap align="left"><B>9.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Property, Plant and Equipment, 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="5%">&nbsp;</TD>
    <TD width="71%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 nowrap align="center" colspan="6" style="border-bottom: 1px solid #ffffff"><B>December 31,</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="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Buildings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">269,276</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">265,324</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Mechanical and electrical installations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">612,340</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">636,796</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equipment and machinery</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,893,041</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,131,234</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Office and computer equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">144,834</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">163,787</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <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">140,733</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">519,584</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5,060,224</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5,716,725</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Accumulated depreciation and amortization</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,010,529</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,443,606</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Property, plant and equipment, net</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,049,695</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,273,119</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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 amounted to $420,217, $481,874 and $471,617 for the years ended December&nbsp;31,
2004, 2005 and 2006, 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>Capitalized interest relating to property, plant and equipment amounted to $15,177, $19,032
and $12,062 in the years ended December&nbsp;31, 2004, 2005 and 2006, 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>For assets under capital leases, total cost was $45,933 and $77,930 at December&nbsp;31, 2005 and
2006 respectively and accumulated amortization was $2,886 and $7,500 at December&nbsp;31, 2005 and
2006 respectively. Amortization of assets under capital leases, included in depreciation
expense, was $Nil, $2,886 and $4,614 for the years ended December&nbsp;31, 2004, 2005 and 2006
respectively.</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="3%" nowrap align="left"><B>10.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Other Non-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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As of December&nbsp;31, 2006, the Company had a refundable deposit placed with a vendor of
$9,533 to secure wafer capacity. The deposit is refundable according to the utilization of
such allocated capacity or at the end of the agreed period of such allocated capacity. The
deposit is initially recorded at the net present value of payments due pursuant to its
contractual terms. The related discount, which is offset by an equal amount of deferred
expense, is amortized to interest income using the effective interest rate method. Deferred
expense is amortized to cost of revenue over the term of the deposit using the
straight-line method. The deposit is 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>

</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><I>F-26</I>
</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: 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="3%" nowrap align="left"><B>11.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Payables</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="4%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 nowrap align="center" colspan="6" style="border-bottom: 1px solid #ffffff"><B>December 31,</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="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Trade and accrued purchases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">106,299</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">104,680</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchases of property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,280</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">193,742</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payables to related parties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,102</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,582</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">166,681</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">302,004</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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: 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="3%" 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="4%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 nowrap align="center" colspan="6" style="border-bottom: 1px solid #ffffff"><B>December 31,</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="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accrued employee related expenses and bonuses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">24,619</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">43,350</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customer capacity guarantee deposits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58,410</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,137</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accrued interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,612</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,494</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customer prepayment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,889</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,247</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other accrued expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,857</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,136</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55,058</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,217</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">216,445</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">150,581</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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 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 guaranteed 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 guaranteed 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 earnings over the term of the deposits 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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company received 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. The receipt was recorded as operating cash flows in the consolidated statements of
cash flows.</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="3%" 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="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) (&#147;EEIA&#148;) 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="6%" 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. The pioneer
status expired on June&nbsp;30, 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="6%" 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>
    <TD style="font-size: 6pt">&nbsp;</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 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; 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="6%" 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>
<P align="center" style="font-size: 10pt"><I>F-27</I>
</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>Under the EEIA, 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="6%" 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="6%" 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="6%" 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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>During the period in which pioneer status is effective, subject to compliance with certain
conditions, income arising from the pioneer trade is exempt from Singapore income tax.
During the period in which post-pioneer status or development and expansion incentive status
is effective, subject to compliance with certain conditions, income arising from the
incentive activities is taxed at a concessionary rate of 10%. Income arising from activities
not covered under any of the abovementioned incentives (hereinafter referred to as
non-qualifying income) is taxed at the normal Singapore corporate tax rate, which was 20% for
the years ended December&nbsp;31, 2004, 2005 and 2006. Thus, the income tax expenses for the
years ended December&nbsp;31, 2004, 2005 and 2006 are primarily on non-qualifying income, such as
interest income, rental income and income from the sale of wafers manufactured by
technologies that are not granted preferential tax treatment. Based on these tax incentives,
income tax is assessed at the individual fab level.</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 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 down 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 normal corporate
tax rate. During 2004, the relevant authority agreed to deem the Company as having complied
with all the conditions and continued the grant of the development and expansion incentive
status until December&nbsp;31, 2004. Accordingly, the Company revised its accruals based on the
concessionary tax rate of 10% and reduced its tax provision by $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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Under Singapore tax law, loss carryforwards and tax depreciation of property, plant and
equipment (hereinafter referred to as wear and tear allowances), which are determined at the
fab level, are deductible to the extent of income before loss carryforwards and wear and tear
allowances. Unutilized losses and wear and tear allowances can be carried forward
indefinitely to set off against income in future tax years, subject to compliance with certain
conditions. As of December&nbsp;31, 2005 and 2006, the Company has unutilized wear and tear
allowance carryforwards of approximately $1,583,000 and $1,742,000 respectively. The Company
does not have any loss carryforwards as of December&nbsp;31, 2005 and 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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Income (loss)&nbsp;before income taxes 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="4%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 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>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Singapore</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,942</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(147,595</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">89,024</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,403</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">994</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,654</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11,345</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(146,601</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">90,678</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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"><I>F-28</I>
</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">&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="4%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 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>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current expense (benefit) &#151; Singapore</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5,798</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">13,848</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">22,011</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:170px; text-indent:-15px">&#151; Foreign</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">292</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(17</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">573</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred expense (benefit) &#151; Singapore</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,428</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(800</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,502</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:178px; text-indent:-15px">&#151; Foreign</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(34</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(162</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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 style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></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>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">23,924</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>A reconciliation of the expected tax expense (benefit)&nbsp;computed by applying the Singapore
statutory tax rate of 20% for 2004, 2005 and 2006 to income (loss)&nbsp;before income taxes to
income 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="4%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 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>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense (benefit)&nbsp;computed at the
Singapore statutory tax rate</DIV></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>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">18,136</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non-deductible research and development expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">898</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">16,726</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non-deductible pre-pioneer operating losses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,412</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,084</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other non-deductible expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,272</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,721</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,137</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <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">6,263</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,561</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,502</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <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">(2,263</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">(6,833</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non-taxable decrease in equity method investment</DIV></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>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,208</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of change in concessionary tax status</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <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">(1,681</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,190</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">468</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense</DIV></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>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">23,924</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>For the years ended December&nbsp;31, 2004 and 2006, the pioneer status had the effect of
increasing (decreasing)&nbsp;basic and diluted net earnings per ordinary share by $(0.00) and
$0.00 and basic and diluted net earnings per ADS by $(0.02) and $0.02, 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>For the year ended December&nbsp;31, 2005, the pioneer status had the effect of (increasing)
decreasing basic and diluted net (loss)&nbsp;per ordinary share by $(0.01) and basic and diluted
net (loss)&nbsp;per ADS by $(0.11).</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>Deferred tax assets and deferred tax liabilities, which are substantially non-current and
relate to Singapore, 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="4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 nowrap align="center" colspan="6" style="border-bottom: 1px solid #ffffff"><B>December 31,</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="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">Property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(802</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,105</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <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">(1,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(662</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unremitted offshore income</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">(2,554</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,802</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(5,321</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <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>&nbsp;</TD>
    <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" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unutilized wear and tear allowances</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">316,550</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">263,437</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">Property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,112</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,598</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other accrued expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,191</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,545</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">331,853</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">287,580</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <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">(322,413</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(273,814</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,440</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">13,766</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <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>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net deferred tax assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,638</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8,445</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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"><I>F-29</I>
</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">&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 net deferred tax assets is dependent on the
availability of future taxable income during the periods in which those assets will be
reversed. Management considers the scheduled reversal of deferred tax liabilities, projected
future taxable income, and tax planning strategies in making this assessment. The valuation
allowance is established for deferred tax assets that cannot be objectively supported as more
likely than not to be realized by the Company.</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>Based on the historical level of taxable income specific to certain fabs, management has
concluded that it could not objectively support that sufficient future taxable income will be
realized and that therefore it is more likely than not that deferred tax assets will not be
realizable. As a result of the assessment a valuation allowance of $322,413 and $273,814 for
these fabs&#146; net deferred tax assets has been recorded as at December&nbsp;31, 2005 and 2006,
respectively. The Company expects to continue to maintain valuation allowances on future tax
benefits for such fabs until objective positive evidence is sufficient to support reversal of
the valuation allowance based upon current and preceding years&#146; results of operations and
anticipated future taxable income levels. Management has, however, concluded that a
valuation allowance on $7,638 and $8,445 of net deferred tax assets arising from other
operations as at December&nbsp;31, 2005 and 2006 respectively, was not required. This is because
it is more likely than not that these operations will generate sufficient future taxable
income to realize the related net deferred tax assets.</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 net change in the valuation allowance during the year ended December&nbsp;31, 2006 was a
decrease of $48,599. The decrease is due to the derecognition of deferred tax
assets for temporary differences that are now expected to reverse during the tax-exempt pioneer period
rather than the taxable post-pioneer 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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company recorded an increase in deferred tax assets and valuation allowance in the
amounts of $3,993 and $1,846, respectively, as a result of the cumulative effect adjustment
under SAB108 (see Note 1(c)).</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="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="4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 nowrap align="center" colspan="6" style="border-bottom: 1px solid #ffffff"><B>December 31,</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="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Floating rate loans:</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>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">CSP Syndicated Loan</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">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">Exim Guaranteed Loan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">122,124</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">324,277</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <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">97,155</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>&nbsp;</TD>
    <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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">371,904</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,433</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">6.25% senior notes due 2013</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">297,405</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">246,805</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,836</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,447,892</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,331,660</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <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">(319,634</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(123,629</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term debt, excluding current installments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,128,258</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,208,031</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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="4%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->

<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minimum future lease payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">63,931</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">124,194</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amount representing interest at rates of 6.2% to 7.8%</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(20,336</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(47,255</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Present value of minimum future lease payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,595</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76,939</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less: Current installments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,819</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,998</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Obligations under capital leases, excluding current installments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">40,776</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">72,941</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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"><I>F-30</I>
</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="4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">Long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">319,634</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">123,629</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">Obligations under capital leases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,819</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,998</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">322,453</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">127,627</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">Long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,128,258</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,208,031</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">Obligations under capital leases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,776</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">72,941</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,169,034</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,280,972</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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="4%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 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 nowrap align="center" colspan="6"><B>Interest Rates As of</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="center" colspan="6" style="border-bottom: 1px solid #ffffff"><B>December 31,</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="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Debt obligations at floating rates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5.11</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5.80</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Debt obligations at fixed rates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5.91</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">6.08</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Obligations under capital leases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">6.50</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">7.08</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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>CSP&#146;s U.S. dollar syndicated floating rate loan was 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 for an amount of $820,000 which was fully drawn down. The loan bore 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 was payable semi-annually and principal was payable
in six semi-annual installments which commenced in March&nbsp;2004. The loan matured and was
fully repaid during 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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The SMBC/OCBC Term Loan was 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 bore interest at LIBOR plus 1.75% and
was payable semi-annually. The loan was fully repaid in April&nbsp;2006 using the proceeds from
the issuance of the 6.25% senior notes due in 2013.</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 Exim Guaranteed Loan is from J.P. Morgan, guaranteed by the Export-Import Bank of the
United States, for a maximum of $653,131. The loan is divided into two tranches, of which one
tranche of $324,277 had been fully drawn down as of December&nbsp;31, 2006. Principal repayment of
the first tranche is payable semi-annually over five years, beginning on January&nbsp;16, 2007.
The availability period for the other tranche is until December&nbsp;15, 2008. 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="3%" 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>

<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 senior unsecured convertible notes (&#147;Convertible Notes&#148;) bore a coupon rate of 2.50%
per annum and had a yield to maturity of 5.25% per annum. In September&nbsp;2005, pursuant to a
cash tender offer (&#147;Tender Offer&#148;) for any and all of its $575,000 original principal amount
of the Convertible Notes outstanding, $477,845 original principal amount of the Convertible
Notes, representing approximately 83.1% of the Convertible Notes, were purchased. The
remaining Convertible Notes matured and were fully redeemed on April&nbsp;2, 2006.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><I>F-31</I>
</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 senior notes due 2010 (&#147;Senior Notes due 2010&#148;) with face value of $375,000 were
issued at a price of 98.896% of the principal amount. The senior notes due 2015 (&#147;Senior Notes
due 2015&#148;) with face value of $250,000 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 due 2010 and Senior Notes due 2015 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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Convertible redeemable preference shares (refer to Note 15) and 6% amortizing bonds due 2010
(&#147;Amortizing Bonds&#148;) have 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.</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 2006, the Company issued senior notes due 2013 (&#147;Senior Notes due 2013&#148;) with a
face value of $300,000 at a price of 99.053% of the principal amount. Interest is payable at
the rate of 6.25% per annum on April 4 and October 4 of each year, beginning on October&nbsp;4,
2006. The Senior Notes due 2013 mature on April&nbsp;4, 2013, and 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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As of December&nbsp;31, 2006, other long-term debt represents the cumulative fair value
change of the Senior Notes due 2013 due to changes in interest rates commencing on the date
the Company designated an interest rate swap transaction as a fair value hedge of this debt.</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 Senior Notes and Amortizing Bonds include a company call option and an investor put
option. If the Company were to exercise the call option, investors would receive an amount
equal to the outstanding principal amount, plus any accrued and unpaid interest through the
call/redemption date. If the investors were to exercise the put option, they would receive an
amount equal to 101% of the outstanding principal amount, plus any accrued and unpaid interest
to the put/repayment date. Therefore, the sum of the amounts received by the investors in the
event of exercise of the call or put options would not significantly differ from the recorded
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 Company evaluated the call and put options included in the Senior Notes and
Amortizing Bond in accordance with SFAS No.&nbsp;133 and Derivatives Implementation Group (&#147;DIG&#148;)
Issue B16 &#147;Embedded Derivatives: Calls and Puts in Debt Instruments&#148; (&#147;DIG Issue B16&#148;). Based
on its evaluation, the Company determined that the call and put options are clearly and
closely related to the debt instrument. Therefore these embedded derivatives have not been
bifurcated.</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>Annual maturities of long-term debt as of December&nbsp;31, 2006 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="4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="84%">&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>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">123,629</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74,164</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74,730</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">450,332</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">2011</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">64,855</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">Thereafter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">550,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,337,710</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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 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 in each of the periods indicated and do not
include the unamortized debt discount relating to the senior notes, which are reported as a
direct reduction to the face amounts of the senior notes.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><I>F-32</I>
</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 Company has total unutilized banking facilities of $591,763 and $591,400 for
short-term advances, term loans and bankers&#146; guarantees as of December&nbsp;31, 2005 and 2006,
respectively. Facilities as of December&nbsp;31, 2006 include $200,000 that will expire on March
30, 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="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, 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 on 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>The obligations under capital leases include contracts for supply of gases used by the
Company&#146;s fabrication facilities. The Company has assessed that such supply contracts contain
a lease pursuant to the consensus reached in EITF Issue 01-8, &#147;Determining Whether An
Arrangement Contains A Lease&#148;, and are accounted for as capital leases.</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>Minimum future lease payments under capital leases for equipment and machinery as of December
31, 2006 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="4%">&nbsp;</TD>
    <TD width="84%">&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>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,323</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,323</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,323</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,323</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">2011</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,323</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">Thereafter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77,579</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total minimum lease payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">124,194</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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: 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="3%" 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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The holders of the convertible redeemable preference shares (&#147;Preference Shares&#148;) 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,
ADSs at a conversion price of $0.8719 per Ordinary Share at any time 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="3%" 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
17, 2010 at a redemption price equal to $10,000 per Preference 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="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="6%" 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="6%" 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="6%" 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>
<P align="center" style="font-size: 10pt"><I>F-33</I>
</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>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
of $8,443.24 per Preference Share accreted to its present value using the effective interest
rate method calculation as follows:</TD>
</TR>

</TABLE>
</DIV>

<DIV align="right">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="96%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="63%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="center" valign="top">Elapsed&nbsp;days</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD nowrap align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="center" valign="top">1,800</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">Allocated&nbsp;value&nbsp;*&nbsp;($10,000/allocated&nbsp;value)</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&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 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="6%" 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="6%" 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="6%" 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="6%" 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="3%" 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 rate method. Such accretion
adjusts net income (loss)&nbsp;available to ordinary shareholders. Accretion charge for the years
ended December&nbsp;31, 2005 and 2006 was $3,196 and $9,476, 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>During 2006, 2 Preference Shares were converted and 18,924 of ordinary shares were issued as
a result of the conversion.</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 include call and put options, which the Company has evaluated under the
provisions of SFAS No.&nbsp;133 and DIG Issue B16. For purposes of assessing if the puts and calls
are closely related to the Preference Shares, the Company has referred to DIG Issue B16 as the
Preference Shares are akin to a debt instrument because they have a mandatory redemption
feature at maturity and holders are not entitled to vote at the Company&#146;s general meetings nor
are they entitled to receive dividends or otherwise participate in earnings. The Preference
Shares do not embody any claim to residual interest of the Company. Upon exercise of the call
or put options, investors would receive an amount equal to the accreted value of their shares
and does not constitute an accelerated repayment of the redemption principal amount of $10,000
per Preference Share. The call and put options are considered to be clearly and closely
related to the Preference Shares. Therefore these embedded derivatives have not been
bifurcated.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><I>F-34</I>
</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: 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="3%" 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="3%" 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="3%" 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 had a choice of physical or cash
settlement. The counter-party could 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&nbsp;=&nbsp;S$1.71) and the Company would
receive approximately $200,000. The number of ordinary shares under
the option transaction was equal to the number of shares that were
originally planned for issuance under the Convertible Notes. The option
transaction, which was contractually separate from the Convertible
Notes, was exercisable by the counter-party from January&nbsp;2, 2005
and expired on April&nbsp;2, 2006, matching the maturity date of the
Convertible Notes. Goldman Sachs International did not exercise its
rights under the option transaction.</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><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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Singapore law allows dividends to be paid only out of the Company&#146;s net profits for the year
or retained earnings. Shareholders of ordinary shares are not liable for Singapore income
tax on dividends paid by the Company out of its tax exempt profits from pioneer activities
and net profits after deduction of tax at the concessionary rate from post pioneer or
development and expansion 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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Distributions of profits from non-pioneer activities which have been subject to tax at the
normal corporate tax rate 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-residents 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="3%" 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-qualifying chargeable income constitutes a final tax. Companies that have moved to the
one-tier system can henceforth pay dividends that are exempted from Singapore income 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="3%" 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 franking tax credit balance under the old imputation system to pay a franked
dividend to its shareholders. The Company has approximately $54,000 and $52,400 of available
balances under the old imputation system as of December&nbsp;31, 2005 and 2006, 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>Accumulated deficit includes $(20,681) and $15,359 of post-formation (losses)&nbsp;gains of SMP as
of December&nbsp;31, 2005 and 2006, 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><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="4%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 nowrap align="center" colspan="6" style="border-bottom: 1px solid #ffffff"><B>December 31,</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="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cumulative foreign currency translation loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">52,659</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">52,091</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net unrealized cash flow hedging losses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,036</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,350</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net unrealized losses on available-for-sale securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,729</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">390</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">57,424</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">53,831</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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 foreign currency translation loss, net unrealized losses on available-for-sale securities
and net unrealized cash flow hedging losses are not adjusted for income taxes because such
losses are generally not tax deductible.</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="3%" nowrap align="left"><B>17.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Share Options and Incentive Plans</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="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B><I>(a)</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>1999 Option Plan</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="3%" 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 increased by 30,488 shares. The total shares provided under the 1999 Option Plan are hence 227,648 shares. 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. The Company issues new shares upon exercise of options. The remaining shares available for future grants are 90,521
and 81,727 as of December&nbsp;31, 2005 and 2006, 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 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>
</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><I>F-35</I>
</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 contractual term of options does not exceed 10&nbsp;years from the date of grant. Upon
leaving employment of the Company, employees are given a specified period to exercise
outstanding options. 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.</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 weighted-average grant-date fair value of share options granted, the total intrinsic
value of share options exercised and the total fair value of share options vested during the
years ended December&nbsp;31, 2004, 2005 and 2006 were 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="4%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 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>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted-average grant-date fair value of share options granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.63</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.47</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.43</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total intrinsic value of share options exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">557</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">249</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">320</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total fair value of share options vested</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">25,561</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">26,717</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">14,495</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>Stock option activity for all outstanding options and the corresponding price information for
the years ended December&nbsp;31, 2004, 2005 and 2006 were 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="4%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 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>&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 nowrap align="center" colspan="2"><B>Number</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>of 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>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Outstanding at January&nbsp;1, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104,223</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.67</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,905</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.93</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <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">$</TD>
    <TD align="right">1.65</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,074</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.46</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Forfeited</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">$</TD>
    <TD align="right">2.89</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Outstanding at December&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112,654</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.36</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <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">$</TD>
    <TD align="right">0.69</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expired</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,695</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6.90</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <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">$</TD>
    <TD align="right">0.54</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Forfeited</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,223</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.41</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <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">$</TD>
    <TD align="right">2.04</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,666</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.77</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expired</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,958</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.30</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,432</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.55</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Forfeited</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,913</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.01</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Outstanding at December&nbsp;31, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">119,843</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.89</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <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">76,720</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.51</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>
</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>Changes in the number of unvested share options during the year ended December&nbsp;31, 2006,
together with the corresponding weighted-average grant date fair values and the status of
unvested options at December&nbsp;31, 2006, were 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="4%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 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>&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 nowrap align="center" colspan="2"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>grant date</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="center" colspan="2"><B>of options</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>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unvested at January&nbsp;1, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48,214</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.66</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,666</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.43</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Vested</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(18,885</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.77</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Forfeited</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,872</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.57</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unvested at December&nbsp;31, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,123</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.52</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><I>F-36</I>
</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">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Information regarding outstanding and exercisable share options as of December&nbsp;31, 2006,
was 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="4%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 nowrap align="center" colspan="6"><B>Options outstanding</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 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 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 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 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 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">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Number of</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>Intrinsic</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <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>options</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>term</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&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>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>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">$0.39 to $1.00</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68,671</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">7.4 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.73</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,891</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">$1.06 to $1.95</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,466</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">4.7 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.41</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,618</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">$2.14 to $2.44</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,815</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">4.4 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">477</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">$5.81</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,781</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">3.8 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5.81</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">$8.31</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,110</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">3.3 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8.31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">119,843</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,986</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>
</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="4%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 nowrap align="center" colspan="6"><B>Options exercisable</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 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 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 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 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 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">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Number of</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>Intrinsic</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <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>options</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>term</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&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>value</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">$0.39 to $1.00</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,760</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">6.4 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,583</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">$1.06 to $1.95</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,272</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">4.5 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,168</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">$2.14 to $2.44</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,797</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">4.4 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">477</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">$5.81</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,781</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">3.8 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5.81</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">$8.31</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,110</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">3.3 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8.31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76,720</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,228</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>
</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 options vest over one to five years and expire on dates ranging from February&nbsp;2007
to October&nbsp;2016.</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>Income from continuing operations, income before income taxes and net income for the
year ended December&nbsp;31, 2006 were reduced by $7,376 as a result of the adoption of SFAS No.
123(R). Total share-based compensation expense recognized for the year ended December&nbsp;31,
2006 was:</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="4%">&nbsp;</TD>
    <TD width="84%">&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 nowrap align="center" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,565</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Research and development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">712</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Sales and marketing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,031</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,068</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total share-based compensation expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,376</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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 align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="4%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 nowrap align="center" colspan="2"><B>Per</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 nowrap align="center" colspan="2"><B>ordinary</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 nowrap align="left"></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>share</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Per ADS</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net share-based compensation expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"></TD>
    <TD align="right"></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"></TD>
    <TD align="right"></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.03</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.03</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><I>F-37</I>
</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">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As of December&nbsp;31, 2006, there was $8,498 of total unrecognized compensation costs
related to share options scheduled to be recognized over a weighted average period of 3
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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Cash proceeds of $1,456 were received from option exercises during the year ended December
31, 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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As share-based compensation cost is not tax deductible in Singapore, the recognition of
the share-based compensation expense did not result in income tax benefits.</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 fair values of the option grants awarded during the years ended December&nbsp;31, 2004,
2005 and 2006 were estimated on the date of grant using the Black-Scholes option-pricing
model with the following assumptions.</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="4%">&nbsp;</TD>
    <TD width="31%">&nbsp;</TD>

    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="17%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>

    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="17%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>

    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="17%">&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 nowrap align="center" colspan="1"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="1"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="1"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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="top" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Risk free interest rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right">2.97% to 4.14%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right">4.06% to 4.64%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right">4.59% to 5.22%</TD>
</TR>
<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected volatility</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right">61.94% to 65.04%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right">58.75% to 61.04%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right">40.45% to 57.86%</TD>
</TR>
<TR valign="top" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected term</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">5 to 8 years</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">5 to 9 years</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">3 to 6.25 years</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dividend yield</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.00%</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.00%</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.00%</TD>
    <TD nowrap>&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>Expected volatilities are based on historical volatility rates of the Company&#146;s
ordinary shares. For options awarded during the years ended December&nbsp;31, 2004 and 2005, the
expected term is based on the contractual term of the grant, vesting periods, and past
exercise and post-vesting forfeiture behavior. For options awarded during the year ended
December&nbsp;31, 2006, the expected term is determined using the simplified approach as permitted
by Staff Accounting Bulletin No.&nbsp;107 (&#147;SAB 107&#148;). The risk-free rate for periods within the
contractual term of the award is based upon observed interest rates appropriate for the term
of the Company&#146;s employee stock 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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Share-based compensation expense recognized in the consolidated statements of operations for
the year ended December&nbsp;31, 2006 was based on awards ultimately expected to vest after
adjusting for estimated future pre-vesting forfeitures. SFAS No.&nbsp;123(R) requires forfeitures
to be estimated at the time of grant and revised, if necessary, in subsequent reporting
periods if actual forfeitures differ from those estimates. Pre-vesting forfeitures were
estimated to be between approximately 1% to 21% for the year ended December&nbsp;31, 2006 based
on historical pre-vesting forfeitures. In the Company&#146;s pro forma information disclosures
required under SFAS No.&nbsp;123 for the periods prior to fiscal year 2006, the Company accounted
for forfeitures as they occurred.</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>Options to purchase 595, 406 and 390 shares of the Company were granted to employees of
SMP in 2004, 2005 and 2006, respectively. SMP bears the share-based compensation expense in
respect of these options.</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="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B><I>(b)</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>2001 Share Purchase Plans</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="3%" 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>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><I>F-38</I>
</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 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 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="3%" 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>

</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="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B><I>(c)</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>2004 Share Purchase Plans</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="3%" 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="3%" 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="4%" 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 expense; 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">(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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The 2004 Plans are administered by a committee appointed by the Directors. 2,348 and 1,156
shares were issued at prices from $0.56 to $0.63 (S$0.92 to S$1.06) and $0.77 to $0.79
(S$1.22 to S$1.28) during the years ended 2005 and 2006, 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 ESPP 2004 Plans are non-compensatory as the purchase price is 95% of the fair market
value of the ordinary shares applied to the Company&#146;s average ordinary share price on the
last trading day of the offer period. Therefore, the Company does not recognize compensation
expense related to shares sold under the ESPP 2004 Plans.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><I>F-39</I>
</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: 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="3%" nowrap align="left"><B>18.</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="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B><I>(a)</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Commitments</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="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="4%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 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>&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>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Contracts for capital expenditures</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">205,689</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">525,200</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, 2006, 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="4%">&nbsp;</TD>
    <TD width="84%">&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>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,811</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,157</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">947</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">739</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">2011</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">527</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">Thereafter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">827</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,008</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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, 2004, 2005 and 2006 was $5,473, $5,660 and $5,687 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 Agere 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 Agere in SMP falls below 49%. In exchange the Company has waived capacity shortfall
obligations from Agere. 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 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, 2005 and 2006 are $200,000 and $335,000 respectively.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><I>F-40</I>
</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: 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="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B><I>(b)</I></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Contingencies</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="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 accrues costs associated with these
matters when they become probable and reasonably estimable. The Company does not believe 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>

<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 submits tax returns and claims with government tax authorities which are
subject to agreement and audit by those tax authorities. Actual taxes to be paid could vary
due to the outcome of audits completed by the tax authorities. The Company records tax
contingencies as tax payable for certain positions which may be challenged by the tax
authorities and which the Company may not ultimately prevail in defending. The income tax
contingencies mainly relate to transfer pricing positions and gains which may be taxable. As
of December&nbsp;31, 2005 and 2006, the income tax contingencies recorded as tax payable amounted
to $5,070 and $6,759, respectively. The amounts recorded are determined based upon the
Company&#146;s best estimate of possible assessments by the tax authorities and are adjusted, from
time to time, based upon changing facts and circumstances.</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 measures its obligations associated with its
retirement of tangible long-lived assets in accordance with the provisions of SFAS No.&nbsp;143,
&#147;Accounting for Asset Retirement Obligations&#148;. As at December&nbsp;31, 2006, the liability
related to the requirements in the Company&#146;s lease agreements for the potential return of
buildings to tenantable condition and the potential return of land on which fabs have been
built to its original condition amounted to $17,909.</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="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><B>At December&nbsp;31, 2006</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="4%">&nbsp;</TD>
    <TD width="41%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>

    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>

    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>

    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD align="left"><B>Derivative&nbsp;Instrument</B></TD>
    <TD>&nbsp;</TD>
    <TD align="right" colspan="3"><B>Notional&nbsp;Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD align="right" colspan="3"><B>Average&nbsp;Rate/Price</B></TD>
    <TD>&nbsp;</TD>
    <TD align="right" colspan="3"><B>Maturity</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Forward Contracts</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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; Yen Forward Contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right">6,102,865</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right">114.43/USD</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right">2007</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; Euro Forward Contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right">9,137</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right">1.31/Euro</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right">2007</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; SGD Forward Contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right">13,871</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right">1.54/USD</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right">2007</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>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest rate swap</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right">300,000</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right">LIBOR &#043; 0.93%</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right">2013</TD>
</TR>
<TR>
<TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">2006 Option (shares)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right">214,800</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right">S$1.60/S$2.15</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right">2011</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 March 2006, the Company entered into a call option transaction (&#147;2006 Option&#148;) with
Goldman Sachs International (&#147;GS&#148;) to replace the call option transaction that the Company
had previously entered into with GS in August&nbsp;2004 (&#147;2004 Option&#148;) that
expired on April&nbsp;2, 2006. Under the 2006 Option, GS may purchase up to 214,800 of the
Company&#146;s ordinary shares at a price of S$1.60 per share in the
first year and S$2.15 per share
thereafter. If the 2006 Option is exercised in
full and physically settled the Company will receive approximately $300,000 (based on an
exchange rate of $1.00 = S$1.54). If the 2006 Option is exercised in full and physically settled in the first year, the Company will receive
approximately $222,911 (based on an exchange rate
$1.00&nbsp;=&nbsp;S$1.54).</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>Under the terms of the 2006 Option, if the option is exercised the Company has the right
either to issue new shares to GS or to settle the transaction in cash. If the 2006 Option is
not exercised or terminated earlier, it will expire on March&nbsp;29, 2011.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><I>F-41</I>
</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>In the first year of the 2006 Option, the Company has the right to terminate the 2006
Option early in whole or in part upon the first time that the closing price of the ordinary shares equals or exceeds S$1.75 on each of any 20 business days in a consecutive 30 business
day period. If the Company elects to do so and elects to settle by delivering shares, GS
will have the right but not the obligation to buy from the Company from time to time during
the following 30 business days such number of the ordinary shares up to the amount
terminated at S$1.60 per share. As of December 31, 2006, the
Company&#146;s right to terminate the 2006 Option had not been
triggered.</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>From the second year of the 2006 Option, the Company has the right to terminate the 2006
Option early in whole or in part if the closing price of the ordinary shares is equal to or
exceeds S$2.6875 on each of any 20 business days in any consecutive 30 business day period.
If the Company elects to exercise this right of termination, GS will be required to buy from
the Company such number of the ordinary shares relating to the terminated portion of the 2006
Option at S$2.15 per 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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The 2006 Option is a derivative instrument that is dual indexed to the Company&#146;s own
stock and the Singapore Dollar currency exchange rate. As a result, the 2006 Option is not eligible for the scope
exception of paragraph 11(a) of SFAS No.&nbsp;133 and is accounted for
as a derivative in accordance with SFAS No.&nbsp;133, with changes in its fair value recorded 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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The fair value of the 2006 Option at issuance was approximately $6,040 and has been recorded
as a liability. In subsequent periods, changes in the fair value of the 2006 Option have been
recorded in earnings as other income (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>To protect against volatility of future cash flows caused by changes in exchange rates, the
Company may use forward exchange contracts, currency options and currency swap instruments
for forecasted transactions such as operating expenses and capital purchases. To manage
interest rate risk, the Company may utilize interest rate derivative instruments to modify
the interest characteristics of its outstanding debts.</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 foreign currency cash flow and
fair value hedges except for certain foreign currency forward contracts and the 2006 Option.
These certain foreign currency forward contracts relate 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
maximum tenure for these transactions is 18&nbsp;months. The Company uses foreign currency
forward contracts to manage these risks and designates them as foreign currency cash-flow
hedges. The Company uses foreign currency forward contracts, which match the terms of the
individual foreign currency exposures, and as a result, any ineffectiveness of the Company&#146;s
hedges is negligible. For the year ended December&nbsp;31, 2006, the ineffective amount
reclassified from other comprehensive income into earnings was a loss of $269 and was
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 depreciation commences for the asset related to
the purchase commitment.</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 US dollar loan. The amount relating to time value, which is excluded from the
assessment of hedge effectiveness, was $(989) in the year ended December&nbsp;31, 2006. For the
year ended December&nbsp;31, 2006, the ineffective amount reclassified into earnings (Other
income (loss), net) was a gain of $806. The interest rate cap contracts matured following
the maturity of the loan.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><I>F-42</I>
</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 Company entered into interest rate swap contracts to hedge fixed-rate interest
obligations associated with Convertible Notes issued in April&nbsp;2001, with the effect of
swapping the fixed-rate interest obligations to floating-rate obligations based on LIBOR
rates. The Company designated these interest rate swap contracts as fair-value hedges. The
interest rate swaps were terminated following the completion of the tender offer for 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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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 both recorded in earnings as interest
expense. Net recognized gains (losses)&nbsp;arising from ineffectiveness of these fair value
hedges were $(1,771), $(5,246) and $Nil in the years ended December&nbsp;31, 2004, 2005 and 2006,
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>In 2006, the Company issued $300,000 Senior Notes due 2013 with semi-annual interest
payments. The Company entered into an interest rate swap (&#147;IRS&#148;) contract to hedge the
fixed-rate interest obligations of 6.25% per annum associated with the Senior Notes due 2013
with the effect of swapping the fixed-rate interest obligations to a floating-rate
obligation based on US LIBOR rates. In August&nbsp;2006, the Company designated the IRS as a
fair-value hedge of changes in the fair value of the Senior Notes due 2013 attributable to
changes in the benchmark interest rate, which is US dollar six-month LIBOR. From that date,
changes in the fair value of the derivative and changes in the fair value of the item being
hedged are recorded in earnings (other income (loss), net). Net recognized gain arising from
ineffectiveness of fair value hedges was $574 in the year ended December&nbsp;31, 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="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 $(156). Net realized losses recognized
from cash flow hedges were $(469) and $(133) for the years ended December&nbsp;31, 2005 and 2006,
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 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="4%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 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>&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>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Beginning</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 valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cumulative effect adjustment on adoption of SAB 108</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">1,906</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Reclassification of cash flow hedging losses into earnings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">469</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">133</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <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">17</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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net unrealized gains (losses)&nbsp;on change in cash flow
hedging derivative fair values</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,362</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ending</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,036</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,350</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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 Company exposes itself to credit risk and market risk by using derivative instruments to
hedge exposures of changes in foreign currency rates and interest rates. Credit risk is the
failure of the counterparty to perform under the terms of the derivative contract. When the
fair value of a derivative contract is positive, the counterparty owes the Company, which
creates credit risk for the Company. When the fair value of a derivative contract is
negative, the Company owes the counterparty and, therefore, it 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. The maximum amount of loss due to credit risk associated with these
financial instruments is their respective fair values as stated in Note 20.</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>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 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"><I>F-43</I>
</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: 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="3%" 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="4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 nowrap align="center" colspan="6"><B>December 31,</B></TD>
    <TD>&nbsp;</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>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>2006</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="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>&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>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><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>&nbsp;</TD>
    <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>&nbsp;</TD>
    <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">(1,447,892</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,466,425</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,331,660</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,336,045</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Forward foreign exchange contracts</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <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">(344</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">(1,724</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,724</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Embedded
foreign currency derivatives in purchase contracts</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">297</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">297</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest rate swap</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">3,109</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,109</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest rate cap</DIV></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>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">2006 Option</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">(7,466</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,466</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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Cash and cash equivalents, related party receivables and payables, accounts receivable and
accounts payable. </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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Marketable securities. </I>Marketable securities are recorded at fair value (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.</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>Long-term debt. </I>The fair value is based on current interest rates available to the Company
for issuance of debt with 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="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.</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>Embedded foreign currency derivatives in purchase
contracts. </I>The fair value is estimated by reference to movements
in exchange rates between contract date and balance sheet date.</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>Interest rate swap. </I>The fair value is estimated using market quotations for interest rate
swaps 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="3%" 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="3%" nowrap align="left"><I>&nbsp;</I></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>2006 Option. </I>The fair value is based on an external
market value quotation. Such market value quotation is derived using equity option pricing variables
including Chartered&#146;s ordinary share price, 2006 Option strike price, 2006 Option date of expiration, prevailing market interest rate, Chartered&#146;s underlying share price volatility; adjusted for the availability of
stock borrow, market liquidity of Chartered&#146;s traded instruments and early termination features.</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>
<P align="center" style="font-size: 10pt"><I>F-44</I>
</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: 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="3%" nowrap align="left"><B>21.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Operating Segment, Geographic and Major Customer 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="3%" 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 as 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>

<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 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="4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 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>&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>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">USA</DIV></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>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,079,187</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Taiwan</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">122,881</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Japan</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,861</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Singapore</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,716</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Others</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150,880</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">932,131</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,032,734</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,414,525</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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="4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 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>&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>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Singapore</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,048,913</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,271,012</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">782</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,107</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,049,695</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,273,119</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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="4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD 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 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>&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>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Revenue 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>&nbsp;</TD>
    <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">20.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">22.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">24.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <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">19.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customer C</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">10.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customer D</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customer E</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</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">*</TD>
    <TD>&nbsp;</TD>
    <TD>less than 10% of net revenue for the year</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><I>F-45</I>
</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: 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="3%" nowrap align="left"><B>22.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Other Operating Expenses, net</B></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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Other operating expenses, net primarily consists 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 $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>

