Edgar Filing: ADVANCED SEMICONDUCTOR ENGINEERING INC

Form F-3

As filed with the Securities and Exchange Commission on December 15, 2003

Registration No. 333-

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM F-3

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

LOGO

(Exact name of Registrant as specified in its charter)

ADVANCED SEMICONDUCTOR ENGINEERING, INC.

(Translation of Registrant’s name into English)

Republic of China

3674

Not Applicable

(State or other jurisdiction of incorporation

or organization)

(Primary Standard Industrial Classification Code Number)

(I.R.S. Employer

Identification No.)

26 Chin Third Road

Nantze Export Processing Zone

Nantze, Kaohsiung, Taiwan

Republic of China

(8867) 361-7131

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

CT Corporation System

111 Eighth Avenue

New York, New York 10011

(212) 894-8940

(Name, address, including zip code, and telephone number, including area code, of agent for service)

With copies to:

Show-Mao Chen, Esq.

Davis Polk & Wardwell

18th Floor, The Hong Kong Club Building

3A Chater Road

Hong Kong

852-2533-3300

William Y. Chua, Esq.

Sullivan & Cromwell LLP

28th Floor

Nine Queen’s Road Central

Hong Kong

852-2826-8688

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. ¨

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. ¨

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered(1)	Proposed Maximum Aggregate Offering Price(2)		Amount of Registration Fee

Common shares, par value NT$10 per share(3)		US$317,055,000		US$25,650

US$150,000,000 zero coupon convertible notes due 2009(4)		US$150,000,000		US$12,135

Total	US$	467,055,000	US$	37,785

(1)

All common shares and convertible notes initially offered and sold outside the United States that may be resold from time to time in the United States either as part of the distribution or within 40 days after the later of the effective date of this registration statement and the date the securities are first bona fide offered to the public. Neither the common shares nor the convertible notes are being registered for the purpose of sales outside the United States.

(2)

Estimated solely for the purpose of determining the amount of the registration fee in accordance with Rule 457(c) and (i) under the Securities Act of 1933. In the case of the common shares, the registration fee is calculated on the basis of the average of the high and the low prices of the common shares represented by the American depositary shares on the New York Stock Exchange on December 9, 2003. In the case of the convertible notes, the registration fee is calculated on the basis of proposed offering price of the convertible notes.

(3)

Includes the registration of 45,000,000 common shares represented by 9,000,000 American depositary shares that the underwriters have the option to purchase to cover overallotments, if any. American depositary shares evidenced by American depositary receipts issuable upon deposit of the common shares registered hereby have been registered pursuant to a separate registration statement on Form F-6 filed with the Commission on August 31, 2000 (File No. 333-12468). Each American depositary share represents five common shares.

(4)

Includes the registration of (a) US$15,000,000 aggregate principal amount of the convertible notes that the underwriters have the option to purchase to cover overallotments, if any; and (b) such currently indeterminate number of common shares as shall be issuable from time to time upon conversion of the convertible notes.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion. Dated December 15, 2003.

LOGO

60,000,000 American Depositary Shares

Advanced Semiconductor Engineering, Inc.

Representing 300,000,000 Common Shares

and

US$135,000,000 Zero Coupon Convertible Notes due 2009

Advanced Semiconductor Engineering, Inc., or ASE Inc., is offering 60,000,000 American depositary shares, or ADSs. Each ADS represents five common shares, par value NT$10 per share. The ADSs are evidenced by American depositary receipts, or ADRs. Concurrently, ASE Inc. is offering US$135,000,000 zero coupon convertible notes due 2009. Neither the ADSs nor the convertible notes are being offered in the Republic of China. The ADSs offered by this prospectus will initially be issued as temporary ADSs, which are not fungible with our existing ADSs. For a period of five business days after the closing date, owners of temporary ADSs will not be able to withdraw the underlying common shares from our ADS facility.

Our outstanding common shares are listed on the Taiwan Stock Exchange under the symbol “2311”. The closing price of our common shares on the Taiwan Stock Exchange on December 12, 2003 was NT$31.50 per share, which is equivalent to approximately US$0.93, assuming an exchange rate of NT$34.03 = US$1.00. Our outstanding ADSs are listed on the New York Stock Exchange under the symbol “ASX”. The closing price of our ADSs on the New York Stock Exchange on December 12, 2003 was US$4.55 per ADS. Until the expiration of the five-business day period described above, the ADSs offered by this prospectus are expected to trade on the New York Stock Exchange under the temporary symbol “ASX Pr”. Application has been made to list the convertible notes on the Luxembourg Stock Exchange.

See “Risk Factors” beginning on page 15 to read about factors you should consider before buying the ADSs or the convertible notes.

Neither the United States Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

	Per ADS	Total (ADS Offering)	Per Convertible Note	Total (Convertible Note Offering)
Initial price to public	US$	US$	%	US$
Underwriting discount	US$	US$	%	US$
Proceeds, before expenses, to ASE Inc.	US$	US$	%	US$

ASE Enterprises Limited, or ASE Enterprises, has granted the underwriters an option exercisable within 30 days from the date of this prospectus to purchase up to an additional 9,000,000 ADSs at the initial price to public less the underwriting discount, solely to cover overallotments, if any. If the underwriters exercise this overallotment option, the proceeds, before expenses, to the selling shareholder will be US$ per ADS. ASE Inc. has also granted the underwriters an option exercisable within 30 days from the date of this prospectus to purchase up to an additional US$15,000,000 aggregate principal amount of the convertible notes at the initial price to public less the underwriting discount, solely to cover overallotments, if any.

The underwriters expect to deliver the ADSs and the convertible notes through the book-entry transfer facilities of The Depository Trust Company, or DTC, against payment in U.S. dollars in New York, New York on , 2004.

Goldman Sachs International

Prospectus dated , 2004.

These securities may not be offered or sold, directly or indirectly, in the Republic of China, except as permitted by applicable laws of the Republic of China.

The ADSs and the convertible notes may only be offered, sold, transferred or delivered in or from The Netherlands, as part of their initial distribution or as part of any re-offering, and neither this prospectus nor any other document in respect of the offerings may be distributed or circulated in The Netherlands, other than to individuals or legal entities which include, but are not limited to, banks, brokers, dealers, institutional investors and undertakings with a treasury department, who or which trade or invest in securities in the conduct of a business or profession.

In connection with the offerings, Goldman Sachs International or any person acting for it may overallot or effect transactions with a view to supporting the market price of the ADSs or the convertible notes and, subject to applicable laws of the Republic of China, the common shares at a level higher than that which might otherwise prevail for a limited period of time after the issue date. However, there may be no obligation on Goldman Sachs International or its agent to do this. Such stabilization, if commenced, may be discontinued at any time, and must be brought to an end after a limited period. See “Underwriting”.

Unless otherwise specified, the information contained herein assumes that the underwriters’ overallotment option has not been exercised. All references contained herein to the common shares outstanding include common shares held by our consolidated subsidiaries, unless otherwise specified.

This prospectus contains translations of NT dollar amounts into U.S. dollars at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from NT dollars to U.S. dollars and from U.S. dollars to NT dollars were made at the noon buying rate in The City of New York for cable transfers in NT dollars per U.S. dollar as certified for customs purposes by the Federal Reserve Bank of New York, or the noon buying rate, as of June 30, 2003, which was NT$34.61 to US$1.00. We make no representation that the NT dollar or U.S. dollar amounts referred to herein could have been or could be converted into U.S. dollars or NT dollars, as the case may be, at any particular rate or at all. On December 12, 2003, the noon buying rate was NT$34.03 to US$1.00.

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements appearing elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the discussion of the risks of investing in our ADSs and convertible notes under “Risk Factors”, before deciding to buy our ADSs or convertible notes.

Business

We are the world’s largest independent provider of semiconductor packaging services and, together with our subsidiary ASE Test Limited, or ASE Test, the world’s largest independent provider of semiconductor testing services. Our services include semiconductor packaging, design and production of interconnect materials, front-end engineering testing, wafer probing and final testing services. We offer packaging and testing services on both stand-alone and turnkey bases. Turnkey services consist of the integrated packaging, testing and direct shipment of semiconductors to end users designated by our customers. As part of our integrated packaging solution, we also design and produce advanced and cost competitive interconnect materials for both internal use in our packaging operations and for sale to third-party customers.

We believe that we are better positioned than our competitors to meet the requirements of semiconductor companies worldwide for outsourced packaging and testing services across a wide range of end-use applications because of:

our ability to provide a broad range of advanced semiconductor packaging and testing services on a large scale turnkey basis;

our expertise in developing and providing advanced packaging, interconnect materials and testing technologies and solutions;

our scale of operations and financial position, which enable us to make significant investments in capacity expansion and research and development as well as to make selective acquisitions;

our geographic presence in key centers of outsourced semiconductor and electronics manufacturing; and

our long-term relationships with providers of complementary semiconductor manufacturing services, including our strategic alliance with Taiwan Semiconductor Manufacturing Company Limited, or TSMC, the world’s largest dedicated semiconductor foundry.

We believe that the trend for semiconductor companies to outsource their packaging and testing requirements is accelerating as semiconductor companies increasingly rely on independent providers of foundry and advanced packaging and testing services. In response to the increased pace of new product development and shortened product life and production cycles, semiconductor companies are increasingly seeking independent packaging and testing companies that can provide turnkey services in order to reduce time-to-market. We believe that our expertise and scale in advanced technology and our ability to integrate our broad range of solutions into turnkey services allow us to benefit from the accelerated outsourcing trend and better serve our existing and potential customers.

We believe that we have benefited, and will continue to benefit, from our geographic location in Taiwan. Taiwan is currently the largest center for outsourced semiconductor manufacturing in the world and, in addition, has a high concentration of electronics manufacturing service providers, which are the

end users of our customers’ products. Our close proximity to foundries and other providers of complementary semiconductor manufacturing services is attractive to our customers who wish to take advantage of the efficiencies of a total semiconductor manufacturing solution by outsourcing several stages of their manufacturing requirements. Our close proximity to end users of our customers’ products is attractive to our customers who wish to take advantage of the logistical efficiencies of direct shipment services that we offer. We believe that, as a result, we are well positioned to meet the advanced semiconductor engineering and manufacturing requirements of our customers.

We have a global base of over 200 customers, including:

Ÿ Agilent Technologies, Inc.		Ÿ NVIDIA Corporation
Ÿ Altera Corporation		Ÿ ON Semiconductor Corp.
Ÿ ATI Technologies Inc.		Ÿ Qualcomm Incorporated
Ÿ Conexant Systems, Inc.		Ÿ RF Micro Devices, Inc.
Ÿ IBM Corporation		Ÿ Silicon Integrated Systems Corp.
Ÿ Koninklijke Philips Electronics N.V.		Ÿ STMicroelectronics N.V.
Ÿ LSI Logic Corporation		Ÿ Sunplus Technology Co., Ltd.
Ÿ Motorola, Inc.		Ÿ VIA Technologies, Inc.

Strategy

Our objective is to provide leading-edge semiconductor packaging and testing services and interconnect materials design and production capabilities which set industry standards and to lead and facilitate the industry trend towards outsourcing semiconductor manufacturing requirements. The principal elements of our strategy are to:

maintain our focus on providing a complete range of semiconductor packaging and testing services;

continue to focus on advanced technological, processing and interconnect materials capabilities;

strategically expand production capacity;

continue to leverage our presence in key centers of semiconductor and electronics manufacturing; and

strengthen and develop strategic relationships with providers of complementary semiconductor manufacturing services.

Our Corporate Structure

The following chart illustrates our corporate structure and our effective equity interest in each of our principal operating subsidiaries and affiliates as of October 31, 2003. The following chart does not include wholly-owned intermediate holding companies.

LOGO

(1)	The common shares of ASE Inc. are listed on the Taiwan Stock Exchange under the symbol “2311”. The ADSs of ASE Inc. are listed on the New York Stock Exchange under the symbol “ASX”.

(2)	The ordinary shares of ASE Test are quoted for trading on the Nasdaq National Market under the symbol “ASTSF”. ASE Test’s Taiwan depositary shares, which represent its ordinary shares, are listed for trading on the Taiwan Stock Exchange under the symbol “9101”.

(3)

On October 28, 2003, we entered into a merger agreement with ASE (Chung Li) Inc. and ASE Material Inc. pursuant to which ASE (Chung Li) Inc. and ASE Material Inc. will be merged with and into ASE Inc., with ASE Inc. as the surviving corporation. For more information on the pending merger, see “Business—Recent Developments”.

(4)	The common shares of Universal Scientific Industrial Co., Ltd. are listed on the Taiwan Stock Exchange under the symbol “2350”.

(5)	The common shares of Hung Ching Development & Construction Co., Ltd. are listed on the Taiwan Stock Exchange under the symbol “2527”.

(6)	The remaining shares of ASE Material Inc. are owned by the management and employees of ASE Material Inc., the management and employees of ASE Inc. and its affiliates, as well as a strategic investor.

We are incorporated under the laws of the Republic of China, or the ROC. Our principal executive offices are located at 26 Chin Third Road, Nantze Export Processing Zone, Nantze, Kaohsiung, Taiwan, ROC and our telephone number at the above address is (8867) 361-7131.

Recent Developments

On October 28, 2003, we entered into a merger agreement with ASE (Chung Li) Inc., or ASE Chung Li, and ASE Material Inc., or ASE Material, pursuant to which ASE Chung Li and ASE Material will be merged with and into ASE Inc., with ASE Inc. as the surviving corporation. We currently own 72.4% of the common shares of ASE Chung Li and 61.4% of the common shares of ASE Material. The merger is to be consummated by means of a share exchange pursuant to which each common share of ASE Chung Li not directly owned by ASE Inc. will be exchanged for 0.85 ASE Inc. common share and each common share of ASE Material not directly owned by ASE Inc. will be exchanged for 0.5 ASE Inc. common share. The merger agreement has been approved by the board of directors of each of ASE Inc., ASE Chung Li and ASE Material and by the shareholders of ASE Chung Li and ASE Material. The completion of the merger is conditional upon, among other things, (1) approval of the shareholders of ASE Inc., (2) the receipt of the relevant regulatory approvals, including the approvals of the ROC Securities and Futures Commission in connection with the merger, (3) approval of the Taiwan Stock Exchange in connection with the issuance of ASE Inc. common shares pursuant to the share exchange, and (4) consent from lenders under certain loan agreements. Assuming receipt of all necessary approvals and consents, we expect that the merger will be completed by July 1, 2004. ASE Chung Li was established in April 1999 to acquire Motorola’s packaging and testing facilities in Chung Li, Taiwan. ASE Material was established in December 1997 to design and produce interconnect materials.

On October 28, 2003, we entered into a joint venture agreement with Compeq Manufacturing Co. Ltd., or Compeq, to establish ASE-Compeq Technologies, Inc., which will focus on the design and production of interconnect materials for packaging semiconductors. Pursuant to the joint venture agreement, we will own 60% of the equity interest in ASE-Compeq Technologies, Inc. and Compeq will own the remaining 40% of the equity interest. The joint venture is subject to the approval of the ROC Fair Trade Commission. We expect that ASE-Compeq Technologies, Inc. will focus on meeting our substrates requirements and gradually expand its customer base to include integrated device manufacturers and other independent semiconductor packaging and testing companies.

For more information on the pending merger and joint venture, see “Business—Recent Developments”.

The Offerings

The offerings described in this prospectus consist of the ADS offering and the convertible note offering. The closing of one offering is not conditional upon the closing of the other offering.

The following information assumes that, unless otherwise indicated, (1) the underwriters do not exercise the overallotment option of ADSs granted by ASE Enterprises, and (2) the underwriters do not exercise the overallotment option of convertible notes granted by us. See “Underwriting”.

The ADS Offering

Offering price

US$ per ADS

ADSs offered by ASE Inc.

60,000,000 ADSs

ADSs offered by the selling shareholder

If the underwriters exercise the overallotment option of ADSs, ASE Enterprises, a company organized under the laws of Hong Kong, which held 19.3% of our outstanding common shares as of October 31, 2003, will sell up to 9,000,000 ADS in the ADS offering.

ADSs outstanding as of December 12, 2003

18,476,873 ADSs

Common shares outstanding after the ADS offering

3,880,280,000 common shares

ADS : common share ratio

1 : 5

Overallotment option

ASE Enterprises has granted the underwriters an option, exercisable within 30 days from the date hereof, to purchase up to an additional 9,000,000 ADSs, solely to cover overallotments, if any.