<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 restructuring charge of $4,558, $Nil and $Nil in December&nbsp;31, 2004, 2005 and 2006
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="4%">&nbsp;</TD>
    <TD width="57%">&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="10%">&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 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 nowrap align="center" colspan="2"><B></B></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>&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>&nbsp;</TD>
    <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>&nbsp;</TD>
    <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>&nbsp;</TD>
    <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>&nbsp;</TD>
    <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>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD nowrap align="right">17,000 to 20,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">16,979</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <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>An impairment charge of $3,938 recorded in 2005 on certain plant and equipment which were
initially classified as held for sale during the period ended June&nbsp;30, 2004. These assets
were written down to $3,878, which was their fair value less costs to sell at June&nbsp;30,
2005. 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 offers to purchase the assets but did not receive
any offers it considered reasonable. 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. The sale was
completed in January&nbsp;2006 for a total consideration of $6,500. A gain on this sale of $2,611
was recorded in 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="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A foreign exchange gain (loss)&nbsp;of $1,320, $(356) and $(6,125) for the years ended December
31, 2004, 2005 and 2006 respectively.</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="3%" nowrap align="left"><B>23.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Other Income (loss), 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>In 2004, other income (loss), net included 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 (loss), 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">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In 2006, other income (loss), net included an other-than-temporary impairment loss of $2,698 on
available-for-sale securities.</TD>
</TR>

</TABLE>
</DIV>








<P align="center" style="font-size: 10pt"><I>F-46</I>
</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, 2006.
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
American Depositary Shares,
each represented by ten Ordinary Shares
Name of Each Exchange on Which Registered
NASDAQ Global Select Market
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
(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. 2,535,895,593 Ordinary Shares and
28,350 Convertible Redeemable Preference Shares as of December 31, 2006.
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
2
Presentation of Certain Financial Information
2
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
20
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
37
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
64
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
78
ITEM
8. FINANCIAL INFORMATION
80
ITEM 9. THE OFFER AND LISTING
81
ITEM 10. ADDITIONAL INFORMATION
82
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
98
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
100
PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
101
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
101
ITEM 15. CONTROLS AND PROCEDURES
101
ITEM 16.
A. AUDIT COMMITTEE FINANCIAL EXPERT
102B
B. CODE OF ETHICS
102B
C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
102B
D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
103
E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
103
PART III
ITEM 17. FINANCIAL STATEMENTS
103
ITEM 18. FINANCIAL STATEMENTS
103
ITEM 19. EXHIBITS
104
SIGNATURES
Index
to Financial Statements
F-1
Ex-2.2 Specimen certificate for ordinary shares in respect of new issuances of shares issued on and after Jan 30, 2006.
Ex-2.3 Specimen certificate for ordinary shares transferred on and after Jan 30, 2006 in respect of shares issued before Jan 30, 2006.
Ex-4.11.8 Third Amended & Restated Amendment No.3 dated Nov 17, 2006.
Ex-4.11.13 Master IBM Joint Development Terms and Conditions dated Dec 15, 2006 for joint development projects with International Business Machines Corporation.
Ex-4.11.14 Participation Agreement dated Jan 1, 2007 by and between the company and International Business Machines Corporation.
Ex-4.11.15 Joint Development Project Agreement dated Dec 15, 2006 for 45nm Bulk-Industry Standard Semiconductor Process Technology.
Ex-4.11.16 Joint Development Project Agreement dated Dec 15, 2006 for 32nm Bulk-Industry Standard Semiconductor Process Technology.
Ex-4.16.3 Supplemental Agreement dated Jan 3, 2007 by and between Terra Investments Pte. Ltd.
Ex-4.18.4 Supplemental Agreement dated Jan 3, 2007 by and between Terra Investments Pte. Ltd.
Ex-4.19.1 Offer Letter dated Feb 16, 2006 from Jurong Town Corporation to Terra Investment Pte. Ltd.
Ex-4.19.2 Acceptance of Offer dated Feb 21, 2006 from the company to Terra Investments Pte. Ltd.
Ex-4.19.3 Acceptance of Offer dated Feb 24, 2006 from Terra Investments Pte. Ltd.
Ex-12.1 Certification of the President & Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Ex-12.2 Certification of the Senior Vice President & 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
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 per U.S. dollar as certified for customs purposes by the
Federal Reserve Bank of New York. The noon buying rate on January 31, 2007 was S$1.5362 = $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. Our 49%-owned joint venture company,
Silicon Manufacturing Partners Pte Ltd, or SMP, a corporation incorporated under the laws of the
Republic of Singapore, is not consolidated under U.S. GAAP. We account for our 49% investment in
SMP using the equity method. SMP meets certain "significance" tests pursuant to Rule 3-09 of
Regulation S-X. Accordingly, separate financial statements of SMP are required to be filed by us
and we intend to file an amendment to this annual report on Form 20-F to include the separate
financial statements of SMP as soon as available but no later than June 30, 2007. We have included
in this annual report on Form 20-F information relating to our share of SMP revenue. The financial
statements of SMP are reported in U.S. dollars and presented in accordance with U.S. GAAP. In 2005,
SMP changed its fiscal year end to September 30. The financial statements of SMP to be filed by
amendment to this annual report will consist of its audited annual financial statements as of and
for the year ended December 31, 2004, its unaudited financial statements as of and for the twelve
months ended December 31, 2005 (which period includes the nine months of SMP's fiscal year 2005 and
the first three months of SMP's fiscal year 2006) and audited financial statements as of and for
the twelve months ended December 31, 2006 (which period includes the last nine months of SMP's
fiscal year 2006 and the first three months of SMP's fiscal year 2007).
The share and per share data and American Depositary Share, or ADS, and per ADS data in this
document for the year 2002 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, 2002,
2003 and 2004 and the selected consolidated statements of operations data for the years ended
December 31, 2002 and 2003 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, 2005 and 2006 and the
selected consolidated statements of operations data for each of the years in the three year period
ended December 31, 2006 are derived from our audited consolidated financial statements included
elsewhere in this document which have been audited by KPMG, an independent registered public
accounting firm, whose report appearing elsewhere herein refers to
the adoption of the fair value method of accounting for stock-based
compensation as required by Statement of Financial Accounting
Standards No. 123(R),
Share-Based Payments
effective
January 1, 2006, and a change in the Company's method of
quantifying errors in 2006. Our consolidated financial statements are prepared in accordance with U.S. GAAP.
Year Ended December 31,
2002
(16)
2003
(16)
2004
(16)
2005
(16)
2006
(in thousands, except share and per share data and ratios)
Consolidated Statements of
Operations Data:
Net revenue
$
449,241
$
551,911
$
932,131
$
1,032,734
$
1,414,525
Cost of revenue
627,682
646,320
764,305
917,048
1,070,782
Gross profit (loss)
(178,441
)
(94,409
)
167,826
115,686
343,743
Other
revenue
(1)
18,314
16,956
17,927
20,685
21,030
Operating expenses:
Research and development
77,565
115,478
93,818
122,073
152,756
Sales and marketing
41,196
39,010
37,995
42,503
55,007
General and administrative
43,899
41,540
34,951
40,025
42,558
Fab start-up costs
8,338
9,219
33,199
22,697
—
Other operating expenses
(income), net
23,415
(2)
2,292
(3)
(139
)
(4)
14,202
(6)
13,766
(8)
Total operating expenses
194,413
207,539
199,824
241,500
264,087
Equity in income (loss) of
SMP
(84,846
)
23,194
27,563
6,486
36,040
Other income (loss), net
(1,212
)
9,241
16,416
(5)
(6,744
)
(7)
(2,689
)
(9)
Interest income
16,637
12,168
11,530
28,625
44,591
Interest expense and
amortization of debt
discount
(41,661
)
(42,222
)
(30,093
)
(69,839
)
(87,950
)
3
Table of Contents
Year Ended December 31,
2002
2003
2004
2005
2006
(in thousands, except share and per share data and ratios)
Income tax expense
(10)
(7,029
)
(11,671
)
(4,774
)
(12,997
)
(23,924
)
Minority interest in loss of CSP
55,563
9,491
—
—
—
Net income (loss) before cumulative
effect of change in accounting policy
(417,088
)
(284,791
)
6,571
(159,598
)
66,754
Cumulative effect adjustment for change
in accounting
policy
(11)
—
(6,421
)
—
—
—
Net income (loss)
(417,088
)
(291,212
)
6,571
(159,598
)
66,754
Less:Accretion to redemption value of
convertible redeemable preference
shares
—
—
—
(3,196
)
(9,476
)
Net Income (loss) available to common
shareholders
$
(417,088
)
$
(291,212
)
$
6,571
$
(162,794
)
$
57,278
Basic and diluted net earnings (loss) per
ordinary
share
(12)
$
(0.23
)
$
(0.12
)
$
0.00
$
(0.06
)
$
0.02
Number of shares used in computing net
earnings (loss) per ordinary share:
Basic
1,799,106
2,502,294
2,508,376
2,511,428
2,528,056
Diluted
1,799,106
2,502,294
2,516,942
2,511,428
2,534,065
Basic and diluted net earnings (loss) per ADS
(12)
$
(2.32
)
$
(1.16
)
$
0.03
$
(0.65
)
$
0.23
Number of ADSs used in computing net
earnings (loss) per ADS:
Basic
179,911
250,229
250,838
251,143
252,806
Diluted
179,911
250,229
251,694
251,143
253,407
Other
Data
(13)
:
Ratio of earnings to combined fixed
charges and preferred dividends
—
—
—
—
1.76X
Deficiency of earnings available to cover
combined fixed charges and preferred
dividends
$
381,225
$
301,421
$
19,268
$
132,793
—
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Table of Contents
As of December 31,
2002
2003
2004
2005
2006
(in thousands)
Consolidated Balance Sheet Data:
Cash and cash equivalents
$
1,210,925
$
905,472
$
539,399
$
819,856
$
718,982
Working capital
(14)
942,059
682,322
165,537
549,441
568,469
Total assets
3,333,463
3,021,027
3,090,012
3,517,294
3,618,431
Long-term obligations
1,154,815
1,049,837
960,660
1,187,004
1,329,908
Convertible redeemable preference
shares
—
—
—
250,663
246,174
Long-term obligations and
convertible redeemable
preference shares
1,154,815
1,049,837
960,660
1,437,667
1,576,082
Ordinary share capital
(15)
2,682,465
2,678,661
2,682,638
2,682,050
2,704,215
Total
shareholders' equity
1,785,459
1,494,555
1,505,631
1,346,374
1,428,857
Notes:
(1)
Other revenue consists of rental income and management fees.
(2)
Included in the 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.
(3)
Included in the 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.
(4)
Included in the 2004 other operating expenses (income), net line were:
(a)
A gain of $10.4 million from the sale of equipment to 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.
(5)
Other income, net, in 2004 related primarily to a
gain of $14.3 million from the sale of technology to CSMC.
(6)
Other operating expenses (income), net in 2005 included a fixed asset impairment charge
of $3.9 million on assets held for sale.
(7)
Other loss, net, in 2005 related primarily to an expense of $7.0 million related to the
termination of hedging transactions and
other costs as a result of the cash 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.
(8)
Other operating expenses, net, in 2006 included losses of $6.1 million resulting from
foreign currency fluctuations, partially
offset by a gain of $2.6 million from the disposal of fixed assets from Fab 1.
(9)
Other loss, net, in 2006 related primarily to an other-than-temporary
impairment loss of $2.7 million on securities classified as available-for-sale. Other loss, net, in 2006 also included net losses of $0.4 million
relating to net losses of $1.4 million resulting from changes in the fair value of a call option
transaction and net losses of $1.0 million relating to time
value of our interest rate cap contracts which are excluded from the assessment of hedge
effectiveness, partially offset by net gains of $1.4 million arising from the ineffective portion
of our derivative instruments and net gains of $0.6 million resulting from changes in the fair
value of an interest rate swap prior to its designation as a hedging instrument.
(10)
The pioneer status had the effect of increasing (decreasing) basic and diluted net earnings
per ordinary share or (increasing) decreasing basic and diluted net (loss) per ordinary
share by $(0.04), $(0.02), $(0.00), $(0.01) and $0.00 and increasing (decreasing) basic and
diluted net earnings per ADS or (increasing) decreasing basic and diluted net (loss) per ADS
by
5
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$(0.36), $(0.15), $(0.02), $(0.11) and $0.02 for the years ended December 31, 2002,
2003, 2004, 2005 and 2006, respectively.
(11)
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.
(12)
For 2003, basic and diluted net loss per ordinary share prior to the cumulative effect
adjustment was $(0.11) and basic and diluted net loss per ADS prior to the cumulative effect
adjustment was $(1.14).
(13)
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 dividends consist of
accretion charges relating to our convertible redeemable preference shares.
(14)
Working capital is calculated as the excess of current assets over current liabilities.
(15)
Until January 30, 2006, ordinary shares of the Company had a par value of S$0.26. The
Singapore Companies (Amendment) Act 2005, which came into effect on January 30, 2006,
abolished the concept of "par value" and "authorized capital". Accordingly, the amounts
previously disclosed under "ordinary shares" and "additional paid-in capital" line items
have been combined as "Ordinary Share Capital".
(16)
Reclassifications and certain immaterial classification corrections have been made to prior years'
financial statements to conform to classifications used in the current year. These include
reporting operating grant income as a reduction of the expenses that the grants are intended to
reimburse rather than as other income, reporting rental income and management fees as other revenue
rather than as other income, reporting depreciation of rental buildings as other operating expense
rather than as other expense and certain other immaterial reclassifications.
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 we may not be profitable in the future.
In 2002, 2003 and 2005, we incurred net losses of $417.1 million, $291.2 million and $159.6
million, respectively. In 2004 and for the year ended December 31, 2006, we generated net income of
$6.6 million and $66.8 million, respectively.
As of December 31, 2006, we had an accumulated deficit of $1,221.5 million. We cannot
assure you that the accumulated deficit will not continue or increase in the future or that
we will remain profitable.
6
Table of Contents
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 lenders' consent prior to paying dividends on our ordinary shares;
•
require us to dedicate a substantial portion of our cash flow from operations to
payments on our debt, thereby reducing the availability of our cash flow to fund capital
expenditures, working capital and other general corporate purposes. The term "capital
expenditures" means the amount we paid or will pay 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 2004, 2005 and 2006, we made substantial capital expenditures of $686.3 million,
$628.1 million and $554.3 million, respectively. We expect our total cash outflow for capital
expenditures in 2007 to be approximately $800 million, including $65 million of capital
expenditures in 2006 for our 90 nanometer, or nm, and below technologies which are expected to be paid in 2007. Capital expenditures planned for 2007
are primarily for increasing 65nm and below capacity. With the above capital
expenditures, Fab 7 is expected to have equipment (installed or available for installation) that is
equivalent to a capacity of 25,000 300 millimeter, or mm, wafers per month by December 2007. We had
originally planned to equip Fab 7 with a full capacity of 30,000 300-mm wafers per month but have
revised this estimate to 39,000 300-mm wafers per month covering mainly 0.13 micron, or um, to 65nm
technology nodes. In addition, to further align our manufacturing capabilities with our technology
position, we are adding an additional phase for our Fab 7 expansion that will be focused on 65nm
and 45nm technologies. At completion, Fab 7 is expected to have a capacity of 45,000 300-mm wafers
per month and our total capital investment in Fab 7 is expected to be approximately between $4,200
million and $4,500 million. As of December 31, 2006, we have spent $1,638.6 million equipping Fab
7. 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 $180 million for research and
development in 2007.
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 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 45,000 300-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
7
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•
continuously improve our device yields.
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. Our average capacity
utilization improved from 58% in 2003 to 77% in 2006 but fluctuated during this period as well. We
cannot assure you that market conditions will continue to improve or that the 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, although our average
utilization rate improved to 80%, we experienced market weakness from the second half of June 2004
which continued into the first half of 2005 as the industry worked through 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%. In 2006, our average
utilization rate was 77%. This was mainly due to higher utilization rate of 82% for each of the
first and second quarters of the year. During the second half of 2006, companies in the supply
chain, including our customers, experienced excess inventory and seasonally weaker than usual
market conditions. The inventory correction and weaker market impacted our utilization in the third
and fourth quarters of the year resulting in our utilization rates declining in those quarters to
74% and 70%, respectively. We cannot assure you that market conditions will improve in 2007 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
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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 June 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. We further expanded our joint
development efforts with IBM to include 45nm bulk CMOS process technology in December 2004 and 32nm
bulk CMOS logic process technology in December 2006. 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 depended on our joint development agreements with our technology partners for faster
introduction of 90nm and 65nm bulk CMOS process technologies and we continue to depend on our joint
development agreement with IBM for faster introduction of 45nm and 32nm bulk CMOS process
technologies. If we encounter problems in the successful implementation of our joint development
agreements with these technology 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
affected. "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). Agere Systems Inc. announced in December 2006 that it has entered into an
agreement to merge with LSI Logic Corporation under the LSI Logic name. In February 2007, pursuant
to our joint venture agreement with Agere Systems Singapore Pte Ltd, or Agere Systems Singapore, a
subsidiary of Agere Systems Inc., relating to SMP, we received a written notice from Agere Systems
Singapore that a change of control of Agere Systems Singapore will occur upon the merger of Agere
Systems Inc. and LSI logic Corporation which is expected to close in the second quarter of 2007. We
are still evaluating our options under the joint venture agreement, including exercising our right
to require Agere Systems Singapore to sell to us the SMP shares held by Agere Systems Singapore.
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 these technology alliances 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 72% of our total net revenue for both
2005 and 2006. Our top five customers collectively accounted for approximately 60% of our total net
revenue in 2006, compared with approximately 56% of our total net revenue in the previous year.
Our top three customers for 2006, in order of revenue contribution, were Broadcom, IBM and Advanced
Micro Devices, and each of them contributed more than 10% of our total net revenue in 2006. 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 sectors. We expect that we will continue to be
dependent for a significant portion of our revenue upon a relatively limited number of customers,
which 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. Customer concentration is more significant for our leading-edge process
technologies. We cannot assure you that revenue generated from these customers, individually or in
the aggregate, will reach or exceed historical levels in any future period. Loss or cancellation of
business from, significant changes in scheduled deliveries to, quality or 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
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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 collaborate 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 collaboration 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 generally 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 of the commencement of the manufacture of the product. The time required to manufacture a product depends on the complexity of such product, with the more advanced technology products generally requiring a longer cycle time. In addition, due to the
cyclical nature of the semiconductor industry, the length of time between our receipt of the purchase orders from our customers and the commencement date of the manufacture of the products 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 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 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 tabs. 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, a
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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 control. These factors include, among others:
•
the cyclical nature of both the semiconductor industry and the markets served by our
customers;
•
pricing pressure from competitors in the foundry industry;
•
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 that 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 receivable in a timely manner;
•
the occurrence of losses from a customer's inability to pay our accounts receivable 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;
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•
our susceptibility to intellectual property rights disputes;
•
our ability to continue with existing, and to enter into new 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. We have filed and 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 may 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 until they are published or granted. Although we are not currently a
party to any material litigation involving patent infringement, the semiconductor industry is
characterized by frequent litigation regarding patent and other intellectual property rights. As is
typical in the semiconductor industry, we have from time to time received communications from third
parties asserting patents that cover certain of our technologies and alleging infringement of
certain intellectual property rights of others. We expect to receive similar communications in the
future. In the event any third party were to make a valid claim against us or our customers, we
could be required to:
•
discontinue using certain process technologies which could cause us to stop
manufacturing certain
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 are subject to the risk of increased income taxes
A large portion of our operations in Singapore is afforded lower tax rates from tax incentives
provided to attract and retain business. These tax incentives are subject to certain conditions
with which we expect to comply, such as achieving fixed amounts of capital expenditure and
headcount by certain dates. Our taxes could increase if we do not meet the incentive requirements,
or tax rates applicable to us in Singapore are otherwise increased.
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We base our tax positions upon the anticipated results from tax authority examinations. Our
estimate of the potential outcome for any uncertain tax issues is highly judgmental. There can be
no assurance that the outcome from examinations will not have an adverse effect on our operating
results and financial condition.
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 2006, we cannot
assure you that we will continue to be able to do so in the future at similar or reasonable premium
rates. 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 at similar or reasonable premium rates, 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. 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 generally 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
raw materials and supplies at acceptable prices. We obtain most of our raw materials and supplies,
including critical raw materials such as raw semiconductor wafers, from a limited number of
vendors. Some of these raw materials and supplies are available from a limited number of vendors in
limited quantity and their procurement may require a long lead time. We purchase most of our key
raw materials and supplies on a purchase order basis. We generally 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 raw 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 raw materials and supplies and a need
subsequently arises to look to other alternative suppliers, we would have to qualify these
alternative suppliers, and such qualification could lead to delays in production and seriously harm
our company.
In addition, from time to time, we may reject raw materials and supplies that do not meet our
specifications. 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 original equipment manufacturers and vendors that make
and sell the complex equipment and equipment spare parts that 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. In addition,
in the event of shortage of supply of equipment spare parts, we would need to qualify alternative
sources and/or equipment spare parts. Any delay in the delivery or increase in the cost or
availability of this equipment or equipment spare parts 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 Overview — Equipment and Materials" for
additional information regarding our relationships with our suppliers of materials and equipment.
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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 they are diced into
individual chips. We currently subcontract a significant number of orders for assembly, testing and
wafer bumping services 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, Amkor
Technology Singapore Pte. Ltd, and Amkor Technology Taiwan, Ltd, or collectively Amkor, and EEMS
Test Singapore Pte. Ltd., or EEMS. STATS ChipPAC, UTAC, ASE, Amkor and EEMS may, from time to time,
experience tester capacity constrain and production interruption due to, among other things,
technical problems occurring during the assembly, testing and wafer bumping processes. Because
STATS ChipPAC, UTAC, ASE, Amkor and EEMS 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. While we have, in the second half of 2006, qualified our
subcontractor, Amkor Technology Singapore Pte. Ltd.'s, wafer bumping services in printing and
plating technology on our 90nm and 65nm process technology nodes, the availability of such wafer
bumping capabilities are limited and are still subject to qualification on our customers' products.
If we are unable to gain access to such advanced packaging and wafer bumping services in a timely
manner, or if there is a shortage in the availability of such wafer bumping services, or if there
are delays in the qualification of such technology, or if there are disruptions in such services,
it would impact our ability to secure business for the more advanced technology nodes and 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.
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 risks in constructing and equipping new fabrication plants.
Where we expand by constructing new fabrication plants, there could be events that could delay
the project or
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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, and 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, 2006, 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 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 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. 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
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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, 2006, Temasek through its subsidiary Singapore Technologies
Semiconductors Pte Ltd, or ST Semiconductors, beneficially owned approximately 59.56% 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 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.
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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, Europe and Malaysia. 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 and the
maintenance of foreign currency bank deposits, 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 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 2006. However, there can be no
assurances that we will not be a PFIC in 2007 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 2007 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,
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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. may not be 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 take-over 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 (either on his
own or together with parties acting in concert with him) additional voting shares representing 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.
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 be sold in the U.S. only 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, 2006, 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;
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•
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, 2006, there were 539 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$580.0 billion, or $378.1 billion (based on the noon buying rate as of December 29, 2006 of
S$1.5338 to $1.00). For the year ended December 31, 2006, the aggregate equity trading value on the
Singapore Exchange (including shares traded on the CLOB International trading system) was
approximately S$291.2 billion or $189.9 billion (based on the noon buying rate as of December 29,
2006 of S$1.5338 to $1.00). The relatively small market capitalization of, and trading volume on,
the Main Board of the Singapore Exchange may cause the market 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.
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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 2007;
•
our capacity utilization rate, production capacity and production capacity mix;
•
our plans to expand our production capacity for 90nm and smaller process geometry
technologies to meet the
anticipated needs of our customers;
•
our 2007 planned capital expenditures, research and
development expenditures, depreciation and 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 demands from our major customers, excess inventory, life cycle, market
outlook and trends or specific products;
•
competition from other foundries;
•
unforeseen delays, interruptions, performance level and technology mix in our fabrication
facilities;
•
our progress on leading-edge products;
•
changes in capacity plans, changes in allocation and process technology mix, and the
unavailability of materials, equipment, manpower and expertise;
•
access to or delays in technological advances or our development of process technologies;
•
the successful implementation of our technology and supply alliances (including
our joint development
agreements with IBM, Infineon and Samsung);
•
the growth rate of fabless companies, the outsourcing strategy of IDMs and our
expectation that IDMs will utilize
foundry capacity more extensively;
•
demand and supply outlook in the semiconductor market and the economic conditions in
the United States as
well as globally;
•
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., 880N. McCarthy Blvd, Suite 100, Milpitas,
California 95035, telephone +1-408-941-1100.
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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 "— C. Organizational Structure."
Our principal capital expenditures for the fiscal years 2004, 2005 and 2006 were comprised
mainly of the purchase of semiconductor equipment for the equipping of our fabs. Our capital
expenditures amounted to $686.3 million in 2004, $628.1 million in 2005 and $554.3 million in 2006.
We expect our total cash outflow for capital expenditures in 2007 to be approximately $800 million,
including $65 million of capital expenditures in 2006 for our
90nm and below technologies which are expected to be paid in 2007.
Capital expenditures planned for 2007 are primarily for increasing 65nm and below capacity. For
more details on the costs of equipping Fab 7, see "Item 5. Operating and Financial Review and
Prospects — Liquidity and Capital Resources."
For the year 2006, 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 only 300-mm facility.
We have service operations in ten locations and in nine 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.
The semiconductor industry was historically 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 focus on design and marketing and utilize
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 advanced semiconductor process technologies.
According to recent industry research reports and company announcements, the cost of a
state-of-the-art 300-mm fab can range from $3 billion to $5 billion, which is approximately six
times to ten times higher than the cost a decade ago. Today, only large and well-capitalized or
funded companies can support the substantial technology and investment
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requirements of building state-of-the-art fabs. In addition, for companies to justify the
enormous cost of a new fab, a high level of capacity utilization is essential to ensure that fixed
costs are fully absorbed. These trends have led to the rapid growth in demand in the recent years
for advanced semiconductor manufacturing services provided by semiconductor
foundries.
Foundry services are now utilized by nearly every major semiconductor company in the world.
Historically, IDMs have used foundry services for their incremental manufacturing needs. Given the
high cost of implementing 300-mm technology and the mounting pressure on them to improve profit
margins and accelerate time-to-market, we expect IDMs to utilize foundries more extensively in the
future for their core manufacturing needs.
The Requirements of a Full-Service Foundry
As demand for foundry services has grown, many semiconductor suppliers are seeking highly
committed foundry providers that meet their manufacturing technology requirements. These foundry
providers 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). To attract customers,
semiconductor foundries are increasingly offering 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 are expected to provide a full range of semiconductor process
technologies. A semiconductor foundry will struggle economically if it relies 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 expected 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 providers 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 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 customers the flexibility to adapt quickly to new market opportunities.
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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 processes 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.
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. In June 2006, together
with IBM, Samsung and Infineon, we extended the Design Enablement Program to include 45nm bulk CMOS
process. In December 2006, we extended our Design Enablement Program with IBM to include 32nm bulk
CMOS logic process and to further define our enablement joint development activities for 45nm bulk
CMOS logic process. Many EDA and intellectual property companies have supported and developed
solutions on Chartered's processes. 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.
In October 2006, we announced our strategic investment in Gateway Silicon Inc, or GSI, a
Taiwan-based company specializing in application specific integrated circuit and SOC design
services and intellectual property development and integration. We plan to collaborate with GSI in
developing and optimizing design services while leveraging GSI's expertise to enhance our portfolio
of value-added solutions, or VAS. The VAS offering is based on our proven CMOS process technologies
supported with cost-effective wafer fab production capacity. It provides our customers with
competitive solutions to develop their products timely in markets such as wireless, consumer, Radio
Frequency Identification, or RFID, security and industrial control systems market.
Our supply chain automation started in April 2004 when we launched our e-Business initiatives
with our customers. Since then, we have continued to enhance our automation initiatives to increase
the ability and ease of our customers to transact business online with us. In parallel, we have
also implemented and will continue to augment our automation capabilities with our subcontractors
and suppliers with the goal of providing increased seamless connectivity across the entire supply
chain.
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 which is focused on improving
growth and profitability are:
Leverage improved technology position and improve revenue and margins
The strengthening of our technology roadmap resulting from our joint development
agreements with IBM and our other technology partners and the expansion of our third party network
of pre-qualified EDA, intellectual property and design services solutions allows us to target a
leading-edge blue-chip customer base and further diversify our customer base. In addition, we are
also able to start offering leading-edge solutions to customers at a similar time frame as our
leading competitors and are therefore able to target more "first source" business than we were able
to in the past. We expect our improved technology position to improve our revenue growth and
margins.
Align manufacturing capacity with technology position, optimize capacity utilization and
improve cost structure
We aim to optimize our capacity primarily by expanding capability for leading-edge
technologies, to align with our
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technology position and maximize capacity utilization at mature technology nodes. To
maximize productivity and resource utilization across fabs and increase flexibility in
manufacturing, we adopt a "borderless fab" approach within our campus. This 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.
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 new or additional applications. We
emphasize leveraging our capabilities in mixed-signal and RF CMOS processes with complete solutions
for our niche technologies for products such as smart cards, RFID, tags, display drivers and power
management for mobile products. Using mature technologies in older fabs will allow the company to
generate margins and cash flows to support the investment in the advanced technologies.
Leading-edge Technologies.
As part of our plan to expand our capability for leading-edge
technologies, we intend to expand our production capacity for 90nm and smaller process geometry
technologies to meet the anticipated needs of our customers. We expect our leading-edge technology
capacity in 2007 to increase by over 80% compared to 2006 and to represent approximately 22% of our
total expected capacity in December 2007. We believe that increasing our foundry capacity in 90nm
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 complete product support for customers
We are continuing to expand our range of product support activities for customers 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 technology
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 2007 to 2010 and
65nm, 45nm and 32nm logic processes, including their generic, low power and high speed variants.
The roadmaps also cover 90nm and 65nm mixed signal and RF modules, and 0.22um 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 process are directed to the 45nm technology node.
Under our March 2004 joint development agreement with IBM, Infineon and Samsung, we, together with
our technology partners, have developed 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 and in December 2006, we expanded our joint development efforts with IBM to include 32nm
bulk CMOS logic process technology and to further define the terms of our joint development
activities for 45nm bulk CMOS logic process. We expect our reciprocal
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manufacturing arrangement with IBM 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
and other technology partners 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.
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 EDA vendors and intellectual
property companies' 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
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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.
•
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, 2006, 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. Fab 1, which was wholly-owned by our company, ceased operations at the
end of March 2004 and some of its operations were moved to Fab 2. 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
Data Including
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
Chartered's Share of SMP
2005
2005
2005
2005
2006
2006
2006
2006
Thousand eight-inch
equivalent wafers:
Total wafers shipped
186.2
224.5
295.2
345.8
349.4
355.7
337.0
322.9
Total
capacity
317.0
346.5
401.4
435.9
427.5
436.4
458.2
461.7
Utilization
59
%
65
%
74
%
79
%
82
%
82
%
74
%
70
%
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1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
Capacity by Fab
2005
2005
2005
2005
2006
2006
2006
2006
Thousand eight-inch equivalent
wafers:
Fab2
130.6
137.7
139.2
145.7
142.6
144.1
145.7
145.7
Fab3
71.4
74.3
74.2
74.2
69.5
70.3
71.0
71.0
Fab5
(1)
34.5
35.8
36.2
35.6
34.3
34.6
35.0
35.0
Fab6
80.5
89.4
100.5
112.9
114.5
115.8
117.0
117.0
Fab7
(2)
—
9.3
51.3
67.5
66.6
71.6
89.5
93.0
Total
317.0
346.5
401.4
435.9
427.5
436.4
458.2
461.7
Notes:
(1) 49% of total capacity, based on Chartered's equity ownership.
(2) Fab 7, our only 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 2,000,000 wafers (eight-inch equivalent)
for the full year 2007, compared to approximately 1,800,000 wafers (eight-inch equivalent) for the
full year 2006. We plan to increase our leading-edge capacity (90nm and smaller process geometry
technologies) in 2007 by over 80% as compared to 2006 and to represent approximately 22% of our
total expected wafer capacity in December 2007. The following table reflects our wafer capacity
figures as of December 31, 2006 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
Estimated full
capacity
(2)
50,000 wafers per month
25,000 wafers per month
24,000 wafers per month
39,000 wafers per month
45,000 wafers per month
(3)
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
(4)
0.35 to
0.25 to
0.25 to
0.13um and
0.18um
(4)
0.13um
(4)
0.11um
(4)
smaller process
geometry
technologies including
90nm, 65nm and 45nm
Manufacturing
technologies
(5)
Digital; Mixed
Digital; Mixed
Digital; RF CMOS;
High performance,
High performance,
Signal; RF CMOS; SRAM;
Signal; RF
BiCMOS; Mixed Signal;
high-density CMOS; high
high-density CMOS;
Flash Memory; HVCMOS;
CMOS; SRAM
eSRAM
density SRAM Mixed
Mixed Signal; SOI
EEPROM; DMOS; BiCMOS,
Signal; RF CMOS
BiPolar; OTP;
PowerMos
Clean room
109,000 sq.ft.
81,000 sq.ft.
96,540 sq. ft.
126,000 sq. ft.
232,000 sq. ft.
Class-1 SMIF
(6)
Class-1 SMIF
(6)
Class-1 SMIF
(6)
Class-1 SMIF
(6)
Class-1 SMIF
(6)
Notes:
(1)
With respect to Fab 5 and Fab 6, the information includes capacity of our strategic partners.
(2)
Estimated full capacity is the production output capability based on our current and
anticipated process technology mix, which may
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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.
(3)
Equivalent to 101,250 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 45,000 300-mm
wafers per month, and this is expected to take a number of years and will be paced by customer
demand and industry conditions.
(4)
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.
(5)
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. SOI refers to Silicon-On-lnsulator. PowerMos refers to discrete metal oxide silicon transistor to control high power.
(6)
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,
2002
2003
2004
2005
2006
(in thousands)
Total Output
445
722
1,035
1,052
1,365
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 9001:2000 standards. ISO 9001:2000 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 have also achieved ISO/TS 16949:2002 (Technical Specification) certification since 2005 and have
met the yearly surveillance audit requirements. ISO/TS 16949:2002, commonly referred to as TS2, was
introduced by ISO in March 2002 and is currently considered to be one of 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 9001:2000 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 recognition of our manufacturing excellence and quality standards.
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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
June 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 to include 45nm bulk CMOS process technology. In December 2006, we further extended our
cooperation with IBM with a new agreement for the joint development of 32nm bulk CMOS logic process
as well as for the expansion of our 45nm bulk CMOS logic process joint development activities. Our
joint development with IBM now spans four separate generations of technologies from 90nm, 65nm,
45nm, to 32nm. With IBM, we have jointly completed the development of
90nm and 65nm bulk CMOS process. The
development of 45nm bulk CMOS logic process and 32nm bulk CMOS logic process is currently being and
will be carried out at IBM's facilities at East Fishkill, New York. Each participating company to a
particular joint development activity with IBM will have the ability to implement the jointly
developed processes in its manufacturing facilities. Accordingly, Chartered has the ability to
implement the jointly developed 90nm and 65nm bulk CMOS process as well as the 45nm and 32nm bulk CMOS logic
process, when developed, in our manufacturing facility, Fab 7.
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. The capacity
that we had reserved in IBM's 300-mm chip manufacturing facility in East Fishkill, New York, was
intended to support our customers' capacity requirements while Fab 7 was not in the production
stage. As our Fab 7 has commenced production and we intend to fully equip Fab 7 to a capacity of
45,000 300-mm wafers per month, we believe that we will have sufficient capacity in Fab 7 to
support our customers' capacity requirements for 300-mm wafers. Accordingly, in March 2006, IBM and
our company reached an agreement pursuant to which IBM refunded the deposit that we had placed with
IBM for the purposes of reserving manufacturing capacity at IBM's facility at East Fishkill, New
York. As a result of the refund of deposit from IBM in April 2006, IBM is no longer required to
reserve any capacity for us.
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
and in June 2006, the Design Enablement Program was further extended to include 45nm 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 EDA vendors and intellectual property
companies 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. In December 2006, Chartered and
IBM agreed to expand the joint development of the design kits for 32nm bulk CMOS logic process and
to further expand the enablement activities for 45nm bulk CMOS logic process. 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 and our other technology partners.
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 and our other technology partners as well as
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 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, as well as its rights and obligations in
relation to, CSP to Avago in January 2006 and consequently, Avago has replaced Agilent Technologies
Europe B.V. in January 2006 as a shareholder of CSP. Currently, Chartered, EDB Investments, Avago
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and Singapex hold 51%, 26.5%, 15%, and 7.5% equity interests 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.
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. The joint venture parties had previously agreed with Agilent
Technologies Europe B.V. in 2001 that the two directors appointed by Agilent Technologies Europe
B.V. would remain on CSP's Board of Directors even after it reduced its ownership in CSP to 15%,
except that they would not have voting rights. Avago is subject to the same arrangement and may
elect two directors as long as it owns at least 15% of CSP, although its directors have no voting
rights. 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 Microelectronics Pte. Ltd., now known as Agere Systems Singapore, relating to the
joint venture ownership of Fab 5. Agere Systems Inc. announced in December 2006 that it has entered
into an agreement to merge with LSI Logic Corporation under the LSI Logic name. On February 13,
2007, pursuant to our joint venture agreement with Agere Systems Singapore relating to SMP, we
received a written notice from Agere Systems Singapore that the merger of Agere Systems Inc. and
LSI logic Corporation, which is expected to close in the second quarter of 2007, will result in a
change of control of Agere Systems Singapore. Pursuant to the joint venture agreement, if we object
to such change of control, we may, within 30 days after the notice from Agere Systems Singapore,
give notice in writing to Agere Systems Singapore to require Agere Systems Singapore to sell to us
all of SMP shares held by Agere Systems Singapore at fair market value, as defined in the joint
venture agreement. We are still evaluating our options under the joint venture agreement.
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. 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
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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.
We and Agere Systems Singapore contributed 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.
We and Agere Systems Singapore have signed an assured supply and demand agreement with SMP.
The agreement was intended to ensure that all of the fixed costs of SMP are recovered by allocating
all of its wafer capacity to our company and Agere Systems Singapore in accordance with the
respective parties' equity interest in SMP and each party would bear the fixed costs attributable
to its allocated capacity. In September 2004, we and Agere Systems Singapore entered into an
agreement pursuant to which both parties agreed to annually reimburse any losses suffered by SMP
that are attributable to the respective parties. For the year ended December 31, 2006, SMP did not
suffer any losses that were attributable to our company and accordingly no reimbursements were
payable by our company to SMP. There were also no such reimbursements payable to SMP by our company
in 2005 and 2004. To the extent that the number of wafers started for us are less than our
allocated capacity in the future, there is no assurance that there will be no reimbursements
payable to SMP by our company in respect of unrecovered fixed costs of SMP.
Pursuant to a cost sharing agreement, we perform certain management and corporate support
activities for the benefit of SMP including accounting, financial and human resources. Under this
agreement, SMP is allocated a portion of our costs in performing these activities.
SMP owns and operates Fab 5, which is located on the same premises as the rest of our
manufacturing facilities in Singapore. 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.
The Supplemental Agreement to the Joint Venture Agreement entered into in September 2004 also
provided that SMP could pay dividends out of the profits of the joint venture determined on a year
to year basis rather than on a cumulative basis as was the case previously. We received dividends
of $29.5 million and $38.2 million from SMP for the years ended December 31, 2005 and December 31,
2006, respectively. We did not receive any dividend from SMP for the year ended December 31, 2004.
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 October 2005, SMP reorganized its paid-up share capital and authorized a return of a
portion to its shareholders in the form of cash, our entitlement being $20.4 million, in a capital
reduction sanctioned by the High Court of Singapore. In October 2006, the board of directors of SMP
agreed to further reduce the issued and paid-up capital of SMP from S$141,515,511 divided into
69,343,426 "A" ordinary shares and 72,172,085 "B" ordinary shares to S$74,159,103 divided into
69,343,426 "A" ordinary shares and 72,172,085 "B" ordinary shares. This second capital reduction
for SMP was approved by the High Court of Singapore on November 9, 2006, and made effective
pursuant to the lodgment of the Order of Court with the Accounting and Corporate Regulatory
Authority of Singapore on November 13, 2006. Our entitlement arising from the second return of
capital from SMP was $19.1 million. In 2006, we received $16.9 million
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arising from both the first and the second returns of capital from SMP. The balance of our
entitlement from the second return of capital from SMP will be paid to us as and when payment is
declared by the SMP board of directors.
Customers and Markets
We manufactured semiconductors for over 150 different active customers in 2006. Our top
five customers in 2006 collectively accounted for approximately 60% of our total net revenue in
2006, compared with approximately 56% in the previous year. Our top three customers for 2006, in
order of revenue contribution, were Broadcom, IBM and Advanced Micro Devices, and each contributed
more than 10% of our total net revenue in 2006 compared with 2005 where Broadcom and IBM each
exceeded 10% of our total net 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 sectors.
The following table sets forth our customers who have each exceeded 10% of our total net
revenue in 2006 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.
Advanced Micro Devices
Central processing units ("CPUs") for computers.
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:
2004
2005
2006
Americas
68
%
75
%
77
%
Europe
9
9
9
Asia-Pacific
— Singapore
1
1
3
— Others
19
12
9
Japan
3
3
2
Total
100
%
100
%
100
%
By $ (in thousands):
2004
2005
2006
Americas
$
631,150
$
774,950
$
1,089,068
Europe
85,125
91,844
129,619
Asia-Pacific
— Singapore
3,392
8,995
37,716
— Others
179,206
123,449
134,261
Japan
33,258
33,496
23,861
Total
$
932,131
$
1,032,734
$1,414,525
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; Shanghai, China; and Seoul, Korea.
We currently allocate a portion of our wafer manufacturing capacity to certain customers under
several types of agreements.
Please refer to "Item 5. Operating and Financial Review and Prospects — Results of Operations"
for a breakdown of our revenues by market sector and by technology.
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Customer Service
We focus on providing a high level of customer service in order to attract customers and
maintain their on-going business. 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 process
and pre-contract customer design validation activities. 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.
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 2004, 2005 and 2006, our research and
development expenses, including our share of expenses related to the IBM joint-development
agreement, were $118.3 million and $122.1 million and $152.8 million, respectively. Those expenses
represented 12.7%, 11.8% and 10.8% of our net revenue for the respective periods. As of December
31, 2005, we employed 370 professionals in our research and development department, 62 of whom have
PhDs. As of December 31, 2006, we employed 508 professionals in our research and development
department, 91 of whom have PhDs. The increase in headcount in our research and development
department was primarily to enhance Chartered's capability in design services and customized
technology developments to expand our customer base.
Our investment in research and development allows us to continue developing new and advanced
processes down to the 45nm technology node and beyond. 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
June 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.
In December 2004, we and IBM expanded our joint development efforts to include 45nm bulk CMOS
process technology and in December 2006, we further expanded our joint development efforts with IBM
to include 32nm bulk CMOS logic process technology and to further define the terms of our joint
development activities for 45nm bulk CMOS logic process technology. We believe the joint