ROC share issuance procedures and temporary limitation on withdrawal of common shares from the ADS facility

In connection with the issuance by an ROC company of newly-issued common shares for cash, such as the newly-issued common shares underlying the ADSs being offered by us in this offering, settlement is initially made by delivery to the persons purchasing the newly-issued common shares of a certificate of payment representing the irrevocable right to receive such newly-issued common shares. On the closing date, we will initially deliver to the custodian for the depositary a certificate of payment evidencing the irrevocable right to receive the common shares offered by us in connection with this offering. No later than the second business day in the ROC following the

closing date, we are required to apply to the Taiwan Stock Exchange for listing of the master book-entry certificate of payment. It is expected that the Taiwan Stock Exchange will approve the listing of the master book-entry certificate of payment on the fourth business day in the ROC following the closing date. Immediately upon such listing, the certificate of payment we deliver to the custodian for the depositary on the closing date will be replaced by the master book-entry certificate of payment. When the master book-entry certificate of payment replaces the certificate of payment, DTC will be instructed to exchange the temporary ADSs initially issued in the ADS offering for ADSs which are fully fungible with existing ADSs. This process is expected to be completed within one New York business day of notice that the master book-entry certificate of has been received. As a result, for a period of five business days following the closing date, holders of ADSs offered by this prospectus will not be able to withdraw the underlying common shares from our ADS facility. Until the expiration of the five-business day period discussed above, the ADSs offered by this prospectus are expected to trade on the New York Stock Exchange under the temporary symbol “ASX Pr”. Except where the context otherwise requires, all references in this prospectus to the common shares represented by our ADSs assume that we have received the approval from the Taiwan Stock Exchange for the listing of the master book-entry certificate of payment, and during the period before receipt of the approval those references shall be deemed as references to the certificate of payment initially delivered to the custodian for the depositary.

Trading market for the common shares

The only trading market for the common shares is the Taiwan Stock Exchange. The common shares have been listed on the Taiwan Stock Exchange since 1989 under the symbol “2311”.

New York Stock Exchange symbol for ADSs

“ASX”

Temporary New York Stock Exchange symbol for ADSs offered by this prospectus

Until five business days after their initial delivery to investors, as described above, the ADSs offered by this prospectus are expected to trade on the New York Stock Exchange under the temporary symbol “ASX Pr”. A temporary symbol is necessary to distinguish the ADSs offered by this prospectus and the existing ADSs during the five-business day period.

Timing and settlement for ADSs

The ADSs are expected to be delivered against payment on , 2004. The ADRs evidencing the ADSs will be deposited with a custodian for, and registered in the name of a nominee

of DTC in New York, New York. In general, beneficial interests in the ADSs will be shown on, and transfers of these beneficial interests will be effected only through, records maintained by DTC and its direct and indirect participants.

The Convertible Note Offering

The offering

US$135,000,000 aggregate principal amount of the convertible notes are being offered.

Offering price

100%

Maturity date

, 2009

Overallotment option

We have granted the underwriters an option to purchase an additional US$15,000,000 aggregate principal amount of the convertible notes, solely to cover overallotments. See “Underwriting”.

Interest

The convertible notes will not bear interest.

Ranking

The convertible notes will be our direct, unconditional, unsubordinated and unsecured obligations, and will rank at least pari passu among themselves and with all of our other direct, unconditional, unsubordinated and unsecured obligations.

Conversion rights

Subject to certain conditions, each holder of the convertible notes will have the right during the conversion period (as defined herein) to convert its convertible notes (or any portion thereof being US$1,000 in principal amount or an integral multiple thereof) into common shares and, upon conversion may, subject to obtaining the necessary approvals and compliance with the terms and conditions of the deposit agreement and in accordance with applicable law, direct that the common shares issuable upon conversion be deposited with the depositary for issuance of ADSs, provided, however, that the conversion right during any closed period (as defined in “Description of Convertible Notes—Conversion—Conversion Right”) shall be suspended and the conversion period shall not include any such closed period. We have received approval from the ROC Securities and Futures Commission to permit holders to deposit the common shares received upon conversion into the ADS facility.

Subject to changes in ROC laws and regulations, we shall as soon as practicable but in no event more than five trading days from the conversion date, issue common shares to the converting holders or Citibank, N.A., as depositary, as the case may be.

Conversion price

The initial conversion price will be NT$ per share with a fixed exchange rate applicable on conversion of convertible notes of NT$ = US$1.00.

Repurchase at the option of the holders

Repurchase at the option of the holders upon a change of control

Unless the convertible notes have been previously redeemed, repurchased and canceled or converted, each holder shall have the right, at such holder’s option, to require us to repurchase all (or any portion of the principal amount thereof which is US$1,000 or any integral multiple thereof) of such holder’s convertible notes at a price equal to 100% of the principal amount of the convertible notes plus an amount that, together with the principal amount, would provide a holder of the convertible notes who purchased the convertible notes at the issue price on the original issue date with a gross compound yield of % per annum, calculated on a semi-annual basis, upon the occurrence of a change of control (as defined in “Description of Convertible Notes—Repurchase of Convertible Notes in the Event of Change of Control”). See “Description of Convertible Notes—Repurchase of Convertible Notes—Repurchase in the Event of Change of Control”.

Repurchase in the event of delisting

Unless the convertible notes have been previously redeemed, repurchased and canceled or converted, in the event that the common shares cease to be listed or admitted to trading on the Taiwan Stock Exchange or the ADSs cease to be listed or admitted to trading on the New York Stock Exchange, each holder shall have the right, at such holder’s option, to require us to repurchase all (but not less than all) of such holder’s convertible notes on the 20th business day after the trustee mails to each holder a notice regarding such delisting at a price equal to 100% of the outstanding principal amount thereof.

Redemption at our option

The convertible notes may be redeemed at our option, in whole or in part, at any time on or after at the early redemption price; provided that (a) the closing price (translated into U.S. dollars at the prevailing rate) of the common shares for a period

of 20 consecutive trading days is at least 130% of the conversion price (translated into U.S. dollars at the exchange rate of NT$ = US$ ) and (b) the applicable redemption date does not fall within a closed period.

Notwithstanding the foregoing, we may redeem all of the convertible notes at any time, on not less than 30 nor more than 60 days’ notice, at the early redemption price on the redemption date if at least 90% in aggregate principal amount of the convertible notes originally outstanding has been redeemed, repurchased and canceled or converted, provided that the applicable redemption date does not fall within a closed period.

Additional amounts

Payment of principal and interest and premium (if any) on the convertible notes will be made without withholding for or on account of certain taxes of the ROC or such other jurisdiction in which we are then organized or resident for tax purposes to the extent set forth under “Description of Convertible Notes—Additional Amounts”.

Tax redemption

If, as a result of certain changes relating to the tax laws in the ROC or such other jurisdiction in which we are then organized or resident for tax purposes, we become obligated to pay additional amounts, the convertible notes may be redeemed at our option, in whole but not in part, at the early redemption price, provided that such right cannot be exercised earlier than 45 days prior to the first date on which we would be obligated to make an additional amounts payment with respect to all or substantially all of the outstanding convertible notes.

Redemption amount at maturity

Unless the convertible notes have been previously redeemed, repurchased and canceled or converted, we will redeem the convertible notes on the maturity date at a redemption price equal to 100% of the outstanding principal amount thereof.

Negative pledge

Subject to certain exceptions, we will not, and will procure that none of our principal subsidiaries will, create or permit to subsist any lien to secure for the benefit of the holders of any international investment securities any sum owing in respect thereof or any guarantee or indemnity thereof without making effective provision to secure the convertible notes (a) equally and ratably with such international investment securities with a similar lien or (b) with such other security as shall be approved by a majority of the outstanding registered holders of the convertible notes. See “Description of Convertible Notes—Certain Covenants—Negative Pledge”.

Governing law

The indenture and the convertible notes will be governed by, and construed in accordance with, the laws of the State of New York.

Form and denomination

The convertible notes will be issued in the form of one or more fully registered global notes. The global notes will be deposited with, or on behalf of, DTC and registered in the name of Cede & Co. as DTC’s nominee. Interests in the global notes will be shown on, and transfers, conversions and redemptions thereof will be effected only through, records maintained by DTC and its participants. Except as described herein, convertible notes in certificated form will not be issued in exchange for the global notes or interests therein. The convertible notes will be denominated in principal amounts of US$1,000 and integral multiples thereof. See “Description of Convertible Notes—Book Entry; Delivery and Form”.

Listing

Application has been made to list the convertible notes on the Luxembourg Stock Exchange.

Delivery of the convertible notes

Delivery of the convertible notes, against payment in same-day funds, is expected on or about , 2004.

Use of Proceeds

ADS offering

The net proceeds to us from the ADS offering after deducting the underwriting discount and commissions and estimated offering expenses are expected to be approximately US$264.6 million (assuming an initial offering price of US$4.55 per ADS, which is based on the closing price of the ADSs on the New York Stock Exchange on December 12, 2003). We will not receive any proceeds from the sale of ADSs by ASE Enterprises if the underwriters’ overallotment option to purchase additional ADSs is exercised. We intend to use the net proceeds from the ADS offering to purchase raw materials and machinery and equipment. See “Use of Proceeds”.

Convertible note offering

The net proceeds from the convertible note offering after deducting the underwriting discount and commissions and estimated offering expenses are expected to be approximately US$133.5 million. If the underwriters’ overallotment option to purchase additional convertible notes is exercised in full, we will receive approximately US$14.8 million in additional net proceeds, after we deduct the underwriting discount and commissions and estimated offering expenses. We intend to use the net proceeds from the convertible note offering to repay some of our outstanding indebtedness. See “Use of Proceeds”.

Summary Consolidated Financial Information

The summary consolidated income statement data and cash flow data for the years ended December 31, 2000, 2001 and 2002 and for the six months ended June 30, 2003, and the summary consolidated balance sheet data as of December 31, 2001 and 2002 and as of June 30, 2003, set forth below are derived from our audited consolidated financial statements included in this prospectus and should be read in conjunction with, and are qualified in their entirety by reference to, these consolidated financial statements. Our consolidated financial statements as of and for the years ended December 31, 2000, 2001 and 2002 and our consolidated financial statements as of and for the six months ended June 30, 2003 have been audited by TN Soong & Co., independent public accountants, an associate member firm of Deloitte Touche Tohmatsu. TN Soong & Co. and Deloitte & Touche (Taiwan) combined to establish Deloitte & Touche effective June 1, 2003. The summary consolidated income statement data and cash flow data for the six months ended June 30, 2002, and the summary consolidated balance sheet data as of June 30, 2002, set forth below are derived from our unaudited consolidated financial statements included in this prospectus and should be read in conjunction with, and are qualified in their entirety by reference to, these consolidated financial statements. The summary consolidated income statement data and cash flow data for the years ended December 31, 1998 and 1999 and the summary consolidated balance sheet data as of December 31, 1998, 1999 and 2000 set forth below are derived from our audited consolidated financial statements not included in this prospectus. These consolidated financial statements have been audited by TN Soong & Co., independent public accountants, an associate member firm of Deloitte Touche Tohmatsu. Our consolidated financial statements have been prepared and presented in accordance with generally accepted accounting principles in the ROC, or ROC GAAP, which differ in material respects from generally accepted accounting principles in the United States, or U.S. GAAP. See notes 26 and 27 to our consolidated financial statements for a description of the principal differences between ROC GAAP and U.S. GAAP for the periods covered by these consolidated financial statements.

	As of and for the Year Ended December 31,												As of and for the Six Months Ended June 30,
	1998		1999		2000		2001		2002				2002		2003
	NT$		NT$		NT$		NT$		NT$		US$		NT$		NT$		US$
													(unaudited)
	(in millions, except earnings per share and per ADS data)
ROC GAAP:
Income Statement Data:
Net revenues	20,762.4		32,609.6		50,893.4		38,367.8		45,586.8		1,317.2		20,872.2		24,357.2		703.8
Cost of revenues	(15,468.1	)	(23,959.6	)	(35,567.3	)	(32,957.0	)	(38,492.2	)	(1,112.2	)	(17,984.4	)	(20,875.9	)	(603.2	)

Gross profit	5,294.3		8,650.0		15,326.1		5,410.8		7,094.6		205.0		2,887.8		3,481.3		100.6
Total operating expenses	(2,453.4	)	(3,801.4	)	(5,449.0	)	(5,872.9	)	(7,779.8	)	(224.8	)	(3,085.3	)	(3,523.6	)	(101.8	)

Operating income (loss)	2,840.9		4,848.6		9,877.1		(462.1	)	(685.2	)	(19.8	)	(197.5	)	(42.3	)	(1.2	)
Net non-operating income (expense)	(859.6	)	4,213.8		(1,473.5	)	(2,523.4	)	(2,024.5	)	(58.5	)	(798.1	)	(807.1	)	(23.3	)
Income tax benefit (expense)	150.8		(459.5	)	(1,065.8	)	199.2		1,140.3		32.9		313.0		511.8		14.8
Income before acquisition	—		(65.1	)	—		—		—		—		—		—		—
Extraordinary loss	—		—		—		(144.6	)	(34.6	)	(1.0	)	—		—		—
Minority interest in net loss (income) of subsidiary	(528.1	)	(743.1	)	(1,500.6	)	788.7		1,733.0		50.1		526.0		350.0		10.1

Net income (loss)	1,604.0		7,794.7		5,837.2		(2,142.2	)	129.0		3.7		(156.6	)	12.4		0.4

Earnings per common share:
Basic(1)	0.51		2.49		1.84		(0.66	)	0.04		0.00		(0.05	)	0.00		0.00
Diluted(1)	0.49		2.45		1.80		(0.66	)	0.04		0.00		(0.05	)	0.00		0.00
Dividends per common share(2)	7.20		1.07		3.15		1.70		—		—		—		0.03		0.00
Earnings per pro forma equivalent ADS:
Basic(1)	2.56		12.43		9.22		(3.29	)	0.21		0.01		(0.25	)	0.02		0.00
Diluted(1)	2.43		12.27		9.01		(3.29	)	0.21		0.01		(0.25	)	0.02		0.00
Number of common shares(3)	3,135.2		3,135.2		3,166.8		3,254.8		3,090.7		3,090.7		3,090.7		3,116.6		3,116.6
Number of pro forma equivalent ADSs	627.0		627.0		633.4		651.0		618.1		618.1		618.1		623.3		623.3

	As of and for the Year Ended December 31,												As of and for the Six Months Ended June 30,
	1998		1999		2000		2001		2002				2002		2003
	NT$		NT$		NT$		NT$		NT$		US$		NT$		NT$		US$
													(unaudited)
	(in millions, except earnings per share and per ADS data)

Balance Sheet Data:
Current assets:
Cash and cash equivalents	8,173.9		11,809.1		14,166.5		11,770.7		10,381.9		300.0		7,608.4		11,553.5		333.8
Short-term investments	647.2		216.3		1,682.7		4,601.2		2,038.0		58.9		3,986.0		3,063.1		88.5
Notes and accounts receivable	3,636.7		7,463.4		9,260.6		7,126.1		8,998.5		260.0		7,685.4		9,026.9		260.8
Inventories	1,744.8		2,449.7		3,246.3		2,768.4		3,131.7		90.5		2,923.6		3,551.6		102.6
Other	771.9		1,411.8		2,431.6		3,383.2		2,481.7		71.7		5,783.2		7,229.2		208.9

Total	14,974.5		23,350.3		30,787.7		29,649.6		27,031.8		781.1		27,986.6		34,424.3		994.6
Long-term investments	7,317.0		9,674.4		10,712.2		9,530.4		6,566.7		189.7		6,746.1		6,473.8		187.0
Properties	20,356.8		38,107.5		60,566.2		60,555.1		63,088.9		1,822.8		59,986.8		64,820.0		1,872.9
Other assets	1,125.9		952.8		1,275.6		1,342.3		2,640.2		76.3		1,973.0		4,212.5		121.7
Consolidated debits	3,237.3		5,245.8		4,999.5		5,248.9		5,541.8		160.1		5,759.0		5,099.6		147.4