development efforts with our technology partners 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 and other technology partners 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 grants from various agencies of the Government of
Singapore. The amounts under these grants relate to a portion of depreciation expenses arising
from our research and development related capital expenditures
and the training and staffing costs associated with some of our process technology development
programs. In 2004, 2005 and 2006, $19.0 million, $7.5 million and $1.9 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 and achievement of program milestones. The main condition attached to the grants is the completion of
the project to which the grant relates.
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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 equipment, 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. In addition, we also depend on the original equipment
manufacturers and other equipment suppliers for equipment spare parts to maintain and keep our
equipment in operation. In the event of disruption of supply or shortage of equipment spare parts,
we may need to qualify alternative sources or equipment spare parts which will take time and could
lead to a delay in our production.
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.
The prices of semiconductor wafers, bulk gases and chemicals tend to be volatile. 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 raw materials on a purchase order basis. We generally do not
have long-term contracts with our vendors. For those materials that are wholly procured from one
source, we 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, 2006, we have filed in our company's history an aggregate of 2,252 patent
applications worldwide, (1,078 of which had been filed in the U.S.) and held an aggregate of 1,502
issued patents worldwide (804 of which are issued U.S. patents). Of the 1,078 aggregate
applications filed in the U.S., 804 had been issued as of December 31, 2006 and 14 had been allowed
but not issued. Those 14 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 2,252 patent applications have been filed as of December 31, 2006, these include not
only the patent applications filed in the 12 months ended December 31, 2006 but all patent
applications previously filed by our company.)
The number of patents filed by us in 2005 and 2006 were 146 and 129, respectively, and the
number of patents issued to us in 2005 and 2006 were 249 (of which 47 were issued U.S. patents) and
143 (of which 61 were issued U.S. patents), respectively.
Our issued patents have expiration dates ranging from 2011 to 2025. All of the allowed and
pending patents will expire after 2026. 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 will 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,
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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 only 300-mm
facility, Fab 7, which started commercial shipments in June 2005, is expected to be certified in
2007. 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 business interruption losses arising from fire, natural disasters and certain other
risks up to their respective policy limits. We also maintain public liability insurance for claims
from third parties for bodily injury and property damage arising out of our business operations. In
addition, we also maintain product liability insurance for damages sustained by others for bodily
injury or property damage caused by our product(s). Some of our insurance coverage for SMP is under
Agere Systems, Inc.'s global group insurance policies. The policies above are subject to terms,
conditions and exclusions as defined in the respective policies, which are customary in the
insurance market.
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, 2006, 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."
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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 Incorporated
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 Limited
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. We
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. We sold and transferred our 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 4.14 and Exhibit
4.15.2").
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
4.16.1 and Exhibit 4.16.2"). In January 2007, we entered into a supplemental agreement with Terra
to amend the terms of the rental payments (see "Item 19. Exhibits — Exhibit 4.16.3").
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 4.17.2 and Exhibit 4.17.3").
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 4.18.1 and Exhibit 4.18.3"). In
January 2007, we entered into a supplemental agreement with Terra to amend the terms of the rental
payments (see "Item 19. Exhibits — Exhibit 4.18.4").
We have in 2006 leased an additional plot of land from Terra which in turn leased the land
from JTC. The lease runs until 2030. We intend to use this additional plot of land primarily for
ancillary purposes to support our company's business operations. Our company has paid in full all
rental payments due for this lease (see "Item 19. Exhibits — Exhibit 4.19.1, Exhibit 4.19.2 and
Exhibit 4.19.3").
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.
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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. The following also includes a discussion of our share of SMP revenue.
SMP meets certain "significance" tests pursuant to Rule 3-09 of Regulation S-X. Accordingly,
separate financial statements of SMP are required to be filed by us and we intend to file an
amendment to this annual report on
Form 20-F
to include the separate financial statements of SMP as
soon as available but no later than June 30, 2007. Further, 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.
EXECUTIVE 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 and 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. We have service operations in ten locations in nine countries in
North America, Europe and Asia. Our principal customers are located in the U.S., Taiwan, Japan and
Europe. We derive revenues primarily from fabricating semiconductor wafers and, to a lesser extent,
from providing associated subcontracted assembly and test services and pre-fabricating services.
As a dedicated foundry, our financial performance largely depends on a number of factors
including timeliness in introducing technology and manufacturing solutions, ability to enter into
arrangements with diverse customers for high volume production of our wafers, utilization rate of
our capacity, and external factors such as pricing and general semiconductor market conditions and
industry cycles.
To enhance our position in technology and manufacturing solutions in the market place, we
collaborate with other companies in the industry to develop the required solutions including
process and manufacturing technologies, as well as electronic design automation and intellectual
property enablement. This collaborative model allows sharing of cost and risks while accelerating
our progress. A critical competence required in the foundry business is the ability to manufacture
wafers efficiently for a diverse number of customers for a diverse number of products and devices.
We strive to achieve this objective in our operations and serve multiple customers in the consumer,
computer and communications sectors of the market. However, we do not set limits for our exposure
in any specific sector mentioned above.
Customers expect top-tier foundries to continuously invest in leading edge capacity to serve
their needs in a timely manner. The equipment used in a foundry's manufacturing facilities are
complex and sophisticated and require a high level of investment. We make ongoing capital
expenditure decisions based on an analysis of industry and market conditions, and opportunities and
expected demand from existing and prospective customers. Due to the high level of investments made
in equipment, a significant amount of our cost is fixed in nature in the form of depreciation.
Therefore, maintaining a high level of utilization of our manufacturing capacity is critical to
generating healthy financial performance.
INDUSTRY OVERVIEW
Cyclicality of the Semiconductor industry
The semiconductor industry is highly cyclical. For example, according to the
Semiconductor Industry Association, or the SIA, the worldwide semiconductor industry, in terms of
revenue, remained at similar levels between 2001 and 2002, and then grew by approximately 18%, 28%,
7% and 9% sequentially in 2003, 2004, 2005 and 2006, 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.
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Substantial Capital Expenditures
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 strategy to position ourselves to serve market needs during the
market's growth phase. We invested $220.8 million in capital expenditures in 2003, focused
primarily on 0.13um technologies. In 2004, 2005 and 2006, we invested $686.3 million, $628.1
million and $554.3 million, respectively, in capital expenditures. Capital expenditures in 2004
were primarily for our 0.13um and below technologies, while capital expenditures in 2005 and 2006
were primarily for our 90nm and below technologies.
Pricing, Change in Product Mix and Technology Migration
The pricing 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 typically 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. The prices for wafers of a given level of technology
and device complexity will generally decline over the product life cycle and foundries must
continue to migrate to increasingly sophisticated technologies or introduce value added solutions
to sustain the same level of profitability. Over the period from 2004 to 2006, our ASP per wafer
(eight-inch equivalent) increased by 2.4% from $1,012 in 2004 to $1,036 in 2005 and then increased
sequentially by 7.3% to $1,112 in 2006. The increase in our ASP was due primarily to a higher mix
of advanced technologies (we define our advanced technologies in 2006
as 0.13um and smaller
process geometry technologies) over the period which commanded higher selling prices. There is no
assurance that we will continue to see increases in ASP or that it will not decrease in the future.
Capacity Utilization Rates (based on total shipments and total capacity, both of which include
our share of SMP)
Largely as a result of the muted semiconductor industry growth in 2002 following the
severe downturn which started in 2001, our average utilization rate in 2002 was 37%, resulting in
significant net losses. As the semiconductor industry resumed growth, 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. 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. This, offset by the improving market
conditions and the ramp up of 90nm shipments in the second half of 2005, resulted in an average
capacity utilization of 70% for the year 2005. Our average capacity utilization increased from 70%
in 2005 to 77% in 2006, due primarily to higher utilization of 82% for both the first and second
quarters of 2006. During the second half of 2006 companies in the supply chain, including our
customers, experienced excess inventory and seasonally weaker than usual market conditions. The
inventory correction and weaker market impacted our utilization rate in the third and fourth
quarters of 2006 resulting in our utilization rates declining in those quarters to 74% and 70%,
respectively.
Our average capacity utilization, based on eight-inch equivalent wafers, from 2002 to 2006 is as
follows:
2002
2003
2004
(2)
2005
(3)
2006
Average capacity utilization
(1)
37
%
58
%
80
%
70
%
77
%
Notes:
(1)
Based on total shipments and total capacity, both of which include our share of SMP.
(2)
Fab 1 ceased operations at the end of March 2004, with some of its operations moved to Fab 2.
(3)
Fab 7 started commercial shipment in June 2005.
2006 OVERVIEW
Our revenues in 2006 grew 37% compared to 2005, significantly outpacing the worldwide
semiconductor industry growth of approximately 9%. We achieved this growth even though companies in
the supply chain, including our customers, experienced excess inventory and seasonally weaker than
usual market conditions during the second half of 2006. Our revenue growth was primarily driven by
the ramp up of our leading-edge 90nm revenue. Revenue from our
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0.13um and smaller process geometry technologies, including 90nm, represented 57% of our total net
revenue and revenue from 90nm technologies alone contributed 29% of our total net revenue for 2006.
With our expanding business and corresponding revenue growth, we achieved a net income of $66.8 million for 2006. We also achieved a lower breakeven utilization rate of around 70% in the fourth
quarter of 2006 compared to approximately 75% in the same period in 2005.
For 2006, capacity for our advanced technologies increased by approximately 66% while total
capacity increased by approximately 19% to 1.8 million eight-inch equivalent wafers from 1.5
million eight-inch equivalent wafers in 2005. In 2006, we invested
$554.3 million in capital
expenditures primarily for our 90nm and below technologies and incurred $152.8 million research and
development expenses primarily for the 65nm and 45nm technology nodes.
In March 2006, we entered into a call option transaction, or 2006 Option, with Goldman Sachs
International, or GS, to replace the call option transaction that we had previously entered into
with GS in August 2004 which expired on April 2,
2006. Under the 2006 Option, GS may purchase up to 214.8 million of our ordinary shares. If the
2006 Option is
exercised in full at the price of S$2.15 per share and physically settled, we would receive
approximately $300 million
based on an exchange rate of $1.00 = S$1.54 that could be used for repayment of debt and general
corporate purposes.
See the "— Liquidity and Capital Resources — Current and expected liquidity" section below for more
details.
In 2006, we issued $300 million principal amount of 6.25% senior notes due 2013 at a
price of 99.053% of the principal amount through a public offering. Proceeds from the offering were
used to repay $300 million principal amount of existing bank loans.
2007 OUTLOOK AND PLANS
The discussion under "2007 Outlook and Plans" contains forward-looking statements that involve
risks and uncertainties. Our actual results may differ significantly from those projected in these
forward-looking statements. Factors that might cause future results to differ significantly from
those projected in these 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.
2007 Outlook
The overall macro economic conditions look favorable as we enter 2007. According to the SIA,
the worldwide semiconductor industry is expected to grow by approximately 10% in 2007 compared to
2006, in terms of revenue, with generally healthy economic conditions in all of the world's major
semiconductor markets.
2007 Planned Capacity
We expect to achieve total wafer capacity of approximately 2.0 million wafers (eight-inch
equivalent) for the full year
2007, compared to approximately 1.8 million wafers (eight-inch equivalent) for the full year 2006.
We plan to increase our
capacity for 90nm and smaller process geometry technologies in 2007 by over 80% as compared to 2006
and to
represent approximately 22% of our total expected wafer capacity in December 2007.
2007
Planned Capital Expenditures
Our total cash outflow for capital expenditures in 2007 is expected to be approximately $800
million, compared to $554 million in 2006. The $800 million capital expenditure figure includes $65
million of capital expenditures in 2006 for our 90nm and below
technologies which are expected to be paid in 2007. Capital expenditures
planned for 2007 are primarily for increasing 65nm and below capacity. With the above capital
expenditures, Fab 7 is expected to have equipment that are installed or available for installation
equivalent to a capacity of 25,000 300-mm wafers per month by December 2007. We expect depreciation
and amortization for the year 2007 to be approximately $550 million, compared to $504 million in
2006.
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2007 Planned Research and Development Expenditures
We expect to incur approximately $180 million for research and development in 2007,
compared to $153 million in 2006. The increased investment is intended to fund the development and
qualification of 45nm process technology on an accelerated schedule, including costs associated
with capital investment in leading-edge semiconductor tools.
CRITICAL ACCOUNTING POLICIES
The preparation of the consolidated financial statements and related disclosures in the
accompanying notes in accordance with U.S. GAAP requires management to make judgments, 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 we believe to be reasonable under the present
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 twenty 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 salvage values. We amortize technology licenses using the straight-line
method over the shorter of the license period or the estimated useful life of the license, which on
weighted average is approximately six years. These lives represent our estimate of the periods that
we expect to derive economic benefits from the assets. In estimating these useful lives and 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, the significant factors
we consider include 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 only 300-mm wafer fabrication facility, during the
second quarter of 2005, we have estimated salvage values that are higher than our historical
estimates for equipment when our other fabs began service. This is due primarily to the equipment
in Fab 7 being put into use at the early stages of the 90nm and below process technology life
cycles. 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 using more mature process
technologies where the equipment was generally put into use later in the process geometry
technology life cycle.
In the third quarter of 2006, we revised the estimated salvage values of some of our 200-mm
equipment and machinery to reflect higher expected salvage values than we have historically
estimated. These equipment and machinery primarily support our advanced technologies where we are
observing higher salvage values in the equipment resale market. We believe a significant driver of
this is that we initially placed this equipment into use earlier in the process geometry technology
life cycle than we have done for other 200-mm equipment. This change will result in lower
depreciation over the remaining lives of the affected eight-inch process equipment and machinery.
The impact of this change was an improvement to our net income by $11.3
million in 2006, resulting in an improvement of both our basic and diluted net earnings per ADS by
$0.04 each in 2006. Basic and diluted net earnings per ordinary share in 2006 were $0.02 both
before and after the impact of this change.
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 review long-lived 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 are required to make judgments and assumptions in identifying those
events or changes in circumstances that may trigger impairment. Some of the factors we consider
include:
•
A significant decrease in the market price of a long-lived asset group;
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•
A significant adverse change in the extent or manner in which a long-lived asset
group is being used or in its physical condition;
•
A significant adverse change in legal factors or in the business climate that could
affect the value of a long-lived asset group, including an adverse action or assessment
by a regulator;
•
An accumulation of costs significantly in excess of the amount originally expected
for the acquisition or construction of a long-lived asset group;
•
A current-period operating or cash flow loss combined with a history of operating or
cash flow losses or a projection or forecast that demonstrates continuing losses
associated with the use of a long-lived asset group; and
•
A current expectation that, more likely than not, a long-lived asset group will be sold
or otherwise disposed of significantly before the end of its previously estimated useful
life.
We perform impairment tests for groups of long-lived assets at the lowest level of
identifiable independent cash flows. In determining the appropriate asset groupings we make
subjective judgments about 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 equipment. We have identified our
individual fabs to be the lowest level of identifiable independent cash flows for purposes of
performing impairment tests.
The determination of recoverability for long-lived assets held for use 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 which require
a considerable amount of judgment, If the sum of the undiscounted cash flows (excluding interest)
is less than the carrying value of the asset group, an impairment charge is recognized for the
amount by which the carrying value of the asset group 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.
We also routinely review our long-lived assets that are held for sale for impairment in
comparison to their fair values less costs to sell. In calculating an impairment charge for assets
held for sale, significant judgment is required in estimating fair values and costs to sell.
In 2004 and 2005, we recorded impairment charges of $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. We did not record an impairment
charge in 2006 on our long-lived assets.
However, if we had made different judgments and assumptions in making our estimates of future
cash flows of our assets held for use or fair values and costs to sell for 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 inventory carrying values are higher than 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. Some of the significant
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factors we consider in estimating the net realizable value of our inventories include the
likelihood of changes in market and customer demand and expected changes in market prices for our
inventories.
Judgments, estimates and assumptions 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. While our estimates require us to make significant
judgments and assumptions about the expected net realizable values of our inventories, we believe
our estimates are reasonable as historically sales of inventories for which the actual net
realizable values were higher than estimated have not significantly impacted our gross profit.
As of December 31, 2005 and 2006, we reduced carrying values of inventory by $30.1 million and
$15.8 million, respectively, to write down certain inventories, primarily work-in-progress, to
estimated net realizable value. These write-downs were recognized in
cost of revenue. Subsequent to such write-downs we sell or dispose of these inventories. In each of 2004, 2005 and 2006, we sold
some of our inventories that we had written down to their estimated net realizable value in the
previous year at prices which were higher than our previous estimate of the net realizable value.
Such sales improved our gross profit by approximately $1.4 million, $0.7 million and $1.8 million
for 2004, 2005 and 2006, respectively.
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 derive revenue primarily from fabricating semiconductor wafers and, to a lesser
extent, from providing associated subcontracted assembly and test services as well as
pre-fabricating services such as masks generation and engineering services. We enter into
arrangements with customers which typically include some or all of the above deliverables.
When our arrangements include multiple deliverables, we first determine whether each
deliverable meets the separation criteria in Financial Accounting Standards Board, or FASB,
Emerging Issues Task Force, or EITF, Issue 00-21, "Accounting for Revenue Arrangements with
Multiple Deliverables". In general, a deliverable (or a group of deliverables) meets the separation
criteria if the deliverable has standalone value to the customer and if there is objective and
reliable evidence of the fair value of the remaining deliverables in the arrangement. Each
deliverable that meets the separation criteria is considered a "separate unit of accounting." The
total arrangement consideration is then allocated to each separate unit of accounting based on
their relative fair values. Substantially all of our arrangements for the sale of semiconductor
wafers and related services consist of a single unit of accounting. The application of EITF 00-21
requires judgment as to whether the deliverables can be divided into more than one unit of
accounting and whether the separate units of accounting have value to the customer on a stand-alone
basis. Changes to how we determine these elements could affect the timing of revenue recognition.
Revenue for each unit of accounting is recognized when the contractual obligations have been
performed and title and risk of loss has passed to the customer, there is evidence of a final
arrangement as to the specific terms of the agreed upon sales, selling prices to the customers are
fixed or determinable and collection of the revenue is reasonably assured, and, where applicable,
delivery has occurred. Generally, this results in revenue recognition upon shipment of wafers.
To a lesser extent, we also derive other revenue relating to rental income and management fees
which is recognized when the contractual obligations have been performed, there is evidence of a
final arrangement, fees are fixed or determinable and collection of the revenue is reasonably
assured.
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
consideration 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 (loss), 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.
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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.
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 as the manufacturing processes mature and higher sales credits and returns on
new processes. We have charged $4.8 million, $18.3 million and $6.3 million to results of our
operations for sales credits and returns for 2004, 2005 and 2006, respectively. 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 have been materially different.
Collectibility of Accounts Receivable
We manage the credit risk of collectibility of our accounts receivable through our
credit evaluation process, credit policies, and credit control and collection procedures. 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. 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. 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
A large portion of our operations in Singapore are afforded lower tax rates from tax
incentives provided to attract and retain business. These tax incentives expire over various
periods till September 30, 2020 and are subject to certain conditions with which we expect to
comply, such as achieving fixed amounts of capital expenditure and headcount by certain dates. Our
taxes could increase if we do not meet the incentive requirements, or tax rates applicable to us in
such jurisdictions are otherwise increased.
We regularly assess the likelihood of adverse outcomes on our tax positions resulting from tax
authority examinations to determine the adequacy of our provision for income taxes. Our estimate of
the potential outcome for any uncertain tax issues is highly judgmental, and we believe we have
adequately provided for probable outcomes relating to uncertain tax matters. We adjust our
provision in light of changing facts and circumstances, such as the closing of a tax audit or the
refinement of an estimate. To the extent that the final tax outcome from examinations of these
matters is different than the amounts recorded, such differences will be recorded in the period in
which such determination is made and may be materially different from amounts recorded to date.
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. A
valuation allowance reduces deferred tax assets to estimated realizable value based on estimates,
past performance and certain tax planning strategies, and our objective assessment of whether it is
more likely than not that we will be able to generate sufficient future taxable income to realize
the net deferred tax assets. A valuation allowance has been established for tax assets pertaining
to certain fabs (operating under tax incentives) in the amount of $322.4 million and $273.8 million
as of December 31, 2005 and 2006, respectively. The valuation allowance will be maintained until
sufficient positive evidence exists to support reversal of the valuation allowance based upon
current and preceding years' results of operations and anticipated future taxable income levels.
Our judgment regarding future profitability may change due to future market conditions,
changes in Singapore or international tax laws and other factors, If these estimates and related
assumptions change in the future, we may be required to increase or decrease our valuation
allowance against deferred tax assets previously recognized, resulting in additional or lower
income tax expense.
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CHANGE IN ACCOUNTING POLICIES
SFAS No. 123(R), Share-Based Payments
In December 2004, the FASB issued SFAS No. 123(R), "Share-Based Payments." SFAS No. 123(R)
requires that the compensation cost relating to share-based payment transactions be recognized in
financial statements. That cost is to be measured based on the fair value of the equity or
liability instruments issued. SFAS No. 123(R) replaced SFAS No. 123, "Accounting for Stock-Based
Compensation," and superseded APB Opinion No. 25, or APB 25, "Accounting for Stock Issued to
Employees." In March 2005, the SEC issued Staff Accounting Bulletin No. 107, on the interaction
between SFAS No. 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.
We adopted the provisions of SFAS No. 123(R) on January 1, 2006, the first day of our fiscal
year 2006, using the modified prospective application which provides for certain changes to the
method for valuing share-based compensation. Under the modified prospective application, prior
periods are not revised for comparative purposes. Under SFAS No. 123(R), share-based compensation
cost is measured based on the estimated fair value of the award at the grant date and is recognized
as expense over the employee's requisite service period. Prior to adopting the provisions of SFAS
No. 123(R), we measured share-based employee compensation cost in accordance with the intrinsic
value method of APB 25 and related interpretations. Intrinsic value is determined based on the
excess of fair market value of the stock subject to the option at the grant date and the option
exercise price. The total fair value-based compensation expense associated with prior awards that
were not vested at the adoption of SFAS No. 123R was $9.8 million which will be recorded in
earnings over a weighted average period of approximately three years. In 2006, we recorded a
compensation expense of $6.4 million in earnings associated with such awards. The remaining $2.5
million, $0.7 million and $0.2 million of compensation expenses associated with such awards are
expected to be recorded in earnings in 2007, 2008 and 2009, respectively.
Upon
adoption of SFAS No. 123(R), we continued to use the Black-Scholes option-pricing model
for valuation for share-based awards granted beginning January 1, 2006, which was also previously
used for our pro forma information disclosures required under SFAS No. 123. SFAS No. 123(R)
requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent
reporting periods if actual forfeitures differ from those estimates. In our pro forma information
disclosures required under SFAS No. 123 for the periods prior to 2006, we accounted for forfeitures
as they occurred. Refer to Note 17 of the consolidated financial statements for more details on our
share-based payments.
Staff Accounting Bulletin No. 108, or SAB 108, Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year Financial Statements
Refer to Note 1(c) of the consolidated financial statements for more details on the errors
adjusted upon the initial adoption of SAB 108. In addition to reporting a cumulative effect
adjustment upon initial adoption of SAB 108 as of January 1, 2006, previously issued financial
statements in the first, second and third quarters of 2006 have also been corrected for immaterial
errors, resulting in an increase (decrease) to net income for these quarters by $(0.3) million,
$0.5 million and $(0.5) million, respectively.
Other Adjustments and Reclassifications
See Note 1(c) of the consolidated financial statements for more details on other adjustments and
reclassifications.
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RESULTS OF OPERATIONS
The following table sets forth our consolidated statements of operations data as a percentage
of net revenue for the periods indicated:
Years ended December 31,
2004
2005
2006
Consolidated Statements of Operations data:
Net revenue
100.0
%
100.0
%
100.0
%
Cost of revenue
82.0
88.8
75.7
Gross profit
18.0
11.2
24.3
Other revenue
1.9
2.0
1.5
Operating expenses:
Research and development
10.1
11.8
10.8
Sales and marketing
4.1
4.1
3.9
General and administrative
3.7
3.9
3.0
Fab start-up costs
3.5
2.2
—
Other operating expenses (income), net
(0.0
)
1.4
1.0
Total operating expenses
21.4
23.4
18.7
Equity in income of SMP
2.9
0.6
2.5
Other income (loss), net
1.8
(0.6
)
(0.2
)
Interest income
1.2
2.8
3.2
Interest expense and amortization of debt discount
(3.2
)
(6.8
)
(6.2
)
Income (loss) before income taxes
1.2
(14.2
)
6.4
Income tax expense
0.5
1.3
1.7
Net income (loss)
0.7
%
(15.5
)%
4.7
%
Less: Accretion to redemption value of convertible redeemable preference shares
—
0.3
0.7
Net income (loss) available to ordinary shareholders
0.7
%
(15.8
)%
4.0
%
The following table sets forth a breakdown of revenue by market sector for the periods indicated:
Years ended December 31,
2004
2005
2006
Communications
51
%
35
%
30
%
Computer
30
25
31
Consumer
15
35
37
Other *
4
5
2
Total
100
%
100
%
100
%
The following table sets forth a breakdown of revenue by geographical region for the periods
indicated:
Years ended December 31,
2004
2005
2006
Americas
68
%
75
%
77
%
Europe
9
9
9
Asia-Pacific
20
13
12
Japan
3
3
2
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,
2004
2005
2006
0.09 and below
—
%
19
%
29
%
Up to 0.13
19
23
28
Up to 0.18
16
10
8
Up to 0.25
19
10
9
Up to 0.35
29
23
16
Above 0.35
17
12
10
Other *
—
3
—
Total
100
%
100
%
100
%
Note:
*
Includes revenue from generation of customers' mask sets
Years
ended December 31, 2005 and December 31, 2006
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. As a dedicated foundry, our financial performance, including our revenue, largely depends
on a number of factors including timeliness in introducing technology and manufacturing solutions,
ability to enter into arrangements with diverse customers for high volume production of our wafers,
utilization rate of our capacity, and external factors such as pricing and general semiconductor
market conditions and industry cycles.
In the first quarter of 2005, the semiconductor industry continued to work through the excess
inventories resulting from the market weakness experienced from the second half of 2004. 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 90nm
shipments. Our net revenue increased in the fourth quarter of 2005 as we capitalized on the growth
in revenue from our advanced technologies and also benefited from favorable market conditions. The
subsequent decrease in our revenue in the first quarter of 2006 compared to the fourth quarter of
2005 was not as significant as may have been expected considering the typical seasonality decrease
in the first quarter. Capacity utilization rates remained high at 82% for both the first and second
quarters of 2006. During the second half of 2006 companies in the supply chain, including our
customers, experienced excess inventory and a seasonally weaker than usual market conditions which
resulted in a decline in our utilization rates in the third and fourth quarters of 2006, which in
turn caused a sequential decrease in our revenue in those quarters. Despite this, net revenue
increased 37.0% from $1,032.7 million in 2005 to $1,414.5 million in 2006 due primarily to the
continued growth in revenue from our advanced technologies. Our revenue growth in 2006 compared to
2005 significantly outpaced the worldwide semiconductor industry growth of approximately 9%.
Our customers continued to make increased use of our advanced technologies, and revenue from
our 0.13um and smaller process geometry technologies increased by 86% between 2005 and 2006.
Revenue from these advanced technologies represented 42% of our total revenue in 2005 as compared
to 57% of our total revenue in 2006, of which 19% and 29% of our total revenue was attributable to
revenue from our 90nm technologies in 2005 and 2006, respectively. We started commercial shipment
of 90nm technologies in June 2005.
Shipments increased by 29.4% from 965,045 wafers (eight-inch equivalent) in 2005 to 1,248,554
wafers (eight-inch equivalent) in 2006. ASP increased by 7.3% from $1,036 per wafer (eight-inch
equivalent) in 2005 to $1,112 per wafer (eight-inch equivalent) in 2006, due primarily to a higher
mix of advanced technologies which command higher selling prices.
Revenue from the communications and the consumer sectors each represented 35% of our total
revenue, while revenue from the computer sector represented 25% of our total revenue in 2005. In
2006, the consumer sector was our highest revenue contributor and represented 37% of our total
revenue, while the computer and the communications sectors represented 31% and 30% of our total
revenue, respectively.
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Table of Contents
Revenue from the computer, consumer and communications sectors increased by 70%, 45% and 17%,
respectively, between 2005 and 2006. The increase in computer sector
revenue was due primarily to a
higher demand for workstations, personal computer and motherboard devices. The increase in consumer
sector revenue was due primarily to higher demand for set-top box and video game devices, while the
increase in communications sector revenue was due primarily to a higher demand for digital
subscriber line, or xDSL cards, partially offset by a lower demand for Local Area Network, or LAN,
switches/routers/hubs/cards and mobile phone handset devices.
Revenue from the Americas region continued to be the largest contributor to our total revenue,
increasing from 75% of our total revenue in 2005 to 77% of our total revenue in 2006, driven
primarily by revenue from the computer sector. Revenue from all other regions remained largely
unchanged in terms of their percentage contributions to our total revenue between 2005 and 2006.
Net revenue in dollar terms for 2006 was higher across all geographical regions compared to 2005,
except for net revenue for the Japan region which decreased by 9% between 2005 and 2006.
Our top three customers for 2005, in order of revenue contribution, were Broadcom, IBM and
Agilent Technologies, of which Broadcom and IBM contributed more than 10% of our total net revenue
in 2005. Broadcom and IBM continued to be our top two customers for 2006, in order of revenue
contribution, while Advanced Micro Devices replaced Agilent Technologies as a top three customer
for 2006. Each of our top three customers for 2006 contributed more than 10% of our total net
revenue in 2006.
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 and
amortization of certain technology licenses. Cost of revenue increased by 16.8% from $917.0 million
in 2005 to $1,070.8 million in 2006 although our shipments increased by 29.4% in 2006 compared to
2005, as a large proportion of our cost of revenue is fixed in nature. Depreciation continued to be
a significant portion of our cost of revenue, comprising 47.6% and 40.7% of our cost of revenue in
2005 and 2006, respectively.
In the third quarter of 2006, we changed the estimated salvage values in relation to certain
eight-inch equipment and machinery to reflect higher expected salvage values than we have
historically estimated. These equipment and machinery primarily support our advanced technologies.
The change in the estimated salvage values is a change in accounting
estimate that was applied prospectively
from July 1, 2006. This change will result in lower depreciation
over the remaining lives of the affected eight-inch process equipment and machinery. The impact of
this change was a reduction to our cost of revenue of $11.3 million in 2006.
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. Cost per wafer shipped decreased by 8.7% from $921 (eight-inch
equivalent) in 2005 to $841 (eight-inch equivalent) in 2006, primarily as a result of an increase
in shipments by 29.4% between 2005 and 2006.
Our gross profit improved from $115.7 million in 2005 to $343.7 million in 2006, due primarily
to higher revenues resulting from significantly higher shipments and to a lesser extent, higher ASP
per wafer as a result of a higher mix of advanced technologies which command higher selling prices.
In each of 2005 and 2006, we sold some of our inventories that we had written down to their
estimated net realizable value in the previous year at prices which were higher than our previous
estimate of the net realizable value. Such sales improved our gross profit by approximately $0.7
million and $1.8 million for 2005 and 2006, respectively.
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 2005 and 2006, there was no significant impact
on our cost of revenue arising from fluctuations in exchange rates.
Other revenue
Other revenue was $20.7 million in 2005 compared to $21.0 million in 2006, and relates to
rental income and management fees.
47
Table of Contents
Research and development expenses
Research and development, or R&D, expenses consist primarily of our share of expenses related
to joint-development projects with IBM, Samsung and Infineon, payroll related costs for R&D
personnel, depreciation of R&D equipment and expenses related to
the development of design kits and
intellectual property solutions for design of integrated circuits. R&D expenses increased by 25.1%
from $122.1 million in 2005 to $152.8 million in 2006 due primarily to higher development
activities related to the 65nm technology node, and to a lesser extent, higher activities related
to development of design kits and intellectual property solutions for advanced technologies in
2006. There was no significant change in R&D expenses as a percentage of revenue which were 11.8%
and 10.8% in 2005 and 2006, respectively.
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 pre-contract customer design
validation activities. EDA-related expenses and costs related to pre-contract customer design
validation activities relate to efforts to attract new customers and expand our penetration of
existing customers. Sales and marketing expenses increased by 29.4% from $42.5 million in 2005 to
$55.0 million in 2006 due primarily to higher payroll related expenses, and to a lesser extent,
higher amortization of EDA software due to an increase in EDA software acquisition and higher
expenses incurred for pre-contract customer design validation activities in 2006. The higher
payroll related expenses in 2006 were due primarily to an increase in headcount and an increase in
compensation cost relating to share-based payment transactions after adoption of SFAS No. 123(R) on
January 1, 2006. Sales and marketing expenses as a percentage of revenue remained at approximately
similar levels in 2005 and 2006 at 4.1% and 3.9%, respectively.
General and administrative expenses
General and administrative, or G&A, expenses consist primarily of payroll related costs for
administrative personnel, consultancy, legal and professional fees and depreciation of equipment
used in G&A activities. G&A expenses increased by 6.3% from $40.0 million in 2005 to $42.6 million
in 2006 due primarily to higher payroll related expenses resulting primarily from an increase in
compensation cost relating to share-based payment transactions after adoption of SFAS No. 123(R),
"Share-Based Payments" on January 1, 2006. G&A expenses as a percentage of revenue remained at
approximately similar levels in 2005 and 2006 being 3.9% and 3.0%, respectively.
Fab start-up costs
Fab start-up costs, all related to Fab 7, were $22.7 million in 2005. No fab start-up costs
were recorded in 2006 as Fab 7 entered commercial production during the second quarter of 2005.
Other operating expenses, net
Other operating expenses, net, were $14.2 million and $13.8 million in 2005 and 2006,
respectively. Other operating expenses, net, in 2005 included a fixed asset impairment charge of
$3.9 million on assets held for sale while there was no fixed asset impairment charge in 2006.
Other operating expenses, net, in 2006 included losses of $6.1 million resulting from foreign
currency fluctuations, partially offset by a gain of $2.6 million from the disposal of fixed assets
from Fab 1.
Equity in income of SMP
Equity in income of SMP was $6.5 million in 2005 compared to $36.0 million in 2006, due
primarily to lower production costs and higher shipments in 2006. 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 2005, the equity in income of SMP was $6.5 million compared to our total net loss of
$159.6 million, while in 2006, the equity in income of SMP was $36.0 million compared to our total
net income of $66.8 million.
The following information summarizes our total business base revenue, which includes our share
of SMP revenue, in 2005 and 2006. 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
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Table of Contents
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:
Year ended December 31,
2005
2006
(In millions)
Net revenue (U.S. GAAP)
$
1,032.7
$
1,414.5
Chartered's share of SMP revenue
$
99.2
$
112.1
Net revenue including Chartered's share of SMP
$
1,131.9
$
1,526.6
The following table provides information that indicates the effect of SMP's operations on
some of our non-U.S. GAAP performance indicators:
Year ended December 31,
2005
2006
Excluding
Including
Excluding
Including
Chartered's
Chartered's
Chartered's
Chartered's
share
share
share
share
of SMP
of SMP
of SMP
of SMP
Shipments (in thousands)*
965.0
1,051.8
1 ,248.6
1,365.0
ASP per wafer
$
1,036
$
1,045
$
1,112
$
1,099
Note:
*
Eight-inch equivalent wafers
Other loss, net
Other loss, net, in 2005 was $6.7 million compared to $2.7 million in 2006. Other loss, net, in
2005 related primarily to an expense of $7.0 million related to the termination of hedging
transactions and other costs as a result of our cash tender offer for and repurchase of
approximately $478 million of our then outstanding $575 million 2.5% senior convertible notes
due 2006. Other loss, net, in 2006 related primarily to an
other-than-temporary impairment loss of $2.7 million on securities
classified as available-for-sale. Other loss, net, in 2006 also included net
losses of $0.4 million relating to net losses of $1.4 million resulting from changes
in the fair value of a call option transaction and
net losses of $1.0 million relating to time value of our interest rate cap contracts which
are excluded from the assessment of hedge effectiveness, partially offset by net
gains of $1.4 million arising from the ineffective portion of our derivative
instruments and net gains of $0.6 million resulting from changes in the fair
value of an interest rate swap prior to its designation as a hedging instrument.
Interest income
Interest income increased by 55.8% from $28.6 million in 2005 to $44.6 million in 2006, due
primarily to higher interest rates, and to a lesser extent, higher average cash balances in 2006
compared to 2005.
Interest expense and amortization of debt discount
Interest expense and amortization of debt discount increased by 25.9% from $69.8 million in
2005 to $88.0 million in 2006, due primarily to higher interest rates on outstanding floating
rate debt, and to a lesser extent, lower interest capitalization associated with lower capital
expenditures related to our 90nm and below technologies, partially offset by lower average
outstanding debt balances in 2006.
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 2005, we recorded income
tax expense of $13.0 million
compared to $23.9 million in 2006. The pioneer tax-exempt status for Fab 2 expired on June 30,
2006 and income from our post-pioneer trade and development and expansion activities in Fab 2 is
taxed at a concessionary tax rate of 10% for a 5-year period beginning July 1, 2006, as
discussed in the "Special Tax Status" section below. Both the change in Fab 2's tax rate and a
higher taxable net interest income contributed to the increase in income tax expense for 2006 as
compared to 2005.
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
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Table of Contents
consolidated statements of operations. The effect of this on our results of operations was an
increase of $64.9 million to our net loss in 2005 and a reduction of $12.8 million to our net
income in 2006, for losses not allocated to the minority interest according to their proportionate
ownership.
Accretion to redemption value of convertible redeemable preference shares
In the third quarter of 2005, 30,000 convertible redeemable preference shares were issued. We
accrete the carrying amounts of the convertible redeemable preference shares to their redemption
values at maturity and record such accretion using the effective interest method over the remaining
period until the maturity date on August 17, 2010. Such accretion adjusts net income (loss)
available to ordinary shareholders. Accretion charges for 2005 and 2006 were $3.2 million and $9.5
million, respectively. In the second quarter of 2006, 1,650 convertible redeemable preference
shares were converted into ordinary shares and the impact on the accretion charges arising from
such conversion was not material.
Years ended December 31, 2004 and December 31, 2005
Net revenue
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. 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 handset 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 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
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Table of Contents
Cost of revenue increased by 20.0% from $764.3 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 51.2% 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 11.0% from
$830 (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 was no significant impact
on our cost of revenue arising from fluctuations in exchange rates.
Our
gross profit deteriorated from 18.0% 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.
Other revenue
Other revenue was $17.9 million in 2004 compared to $20.7 million in 2005 and relates
to rental income and management fees.
Research and development expenses
R&D expenses increased by 30.1% from $93.8 million in 2004 to $122.1 million in 2005 due
primarily to lower recognition of research grants received for the reimbursement of R&D expenses in
2005 compared to 2004. To a lesser extent, the increase in R&D expenses was also due 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.
Sales and marketing expenses
Sales and marketing expenses increased by 11.9% from $38.0 million in 2004 to $42.5 million in
2005. The increase was due primarily to higher expenses resulting from expanded offering of EDA
tools provided and higher expenses incurred for pre-contract customer design validation activities.
General and administrative expenses
G&A expenses increased by 14.5% from $35.0 million in 2004 to $40.0 million in 2005. This was
due primarily to higher payroll-related expenses in 2005 and several transactions in 2004 which
reduced G&A expenses 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 against which an allowance was previously made.
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.
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Table of Contents
Other operating expenses (income), net
Other
operating income, net, of $0.1 million in 2004 included the following:
•
A gain of $10.4 million from the sale of equipment to CSMC; and
•
A gain of $4.9 million resulting from resolution of a goods and services tax matter,
partially offset by:
•
Fab 1 restructuring charges of $4.6 million; and
•
An impairment charge of $1.7 million resulting from our migration to an enhanced manufacturing system.
Other operating expenses, net, of $14.2 million in 2005 included a fixed asset impairment
charge of $3.9 million on assets held for sale resulting from decisions to rationalize capacity and
therefore to sell certain assets. Excluding these items, other operating expenses, net, in 2004 and
2005 remained at approximately similar levels.
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 $159.6 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:
Year ended December 31,
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:
Year ended December 31,
2004
2005
Excluding
Including
Excluding
Including
Chartered's
Chartered's
Chartered's
Chartered's
share
share
share
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 (loss), net
Other income, net, in 2004 of $16.4 million related primarily to a gain of $14.3 million from
the sale of technology to CSMC. Other loss, net, in 2005 of $6.7 million related primarily to an
expense of $7.0 million related to the termination of hedging transactions and other costs as a
result of our cash tender offer for and repurchase of approximately $478 million of our then
outstanding $575 million 2.5% senior convertible notes due 2006.
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 our advanced technologies.
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 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 was a reduction of $55.8 million to our net income in 2004 and an
increase of $64.9 million to our net loss in 2005, for losses not allocated to the minority
interest according to their proportionate ownership.
Accretion to redemption value of convertible redeemable preference shares
The convertible redeemable preference shares were issued in the third quarter of 2005. We are
required to accrete the carrying amounts of the convertible redeemable preference shares to their
redemption values at maturity and record such accretion using the effective interest method over
the remaining period until the maturity date on August 17, 2010. Such accretion adjusts net income
(loss) available to ordinary shareholders. Accretion charges for 2005 were $3.2 million. There were
no accretion charges for 2004.
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, 2006.
Reclassifications and certain immaterial
classification corrections have been made to prior periods' financial statements to conform to classifications used in
the current period. These include reporting operating grant income as a reduction of the expenses that the grants are intended
to reimburse rather than as other income, reporting rental income and management fees as other revenue rather than as other income,
reporting depreciation of rental buildings as other operating expense rather than as other expense and certain other immaterial
reclassifications. Certain immaterial corrections have also been made to the financial statements for each of the quarters in 2006
including recording the 2006 Option as a derivative rather than as equity, and certain other immaterial adjustments.
53
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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."
53A
Table of Contents
Quarter ended
(in millions $)
Mar 31,
Jun 30,
Sep 30,
Dec 31,
Mar 31,
Jun 30,
Sep 30,
Dec 31,
2005
2005
2005
2005
2006
2006
2006
2006
Consolidated Statements of Operations
Data:
Net revenue
181.4
194.0
290.1
367.2
355.2
364.8
355.3
339.1
Cost of revenue
191.1
193.6
253.1
279.2
262.4
276.3
260.5
271.4
Gross profit (loss)
(9.7
)
0.4
37.0
88.0
92.8
88.5
94.8
67.7
Other Revenue
4.7
5.7
5.1
5.2
5.0
5.3
5.4
5.4
Operating expenses:
Research and development
27.3
27.7
31.7
35.4
34.9
37.9
42.0
38.1
Sales and marketing
10.5
10.1
11.7
10.2
13.6
11.9
14.2
15.4
General and administrative
9.3
10.7
9.1
11.0
9.7
9.8
11.0
12.1
Fab start-up costs
14.8
7.9
—
—
—
—
—
—
Other operating expenses
(income), net
2.8
6.0
2.3
3.1
(0.7
)
8.4
4.3
1.7
Total operating expenses
64.7
62.4
54.8
59.7
57.5
68.0
71.5
67.3
Equity in income (loss) of SMP
(9.0
)
0.8
4.2
10.5
10.2
7.9
9.6
8.4
Other income (loss), net
0.0
0.1
(7.0
)
0.0
(7.3
)
(5.3
)
10.6
(0.7
)
Interest income
4.9
6.0
8.5
9.1
10.1
12.5
11.5
10.4
Interest expense and amortization of debt discount
(7.3
)
(14.6
)
(22.5
)
(25.2
)
(24.8
)
(22.9
)
(22.3
)
(17.9
)