Total assets	47,011.5		77,330.8		108,341.2		106,326.3		104,869.4		3,030.0		102,451.5		115,030.2		3,323.6

Short-term bank borrowings/loans(4)	6,810.2		9,868.2		13,768.0		13,983.1		13,453.8		388.7		16,181.2		17,773.9		513.6
Long-term bank borrowings/loans(5)	12,235.0		24,551.5		25,976.9		30,674.3		30,553.7		882.8		27,010.8		32,798.0		947.6
Other liabilities and minority interest	6,091.5		12,854.1		24,927.1		19,722.6		21,431.2		619.2		20,517.5		21,846.9		631.2

Total liabilities and minority interest	25,136.7		47,273.8		64,672.0		64,380.0		65,438.7		1,890.7		63,709.5		72,418.8		2,092.4

Shareholders’ equity	21,874.8		30,057.0		43,669.2		41,946.3		39,430.7		1,139.3		38,742.0		42,611.4		1,231.2

Cash Flow Data:
Net cash outflow from acquisition of fixed assets	(6,945.0	)	(9,869.2	)	(30,063.6	)	(11,565.7	)	(12,657.9	)	(365.7	)	(2,798.7	)	(8,022.0	)	(231.8	)
Depreciation and amortization	3,237.2		5,554.4		8,593.8		11,127.3		12,286.3		355.0		5,943.1		6,246.6		180.5
Net cash inflow from operations	5,194.2		7,017.2		17,459.9		11,578.4		11,313.8		326.9		5,218.7		6,585.1		190.3
Net cash inflow from sale of investments	290.5		7,889.3		—		195.3		—		—		—		2,850.5		82.4
Net cash outflow from investing activities(6)	(8,558.3	)	(11,782.7	)	(33,392.0	)	(15,051.2	)	(13,167.2	)	(380.4	)	(7,467.1	)	(6,464.1	)	(186.8	)
Net cash inflow (outflow) from financing activities(7)	589.3		8,569.0		17,607.3		603.5		530.5		15.3		(1,523.5	)	1,163.1		33.6

Segment Data:
Net revenues:
Packaging	16,867.4		24,523.0		38,028.8		28,898.2		35,515.4		1,026.2		16,252.0		19,008.1		549.2
Testing	3,131.3		7,793.2		12,768.4		9,459.2		10,060.6		290.7		4,617.9		5,287.0		152.8
Other	763.7		293.4		96.2		10.4		10.8		0.3		2.3		62.1		1.8
Gross profit:
Packaging	3,693.8		5,753.0		10,016.9		4,625.8		6,255.4		180.7		2,789.4		2,597.4		75.0
Testing	1,484.6		3,105.2		5,294.4		782.8		841.2		24.3		98.2		886.9		25.6
Other	115.9		(208.2	)	14.8		2.2		(2.0	)	(0.0	)	0.2		(3.0	)	(0.0	)

	As of and for the Year Ended December 31,								As of and for the Six Months Ended June 30,
	2000		2001		2002				2002		2003
	NT$		NT$		NT$		US$		NT$		NT$		US$
									(unaudited)
	(in millions, except earnings per share and per ADS data)

U.S. GAAP:
Income Statement Data:
Net revenues	50,893.4		38,367.8		45,586.8		1,317.1		20,872.2		24,357.2		703.8
Cost of revenues	37,081.2		34,538.3		39,308.2		1,135.7		18,696.6		21,274.8		614.8

Gross profit	13,812.2		3,829.5		6,278.6		181.4		2,175.6		3,082.4		89.0
Total operating expenses	5,820.8		6,209.9		9,294.2		268.5		2,864.3		3,209.7		92.7

Operating income (loss)	7,991.4		(2,380.4	)	(3,015.6	)	(87.1	)	(688.7	)	(127.3	)	(3.7	)
Net non-operating income (expense)	(1,502.5	)	(2,704.6	)	(2.793.8	)	(80.7	)	(726.5	)	(357.6	)	(10.3	)
Income tax benefit (expense)	(1,059.2	)	254.4		1,162.6		33.6		318.3		517.2		14.9
Minority interest in net loss (income) of subsidiary	(1,499.7	)	784.0		1,572.5		45.4		448.4		277.4		8.0

Net income (loss)	3,930.0		(4,046.6	)	(3,074.3	)	(88.8	)	(648.5	)	309.7		8.9

Earnings per common share:
Basic(1)	1.34		(1.32	)	(0.99	)	(0.03	)	(0.21	)	0.10		0.00
Diluted(1)	1.29		(1.32	)	(0.99	)	(0.03	)	(0.21	)	0.10		0.00
Earnings per pro forma equivalent ADS:
Basic(1)	6.69		(6.59	)	(4.97	)	(0.14	)	(1.05	)	0.50		0.01
Diluted(1)	6.47		(6.59	)	(4.97	)	(0.14	)	(1.05	)	0.50		0.01
Number of common shares(8)	2,938.0		3,071.2		3,090.7		3,090.7		3,090.7		3,116.6		3,116.6
Number of pro forma equivalent ADSs	587.6		614.2		618.1		618.1		618.1		623.3		623.3

Balance Sheet Data:
Current Assets:
Cash and cash equivalents			11,770.7		10.381.9		300.0		7,608.4		11,553.5		333.8
Short-term investments			4,642.1		2,040.0		58.9		4,002.8		3,067.9		88.7
Notes and accounts receivable			7,126.1		8,998.5		260.0		7,685.4		9,026.9		260.8
Inventories			2,768.4		3,131.7		90.5		2,923.6		3,551.6		102.6
Other			3,383.2		2,481.7		71.7		5,783.2		7,229.1		208.9

Total			29,690.5		27,033.8		781.1		28,003.4		34,429.0		994.8
Long-term investments			6,608.3		5,609.3		162.1		6,568.8		5,608.1		162.0
Properties			60,363.1		62,797.4		1,814.4		59,748.7		64,478.0		1,863.0
Other assets			1,371.0		2,679.7		77.4		2,007.2		4,257.5		123.0
Consolidated debits			4,331.6		3,227.0		93.2		5,248.8		3,198.0		92.4

Total assets			102,364.5		101,347.2		2,928.2		101,576.9		111,970.6		3,235.2

Short-term bank borrowings/loans(4)			13,983.1		13,453.8		388.7		16,181.2		17,773.9		513.6
Long-term bank borrowings/loans(5)			30,674.3		30,553.7		882.8		27,010.8		32,798.0		947.6
Other liabilities and minority interest			19,746.8		21,622.9		624.8		20,695.0		22,129.2		639.4

Total liabilities and minority interest			64,404.2		65,630.4		1,896.3		63,887.0		72,701.1		2,100.6

Shareholders’ equity			37,960.3		35,716.8		1,031.9		37,689.9		39,269.5		1,134.6

(1)	The numerator of both basic and diluted earnings per share is calculated with consideration of the adjustment of ASE Test’s basic and diluted earnings per share. See notes 19 and 28(i) to the consolidated financial statements.

(2)	Dividends per common share issued as a stock dividend.

(3)

Represents the weighted average number of shares after retroactive adjustments to give effect to stock dividends and employee stock bonuses. Beginning in 2002, common shares held by consolidated subsidiaries are classified for accounting purposes as “treasury stock”, and are deducted from the number of common shares outstanding.

(4)	Includes current portions of long-term debt and long-term payable for investments.

(5)	Excludes current portion of long-term debt and long-term payable for investments.

(6)	Includes proceeds from the sale of common shares, including common shares represented by global depositary shares or ADSs, by affiliates of ASE Inc. and proceeds from the sale of ordinary shares of ASE Test by ASE Inc.

(7)	Includes proceeds from primary offerings of common shares represented by ADSs by ASE Inc., and of ordinary shares by ASE Test.

(8)	Represents the weighted average number of shares after retroactive adjustments to give effect to stock dividends.

RATIO OF EARNINGS TO FIXED CHARGES

The following table sets forth, for the periods indicated, our ratio of earnings to fixed charges.

	Year Ended December 31,							Six Months Ended June 30,
	1998	1999	2000	2001		2002		2003
Ratio of Earnings to Fixed Charges:
in accordance with ROC GAAP	2.24	6.07	4.11	—	(1)	—	(2)	—	(3)
in accordance with U.S. GAAP	1.14	4.19	3.33	—	(4)	—	(5)	—	(6)

(1)	Under ROC GAAP our earnings were insufficient to cover our fixed charges by NT$1,346.7 million during the year ended December 31, 2001.

(2)	Under ROC GAAP our earnings were insufficient to cover our fixed charges by NT$731.5 million (US$21.1 million) during the year ended December 31, 2002.

(3)	Under ROC GAAP our earnings were insufficient to cover our fixed charges by NT$422.6 million (US$12.2 million) during the six months ended June 30, 2003.

(4)	Under U.S. GAAP our earnings were insufficient to cover our fixed charges by NT$2,767.9 million during the year ended December 31, 2001.

(5)	Under U.S. GAAP our earnings were insufficient to cover our fixed charges by NT$4,121.3 million (US$119.1 million) during the year ended December 31, 2002.

(6)	Under U.S. GAAP our earnings were insufficient to cover our fixed charges by NT$149.8 million (US$4.3 million) during the six months ended June 30, 2003.

The following table sets forth, for the periods indicated, our ratio of earnings to fixed charges on an as adjusted basis to give effect to the use of proceeds from the convertible bond offering to repay some of our outstanding indebtedness.

	Year Ended December 31,		Six Months Ended June 30,
	2002		2003
Ratio of Earnings to Fixed Charges:
in accordance with ROC GAAP	—	(1)	—	(2)
in accordance with U.S. GAAP	—	(3)	—	(4)

(1)	Under ROC GAAP our earnings were insufficient to cover our fixed charges by NT$709.2 million (US$20.5 million) during the year ended December 31, 2002, on an as adjusted basis.

(2)	Under ROC GAAP our earnings were insufficient to cover our fixed charges by NT$451.6 million (US$13.0 million) during the six months ended June 30, 2003, on an as adjusted basis.

(3)	Under U.S. GAAP our earnings were insufficient to cover our fixed charges by NT$4,099.0 million (US$118.4 million) during the year ended December 31, 2002, on an as adjusted basis.

(4)	Under U.S. GAAP our earnings were insufficient to cover our fixed charges by NT$178.8 million (US$5.2 million) during the six months ended June 30, 2003, on an as adjusted basis.

Fixed charges consist of interest expense on all indebtedness and capitalized interest.

RISK FACTORS

You should carefully consider the risks described below before making an investment decision. In particular, as we are a non-U.S. company, there are risks associated with investing in our ADSs or convertible notes that are not typical with investments in the shares of U.S. companies. Before making an investment decision, you should carefully consider all of the information contained in this prospectus, including the following risk factors.

Risks Relating to Our Business

Since we are dependent on the highly cyclical semiconductor industry and conditions in the markets for the end-use applications of our products, our revenues and earnings may fluctuate significantly.

Our semiconductor packaging and testing business is affected by market conditions in the highly cyclical semiconductor industry. All of our customers operate in this industry, and variations in order levels from our customers and service fee rates may result in volatility in our revenues and earnings. From time to time, the semiconductor industry has experienced significant, and sometimes prolonged, downturns. As our business is, and will continue to be, dependent on the requirements of semiconductor companies for independent packaging and testing services, any future downturn in the semiconductor industry would reduce demand for our services. For example, a worldwide slowdown in demand for semiconductors led to excess capacity and increased competition beginning in early 1998. As a result, price declines in 1998 accelerated more rapidly and, together with a significant decrease in demand, adversely affected our operating results in 1998. Prices for packaging and testing services improved due to an upturn in the industry in the second half of 1999 that continued through the third quarter of 2000, but have fallen since an industry downturn that commenced in the fourth quarter of 2000. This most recent worldwide downturn resulted in an even more significant deterioration in the average selling prices, as well as demand, for our services in 2001, and significantly and adversely affected our operating results in 2001. Although there has been a modest recovery in the semiconductor industry during 2002 and 2003, we expect the market conditions to continue to exert downward pressure on the average selling prices for our packaging and testing services. If we cannot reduce our costs to sufficiently offset any decline in average selling prices, our profitability will suffer and we may incur losses.

Market conditions in the semiconductor industry depend to a large degree on conditions in the markets for the end-use applications of semiconductor products, such as communications, personal computer and consumer electronics products. Any deterioration of conditions in the markets for the end-use applications of the semiconductors we package and test would reduce demand for our services, and would likely have a material adverse effect on our financial condition and results of operations. In the six months ended June 30, 2003, approximately 36.2%, 34.6% and 28.0% of our net revenues were attributable to the packaging and testing of semiconductors used in communications, personal computer, and consumer electronics applications, respectively. In 2002, approximately 34.4%, 35.4% and 28.8% of our net revenues were attributable to the packaging and testing of semiconductors used in communications, personal computer, and consumer electronics applications, respectively. Each of the markets for end-use applications is subject to intense competition and significant shifts in demand, which could put pricing pressure on the packaging and testing services provided by us and adversely affect our revenues and earnings.

A reversal or slowdown in the outsourcing trend for semiconductor packaging and testing services could adversely affect our growth prospects and profitability.

In recent years, semiconductor manufacturers that have their own in-house packaging and testing capabilities, known as integrated device manufacturers, have increasingly outsourced stages of the

semiconductor production process, including packaging and testing, to independent companies to reduce costs and shorten production cycles. In addition, the availability of advanced independent semiconductor manufacturing services has also enabled the growth of so-called “fabless” semiconductor companies that focus exclusively on design and marketing, and that outsource their manufacturing, packaging and testing requirements to independent companies. We cannot assure you that these integrated device manufacturers and fabless semiconductor companies will continue to outsource their packaging and testing requirements to third parties like us. A reversal of, or a slowdown in, this outsourcing trend could result in reduced demand for our services and adversely affect our growth prospects and profitability.

If we are unable to compete favorably in the highly competitive semiconductor packaging and testing markets, our revenues and earnings may decrease.

The semiconductor packaging and testing markets are very competitive. We face competition from a number of sources, including other independent semiconductor packaging and testing companies, especially those which offer turnkey packaging and testing services. We believe that the principal competitive factors in the markets for our products and services are:

ability to provide total solutions to customers;

technological expertise;

range of package types and testing platforms available;

ability to design and produce advanced and cost competitive interconnect materials;

ability to work closely with customers at the product development stage;

responsiveness and flexibility;

capacity;

production cycle time;

production yield; and

price.

We face increasing competition from other packaging and testing companies, as most of our customers obtain packaging or testing services from more than one source. In addition, some of our competitors may have access to more advanced technologies and greater financial and other resources than we do. Many of our competitors have shown a willingness to quickly and sharply reduce prices, as they did in 1998 and in 2001, in order to maintain capacity utilization in their facilities during periods of reduced demand. Although prices have stabilized, any renewed erosion in the prices for our packaging and testing services could cause our revenues and earnings to decrease and have a material adverse effect on our financial condition and results of operations.

Our profitability depends on our ability to respond to rapid technological changes in the semiconductor industry.

The semiconductor industry is characterized by rapid increases in the diversity and complexity of semiconductors. As a result, we expect that we will need to constantly offer more sophisticated packaging and testing technologies and processes in order to respond to competitive industry conditions and customer requirements. If we fail to develop, or obtain access to, advances in packaging or testing technologies or processes, we may become less competitive and less profitable. In addition, advances in technology typically lead to declining average selling prices for semiconductors packaged or tested with older technologies or processes. As a result, if we cannot reduce the costs associated with our services, the profitability on a given service, and our overall profitability, may decrease over time.

Our operating results are subject to significant fluctuations, which could adversely affect the market value of your investment.

Our operating results have varied significantly from period to period and may continue to vary in the future. Downward fluctuations in our operating results may result in decreases in the market price of the common shares, the ADSs and the convertible notes. Among the more important factors affecting our quarterly and annual operating results are the following:

changes in general economic and business conditions, particularly given the cyclical nature of the semiconductor industry and the markets served by our customers;

our ability to quickly adjust to unanticipated declines or shortfalls in demand and market prices for our packaging and testing services, due to our high percentage of fixed costs;

timing of capital expenditures in anticipation of future orders;

changes in prices of our packaging and testing services;

volume of orders relative to our packaging and testing capacity;

our ability to design and produce advanced and cost competitive interconnect materials;

our ability to obtain adequate packaging and testing equipment on a timely basis;

changes in costs and availability of raw materials, equipment and labor; and

earthquakes, drought and other natural disasters, as well as industrial accidents.