Income (loss) before income taxes
(81.1
)
(64.0
)
(29.5
)
27.9
28.5
18.0
38.1
6.0
Income tax expense
3.4
3.1
5.0
1.4
6.5
5.1
11.4
0.9
Net income (loss)
(84.5
)
(67.1
)
(34.5
)
26.5
22.0
12.9
26.7
5.1
Less: Accretion to redemption value of convertible redeemable preference shares
—
—
0.8
2.4
2.4
2.4
2.3
2.3
Net income (loss) available to ordinary shareholders
(84.5
)
(67.1
)
(35.3
)
24.1
19.6
10.5
24.4
2.8
54
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,
2005
2005
2005
2005
2006
2006
2006
2006
Consolidated Statements of Operations Data:
Net revenue
100.0
%
100.
%
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
Cost of revenue
105.4
99.8
87.2
76.0
73.9
75.8
73.3
80.0
Gross profit (loss)
(5.4
)
0.2
12.8
24.0
26.1
24.2
26.7
20.0
Other Revenue
2.6
2.9
1.7
1.4
1.4
1.4
1.5
1.6
Operating expenses:
Research and development
15.1
14.2
10.9
9.6
9.8
10.4
11.8
11.3
Fab start-up costs
8.2
4.1
—
—
—
—
—
—
Sales and marketing
5.8
5.2
4.0
2.8
3.8
3.2
4.0
4.5
General and administrative
5.1
5.5
3.2
3.0
2.7
2.6
3.1
3.6
Other operating expenses (income), net
1.5
3.1
0.8
0.9
(0.2
)
2.3
1.2
0.5
Total operating expenses
35.7
32.1
18.9
16.3
16.1
18.5
20.1
19.9
Equity in income (loss) of SMP
(4.9
)
0.4
1.5
2.9
2.9
2.2
2.7
2.5
Other income (loss), net
0.0
0.0
(2.4
)
0.0
(2.1
)
(1.4
)
3.0
(0.2
)
Interest income
2.7
3.1
2.9
2.5
2.8
3.4
3.2
3.1
Interest expense and amortization of debt discount
(4.0
)
(7.5
)
(7.8
)
(6.9
)
(7.0
)
(6.3
)
(6.2
)
(5.3
)
Income (loss) before income taxes
(44.7
)
(33.0
)
(10.2
)
7.6
8.0
5.0
10.8
1.8
Income tax expense
1.9
1.6
1.7
0.4
1.8
1.4
3.2
0.3
Net income (loss)
(46.6
)
(34.6
)
(11.9
)
7.2
6.2
3.6
7.6
1.5
Less: Accretion to redemption value of convertible redeemable preference shares
—
—
0.3
0.6
0.7
0.7
0.7
0.7
Net income (loss) available to ordinary shareholders
(46.6
)%
(34.6
)%
(12.2
)%
6.6
%
5.5
%
2.9
%
6.9
%
0.8
%
Net revenue
In the first quarter of 2005, the semiconductor industry continued to work through the excess inventories resulting
from the market weakness experienced from the second half of 2004. 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,
55
Table of Contents
respectively. The increase in revenue in the third quarter of 2005 was due mainly to the ramp
up of our 90nm shipments. Our net revenue increased in the fourth quarter of 2005 as we capitalized
on the growth in revenue from our advanced technologies and also benefited from favorable market
conditions. The decrease in our revenue in the first quarter of 2006 compared to the fourth quarter
of 2005 was not as significant as may have been expected considering the typical seasonality
decrease in the first quarter. Capacity utilization rates remained high at 82% for both the first
and second quarters of 2006. During the second half of 2006, companies in the supply chain,
including our customers, experienced excess inventory and seasonally weaker than usual market
conditions. This resulted in the sequential decrease in our net revenue in the third and fourth
quarters of 2006.
Gross profit (loss)
Other than the first quarter of 2005 in which we recorded a negative gross margin of
5.4%, we recorded a positive gross margin for the remaining quarters from the second quarter of
2005 to the fourth quarter of 2006. The improvement in the gross margin from the first quarter of
2005 to the second quarter of 2005 was due primarily to higher shipments in the second quarter of
2005 which caused a decrease in cost per wafer due to fixed costs being spread over a larger base
of shipments. The continued improvement in the gross margin sequentially in the third and the
fourth quarters of 2005 was due primarily to an increase in ASP per wafer. Gross margin in each
quarter from the fourth quarter of 2005 to the third quarter of 2006 remained at approximately
similar levels. The sequential decrease in gross margin in the fourth quarter of 2006 was due
primarily to higher cost per wafer resulting from lower production volumes over which fixed costs
were allocated and a less favorable mix in the production levels.
Research and development expenses
R&D expenses remained at approximately similar levels in the first and second quarters of
2005. The sequential 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 activities related to development of design kits and intellectual
property solutions for design of integrated circuits. R&D expenses remained at approximately
similar levels between the fourth quarter of 2005 and the first quarter of 2006. The sequential
increase in the second and third quarters of 2006 was due primarily to increased activities related
to the 65nm technology node, while the development activities related to the 65nm technology node
decreased in the fourth quarter of 2006 as we transitioned the development activities to the next
technology node, resulting in a sequential decrease in R&D expenses from the third quarter of 2006
to the fourth quarter of 2006.
Fab start-up costs
Fab start-up costs, all related to Fab 7, 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 subsequent to the second quarter of 2005.
Other operating expenses (income), net
Other operating expenses, net, of $6.0 million in the second quarter of 2005 included a
fixed asset impairment charge of $3.9 million on assets held for
sale, while other operating
income, net, of $0.7 million in the first quarter of 2006 included a gain of $2.6 million from the
disposal of fixed assets from Fab 1. The increase in other operating expenses, net, in the second
quarter of 2006 to $8.4 million related primarily to losses resulting from foreign currency
fluctuations. No significant changes in other operating expenses (income), net, were noted for the
subsequent quarters in 2006.
Equity in income (loss) of SMP
As with the results of our majority-owned fabs, the equity in income (loss) of SMP can
have a material effect on our quarterly consolidated statements of operations. The equity in income
(loss) of SMP for the eight fiscal quarters ended December 31, 2006 were significant amounts when
compared to the net income or net loss of the respective fiscal quarters during that period, except
for the second quarter of 2005.
Other than the first quarter of 2005 in which we recognized equity in loss of SMP of $9.0
million, we recognized equity in income of SMP for the remaining quarters from the second quarter
of 2005 to the fourth quarter of 2006. In the second quarter of 2005, we recognized equity in
income of SMP of $0.8 million due primarily to higher revenue resulting primarily from higher
shipments. The sequential increase in equity in income of SMP in the third quarter of 2005 was due
primarily to lower production costs. Equity in income of SMP continued to increase sequentially in
the fourth quarter of 2005 due primarily to higher revenue resulting mainly from higher shipments.
Equity in income of SMP remained at approximately similar levels between the fourth quarter of 2005
and the first quarter of 2006 and decreased sequentially in the second quarter of 2006 due
primarily to lower revenue resulting primarily from lower shipments. The subsequent increase in
56
Table of Contents
equity in income of SMP in the third quarter of 2006 was due primarily to lower production costs,
while the sequential decrease in the fourth quarter of 2006 was due primarily to lower revenue
resulting from lower ASP per wafer and lower shipments.
The following information summarizes our total business base revenue, which includes our share
of SMP revenue for the eight fiscal quarters ended December 31,
2006. 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,
2005
2005
2005
2005
2006
2006
2006
2006
(in millions)
Net revenue
(U.S. GAAP)
$
181.4
$
194.0
$
290.1
$
367.2
$
355.2
$
364.8
$
355.3
$
339.1
Chartered's share of
SMP revenue
$
14.7
$
25.9
$
26.4
$
32.2
$
30.9
$
28.9
$
27.8
$
24.6
Net revenue including
Chartered's share of
SMP
$
196.1
$
219.9
$
316.5
$
399.4
$
386.1
$
393.7
$
383.1
$
363.7
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, 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
Mar 31 ,2006
Jun 30, 2006
Sep 30, 2006
Dec 31, 2006
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)*
318.2
349.4
327.0
355.7
307.9
337.0
295.5
322.9
ASP per wafer
$
1,089
$
1,080
$
1,089
$
1,082
$
1,136
$
1,120
$
1,135
$
1,115
Note:
* Eight-inch equivalent wafers
57
Table of Contents
Other income (loss), net
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 our cash tender
offer for and repurchase of approximately $478 million of our then outstanding $575 million 2.5%
senior convertible notes due 2006. In the first quarter of 2006, we entered into an interest rate
swap to economically swap the fixed-rate interest obligation associated with the 6.25% senior notes
due 2013 from a fixed-rate interest obligation to a floating-rate interest obligation and also entered into the 2006 Option with GS. Other income
(loss), net, in the first, second, third and fourth quarters of 2006 included gains (losses)
resulting from changes in the fair value of this interest rate swap prior to its designation as a
hedging instrument and changes in the fair value of the 2006 Option. Other loss, net, in the first
quarter of 2006 also included an impairment loss
of $2.7 million on securities classified as available-for-sale.
Interest income
Interest income increased sequentially in each quarter from the first quarter of 2005 to the
second quarter of 2006 due to higher interest rates and higher average cash balances. The
sequential decrease in the third quarter of 2006 was due primarily to lower average cash balances,
partially offset by higher interest rates. Interest income continued to decrease in the fourth
quarter of 2006 due primarily to lower average cash balances.
Interest expense and amortization of debt discount
Interest expense and amortization of debt discount increased sequentially from the first quarter of
2005 to the third quarter of 2005 and remained at approximately similar levels in each quarter up
to the third quarter of 2006 and subsequently decreased in the fourth quarter of 2006. The
sequential increase in the second and third quarters of 2005 was due to lower interest
capitalization associated with capital expenditures related primarily for our 90nm and below
technologies, higher average outstanding debt balances and higher interest rates. The sequential
decrease in the fourth quarter of 2006 was due primarily to a recovery resulting from an approval
of a withholding tax waiver associated with interest payment of an existing loan and higher
interest capitalization associated with capital expenditures primarily related for our 90nm and
below technologies.
Accretion to redemption value of convertible redeemable preference shares
We are required to accrete the carrying amounts of the convertible redeemable preference
shares, which were issued in the third quarter of 2005, to their redemption values at maturity and
record such accretion using the effective interest method over the remaining period until the
maturity date on August 17, 2010. Such accretion adjusts net income (loss) available to ordinary
shareholders. In the second quarter of 2006, 1,650 convertible redeemable preference shares were
converted into ordinary shares and the impact on the accretion charges arising from such conversion
was not material.
LIQUIDITY AND CAPITAL RESOURCES
Current and expected liquidity
As of December 31, 2006, our principal sources of liquidity included $719.0 million in cash
and cash equivalents, and $591.4 million of unutilized banking facilities consisting of term loans
and bank credit lines. $200.0 million of these unutilized banking facilities will expire on March
30, 2007 and there is no certainty that we will renew the facility related to this amount.
There
was no significant change in our working capital, which was $549.4 million and $568.5
million as of December 31, 2005 and December 31, 2006, respectively. Working capital is calculated
as the excess of current assets over current liabilities.
In March 2006, we entered into the 2006 Option with GS to replace the call option
transaction that we had previously entered into with GS in August 2004 and that expired on April 2,
2006. Under the 2006 Option, GS may purchase up to 214.8 million of our ordinary shares at a price
of S$2.15 per share. If the 2006 Option is exercised in full at the price of S$2.15 per share and
physically settled, we would receive approximately $300 million based on an exchange rate of $1.00
= S$1.54 that could be used for repayment of debt and general corporate purposes. The 2006 Option
contains early termination provisions, whereby we may choose to terminate the 2006 Option in whole
or in part, triggered by the closing price of our ordinary shares reaching and maintaining
specified levels for a defined period of time. Under the terms of the 2006 Option, we have the
right in all cases either to issue new ordinary shares to GS or to settle the transaction in cash.
If the 2006 Option is not exercised or terminated earlier, it will expire on March 29, 2011.
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Table of Contents
The closing prices of our ordinary shares since we entered into the 2006 Option to the end of 2006
have not triggered the early termination provisions. As of December 31, 2006, GS had also not
exercised its rights under the 2006 Option.
In 2006, we issued $300.0 million of 6.25% senior notes due 2013. Following the issuance
of the 6.25% senior notes due 2013, the SMBC/OCBC Term Loan was repaid in full using the proceeds
from the issuance of the 6.25% senior notes due 2013 in 2006.
Our target cash and cash equivalents balance, as of December 31, 2007 is approximately $700
million. This is based on our cash and cash equivalents of $719 million as of December 31, 2006,
planned draw downs of our existing credit facilities of approximately $329 million, expected cash
outflows for capital expenditures of approximately $800 million primarily for increasing 65nm and
below capacity, and debt repayments of approximately $73 million in 2007. Achieving our target cash
and cash equivalents balance also depends on our ability to generate operating cash flow in 2007
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 2007 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 bring Fab 7 to its estimated total capacity of 45,000 300-mm wafers per month. See
the "— Liquidity and Capital Resources — Historic
investing cash flows and capital expenditures "
section below for more details on our capital expenditures. 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. We believe the following
uncertainties exist regarding our liquidity:
•
Ability to Increase Revenue
— If our revenues and margins were to decline, our ability to
generate net cash from operating activities in a sufficient amount to meet our cash needs could be
adversely affected.
•
Renewal of credit facilities
—There is no certainty that we will renew our credit facilities
which expire in 2007.
•
Debt Ratings
—Our ability to obtain external financing and the related cost of borrowing are
affected by our debt ratings.
Historical cash flows
The following table sets forth the summary of our cash flows for the periods presented:
Year ended December 31,
2004
2005
2006
(In thousands)
Net cash provided by operating activities
$
331,684
$
404,374
$
520,670
Net cash used in investing activities
732,715
568,243
419,905
Net cash provided by (used in) financing activities
34,939
444,753
(204,987
)
Historical operating cash flows
Net cash provided by operating activities was $331.7 million, $404.4 million and $520.7
million in 2004, 2005 and 2006, respectively. 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. The $116.3 million improvement in cash provided by operating activities
between 2005 and 2006 was due primarily due to higher collections as a result of higher sales and
higher dividend income from SMP, partially offset by higher payments to creditors and higher
interest payments on outstanding loans in 2006.
In 2005, pre-payments of $40.0 million were received from a customer for future purchases and to
secure 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-payments for future purchases in either 2004 or 2006. We
recorded revenue of $9.1 million and $11.6 million related to such arrangements with no related
cash inflows in 2005 and 2006, respectively. Net cash provided by operating activities in 2005 and
2006
59
Table of Contents
also
included dividends received from SMP of $29.5 million and $38.2 million, respectively. No
dividends were received from SMP in 2004.
Historical
investing cash flows and capital expenditures
Net
cash used in investing activities was $732.7 million,
$568.2 million and $419.9 million in
2004, 2005 and 2006, respectively. Investing activities consisted primarily of capital expenditures
totaling $686.3 million, $628.1 million and $554.3 million in 2004, 2005 and 2006, respectively.
Capital expenditures in 2004 were primarily for our 0.13um and below technologies, while capital
expenditures in 2005 and 2006 were primarily for our 90nm and below technologies. Investing
activities in 2004 also included placement of a refundable deposit of $35.0 million to secure wafer
capacity for one of our more advanced technologies while there were no such refundable deposits
placed in 2005. We received $111.7 million in 2006 related to the refund of such deposits placed in
2004 and 2003.
In October 2005, SMP reorganized its paid-up share capital and authorized a return of a
portion to its shareholders in the form of cash, our entitlement being $20.4 million, in a capital
reduction sanctioned by the High Court of Singapore. In 2005, we received $17.3 million arising
from the return of capital approved in 2005. In October 2006, the board of directors of SMP
approved a second capital reduction, which was subsequently approved by the High Court of Singapore
and filed with the Accounting and Corporate Regulatory Authority of Singapore in November 2006. Our
entitlement arising from the second return of capital from SMP was $19.1 million. In 2006, we
received an additional $16.9 million arising from both the first and the second return of capital
from SMP.
We expect our capital expenditures for 2007 to be approximately $800 million, primarily for
increasing 65nm and below capacity. With the above capital expenditure, Fab 7 is expected to have
equipment (installed or available for installation) that is equivalent to a capacity of 25,000
300-mm wafers per month by December 2007. In December 2006, Fab 7 was equipped with a capacity of
15,000 300-mm wafers per month. We had originally planned Fab 7 to have a capacity of 30,000 300-mm
wafers per month when completed. We have now revised this estimate to 39,000 300-mm wafers per
month covering mainly 0.13um to 65nm technology nodes. In addition, to further align our
manufacturing capabilities with our technology position, we are adding an additional phase of
expansion for Fab 7 that will be focused on 65nm and 45nm technologies, to bring its total
capacity to 45,000 300-mm wafers per month. The revised capacity plan will take several years to
complete and depends on market conditions, customer demand, adoption of next generation
technologies and our financial plans. The total capital expenditure for the revised capacity plan
is expected to be approximately $4,200 million to $4,500 million, compared to our previous
expectation of approximately $2,700 million to $3,000 million for the originally planned capacity
of 30,000 300-mm wafers per month. As of December 31, 2004, December 31, 2005 and December 31,
2006, we have spent an accumulated total of $637.9 million, $1,201.9 million and $1,638.6 million,
respectively, on the equipping of Fab 7. As of December 31, 2004, December 31, 2005 and December
31, 2006, we had commitments on contracts for capital expenditures of $312.9 million, $205.7
million and $525.2 million, respectively.
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.
Historical financing cash flows
Net cash provided by financing activities was $34.9 million
and $444.8 million in 2004 and
2005, respectively, while net cash used in financing activities was
$205.0 million in 2006. In
2004, we obtained a loan with competitive interest rates that was guaranteed by the Export-Import
Bank of the United States, or EXIM Guaranteed Loan, for a maximum of $653.1 million for purposes of financing certain capital
expenditures purchased from U.S. vendors. In 2005 we issued the 5.75% senior notes due 2010, the
6.375% senior notes due 2015, the 6.00% amortizing bonds due 2010 and the convertible redeemable
preference shares. The borrowings from the 5.75% senior notes due 2010, the 6.375% senior notes due 2015 and
the 6.00% amortizing bonds due 2010 extended the maturity terms of our debt profile.
With a portion of the proceeds from these borrowings and the issuance of the convertible redeemable preference
shares, we also made
repayments of debt in 2005, including the repurchase of the 2.5% convertible notes due 2006 and the
related interest payments arising from our cash tender offer for the 2.5% convertible notes due
2006. In 2006, we replaced debt with short remaining terms to
maturity with debt that matures over a longer term. Such repayments of debt in 2006 included the SMBC/OCBC Term
60
Table of Contents
Loan which was fully repaid in 2006 using the proceeds from the issuance of the 6.25% senior
notes due 2013 in April 2006, the 2.5% senior convertible notes due 2006 which matured and were
fully redeemed in April 2006 and the CSP syndicated loan which matured and was fully repaid in
September 2006. Refer to Note 14 of the consolidated financial statements for more details on our
outstanding loans.
The restricted cash in 2005 and 2006 related to cash amounts reserved in a bank account and
restricted for the purpose of semi-annual principal and interest repayments of the EXIM Guaranteed Loan. The
increase in restricted cash in 2006 compared to 2005 was due primarily to the commencement of principal repayment
of the EXIM Guaranteed Loan in early 2007. There was no restricted cash in 2004 as we only
started to draw down the EXIM Guaranteed Loan in the first quarter of 2005.
Grants for research and development and training
In 2004, 2005 and 2006 we received $19.0 million, $7.5 million and $1.9 million,
respectively, in grants from various agencies of the Government of Singapore, which are included in
operating cash flows. The amounts under these grants relate to a portion of depreciation expenses arising
from our R&D related capital expenditures and 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
and achievement of program milestones. The main condition attached to the grants is the completion
of the project to which the grant relates. Although the amount of grants we received from the
Government of Singapore in 2006 was significantly lower than in 2005, we expect that the amount of
such grants we may be eligible to receive to be higher in 2007. The grant income expected to be
received in 2007 relates primarily to funding for capital expenditures and for the training and
staffing costs associated with our 65nm process technology development programs to be incurred in
Singapore. See also "Item 4, Information on our Company — B. Business Overview — Research and
Development" for further details.
Off-balance sheet arrangements
We were not a party to any off-balance sheet arrangements in 2006, 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.
Outstanding indebtedness
As of December 31, 2006, our total loans outstanding were $1,331.7 million, comprising our
senior notes, amortizing bonds and other U.S. dollar loans as follows:
As of
December 31,
2006
(in thousands)
Floating rate loans:
Exim Guaranteed Loan
324,277
Bank of America Term Loan
50,000
6.00% amortizing bonds due 2010
38,433
5.75% senior notes due 2010
371,904
6.25% senior notes due 2013
297,405
6.375% senior notes due 2015
246,805
Other
2,836
Total
$
1,331,660
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 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.
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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. If Temasek fails 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, 2006, 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.
Contractual obligations
The following table sets forth the payments due related to specific contractual obligations as
of December 31, 2006:
Payments due by period (in thousands)
Less than
1 – 3
3 – 5
More than
Total
1 year
years
years
5 years
Long-term debt including
principal and interest
(1)
$
1,714,885
$
197,965
$
283,580
$
602,791
$
630,549
Capital lease obligations
including principal and
interest
124,194
9,323
18,646
18,646
77,579
Capacity deposits
(2)
33,766
33,766
—
—
—
Operating lease obligations
91,554
6,426
8,789
7,650
68,689
Purchase obligations under
(3)
Capital expenditures
525,200
525,200
—
—
—
Technology agreements
335,463
94,366
188,847
52,250
—
Other
69,928
67,129
2,169
315
315
Other long-term liabilities
17,909
—
—
—
17,909
Total
$
2,912,899
$
934,175
$
502,031
$
681,652
$
795,041
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 5.75% senior notes due 2010, the 6.25% senior notes due 2013 and the 6.375% senior notes due
2015 were issued at a price of 98.896%, 99.053% and 98.573%, respectively, of the principal amount.
As of December 31, 2006, the carrying amounts of the 5.75% senior notes due 2010, the 6.25% senior
notes due 2013 and the 6.375% senior notes due 2015 were $371.9 million, $297.4 million and $246.8
million, respectively, as the unamortized debt discount was reported as a direct reduction to the
carrying amounts of the senior notes. The estimated interest repayments on floating-rate
obligations were calculated using the floating interest rates related to these obligations as of
December 31, 2006. Actual payments 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)
We have not included purchase obligations that have been recorded on our consolidated balance
sheet as of December 31, 2006. These obligations amounted to $270.7 million, $12.0 million and
$213.4 million for capital expenditures, technology agreements and other purchase obligations
primarily relating to operating expenses, respectively.
In the second quarter of 2006, 1,650 out of the originally issued 30,000 preference shares
were converted into ordinary shares. Assuming no further conversion or any 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 remaining preference share at a redemption price equal to $10,000
per preference share. Refer to Note 15 of the consolidated financial statements for more details on
the preference shares.
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We and Agere Systems Singapore have signed an assured supply and demand agreement with SMP.
The agreement was intended to ensure that all of the fixed costs of SMP are recovered by allocating
all of its wafer capacity to our company and Agere Systems Singapore in accordance with the
respective parties' equity interest in SMP and each party would bear the fixed costs attributable
to its allocated capacity. In September 2004, we and Agere Systems Singapore entered into an
agreement pursuant to which both parties agreed to annually reimburse any losses suffered by SMP
that are attributable to the respective parties. For the year ended December 31, 2006, SMP did not
suffer any losses that were attributable to our company and accordingly no reimbursements were
payable by our company to SMP. There were also no such reimbursements payable to SMP by our company
in 2005 and 2004. To the extent that the number of wafers started for us is less than our allocated
capacity in the future, there is no assurance that there will be no reimbursements payable to SMP
by our company in respect of unrecovered fixed costs of SMP.
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.
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 pioneer status expired on June 30, 2006;
•
the manufacture of integrated circuits using submicron technology at Fab 3 for a ten-year
period beginning July 1, 1999;
•
the wafer fabrication of 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 in which our pioneer status is effective, subject to our compliance with
certain conditions, income arising from our pioneer trade is exempted from Singapore income tax.
During the period in which our post-pioneer status or development and expansion incentive status is
effective, subject to our compliance with certain conditions, income arising from the post-pioneer
activities or development and expansion incentive activities is taxed at a concessionary rate of
10%.
The profits arising from our pioneer trade which are tax-exempted 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. Holders of the ordinary shares will not be subject to
Singapore income tax on such dividends. Please see "Item 10. Additional Information — 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.
Under
Singapore tax law, loss carryforwards and tax depreciation of property, plant and
equipment (hereinafter referred to as wear and tear allowances) are deductible to the extent of
income before loss carryforwards and wear and tear allowances. Unutilized losses and wear and tear
allowances can be carried forward indefinitely to set off against income in future tax years,
subject to our compliance with certain conditions.
Income arising from activities not covered under the pioneer status, post-pioneer status or
development and expansion incentive status (hereinafter referred to as non-qualifying income) is
taxed at the normal Singapore corporate tax rate of 20% for the year ended December 31, 2006. Thus,
the income tax expense for the year ended December 31, 2006 is primarily on non-qualifying income,
such as interest income, rental income and income from the sale of wafers manufactured by
technologies that are not granted preferential tax treatment.
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Foreign Currency Risk
See "Item 11, Quantitative and Qualitative Disclosures about Market Risk — Foreign
currency risk."
RECENT ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED
In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid Financial
instruments", which amends SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities" and SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities". SFAS No. 155 provides guidance to simplify the accounting for
certain hybrid instruments by permitting fair value remeasurement for any hybrid financial
instrument that contains an embedded derivative, as well as clarifies that beneficial interests in
securitized financial assets are subject to SFAS No, 133. In addition, SFAS No. 155 eliminates a
restriction on the passive derivative instruments that a qualifying special-purpose entity may hold
under SFAS No. 140. SFAS No. 155 is effective for all financial instruments acquired, issued or
subject to a new basis occurring after the beginning of an entity's first fiscal year that begins
after September 15, 2006. The adoption of SFAS No. 155 is not expected to have a material impact on
our consolidated financial position or consolidated statements of operations.
In June 2006, the FASB ratified the consensus reached by the Emerging Issue Task Force, or
EITF, on Issue No. 06-3, "How Taxes Collected from Customers and Remitted to Governmental
Authorities Should Be Presented in the Income Statement (That Is, Gross versus Net Presentation)",
or EITF 06-3. EITF 06-3 states that a company should disclose its accounting policy regarding the
gross or net presentation of certain taxes. If taxes included in gross revenues are significant, a
company should disclose the amount of such taxes for each period for which an income statement is
presented (i.e., both interim and annual periods). Taxes within the scope of EITF 06-3 are those
that are imposed on and concurrent with a specific revenue-producing transaction, such as sales tax
or value-added tax. Taxes assessed on an entity's activities over a period of time, such as gross
receipts taxes, are not within the scope of the issue. The guidance in this consensus is effective
for the first interim reporting period beginning after December 15, 2006, which is the first
quarter of our fiscal year 2007. The adoption of EITF 06-3 is not expected to have a material
impact on our consolidated statements of operations or financial position.
In July 2006, the FASB issued FASB interpretation No. 48, or FIN 48, "Accounting for
Uncertainty in Income Taxes." This Interpretation clarifies the accounting for uncertainty in
income taxes recognized in an enterprise's financial statements in accordance with SFAS No. 109,
Accounting for Income Taxes. This Interpretation prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. This Interpretation also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods, disclosure, and transition.
FIN 48 is effective for fiscal years beginning after December 15, 2006. We do not expect any
material impact on our consolidated financial position or consolidated statements of operations
upon initial adoption of FIN 48.
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements." SFAS No. 157
defines fair value, establishes a framework for measuring fair value in generally accepted
accounting principles and expands disclosures about fair value measurements. SFAS 157 does not
require any new fair value measurements and eliminates inconsistencies in guidance found in various
prior accounting pronouncements. SFAS No. 157 emphasizes that fair value is a market-based
measurement, not an entity-specific measurement, and states that a fair value measurement should be
determined based on the assumptions that market participants would use in pricing the asset or
liability. SFAS No. 157 is effective for financial statements issued for fiscal years beginning
after November 15, 2007, and interim periods within those fiscal years. We are required to adopt
this Statement in the first quarter of our fiscal year 2008 and are currently assessing the impact
of adopting SFAS No. 157 but do not believe the adoption of SFAS No. 157 will have a material
impact on our consolidated financial statements.
In February 2007, the FASB issued SFAS No. 159, "Fair Value Option for Financial Assets and
Financial Liabilities". Under SFAS No. 159, entities will be permitted to measure various financial
instruments and certain other assets and liabilities at fair value on an instrument-by-instrument
basis (the fair value option). SFAS No. 159 is effective for financial statements issued for fiscal
years beginning after Nov. 15, 2007. We are currently assessing the impact SFAS No. 159 will have
on our consolidated financial position and consolidated statements of operations.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A.
DIRECTORS AND SENIOR MANAGEMENT
The following table sets forth, as of January 31, 2007, the name, age and position of each
director and member of senior management of our company. The business address of our directors and
senior management is our principal office in Singapore.
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Board of Directors
Name
Age
Position
James A. Norling
(1)(2)(4)
64
Chairman of the Board
Chia Song Hwee
(1)
44
Director
Andre Borrel
(2)(3)(4)
70
Director
Charles E. Thompson
(2)(4)
77
Director
Tsugio
Makimoto, PhD
69
Director
Tay
Siew Choon
(1)(2)(4)
59
Director
Peter Seah Lim Huat
(1)(2)(4)
60
Director
Philip Tan Yuen Fah
(3)
62
Director
Pasquale Pistorio
71
Director
Steven H. Hamblin
(3)
58
Director
Maurizio Ghirga
(3)(5)
68
Director
Senior Management
Name
Age
Position
Chia Song Hwee
44
President and Chief Executive Officer
George Thomas
53
Senior Vice President and Chief Financial Officer
Ang Kay Chai
47
Senior Vice President, Fab Operations
Hsia Liang Choo, PhD
58
Senior Vice President, Technology Development
Michael J. Rekuc
57
Senior Vice President, Worldwide Sales and Marketing
Simon Yang, PhD
47
Senior Vice President and Chief Technology Officer
Roy
Kannan
(6)
54
Vice President and Chief Information Officer
Leow Kim Keat
44
Vice President, Customer Support Operations and
Supply Management Organization
Ng Seng Huwi
49
Vice President, Human Resources
Tan Seng Chai
44
Vice President, Strategy Resources
Tony Tsai
57
Vice President, Quality and Reliability Assurance
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. Mr. Andre Borrel ceased to be a member of the Audit Committee
on February 1, 2007.
(4)
Member of the Nominating Committee.
(5)
Appointed as a Director to our Board of Directors on November 2, 2006.
(6)
Mr. Roy Kannan will be leaving our company and his last day is on March 9, 2007. Mr.
Tan Seng Chai will, with effect from March 10, 2007, act as our interim Chief Information
Officer.
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
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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.
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 Straco
Corporation Limited, Pan-United Corporation Ltd, TauRx Therapeutics Ltd and Civil Aviation
Authority of Singapore. 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).
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 known as 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 also currently sits on the board of various companies including Guthrie GTS
Ltd and Singapore Food Industries Ltd. Mr. Tan was in the commerce and industry sector for 11 years
prior to entering the banking and financial sector. He joined
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the Overseas Union Bank in 1979 holding various senior positions and retired in 2002 as Executive
Vice President, Corporate Services. Mr. Tan holds a Bachelor of Accountancy from the University of
Singapore and a Bachelor of Laws from the University of Wolverhampton, UK. He also holds a
post-graduate diploma in Business Administration from the Manchester Business School, UK. He is a
Fellow of the Institute of Certified Public Accountants of Singapore, CPA (Australia), Chartered
Association of Certified Accountants, UK and an Associate of the Chartered Institute of Management
Accountants, UK.
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. Mr. Hamblin is also a licensed CPA in the state of Texas.
Maurizio Ghirga
Maurizio Ghirga has served on our Board of Directors and as a member of the Audit Committee
since November 2006. Mr. Ghirga brings to Chartered more than 40 years of experience in the
electronics and oil industries. Mr. Ghirga held various senior positions with ESSO Italy and ESSO
Chemical Italy, both subsidiaries of EXXON Co. prior to joining SGS Microelectronics in 1983 as the
chief financial officer. After a merger of SGS Microelectronics and Thomson Semiconductors and the
formation of SGS-Thomson (now known as STMicroelectronics) in 1987, Mr. Ghirga was appointed as
the corporate vice president and chief financial officer. Mr Ghirga, in his capacity as chief
financial officer of ST Microelectronics, contributed to the initial public offering of ST
Microelectronics on the New York Stock Exchange in 1994. After his retirement in 2003, Mr. Ghirga
served as the senior advisor to the president of ST Microelectronics. From early 2005 to the middle
of 2006, Mr. Ghirga was the president and chief executive officer of Accent srl Design Technology
Services, a silicon-design joint venture company between ST Microelectronics and Cadence Design
Systems Inc. Mr. Ghirga holds degrees in economics and finance at the University of Genoa.
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 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.
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Ang
Kay Chai
Ang Kay Chai has served as our Senior Vice President, Fab Operations, since September
2002. 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 was 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 our 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 University
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.
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. Mr. Roy Kannan will be leaving our company and his last day is
on March 9, 2007.
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Leow Kim Keat
Leow Kim Keat was appointed vice president, customer support operations and supply
management organization (SMO) in November 2006. Previously vice president of customer support
operations, Mr. Leow took on the added role of SMO leadership in November 2006, overseeing the
company's relationships with vendors and turnkey partners. Meanwhile, Mr. Leow continues to lead
the customer support operations, as he has since February 2002, with responsibilities for corporate
factory planning, industrial engineering, factory capacity; business planning and planning systems
as well as tapeout operations and pricing. Mr. Leow has over 21 years of experience in
semiconductor manufacturing, including more than 14 years with Chartered. Prior to Chartered, Mr.
Leow spent over seven years at Texas Instruments Singapore where he held various manufacturing
positions. Mr. Leow holds a Bachelor of Science from the National University of Singapore and a
Graduate Diploma in Business Administration from the Singapore Institute of Management.
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 University of Singapore in 1987 and a Master of Science
(Industrial and System Engineering) from the National University of Singapore in 1991.
Tony Tsai
Tony Tsai has served as our Vice President, Quality and Reliability Assurance since
October 2006. Mr. Tsai is responsible for our quality and reliability assurance operations. Mr.
Tsai has over 30 years of experience in driving quality in manufacturing operations. Before joining
Chartered, he spent more than 10 years with Powerchip Semiconductor Corporation, where he last held
the position of chief quality officer. Prior to that, Mr. Tsai was head of reliability and quality
assurance operations at Motorola Taiwan. He also held quality control and assurance positions in
Bourns (Electronics) Taiwan and Precision Monolithic Incorporation, an analog integrated circuit
testing company which has since been bought over by Analog Devices Inc. Mr. Tsai holds a Bachelor
of Electronics Engineering from Tamkang University, Taiwan, and an Executive Master of Business
Administration from the National Chiao Tung University, Taiwan.
B. COMPENSATION OF DIRECTORS AND SENIOR MANAGEMENT
Our company's total compensation framework is aimed to link our employees' compensation
to annual overall business and personal performance targets, and create sustained wealth for the
shareholders. To ensure competitiveness, we consistently benchmark our total compensation plan with
relevant market practices to attract and retain talents in the tight market human capital
environment in the semiconductor industry.
Our compensation mix consists of annual base salary, short-term incentives, long-term
incentives and other benefits. We provide competitive annual base salary to our employees.
Short-term incentives are paid in the form of variable cash bonuses on a quarterly and annual
basis. Employees are rewarded for meeting short- term company financial targets. The short-term
incentives are also based on overall individual performance and behavioral ratings.
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The long-term incentives comprise deferred retention plans for critical resources and
share-based compensation plan. Deferred retention plans refer to compensation schemes where
monetary rewards are granted to employees who are our critical resources but the payments are
deferred over a period of time. We currently have three share-based compensation plans, namely our
Share Option Plan 1999, or the 1999 Option Plan, our Chartered Employee Share Purchase Plan, or
Chartered ESPP 2004, and the Share Purchase Plan for employees of SMP, or SMP ESPP 2004. The
objective of the share-based compensation plans is to reward key employees for achieving long-term
company targets and to create employee share ownership. Participation in the share-based
compensation plan depends on the individual responsibility, performance level and contributions to
the business. Other benefits provided to employees include leave, medical, group insurance and
other employee welfare benefits, which we believe are comparable to industry practices. We also
regularly organize activities for employees and their families to enhance their work-life balance.
Our overall compensation philosophy is to ensure competitive annual base salary and benefits
to our employees, with variable components tied to delivery of company financial results, and
individual performance and contributions to the business.
To drive growth and profitability of the company and to motivate our senior management and
employees to work towards achieving the company's annual and long-term performance goals, the ERCC
has introduced, and may from time to time introduce, compensation schemes such as performance
bonus, executive incentive plans and share-based compensation plans. At the 2007 shareholders'
annual general meeting, we intend to propose the adoption of two new share-based compensation
plans, namely, the Restricted Share Unit Plan 2007 and the Performance Share Unit Plan 2007 for
shareholders' approval. More details will be provided in the proxy statement for the annual general
meeting to be distributed to the shareholders.
During 2006, we granted options to purchase 4,750,000 ordinary shares to our directors and
senior management. These options were granted under our Option Plan 1999. The exercise price of
these options is S$1.21. The expiration dates of these options range from August 25, 2011 to August
26, 2016, subject to annual vesting requirements. See "Item 6. Directors, Senior Management and
Employees — E. Share ownership for Directors and Senior Management" for further details.
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, 2005 and 2006 were approximately $5.2 million and $6.0 million, respectively. The increase is
mainly due to the increase in retainer fees payable to directors and the variable bonus awarded to
the senior management (including amounts paid to or accrued for our Chief Executive Officer and
President and our top five senior executives) in view of the goals attained and performance of our
company in 2006.
We also provide our directors and our senior management with customary director or senior
management insurance, as appropriate. Our President and Chief Executive Officer does not have a
guaranteed minimum annual bonus.
We provide a table below setting out the compensation paid or proposed to be paid to our
directors for services rendered during the fiscal year ended December 31, 2006.
We also provide below a table setting out the aggregate compensation paid or proposed to be
paid to our Chief Executive Officer and President and our top five senior executives for services
rendered during the fiscal year ended December 31, 2006. The table also sets out the names of the
top five senior executives, their compensation categorized in the bands of $200,000 and a breakdown
in percentage terms of the remuneration earned through base salary, variable or performance-related
bonuses, benefits in kind and share options granted.
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Table of Contents
Compensation table for directors for services rendered in the year ended December 31, 2006
Options
Exercise
Director's
Granted
Price
Salary
(1)
Bonus
(2)
Others
(3)
Fees
(4)
Total
in 2006
S$
Exercise Period
(US$ in thousands, except options data)
Chia Song Hwee
490
469
149
—
1,108
1,000,000
1.21
25/08/2007 to 25/08/2016
James A. Norling
—
—
—
108
108
120,000
1.21
25/08/2007 to 25/08/2011
Andre Borrel
—
—
—
66
66
70,000
1.21
25/08/2007 to 25/08/2011
Charles E. Thompson
—
—
—
57
57
70,000
1.21
25/08/2007 to 25/08/2011
Tsugio Makimoto
—
—
—
50
50
70,000
1.21
25/08/2007 to 25/08/2011
Tay Siew Choon
—
—
—
45
45
70,000
1.21
25/08/2007 to 25/08/2011
Peter Seah Lim Huat
—
—
—
51
51
95,000
1.21
25/08/2007 to 25/08/2011
Philip Tan Yuen Fah
—
—
—
49
49
95,000
1.21
25/08/2007 to 25/08/2011
Pasquale Pistorio
—
—
—
51
51
70,000
1.21
25/08/2007 to 25/08/2011
Steven H.
Hamblin
(5)
—
—
—
61
61
70,000
1.21
25/08/2007 to 25/08/2011
Sum Soon
Lim
(6)
—
—
—
18
18
—
—
—
Robert E. La
Blanc
(6)
—
—
—
23
23
—
—
—
Maurizio
Ghirga
(5)
—
—
—
12
12
—
—
—
Total as of December
31, 2006
490
469
149
591
1,699
Total as of December
31, 2005
406
194
35
463
1,098
Notes:
(1)
Base salary (inclusive of employers' Central Provident Fund, or CPF).
(2)
Bonus paid in February 2007 for services rendered in 2006, inclusive of employer CPF contribution.
(3)
Allowances (inclusive of employers' CPF) and others.
(4)
Shareholders' approval will be sought at our annual general meeting to be held in April 2007
for the payment of our directors' fees
of approximately $591,000 for the fiscal year ended December 31, 2006.
(5)
Messrs. Steven H. Hamblin and Maurizio Ghirga were appointed as our Directors in January
2006 and November 2006,
respectively.
(6)
Messrs Sum Soon Lim and Robert E. La Blanc. retired from our Board of Directors in April 2006.
(7)
For disclosure purposes, all payments in Singapore dollars
are converted to United States dollars based on the exchange rate of
S$1.5418 = US$1.00 as of December 31, 2006.
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Compensation table for Chief Executive Officer and President and top five senior
executives for services rendered in the year ended December 31, 2006.
Total Options
Salary
Bonus
Others
Total
Granted in 2006
Exercise Price
Exercise Period
(1)
(2)
(3)
(4)
S$
(US$ in thousands, except options data)
Above US$900,000
Chia Song Hwee
490
469
149
1,108
1,000,000
1.21
25/08/2007 to 25/08/2016
44
%
42
%
14
%
100
%
US$700,000
–US$899,000
Nil
US$500,000 – US$699,000
Aggregate of top five senior
executives
1,694
613
716
3,023
2,100,000
1.21
25/08/2007 to 25/08/2016
Average per person
339
123
143
605
Ang Kay Chai
65
%
26
%
9
%
100
%
400,000
1.21
25/08/2007 to 25/08/2016
George Thomas
56
%
22
%
22
%
100
%
400,000
1.21
25/08/2007 to 25/08/2016
Hsia Liang Choo
50
%
13
%
37
%
100
%
400,000
1.21
25/08/2007 to 25/08/2016
Michael J Rekuc
58
%
16
%
26
%
100
%
400,000
1.21
25/08/2007 to 25/08/2016
Yang Simon Shi-Ning
53
%
25
%
22
%
100
%
500,000
1.21
25/08/2007 to 25/08/2016
Notes:
(1)
Base salary (inclusive of employers' Central Provident Fund, or CPF).
(2)
Bonus paid in February 2007 for services rendered in 2006, inclusive of employer CPF
contribution.
(3)
Allowances (inclusive of employers' CPF) and others.
(4)
In number of ordinary shares.
(5)
For disclosure purposes, all payments in Singapore dollars
are converted to United States dollars based on the exchange rate of
S$1.5418 = US$1.00 as of December 31, 2006.
C. BOARD PRACTICES
BOARD COMPOSITION
Our Articles of Association set the minimum number of directors at two. We currently have
11 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 subject to
notice provisions. None of our directors receive benefits upon termination of their appointment in
their capacity as directors. Messrs. Sum Soon Lim and Robert E. La Blanc retired at our annual
general meeting of shareholders in April 2006 and did not seek re-election. Messrs. Steven H.
Hamblin and Maurizio Ghirga were appointed to our Board of Directors on January 1, 2006 and
November 2, 2006, respectively.
As of December 31, 2006, Temasek, through its subsidiary, ST Semiconductors, beneficially
owned approximately 59.56% 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
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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 Board of Directors held five meetings during the fiscal year ended December 31, 2006,
including four regularly scheduled meetings and one special meeting. 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, 2006.
Audit Committee
The Audit Committee of our Board of Directors consists of three 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 recommendations of our
independent auditors and the response of our company's management to both the internal and external
audits. The Audit Committee met four times in 2006 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 our code of ethics.
The members of the Audit Committee are Messrs. Philip Tan Yuen Fah (chairman), Steven H.
Hamblin and Maurizio Ghirga (appointed as of November 2, 2006). The Audit Committee held nine
meetings during the fiscal year ended December 31, 2006. Mr. Andre Borrel ceased to be a member of
the Audit Committee on February 1, 2007.
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 plans 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 and Tay Siew Choon. The ERCC held five meetings during the fiscal year
ended December 31, 2006.
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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.
The members of the NC are Messrs. James A. Norling (chairman), Peter Seah Lim Huat, Andre
Borrel, Charles E. Thompson and Tay Siew Choon. The NC held four meetings during the fiscal year
ended December 31, 2006.
D. EMPLOYEES
As of December 31, 2006, our total staff strength (including employees of our
subsidiary, CSP) was 4,681 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
2004
2005
2006
Engineering (Modules, Yield Engineering,
Process
Integration, Product Engineering, Joint
Venture Technology, Metrology)
1,410
1,677
1,856
Manufacturing Operations
900
880
1,011
Manufacturing Support
572
638
724
Research and Development
253
370
508
Administration, Marketing and Finance
471
508
582
Total
3,606
4,073
4,681
As of December 31,
Geographical Locations
2004
2005
2006
Singapore
3,479
3,932
4,540
Americas
87
104
103
Europe
17
16
15
Asia-Pacific (other than Singapore)
23
21
23
Total
3,606
4,073
4,681
As of December 31, 2006, we had a total of 629 temporary employees. The average number of
temporary employees in 2006 based on the number of temporary employees at the end of each month end
was 700 per month.
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 —
E. Share Ownership for Directors and Senior Management — Employee Benefit Plans" for a discussion
of our share option plan and our share purchase plan.
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Table of Contents
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, 2006, based on an aggregate of 2,535,895,593
ordinary shares outstanding as of such date.
No. of Ordinary
Shares Beneficially
Directors
Owned
(1)
James A. Norling
1,596,804
Chia Song Hwee
6,227,128
Andre Borrel
312,947
Charles E. Thompson
285,054
Tsugio Makimoto
228,304
Tay Siew Choon
461,326
> Please see note (2)
Peter Seah Lim Huat
301,887
below
Philip Tan Yuen Fah
170,000
Pasquale Pistorio
2,560,000
Steven H. Hamblin
10,000
Maurizio Ghirga
0
All directors and senior
management
(3)
as a group (21
persons)
21,173,271
Notes:
(1)
Gives effect to the ordinary shares issuable within 60 days from December 31, 2006 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, 2006.
(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, 2006.
Directors
As of December 31, 2006
Exercise Price S$
Exercise Period
James A. Norling
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
120,000
*
1.21
25/08/2007 to 25/08/2011
Chia Song Hwee
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
1,000,000
*
1.21
25/08/2007 to 25/08/2016
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Directors
As of December 31, 2006
Exercise Price S$
Exercise Period
Andre Borrel
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
70,000
*
1.21
25/08/2007 to 25/08/2011
Charles E. Thompson
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
70,000
*
1.21
25/08/2007 to 25/08/2011
Tsugio Makimoto
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
70,000
*
1.21
25/08/2007 to 25/08/2011
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
95,000
*
1.21
25/08/2007 to 25/08/2011
Tay Siew Choon
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
70,000
*
1.21
25/08/2007 to 25/08/2011
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
95,000
*
1.21
25/08/2007 to 25/08/2011
Pasquale Pistorio
60,000
1.16
26/08/2006 to 26/08/2010
70,000
*
1.21
25/08/2007 to 25/08/2011
Steven H. Hamblin
70,000
*
1.21
25/08/2007 to 25/08/2011
Note:
*
Options that were granted in 2006.
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:
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•
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, 2006, options to purchase 119,842,980 ordinary shares were issued and
outstanding under our 1999 Option Plan, of which options to purchase 28,659,419 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 February 22, 2007
to October 3, 2016.
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 April 2004, we adopted 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. The Chartered ESPP 2004 was established as part of our overall employee
compensation policy to put our company and SMP in a competitive position as an employer. The
Chartered ESPP 2004 and the SMP 2004 are on substantially similar terms except that the Chartered
ESPP 2004 is intended to qualify under Section 423 of the Code while the SMP ESPP 2004 is not
intended to qualify under Section 423 of the Code.
The Chartered ESPP 2004 and SMP ESPP 2004 are administered by the ERCC. Subject to certain
restrictions, our employees are eligible to participate in the Chartered ESPP 2004 and certain
employees of SMP are eligible to participate in the SMP 2004. Eligible employees who elect to
participate in the Chartered ESPP 2004 or the SMP ESPP 2004 may designate up to 10% of their
respective monthly compensation towards the purchase of our company's shares. Prior to March 2005,
the purchase price of our company's shares under Chartered ESPP 2004 and SMP ESPP 2004 prior to the
offering cycle commencing March 1, 2005 was at a price representing the lower of (a) a 15% discount
from the fair market value of the ordinary shares on the last trading day in such offering period,
or (b) a 15% discount of the fair market value of the ordinary shares on the last trading day
before the commencement of such offering period. The ERCC however may alter the method of
determining the purchase price payable by the participants in order to reduce or eliminate any
share based compensation charge which our company may incur with respect to the Chartered ESPP 2004
or SMP ESPP 2004. With effect from March 1, 2005, the purchase price of our company's shares under
Chartered ESPP 2004 and SMP ESPP 2004 was increased to a price representing 95% of the fair market
value of the ordinary shares applied to our company's average share price on the last trading day
of the offer period.
The aggregate number of ordinary shares that are available for purchase under the
Chartered ESPP 2004 and the SMP ESPP 2004 taken together is 30,000,000 ordinary shares with a
limit of 3,000,000 ordinary shares per calendar year. A total of 1,155,720 ordinary shares were
issued in 2006 under the Chartered ESPP 2004 and the SMP ESPP 2004.
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The Board has the right to amend, suspend or terminate the Chartered ESPP 2004 or the
SMP ESPP 2004 at any time and without notice. Shareholders' approval will be required, however, to
change the maximum aggregate number of ordinary shares to be issued under the plans, except for a
change in the number of ordinary shares due to a share dividend, a subdivision or consolidation of
ordinary shares, or other change in our capital structure. In addition, shareholders' approval will
be required to change the eligibility requirements for participation in the Chartered ESPP 2004 or
the SMP ESPP 2004, and for any other amendment of the plans to the extent required by applicable
law or regulation.
Equity Compensation Plan Information as of December 31, 2006
(b)
(c)
Weighted-
Number of Securities
(a)
average
Remaining Available
Number of Securities
Exercise Price of
for Future Issuance
to be Issued upon
Outstanding
under Equity
Exercise of
Options,
Compensation Plans
Outstanding Options,
Warrants and
(Excluding Securities
Plan Category
Warrants and Rights
Rights
in Column (a))
Equity compensation plans approved
by shareholders
119,842,980
$
1.89
108,223,143
Equity compensation plans not
approved by shareholders
N.A.*
N.A.*
N.A.*
Total
119,842,980
$
1.89
108,223,143
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 January 31, 2007 based on an aggregate of 2,536,172,438 ordinary shares outstanding as of such
date:
Ordinary Shares
(1)
Beneficially Owned
(2)
Shareholders Holding 5% or More
(3)
Number
Percentage
Temasek Holdings (Private) Limited
1,510,324,883
59.55
%
Notes:
(1)
The number of ordinary shares listed in this table includes ordinary shares held
directly or in the form of ADSs.
(2)
Beneficial ownership is determined in accordance with the rules of the SEC and includes
voting and investment power with
respect to ordinary shares. Unless otherwise indicated, the persons named in the table have
sole voting and sole investment
control with respect to all ordinary shares beneficially owned.
(3)
The 1,510,324,883 ordinary shares beneficially owned by Temasek consists of the 1,510,324,883
ordinary shares held by ST
Semiconductors out of which 215,000,000 ordinary shares are subject to the terms of a securities
lending agreement entered into
by ST Semiconductors with a certain financial institution. ST Semiconductors is a wholly-owned
subsidiary of Temasek. Temasek
may therefore be deemed to beneficially own the shares owned by ST Semiconductors.
As
of January 31, 2007, 669,129 of our ordinary shares, representing 0.03% of our
outstanding ordinary shares, were held by a total of 108 holders of record with addresses in the
U.S. As of the same date, 8,274,110 of our ADSs (representing 82,741,100 ordinary shares),
representing 3.26% of our outstanding ordinary shares, were held by a total of 10 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
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number of beneficial holders or where the beneficial holders are resident. All holders of our
ordinary shares are entitled to the same voting rights.
B. RELATED PARTY TRANSACTIONS
The Temasek Group
As
of December 31, 2006, Temasek, through its subsidiary, ST
Semiconductors, beneficially owned approximately 59.56% 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
Sean Lim Huat is a member of the Temasek Advisory Panel.
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. See Note
2(a) to the consolidated financial statements.
Financial Support Provided by Singapore Technologies
Prior to December 31, 2004, Singapore Technologies Pte Ltd, or 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 in our company were
transferred to Temasek.
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 2004 was $2.9 million. Singapore Technologies also provided us with a short-term credit
facility. Since December 31, 2004, these activities have been discontinued.
As of December 31, 2004, $28.1 million of our debt was guaranteed by Singapore Technologies
and as of December 31, 2005 and 2006, 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. Effective from 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 2004, management fees with Singapore Technologies amounted to $2.7 million. There were no
management fees payable to Singapore Technologies in 2005 and 2006 as our service agreement with
Singapore Technologies was terminated effective from 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 $7.1 million in
2004. There were no such reimbursements in 2005 and 2006.
Other Transactions
In 2006, we transacted business with affiliates of Temasek in the normal course of our respective
businesses.
We paid STATS ChipPAC $19.1 million, $12.9 million and $10.6 million in 2004, 2005
and 2006, respectively, for
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services rendered in those years. We also paid other affiliates of Temasek $2.2 million, $0.9
million and $0.5 million in 2004, 2005 and 2006, respectively, for services rendered in those
years. We purchased $0.4 million, $4.0 million and $1.8 million in assets from affiliates of
Temasek in 2004, 2005 and 2006, 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, 2004,
2005 and 2006 were approximately $2.8 million, $2.7 million and $3.3 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."
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 2006. 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 403 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
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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, 2006, we are not involved in any legal or arbitration
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, 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
January 1,
through December 31, 2006
$
11.81
$
6.70
Singapore Exchange
High
Low
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
January 1, through
December 31, 2006
S$1.84
S$1.03
(b)  Quarterly high and low market prices
Nasdaq
High
Low
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
January 1, through March 31, 2006
$
9.67
$
7.60
April 1, through June 30, 2006
$
11.81
$
8.16
July 1, through September 30, 2006
$
8.84
$
6.70
October 1, through December 31, 2006
$
9.15
$
7.29
Singapore Exchange
High
Low
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
January 1, through March 31, 2006
S$1.57
S$1.26
April 1, through June 30, 2006
S$1.84
S$1.29
July 1, through September 30, 2006
S$1.40
S$1.03
October 1, through December 31, 2006
S$1.40
S$1.15
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(c)  Monthly high and low market prices
Nasdaq
High
Low
September 1,
through September 30, 2006
$  8.04
$7.41
October 1, through October 31, 2006
$  7.89
$7.29
November 1, through November 30, 2006
$  9.00
$7.60
December 1, through December 31, 2006
$  9.15
$7.99
January 1, through January 31, 2007
$  8.99
$8.08
February 1,
through February 28, 2007
$10.48
$9.22
Singapore Exchange
High
Low
September 1, through September 30, 2006
S$1.27
S$1.19
October 1,
through October 31, 2006
S$1.23
S$1.15
November 1,
through November 30, 2006
S$1.40
S$1.17
December 1, through December 31, 2006
S$1.40
S$1.25
January 1,
through January 31, 2007
S$1.40
S$1.22
February 1,
through February 28, 2007
S$1.61
S$1.40
The
last reported sale price of the ADSs as quoted on Nasdaq on
February 28, 2007 was $9.82 per ADS. The last reported sale price of the ordinary shares as quoted on the Singapore Exchange
on February 28, 2007 was S$1.46 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"). The Companies (Amendment) Act 2005 of Singapore,
or the Companies (Amendment) Act, which came into operation on January 30, 2006 introduced several
changes to the company law regime which included the abolishment of the concepts of par value,
authorized capital, share premium and the issue of shares at a discount. In addition, the Companies
(Amendment) Act also introduced new provisions on share repurchases and treasury shares. Under
these new provisions, a company can now repurchase shares out of share capital, as well as from
profits so long as the company is solvent. Ordinary shares which are the subject of a share
repurchase by a company can be held by that company as treasury shares instead of being cancelled.
The right to attend and vote at meetings and the right to dividends or other distributions will be
suspended for so long as the repurchased shares are held as treasury shares.
Our company intends to propose changes to our Articles of Association at our next annual
general meeting to be held on April 24, 2007 to address the above key changes introduced by the
Companies (Amendment) Act as well as to streamline and rationalize certain other existing
provisions in our Articles of Association.
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.
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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, 2006, there were 2,535,895,593 ordinary shares and 28,350
preference shares issued and allotted by our company.
Prior to the Companies (Amendment) Act becoming effective on 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 $0.01 each.
As of January 30, 2006, with the abolishment of the concept of "par value" and "authorized
capital", 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
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.
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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 genera! 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 person or by proxy, but they are not entitled to attend, speak or vote
at our general meetings. However, the preference shareholders are only entitled to attend and vote
(but not speak) at those general 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 as defined in our Articles of Association for such preference
share were the date 48 hours preceding the date of such class meeting or general meeting. A proxy
need not be a shareholder.
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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:
•
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
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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 are 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 in certain specified circumstances.
Singapore law contains certain restrictions on 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.
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 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. If a person acquires 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 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 (either on his
own or together with parties acting in concert with him) additional voting shares representing more
than 1% of our voting shares in any six-
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month period, he must, except with the consent of the Singapore Securities Industry Council,
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 offerer or parties acting in concert
with the offerer 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 offerer 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 take-over 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. 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.
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 totai 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.
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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 or was material to
us during the last two years.
(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.
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 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.
The CSP syndicated loan matured and was fully repaid in
September 2006.
Chartered Loan Agreements
EXIM
Guaranteed 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, as guarantor
and JP Morgan as facility agent (see "item 19. Exhibits — Exhibit 4.3"). Pursuant to this
agreement, we secured a $653 million term loan facility from JP Morgan, guaranteed by Exim. This
facility may only be used to finance the purchase of equipment from U.S. vendors for our company's
Fab 7 facility and may be drawn down only in accordance with the equipment purchases which follow
an agreed ramp schedule. 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. This
facility bears interest at LiBOR plus 0.125% and interest is payable semi-annually.
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 agreed to provide us with a $200 million term
loan facility (with a $100 million green-shoe option). The $100 million green-shoe option was
subsequently subscribed by ABN AMRO Bank, United Overseas Bank and Deutsche Bank.In 2005, the
entire $300 million loan facility, which included the $100 million green-shoe option, was fully
drawn down. The repayment period was to commence from the end of the 30
th
month from the
date of the first draw down, and the amount drawn down was to be repaid in six equal semi-annual
installments. This facility was fully repaid in April 2006 using the proceeds from the issuance of
the 6.25% senior notes due 2013 as described below.
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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 4.4"). The facility bears interest at LIBOR plus 0.80%
and interest is payable semi-annually. The purpose of the facility is to fund our company's capital
expenditure and for our company's general corporate purposes. 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. This $50 million loan facility was
fully drawn down in March 2005.
SMBC Facility Agreement
We entered into a facility agreement with SMBC as arranger and Sumitomo Mitsui Banking
Corporation, Singapore Branch, as Agent, on March 3, 2006 (see "Item 19. Exhibits — Exhibit 4.6").
This facility agreement is in relation to a $150 million revolving credit facility with a greenshoe
option to increase to $250 million and is a renewal of the facility agreement dated December 23,
2004 (described above) which has expired. This facility bears interest at a floating rate determined by reference to LIBOR, payable
on the last day of each interest period selected by us. The amounts borrowed under this facility
are to be applied towards repaying our company's existing borrowings or our working capital
requirements. This facility agreement provides for the termination of the facility on March 30,
2007 with an option for parties to extend the term for a further period of 364 days subject to
certain conditions.
On June 30, 2006, we entered into a syndication agreement with SMBC as arranger, Sumitomo
Mitsui Banking Corporation, Singapore Branch as original lender, and with Bayerische Hypo-und
Vereinsbank AG, WestLB and Societe Generale as new lenders , pursuant to which SMBC transferred
US$50 million of its commitment under the facility agreement dated March 3, 2006 to Bayerische
Hypo-und Vereinsbank AG, WestLB and Societe Generale ("Syndicated Lenders"). As a result of this
syndication, SMBC has a commitment of US$150 million and the Syndicated Lenders have an aggregate
commitment of US$50 million under the facility agreement dated
March 3, 2006 (see "Item 19.
Exhibits — Exhibit 4.6.1").
Equity Call Option
In August 2004, we entered into a bilateral option transaction with Goidman Sachs
International, as counter-party, to pro-actively manage our convertible notes due April 2, 2006.
In March 2006, we replaced the bilateral option transaction with Goldman Sachs International
which we had entered into in August 2004 and which was due to expire on April 2, 2006 with a new
call option transaction ("2006 Option") (see "Item 19. Exhibits — Exhibit 4.5") for the same number
of our ordinary shares. Under the 2006 Option transaction, we have a choice of physical or cash
settlement. Goldman Sachs International may purchase 214,800,000 of our ordinary shares at S$2.15
per share and the option to purchase these shares is exercisable by Goldman Sachs International
from March 29, 2006 and will expire on March 29, 2011.
In the first year of the 2006 Option, we have the right to terminate the 2006 Option early in
whole or in part on the first occasion that the closing price of our ordinary shares equals or
exceeds S$1.75 on each of any 20 business days in any consecutive 30 business day period. If we
elect to do so and elect to settle the portion of the 2006 Option being terminated early by
delivering shares, Goldman Sachs International will have the right but not the obligation during
the following 30 business days to buy from us such number of our ordinary shares up to the amount
terminated early at S$1.60 per share. In respect of any portion not terminated early under those
circumstances or if we do not terminate any part of the 2006 Option early, then the 2006 Option (or
the relevant part) will continue under its terms.
In the second year of the 2006 Option, we have the right to terminate the 2006 Option early in
whole or in part if the closing price of our ordinary shares is equal to or exceeds S$2.6875 on
each of any 20 business days in any consecutive 30 business day
period. If we elect to exercise
this right of termination, Goldman Sachs International will be required to buy from us such number
of ordinary shares relating to the terminated portion of the 2006 Option at S$2.15 per share.
The closing prices of our ordinary shares since we entered into the 2006 Option to the end of
2006 did not trigger the early termination provisions. As of December 31, 2006, Goldman Sachs
International had not exercised its rights under the 2006 Option.
5.75%
senior notes due 2010 and
6.375%
senior notes
due
2015
In 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, are effectively subordinated to the indebtedness and other liabilities
of our subsidiaries and joint ventures and any of our secured
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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 payable semi-annually
on February 3 and August 3 of each year, commencing February 3, 2006. The 6.375% senior notes due
2015 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 ail 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.
Convertible Redeemable Preference Shares and 6% Amortizing Bonds due 2010
In July 2005, we issued 30,000 units which comprised of 30,000 non-voting convertible
redeemable preferred shares due 2010 ("preference shares") and $46.7 million of 6.00% amortizing
bonds due 2010 ("Amortizing Bonds"). The units were each priced at $10,000 and they raised an
aggregate amount of $300 million, which was allocated to the preference shares and the Amortizing
Bonds based on their relative fair values. The preference shares and Amortizing Bonds are legally
separable instruments. The Amortizing Bonds are our unsecured, senior and unsubordinated
obligations. The Amortizing Bonds, however, are 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. Principal in semi-annual installments are payable on
the Amortizing Bonds on February 17 and August 17 of each year, commencing on February 17, 2006,
with the final principal installment to be paid at maturity on August 17, 2010. Interest at the
rate of 6.00% per annum is payable semi-annually on February 17 and August 17 of each year,
commencing February 17, 2006. We will redeem the Amortizing Bonds at 100% of the then outstanding
principal amount, together with any accrued and unpaid interest, on the maturity date.
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 the Amortizing Bonds at a redemption price equal to the outstanding principal amount, plus
any accrued and unpaid interest to the redemption date.
Upon the occurrence of specified change of control events, holders of these Amortizing
Bonds may require us to repay in cash their Amortizing Bonds 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 from
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.
Please see "Item 10. Additional Information — B. Our Memorandum and Articles of Association"
for information on our preference shares.
6.25%
senior notes due 2013
In 2006, we issued $300 million of 6.25% senior notes due 2013. These senior notes are
our unsecured, senior and unsubordinated obligations. The senior notes, however, are 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 6.25%
senior notes due 2013 will mature on April 4, 2013, with interest at the rate of 6.25% per annum
payable semi-annually on April 4 and October 4 of each year, commencing October 4, 2006. We will
pay 100% of the principal amount of the senior notes, together with any accrued and unpaid
interest, on the maturity date.
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 the 6.25% senior notes at a redemption price equal to the principal amount, plus
any accrued and unpaid interest to the redemption date.
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Upon the occurrence of specified change of control events, holders of these 6.25% 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, 2006, the equity interests of CSP were 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 — Exhibit 4.7.3").
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 4.8.3").
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 4.8.10") 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").
(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 4.9.4"), 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.
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In September 2002, we entered into a Letter Agreement with Agere Systems Inc. (see
"Item 19. Exhibits — Exhibit 4.9.7"), 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 4.11.1"). 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 4.11.2").
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 4.11.3"),
Copper/Related FEOL Technology License Agreement (see "Item 19. Exhibits — Exhibit 4.11.4") and
Refundable Cross Deposit Agreement (see "Item 19. Exhibits — Exhibit 4.11.10").
The "SF" Process Development and Cost Sharing Agreement provides for the development of 90nm
and 65nm logic processes on 300-mm silicon wafers. The "SF" Process Development and Cost Sharing
Agreement was amended on several occasions to, among other things, 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 on March 5, 2004 (see "Item 19.
Exhibits — Exhibit 4.11.7"), to extend parties' collaboration to include 45nm process technologies
(see Item 19. Exhibits — Exhibit 4.11.9"), and to expand parties' agreement with regard to the
design kit models as well as to include development of design enablement for certain other 90nm
technologies as described in the agreement and to broaden the scope of the license grant (see "Item
19. Exhibits — Exhibit 4.11.8").
In December 2006, IBM and our company agreed, subject to the necessary consents of Infineon
and Samsung, to use a new contract structure to continue our existing development work for 45nm
bulk CMOS process technology and 45nm bulk CMOS enablement as well to define the framework for
future joint development activities. The new contract structure comprises the Master IBM Joint
Development Terms and Conditions for joint development projects with IBM (see "Item 19. Exhibits —
Exhibit 4.11.13") and project agreements which will provide the terms and conditions specific to
individual joint development project activities. In December 2006, we entered into project
agreements with IBM for the joint development of 32nm bulk CMOS logic process technology (see "Item
19. Exhibits — Exhibit 4.11.16) and to further define the terms of the joint development activities
for 45nm bulk CMOS logic process (see "Item 19. Exhibits — Exhibit 4.11.15"). As part of the new
contract structure, IBM and our company also entered into a Participation Agreement (see "Item 19.
Exhibits — Exhibit 4.11.14") to address additional matters agreed between our companies.
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 This Refundable Cross Deposit Agreement was further amended and supplemented by
way of a Supplemental Agreement and a Letter Agreement effective as of December 19, 2003 and March
15, 2006, respectively, (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 4.11.11 and Exhibit 4.11.12").
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
4.12"). 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 4.13"). Under this Agreement, Motorola and our company
granted to one another a license to use certain of each other's patents.
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(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 Dollar Per
US$1.00
Noon
Buying Rate
Fiscal
Year Ended December 31,
Average
(1)
High
Low
Period
End
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
2006
1.5804
1.6521
1.5338
1.5338
Singapore Dolllars Per
US$1. 00
Noon
Buying Rate
Month
High
Low
September 2006
1.5900
1.5676
October 2006
1.5904
1.5575
November 2006
1.5662
1.5373
December 2006
1.5456
1.5338
January 2007
1.5428
1.5316
February 2007
1.5424
1.5258
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
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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 off 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 i
s
subject to income tax on
income accrued in or derived from Singapore.
Subject to the provisions of any applicable tax treaties and certain exceptions, non-residents
who derive certain types of income from Singapore are subject to a withholding tax on that income
currently at a rate of 20% for the year ended December 31, 2006 (or 15% in the case of interest and
rental of movable equipment; and 10% in the case of royalties). We are obligated by law to withhold
tax when making such payments to a non-resident. No comprehensive tax treaty currently exists
between Singapore and the U.S.
A corporation is 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.
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 "— 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 normal corporate
income tax rate (which is currently 20%) 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. In this way, the tax we paid would have been available to our shareholders as a tax
credit to offset their tax liabilities on their overall income (including the gross amount of
dividends) subject to Singapore income tax.
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 the net dividends received
by a non-resident holder of ordinary shares or ADSs. Further, a non-resident shareholder who does
not have deductible expenses attributed to such dividend income would not be able to claim any tax
refund from the Inland Revenue Authority of Singapore.
One-Tier Corporate Tax System.
The one-tier corporate tax system ("one-tier 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 Singapore, in the hands of a shareholder of ordinary shares or ADSs, regardless of whether the shareholder is a company or an individual and whether or not the
shareholder is a
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Singapore tax resident. Accordingly, under the one-tier 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, companies with unutilized dividend franking credits as of December 31, 2002, are
given a five year transitional period from January 1, 2003 to December 31, 2007 to remain on the
imputation system for the purposes of paying Franked Dividends.
We do not presently intend to migrate to the one-tier system until our dividend franking
credits as of December 31, 2002 are fully utilized or until the transitional period comes to an
end, whichever is earlier. Accordingly, for so long as we have not moved to the one-tier system,
shareholders may continue to receive dividends with credits attached as described above under"—
Imputation System." In this regard, tax vouchers issued by us, if any, will distinguish between
franked dividends and normal tax exempt dividends. The latter comprise dividends paid out of income
that has been exempt from tax, or income net of tax payable at a concessionary tax rate, approved
deduction or approved further deduction of expenses; or foreign tax credit allowed. Once we have
fully utilized our dividend franking credits (that is, we are required to move to the one-tier
system) or elected to move to the one-tier system at an earlier date, tax vouchers issued by us, if
any, will distinguish between normal tax exempt dividends and exempt dividends under the one-tier
system.
Tax on capital gains
Singapore does not impose tax on capital gains. There are currently no specific laws
or regulations which address the characterization of capital gains. Hence, gains or profits
arising from the ordinary shares or ADSs may be construed to be of an income nature and subject to
tax if they arise from activities which the Inland Revenue Authority of Singapore regards as the
carrying on of a trade or business in Singapore.
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, or
•
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.
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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.
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 at that time.
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 before January 1, 2011 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
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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 2006. However,
there can be no assurance that we will not be a PFIC in 2007 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 risk that we may be a PFIC in 2007 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 Global Select
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 (certified
on IRS Form W-9) 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 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.
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I. SUBSIDIARY INFORMATION
For more information on our subsidiaries, please see "Item 4. Information on Our
Company — C. Organizational Structure."
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Quantitative and qualitative disclosures about market risk
Our exposure to financial market risks is derived primarily from the changes in
interest rates, foreign exchange rates and the price of our ordinary shares. To mitigate these risks, we utilize derivative
financial instruments and natural hedging by maintaining foreign currency bank deposits, 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 floating rate 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. To manage interest rate risk, we may utilize
interest rate derivative instruments to modify the interest characteristics of our outstanding
debts. The market risk associated with such interest rate contracts is managed by establishing
and monitoring parameters that limit the types and degree of market risk that may be undertaken.
We assess interest rate cash flow risk by continually identifying and monitoring changes in
interest rate exposures that may adversely impact expected future cash flows and by evaluating
hedging opportunities.
The tables below provide information about our derivative financial instruments and other
financial instruments that are sensitive to changes in interest rates, including interest rate
contracts and long-term debt. For long-term debt, the table presents principal cash flows and related weighted average interest rates
by expected maturity dates. For interest rate contracts, the tables present notional amounts and
weighted average interest rates by expected (contractual) maturity dates. Notional amounts are
used to calculate the contractual payments to be exchanged under the contract. Weighted average
floating rates are based on prevailing floating interest rates related to the outstanding
obligations as of December 31, 2006.
As of December 31, 2006
Expected Maturity Date
(In thousands, except interest rates)
Fair
2007
2008
2009
2010
2011
Thereafter
Total
Value
LONG-TERM DEBT:
Floating rate
debt (US$)
$
114,855
$
64,855
$
64,855
$
64,855
$
64,857
$
—
$
374,277
$
373,905
Weighted
average
interest
rate
5.95
%
5.73
%
5.73
%
5.73
%
5.73
%
—
%
5.80
%
(1)
Fixed rate debt
(US$)
(2)
$
8,774
$
9,308
$
9,875
$
385,476
$
—
$
550,000
$
963,433
$
962,140
Weighted
average
interest
rate
6.00
%
6.00
%
6.00
%
5.76
%
—
%
6.31
%
6.08
%
(1)
Total
$
123,629
$
74,163
$
74,730
$
450,333
$
64,855
$
550,000
$
1,337,710
$
1,336,045
98
Table of Contents
As of December 31, 2006
Expected Maturity Date
(In thousands, except interest rates)
2006
2007
2008
2009
2010
Thereafter
Total
Fair Value
INTEREST
RATE DERIVATIVES
Interest rate swap
(2)
:
Fixed to Floating (US$)
—
—
—
—
—
$
300,000
$
300,000
$
3,109
Average pay rate
LIBOR plus
—
—
—
—
—
0.93
%
Average receive rate
—
—
—
—
—
6.25
%
As of
December 31, 2005
(In Thousands)
Total
Fair Value
LONG-TERM DEBT
Floating rate debt
(2)
$
686,657
$
686,657
Fixed rate debt
768,858
779,768
Total
$
1,455,515
$
1,466,425
INTEREST RATE DERIVATIVES
Interest rate cap contracts
(3)
$
183,333
$
1,394
Note:
(1)
Average interest rate under "Total" are the weighted average interest rates of loans
outstanding as of December 31, 2006.
(2)
The SMBC/OCBC Term Loan, which bears floating interest at LIBOR plus 1.75% as of December 31,
2005, was fully repaid using
the proceeds from the issuance of the 6.25% senior notes due 2013 in 2006. We entered
into an interest rate swap to
economically swap the fixed-rate interest obligation associated with the 6.25% senior notes due
2013 from a fixed-rate interest
obligation to a floating-rate interest obligation based on LIBOR for U.S. dollars plus 0.93%.
(3)
As of December 31, 2005, we entered into four interest rate cap contracts related to the
floating rate obligations associated with
$300.0 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. These interest rate cap contracts matured in September 2006.
As of December 31, 2006, after taking into account the economic effect of hedging
instruments, 49.5% and 50.5% of our interest rate payment obligations are at fixed rates and
floating rates, respectively. We do not have cash flow and earnings exposure due to market interest
rate changes for our fixed rate debt obligations, however we do have cash flow and earnings
exposure due to market interest rate changes for our floating rate debt obligations. Based on our
interest payment obligations as of December 31, 2006, a 0.5% increase in interest rates would
increase our floating rate interest payments by 8.3% 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 reporting and 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 2006 and as a result, we had relatively little foreign currency exchange
risk with respect to our revenue. In 2005, approximately 78% and 20% of our cost of revenue was
denominated in U.S. dollars and Singapore dollars, respectively. This did not significantly change
in 2006 where approximately 76% and 22% of our cost of revenue was denominated in U.S. dollars and
Singapore dollars, respectively. Approximately 55% of our 2005 capital expenditures were denominated
in U.S. dollars, approximately 13% were denominated in Euro, approximately 28% were denominated in
Japanese yen and approximately 4% were
99
Table of Contents
denominated
in Singapore dollars. In 2006, approximately 59% of our capital expenditures
were denominated in U.S. dollars, approximately 16% were denominated in Euro, approximately 20%
were denominated in Japanese yen and approximately 5% were denominated in Singapore dollars.
Other
than a portion of our cash and cash equivalents, payables, and capital lease
obligations, our financial assets and liabilities are primarily denominated in U.S. dollars. As of
December 31, 2005, 96% of our cash and cash equivalents were denominated in U.S. dollars, with the
remaining cash and cash equivalents denominated in Japanese yen, Singapore dollars and Euro. As of
December 31, 2006, 90% and 8% of our cash and cash equivalents were denominated in U.S. dollars
and Singapore dollars, respectively, with the remaining cash and cash equivalents denominated in
Japanese yen and Euro. For our payables, 12% were denominated in Japanese yen and Singapore
dollars each while 3% were denominated in Euro in 2005. In 2006, 17%, 6%, and 9% of our payables
were denominated in Japanese yen, Singapore dollars and Euro, respectively. 100% of our capital
lease obligations were denominated in Singapore dollars in 2005 and 2006.
We minimize our currency risk by purchasing certain raw materials and equipment in U.S.
dollars and borrowing in U.S. dollars. In addition, 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. 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 Euros. We do not use currency forward contracts to hedge 100% of our
foreign currency denominated firm commitments. Other than currency forward contracts, we also
utilize natural hedging by maintaining foreign currency bank deposits and utilizing these for
settlement of foreign currency liabilities. As of December 31, 2005, we had $5.9 million, $10.8
million and $16.1 million in U.S. dollar equivalents of bank deposits denominated in Japanese yen,
Singapore dollars and Euro, respectively. As of December 31, 2006, we had $4.0 million, $54.6 million
and $6.3 million in U.S. dollar equivalents of cash and cash equivalents denominated in Japanese
yen, Singapore dollars and Euro, respectively. Our Singapore dollar cash balance is used primarily
to naturally hedge our capital lease obligations and expenses denominated in Singapore dollars
while our Euro and Japanese yen cash balances are used primarily for capital expenditure payments.
The table below provides information about our foreign currency forward contracts and
presents the information in U.S. dollar equivalents.
As of December 31, 2006
Expected
Maturity Date of Notional Amounts
As of December 31, 2005
(In
thousands, except exchange rates)
(In thousands)
2007
Thereafter
Total
Fair Value
Total
Fair Value
FORWARD FOREIGN
EXCHANGE AGREEMENTS:
(Receive Yen/Pay US$)
Contract Amount
$
51,264
—
$
51,264
$
(1,724
)
$
30,024
$
(208
)
Average Contractual
Exchange Rate
114.43
—
(Receive S$/Pay US$)
Contract Amount
$
8,997
—
$
8,997
$
41
$
11,976
$
1
Average Contractual
Exchange Rate
1.54
—
(Receive Euros/Pay US$)
Contract Amount
$
11,997
—
$
11,997
$
50
$
1,102
$
(107
)
Average Contractual Exchange
Rate
1.31
—
Total Contract Amount
$
72,258
—
$
72,258
$
(1,633
)
$
43,102
$
(314
)
In addition, we also entered into purchase contracts for which payments are denominated in
currencies other than the functional currency or the local currency of the parties to
the contracts or,
in some cases, their parent company where the parent company provides the majority of resources
required under the contract on behalf of the subsidiary who is party
to the contract. Therefore these contracts contain embedded foreign currency derivatives. The
outstanding notional amounts of these purchase contracts as of December 31, 2006 are as follows:
Denominated in Japanese yen (in thousands)
743,349
Denominated in Euro (in thousands)
29
The fair values of these embedded foreign currency derivatives as of December 31, 2006 are $0.3
million.
Equity Price Risk
In March 2006, we entered into the 2006 Option with GS to replace the call option transaction
that we had previously entered into with GS in August 2004 and that expired on April 2, 2006. Under
the 2006 Option, GS may purchase up to 214.8 million of our ordinary shares at a price of S$2.15
per share. If the 2006 Option is exercised in full at the price of S$2.15 per share and physically
settled, we would receive approximately $300 million based on an exchange rate of $1.00 = S$1.54
that could be used for repayment of debt and general corporate purposes. The 2006 Option contains
early termination provisions, whereby we may choose to terminate the 2006 Option in whole or in
part, triggered by the closing price of our ordinary shares reaching and maintaining specified
levels for a defined period of time. Under the terms of the 2006 Option, we have the right in all
cases either to issue new ordinary shares to GS or to settle the transaction in cash. If the 2006
Option is not exercised or terminated earlier, it will expire on March 29, 2011. The 2006 Option
which we entered into with GS is a derivative instrument that is dual indexed to our ordinary share price and
currency exchange rates. As a result we are exposed to both price fluctuations of our ordinary shares
as well as exchange rate movements of the U.S. dollar, which is our
reporting and functional currency, against the Singapore dollar. The fair value of the 2006 Option as of December 31, 2006 is $7.5 million.
A hypothetical 10% increase (decrease) to the last closing price of our ordinary shares as of
December 31, 2006 of S$1.28 using the exchange rate as of that date would result in an increase (a
reduction) of approximately $3.1 million and $(2.7) million in the fair value of the 2006 Option,
which would decrease (increase) our earnings by $3.1 million and $(2.7) million, respectively.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not applicable.
100
Table of Contents
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
Evaluation of Disclosure Controls and Procedures
As
required by Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as
amended, or the Exchange Act, management has evaluated, with the participation of our Chief
Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and
procedures as of the end of the period covered by this report. Disclosure controls and procedures
refer to controls and other procedures designed to ensure that information required to be
disclosed in the reports we file or submit under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the rules and forms of the SEC.
Disclosure controls and procedures include, without limitation, controls and procedures designed
to ensure that information required to be disclosed by us in our reports that we file or submit
under the Exchange Act is accumulated and communicated to management, including our Chief
Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding
our required disclosure. In designing and evaluating our disclosure controls and procedures,
management recognizes 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
was required to apply its judgment in evaluating and implementing 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.
Based on the foregoing, our Chief Executive Officer and Chief Financial Officer have
concluded that, as of December 31, 2006, the end of the period covered by this report, our
disclosure controls and procedures were effective.
Management's Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over
financial reporting.
Internal control over financial reporting refers to a process designed by, or under the
supervision of, our Chief Executive Officer and Chief Financial Officer and effected by our Board
of Directors, management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles and includes those policies
and procedures that:
•
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and
dispositions of our assets;
•
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that our receipts
and expenditures are
being made only in accordance with authorizations of our management and members of our board of directors; and
•
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of our assets that could have a material effect on our financial
statements.
Internal control over financial reporting cannot provide absolute assurance of achieving
financial reporting objectives because of its inherent limitations. Internal control over
financial reporting is a process that involves human diligence and compliance and is subject to
lapses in judgment and breakdowns resulting from human failures. Internal control over financial
reporting also can be circumvented by collusion or improper override. Because of such limitations,
there is a risk that material misstatements may not be prevented or detected on a timely basis by
internal control over financial
101
Table of Contents
reporting. However, these inherent limitations are known features of the financial reporting
process, and it is possible to design into the process safeguards to reduce, though not
eliminate, this risk.
Management evaluated the effectiveness of our internal control over financial reporting
as of December 31, 2006 using the framework set forth in the report of the Treadway
Commission's Committee of Sponsoring Organizations (COSO), "Internal Control — Integrated
Framework."
Based on the foregoing, management has concluded that our internal control over financial
reporting was effective as of December 31, 2006. Our company's independent registered public accounting firm, KPMG, has issued a report on our company's assessment of our internal control over financial reporting which is set forth below.
Changes in Internal Control over Financial Reporting
Management has evaluated, with the participation of our Chief Executive Officer and Chief
Financial Officer, whether any changes in our internal control over financial reporting that
occurred during our last fiscal year have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting. Based on the evaluation we
conducted, management has concluded that no such changes have occurred.
102
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders
Chartered Semiconductor Manufacturing Ltd:
We have audited management's assessment, included in the accompanying Management's Report on Internal Control Over Financial Reporting
,
that Chartered Semiconductor
Manufacturing Ltd maintained effective internal control over financial reporting as of December 31,
2006, based on criteria established in Internal Control — Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). Chartered Semiconductor
Manufacturing Ltd's management is responsible for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness of internal control over financial
reporting. Our responsibility is to express an opinion on management's assessment and an opinion on
the effectiveness of the Company's internal control over financial reporting 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 effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, evaluating management's assessment, testing and evaluating the
design and operating effectiveness of internal control, and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis
for our opinion.
A company's internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. A
company's internal control over financial reporting includes those policies and procedures that (1)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of management and directors of the company;
and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company's assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
In our opinion, management's assessment that Chartered Semiconductor Manufacturing Ltd maintained
effective internal control over financial reporting as of December 31, 2006, is fairly stated, in
all material respects, based on criteria established in Internal Control — Integrated Framework
issued by COSO. Also, in our opinion, Chartered Semiconductor Manufacturing Ltd maintained, in all
material respects, effective internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control — Integrated Framework issued
by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the consolidated balance sheets of Chartered Semiconductor Manufacturing Ltd
as of December 31, 2005 and 2006, 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, 2006, and our report dated
March 9, 2007 expressed an
unqualified opinion on those consolidated financial statements.
/s/ KPMG
Singapore
March 9, 2007
102A
Table of Contents
ITEM 16.
A. AUDIT COMMITTEE FINANCIAL EXPERT
Our Audit Committee members are Messrs. Philip Tan Yuen Fah (chairman), Steven H. Hamblin
and Maurizio Ghirga (appointed as of November 2, 2006). Mr. Andre Borrel ceased to be a member of
the Audit Committee on February 1, 2007. Please see "Item 6. Directors, Senior Management and
Employees" for their experience and qualifications. Our Board has determined that Messrs. Steven
H. Hamblin and Maurizio Ghirga meet all of the criteria required to be named an Audit Committee
"Financial Expert," as defined in the applicable rules of the SEC.
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 2005 and 2006 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)
2005
788
76
206
233
1,303
2006
1,257
21
150
6
1,434
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.
102B
Table of Contents
All other fees
Services provided related to assistance with process documentation 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 October 2005 and November 2006, our Audit Committee pre-approved a list of services that could
be rendered by the independent auditors in 2006 and 2007, respectively. In January 2007, our Audit
Committee pre-approved the personal income tax services that could be rendered to certain employees
by the independent auditors in 2007. 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
Not Applicable.
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, 2005 and 2006
Consolidated Statements of Operations for the years ended December 31, 2004, 2005 and 2006
Consolidated
Statements of Comprehensive Income (Loss) for the years ended December 31, 2004,
2005 and 2006
Consolidated Statements of Shareholders' Equity for the years ended December 31, 2004, 2005 and 2006
Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2005 and 2006
Notes to Consolidated Financial Statements
Silicon Manufacturing Partners Pte Ltd Financial Statements
SMP, our 49.0%-owned equity-method joint venture company, meets certain "significance" tests
pursuant to Rule 3-09 of Regulation S-X. Accordingly, separate financial statements of SMP
are required to be filed by us and we intend to file an amendment to this annual report on
Form 20-F to include the separate financial statements of SMP as soon as available but no
later than June 30, 2007.
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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 issued prior to January 30, 2006.
2.2
(27)
Specimen certificate for ordinary shares in respect of new issuances of shares issued on and
after January 30, 2006.
2.3
(27)
Specimen certificate for ordinary shares transferred on and after January 30, 2006 in respect of
shares issued before January 30, 2006.
2.4
(23)
Specimen certificate for convertible redeemable preference shares.
2.5
(3)
Deposit Agreement dated November 4, 1999 by and among the company, Citibank, N.A. and
the holders and beneficial owners of American Depositary Shares evidenced by
American Depositary Receipts issued thereunder (including as an exhibit, the form of
American Depositary Receipt).
2.6
(19)
Conversion Price Certificate dated August 17, 2005 of the company.
Loan Agreements and Indentures
4.1.1
(6)
Indenture dated as of April 2, 2001 by and between the company and Wells Fargo Bank
Minnesota, National Association.
4.1.2
(20)
Second Supplemental Indenture dated August 3, 2005 by and between the company and The
Bank of New York.
4.1.3
(20)
Third Supplemental indenture dated August 3, 2005 by and between the company and The
Bank of New York.
4.1.4
(21)
Fourth Supplemental Indenture dated August 17, 2005 by and between the company and The
Bank of New York.
4.1.5
(24)
Fifth Supplemental Indenture dated April 4, 2006 by and between the company and The Bank
of New York.
4.2
(21)
Master Agency Agreement dated August 17, 2005 by and between the company and The Bank
of New York.
4.3
(18)(+)
Facility Agreement dated December 23, 2004 by and among the company as Borrower,
JPMorgan Chase Bank, N.A. as Lender, Export-Import Bank of the United
States as guarantor and JPMorgan Chase Bank, N.A as Facility Agent.
4.4
(18)(+)
Facility Agreement dated December 22, 2004 by and between the company as Borrower and
Bank of America as Lender.
4.5
(25)(++)
Letter of Confirmation from Goldman Sachs International to the company dated March 29,
2006 supplementing the ISDA Master Agreement (Multicurrency-Cross Border) dated
August 10, 2004 by and between the company and Goldman Sachs international, as
counter-party together with the Schedule to the Master Agreement.
4.6
(25)(++)
Facility Agreement dated March 3, 2006 by and between the company as
Borrower and
Sumitomo Mitsui Banking Corporation as Arranger and Sumitomo Mitsui Banking
Corporation, Singapore Branch as Agent.
4.6.1
(26)
Syndication Agreement dated June 30, 2006 relating to the Facility Agreement dated March 3,
2006 by and between the company as Borrower and Sumitomo Mitsui Banking Corporation
as Arranger and Sumitomo Mitsui Banking Corporation, Singapore Branch as Agent.
Strategic Alliances
104
Table of Contents
CSP
4.7.1
(7)
Deed of Accession and Ratification dated October 22, 2001 by and among the company, EDB
Investments Pte Ltd, Agilent Technologies Europe B.V. and Singapex Investments Pte
Ltd relating to the Joint Venture Agreement dated March 13,1997, as amended and
restated on October 23, 2001 (the "Restated Joint Venture Agreement" dated October
23, 2001).
4.7.2
(7)
Amendment Agreement No. 1 dated January 31, 2002 to Restated Joint Venture Agreement
dated October 23, 2001.
4.7.3
(23)
Deed of Accession and Ratification dated January 26, 2006 by and among the company, EDB
Investments Pte Ltd, Singapex Investments Pte Ltd, Agilent Technologies Europe B.V.
and Avago Technologies General IP (Singapore) Pte. Ltd. relating to the Restated
Joint Venture Agreement dated October 23, 2001 and as further amended by an
amendment (No.1) dated January 31, 2002.
SMP
4.8.1
(2)(+)
Joint Venture Agreement dated December 19, 1997 by and between the company and Lucent
Technologies Microelectronics Pte. Ltd.
4.8.2
(17)
Supplemental Agreement dated September 17, 2004 to the Joint Venture Agreement dated
December 19, 1997 by and between the company and Agere Systems Singapore Pte
Ltd. (formerly known as "Lucent Technologies Microelectronics Pte. Ltd.").
4.8.3
(22)
Second Supplemental Agreement dated January 1, 2005 to the Joint Venture Agreement dated
December 19, 1997 by and between the company and Agere Systems Singapore Pte Ltd.
4.8.4
(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.
4.8.5
(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.
4.8.6
(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.
4.8.7
(10)(+)
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.
4.8.8
(8)(+)
Amendment Agreement (No. 2) dated March 22, 2001 to License and Technology Transfer
Agreement dated February 17, 1998 by and between the company, Agere Systems
Singapore Pte Ltd (formerly known as "Lucent Technologies Microelectronics Pte.
Ltd.") and Silicon Manufacturing Partners Pte Ltd.
4.8.9
(9)(+)
Amendment Agreement (No. 3) dated March 28, 2002 to License and Technology Transfer
Agreement dated February 17, 1998 by and among the company, Agere Systems Singapore
Pte Ltd (formerly known as "Lucent Technologies Microelectronics Pte. Ltd.") and
Silicon Manufacturing Partners Pte Ltd.
4.8.10
(4)(+)
Amendment Agreement (No. 4) dated July 1, 2003 to License and Technology Transfer
Agreement dated February 17, 1998 by and among the company, Agere Systems Singapore
Pte Ltd (formerly known as "Lucent Technologies Microelectronics Pte. Ltd.") and
Silicon Manufacturing Partners Pte Ltd.