Due to the factors listed above, it is possible that our future operating results or growth rates may be below the expectations of research analysts and investors. If so, the market price of the common shares, the ADSs and the convertible notes, and thus the market value of your investment, may fall.

If we are not successful in developing and enhancing our in-house interconnect materials capabilities, our margins and profitability may be adversely affected.

We expect that interconnect materials will become an increasingly important value-added component of the semiconductor packaging business as technology migrates from the traditional wirebonding process towards the flip-chip wafer bumping process and interconnect materials such as advanced substrates represent a higher percentage of the cost of the packaging process. As a result, we expect that we will need to offer more advanced interconnect materials designs and production processes in order to respond to competitive industry conditions and customer requirements. In particular, our competitive position will depend to a significant extent on our ability to design and produce interconnect materials that are comparable to or better than those produced by independent suppliers and others. Many of these independent suppliers have dedicated greater resources than we have for the research and development and design and production of interconnect materials. In addition, we may not be able to acquire the technology and personnel that would enable us to further develop our in-house expertise and enhance our design and production capabilities. We intend to enhance our interconnect materials capabilities through our merger with ASE Material and our joint venture with Compeq. See “Business—Recent Developments”. If we are unable to maintain and enhance our in-house interconnect materials expertise to offer advanced interconnect materials that meet the requirements of our customers, we may become less competitive and our margins and profitability may suffer as a result.

If our joint venture with Compeq is not successful or our pending merger with ASE Chung Li and ASE Material is not completed as planned or is not otherwise successful, we may not be able to realize the anticipated benefits of the joint venture and the merger and our business prospects and profitability may be adversely affected.

On October 28, 2003, we entered into a joint venture agreement with Compeq to establish ASE-Compeq Technologies, Inc., which will focus on the design and production of interconnect materials for packaging semiconductors. The joint venture is subject to the approval of the ROC Fair Trade Commission. The joint venture with Compeq is intended to provide us with access to Compeq’s advanced production capacity, experience in advanced substrates production and engineering capabilities. Pursuant to the joint venture agreement, either party can terminate the relationship at any time with 90 days’ prior written notice. The success of our joint venture is dependent on a number of factors, some of which are unforeseen, including the ability of Compeq to meet the design and production requirements of the customers of the joint venture, the ability of the management of the two companies to work effectively together and the effectiveness of the sales and marketing strategy of ASE-Compeq Technologies, Inc. The joint venture can be terminated for any reason. If the joint venture with Compeq is not successful, and we are not able to enter into a similar joint venture agreement with another interconnect materials joint venture partner, our interconnect materials design and production capability may be adversely affected and we may not be able to meet our customers’ demand for advanced interconnect materials, which could have an adverse effect on our profitability.

On October 28, 2003, we also entered into a merger agreement with ASE Chung Li and ASE Material pursuant to which ASE Chung Li and ASE Material will be merged with and into ASE Inc., with ASE Inc. as the surviving corporation. Upon the completion of the merger, all of the assets and liabilities of ASE Chung Li and ASE Material will be owned and assumed by ASE Inc., and the operations of ASE Chung Li and ASE Material will be integrated with the operations of ASE Inc. The merger of ASE Chung Li and ASE Material is intended to enhance our ability to provide turnkey packaging and testing services to our customers, further strengthen our ability to provide turnkey services that incorporate interconnect materials to our customers, increase our economies of scale, improve our operating efficiency and simplify our corporate structure.

We cannot assure you that we will be able to complete the merger as planned or that we will be successful in achieving the anticipated benefits of the merger. The merger is expected to become effective on July 1, 2004, subject to (1) approval of the shareholders of ASE Inc., (2) receipt of the relevant regulatory approvals, including the approvals of the ROC Securities and Futures Commission in connection with the merger, (3) approval of the Taiwan Stock Exchange in connection with the issuance of ASE Inc. common shares pursuant to the share exchange, and (4) consent from lenders under certain loan agreements. In addition, the success of the merger will depend on a number of factors, many of which are unforeseen, including our ability to integrate the operations of ASE Chung Li and ASE Material with those of ASE Inc. and retention of select management personnel. If the merger with ASE Chung Li and ASE Material is not completed for any reason, including the failure to obtain the required approvals and consents, or we are not otherwise successful in integrating the operations of the merged companies, we may not be able to realize the anticipated benefits of the merger and our business prospects and profitability may be adversely affected.

Due to our high percentage of fixed costs, we will be unable to maintain our gross margin at past levels if we are unable to achieve relatively high capacity utilization rates.

testing equipment, commonly referred to as “capacity utilization rates”. In particular, increases or decreases in our capacity utilization rates can have a significant effect on gross margins since the unit cost of packaging and testing services generally decreases as fixed costs are allocated over a larger number of units. In periods of low demand, we experience relatively low capacity utilization rates in our operations due to relatively low growth in demand, which leads to reduced margins during that period. During 2001, we experienced lower than anticipated utilization rates in our operations due to a significant decline in worldwide demand for our packaging and testing services, which led to reduced margins during that period. Although our capacity utilization rates have improved recently, we cannot assure you that we will be able to maintain or surpass our past gross margin levels if we cannot consistently achieve or maintain relatively high capacity utilization rates.

If we are unable to manage our expansion effectively, our growth prospects may be limited and our future profitability may be affected.

We have significantly expanded our packaging and testing operations in recent years, and expect to continue to expand our operations in the future, including the expansion of our interconnect materials operations. In particular, we intend to provide total solutions covering all stages of the semiconductor manufacturing process to attract new customers and broaden our product range to include products packaged and tested for a variety of end-use applications. In the past, we have expanded through both internal growth and the acquisition of new operations. Rapid expansion puts strain on our managerial, technical, financial, operational and other resources. As a result of our expansion, we have implemented and will continue to need to implement additional operational and financial controls and hire and train additional personnel. Any failure to manage our growth effectively could lead to inefficiencies and redundancies and result in reduced growth prospects and profitability.

Because of the highly cyclical nature of our industry, our capital requirements are difficult to plan. If we cannot obtain additional capital when we need it, our growth prospects and future profitability may be adversely affected.

Our capital requirements are difficult to plan in our highly cyclical and rapidly changing industry. We will need capital to fund the expansion of our facilities as well as research and development activities in order to remain competitive. We believe that our existing cash and cash equivalents, short-term investments, expected cash flow from operations and existing credit lines under our short-term loan facilities will be sufficient to meet our capital expenditures, working capital, cash obligations under our existing debt and lease arrangements, and other requirements for at least the next twelve months. However, future capacity expansions or market or other developments may cause us to require additional funds. Our ability to obtain external financing in the future is subject to a variety of uncertainties, including:

our future financial condition, results of operations and cash flows;

general market conditions for financing activities by semiconductor companies; and

economic, political and other conditions in Taiwan and elsewhere.

If we are unable to obtain funding in a timely manner or on acceptable terms, our growth prospects and future profitability may decline.

Restrictive covenants and broad default provisions in the agreements governing our existing debt may materially restrict our operations as well as adversely affect our liquidity, financial condition and results of operations.

We are a party to numerous loan and other agreements relating to the incurrence of debt, many of which include restrictive covenants and broad default provisions. In general, covenants in the

agreements governing our existing debt, and debt we may incur in the future, may materially restrict our operations, including our ability to incur debt, pay dividends, make certain investments and payments and encumber or dispose of assets. In the event of a prolonged downturn in the demand for our services as a result of a downturn in the worldwide semiconductor industry or otherwise, we cannot assure you that we will be able to remain in compliance with our financial covenants which, as a result, may lead to a default. Furthermore, a default under one agreement by us or one of our subsidiaries may also trigger cross-defaults under other agreements. In the event of default, we may not be able to cure the default or obtain a waiver on a timely basis, and our operations would be significantly disrupted or harmed and our liquidity would be adversely affected. An event of default under any agreement governing our existing or future debt, if not cured or waived, would have a material adverse effect on our liquidity, financial condition and results of operations.

As a result of the reduced levels of operating cash flow due primarily to the recent downturn in the worldwide semiconductor industry, we had on occasion during 2001 failed to comply with certain financial covenants in some of our loan agreements. Such non-compliance may also have, through broadly worded cross-default provisions, resulted in default under some of the agreements governing our other existing debt. We have obtained waivers from the relevant lenders relating specifically to such non-compliance. In addition, we have repaid or refinanced all amounts owed under agreements containing cross-default provisions that we have identified which may have been triggered by such non-compliance. Such non-compliance has not had any significant effect on our ability to repay or refinance amounts due in respect of our existing debt. For these and other reasons, including our financial condition and our relationship with our lenders, no lender has to date sought and we do not believe that any of our lenders would seek to declare a default or enforce remedies in respect of our existing debt, as a result of cross-default provisions or otherwise, although we cannot provide any assurance in this regard.

We depend on select personnel and could be affected by the loss of their services.

We depend on the continued service of our executive officers and skilled technical and other personnel. Our business could suffer if we lose the services of any of these personnel and cannot adequately replace them. Although some of these management personnel have entered into employment agreements with us, they may nevertheless leave before the expiration of these agreements. We are not insured against the loss of any of our personnel. In particular, we may be required to increase substantially the number of these employees in connection with our expansion plans, and there is intense competition for their services in the semiconductor industry. We may not be able to either retain our present personnel or attract additional qualified personnel as and when needed. In addition, we may need to increase employee compensation levels in order to attract and retain our existing officers and employees and the additional personnel that we expect to require. A portion of the workforce at our facilities in Taiwan are foreign workers employed by us under work permits which are subject to government regulations on renewal and other terms. Consequently, our business could also suffer if the Taiwan regulations relating to the import of foreign workers were to become significantly more restrictive or if we are otherwise unable to attract or retain these workers at a reasonable cost.

Criminal charges were brought in December 1998 by the district attorney for Taipei against Jason C.S. Chang, our Chairman and Chief Executive Officer, Richard H.P. Chang, our Vice Chairman and President and the Chairman of ASE Test, and Chang Yao Hung-ying, our former director and a former director of ASE Test, and others for alleged breach of fiduciary duties owed to Hung Ching Development & Construction Co. Ltd., or Hung Ching, an affiliate of ASE Inc., in their capacity as directors and officers of Hung Ching, relating to a sale of land. ASE Inc. is not a party to these proceedings and we do not expect that these charges will result in any liability to us. In January 2001, the District Court of Taipei rendered a judgment finding Jason C.S. Chang and Chang Yao Hung-ying

guilty of forgery of corporate and other documents and breach of fiduciary duties and Richard H.P. Chang not guilty. In January 2002, the High Court of Taiwan, the ROC, rendered a judgment relating to the appeal of the judgment by the District Court, and found Jason C.S. Chang and Chang Yao Hung-ying guilty and Richard H.P. Chang not guilty. In order to comply with the Singapore Companies Act, Jason C.S. Chang and Chang Yao Hung-ying have both resigned as directors of our subsidiary, ASE Test. Neither Jason C.S. Chang nor Chang Yao Hung-ying believes that he or she committed any offense in connection with such transactions, and they appealed the decision to the Supreme Court of Taiwan, the ROC. On January 23, 2003, the Supreme Court reversed the judgment of the High Court with respect to Jason C.S. Chang and Chang Yao Hung-ying and remanded the case to the High Court for retrial. We have been advised by counsel to each of Jason C.S. Chang and Chang Yao Hung-ying that a judgment in these proceedings may be rendered by the High Court as early as January 2004, although there can be no certainty as to the exact timing. If a final adverse judgment is rendered against Jason C.S. Chang, he may be required under ROC law to resign as Chairman and a director of ASE Inc. See “Business—Legal Proceedings”.

If we are unable to obtain additional packaging and testing equipment or facilities in a timely manner and at a reasonable cost, our competitiveness and future profitability may be adversely affected.

The semiconductor packaging and testing business is capital intensive and requires significant investment in expensive equipment manufactured by a limited number of suppliers. The market for semiconductor packaging and testing equipment is characterized, from time to time, by intense demand, limited supply and long delivery cycles. Our operations and expansion plans depend on our ability to obtain a significant amount of such equipment from a limited number of suppliers, including, in the case of wire bonders, Kulicke & Soffa Industries Inc., and in the case of testers, Advantest Corporation, Agilent Technologies, Inc., Credence Systems Corporation, LTX Corporation, NP Test Inc. and Teradyne, Inc. We have no binding supply agreements with any of our suppliers and acquire our packaging and testing equipment on a purchase order basis, which exposes us to changing market conditions and other substantial risks. For example, shortages of capital equipment could result in an increase in the price of equipment and longer delivery times. Semiconductor packaging and testing also requires us to operate sizeable facilities. If we are unable to obtain equipment or facilities in a timely manner, we may be unable to fulfill our customers’ orders, which could adversely affect our growth prospects as well as financial condition and results of operations.

Fluctuations in exchange rates could result in foreign exchange losses.

Currently, the majority of our revenues from packaging and testing services are denominated in U.S. dollars and NT dollars. Our costs of revenues and operating expenses associated with packaging and testing services, on the other hand, are incurred in several currencies, primarily in NT dollars and U.S. dollars, as well as, to a lesser extent, Malaysian ringgit, Korean won and Japanese yen. In addition, a substantial portion of our capital expenditures, primarily for the purchase of packaging and testing equipment, has been, and is expected to continue to be, denominated in U.S. dollars with much of the remainder in Japanese yen. Fluctuations in exchange rates, primarily among the U.S. dollar, the NT dollar and the Japanese yen, will affect our costs and operating margins. In addition, these fluctuations could result in exchange losses and increased costs in NT dollar and other local currency terms. Despite hedging and mitigating techniques implemented by us, fluctuations in exchange rates have affected, and may continue to affect, our financial condition and results of operations.

The loss of a major customer or termination of our strategic alliance and other commercial arrangements with semiconductor foundries and providers of other complementary semiconductor manufacturing services may result in a decline in our revenues and profitability.

Although we have over 200 customers, due in part to the concentration of market share in the semiconductor industry, we have derived and expect to continue to derive a large portion of our revenues from a small group of customers during any particular period. Our five largest customers together accounted for approximately 38.2% and 36.2% of our net revenues in the six months ended June 30, 2002 and 2003, respectively. Our five largest customers together accounted for approximately 44.0%, 41.2% and 39.6% of our net revenues in 2000, 2001 and 2002, respectively. Other than Motorola, Inc., no other customer accounted for more than 10% of our net revenues in the six months ended June 30, 2002 and 2003. Other than Motorola, Inc. and VIA Technologies, Inc. in 2000 and 2001, and Motorola, Inc. in 2002, no other customer accounted for more than 10% of our net revenues in 2000, 2001 and 2002. The demand for our services from each customer is directly dependent upon that customer’s level of business activity, which could vary significantly from year to year. The loss of a major customer may adversely affect our revenues and profitability.

Our strategic alliance with TSMC, the world’s largest dedicated semiconductor foundry, as well as our other commercial arrangements with providers of other complementary semiconductor manufacturing services, enable us to offer total semiconductor manufacturing solutions to our customers. This strategic alliance and any of our other commercial arrangements may be terminated at any time. A termination of this strategic alliance and other commercial arrangements, and our failure to enter into substantially similar alliances and commercial arrangements, may adversely affect our competitiveness and our revenues and profitability. All of our key customers operate in the cyclical semiconductor business and have varied in the past, and may vary in the future, order levels significantly from period to period. Some of these companies are relatively small, have limited operating histories and financial resources, and are highly exposed to the cyclicality of the industry. We cannot assure you that these customers or any other customers will continue to place orders with us in the future at the same levels as in prior periods. The loss of one or more of our significant customers, or reduced orders by any one of them, and our inability to replace these customers or make up for such orders could reduce our profitability. In addition, we have in the past reduced, and may in the future be requested to reduce, our prices to limit the level of order cancellations. Any price reduction would likely reduce our margins and profitability.

We depend on our agents for sales and customer service in North America and Europe. Any serious interruption in our relationship with these agents, or substantial loss in their effectiveness, could significantly reduce our revenues and profitability.