Technology transfer, license, joint development and other related agreements
Agere/Lucent
105
Table of Contents
4.9.1
(2)(+)
Technology Transfer Agreement dated February 17, 1998 by and between the company and
Lucent Technologies Inc.
4.9.2
(8)(+)
Amendment Agreement (No. 1) dated July 31, 2000 to Technology Transfer Agreement dated
February 17, 1998 between Lucent Technologies Inc. and the company.
4.9.3
(8)(+)
Amendment Agreement (No. 2) dated March 20, 2001 to Technology Transfer Agreement
dated February 17, 1998 between Agere Systems Inc. (formerly known as
the "Microelectronics Group of Lucent Technologies Inc.") and the
company.
4.9.4
(8)(+)
Amendment Agreement (No. 3) dated March 28, 2002 to Technology Transfer Agreement
dated February 17, 1998 between Agere Systems Inc. (formerly known as
the "Microelectronics Group of Lucent Technologies Inc.") and the
company.
4.9.5
(2)(+)
Patent License Agreement dated January 1,1998 by and between the company and Lucent
Technologies Inc.
4.9.6
(14)(+)
Patent License Agreement Amendment dated August 3, 2000 by and between the company
and Lucent Technologies Inc.
4.9.7
(10)
Letter Agreement dated September 26, 2002 by and between the company and Agere
Systems Inc. amending the Patent License Agreement between the parties dated January
1, 1998.
Toshiba
4.10
(2)(+)
Patent Cross License Agreement dated August 12, 1999 by and between the company and
Toshiba Corporation.
IBM
4.11.1
(7)(++)
Patent Cross-License Agreement dated January 1, 2001 by and between the company and
International Business Machines Corporation.
4.11.2
(11)(+)
Amendment No. 1 dated November 26, 2002 to Patent License Agreement dated January 1,
2001 by and between the company and International Business Machines Corporation.
4.11.3
(11)(++)
"SF" Process Development and Cost Sharing Agreement dated
November 26, 2002 by and between the company and International Business Machines
Corporation.
4.11.4
(11)(+)
Copper / Related FEOL Technology License Agreement dated November 26, 2002
by and between the company and International Business Machines Corporation.
4.11
.
5
(22)(++)
Amendment No. 1 dated January 19, 2005 to the Copper / Related
FEOL Technology License Agreement dated November 26, 2002 by and between the company and
International Business Machines Corporation.
4.11.6
(12)(++)
Amendment No. 1 dated June 26, 2003 to "SF" Process
Development and Cost Sharing Agreement dated November 26, 2002 by and between the company
and International Business Machines Corporation.
4.11.7
(16)(++)
Amended and Restated Amendment No. 2 dated March 9, 2004 to the "SF" Process
Development and Cost Sharing Agreement dated November 26, 2002 by and between the
company and International Business Machines Corporation.
4.11.8
(27)(++)
Third Amended and Restated Amendment No.3 dated November 17, 2006 to
"SF" Process Development and Cost Sharing Agreement dated November 26, 2002 by and between
the company and International Business Machines Corporation.
4.11.9
(18)(+)
Amendment No. 4 dated December 15, 2004 to "SF" Process Development and Cost Scaring
Agreement dated November 26, 2002 by and between the company and International
Business Machines Corporation.
106
Table of Contents
4.11.10
(11)(+)
Refundable Cross Deposit Agreement dated November
26, 2002 by and between the company and International Business Machines Corporation.
4.11.11
(15)(+)
First Supplemental Agreement dated December 19, 2003 to the
Refundable Cross Deposit Agreement dated November 26, 2002 by and between the company and
International Business Machines Corporation.
4.11.12
(25)(++)
Letter Agreement dated March 27, 2006 to vary the terms of the
Refundable Cross Deposit Agreement dated November 26, 2002, as amended and supplemented, by
and between the company and International Business Machines Corporation.
4.11.13
(27)(++)
Master IBM Joint Development Terms and Conditions dated
December 15, 2006 for joint development projects with International Business Machines Corporation.
4.11.14
(27)(++)
Participation Agreement dated January 1, 2007 by and between the
company and International Business Machines Corporation.
4.11.15
(27)(++)
Joint Development Project Agreement
dated December 15, 2006 for 45nm Bulk-Industry
Standard Semiconductor Process Technology by and between the company and
International Business Machines Corporation.
4.11.16
{27)(++)
Joint Development Project Agreement
dated December 15, 2006 for 32nm Bulk-Industry
Standard Semiconductor Process Technology by and between the company and
International Business Machines Corporation.
IBM, Infineon and Samsung
4.12
(16)(+)
"SF" Process 65nm/45nm Development and Cost Sharing Agreement dated March 5, 2004 by
and among the company, International Business Machines Corporation, Infineon
Technologies, A.G. and Samsung Electronics Co., Ltd.
Motorola
4.13
(4)(+)
Patent License Agreement dated July 1, 2003 by and between the company and Motorola, Inc.
Property Agreements
Fab 2
4.14
(18)
Sub-Lease dated October 19, 2004 by and between Singapore Technologies Pte Ltd and the
company relating to Private Lots A12787 and A12787(a) Mukim No. 13 Sembawang.
Fabs 3 and 5
4.15.1
(5)
Sub-Lease Agreement dated February 17, 1998 by and between the company and Silicon
Manufacturing Partners Pte Ltd.
4.15.2
(18)
Sub-Lease dated October 19, 2004 by and between Singapore Technologies Pte Ltd and the
company relating to Private Lot A12787(b) Mukim No. 13.
Fabs 2 and 3 Site Slurry Treatment Plant
4.16.1
(23)
Agreement for Sub-License and Sub-Lease (Private Lot A12787(k)) dated July 8, 2005 by and
between Singapore Technologies Pte Ltd and the company.
4.16.2
(23)
Novation Agreement dated July 8, 2005 by and among Singapore Technologies Pte Ltd, Terra
Investments Pte. Ltd. and the company relating to the Agreement for Sub-License and
Sub-Lease (Private Lot A12787(k)) dated July 8, 2005.
4.16.3
(27)
Supplemental Agreement dated January 3, 2007 by and between Terra Investments
Pte. Ltd. and the company relating to the Agreement for Sub-License and Sub-Lease (Private Lot
107
Table of Contents
A12787(k) now known as A1964508) dated July 8, 2005.
Fab 6
4.17.1
(5)
Building Agreement relating to Private Lot A12787(d) Mukim No. 13 Sembawang dated
September 24, 1999 by and between Jurong Town Corporation and Singapore Technologies Pte Ltd.
4.17.2
(5)
Agreement for Sub-License and Sub-Lease (Private Lot A12787(d)) dated September 24, 1999
by and between Singapore Technologies Pte Ltd and Chartered Silicon Partners Pte Ltd.
4.17.3
(18)
Novation Agreement dated December 31, 2004 by and among Singapore Technologies Pte
Ltd, Terra Investments Pte. Ltd. and Chartered Silicon Partners Pte Ltd
relating to the Agreement for Sub-License and Sub-Lease (Private Lot A12787(d))
dated September 24, 1999.
Fab 7
4.18.1
(13)
Agreement for Sub-License and Sub-Lease (Private Lot A12787(e)) dated July 30, 2001 by
and between Singapore Technologies Pte Ltd and the company.
4.18.2
(13)
Building Agreement relating to Private Lot A12787(e) Woodlands Industrial Park D, G.S. No.
3696K, Mukim No. 13 dated July 30, 2001 by and between Jurong Town Corporation
and Singapore Technologies Pte Ltd.
4.18.3
(18)
Novation Agreement dated December 31, 2004 by and among Singapore Technologies Pte
Ltd, Terra Investments Pte. Ltd. and the company relating to the Agreement for
Sub-License and Sub-Lease (Private Lot A12787(e)) dated July 30, 2001.
4.18.4
(27)
Supplemental Agreement dated
January 3, 2007 by and between Terra Investments Pte. Ltd.
and the company relating to the Agreement for Sub-License and Sub-Lease
(Private Lot A12787(e) now known as A1964507) dated July 30, 2001.
4.19.1
(27)
Offer Letter dated February 16, 2006 from Jurong Town Corporation to Terra Investments Pte.
Ltd. for the lease of land known as Private Lot A1964510 at Plot 6 Woodlands
Industrial Park D in Woodlands Wafer Fab Park.
4.19.2
(27)
Acceptance of Offer dated February 21, 2006 from the company to Terra Investments Pte Ltd.
relating to Private Lot A1964510 at Plot 6 Woodlands Industrial Park D in Woodlands Wafer Fab Park.
4.19.3
(27)
Acceptance of Offer dated February 24, 2006 from Terra Investments Pte. Ltd. to Jurong Town
Corporation relating to Private Lot A1964510 at Plot 6 Woodlands Industrial
Park D in Woodlands Wafer Fab Park.
Related Party Agreements
4.20
(11)
Amended and Restated Turnkey Subcontract Agreement for Sort, Assembly and/or Final Test
Services dated October 30, 2002 by and between the company and ST Assembly Test Services Ltd.
4.21
(15)
Mr. Chia Song Hwee's, President and Chief Executive Officer, Contract of Employment.
8
(11)
List of the company's subsidiaries.
12.1
(27)
Certification of the President and Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
12.2
(27)
Certification of the Senior Vice President and Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
13.1
(27)
Certification of the President and Chief Executive Officer pursuant to 18 U.S.C Section 1350,
108
Table of Contents
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
13.2
(27)
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
(27)
Consent of KPMG.
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
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 Third Quarterly Report 2003 on Form 6-K (File No. 000-27811),
as submitted with the Securities and Exchange Commission on November 13, 2003, which
exhibit is incorporated herein by reference.
(5)
Filed as an exhibit to our company's Registration Statement on Form F-1 (Registration No.
333-88397), as filed with the Securities and Exchange Commission on October 4,1999.
(6)
Submitted as an exhibit to our company's Current Report on Form 6-K (File No. 000-27811), as
submitted with the Securities and Exchange Commission on April 4, 2001, which exhibit is incorporated herein by
reference.
(7)
Filed as an exhibit to our company's Annual Report on Form 20-F (File No. 000-27811), as filed with the
Securities and Exchange Commission on March 11, 2002, which exhibit is
incorporated herein by reference.
(8)
Submitted as an exhibit to our company's First Quarterly Report 2001 on Form 6-K (File No. 000-27811),
as submitted with the Securities and Exchange Commission on May 15, 2001, which
exhibit is incorporated herein by reference.
(9)
Submitted as an exhibit to our company's First Quarterly Report 2002 on Form 6-K (File No.
000-27811), as submitted with the Securities and Exchange Commission on May 14, 2002, which
exhibit is incorporated herein by reference.
(10)
Submitted as an exhibit to our company's Third Quarterly Report 2002 on Form 6-K (File No. 000-27811),
as submitted with the Securities and Exchange Commission on November 14, 2002, which
exhibit is incorporated herein by reference.
(11)
Filed as an exhibit to our company's Annual Report on Form 20-F (File No. 000-27811), as
filed with the
Securities and Exchange Commission on March 13, 2003, which exhibit is incorporated
herein by
reference.
(12)
Submitted as an exhibit to our company's Second Quarterly Report 2003 on Form 6-K (File No. 000-
27811), as submitted with the Securities and Exchange Commission on August 13, 2003,
which exhibit is
incorporated herein by reference.
(13)
Submitted as an exhibit to our company's Third Quarterly Report 2001 on Form 6-K (File No.
000-27811),
as submitted with the Securities and Exchange Commission on November 14, 2001, which
exhibit is
109
Table of Contents
incorporated herein by reference.
(14)
Submitted as an exhibit to our company's Current Report on Form 6-K (File No. 000-27811), as
submitted
with the Securities and Exchange Commission on November 14, 2000, which exhibit is
incorporated
herein by reference.
(15)
Filed as an exhibit to our company's Annual Report on Form 20-F (File No. 000-27811), as
filed with the
Securities and Exchange Commission on March 3, 2004, which exhibit is incorporated
herein by
reference.
(16)
Submitted as an exhibit to our company's First Quarterly Report 2004 on Form 6-K (File No.
000-27811),
as submitted with the Securities and Exchange Commission on May 10, 2004, which
exhibit is
incorporated herein by reference.
(17)
Submitted as an exhibit to our company's Third Quarterly Report 2004 on Form 6-K (File No.
000-27811),
as submitted with the Securities and Exchange Commission on November 8, 2004, which
exhibit is
incorporated herein by reference.
(18)
Filed as an exhibit to our company's Annual Report on Form 20-F (File No. 000-27811), as
filed with the
Securities and Exchange Commission on March 7, 2005, which exhibit is incorporated
herein by
reference.
(19)
Submitted as an exhibit to our company's Current Report 2005 on Form 6-K (File No.
000-27811), as
submitted with the Securities and Exchange Commission on August 17, 2005, which
exhibit is incorporated herein by reference.
(20)
Submitted as an exhibit to our company's Current Report
on Form 6-K (File No. 000-27811), as
submitted
with the Securities and Exchange Commission on August 4, 2005, which exhibit is
incorporated herein by
reference.
(21)
Submitted as an exhibit to our company's Current Report on Form 6-K (File No. 000-27811), as
submitted
with the Securities and Exchange Commission on August 18, 2005, which exhibit is
incorporated herein by reference.
(22)
Submitted as an exhibit to our company's First Quarterly Report on Form 6-K (File No.
000-27811), as
submitted with the Securities and Exchange Commission on May 6, 2005, which exhibit
is incorporated herein by reference.
(23)
Filed as an exhibit to our company's Annual Report on Form 20-F (File No. 000-27811), as filed
with the
Securities and Exchange Commission on March 1, 2006, which exhibit is
incorporated herein by reference.
(24)
Submitted as an exhibit to our company's Current Report on Form 6-K (file No. 000-27811), as submitted
with the Securities and Exchange Commission on April 5, 2006, which exhibit is
incorporated herein by reference.
(25)
Submitted as an exhibit to our company's First Quarterly Report on Form 6-K (File No. 000-27811), as
submitted with the Securities and Exchange Commission on May 10, 2006, which exhibit
is incorporated herein by reference.
(26)
Submitted as an exhibit to our company's Current Report
on Form 6-K (File No. 000-27811), as submitted
with the Securities and Exchange Commission on August 9, 2006, which exhibit is
incorporated herein by
reference.
(27)
Filed 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.
110
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 15
th
day of March 2007.
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 15, 2007
James
A.
Norling
/s/ Chia Song Hwee
President and Chief Executive
Officer
(principal
executive officer)
March 15, 2007
Chia Song Hwee
/s/ George Thomas
Senior Vice President and Chief
Financial Officer
(principal financial and accounting officer)
March 15, 2007
George Thomas
/s/ Andre Borrel
Director
March 15, 2007
Andre Borrel
/s/ Charles E. Thompson
Director
March 15, 2007
Charles
E.
Thompson
/s/ Tsugio Makimoto
Director
March 15, 2007
Tsugio Makimoto
/s/ Tay Siew Choon
Director
March 15, 2007
Tay Siew Choon
/s/ Peter Seah Lim Huat
Director
March 15, 2007
Peter Seah Lim Huat
111
Table of Contents
SIGNATURE
TITLE
DATE
/s/ Philip Tan Yuen Fah
Director
March 15, 2007
Philip Tan Yuen Fah
/s/ Pasquale Pistorio
Director
March 15, 2007
Pasquale Pistorio
/s/ Steven H. Hamblin
Director
March 15, 2007
Steven
H.
Hamblin
/s/ Maurizio Ghirga
Director
March 15, 2007
Maurizio Ghirga
112
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, 2005 and 2006, 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, 2006. 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, 2005 and 2006, and the results of their operations and their
cash flows for each of the years in the three-year period ended December 31, 2006, in conformity
with U.S. generally accepted accounting principles.
As
described in Note 1(q) and Note 17 to the consolidated
financial statements, effective January 1, 2006, the Company
adopted the fair value method of accounting for stock-based
compensation as required by Statement of Financial Accounting
Standards No. 123(R),
Share-Based Payments
. As described in
Note 1(c) to the consolidated financial statements, the
Company changed its method of quantifying errors in 2006.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the effectiveness of Chartered Semiconductor Manufacturing Ltd's internal
control over financial reporting as of December 31, 2006, based on criteria established in Internal
Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO), and our report dated March 9, 2007 expressed an unqualified opinion on
management's assessment of, and the effective operation of, internal control over financial
reporting.
KPMG
Singapore
March 9, 2007
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)
2005
2006
ASSETS
Cash and cash equivalents
$
819,856
$
718,982
Restricted cash
2,832
43,063
Marketable securities
7,467
2,283
Receivables, net
180,764
243,361
Inventories
134,240
157,047
Prepaid expenses
7,670
6,978
Other current assets
129,865
10,247
Total current assets
1,282,694
1,181,961
Investment in SMP
54,517
36,044
Technology licenses, net
106,612
84,991
Property, plant and equipment, net
2,049,695
2,273,119
Other non-current assets
23,776
42,316
Total assets
$
3,517,294
$
3,618,431
LIABILITIES, CONVERTIBLE REDEEMABLE PREFERENCE SHARES AND SHAREHOLDERS' EQUITY
Payables
$
166,681
$
302,004
Income taxes payable
27,674
33,280
Current installments of long-term debt and capital lease obligations
322,453
127,627
Other current liabilities
216,445
150,581
Total current liabilities
733,253
613,492
Long-term debt and capital lease obligations, excluding current installments
1,169,034
1,280,972
Other non-current liabilities
17,970
48,936
Total liabilities
1,920,257
1,943,400
Convertible redeemable preference shares
Authorized: 30 shares in 2005 and 2006
Issued and outstanding: 30 shares in 2005 and 28 shares in 2006
Redemption value at maturity: $10,000 per share
250,663
246,174
Ordinary share capital
Authorized: 4,615,385 shares in 2005 and 2006
Issued and outstanding: 2,513,384 shares in 2005 and 2,535,896 shares
in 2006
2,682,050
2,704,215
Accumulated deficit
(1,278,252
)
(1,221,527
)
Accumulated other comprehensive loss
(57,424
)
(53,831
)
Total shareholders' equity
$
1,346,374
$
1,428,857
Commitments and contingencies
Total liabilities, convertible redeemable preference shares and
shareholders' equity
$
3,517,294
$
3,618,431
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)
2004
2005
2006
Net revenue
$
932,131
$
1,032,734
$
1,414,525
Cost of revenue
(764,305
)
(917,048
)
(1,070,782
)
Gross profit
167,826
115,686
343,743
Other revenue
17,927
20,685
21,030
OPERATING EXPENSES
Research and development
93,818
122,073
152,756
Sales and marketing
37,995
42,503
55,007
General and administrative
34,951
40,025
42,558
Fab start-up costs
33,199
22,697
—
Other operating expenses (income), net
(139
)
14,202
13,766
Total operating expenses
199,824
241,500
264,087
Equity in income of SMP
27,563
6,486
36,040
Other income (loss), net
16,416
(6,744
)
(2,689
)
Interest income
11,530
28,625
44,591
Interest expense and amortization of debt discount
(30,093
)
(69,839
)
(87,950
)
Income (loss) before income taxes
11,345
(146,601
)
90,678
Income tax expense
4,774
12,997
23,924
Net income (loss)
6,571
(159,598
)
66,754
Less: Accretion to redemption value of convertible redeemable
preference shares
—
3,196
9,476
Net income (loss) available to ordinary shareholders
$
6,571
$
(162,794
)
$
57,278
Basic net earnings (loss) per ordinary share
$
0.00
$
(0.06
)
$
0.02
Diluted net earnings (loss) per ordinary share
$
0.00
$
(0.06
)
$
0.02
Basic net earnings (loss) per ADS
$
0.03
$
(0.65
)
$
0.23
Diluted net earnings (loss) per ADS
$
0.03
$
(0.65
)
$
0.23
Number of ordinary shares used in computing:
Basic net earnings (loss) per ordinary share
2,508,376
2,511,428
2,528,056
Effect of dilutive options
8,566
—
6,009
Diluted net earnings (loss) per ordinary share
2,516,942
2,511,428
2,534,065
Number of ADS used in computing:
Basic net earnings (loss) per ADS
250,838
251,143
252,806
Effect of dilutive options
856
—
601
Diluted net earnings (loss) per ADS
251,694
251,143
253,407
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
2004
2005
2006
Net income (loss)
$
6,571
$
(159,598
)
$
66,754
Net unrealized gains (losses) on change in cash flow hedging fair values
598
112
(1,362
)
Share of cash flow hedging gains of SMP
3,945
17
9
Reclassification of cash flow hedging (gains) losses into earnings
(2,942
)
469
133
Foreign currency translation
—
1,721
568
Unrealized losses on available-for-sale securities
(1,073
)
(1,390
)
(11
)
Reclassification of losses on available-for-sale securities into earnings
—
—
2,350
Other comprehensive income, net
528
929
1,687
Comprehensive income (loss)
$
7,099
$
(158,669
)
$
68,441
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
Other
Share
Ordinary Share
Accumulated
Compre-
holders'
Capital
Deficit
hensive Loss
Equity
No.
$
$
$
$
Balance at January 1, 2004
2,505,480
2,678,661
(1,125,225
)
(58,881
)
1,494,555
Net income
—
—
6,571
—
6,571
Other comprehensive income
—
—
—
528
528
Issuance of shares
3,758
2,001
—
—
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
2,682,638
(1,118,654
)
(58,353
)
1,505,631
Net loss
—
—
(159,598
)
—
(159,598
)
Other comprehensive income
—
—
—
929
929
Accretion to redemption
value of convertible
redeemable preference
shares
—
(3,196
)
—
—
(3,196
)
Issuance of shares
4,146
2,387
—
—
2,387
Employee stock compensation
—
1
—
—
1
Non-employee stock
compensation
—
220
—
—
220
Balance at December 31, 2005
2,513,384
2,682,050
(1,278,252
)
(57,424
)
1,346,374
Cumulative effect
adjustment for change in
accounting policy (adoption
of SAB 108)
—
8,114
(10,029
)
1,906
(9
)
Balance at January 1, 2006,
as adjusted
2,513,384
2,690,164
(1,288,281
)
(55,518
)
1,346,365
Net income
—
—
66,754
—
66,754
Other comprehensive income
—
—
—
1,687
1,687
Accretion to redemption
value of convertible
redeemable preference
shares
—
(9,476
)
—
—
(9,476
)
Issuance of shares arising
from conversion of
convertible redeemable
preference shares
18,924
13,965
—
—
13,965
Issuance of shares
3,588
2,357
—
—
2,357
Employee share-based
compensation
—
7,376
—
—
7,376
Non-employee share-based
compensation
—
117
—
—
117
Others
—
(288
)
—
—
(288
)
Balance at December 31, 2006
2,535,896
2,704,215
(1,221,527
)
(53,831
)
1,428,857
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
2004
2005
2006
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)
$
6,571
$
(159,598
)
$
66,754
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Equity in income of SMP
(27,563
)
(6,486
)
(36,040
)
Cash dividends received from SMP
—
29,460
38,178
Depreciation and amortization
437,590
507,687
503,789
Foreign exchange (gain) loss, net
(19
)
434
1,946
Gain on disposal of property, plant and equipment
(11,703
)
(1,594
)
(4,822
)
(Gain) loss on derivatives
(1,270
)
5,993
2,391
Impairment loss on investments
—
—
2,698
Share-based compensation
3
1
7,376
Gain on sale of technology and equipment
(11,708
)
—
—
Others, net
(6,106
)
(6,615
)
(1,417
)
Change in assets and liabilities:
Receivables
16,327
(44,280
)
(61,687
)
Inventories
(15,726
)
(62,081
)
(21,193
)
Prepaid expenses and other current assets
(180
)
853
(5,716
)
Payables and other liabilities
(49,346
)
136,347
20,355
Income taxes payable
(5,186
)
4,253
8,058
Net cash provided by operating activities
331,684
404,374
520,670
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant and equipment
(686,252
)
(628,127
)
(554,292
)
Payments for technology licenses
(37,083
)
(9,351
)
(9,667
)
Purchases of term deposits
(30,000
)
—
—
Refundable deposits placed with vendors
(35,000
)
—
(15,000
)
Refund of deposits placed with a vendor
—
—
111,656
Proceeds from sale of property, plant and equipment
31,217
6,245
9,975
Proceeds from redemption, maturity and disposal of marketable securities and term
deposits
15,000
45,000
20,998
Return of capital from SMP
—
17,300
16,913
Others
9,403
690
(488
)
Net cash used in investing activities
(732,715
)
(568,243
)
(419,905
)
CASH FLOWS FROM FINANCING ACTIVITIES
Debt
Borrowings
318,000
1,128,592
492,915
Repayments
(287,312
)
(990,172
)
(635,010
)
Capital lease payments
—
—
(3,845
)
Receipts of refundable customer deposits
450
81,300
45,183
Refund of customer deposits
—
(22,035
)
(72,108
)
Issuance of ordinary shares
2,001
2,387
2,357
Issuance of convertible redeemable preference shares
—
247,513
—
Increase in
cash restricted for debt repayment
—
(2,832
)
(40,231
)
Others
1,800
—
5,752
Net cash provided by (used in) financing activities
34,939
444,753
(204,987
)
Effect of exchange rate changes on cash and cash equivalents
19
(427
)
3,348
Net increase (decrease) in cash and cash equivalents
(366,073
)
280,457
(100,874
)
Cash and cash equivalents at the beginning of the year
905,472
539,399
819,856
Cash and cash equivalents at the end of the year
$
539,399
$
819,856
$
718,982
Supplemental Cash Flow Information
Interest paid (net of amounts capitalized)
$
18,215
$
77,510
$
85,585
Income taxes paid
$
11,276
$
9,576
$
15,434
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
$
31,998
Property, plant and equipment acquired on credit
$
129,147
$
52,280
$
193,742
Issuance of ordinary shares arising from conversion of convertible redeemable
preference shares
$
—
$
—
$
13,965
Property, plant and equipment contributed by landlord
$
—
$
—
$
858
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 nine 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, 2006, 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, Avago Technologies General IP (Singapore) Pte Ltd ("Avago Singapore")
(previously Agilent Europe B.V. who transferred its entire shareholding in CSP to Avago
Singapore in 2006) and Singapex Investments Pte Ltd own a 51.0%, 26.5%, 15.0% and 7.5% equity
interest in CSP, respectively. 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 United States of
America generally accepted accounting principles ("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 of 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:
2004
2005
2006
Losses not allocated to the
minority shareholders of CSP according to their proportionate
ownership
$55,786
$64,889
$12,831
The cumulative losses not allocated to the minority shareholders of CSP according to their
proportionate ownership as of December 31, 2005 and 2006 are $194,992 and $207,823,
respectively.
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)
(c)
Accounting Changes, Reclassifications and Adjustments
Cumulative Effect Adjustment — SAB 108
In September 2006, the Securities and Exchange Commission ("SEC") issued Staff Accounting
Bulletin No. 108 ("SAB 108"), "Considering the Effects of Prior Year Misstatements when
Quantifying Misstatements in Current Year Financial Statements" which requires companies to
evaluate the materiality of identified unadjusted errors on each financial statement and
related financial statement disclosure using both the rollover approach and the iron curtain
approach ("dual approach"). The rollover approach quantifies misstatements based on the
amount of the error originating in the current year statement of operations whereas the iron
curtain approach quantifies misstatements based on the effects of correcting the
misstatement existing in the balance sheet at the end of the current year, irrespective of
the misstatement's year(s) of origin. Financial statements would require adjustment when
either approach results in quantifying a misstatement that is material. The Company adopted
SAB 108 effective January 1, 2006.
As a transition accommodation SAB 108 permits a cumulative effect adjustment, without
restatement of previously issued financial statements, to be used for errors that are
determined to be immaterial pursuant to the Company's previous method of quantification of
unadjusted errors but are determined to be material under the dual approach. Prior to the
adoption of SAB 108, the Company had quantified unadjusted errors under the rollover
approach and had assessed these unadjusted errors to be immaterial — individually and in
the aggregate. Upon initial adoption of SAB 108 for the fiscal year 2006, the Company
quantified unadjusted errors under the dual approach and assessed that these unadjusted
errors are material. As such, the Company elected to report a cumulative effect adjustment
as of January 1, 2006 for those unadjusted errors quantified as of January 1, 2006. The
impact to the Company's beginning accumulated deficit was an increase of $10,029.
Accrued rent.
The Company did not recognize rental expense for its operating leases on land
using the required straight-line method during the years 1994 to 2004 and began using the
straight-line method prospectively in 2005 following a clarification issued by the SEC in
2005 related to the accounting for leases. The misstatements were determined to be
immaterial to each period based on the prior method of assessing materiality. As a result,
rental expense was cumulatively understated by $20,449 at January 1, 2006. The Company
recorded a $20,449 increase in the liability for accrued rent as of January 1, 2006 with a
corresponding increase to accumulated deficit to correct this misstatement.
Accrued purchase order cancellation penalties
. The Company incorrectly recorded certain loss
contingency accruals for purchase order cancellation penalties during 2000 and 2001. These
did not qualify for recognition as a liability in the balance sheet as it was not probable
that the penalties would be imposed. The misstatements were determined to be immaterial to
each period based on the prior method of assessing materiality. As a result, accrued
operating expenses were overstated by $9,962 at January 1, 2006. The Company recorded a
$9,962 decrease in the liability for accrued purchase order cancellation penalties as of
January 1, 2006 with a corresponding decrease to accumulated deficit to correct these
misstatements.
Stock compensation charge
. The Company had certain computation errors in its stock
compensation charge in the years 2000 to 2005 which include incorrect basis used for options
issued to non-employees and incorrect measurement dates for certain awards. These
misstatements were determined to be immaterial to each period based on the prior method of
assessing materiality and the circumstances giving rise to the misstatements have been
corrected in 2006. As a result, ordinary share capital was understated by $8,114 at January
1, 2006. The Company recorded a $8,114 increase in ordinary share capital as of January 1,
2006 with a corresponding increase to accumulated deficit to correct these misstatements.
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)
Income taxes payable
. The Company overprovided for income taxes arising out of certain
incorrect data used in its tax provision calculations for years 2001 to 2005. The
misstatements were determined to be immaterial to each period based on the prior method of
assessing materiality. As a result, income taxes payable was overstated by $3,062 at January
1, 2006. The Company recorded a $3,062 reduction to income taxes payable as of January 1,
2006 with a corresponding decrease to accumulated deficit to correct these misstatements.
Accrued research and development costs.
The Company over-accrued certain amounts in 2001 for
research and development costs payable to a research partner arising from the data used in
the calculations being incorrect. The misstatements were determined to be immaterial to each
period based on the prior method of assessing materiality. As a result, accrued expenses
were overstated by $1,787 at January 1, 2006. The Company recorded a $1,787 decrease in
accrued research and development costs as of January 1, 2006 with a corresponding decrease
to accumulated deficit to correct these misstatements.
Inventory carrying value.
The Company wrote down the carrying value of certain aged
inventory although the cost basis was realizable. The misstatements were determined to be
immaterial to each period based on the prior method of assessing materiality. As a result,
inventories were understated by $1,572 at January 1, 2006. The Company recorded a $1,572
increase to inventories as of January 1, 2006 with a corresponding decrease to accumulated
deficit to correct these misstatements.
Debt issuance costs.
The Company used certain incorrect assumptions in applying the interest
method to amortize debt issuance costs in 2005. The misstatements were determined to be
immaterial to each period based on the prior method of assessing materiality. As a result,
debt issuance costs were understated by $1,194 at January 1, 2006. The Company recorded a
$1,194 decrease to deferred debt issuance costs as of January 1, 2006 with a corresponding
increase to accumulated deficit to correct these misstatements.
Insurance receivable.
The Company did not recognize an asset in 2004 and 2005 for amounts
that were receivable from an insurance company based on experience to date under an
insurance contract. The misstatements were determined to be immaterial to each period based
on the prior method of assessing materiality. As a result, other receivables were
understated by $908 at January 1, 2006. The Company recorded a $908 increase in other
receivables as of January 1, 2006 with a corresponding decrease to accumulated deficit to
correct these misstatements.
Management fees receivable.
The Company historically recognized certain management fees
based on billings instead of accruing at the time services were rendered. The misstatements
were determined to be immaterial to each period based on the prior method of assessing
materiality. As a result, management fees receivable was understated by $775 at January 1,
2006. The Company recorded a $775 increase in management fees receivable as of January 1,
2006 with a corresponding decrease to accumulated deficit to correct these misstatements.
Research and development cost sharing fees.
The Company recognized certain research and
development cost sharing fees in 2005 on a payment basis rather than when the expenses were
incurred. The misstatements were determined to be immaterial to each period based on the
prior method of assessing materiality. As a result, accrued research and development cost
sharing fees were understated by $550 at January 1, 2006. The Company recorded a $550
increase in the liability for accrued research and development cost sharing fees as of
January 1, 2006 with a corresponding increase to accumulated deficit to correct these
misstatements.
Deferred payroll-related expenses.
The Company recognized certain payroll related expenses
on a payment basis rather than amortizing such prepaid expenses over the requisite service
period during 2004 and 2005. The misstatements were determined to be immaterial to each
period based on the prior method of assessing materiality. As a result, deferred payroll
related expenses were understated by $546 at January 1, 2006. The Company recorded a $546
increase in asset for deferred payroll related expenses as of January 1, 2006 with a
corresponding decrease to accumulated deficit to correct these misstatements.
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)
Advances to suppliers
. The exchange rate fluctuations between the date of advance payments
made in foreign currencies for equipment and the date of delivery of the equipment were
deferred in other comprehensive loss rather than recorded as a component of property, plant
and equipment during 2004 and 2005. The misstatements were determined to be immaterial to
each period based on the prior method of assessing materiality. As a result, other
comprehensive loss was overstated by $1,906 and property, plant and equipment, net was
understated by $1,396 at January 1, 2006. The Company recorded a $1,906 decrease in other
comprehensive loss and a $1,396 increase in property, plant and equipment, net as of January
1, 2006 with a corresponding net increase of $510 to accumulated deficit to correct these
misstatements.
Deferred grant income.
The Company incorrectly calculated the amount of grant to be refunded
to the grantor and hence the amount of grant income to be recognized during 2003 to 2005.
The misstatements were determined to be immaterial to each period based on the prior method
of assessing materiality. As a result, deferred grant income was understated by $475 at
January 1, 2006. The Company recorded a $475 increase in deferred grant income as of January
1, 2006 with a corresponding decrease to accumulated deficit to correct these misstatements.
Translation of income taxes payable.
The Company historically did not translate foreign
currency denominated income taxes payable using the current exchange rate. The misstatements
were determined to be immaterial to each period based on the prior method of assessing
materiality. As a result, income taxes payable were understated by $430 at January 1, 2006.
The Company recorded a $430 increase in income taxes payable as of January 1, 2006 with a
corresponding increase to accumulated deficit to correct these misstatements.
Withholding taxes receivable.
The Company did not recognize an asset in 2005 for refundable
withholding taxes that were receivable from a tax authority. The misstatements were
determined to be immaterial to each period based on the prior method of assessing
materiality. As a result, withholding taxes receivable were understated by $164 at January
1, 2006. The Company recorded a $164 increase in withholding taxes receivable as of January
1, 2006 with a corresponding decrease to accumulated deficit to correct these misstatements.
Provision for income taxes (deferred and current).
As a result of the misstatements
described above, provision for income taxes was misstated by $1,967 at January 1, 2006. The
Company recorded an increase in deferred tax assets, valuation allowance and income taxes
payable in the amounts of $3,993, $1,846 and $180, respectively, as of January 1, 2006 with
a corresponding (decrease) increase to accumulated deficit to correct these misstatements.
Other Adjustments and Reclassifications
Reclassifications and certain immaterial classification corrections have been made to prior years' financial statements to conform to classifications
used in the current year. These include reporting operating grant income as a reduction of the expenses that the grants are intended to reimburse rather than
as other income, reporting rental income and management fees as other revenue rather than as other income, reporting depreciation of rental buildings as other operating
expenses rather than as other expense and certain other immaterial reclassifications.
Until January 30, 2006, ordinary shares of the Company had a par value of S$0.26. The
Singapore Companies (Amendment) Act 2005, which came into effect on January 30, 2006,
abolished the concept of "par value" and "authorized capital." Accordingly, the amounts
previously disclosed under "ordinary shares" and "additional paid-in capital" line items
have been combined as "Ordinary Share Capital."
F-10
Table of Contents
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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)
(d)
Use of Estimates
The preparation of the consolidated financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and
the reported revenues and expenses during the reporting period. Estimates are based on
historical experience, current conditions and on various other assumptions that are believed
to be reasonable under the circumstances. Significant items subject to judgment and 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, valuation of accounts receivable and inventories, the recognition and
measurement of revenue and sales credits and returns allowance, and the fair value of
share-based employee compensation awards and financial instruments. Actual results could
differ from these estimates.
During 2006, the Company changed the estimated salvage values in relation to certain
eight-inch process equipment and machinery to reflect higher expected salvage values than
the Company had historically estimated. The change in the estimated salvage values is a
change in accounting estimate that was applied prospectively from July 1, 2006. This change
will result in lower depreciation over the remaining lives of the affected eight-inch
process equipment and machinery. The impact of this change was an improvement to the
Company's net income by $11,289 for the year ended December 31, 2006, resulting in an
improvement of basic and diluted net earnings per American Depository Shares ("ADS") by
$0.04 for the year ended December 31, 2006. Basic and diluted net earnings per ordinary
share for the year ended December 31, 2006 were $0.02 and $0.02, respectively, both before
and after the impact of this change.
(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 "Other
operating expenses, net" in the consolidated statements of operations.
(f)
Business and Credit Concentrations
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. The market for semiconductors
is characterized by rapid technological change, intense competition and fluctuations in
end-user demand. The Company depends, and will continue to depend, for a significant
portion of its revenue on a relatively limited number of customers who from time to time
may be concentrated in particular end markets. Customer concentration is more significant
for the Company's leading-edge process technologies. The five largest customers of the
Company accounted for 52%, 56% and 60% of net revenue in the years ended December 31, 2004,
2005 and 2006, respectively. Total accounts receivable from these customers was $92,668
and $166,297 at December 31, 2005 and 2006, respectively. The Company's top customer
profile may change from period to period depending on the strength of various market
sectors.
The Company obtains most of its raw materials and supplies, including critical raw materials
such as raw semiconductor wafers, from a limited number of vendors. Some of these raw
materials and supplies are available from a limited number of vendors in limited quantities
and their procurement may require a long lead time. In certain instances, the Company only
has one qualified supplier for raw materials and supplies.
The Company also depends on a limited number of original equipment manufacturers and vendors
that make and sell certain complex equipment and equipment spare parts that the Company uses
in its manufacturing processes. In the event of shortage of supply of equipment spare parts,
the Company would need to qualify alternative sources and/or equipment spare parts.
Financial instruments that potentially subject the Company to concentrations of credit risk
consist principally of cash, investments, derivative financial instruments and receivables.
The Company mitigates the concentration of its credit risk in trade receivables through its
credit evaluation process, credit policies and credit control and collection procedures.
The Company's cash and cash equivalents are placed with major international banks and
financial institutions. Cash and cash equivalents deposited with a single counterparty bank
accounted for 20% of total balances at December 31, 2005 and 2006.
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)
The amounts related to derivative instruments which are subject to credit risk are
generally limited to the amounts, if any, by which a counterparty's obligations exceed the
obligations of the Company with that counterparty. The Company's hedging practices are
further described in Note 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.
(h)
Marketable Securities
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". There are no investments
classified as trading or held-to-maturity as of December 31, 2005 and 2006. There have been
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 included in the line item "Other income (loss), net" in the
consolidated statement of operations.
(i)
Accounts Receivable
The Company reviews its accounts receivable on a periodic basis and makes specific
allowances when there is doubt as to the collectibility of individual receivable balances.
In evaluating the collectibility of individual receivable balances, the Company considers
the age of the balance, the customer's historical payment history, their current
credit-worthiness and current economic trends.
(j)
Inventories
Inventories consist of work in progress, raw materials and consumable supplies and spares
and are stated at the lower of cost or market (net realizable value). 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.
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)
(k)
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. Once a hedging relationship is
established, the Company designates the derivative as either a hedge of the fair value of a
recognized asset or liability or of an unrecognized firm commitment ("fair-value" hedge), a
hedge of a forecasted transaction or of the variability of cash flows to be received or paid
related to a recognized asset or liability ("cash-flow" hedge), or a foreign-currency
fair-value or cash-flow hedge ("foreign-currency" hedge). The Company formally documents
all relationships between hedging instruments and hedged items, as well as its
risk-management objective and strategy for undertaking various hedge transactions, at the
hedge's inception. This process includes linking all derivatives that are designated as
fair-value, cash-flow, or foreign-currency hedges to specific assets and liabilities on the
balance sheet or to specific firm commitments or forecasted transactions. The Company also
formally assesses, both at the hedge's inception and on an ongoing basis, whether the
derivatives that are used in hedging transactions are highly effective in offsetting changes
in fair values or cash flows of hedged items.
Changes in the fair value of derivatives that are highly effective and that are designated
and qualify as fair-value hedges are recorded in earnings, along with the loss or gain on
the hedged assets or liabilities or unrecognized firm commitment of the hedged item that are
attributable to the hedged risks. Changes in the fair value of derivatives that are highly
effective and that are designated and qualify as cash-flow hedges are recorded in other
comprehensive income until earnings are affected by the variability in cash flows of the
designated hedged items. Changes in the fair value of derivatives that are highly effective
as hedges and that are designated and qualify as foreign-currency hedges are recorded in
either earnings or other comprehensive income, depending on whether the hedge transaction is
a fair-value hedge or a cash-flow hedge. Changes in the fair value of derivative
instruments that are not designated as part of a hedging relationship are reported in
current period earnings.
The Company discontinues hedge accounting prospectively when it determines
that a derivative is no longer effective in offsetting changes in the fair value or cash
flows of the hedged item, the derivative expires or is sold, terminated, or exercised, the
derivative is de-designated as a hedging instrument because it is unlikely that a forecasted
transaction will occur, a hedged firm commitment no longer meets the definition of a firm
commitment, or management determines that designation of the derivative as a hedging
instrument is no longer appropriate. When hedge accounting is discontinued because it is
determined that the derivative no longer qualifies as an effective fair-value hedge, the
Company no longer adjusts the hedged asset or liability for changes in fair value. The
adjustment of the carrying amount of the hedged asset or liability is accounted for in the
same manner as other components of the carrying amount of that asset or liability. When
hedge accounting is discontinued because the hedged item no longer meets the definition of a
firm commitment, the Company removes any asset or liability that was recorded pursuant to
recognition of the firm commitment from the balance sheet and recognizes any gain or loss in
earnings. When hedge accounting is discontinued because it is probable that a forecasted
transaction will not occur, gains and losses that were accumulated in other comprehensive
income 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.
(l)
Technology Licenses
Technology license agreements are stated at cost and amortized on a straight-line basis over
the shorter of the expected technology life or the license period.
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)
(m)
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.
(n)
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 they are disposed of, which is the point at
which they cease to be used.
(o)
Revenue Recognition
The Company derives revenue primarily from fabricating semiconductor wafers and, to a
lesser extent, from providing associated subcontracted assembly and test services as well as
pre-fabricating services such as masks generation and engineering services. The Company
enters into arrangements with customers which typically include some or all of the above
deliverables.
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)
When arrangements include multiple deliverables, the Company first determines whether
each deliverable meets the separation criteria in FASB Emerging Issues Task Force ("EITF")
Issue 00-21, "Accounting for Revenue Arrangements with Multiple Deliverables". In general,
a deliverable (or a group of deliverables) meets the separation criteria if the deliverable
has standalone value to the customer and if there is objective and reliable evidence of the
fair value of the remaining deliverables in the arrangement. Each deliverable that meets the
separation criteria is considered a separate "unit of accounting." The total arrangement
consideration is then allocated to each unit of accounting based on their relative fair
values. Substantially all of the Company's arrangements for the sale of semiconductor wafers
and related services consist of a single unit of accounting.
Revenue for each unit of accounting is recognized when the contractual obligations have been
performed and title and risk of loss has passed to the customer, there is evidence of a
final arrangement as to the specific terms of the agreed upon sales, selling prices to the
customers are fixed or determinable, collection of the revenue is reasonably assured, and,
where applicable, delivery has occurred. Generally this results in revenue recognition upon
shipment of wafers. Revenue represents the invoiced value of goods and services supplied
excluding goods and services tax, less allowances for estimated sales credits and returns.
The Company estimates allowances for sales credits and returns based on historical
experience and management's estimate of the level of future claims. Additionally, the
Company accrues for specific items at the time their existence is known and amounts are
estimable.
The Company also derives other revenue relating to rental income and management fees
which is recognized when the contractual obligations have been performed, there is evidence
of a final arrangement, fees are fixed or determinable and collection of the revenue is
reasonably assured. Generally, revenue from rental is recognized over the lease period and
management fee revenue is recognized when services are rendered. These are recorded in the
line item "Other revenue" in the consolidated statements of operations.
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 (loss), net" in the consolidated statements 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.
(p)
Government Grants
Income-related government grants are subsidies of expenses incurred. Income-related
grants are credited to the related expenses when expenditures already incurred constitute
qualifying expenditures for purposes of reimbursement under the grants.
Asset-related government grants consist of grants for the purchase of equipment.
Asset-related grants are credited to the related expenses on a straight-line basis over the
estimated useful lives of the relevant assets or the qualifying period of the relevant grant
projects, depending on the conditions of the grants.
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)
(q)
Share-Based Compensation
The Company adopted the provisions of SFAS No. 123(R), "Share-Based Payments" on January 1,
2006, the first day of the Company's fiscal year 2006. Under SFAS No. 123(R), share-based
compensation cost related to employee grants is measured based on the estimated fair value of
the award at the grant date and is recognized as expense over the employee's requisite
service period. Share-based compensation cost related to non-employees, primarily granted to
employees of SMP, is accounted for utilizing the measurement guidance of EITF 96-18
"Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring, or
in Conjunction with Selling, Goods or Services". The Company adopted the provisions of SFAS
No. 123(R) using the modified prospective application. Under the modified prospective
application, prior periods are not revised for comparative purposes. The provisions of SFAS
No. 123(R) apply to new awards, unvested awards that are outstanding on the effective date,
and to subsequent modification or cancellation of awards. Share-based compensation cost for
new awards granted to employees is recognized on a straight-line basis over the vesting
period. Share-based compensation cost for unvested awards that are outstanding at the date of
adoption and awards for non-employees continues to be recognized in accordance with FASB
Interpretation No. 28 ("FIN 28"), "Accounting for Stock Appreciation Rights and Other
Variable Stock Option Award Plans".
Prior to adopting the provisions of SFAS No. 123(R), the Company measured stock-based
employee compensation cost for financial statement purposes in accordance with the intrinsic
value method of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" ("APB 25") and related interpretations. Employee compensation cost was 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.
The Company uses the Black-Scholes option-pricing model for valuation of share-based awards
granted on or after January 1, 2006, which was also previously used for the Company's pro
forma information disclosures required under SFAS No. 123,
"Accounting for Stock-Based Compensation".
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, "Accounting for Stock-Based
Compensation — Transition and Disclosure", the Company's net
income (loss) would have changed to the pro forma amounts indicated below for the years ended
December 31, 2004 and 2005:
2004
2005
Stock-based employee compensation cost
As reported (intrinsic method)
$
3
$
1
Pro forma (fair-value method)
$
21,406
$
9,431
Net income (loss) available to ordinary shareholders
As reported
$
6,571
$
(162,794
)
Pro forma
$
(14,832
)
$
(172,224
)
Basic and diluted net earnings (loss) per ordinary share
As reported
$
0.00
$
(0.06
)
Pro forma
$
(0.01
)
$
(0.07
)
Basic and diluted net earnings (loss) per ADS
As reported
$
0.03
$
(0.65
)
Pro forma
$
(0.06
)
$
(0.69
)
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)
(r)
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.
(s)
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.
(t)
Deferred Loan Costs
Expenses associated with the issuance of long-term debt are capitalized and are
amortized over the terms of the respective arrangement using the effective interest rate
method.
(u)
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.
(v)
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 deferred tax assets where it is more likely than not that they will not be
realized.
(w)
Net Earnings (Loss) Per Ordinary Share
Basic net earnings (loss) per ordinary share is computed by deducting from net income or
adding to net (loss) the accretion to redemption value of the convertible redeemable
preference shares over the weighted average number of ordinary shares outstanding. Diluted
net earnings (loss) per ordinary share is computed by deducting from net income or adding to
net (loss) the accretion to redemption value of the convertible redeemable preference shares
over the weighted average number of ordinary shares outstanding plus dilutive potential
ordinary shares from the assumed exercise of options outstanding during the period, if any,
using the treasury stock method and other potentially dilutive securities outstanding, such
as convertible redeemable preference shares.
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)
The Company excluded potentially dilutive securities for each period presented from its
diluted net earnings (loss) per ordinary share computation because either the exercise price
or conversion price of the securities exceeded the average fair value of the Company's share
price or when the accretion to redemption value of convertible securities per ordinary share obtainable on conversion exceeds basic net earnings per ordinary share,
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,
2004
2005
2006
Convertible debt
214,792
36,300
—
Employee stock options
98,468
71,841
96,479
Call options with Goldman Sachs International
214,792
214,792
214,792