We depend on non-exclusive agents for sales and customer service in North America and Europe. Our sales agents help us identify customers, monitor delivery acceptance and payment by customers and, within parameters set by us, help us negotiate price, delivery and other terms with our customers. Purchase orders are placed directly with us by our customers. Our customer service agents provide customer service and after-sales support to our customers.

Currently, our sales and customer service agents perform services only for us and our subsidiaries but they are not owned or controlled by us. These agents are free to perform sales and support services for others, including our competitors. In particular, we may not be able to find an adequate replacement for these agents or to develop sufficient capabilities internally on a timely basis. Any serious interruption in our relationship with these agents or substantial loss in their effectiveness in performing their sales and customer service functions could significantly reduce our revenues and profitability.

Our revenues and profitability may decline if we are unable to obtain adequate supplies of raw materials in a timely manner and at a reasonable price.

Our packaging operations require that we obtain adequate supplies of raw materials on a timely basis. Shortages in the supply of raw materials experienced by the semiconductor industry have in the past resulted in occasional price increases and delivery delays. For example, in 1999 and the first half of 2000, the industry experienced a shortage in the supply of advanced substrates used in ball grid array, or BGA, packaging. Raw materials such as advanced substrates are prone to supply shortages since such materials are produced by a limited number of suppliers such as Kinsus Interconnect Technology Corporation, Ibiden Co., Ltd. and Japan Circuit Industrial Co., Ltd. Our merger with ASE Material and our joint venture with Compeq to establish ASE-Compeq Technologies, Inc. are expected to help improve our ability to obtain advanced substrates on a timely basis and at a reasonable cost. However, we do not expect that our internal substrates operations, even after the effectiveness of the ASE Material merger and the formation of ASE-Compeq Technologies, Inc. to be able to meet all of our raw materials requirements. Consequently, we will remain dependent on market supply and demand for our raw materials. We cannot assure you that we will be able to obtain adequate supplies of raw materials in a timely manner and at a reasonable price. Our revenues and earnings could decline if we were unable to obtain adequate supplies of high quality raw materials in a timely manner or if there were significant increases in the costs of raw materials that we could not pass on to our customers.

Any environmental claims or failure to comply with any present or future environmental regulations may require us to spend additional funds and may materially and adversely affect our financial condition and results of operations.

We are subject to a variety of laws and regulations relating to the use, storage, discharge and disposal of chemical by-products of, and water used in, our packaging and interconnect materials production process. Although we have not suffered material environmental claims in the past, the failure to comply with any present or future regulations could result in the assessment of damages or imposition of fines against us, suspension of production or a cessation of our operations. New regulations could require us to acquire costly equipment or to incur other significant expenses. Any failure on our part to control the use of, or adequately restrict the discharge of, hazardous substances could subject us to future liabilities that may have a material adverse effect on our financial condition and results of operations.

Our controlling shareholders may take actions that are not in, or may conflict with, our public shareholders’ best interest.

Members of the Chang family own, directly or indirectly, a controlling interest in our outstanding common shares. See “Principal Shareholders”. Accordingly, these shareholders will continue to have the ability to exercise a controlling influence over our business, including matters relating to:

our management and policies;

the timing and distribution of dividends; and

the election of our directors and supervisors.

Members of the Chang family may take actions that you may not agree with or that are not in our or our public shareholders’ best interests.

We are an ROC company and, because the rights of shareholders under ROC law differ from those under U.S. law and the laws of certain other countries, you may have difficulty protecting your shareholder rights.

Our corporate affairs are governed by our Articles of Incorporation and by the laws governing corporations incorporated in the ROC. The rights of shareholders and the responsibilities of management and the members of the board of directors under ROC law are different from those applicable to a corporation incorporated in the United States and certain other countries. As a result, public shareholders of ROC companies may have more difficulty in protecting their interest in connection with actions taken by management or members of the board of directors than they would as public shareholders of a corporation in the U.S. or certain other countries.

Any required impairment charges may have a material adverse effect on our financial condition and results of operations.

Under currently effective accounting principles, we are required to evaluate our equipment, goodwill and other indefinite-lived assets for impairment whenever there is an indication of impairment. If certain criteria are met, we are required to record an impairment charge. We can give no assurance that impairment charges will not be required in periods subsequent to June 30, 2003.

As a result of new standards under U.S. GAAP that became effective on January 1, 2002, we are no longer permitted to amortize remaining goodwill. Total goodwill amortization expense amounted to NT$815.6 million (US$23.6 million) and NT$413.1 million (US$11.9 million) under ROC GAAP for the year ended December 31, 2002 and the six months ended June 30, 2003, respectively. Starting from January 2002, all goodwill must be periodically tested for impairment under U.S. GAAP. As a result of our impairment test as of December 31, 2002, we wrote off the remaining goodwill associated with our purchase of shares of ASE Test of NT$2,213.0 million (US$63.8 million) under U.S. GAAP. As a result of our impairment test as of June 30, 2003, we determined there had been no impairment. As of December 31, 2002 and June 30, 2003, goodwill under U.S. GAAP amounted to NT$3,227.0 million (US$93.2 million) and NT$3,198.0 million (US$92.4 million), respectively. We currently are not able to estimate the extent and timing of any goodwill impairment charge for future periods. Any goodwill impairment charge required under U.S. GAAP may have a material adverse effect on our financial condition and results of operations on a U.S. GAAP reconciled basis.

The determination of an impairment charge at any given time is based significantly on our expected results of operations over a number of years subsequent to that time. As a result, an impairment charge is more likely to occur during a period when our operating results are otherwise already depressed.

Risks Relating to Taiwan, ROC

Strained relations between the ROC and the People’s Republic of China could negatively affect our business and the market value of your investment.

Our principal executive offices and our principal packaging and testing facilities are located in Taiwan and approximately 77.4% and 76.2% of our net revenues in 2002 and the six months ended June 30, 2003, respectively, were derived from our operations in Taiwan. The ROC has a unique international political status. The People’s Republic of China, or the PRC, asserts sovereignty over all of China, including Taiwan. The PRC government does not recognize the legitimacy of the ROC government. Although significant economic and cultural relations have been established in recent years between the ROC and the PRC, relations have often been strained and the government of the PRC has indicated that it may use military force to gain control over Taiwan in some circumstances, such as the declaration of independence by the ROC. Relations between the ROC and the PRC have

been particularly strained in recent years. Moreover, we cannot predict the impact of the upcoming ROC presidential elections, which will be held in March 2004, on relations between the two governments. Past developments in relations between the ROC and the PRC have on occasion depressed the market price of the securities of ROC companies. Relations between the ROC and the PRC and other factors affecting the political or economic conditions in Taiwan could have a material adverse effect on our financial condition and results of operations, as well as the market price and the liquidity of the common shares, the ADSs and the convertible notes.

In July 2000, our shareholders approved a resolution which authorized our board of directors to make investments in the PRC. However, the ROC government currently restricts certain types of investments by ROC companies in the PRC, including investments in facilities for the packaging and testing of semiconductors. We do not know when or if such laws and policies governing investment in the PRC will be amended, and we cannot assure you that any such amendments to the ROC investment laws and policies will permit us to make an investment that we consider beneficial to us in the PRC in the future. As a result, our growth prospects and profitability may be adversely affected if we are restricted from making certain investments in the PRC and are not able to fully capitalize on the growth of the semiconductor industry in the PRC.

As a substantial portion of our business and operations are located in Taiwan, we are vulnerable to earthquakes, typhoons, drought and other natural disasters, which could severely disrupt the normal operation of our business and adversely affect our earnings.

Taiwan is susceptible to earthquakes and has experienced severe earthquakes which caused significant property damage and loss of life, particularly in the central and eastern parts of Taiwan. These earthquakes damaged production facilities and adversely affected the operations of many companies involved in the semiconductor and other industries. We experienced no structural damage to our facilities and no damage to our machinery and equipment as a result of these earthquakes. There were, however, interruptions to our production schedule primarily as a result of power outages caused by the earthquakes.

Taiwan is also susceptible to typhoons, which may cause damage and business interruption to companies with facilities located in Taiwan. In 2001, Taiwan experienced severe damage from typhoons, including a typhoon on September 16 that caused over 100 deaths, severe flooding and extensive damage to property and businesses. We have not experienced any material damage or business interruption from the increased typhoon activity in Taiwan.

In May 2002, Taiwan experienced a severe drought. Although our manufacturing process does not rely on an adequate supply of water and we were not affected by the May 2002 drought directly, a drought may interrupt the manufacturing process of the foundries located in Taiwan, in turn disrupting some of our customers’ production, and this could result in a decline in the demand for our services. In addition, any temporary or sustained adverse impact from any future droughts may adversely affect Taiwan’s economic, social or political conditions and may lead to fluctuations in the market price of the common shares, the ADSs and the convertible notes.

While we maintain several insurance policies relating to our business, we do not currently carry any insurance coverage for interruptions in public utility services or any other business interruption insurance except in connection with fire. Should these interruptions occur, we will be exposed to substantial risks and may be liable for the full amount of any losses.

Our production facilities as well as many of our suppliers and customers and providers of complementary semiconductor manufacturing services, including foundries, are located in Taiwan. If our customers are affected by an earthquake, a typhoon, a drought or other natural disasters, it could

result in a decline in the demand for our packaging and testing services. If our suppliers and providers of complementary semiconductor manufacturing services are affected, our production schedule could be interrupted or delayed. As a result, a major earthquake, typhoon, drought, or other natural disasters in Taiwan could severely disrupt the normal operation of business and have a material adverse effect on our financial condition and results of operations.

The recent and any future outbreak of SARS may have an adverse effect on the economies of certain Asian countries and may adversely affect our results of operations.

In the first half of 2003, the PRC, Hong Kong, Taiwan, Singapore, Vietnam and certain other countries encountered an outbreak of severe acute respiratory syndrome, or SARS, which is a highly contagious form of atypical pneumonia. Such SARS outbreak had an adverse effect on our results of operations for the first half of 2003, primarily due to the lower than expected demand for our packaging and testing services that resulted from the adverse effect of such SARS outbreak on the level of economic activity in the affected regions. There is no guarantee that SARS or SARS-like outbreaks will not occur again in the future and no guarantee that any future SARS or SARS-like outbreaks, or the measures taken by the governments of the ROC, Hong Kong, the PRC or other countries against SARS or SARS-like outbreaks, will not seriously interrupt our production operations or those of our suppliers and customers, which may have a material adverse effect on our results of operations.

While the long-term impact of the SARS outbreak is unclear at this time, the perception that such SARS outbreak may recur may have an adverse effect on the economic conditions of certain countries in Asia. Each of the governments of the ROC, Hong Kong and Singapore revised downward its gross domestic product growth forecasts for 2003 due to SARS. Such economic fallout of the SARS outbreak may result in further decrease in the demand for our packaging and testing services which would have a material adverse effect on our results of operations.

Risks Relating to Ownership of the Common Shares, the ADSs and the Convertible Notes

The market for the common shares, the ADSs and the convertible notes may not be liquid.

Active, liquid trading markets generally result in lower price volatility and more efficient execution of buy and sell orders for investors, compared to less active and less liquid markets. Liquidity of a securities market is often a function of the volume of the underlying shares that are publicly held by unrelated parties. Although ADS holders are entitled to withdraw the common shares underlying the ADSs from the depositary at any time, ROC law requires that the common shares be held in an account in the ROC or sold for the benefit of the holder on the Taiwan Stock Exchange. In connection with any withdrawal of common shares from our ADS facility, the ADSs evidencing these common shares will be cancelled. Unless additional ADSs are issued, the effect of withdrawals will be to reduce the number of outstanding ADSs. If a significant number of withdrawals are effected, the liquidity of our ADSs will be substantially reduced. We cannot assure you that the ADS depositary will be able to arrange for a sale of deposited shares in a timely manner or at a specified price, particularly during periods of illiquidity or volatility.

There has been no trading market for the common shares outside the ROC and the only trading market for the common shares will be the Taiwan Stock Exchange. The outstanding ADSs are listed on the New York Stock Exchange. There is no assurance that the market for the common shares or the ADSs will be active or liquid.

Prior to the convertible note offering, there has been no market for the convertible notes. Application has been made to list the convertible notes on the Luxembourg Stock Exchange. However,

there can be no assurance that we will be able to obtain or maintain such a listing or that, if listed, a trading market will develop on such exchange.

The market value of your investment may fluctuate due to the volatility of the ROC securities market.

The ROC securities market is smaller and more volatile than the securities markets in the United States and in many European countries. The Taiwan Stock Exchange has experienced substantial fluctuations in the prices and volumes of sales of listed securities and there are currently limits on the range of daily price movements on the Taiwan Stock Exchange. The Taiwan Stock Exchange Index peaked at 12,495.3 in February 1990, and subsequently fell to a low of 2,560.5 in October 1990. On December 12, 2003, the Taiwan Stock Exchange Index closed at 5,858.3. The Taiwan Stock Exchange has experienced problems such as market manipulation, insider trading and payment defaults. The recurrence of these or similar problems could have a material adverse effect on the market price and liquidity of the securities of ROC companies, including the common shares, the ADSs and the convertible notes, in both the domestic and the international markets.

Holders of common shares and ADSs may incur dilution as a result of the practice among ROC technology companies of issuing stock bonuses and stock options to employees.

Similar to other ROC technology companies, we issue bonuses from time to time in the form of common shares valued at par under our employee stock bonus plan. In addition, under the revised ROC Company Law we may, upon approval from our board of directors and the ROC Securities and Futures Commission, establish employee stock option plans. On August 13, 2002, we adopted an employee stock option plan pursuant to which our full-time employees and the full-time employees of our domestic and foreign subsidiaries are eligible to receive stock option grants. As of October 31, 2003, 159,968,000 options have been issued. See “Management—Compensation of Directors, Supervisors and Executive Officers—ASE Inc. Employee Bonus and Stock Option Plans”. The issuance of our common shares pursuant to stock bonuses or stock options may have a dilutive effect on the holders of outstanding common shares and ADSs.

Restrictions on the ability to deposit our common shares into our ADS facility may adversely affect the liquidity and price of our ADSs.

The ability to deposit common shares into our ADS facility is restricted by ROC law. A significant number of withdrawals of common shares underlying our ADSs would reduce the liquidity of the ADSs by reducing the number of ADSs outstanding. As a result, the prevailing market price of our ADSs may differ from the prevailing market price of our common shares on the Taiwan Stock Exchange. Under current ROC law, no person or entity, including you and us, may deposit our common shares in our ADS facility without specific approval of the ROC Securities and Futures Commission, unless:

we pay stock dividends on our common shares;

we make a free distribution of common shares;

holders of ADSs exercise preemptive rights in the event of capital increases for cash; or

to the extent permitted under the deposit agreement and the custodian agreement, holders of ADSs purchase our common shares, directly or through the depositary, on the Taiwan Stock Exchange, and deliver such common shares or deliver our common shares held by such holders to the custodian for deposit into our ADS facility. The depositary may issue ADSs against the deposit of those common shares only if the total number of ADSs outstanding following the deposit will not exceed the number of ADSs previously approved by the ROC Securities and Futures Commission, plus any ADSs issued pursuant to the events described in the first three bulleted points above.

The depositary will not offer holders of ADSs preemptive rights unless both the distribution of the rights and the underlying common shares to our ADS holders are either registered under the U.S. Securities Act of 1933, as amended, or the Securities Act, or exempt from registration under the Securities Act.

In addition, in the case of a deposit of common shares requested as described above, the depositary may refuse to accept our common shares for deposit if such deposit is not permitted under any restriction notified by us to the depositary from time to time. These restrictions may include blackout periods during which deposits may not be made as well as limitations on the size and frequencies of deposits.

Holders of ADSs will not have the same voting rights as our shareholders, which may affect the value of their ADSs.

The voting rights of a holder of ADSs as to the common shares represented by its ADSs are governed by the deposit agreement. Holders of ADSs will not be able to exercise voting rights on an individual basis. If holders representing at least 51% of the ADSs outstanding at the relevant record date instruct the depositary to vote in the same manner regarding a resolution, including the election of directors and supervisors, the depositary will cause all common shares represented by the ADSs to be voted in that manner. If the depositary does not receive timely instructions representing at least 51% of the ADSs outstanding at the relevant record date to vote in the same manner for any resolution, including the election of directors and supervisors, holders of ADSs will be deemed to have instructed the depositary or its nominee to authorize all the common shares represented by the ADSs to be voted at the discretion of our Chairman or his designee, which may not be in the interest of holders of ADSs. See “Description of American Depositary Receipts—Voting Rights”.

The right of holders of ADSs to participate in our rights offerings is limited, which could cause dilution to your holdings.

We may from time to time distribute rights to our shareholders, including rights to acquire our securities. Under the deposit agreement, the depositary will not offer holders of ADSs those rights unless both the distribution of the rights and the underlying securities to all our ADS holders are either registered under the Securities Act, or exempt from registration under the Securities Act. Although we may be eligible to take advantage of certain exemptions under the Securities Act available to certain foreign issuers for rights offerings, we can give no assurances that we will be able to establish an exemption from registration under the Securities Act, and we are under no obligation to file a registration statement for any of these rights. Accordingly, holders of ADSs may be unable to participate in our rights offerings and may experience dilution of their holdings.

If the depositary is unable to sell rights that are not exercised or not distributed or if the sale is not lawful or reasonably practicable, it will allow the rights to lapse, in which case holders of ADSs will receive no value for these rights.

Changes in exchange controls which restrict your ability to convert proceeds received from your ownership of ADSs may have an adverse effect on the value of your investment.

Under current ROC law, the depositary, without obtaining further approvals from the Central Bank of China or any other governmental authority or agency of the ROC, may convert NT dollars into other currencies, including U.S. dollars, for:

the proceeds of the sale of common shares represented by ADSs or received as stock dividends from the common shares and deposited into the depositary receipt facility; and

any cash dividends or distributions received from the common shares.

In addition, the depositary may also convert into NT dollars incoming payments for purchases of common shares for deposit in the ADS facility against the creation of additional ADSs. The depositary may be required to obtain foreign exchange approval from the Central Bank of China on a payment-by-payment basis for conversion from NT dollars into foreign currencies of the proceeds from the sale of subscription rights for new common shares. Although it is expected that the Central Bank of China will grant this approval as a routine matter, we cannot assure you that in the future any approval will be obtained in a timely manner, or at all.

Under current ROC law, a holder of the ADSs, without obtaining further approval from the Central Bank of China, may convert from NT dollars into other currencies, including U.S. dollars, the following:

the proceeds of the sale of any underlying common shares withdrawn from the depositary receipt facility or received as a stock dividend; and

any cash dividends or distribution received.

However, such holder may be required to obtain foreign exchange approval from the Central Bank of China on a payment-by-payment basis for conversion from NT dollars into foreign currencies of the proceeds from the sale of subscription rights for new common shares. Although the Central Bank of China is generally expected to grant this approval as a routine matter, we cannot assure you that you will actually obtain this approval in a timely manner, or at all.

Under the ROC Foreign Exchange Control Law, the Executive Yuan of the ROC government may, without prior notice but subject to subsequent legislative approval, impose foreign exchange controls in the event of, among other things, a material change in international economic conditions. We cannot assure you that foreign exchange controls or other restrictions will not be introduced in the future.

The value of your investment may be reduced by possible future sales of common shares or ADSs by us or our shareholders.

We and the selling shareholder have agreed with the underwriters and the purchasers not to dispose of any of our common shares or securities convertible into or exchangeable for common shares, including ADSs, during the period beginning from the date of this prospectus continuing through the date 90 days after the date of this prospectus, except with the prior written consent of Goldman Sachs International. Each of Jason C.S. Chang, Richard H.P. Chang, Chang Yao Hung-ying, Feng Mei-Jean and Hung Ching has also entered into a similar 90-day lock-up agreement. In addition, we have agreed, subject to certain exceptions, not to issue any of our common shares, including common shares represented by ADSs, during the period beginning from the date of this prospectus continuing through the date 90 days after the date of this prospectus, except with the prior written consent of Goldman Sachs International. We have also agreed to cause each of our subsidiaries and controlled affiliates not to dispose of any of our common shares or securities convertible into or exchangeable for common shares, including ADSs, during the period beginning from the date of the prospectus continuing through the date 90 days after the date of this prospectus, except with the written consent of Goldman Sachs International. These restrictions do not apply to, among other things, the sale of any of our common shares held by the selling shareholder subsequent to 30 days after the date of this prospectus. Goldman Sachs International may, in its discretion, waive or terminate these restrictions. See “Common Shares Eligible for Future Sale” for a more detailed discussion of restrictions that may apply to future sales of our ADSs or common shares.

While we are not aware of any plans by any major shareholders to dispose of significant numbers of common shares, we cannot assure you that one or more existing shareholders or owners of securities convertible or exchangeable into or exercisable for our common shares or ADSs will not

dispose of significant numbers of common shares or ADSs. In addition, following completion of this offering, several of our subsidiaries and affiliates will continue to hold common shares, depositary shares representing common shares and options to purchase common shares or ADSs. We or they may decide to sell those securities in the future. See “Principal Shareholders” for a description of our significant shareholders and affiliates that hold our common shares. We cannot predict the effect, if any, that future sales of common shares or ADSs, or the availability of common shares or ADSs for future sale, will have on the market price of the common shares, the ADSs or the convertible notes prevailing from time to time. Sales of substantial amounts of ADSs or common shares in the public market, or the perception that such sales may occur, could depress the prevailing market prices of the common shares, the ADSs or the convertible notes.

There are limitations on the ability of holders of the convertible notes to exercise conversion rights.

Investors in the convertible notes will not be able to exercise their conversion right during the following closed periods: (1) the 60-day period immediately prior to the date of any of our general shareholders’ meetings; (2) the 30-day period immediately prior to the date of any of our special shareholders’ meetings; (3) the period from the third trading day prior to the date of our notification to the Taiwan Stock Exchange of the record date for the determination of shareholders entitled to the receipt of dividends, subscription of new common shares due to capital increase or other benefits and bonuses to such record date; and (4) such other periods during which we may be required to close our stock transfer books under ROC laws and regulations applicable from time to time.

Under current ROC law, regulations and policy, PRC persons are not permitted to convert the convertible notes or to register as shareholders of our company. See “Description of Convertible Notes—Conversion—Restrictions on Shareholdings by PRC Persons”.

Holders of the convertible notes will bear the risk of fluctuations in the price of the common shares or the ADSs.

The market price of the convertible notes at any time will be affected by fluctuations in the price of the common shares or the ADSs. It is impossible to predict how the price of the common shares or the ADSs will change. Trading prices of the common shares or the ADSs will be influenced by, among other things, our financial condition and results of operations and political, economic, financial and other factors that affect capital markets generally. Any decline in the price of the common shares or the ADSs would adversely affect the market price of the convertible notes.

Fluctuations in the exchange rate between the NT dollar and the U.S. dollar may have a material adverse effect on the value of the convertible notes in U.S. dollar terms.

Although the principal amount of the convertible notes is denominated in U.S. dollars, the common shares are listed on the Taiwan Stock Exchange, which quotes and trades the common shares in NT dollars. As a result, fluctuations in the exchange rate between the NT dollar and the U.S. dollar will affect, among other things, the market price of the convertible notes and the U.S. dollar equivalent of the common shares received upon conversion of the convertible notes.

Holders of the convertible notes will have no rights as shareholders until they acquire the common shares upon conversion of the convertible notes.

Unless and until the holders of the convertible notes acquire the common shares upon conversion of the convertible notes, the holders of the convertible notes will have no rights as shareholders, including any voting rights or rights to receive any dividends or other distributions with respect to the

common shares. Holders of the convertible notes who acquire the common shares upon the exercise of their conversion rights will be entitled to exercise the rights of shareholders only after the conversion date.

Holders of the convertible notes or their designee requesting the conversion of the convertible notes into the common shares may be required to provide certain information to us, and failure to provide such information on a timely basis may result in a delay in the conversion.

A holder of the convertible notes or its designee requesting the conversion of the convertible notes into the common shares may be required to provide certain information to us or the conversion agent, including the name and nationality of the person to be registered as the shareholder, the number of common shares to be acquired by such person and the number of common shares acquired by such person in the past through the conversion date. Under applicable ROC laws, we are required to report to the ROC Securities and Futures Commission if the person to be registered as a shareholder (1) is a “related party” of us as defined in the ROC Statement of Financial Accounting Standards No. 6, or (2) will hold, immediately following such conversion, more than 10% of the total number of our outstanding common shares. Failure to provide such information on a timely basis may result in a delay in the conversion of the convertible notes.

If a non-ROC holder of ADSs withdraws the common shares or a non-ROC holder of the convertible notes converts convertible notes, such holder of the ADSs or holder of the convertible notes will be required to appoint a tax guarantor, local agent and custodian bank in the ROC and register with the Taiwan Stock Exchange in order to buy and sell securities on the Taiwan Stock Exchange.

When a non-ROC holder of ADSs elects to withdraw common shares represented by ADSs or a non-ROC holder of the convertible notes exercises its conversion rights to receive common shares and register as our shareholder, such holder of the ADSs or the convertible notes will be required to appoint an agent for filing tax returns and making tax payments, or a tax guarantor, in the ROC. The tax guarantor will be required to meet the qualifications set by the ROC Ministry of Finance and will act as the guarantor of the withdrawing or converting holder’s tax payment obligations. Evidence of the appointment of a tax guarantor, the approval of such appointment by the ROC tax authorities and tax clearance certificates or evidentiary documents issued by such tax guarantor may be required as conditions to such holder repatriating the profits derived from the sale of common shares. We cannot assure you that a withdrawing or converting holder will be able to appoint and obtain approval for a tax guarantor in a timely manner.

In addition, under current ROC law, such withdrawing holder or converting holder is required to appoint a local agent in the ROC to, among other things, open a securities trading account with a local securities brokerage firm, remit funds and exercise such holder’s rights as a shareholder. Furthermore, such withdrawing or converting holder must appoint a local bank to act as custodian for confirmation and settlement of trades, safekeeping of securities and cash proceeds and reporting and declaration of information. Without satisfying these requirements, non-ROC holders of ADSs that withdraw and hold the common shares represented thereby or converting holders that receive common shares would not be able to hold or otherwise transfer the common shares on the Taiwan Stock Exchange or otherwise.

In addition, non-ROC holders will be required to register with the Taiwan Stock Exchange in order to buy and sell securities on the Taiwan Stock Exchange (and if you are an offshore foreign institutional investor, you will also be required to obtain the approval of the Central Bank of China) prior to withdrawing common shares.

We may be unable to repurchase our convertible notes when requested by the holders or on the date of maturity.

On each of the repurchase dates indicated in the indenture and on the date of maturity, the holders of our convertible notes may require us to repurchase all or a portion of the convertible notes. However, we cannot assure you that we will have enough funds or would be able to arrange financing to pay the purchase price for all convertible notes that are tendered. Our ability to repurchase the convertible notes may be limited by applicable law or the terms of other debt instruments.

FORWARD-LOOKING STATEMENTS

This prospectus and information incorporated by reference includes “forward-looking” statements within the meaning of Section 27A of the Securities Act and Section 21E of the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act. Our forward-looking statements contain information regarding, among other things, our financial condition, results of operations, future expansion plans and business strategy. We have based these forward-looking statements on our current expectations about future events. Although we believe these expectations are reasonable, these forward-looking statements are inherently subject to risks, uncertainties and assumptions about us and events and circumstances that affect our business, including:

•

the highly competitive semiconductor industry;

•

our ability to introduce new packaging, interconnect materials and testing technologies in order to remain competitive;

•

our ability to successfully integrate pending and future mergers and acquisitions;

•

risks associated with international business activities;

•

our business strategy;

•

general economic and political conditions;

•

possible disruptions in commercial activities caused by natural disasters or industrial accidents;

•

our future expansion plans and capital expenditures;

•

fluctuations in foreign currency exchange rates; and

•

other risks identified in the “Risk Factors” section of this prospectus.

The words “anticipate”, “believe”, “estimate”, “expect”, “intend”, “plan” and similar expressions, as they relate to us, are intended to identify these forward-looking statements in this prospectus. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this prospectus. These forward-looking statements are based on our own information and on information from other sources we believe to be reliable. Some of these forward-looking statements are derived from projections made and published by Gartner Dataquest and Semiconductor Industry Association. We were not involved in the preparation of these projections. Our actual results may be materially less favorable than those expressed or implied by these forward-looking statements as a result of risks and other factors noted above and throughout this prospectus. We do not intend to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

USE OF PROCEEDS

The net proceeds to us from the ADS offering after deducting the underwriting discount and commissions and estimated offering expenses are expected to be approximately US$264.6 million (assuming an initial offering price of US$4.55 per ADS, which is based on the closing price of the ADSs on the New York Stock Exchange on December 12, 2003.) We will not receive any proceeds from the sale of ADSs by ASE Enterprises if the underwriters’ overallotment option to purchase additional ADSs is exercised. We intend to use the net proceeds from the ADS offering to purchase raw materials and machinery and equipment.

The net proceeds to us from the convertible note offering after deducting the underwriting discount and commissions and estimated offering expenses are expected to be approximately US$133.5 million. If the underwriters’ overallotment option to purchase additional convertible notes is exercised in full, we will receive approximately US$14.8 million in additional net proceeds, after we deduct the underwriting discount and commissions and estimated offering expenses. We intend to use the net proceeds from the convertible note offering to repay some of our outstanding indebtedness.

The following table sets forth the aggregate principal amount, the interest rate, the maturity and the amount to be repaid of each borrowing to be repaid using the net proceeds from the sale of the convertible notes.

Aggregate Principal Amount	Interest Rate	Maturity	Amount to be Repaid
NT$ (in millions)			NT$ (in millions)
7,000	2.529%	within three years	3,170
500	4.500%	within two years	198
400	4.450%	within three years	188
400	4.000%	within five years	376
500	4.500%	within three years	375
500	4.680%	within two years	313

With respect to our NT$7 billion loan with an interest rate of 2.529%, which was entered into on December 24, 2002, NT$5,200 million was used to repay existing indebtedness and NT$1,800 million was used to purchase equipment. The proceeds of our NT$400 million loan with an interest rate of 4.000%, which was entered into on December 30, 2002, were used to purchase equipment.

MARKET PRICE INFORMATION FOR OUR COMMON SHARES

Our common shares were first issued in March 1984 and have been listed on the Taiwan Stock Exchange since July 1989. The Taiwan Stock Exchange is an auction market where the securities traded are priced according to supply and demand through announced bid and ask prices. As of December 12, 2003, there was an aggregate of 3,580,280,000 of our common shares outstanding. The following table sets forth, for the periods indicated, the high and low closing prices and the average daily volume of trading activity on the Taiwan Stock Exchange for the common shares and the high and low of the daily closing values of the Taiwan Stock Exchange Index. The closing price for our common shares on the Taiwan Stock Exchange on December 12, 2003 was NT$31.50 per share.

	Closing Price per Share		Adjusted Closing Price per Share(1)		Average Daily Trading Volume	Taiwan Stock Exchange Index
	High	Low	High	Low	Average Daily Trading Volume	High	Low
	NT$	NT$	NT$	NT$	(in thousands of shares)
1998	191.00	47.00	59.78	25.09	60,200	9,277.1	6,251.4
1999	117.00	51.00	66.18	27.22	47,782	8,608.9	5,474.8
2000	123.00	22.60	72.68	17.56	24,507	10,202.2	4,614.6
2001	38.80	14.00	31.09	12.73	25,079	6,104.2	3,446.3
First Quarter	38.80	22.50	30.15	17.48	37,753	6,104.2	4,743.9
Second Quarter	29.60	21.00	23.00	16.32	17,902	5,797.9	4,768.6
Third Quarter	22.60	14.00	18.36	12.73	15,674	4,886.9	3,493.8
Fourth Quarter	34.20	14.40	31.09	13.09	29,961	5,551.2	3,446.3
2002	38.50	15.90	35.00	14.45	24,798	6,462.3	3,850.0
First Quarter	35.80	26.00	32.55	23.64	35,735	6,242.6	5,488.3
Second Quarter	38.50	20.80	35.00	18.91	19,479	6,462.3	5,071.8
Third Quarter	24.50	17.10	22.27	15.55	17,232	5,416.5	4,185.9
Fourth Quarter	24.30	15.90	22.09	14.45	28,264	4,823.7	3,850.0
2003 (through December 12)	35.50	16.90	35.50	15.36	25,177	6,142.3	4,139.5
First Quarter	22.50	16.90	20.45	15.36	16,422	5,078.8	4,260.4
Second Quarter	22.50	17.80	20.45	16.18	27,240	5,048.9	4,139.5
June	22.50	19.10	20.45	16.73	54,797	5,048.9	4,678.1
Third Quarter	27.80	21.50	27.80	19.55	33,764	5,757.9	5,017.8
July	26.80	21.50	24.36	19.55	42,319	5,451.8	5,017.8
August	27.00	23.50	26.50	21.36	29,498	5,686.9	5,214.6
September	27.80	26.00	27.80	26.00	28,662	5,757.9	5,611.4
Fourth Quarter (through December 12)	35.50	26.30	35.50	26.30	21,372	6,142.3	5,581.7
October	32.70	26.30	32.70	26.30	22,957	6,108.1	5,581.7
November	35.50	30.10	35.50	30.10	23,643	6,142.3	5,740.6
December (through December 12)	33.00	31.20	33.00	31.20	12,982	5,920.5	5,803.4

(1)	As adjusted retroactively by the Taiwan Stock Exchange to give effect to stock dividends paid in the periods indicated. See “Dividends and Dividend Policy”.