Convertible redeemable preference shares
—
344,067
325,144
The conversion price of convertible debt during the period outstanding was S$4.7980 per share
(equivalent to approximately US$26.7701 per ADS). The weighted average exercise prices of
employee stock options outstanding were $2.36, $2.04 and $1.89 as of December 31, 2004, 2005
and 2006, respectively. The call options have a per share exercise
price of S$1.60 as of
December 31, 2006. The conversion price of the convertible redeemable preference shares is
$0.8719 per share.
2.
Related Parties
(a)
Temasek and affiliates
The Company is a majority owned subsidiary of ST Semiconductors, which is 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:
2004
2005
2006
Affiliates of Temasek
Services purchased from STATS ChipPAC
$
19,104
$
12,872
$
10,625
Property, plant and equipment purchased
415
4,016
1,762
Services purchased
2,178
883
531
Interest income received
2,853
—
—
Management fees paid
2,739
—
—
Sub-lease rental billed for leasehold land from JTC
2,460
2,416
3,170
Rental billed for leasehold land from Ascendas
335
331
108
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)
Included in receivables from related parties and payables to related parties are amounts due
from or to affiliates of Temasek:
December 31,
2005
2006
Amounts due from affiliates of Temasek
$
217
$
8
Amounts due to affiliates of Temasek
$
8,008
$
2,763
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. The Jurong Town Corporation ("JTC") is a
statutory board established by the Singapore government to develop and manage industrial
estates in Singapore. Fab 1 was built on land leased by the Company from Ascendas Land
(Singapore) Pte Ltd ("Ascendas"), a private company wholly-owned by JTC. Following the
cessation of Fab 1 operations in March 2004, the Company classified its leasehold interest in
Fab 1 as held for sale. The sale was completed in January 2006.
Fabs 2, 3, 5 (occupied by SMP), 6 (occupied by CSP) and 7 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 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.
The Company has in 2006 leased an additional plot of land from Terra which in turn leased the
land from JTC. The lease runs until 2030. The Company intends to use this additional plot of
land primarily for ancillary purposes to support the Company's business operations.
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 between 4% to 9%
per annum.
Rental expense for land leased from related parties for the years ended December 31, 2004,
2005 and 2006 was $2,795, $2,747 and $2,768, respectively.
Minimum future rental payments on non-cancellable operating leases of land from the above
related parties as of December 31, 2006 are as follows:
Payable in year ending December 31,
2007
$
2,616
2008
2,762
2009
2,923
2010
3,097
2011
3,287
Thereafter
67,861
$
82,546
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)
(b)
SMP
The Company has a 49% ownership 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 gain (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 difference in the equity
income of SMP recorded as compared to a 49% ratio is an increase of $17,417, $5,758 and
$18,380 for the years ended December 31, 2004, 2005 and 2006. The share of retained
post-formation results recorded was a deficit of $20,681 as compared to a surplus of $17,363
using the 49% ratio and a surplus recorded of $15,359 as compared to a surplus of $35,023
using the 49% ratio as of December 31, 2005 and 2006, respectively.
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 and Agere have entered into an assured supply and demand agreement with SMP under
which the intention was to ensure that all of the fixed costs of SMP are recovered by
allocating all of its wafer capacity to the Company and Agere in accordance with the
respective parties' equity interest in SMP and each party will bear the fixed costs
attributable to its allocated capacity. These billings, if any, do not change the equity in
income (loss) of SMP that the Company recognizes in its consolidated statements of
operations. No amounts were payable by the Company under this agreement for 2004, 2005 and
2006, respectively.
In 2004, the Company and Agere entered into an agreement pursuant to which the Company and
Agere agreed to annually reimburse any losses suffered by SMP that are attributable to the
respective parties. SMP did not suffer any loss that was attributable to the Company in 2004,
2005 and 2006 and accordingly no reimbursements were payable by the Company to SMP under this
agreement for these years.
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 gain (loss) that is included in
the Company's consolidated statements of operations and consolidated balance sheets.
The Company purchased $1,641, $218 and $75 of processed wafers from SMP for the years ended
December 31, 2004, 2005 and 2006, respectively.
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 $9,622, $8,811 and $9,480 in the years ended
December 31, 2004, 2005 and 2006, respectively.
The Company bought plant and equipment of $Nil, $11 and $Nil from SMP during 2004, 2005 and
2006, respectively. The Company also sold plant and equipment of $505, $53 and $Nil to SMP
during 2004, 2005 and 2006, 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, 2004, 2005 and 2006 was $15,307,
$15,662 and $15,958, respectively.
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)
Included in receivables from related parties and payables to related parties are amounts due
from or to SMP:
December 31,
2005
2006
Amounts due from SMP
$
7,694
$
8,724
Amounts due to SMP
$
94
$
819
The balances with SMP are unsecured, interest free and repayable within 12 months.
Investment in SMP
December 31,
2005
2006
Cost (net of return of capital)
$
104,668
$
88,324
Share of retained post-formation (losses) gains
(20,681
)
15,359
Share of accumulated other comprehensive losses
(10
)
(1
)
Dividends received
(29,460
)
(67,638
)
$
54,517
$
36,044
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 authorized a return of 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. In 2005, the Company received
$17,300 arising from the return of capital approved in 2005. In October 2006, the board of
directors of SMP approved a second capital reduction which was subsequently approved by the
High Court of Singapore and filed with the Accounting and Corporate Regulatory Authority of
Singapore in November 2006. The Company's entitlement arising from the second return of
capital from SMP was $19,061. In 2006, the Company received an additional $16,913 arising from
both the first and the second return of capital from SMP.
Shown below is summarized financial information for SMP:
December 31,
2005
2006
Current assets
$
71,101
$
72,063
Property, plant and equipment
55,758
21,972
Other assets
34
55
Current liabilities
(31,311
)
(40,616
)
Other liabilities
(8
)
(19
)
Shareholders' deficit
$
95,574
$
53,455
2004
2005
2006
Net revenue
$
303,570
$
201,345
$
197,932
Gross profit
34,827
4,875
38,010
Operating income
30,070
449
34,885
Net income
20,706
1,486
36,040
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)
3.
Cash and Cash Equivalents and Restricted Cash
December 31,
2005
2006
Cash at
banks, money market funds and cash on hand
$
393,083
$
362,120
Short-term deposits with banks
426,773
356,862
$
819,856
$
718,982
Short-term deposits with banks consist of fixed deposits with original maturities of
90 days or less.
Under the terms of the Exim Guaranteed Loan agreement which is described in Note 14, the
Company is required to maintain on deposit with the lender 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 and 2006, restricted cash amounted to $2,832 and $43,063
respectively, and consists of interest-bearing money market funds.
4.
Marketable Securities
At December 31, 2005
Unrealized
Unrealized
Cost
Gains
(Losses)
Fair Value
Current
Available-for-sale securities:
Equity securities
$
10,196
$
—
$
(2,729
)
$
7,467
At December 31, 2006
Unrealized
Unrealized
Cost
Gains
(Losses)
Fair Value
Current
Available-for-sale securities:
Equity securities
$
2,673
$
—
$
(390
)
$
2,283
No realized gains or losses were recorded for the years ended December 31, 2004 and 2005.
Proceeds from sale of available-for-sale securities were $5,990 in 2006. Gross realized gains
from sale of available-for-sale securities were $348 in 2006. The Company also recorded losses
amounting to $2,698 as a result of an other-than-temporary impairment assessment in 2006.
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)
The following table shows the fair value and gross unrealized losses recorded in accumulated
other comprehensive income (loss) of the Company's available-for-sale equity securities,
aggregated by the length of time the securities have been in a continuous unrealized loss
position.
At December 31,
Less than 12 months
Greater than 12 months
Total
2005
Unrealized
Unrealized
Unrealized
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
)
At December 31,
Less than 12 months
Greater than 12 months
Total
2006
Unrealized
Unrealized
Unrealized
Fair Value
(Losses)
Fair Value
(Losses)
Fair Value
(Losses)
Available-for-sale
securities:
Equity securities
$
2,283
$
(390
)
$
—
$
—
$
2,283
$
(390
)
The Company's investments in available-for-sale equity securities at December 31, 2005 and
2006 consist of investments in the common stock of two companies in the semiconductor
industry, both of which are in an unrealized loss position as at the respective balance sheet
dates. The fair value of the investments was based on quoted share prices at the balance sheet
date. When determining whether the investments were other-than-temporarily impaired, the
Company considered industry analyst reports on the outlook of the semiconductor industry and
the two companies, the length of time that market value has been less than cost, the financial
condition and near term prospects of the issuers 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. Based on this evaluation, the Company does not consider these investments to be
other-than-temporarily impaired at December 31, 2005 and 2006.
5.
Receivables, net
December 31,
2005
2006
Trade receivables
$
181,079
$
230,590
Allowance for doubtful accounts
(991
)
(1,149
)
Allowance for sales credits and returns
(13,901
)
(6,827
)
Trade receivables, net of allowances
166,187
222,614
Receivables from related parties
7,911
8,732
Other receivables
6,666
12,015
$
180,764
$
243,361
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)
Movement in the allowance for doubtful accounts is as follows:
2004
2005
2006
Beginning
$
1,083
$
1,178
$
991
Utilized in year
(38
)
—
(4
)
Charge for the year
1,106
420
466
Reversal of specific allowances due to collection
(973
)
(607
)
(304
)
Ending
$
1,178
$
991
$
1,149
Movement in the allowance for sales credits and returns is as follows:
2004
2005
2006
Beginning
$
9,556
$
6,537
$
13,901
Utilized in year
(7,769
)
(10,940
)
(13,353
)
Charge for the year
4,750
18,304
6,279
Ending
$
6,537
$
13,901
$
6,827
6.
Inventories
December 31,
2005
2006
Raw materials
$
6,895
$
13,306
Work-in-progress
121,871
137,214
Consumable supplies and spares
5,474
6,527
$
134,240
$
157,047
7.
Other Current Assets
As of December 31, 2005, the Company had a refundable deposit placed with a vendor of $109,581
to secure wafer capacity. The deposit was fully refunded during 2006.
8.
Technology Licenses, net
Weighted average
amortization
period (years)
December 31,
December 31,
2005
2006
2005
2006
Technology licenses, at cost
$
168,787
$
178,043
6
6
Accumulated amortization
(62,175
)
(93,052
)
Technology licenses, net
$
106,612
$
84,991
F-25
Table of Contents
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — in US Dollars
In thousands (except per share data)
Amortization amounted to $16,263, $24,616 and $30,877 for 2004, 2005 and 2006, respectively.
Estimated amortization for future periods is as follows:
2007
$
31,563
2008
30,950
2009
16,369
2010
5,834
2011
240
Thereafter
35
$
84,991
9.
Property, Plant and Equipment, net
December 31,
2005
2006
Cost
Buildings
$
269,276
$
265,324
Mechanical and electrical installations
612,340
636,796
Equipment and machinery
3,893,041
4,131,234
Office and computer equipment
144,834
163,787
Assets under installation and construction
140,733
519,584
Total cost
$
5,060,224
$
5,716,725
Accumulated depreciation and amortization
$
3,010,529
$
3,443,606
Property, plant and equipment, net
$
2,049,695
$
2,273,119
Depreciation amounted to $420,217, $481,874 and $471,617 for the years ended December 31,
2004, 2005 and 2006, respectively.
Capitalized interest relating to property, plant and equipment amounted to $15,177, $19,032
and $12,062 in the years ended December 31, 2004, 2005 and 2006, respectively.
For assets under capital leases, total cost was $45,933 and $77,930 at December 31, 2005 and
2006 respectively and accumulated amortization was $2,886 and $7,500 at December 31, 2005 and
2006 respectively. Amortization of assets under capital leases, included in depreciation
expense, was $Nil, $2,886 and $4,614 for the years ended December 31, 2004, 2005 and 2006
respectively.
10.
Other Non-current Assets
As of December 31, 2006, the Company had a refundable deposit placed with a vendor of
$9,533 to secure wafer capacity. The deposit is refundable according to the utilization of
such allocated capacity or at the end of the agreed period of such allocated capacity. The
deposit is initially recorded at the net present value of payments due pursuant to its
contractual terms. The related discount, which is offset by an equal amount of deferred
expense, is amortized to interest income using the effective interest rate method. Deferred
expense is amortized to cost of revenue over the term of the deposit using the
straight-line method. The deposit is classified based on maturity, except that the amounts
are considered current if it is probable that the deposits will be refunded within one
year.
F-26
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
December 31,
2005
2006
Trade and accrued purchases
$
106,299
$
104,680
Purchases of property, plant and equipment
52,280
193,742
Payables to related parties
8,102
3,582
$
166,681
$
302,004
12.
Other Current Liabilities
December 31,
2005
2006
Accrued employee related expenses and bonuses
$
24,619
$
43,350
Customer capacity guarantee deposits
58,410
33,137
Accrued interest
41,612
30,494
Customer prepayment
30,889
19,247
Other accrued expenses
5,857
4,136
Other current liabilities
55,058
20,217
$
216,445
$
150,581
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 guaranteed 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 guaranteed 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 earnings over the term of the deposits 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.
The Company received 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. The receipt was recorded as operating cash flows in the consolidated statements of
cash flows.
13.
Income Taxes
The Company has been granted pioneer status under the Economic Expansion Incentives (Relief
from Income Tax) Act (Chapter 86) ("EEIA") of Singapore for:
•
the manufacture of integrated circuits using submicron technology at
Fab 2 for a ten-year period beginning July 1, 1996. The pioneer
status expired on June 30, 2006;
•
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
(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.
F-27
Table of Contents
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — in US Dollars
In thousands (except per share data)
Under the EEIA, 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 in which pioneer status is effective, subject to compliance with certain
conditions, income arising from the pioneer trade is exempt from Singapore income tax.
During the period in which post-pioneer status or development and expansion incentive status
is effective, subject to compliance with certain conditions, income arising from the
incentive activities is taxed at a concessionary rate of 10%. Income arising from activities
not covered under any of the abovementioned incentives (hereinafter referred to as
non-qualifying income) is taxed at the normal Singapore corporate tax rate, which was 20% for
the years ended December 31, 2004, 2005 and 2006. Thus, the income tax expenses for the
years ended December 31, 2004, 2005 and 2006 are primarily on non-qualifying income, such as
interest income, rental income and income from the sale of wafers manufactured by
technologies that are not granted preferential tax treatment. Based on these tax incentives,
income tax is assessed at the individual fab level.
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 down 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 normal corporate
tax rate. During 2004, the relevant authority agreed to deem the Company as having complied
with all the conditions and continued the grant of the development and expansion incentive
status until December 31, 2004. Accordingly, the Company revised its accruals based on the
concessionary tax rate of 10% and reduced its tax provision by $9,784 for the year ended
December 31, 2004.
Under Singapore tax law, loss carryforwards and tax depreciation of property, plant and
equipment (hereinafter referred to as wear and tear allowances), which are determined at the
fab level, are deductible to the extent of income before loss carryforwards and wear and tear
allowances. Unutilized losses and wear and tear allowances can be carried forward
indefinitely to set off against income in future tax years, subject to compliance with certain
conditions. As of December 31, 2005 and 2006, the Company has unutilized wear and tear
allowance carryforwards of approximately $1,583,000 and $1,742,000 respectively. The Company
does not have any loss carryforwards as of December 31, 2005 and 2006.
Income (loss) before income taxes consists of the following:
2004
2005
2006
Singapore
$
9,942
$
(147,595
)
$
89,024
Foreign
1,403
994
1,654
Total
$
11,345
$
(146,601
)
$
90,678
F-28
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 tax expense consists of the following:
2004
2005
2006
Current expense (benefit) — Singapore
$
5,798
$
13,848
$
22,011
— Foreign
292
(17
)
573
Deferred expense (benefit) — Singapore
(1,428
)
(800
)
1,502
— Foreign
112
(34
)
(162
)
$
4,774
$
12,997
$
23,924
A reconciliation of the expected tax expense (benefit) computed by applying the Singapore
statutory tax rate of 20% for 2004, 2005 and 2006 to income (loss) before income taxes to
income tax expense is as follows:
2004
2005
2006
Income tax expense (benefit) computed at the
Singapore statutory tax rate
$
2,269
$
(29,320
)
$
18,136
Non-deductible research and development expenses
898
473
16,726
Non-deductible pre-pioneer operating losses
5,412
13,084
—
Other non-deductible expenses
6,272
3,721
7,137
Effect of pioneer status, including losses and
allowances not recognized as deferred tax
benefit
6,263
27,561
(4,502
)
Effect of post-pioneer status
(2,263
)
—
(6,833
)
Non-taxable decrease in equity method investment
(5,512
)
(1,332
)
(7,208
)
Effect of change in concessionary tax status
(6,884
)
—
—
All other items, net
(1,681
)
(1,190
)
468
Income tax expense
$
4,774
$
12,997
$
23,924
For the years ended December 31, 2004 and 2006, the pioneer status had the effect of
increasing (decreasing) basic and diluted net earnings per ordinary share by $(0.00) and
$0.00 and basic and diluted net earnings per ADS by $(0.02) and $0.02, respectively.
For the year ended December 31, 2005, the pioneer status had the effect of (increasing)
decreasing basic and diluted net (loss) per ordinary share by $(0.01) and basic and diluted
net (loss) per ADS by $(0.11).
Deferred tax assets and deferred tax liabilities, which are substantially non-current and
relate to Singapore, consist of the following:
December 31,
2005
2006
Deferred tax liabilities
Property, plant and equipment
$
(802
)
$
(2,105
)
Intangible assets
(1,000
)
(662
)
Unremitted offshore income
—
(2,554
)
$
(1,802
)
$
(5,321
)
Deferred tax assets
Unutilized wear and tear allowances
$
316,550
$
263,437
Property, plant and equipment
7,112
11,598
Other accrued expenses
8,191
12,545
331,853
287,580
Valuation allowance
(322,413
)
(273,814
)
$
9,440
$
13,766
Net deferred tax assets
$
7,638
$
8,445
F-29
Table of Contents
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — in US Dollars
In thousands (except per share data)
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 net deferred tax assets is dependent on the
availability of future taxable income during the periods in which those assets will be
reversed. Management considers the scheduled reversal of deferred tax liabilities, projected
future taxable income, and tax planning strategies in making this assessment. The valuation
allowance is established for deferred tax assets that cannot be objectively supported as more
likely than not to be realized by the Company.
Based on the historical level of taxable income specific to certain fabs, management has
concluded that it could not objectively support that sufficient future taxable income will be
realized and that therefore it is more likely than not that deferred tax assets will not be
realizable. As a result of the assessment a valuation allowance of $322,413 and $273,814 for
these fabs' net deferred tax assets has been recorded as at December 31, 2005 and 2006,
respectively. The Company expects to continue to maintain valuation allowances on future tax
benefits for such fabs until objective positive evidence is sufficient to support reversal of
the valuation allowance based upon current and preceding years' results of operations and
anticipated future taxable income levels. Management has, however, concluded that a
valuation allowance on $7,638 and $8,445 of net deferred tax assets arising from other
operations as at December 31, 2005 and 2006 respectively, was not required. This is because
it is more likely than not that these operations will generate sufficient future taxable
income to realize the related net deferred tax assets.
The net change in the valuation allowance during the year ended December 31, 2006 was a
decrease of $48,599. The decrease is due to the derecognition of deferred tax
assets for temporary differences that are now expected to reverse during the tax-exempt pioneer period
rather than the taxable post-pioneer period.
The Company recorded an increase in deferred tax assets and valuation allowance in the
amounts of $3,993 and $1,846, respectively, as a result of the cumulative effect adjustment
under SAB108 (see Note 1(c)).
14.
Long-term Debt and Obligations under Capital Leases
Long-term debt consists of:
December 31,
2005
2006
Floating rate loans:
CSP Syndicated Loan
$
214,533
$
—
SMBC/OCBC Term Loan
300,000
—
Exim Guaranteed Loan
122,124
324,277
Bank of America Term Loan
50,000
50,000
2.5% senior convertible notes due 2006
97,155
—
5.75% senior notes due 2010
371,161
371,904
6.00% amortizing bonds due 2010
46,703
38,433
6.25% senior notes due 2013
—
297,405
6.375% senior notes due 2015
246,540
246,805
Other
(324
)
2,836
1,447,892
1,331,660
Less: Current installments of long-term debt
(319,634
)
(123,629
)
Long-term debt, excluding current installments
$
1,128,258
$
1,208,031
Obligations under capital leases:
2005
2006
Minimum future lease payments
$
63,931
$
124,194
Amount representing interest at rates of 6.2% to 7.8%
(20,336
)
(47,255
)
Present value of minimum future lease payments
43,595
76,939
Less: Current installments
(2,819
)
(3,998
)
Obligations under capital leases, excluding current installments
$
40,776
$
72,941
F-30
Table of Contents
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — in US Dollars
In thousands (except per share data)
2005
2006
Current installments of:
Long-term debt
$
319,634
$
123,629
Obligations under capital leases
2,819
3,998
$
322,453
$
127,627
Non-current portion, excluding current installments:
Long-term debt
$
1,128,258
$
1,208,031
Obligations under capital leases
40,776
72,941
$
1,169,034
$
1,280,972
Weighted Average
Interest Rates As of
December 31,
2005
2006
Debt obligations at floating rates
5.11
%
5.80
%
Debt obligations at fixed rates
5.91
%
6.08
%
Obligations under capital leases
6.50
%
7.08
%
CSP's U.S. dollar syndicated floating rate loan was 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 for an amount of $820,000 which was fully drawn down. The loan bore 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 was payable semi-annually and principal was payable
in six semi-annual installments which commenced in March 2004. The loan matured and was
fully repaid during 2006.
The SMBC/OCBC Term Loan was 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 bore interest at LIBOR plus 1.75% and
was payable semi-annually. The loan was fully repaid in April 2006 using the proceeds from
the issuance of the 6.25% senior notes due in 2013.
The Exim Guaranteed Loan is from J.P. Morgan, guaranteed by the Export-Import Bank of the
United States, for a maximum of $653,131. The loan is divided into two tranches, of which one
tranche of $324,277 had been fully drawn down as of December 31, 2006. Principal repayment of
the first tranche is payable semi-annually over five years, beginning on January 16, 2007.
The availability period for the other tranche is until December 15, 2008. 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.
The senior unsecured convertible notes ("Convertible Notes") bore a coupon rate of 2.50%
per annum and had a yield to maturity of 5.25% per annum. In September 2005, pursuant to a
cash tender offer ("Tender Offer") for any and all of its $575,000 original principal amount
of the Convertible Notes outstanding, $477,845 original principal amount of the Convertible
Notes, representing approximately 83.1% of the Convertible Notes, were purchased. The
remaining Convertible Notes matured and were fully redeemed on April 2, 2006.
F-31
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 notes due 2010 ("Senior Notes due 2010") with face value of $375,000 were
issued at a price of 98.896% of the principal amount. The senior notes due 2015 ("Senior Notes
due 2015") with face value of $250,000 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 due 2010 and Senior Notes due 2015 constitute senior, unsecured obligations of
the Company.
Convertible redeemable preference shares (refer to Note 15) and 6% amortizing bonds due 2010
("Amortizing Bonds") have 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.
In 2006, the Company issued senior notes due 2013 ("Senior Notes due 2013") with a
face value of $300,000 at a price of 99.053% of the principal amount. Interest is payable at
the rate of 6.25% per annum on April 4 and October 4 of each year, beginning on October 4,
2006. The Senior Notes due 2013 mature on April 4, 2013, and constitute senior, unsecured
obligations of the Company.
As of December 31, 2006, other long-term debt represents the cumulative fair value
change of the Senior Notes due 2013 due to changes in interest rates commencing on the date
the Company designated an interest rate swap transaction as a fair value hedge of this debt.
The Senior Notes and Amortizing Bonds include a company call option and an investor put
option. If the Company were to exercise the call option, investors would receive an amount
equal to the outstanding principal amount, plus any accrued and unpaid interest through the
call/redemption date. If the investors were to exercise the put option, they would receive an
amount equal to 101% of the outstanding principal amount, plus any accrued and unpaid interest
to the put/repayment date. Therefore, the sum of the amounts received by the investors in the
event of exercise of the call or put options would not significantly differ from the recorded
value.
The Company evaluated the call and put options included in the Senior Notes and
Amortizing Bond in accordance with SFAS No. 133 and Derivatives Implementation Group ("DIG")
Issue B16 "Embedded Derivatives: Calls and Puts in Debt Instruments" ("DIG Issue B16"). Based
on its evaluation, the Company determined that the call and put options are clearly and
closely related to the debt instrument. Therefore these embedded derivatives have not been
bifurcated.
Annual maturities of long-term debt as of December 31, 2006 are as follows:
Payable in year ending December 31,
2007
$
123,629
2008
74,164
2009
74,730
2010
450,332
2011
64,855
Thereafter
550,000
$
1,337,710
These amounts represent the expected repayments in each of the periods indicated and do not
include the unamortized debt discount relating to the senior notes, which are reported as a
direct reduction to the face amounts of the senior notes.
F-32
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 has total unutilized banking facilities of $591,763 and $591,400 for
short-term advances, term loans and bankers' guarantees as of December 31, 2005 and 2006,
respectively. Facilities as of December 31, 2006 include $200,000 that will expire on March
30, 2007.
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, 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 on incurring further indebtedness, creating security interests
over assets, payment of dividends, disposal of assets and mergers and corporate restructuring.
The obligations under capital leases include contracts for supply of gases used by the
Company's fabrication facilities. The Company has assessed that such supply contracts contain
a lease pursuant to the consensus reached in EITF Issue 01-8, "Determining Whether An
Arrangement Contains A Lease", and are accounted for as capital leases.
Minimum future lease payments under capital leases for equipment and machinery as of December
31, 2006 are as follows:
Payable in year ending December 31,
2007
$
9,323
2008
9,323
2009
9,323
2010
9,323
2011
9,323
Thereafter
77,579
Total minimum lease payments
$
124,194
15.
Convertible Redeemable Preference Shares
The holders of the convertible redeemable preference shares ("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,
ADSs at a conversion price of $0.8719 per Ordinary Share at any time 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.
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.
F-33
Table of Contents
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — in US Dollars
In thousands (except per share data)
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
of $8,443.24 per Preference Share 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 rate method. Such accretion
adjusts net income (loss) available to ordinary shareholders. Accretion charge for the years
ended December 31, 2005 and 2006 was $3,196 and $9,476, respectively.
During 2006, 2 Preference Shares were converted and 18,924 of ordinary shares were issued as
a result of the conversion.
The Preference Shares include call and put options, which the Company has evaluated under the
provisions of SFAS No. 133 and DIG Issue B16. For purposes of assessing if the puts and calls
are closely related to the Preference Shares, the Company has referred to DIG Issue B16 as the
Preference Shares are akin to a debt instrument because they have a mandatory redemption
feature at maturity and holders are not entitled to vote at the Company's general meetings nor
are they entitled to receive dividends or otherwise participate in earnings. The Preference
Shares do not embody any claim to residual interest of the Company. Upon exercise of the call
or put options, investors would receive an amount equal to the accreted value of their shares
and does not constitute an accelerated repayment of the redemption principal amount of $10,000
per Preference Share. The call and put options are considered to be clearly and closely
related to the Preference Shares. Therefore these embedded derivatives have not been
bifurcated.
F-34
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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)
16.
Shareholders' Equity
Ordinary Share Capital
In August 2004, the Company entered into a bilateral
option transaction with Goldman Sachs International as counter-party.
Under the transaction, the Company had a choice of physical or cash
settlement. The counter-party could 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 would
receive approximately $200,000. The number of ordinary shares under
the option transaction was equal to the number of shares that were
originally planned for issuance under the Convertible Notes. The option
transaction, which was contractually separate from the Convertible
Notes, was exercisable by the counter-party from January 2, 2005
and expired on April 2, 2006, matching the maturity date of the
Convertible Notes. Goldman Sachs International did not exercise its
rights under the option transaction.
Accumulated Deficit
Singapore law allows dividends to be paid only out of the Company's net profits for the year
or retained earnings. Shareholders of ordinary shares are not liable for Singapore income
tax on dividends paid by the Company out of its tax exempt profits from pioneer activities
and net profits after deduction of tax at the concessionary rate from post pioneer or
development and expansion 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 tax at the
normal corporate tax rate 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-residents 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-qualifying chargeable income constitutes a final tax. Companies that have moved to the
one-tier system can henceforth pay dividends that are exempted from Singapore income tax in
the hands of their shareholders.
During the transitional period, the Company has up to December 31, 2007 to utilize any
available franking tax credit balance under the old imputation system to pay a franked
dividend to its shareholders. The Company has approximately $54,000 and $52,400 of available
balances under the old imputation system as of December 31, 2005 and 2006, respectively.
Accumulated deficit includes $(20,681) and $15,359 of post-formation (losses) gains of SMP as
of December 31, 2005 and 2006, respectively.
Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss consists of the following:
December 31,
2005
2006
Cumulative foreign currency translation loss
$
52,659
$
52,091
Net unrealized cash flow hedging losses
2,036
1,350
Net unrealized losses on available-for-sale securities
2,729
390
$
57,424
$
53,831
The foreign currency translation loss, net unrealized losses on available-for-sale securities
and net unrealized cash flow hedging losses are not adjusted for income taxes because such
losses are generally not tax deductible.
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 increased by 30,488 shares. The total shares provided under the 1999 Option Plan are hence 227,648 shares. 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 Company issues new shares upon exercise of options. The remaining shares available for future grants are 90,521
and 81,727 as of December 31, 2005 and 2006, respectively.
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.
F-35
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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 contractual term of options does not exceed 10 years from the date of grant. Upon
leaving employment of the Company, employees are given a specified period to exercise
outstanding options. 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.
The weighted-average grant-date fair value of share options granted, the total intrinsic
value of share options exercised and the total fair value of share options vested during the
years ended December 31, 2004, 2005 and 2006 were as follows:
2004
2005
2006
Weighted-average grant-date fair value of share options granted
$
0.63
$
0.47
$
0.43
Total intrinsic value of share options exercised
$
557
$
249
$
320
Total fair value of share options vested
$
25,561
$
26,717
$
14,495
Stock option activity for all outstanding options and the corresponding price information for
the years ended December 31, 2004, 2005 and 2006 were as follows:
Weighted
Average
Number
Exercise
of options
Price
Outstanding at January 1, 2004
104,223
$
2.67
Granted
20,905
$
0.93
Expired
(919
)
$
1.65
Exercised
(1,074
)
$
0.46
Forfeited
(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
Forfeited
(10,223
)
$
2.41
Outstanding at December 31, 2005
113,480
$
2.04
Granted
16,666
$
0.77
Expired
(1,958
)
$
2.30
Exercised
(2,432
)
$
0.55
Forfeited
(5,913
)
$
2.01
Outstanding at December 31, 2006
119,843
$
1.89
Exercisable at end of year
76,720
$
2.51
Changes in the number of unvested share options during the year ended December 31, 2006,
together with the corresponding weighted-average grant date fair values and the status of
unvested options at December 31, 2006, were as follows:
Weighted
Average
Number
grant date
of options
fair value
Unvested at January 1, 2006
48,214
$
0.66
Granted
16,666
$
0.43
Vested
(18,885
)
$
0.77
Forfeited
(2,872
)
$
0.57
Unvested at December 31, 2006
43,123
$
0.52
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)
Information regarding outstanding and exercisable share options as of December 31, 2006,
was as follows:
Options outstanding
Weighted
average
Weighted
remaining
average
Number of
contractual
exercise
Intrinsic
Range of exercise prices
options
term
price
value
$0.39 to $1.00
68,671
7.4 years
$
0.73
$
1,891
$1.06 to $1.95
20,466
4.7 years
$
1.41
$
2,618
$2.14 to $2.44
13,815
4.4 years
$
2.32
$
477
$5.81
9,781
3.8 years
$
5.81
$
—
$8.31
7,110
3.3 years
$
8.31
$
—
119,843
$
4,986
Options exercisable
Weighted
average
Weighted
remaining
average
Number of
contractual
exercise
Intrinsic
Range of exercise prices
options
term
price
value
$0.39 to $1.00
28,760
6.4 years
$
0.70
$
1,583
$1.06 to $1.95
17,272
4.5 years
$
1.42
$
2,168
$2.14 to $2.44
13,797
4.4 years
$
2.32
$
477
$5.81
9,781
3.8 years
$
5.81
$
—
$8.31
7,110
3.3 years
$
8.31
$
—
76,720
$
4,228
The options vest over one to five years and expire on dates ranging from February 2007
to October 2016.
Income from continuing operations, income before income taxes and net income for the
year ended December 31, 2006 were reduced by $7,376 as a result of the adoption of SFAS No.
123(R). Total share-based compensation expense recognized for the year ended December 31,
2006 was:
2006
Cost of revenue
$
2,565
Research and development
712
Sales and marketing
1,031
General and administrative
3,068
Total share-based compensation expense
$
7,376
Per
ordinary
share
Per ADS
Net share-based compensation expense
Basic
$
0.00
$
0.03
Diluted
$
0.00
$
0.03
F-37
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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)
As of December 31, 2006, there was $8,498 of total unrecognized compensation costs
related to share options scheduled to be recognized over a weighted average period of 3
years.
Cash proceeds of $1,456 were received from option exercises during the year ended December
31, 2006.
As share-based compensation cost is not tax deductible in Singapore, the recognition of
the share-based compensation expense did not result in income tax benefits.
The fair values of the option grants awarded during the years ended December 31, 2004,
2005 and 2006 were estimated on the date of grant using the Black-Scholes option-pricing
model with the following assumptions.
2004
2005
2006
Risk free interest rate
2.97% to 4.14%
4.06% to 4.64%
4.59% to 5.22%
Expected volatility
61.94% to 65.04%
58.75% to 61.04%
40.45% to 57.86%
Expected term
5 to 8 years
5 to 9 years
3 to 6.25 years
Dividend yield
0.00%
0.00%
0.00%
Expected volatilities are based on historical volatility rates of the Company's
ordinary shares. For options awarded during the years ended December 31, 2004 and 2005, the
expected term is based on the contractual term of the grant, vesting periods, and past
exercise and post-vesting forfeiture behavior. For options awarded during the year ended
December 31, 2006, the expected term is determined using the simplified approach as permitted
by Staff Accounting Bulletin No. 107 ("SAB 107"). The risk-free rate for periods within the
contractual term of the award is based upon observed interest rates appropriate for the term
of the Company's employee stock options.
Share-based compensation expense recognized in the consolidated statements of operations for
the year ended December 31, 2006 was based on awards ultimately expected to vest after
adjusting for estimated future pre-vesting forfeitures. SFAS No. 123(R) requires forfeitures
to be estimated at the time of grant and revised, if necessary, in subsequent reporting
periods if actual forfeitures differ from those estimates. Pre-vesting forfeitures were
estimated to be between approximately 1% to 21% for the year ended December 31, 2006 based
on historical pre-vesting forfeitures. In the Company's pro forma information disclosures
required under SFAS No. 123 for the periods prior to fiscal year 2006, the Company accounted
for forfeitures as they occurred.
Options to purchase 595, 406 and 390 shares of the Company were granted to employees of
SMP in 2004, 2005 and 2006, respectively. SMP bears the share-based compensation expense 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.
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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 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 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 expense; 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. 2,348 and 1,156
shares were issued at prices from $0.56 to $0.63 (S$0.92 to S$1.06) and $0.77 to $0.79
(S$1.22 to S$1.28) during the years ended 2005 and 2006, respectively.
The ESPP 2004 Plans are non-compensatory as the purchase price is 95% of the fair market
value of the ordinary shares applied to the Company's average ordinary share price on the
last trading day of the offer period. Therefore, the Company does not recognize compensation
expense related to shares sold under the ESPP 2004 Plans.
F-39
Table of Contents
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,
2005
2006
Contracts for capital expenditures
$
205,689
$
525,200
Minimum future rental payments on non-cancellable operating leases, excluding amounts
payable to related parties disclosed in Note 2, as at December 31, 2006, are as follows:
Payable in year ending December 31,
2007
$
3,811
2008
2,157
2009
947
2010
739
2011
527
Thereafter
827
$
9,008
Rental expense, excluding amounts payable to related parties disclosed in Note 2, for the
years ended December 31, 2004, 2005 and 2006 was $5,473, $5,660 and $5,687 respectively.
The Company has a patent license agreement with Agere 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 Agere in SMP falls below 49%. In exchange the Company has waived capacity shortfall
obligations from Agere. The patent license agreement continues for as long as the joint
venture agreement between the parties remains.
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, 2005 and 2006 are $200,000 and $335,000 respectively.
F-40
Table of Contents
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — in US Dollars
In thousands (except per share data)
(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 accrues costs associated with these
matters when they become probable and reasonably estimable. The Company does not believe 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.
The Company submits tax returns and claims with government tax authorities which are
subject to agreement and audit by those tax authorities. Actual taxes to be paid could vary
due to the outcome of audits completed by the tax authorities. The Company records tax
contingencies as tax payable for certain positions which may be challenged by the tax
authorities and which the Company may not ultimately prevail in defending. The income tax
contingencies mainly relate to transfer pricing positions and gains which may be taxable. As
of December 31, 2005 and 2006, the income tax contingencies recorded as tax payable amounted
to $5,070 and $6,759, respectively. The amounts recorded are determined based upon the
Company's best estimate of possible assessments by the tax authorities and are adjusted, from
time to time, based upon changing facts and circumstances.
Effective January 1, 2003, the Company measures its obligations associated with its
retirement of tangible long-lived assets in accordance with the provisions of SFAS No. 143,
"Accounting for Asset Retirement Obligations". As at December 31, 2006, the liability
related to the requirements in the Company's lease agreements for the potential return of
buildings to tenantable condition and the potential return of land on which fabs have been
built to its original condition amounted to $17,909.
19.
Derivative Instruments
At December 31, 2006
Derivative Instrument
Notional Amount
Average Rate/Price
Maturity
Forward Contracts
— Yen Forward Contracts
6,102,865
114.43/USD
2007
— Euro Forward Contracts
9,137
1.31/Euro
2007
— SGD Forward Contracts
13,871
1.54/USD
2007
Interest rate swap
300,000
LIBOR + 0.93%
2013
2006 Option (shares)
214,800
S$1.60/S$2.15
2011
In March 2006, the Company entered into a call option transaction ("2006 Option") with
Goldman Sachs International ("GS") to replace the call option transaction that the Company
had previously entered into with GS in August 2004 ("2004 Option") that
expired on April 2, 2006. Under the 2006 Option, GS may purchase up to 214,800 of the
Company's ordinary shares at a price of S$1.60 per share in the
first year and S$2.15 per share
thereafter. If the 2006 Option is exercised in
full and physically settled the Company will receive approximately $300,000 (based on an
exchange rate of $1.00 = S$1.54). If the 2006 Option is exercised in full and physically settled in the first year, the Company will receive
approximately $222,911 (based on an exchange rate
$1.00 = S$1.54).
Under the terms of the 2006 Option, if the option is exercised the Company has the right
either to issue new shares to GS or to settle the transaction in cash. If the 2006 Option is
not exercised or terminated earlier, it will expire on March 29, 2011.
F-41
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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 the first year of the 2006 Option, the Company has the right to terminate the 2006
Option early in whole or in part upon the first time that the closing price of the ordinary shares equals or exceeds S$1.75 on each of any 20 business days in a consecutive 30 business
day period. If the Company elects to do so and elects to settle by delivering shares, GS
will have the right but not the obligation to buy from the Company from time to time during
the following 30 business days such number of the ordinary shares up to the amount
terminated at S$1.60 per share. As of December 31, 2006, the
Company's right to terminate the 2006 Option had not been
triggered.
From the second year of the 2006 Option, the Company has the right to terminate the 2006
Option early in whole or in part if the closing price of the ordinary shares is equal to or
exceeds S$2.6875 on each of any 20 business days in any consecutive 30 business day period.
If the Company elects to exercise this right of termination, GS will be required to buy from
the Company such number of the ordinary shares relating to the terminated portion of the 2006
Option at S$2.15 per share.
The 2006 Option is a derivative instrument that is dual indexed to the Company's own
stock and the Singapore Dollar currency exchange rate. As a result, the 2006 Option is not eligible for the scope
exception of paragraph 11(a) of SFAS No. 133 and is accounted for
as a derivative in accordance with SFAS No. 133, with changes in its fair value recorded in
earnings.
The fair value of the 2006 Option at issuance was approximately $6,040 and has been recorded
as a liability. In subsequent periods, changes in the fair value of the 2006 Option have been
recorded in earnings as other income (loss).
To protect against volatility of future cash flows caused by changes in exchange rates, the
Company may use forward exchange contracts, currency options and currency swap instruments
for forecasted transactions such as operating expenses and capital purchases. To manage
interest rate risk, the Company may utilize interest rate derivative instruments to modify
the interest characteristics of its outstanding debts.
Most of the Company's derivatives are formally designated as foreign currency cash flow and
fair value hedges except for certain foreign currency forward contracts and the 2006 Option.
These certain foreign currency forward contracts relate 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
maximum tenure for these transactions is 18 months. The Company uses foreign currency
forward contracts to manage these risks and designates them as foreign currency cash-flow
hedges. The Company uses foreign currency forward contracts, which match the terms of the
individual foreign currency exposures, and as a result, any ineffectiveness of the Company's
hedges is negligible. For the year ended December 31, 2006, the ineffective amount
reclassified from other comprehensive income into earnings was a loss of $269 and was
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 depreciation commences for the asset related to
the purchase commitment.
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 US dollar loan. The amount relating to time value, which is excluded from the
assessment of hedge effectiveness, was $(989) in the year ended December 31, 2006. For the
year ended December 31, 2006, the ineffective amount reclassified into earnings (Other
income (loss), net) was a gain of $806. The interest rate cap contracts matured following
the maturity of the loan.
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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 Company entered into interest rate swap contracts to hedge fixed-rate interest
obligations associated with Convertible Notes issued in April 2001, with the effect of
swapping the fixed-rate interest obligations to floating-rate obligations based on LIBOR
rates. The Company designated these interest rate swap contracts as fair-value hedges. The
interest rate swaps were terminated following the completion of the tender offer for the
Convertible Notes in September 2005.
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 both recorded in earnings as interest
expense. Net recognized gains (losses) arising from ineffectiveness of these fair value
hedges were $(1,771), $(5,246) and $Nil in the years ended December 31, 2004, 2005 and 2006,
respectively.
In 2006, the Company issued $300,000 Senior Notes due 2013 with semi-annual interest
payments. The Company entered into an interest rate swap ("IRS") contract to hedge the
fixed-rate interest obligations of 6.25% per annum associated with the Senior Notes due 2013
with the effect of swapping the fixed-rate interest obligations to a floating-rate
obligation based on US LIBOR rates. In August 2006, the Company designated the IRS as a
fair-value hedge of changes in the fair value of the Senior Notes due 2013 attributable to
changes in the benchmark interest rate, which is US dollar six-month LIBOR. From that date,
changes in the fair value of the derivative and changes in the fair value of the item being
hedged are recorded in earnings (other income (loss), net). Net recognized gain arising from
ineffectiveness of fair value hedges was $574 in the year ended December 31, 2006.
The estimated net amount of existing losses from cash flow hedges expected to be
reclassified into earnings within the next year is $(156). Net realized losses recognized
from cash flow hedges were $(469) and $(133) for the years ended December 31, 2005 and 2006,
respectively.
The components of other comprehensive income (loss) related to derivative and hedging
activities consist of the following:
December 31,
2005
2006
Beginning
$
(2,634
)
$
(2,036
)
Cumulative effect adjustment on adoption of SAB 108
—
1,906
Reclassification of cash flow hedging losses into earnings
469
133
Share of cash flow hedging activity gains of SMP
17
9
Net unrealized gains (losses) on change in cash flow
hedging derivative fair values
112
(1,362
)
Ending
$
(2,036
)
$
(1,350
)
The Company exposes itself to credit risk and market risk by using derivative instruments to
hedge exposures of changes in foreign currency rates and interest rates. Credit risk is the
failure of the counterparty to perform under the terms of the derivative contract. When the
fair value of a derivative contract is positive, the counterparty owes the Company, which
creates credit risk for the Company. When the fair value of a derivative contract is
negative, the Company owes the counterparty and, therefore, it 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. The maximum amount of loss due to credit risk associated with these
financial instruments is their respective fair values as stated in Note 20.
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 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-43
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,
2005
2006
Carrying
Estimated
Carrying
Estimated fair
amount
fair value
amount
value
Asset/(Liability)
$
$
$
$
Long term debt
(1,447,892
)
(1,466,425
)
(1,331,660
)
(1,336,045
)
Forward foreign exchange contracts
29
29
91
91
Forward foreign exchange contracts
(344
)
(344
)
(1,724
)
(1,724
)
Embedded
foreign currency derivatives in purchase contracts
—
—
297
297
Interest rate swap
—
—
3,109
3,109
Interest rate cap
1,394
1,394
—
—
2006 Option
—
—
(7,466
)
(7,466
)
Cash and cash equivalents, related party receivables and payables, accounts receivable and
accounts payable.
The carrying amounts approximate fair value in view of the short term
nature of these balances.
Marketable securities.
Marketable securities are recorded at fair value (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 debt with 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.
Embedded foreign currency derivatives in purchase
contracts.
The fair value is estimated by reference to movements
in exchange rates between contract date and balance sheet date.
Interest rate swap.
The fair value is estimated using market quotations for interest rate
swaps with similar terms, adjusted where necessary for maturity differences.
Interest rate cap.
The fair value is estimated by obtaining quotes from brokers.
2006 Option.
The fair value is based on an external
market value quotation. Such market value quotation is derived using equity option pricing variables
including Chartered's ordinary share price, 2006 Option strike price, 2006 Option date of expiration, prevailing market interest rate, Chartered's underlying share price volatility; adjusted for the availability of
stock borrow, market liquidity of Chartered's traded instruments and early termination features.
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.
F-44
Table of Contents
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — in US Dollars
In thousands (except per share data)
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 as 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.
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,
2004
2005
2006
Revenues
USA
$
618,743
$
743,431
$
1,079,187
Taiwan
161,420
112,089
122,881
Japan
33,258
33,496
23,861
Singapore
3,392
8,995
37,716
Others
115,318
134,723
150,880
$
932,131
$
1,032,734
$
1,414,525
December 31,
2005
2006
Property, Plant and Equipment, net
Singapore
$
2,048,913
$
2,271,012
Others
782
2,107
$
2,049,695
$
2,273,119
Years ended December 31,
2004
2005
2006
Revenue by Major Customer:
Customer A
20.7
%
22.3
%
24.0
%
Customer B
—
19.3
18.9
Customer C
—
—
10.3
Customer D
13.4
*
*
Customer E
10.1
*
*
*
less than 10% of net revenue for the year
F-45
Table of Contents
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — in US Dollars
In thousands (except per share data)
22.
Other Operating Expenses, net
Other operating expenses, net primarily consists of:
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.
A restructuring charge of $4,558, $Nil and $Nil in December 31, 2004, 2005 and 2006
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
An impairment charge of $3,938 recorded in 2005 on certain plant and equipment which were
initially classified as held for sale during the period ended June 30, 2004. These assets
were written down to $3,878, which was their fair value less costs to sell at June 30,
2005. 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 offers to purchase the assets but did not receive
any offers it considered reasonable. 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. The sale was
completed in January 2006 for a total consideration of $6,500. A gain on this sale of $2,611
was recorded in 2006.
A foreign exchange gain (loss) of $1,320, $(356) and $(6,125) for the years ended December
31, 2004, 2005 and 2006 respectively.
23.
Other Income (loss), net
In 2004, other income (loss), net included the recognition of a gain of $14,330 from the
sale of technology to CSMC Technologies Corporation.
In 2005, other income (loss), 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.
In 2006, other income (loss), net included an other-than-temporary impairment loss of $2,698 on
available-for-sale securities.
F-46