The performance of the Taiwan Stock Exchange has in recent years been characterized by extreme price volatility. There are currently limits on the range of daily price movements on the Taiwan Stock Exchange. See “Annex A—The Securities Markets of the ROC—The Taiwan Stock Exchange”.

MARKET PRICE INFORMATION FOR OUR ADSs

Our ADSs have been listed on the New York Stock Exchange under the symbol “ASX” since September 26, 2000. The outstanding ADSs are identified by the CUSIP number 00756M404. As of December 12, 2003, a total of 18,476,873 ADSs were outstanding. The table below shows, for the periods indicated, the high and low closing prices and the average daily volume of trading activity on the New York Stock Exchange for our ADSs and the highest and lowest of the daily closing values of the New York Stock Exchange Composite Index. The closing price for our ADSs on the New York Stock Exchange on December 12, 2003 was US$4.55 per ADS.

	Closing Price per ADS		Adjusted Closing Price per ADS(1)		Average Daily Trading Volume	New York Stock Exchange Composite Index
	High	Low	High	Low	Average Daily Trading Volume	High	Low
	US$	US$	US$	US$	(in thousands of ADSs)
2000	6.75	3.06	5.24	2.38	31	7,164.55	6,094.91
Fourth Quarter	6.75	3.06	5.24	2.38	31	7,061.88	6,599.28
2001	6.05	1.75	4.70	1.59	106	7,048.13	5,331.38
First Quarter	6.05	3.06	4.70	2.38	99	7,048.13	5,988.43
Second Quarter	4.55	2.99	3.54	2.32	141	7,016.30	6,049.02
Third Quarter	3.25	1.75	2.73	1.59	52	6,632.58	5,331.38
Fourth Quarter	5.07	2.15	4.61	1.95	126	6,284.81	5,731.49
2002	5.54	2.21	5.04	2.01	111	6,445.01	4,452.49
First Quarter	5.35	3.75	4.86	3.41	135	6,445.01	5,894.75
Second Quarter	5.54	3.05	5.04	2.77	130	6,327.11	5,543.28
Third Quarter	3.70	2.39	3.36	2.17	110	5,598.68	4,549.66
Fourth Quarter	3.50	2.21	3.18	2.01	72	5,247.64	4,452.49
2003 (through December 12)	5.27	2.45	5.27	2.23	197	6,196.29	4,486.70
First Quarter	3.23	2.45	2.94	2.23	40	5,255.39	4,486.70
Second Quarter	3.22	2.50	2.93	2.27	229	5,722.85	4,793.56
June	3.22	2.68	2.93	2.44	583	5,722.85	5,470.02
Third Quarter	4.11	3.17	4.11	2.88	257	5,855.97	5,451.02
July	3.83	3.17	3.48	2.88	274	5,642.44	5,483.61
August	4.02	3.48	4.02	3.16	227	5,660.16	5,451.02
September	4.11	3.75	4.11	3.75	269	5,855.97	5,644.03
Fourth Quarter (through December 12)	5.27	3.88	5.27	3.88	268	6,196.29	5,768.32
October	4.97	3.88	4.97	3.88	214	5,960.28	5,768.32
November	5.27	4.48	5.27	4.48	388	6,073.02	5,924.78
December (through December 12)	4.73	4.38	4.73	4.38	162	6,196.29	6,108.65

(1)	As adjusted retroactively to give effect to stock dividends paid in the periods indicated. See “Dividends and Dividend Policy”.

DIVIDENDS AND DIVIDEND POLICY

To date we have not paid cash dividends on our common shares, and we expect that we will continue to pay a substantial portion, if not all, of our dividends in the form of stock. We have paid annual stock dividends on our common shares since 1989 except in 2002, in which we did not pay any dividend due to the losses we incurred in the 2001 fiscal year.

The following table sets forth the aggregate number of outstanding common shares entitled to dividends, as well as the stock dividends paid during each of the years indicated. The stock dividends per common share represent dividends paid in the fiscal year for common shares outstanding on the record date applicable to the payment of these dividends.

	Stock Dividends Per Common Share(1)		Total Common Shares Issued as Stock Dividends	Outstanding Common Shares on Record Date(2)		Percentage of Outstanding Common Shares Represented by Stock Dividends
	NT$	US$
1995	3.60	0.14	93,600,000	260,000,000		36.0	%
1996	8.00	0.29	319,840,000	399,800,000	(3)	80.0	%
1997	3.80	0.14	277,020,000	729,000,000		38.0	%
1998	7.20	0.21	732,240,000	1,017,000,000		72.0	%
1999	1.07	0.03	190,460,000	1,780,000,000		10.7	%
2000	3.15	0.10	623,811,852	1,980,355,086		31.5	%
2001	1.70	0.05	467,840,000	2,752,000,000		17.0	%
2002	—	—	—	3,254,800,000		—
2003	1.00	0.03	325,480,000	3,254,800,000		10.0	%

(1)

Holders of common shares receive as a stock dividend the number of common shares equal to the NT dollar value per common share of the dividend declared multiplied by the number of common shares owned and divided by the par value of NT$10 per share. Fractional shares are not issued but are paid in cash.

(2)	Aggregate number of common shares outstanding on the record date applicable to the dividend payment. Includes common shares issued in the previous year under our employee bonus plan.

(3)	Includes 43,000,000 common shares issued in connection with an offering of global depositary shares in July 1995.

We have historically paid stock dividends on our common shares with respect to the results of the preceding year after approval by our shareholders at the annual general meeting of shareholders. The form, frequency and amount of future cash or stock dividends on our common shares and ADSs will depend upon our earnings, cash flow, financial condition and other factors. See “Description of Common Shares—Dividends and Distributions”.

In general, we are not permitted to distribute dividends or make other distributions to shareholders for any year where we did not record net income or retained earnings (excluding reserves). The ROC Company Law also requires that 10% of annual net income (less prior years’ losses, if any) be set aside as a legal reserve until the accumulated legal reserve equals our paid-in capital. In addition, our Articles of Incorporation require that before a dividend is paid out of our annual net income:

up to 2% of our annual net income (less prior years’ losses and legal and special reserves, if any) should be paid to our directors and supervisors as compensation; and

between 5% and 7% of the annual net income (less prior years’ losses and legal and special reserves, if any) should be paid to our employees as bonuses; the 5% portion is to be distributed to all employees in accordance with our employee bonus distribution rules, while

any portion exceeding 5% is to be distributed in accordance with rules established by our board of directors to individual employees who have been recognized as having made special contributions to our company.

In order to meet the needs of our present and future capital expenditures, our dividend distribution will be primarily in the form of common shares. Cash dividends may also be distributed in certain circumstances. However, the percentage of cash dividends generally will not exceed 20% in any dividend distribution, provided further that cash dividends will not be paid if the dividend per share is less than NT$0.10.

Holders of ADSs will be entitled to receive dividends, subject to the terms of the deposit agreement, to the same extent as the holders of the common shares. Cash dividends will be paid to the depositary in NT dollars and, except as otherwise described under “Description of American Depositary Receipts—Dividends and Distributions—Distributions of Cash”, will be converted by the depositary into U.S. dollars and paid to holders of ADSs according to the terms of the deposit agreement. Stock dividends will be distributed to the depositary and, except as otherwise described under “Description of American Depositary Receipts—Dividends and Distributions—Distributions of Shares”, will be distributed by the Depositary, in the form of additional ADSs, to holders of ADSs according to the terms of the deposit agreement.

Holders of outstanding common shares on a dividend record date will be entitled to the full dividend declared without regard to any prior or subsequent transfer of common shares. Accordingly, holders of outstanding ADSs on the relevant dividend record date will, subject to the terms of the deposit agreement, be entitled to the full amount of any dividend declared at our next general meeting of the shareholders.

For information relating to ROC withholding taxes payable on dividends, see “Taxation—ROC Taxation—Common Shares and ADSs—Dividends on Common Shares and ADSs”. For information relating to ROC foreign exchange approvals required for the conversion by the depositary of dividends on common shares from NT dollars into U.S. dollars for the payment to holders of ADSs, see “Annex B—Foreign Investment and Exchange Controls in the ROC—Depositary Receipts”.

EXCHANGE RATES

Fluctuations in the exchange rate between NT dollars and U.S. dollars will affect the U.S. dollar equivalent of the NT dollar price of the common shares on the Taiwan Stock Exchange and, as a result, will likely affect the market price of the ADSs and the convertible notes. Fluctuations will also affect the U.S. dollar conversion by the depositary of cash dividends paid in NT dollars on, and the NT dollar proceeds received by the depositary from any sale of, common shares represented by ADSs, in each case, according to the terms of the deposit agreement.

The following table sets forth, for the periods indicated, information concerning the number of NT dollars for which one U.S. dollar could be exchanged based on the noon buying rate for cable transfers in NT dollars as certified for customs purposes by the Federal Reserve Bank of New York.

	NT Dollars per U.S. Dollar Noon Buying Rate
	Average	High	Low	Period-End
1998	33.50	35.00	32.05	32.27
1999	32.28	33.40	31.39	31.39
2000	31.37	33.25	30.35	33.17
2001	33.91	35.13	32.23	35.00
2002	34.53	34.79	34.70	34.70
2003 (through December 12)	34.44	34.98	33.72	34.03
June	34.63	34.71	34.52	34.61
July	34.39	34.58	34.41	34.41
August	34.31	34.47	34.12	34.12
September	33.99	34.15	33.72	33.78
October	33.87	34.05	33.72	33.98
November	34.00	34.06	33.95	34.20
December (through December 12)	34.04	34.05	34.03	34.03

Source: Federal Reserve Statistical Release H10(512), 1997-2003, Board of Governors of the Federal Reserve System.

On December 12, 2003, the noon buying rate was NT$34.03 = US$1.00.

For information relating to ROC foreign exchange approvals required for the conversion by the Depositary of dividends on common shares or proceeds from the sale of common shares from NT dollars into U.S. dollars and the payment to holders of ADSs, see “Annex B—Foreign Investment and Exchange Controls in the ROC—Depositary Receipts”.

CAPITALIZATION

The following table sets forth our consolidated short-term debt and capitalization as of June 30, 2003 on an actual basis and on an as adjusted basis to give effect to the net proceeds received by us from the sale of the ADSs and the convertible notes, after deducting underwriting and estimated offering expenses (assuming an initial offering price of US$4.55 per ADS, which is based on the closing price of the ADSs on the New York Stock Exchange on December 12, 2003). Except as noted in this prospectus, there has been no material change in our consolidated capitalization since June 30, 2003. The following table should be read in conjunction with our consolidated financial statements included in this prospectus.

	As of June 30, 2003
	Actual				As Adjusted
	NT$		US$		NT$		US$
	(in millions)
Short-term debt (including current portions of long-term debt, long-term bonds payable and long-term payable for investments)	17,773.9		513.5		17,773.9		513.5

Long-term debt (excluding current portion of long-term debt)
Unguaranteed and unsecured long-term debt	15,347.9		443.5		16,797.9		485.4
Unguaranteed and secured long-term debt	4,397.4		127.1		3,448.4		99.6
Guaranteed and unsecured long-term debt	9,307.2		268.9		9,307.2		268.9
Guaranteed and secured long-term debt	1,392.0		40.2		891.0		25.8
Long-term payable for investments	2,353.5		68.0		2,353.5		68.0
Shareholders’ equity:
Capital stock, par value NT$10, 5,150.0 million shares authorized, 3,254.8 million shares issued and outstanding	32,548.0		940.4		35,548.0		1,027.1
Capital surplus	7,173.9		207.3		13,331.7		385.2
Retained earnings	1,175.6		34.0		1,175.6		34.0
Unrealized loss on long-term investments in shares of stock	(68.9	)	(2.0	)	(68.9	)	(2.0	)
Treasury stock	(10.0	)	(0.3	)	(10.0	)	(0.3	)
Cumulative translation adjustments	1,792.8		51.8		1,792.8		51.8

Total shareholders’ equity	42,611.4		1,231.2		51,769.2		1,495.8

Total capitalization	93,183.3		2,692.4		102,341.1		2,957.0

In August 2003, ASE Test redeemed US$159.9 million aggregate principal amount of its US$160 million 1% guaranteed convertible notes due 2004. In September 2003, we entered into a NT$7.0 billion five-year unsecured syndicated credit facility, for which Citibank, N.A., Taipei Branch acted as the lead manager. In September 2003, we issued US$200 million in aggregate principal amount of unsecured zero coupon convertible bonds due 2008.

SELLING SHAREHOLDER

In the event the underwriters exercise the overallotment option to purchase additional ADSs, ASE Enterprises, a company organized under the laws of Hong Kong, which held 19.3% of our outstanding common shares as of October 31, 2003, will sell up to a total of 9,000,000 additional ADSs. The table below sets forth the beneficial ownership of our common shares of the selling shareholder prior to the ADS offering and after giving effect to the sale of all of the ADSs offered in the ADS offering.

Before the ADS Offering

(as of October 31, 2003)

After the ADS Offering
(Assuming the Overallotment
Option is Not Exercised)

After the ADS Offering

(Assuming the

Overallotment Option is Fully
Exercised)

Name

Number of

Common
Shares

Percentage
of Total
Outstanding

Common
Shares

Number of

Common
Shares

Percentage
of Total
Outstanding
Common
Shares

Number of
Common
Shares

Percentage
of Total
Outstanding
Common
Shares

ASE Enterprises

691,235,417

19.3%

691,235,417

17.8%

646,235,417

16.7%

The principal executive offices of ASE Enterprises are located at 1408 Worldwide House, 19 Des Voeux Road Central, Hong Kong.

SELECTED CONSOLIDATED FINANCIAL INFORMATION

The selected consolidated income statement data and cash flow data for the years ended December 31, 2000, 2001 and 2002 and for the six months ended June 30, 2003, and the selected consolidated balance sheet data as of December 31, 2001 and 2002 and as of June 30, 2003, set forth below are derived from our audited consolidated financial statements included in this prospectus and should be read in conjunction with, and are qualified in their entirety by reference to, these consolidated financial statements. Our consolidated financial statements as of and for the years ended December 31, 2000, 2001 and 2002 and our consolidated financial statements as of and for the six months ended June 30, 2003 have been audited by TN Soong & Co., independent public accountants, an associate member firm of Deloitte Touche Tohmatsu. TN Soong & Co. and Deloitte & Touche (Taiwan) combined to establish Deloitte & Touche effective June 1, 2003. The selected consolidated income statement data and cash flow data for the six months ended June 30, 2002, and the selected consolidated balance sheet data as of June 30, 2002, set forth below are derived from our unaudited consolidated financial statements included in this prospectus and should be read in conjunction with, and are qualified in their entirety by reference to, these consolidated financial statements. The selected consolidated income statement data and cash flow data for the years ended December 31, 1998 and 1999 and the selected consolidated balance sheet data as of December 31, 1998, 1999 and 2000 set forth below are derived from our audited consolidated financial statements not included in this prospectus. These consolidated financial statements have been audited by TN Soong & Co., independent public accountants, an associate member firm of Deloitte Touche Tohmatsu. Our consolidated financial statements have been prepared and presented in accordance with ROC GAAP, which differ in material respects from U.S. GAAP. See notes 26 and 27 to our consolidated financial statements for a description of the principal differences between ROC GAAP and U.S. GAAP for the periods covered by these consolidated financial statements.

	As of and for the Year Ended December 31,												As of and for the Six Months Ended June 30,
	1998		1999		2000		2001		2002				2002		2003
	NT$		NT$		NT$		NT$		NT$		US$		NT$		NT$		US$
													(unaudited)
	(in millions, except earnings per share and per ADS data)
ROC GAAP:
Income Statement Data:
Net revenues	20,762.4		32,609.6		50,893.4		38,367.8		45,586.8		1,317.2		20,872.2		24,357.2		703.8
Cost of revenues	(15,468.1	)	(23,959.6	)	(35,567.3	)	(32,957.0	)	(38,492.2	)	(1,112.2	)	(17,984.4	)	(20,875.9	)	(603.2	)

Gross profit	5,294.3		8,650.0		15,326.1		5,410.8		7,094.6		205.0		2,887.8		3,481.3		100.6
Total operating expenses	(2,453.4	)	(3,801.4	)	(5,449.0	)	(5,872.9	)	(7,779.8	)	(224.8	)	(3,085.3	)	(3,523.6	)	(101.8	)

Operating expenses:
Selling	(744.7	)	(924.3	)	(1,020.5	)	(877.9	)	(909.4	)	(26.3	)	(427.3	)	(530.5	)	(15.3	)
General and administrative(1)	(909.4	)	(1,655.0	)	(2,606.2	)	(2,797.6	)	(4,005.8	)	(115.7	)	(1,335.5	)	(1,486.8	)	(43.0	)
Goodwill amortization(2)	(345.7	)	(507.8	)	(559.8	)	(692.9	)	(815.6	)	(23.6	)	(407.1	)	(413.1	)	(11.9	)
Research and development	(453.6	)	(714.3	)	(1,262.5	)	(1,504.5	)	(2,049.0	)	(59.2	)	(915.4	)	(1,093.2	)	(31.6	)

Operating income (loss)	2,840.9		4,848.6		9,877.1		(462.1	)	(685.2	)	(19.8	)	(197.5	)	(42.3	)	(1.2	)
Net non-operating income (expense):
Investment income (loss) on long-term investment—net(1)(3)	54.6		329.9		195.7		(868.8	)	(162.4	)	(4.7	)	(46.7	)	(48.3	)	(1.4	)
Goodwill amortization(4)	(155.1	)	(279.3	)	(363.0	)	(378.0	)	(247.9	)	(7.2	)	(111.5	)	(110.3	)	(3.2	)
Gain (loss) on sale of investments—net	606.9		5,544.2		91.7		50.7		101.3		2.9		58.7		(328.0	)	(9.5	)
Foreign exchange gain (loss)—net	(935.5	)	(538.4	)	302.7		247.5		(397.9	)	(11.5	)	(264.7	)	(39.6	)	(1.1	)
Interest income (expense)—net(5)	(380.4	)	(1,046.6	)	(1,538.0	)	(1,739.3	)	(1,578.6	)	(45.5	)	(775.4	)	(235.7	)	(6.8	)
Others—net(6)	(50.1	)	204.0		(162.6	)	164.5		261.0		7.5		341.5		(45.2	)	(1.3	)

Income (loss) before tax	1,981.3		9,062.4		8,403.6		(2,985.5	)	(2,709.7	)	(78.3	)	(995.6	)	(849.4	)	(24.5	)
Income tax benefit (expense)	150.8		(459.5	)	(1,065.8	)	199.2		1,140.3		32.9		313.0		511.8		14.8

Income (loss) before minority interest	2,132.1		8,602.9		7,337.8		(2,786.3	)	(1,569.4	)	(45.4	)	(682.6	)	(337.6	)	(9.7	)
Income before acquisition	—		(65.1	)	—		—		—		—		—		—		—
Extraordinary loss	—		—		—		(144.6	)	(34.6	)	(1.0	)	—		—		—
Minority interest in net loss (income) of subsidiary	(528.1	)	(743.1	)	(1,500.6	)	788.7		1,733.0		50.1		526.0		350.0		10.1

Net income (loss)	1,604.0		7,794.7		5,837.2		(2,142.2	)	129.0		3.7		(156.6	)	12.4		0.4

Earnings per common share:
Basic(7)	0.51		2.49		1.84		(0.66	)	0.04		0.00		(0.05	)	0.00		0.00
Diluted(7)	0.49		2.45		1.80		(0.66	)	0.04		0.00		(0.05	)	0.00		0.00
Dividends per common share(8)	7.20		1.07		3.15		1.70		—		—		—		0.03		0.00

	As of and for the Year Ended December 31,												As of and for the Six Months Ended June 30,
	1998		1999		2000		2001		2002				2002		2003
	NT$		NT$		NT$		NT$		NT$		US$		NT$		NT$		US$
													(unaudited)
	(in millions, except earnings per share and per ADS data)
Earnings per pro forma equivalent ADS:
Basic(7)	2.56		12.43		9.22		(3.29	)	0.21		0.01		(0.25	)	0.02		0.00
Diluted(7)	2.43		12.27		9.01		(3.29	)	0.21		0.01		(0.25	)	0.02		0.00
Number of common shares(9)	3,135.2		3,135.2		3,166.8		3,254.8		3,090.7		3,090.7		3,090.7		3,116.6		3,116.6
Number of pro forma equivalent ADSs	627.0		627.0		633.4		651.0		618.1		618.1		618.1		623.3		623.3

Balance Sheet Data:
Current assets:
Cash and cash equivalents	8,173.9		11,809.1		14,166.5		11,770.7		10,381.9		300.0		7,608.4		11,553.5		333.8
Short-term investments	647.2		216.3		1,682.7		4,601.2		2,038.0		58.9		3,986.0		3,063.1		88.5
Notes and accounts receivable	3,636.7		7,463.4		9,260.6		7,126.1		8,998.5		260.0		7,685.4		9,026.9		260.8
Inventories	1,744.8		2,449.7		3,246.3		2,768.4		3,131.7		90.5		2,923.6		3,551.6		102.6
Other	771.9		1,411.8		2,431.6		3,383.2		2,481.7		71.7		5,783.2		7,229.2		208.9

Total	14,974.5		23,350.3		30,787.7		29,649.6		27,031.8		781.1		27,986.6		34,424.3		994.6
Long-term investments	7,317.0		9,674.4		10,712.2		9,530.4		6,566.7		189.7		6,746.1		6,473.8		187.0
Properties	20,356.8		38,107.5		60,566.2		60,555.1		63,088.9		1,822.8		59,986.8		64,820.0		1,872.9
Other assets	1,125.9		952.8		1,275.6		1,342.3		2,640.2		76.3		1,973.0		4,212.5		121.7
Consolidated debits	3,237.3		5,245.8		4,999.5		5,248.9		5,541.8		160.1		5,759.0		5,099.6		147.4

Total assets	47,011.5		77,330.8		108,341.2		106,326.3		104,869.4		3,030.0		102,451.5		115,030.2		3,323.6

Short-term bank borrowings/loans(10)	6,810.2		9,868.2		13,768.0		13,983.1		13,453.8		388.7		16,181.2		17,773.9		513.6
Long-term bank borrowings/loans(11)	12,235.0		24,551.5		25,976.9		30,674.3		30,553.7		882.8		27,010.8		32,798.0		947.6
Other liabilities and minority interest	6,091.5		12,854.1		24,927.1		19,722.6		21,431.2		619.2		20,517.5		21,846.9		631.2

Total liabilities and minority interest	25,136.7		47,273.8		64,672.0		64,380.0		65,438.7		1,890.7		63,709.5		72,418.8		2,092.4

Shareholders’ equity	21,874.8		30,057.0		43,669.2		41,946.3		39,430.7		1,139.3		38,742.0		42,611.4		1,231.2

Cash Flow Data:
Net cash outflow from acquisition of fixed assets	(6,945.0	)	(9,869.2	)	(30,063.6	)	(11,565.7	)	(12,657.9	)	(365.7	)	(2,798.7	)	(8,022.0	)	(231.8	)
Depreciation and amortization	3,237.2		5,554.4		8,593.8		11,127.3		12,286.3		355.0		5,943.1		6,246.6		180.5
Net cash inflow from operations	5,194.2		7,017.2		17,459.9		11,578.4		11,313.8		326.9		5,218.7		6,585.1		190.3
Net cash inflow from sale of investments	290.5		7,889.3		—		195.3		—		—		—		2,850.5		82.4
Net cash outflow from investing activities(12)	(8,558.3	)	(11,782.7	)	(33,392.0	)	(15,051.2	)	(13,167.2	)	(380.4	)	(7,467.1	)	(6,464.1	)	(186.8	)
Net cash inflow (outflow) from financing activities(13)	589.3		8,569.0		17,607.3		603.5		530.5		15.3		(1,523.5	)	1,163.1		33.6

Segment Data:
Net revenues:
Packaging	16,867.4		24,523.0		38,028.8		28,898.2		35,515.4		1,026.2		16,252.0		19,008.1		549.2
Testing	3,131.3		7,793.2		12,768.4		9,459.2		10,060.6		290.7		4,617.9		5,287.0		152.8
Other	763.7		293.4		96.2		10.4		10.8		0.3		2.3		62.1		1.8
Gross profit:
Packaging	3,693.8		5,753.0		10,016.9		4,625.8		6,255.4		180.7		2,789.4		2,597.4		75.0
Testing	1,484.6		3,105.2		5,294.4		782.8		841.2		24.3		98.2		886.9		25.6
Other	115.9		(208.2	)	14.8		2.2		(2.0	)	(0.0	)	0.2		(3.0	)	(0.0	)

	As of and for the Year Ended December 31,								As of and for the Six Months Ended June 30,
	2000		2001		2002				2002		2003
	NT$		NT$		NT$		US$		NT$		NT$		US$
									(unaudited)
	(in millions, except earnings per share and per ADS data)

U.S. GAAP:
Income Statement Data:
Net revenues	50,893.4		38,367.8		45,586.8		1,317.1		20,872.2		24,357.2		703.8
Cost of revenues	37,081.2		34,538.3		39,308.2		1,135.7		18,696.6		21,274.8		614.8

Gross profit	13,812.2		3,829.5		6,278.6		181.4		2,175.6		3,082.4		89.0
Total operating expenses	5,820.8		6,209.9		9,294.2		268.5		2,864.3		3,209.7		92.7

Operating income (loss)	7,991.4		(2,380.4	)	(3,015.6	)	(87.1	)	(688.7	)	(127.3	)	(3.7	)
Net non-operating income (expense)	(1,502.5	)	(2,704.6	)	(2,793.8	)	(80.7	)	(726.5	)	(357.6	)	(10.3	)
Income tax benefit (expense)	(1,059.2	)	254.4		1,162.6		33.6		318.3		517.2		14.9
Minority interest in net loss (income) of subsidiary	(1,499.7	)	784.0		1,572.5		45.4		448.4		277.4		8.0

Net income (loss)	3,930.0		(4,046.6	)	(3,074.3	)	(88.8	)	(648.5	)	309.7		8.9

Earnings per common share:
Basic(7)	1.34		(1.32	)	(0.99	)	(0.03	)	(0.21	)	0.10		0.00
Diluted(7)	1.29		(1.32	)	(0.99	)	(0.03	)	(0.21	)	0.10		0.00
Earnings per pro forma equivalent ADS:
Basic(7)	6.69		(6.59	)	(4.97	)	(0.14	)	(1.05	)	0.50		0.01
Diluted(7)	6.47		(6.59	)	(4.97	)	(0.14	)	(1.05	)	0.50		0.01
Number of common shares(14)	2,938.0		3,071.2		3,090.7		3,090.7		3,090.7		3,116.6		3,116.6
Number of pro forma equivalent ADSs	587.6		614.2		618.1		618.1		618.1		623.3		623.3

Balance Sheet Data:
Current Assets
Cash and cash equivalents			11,770.7		10.381.9		300.0		7,608.4		11,553.5		333.8
Short-term investments			4,642.1		2,040.0		58.9		4,002.8		3,067.9		88.7
Notes and accounts receivable			7,126.1		8,998.5		260.0		7,685.4		9,026.9		260.8
Inventories			2,768.4		3,131.7		90.5		2,923.6		3,551.6		102.6
Other			3,383.2		2,481.7		71.7		5,783.2		7,229.1		208.9

Total			29,690.5		27,033.8		781.1		28,003.4		34,429.0		994.8
Long-term investments			6,608.3		5,609.3		162.1		6,568.8		5,608.1		162.0
Properties			60,363.1		62,797.4		1,814.4		59,748.7		64,478.0		1,863.0
Other assets			1,371.0		2,679.7		77.4		2,007.2		4,257.5		123.0
Consolidated debits			4,331.6		3,227.0		93.2		5,248.8		3,198.0		92.4

Total assets			102,364.5		101,347.2		2,928.2		101,576.9		111,970.6		3,235.2

Short-term bank borrowings/loans(10)			13,983.1		13,453.8		388.7		16,181.2		17,773.9		513.6
Long-term bank borrowings/loans(11)			30,674.3		30,553.7		882.8		27,010.8		32,798.0		947.6
Other liabilities and minority interest			19,746.8		21,622.9		624.8		20,695.0		22,129.2		639.4

Total liabilities and minority interest			64,404.2		65,630.4		1,896.3		63,887.0		72,701.1		2,100.6

Shareholders’ equity			37,960.3		35,716.8		1,031.9		37,689.9		39,269.5		1,134.6

(1)	Excludes goodwill amortization for purposes of this table only.

(2)	Included in general and administrative expense in our consolidated financial statements.

(3)	Derived by netting “investment income under equity method” in non-operating income and “investment loss under equity method” in non-operating expenses in our consolidated financial statements.

(4)	Included in “investment loss under equity method” in non-operating expenses in our consolidated financial statements.

(5)	Derived by netting “interest” in non-operating income and “interest” in non-operating expenses in our consolidated financial statements.

(6)	Derived by netting “others” in non-operating income and “others” in non-operating expenses in our consolidated financial statements.

(7)	The numerator of both basic and diluted earnings per share is calculated with consideration of the adjustment of ASE Test’s basic and diluted earnings per share. See notes 19 and 28(i) to the consolidated financial statements.

(8)	Dividends per common share issued as a stock dividend.

(9)

(10)	Includes current portions of long-term debt and long-term payable for investments.

(11)	Excludes current portion of long-term debt and long-term payable for investments.

(12)	Includes proceeds from the sale of common shares, including common shares represented by global depositary shares or ADSs, by affiliates of ASE Inc., and proceeds from the sale of ordinary shares of ASE Test by ASE Inc.

(13)	Includes proceeds from primary offerings of common shares represented by ADSs by ASE Inc., and of ordinary shares by ASE Test.

(14)	Represents the weighted average number of shares after retroactive adjustments to give effect to stock dividends.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

The following discussion of our business, financial condition and results of operations should be read in conjunction with our consolidated financial statements, which are included elsewhere in this prospectus. This discussion contains forward-looking statements that reflect our current views with respect to future events and financial performance. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of any number of factors, such as those set forth under “Risk Factors” and elsewhere in this prospectus. See “Forward-Looking Statements”.

Overview

We offer a broad range of semiconductor packaging and testing services. In addition to offering each service separately, we also offer turnkey services, which consist of the integrated packaging, testing and direct shipment of semiconductors to end users designated by our customers. Our net revenues decreased from NT$50,893.4 million in 2000 to NT$38,367.8 million in 2001, primarily as a result of a severe downturn in the semiconductor industry, but increased to NT$45,586.8 million (US$1,317.2 million) in 2002. Our net revenues increased to NT$24,357.2 million (US$703.8 million) in the six months ended June 30, 2003 from NT$20,872.2 million in the same period in 2002. The increase in our net revenues in 2002 and in the six months ended June 30, 2003 reflected a modest recovery in the semiconductor industry and increased outsourcing of the packaging of advanced package types such as BGA. The decrease in our net revenues from 2000 to 2001 was across each of the principal end-use applications of the semiconductors that we packaged and tested—communications, personal computers and consumer electronics. In 2002 and the six months ended June 30, 2003, we experienced a gradual improvement in our net revenues compared to 2001 and the six months ended June 30, 2002, respectively, across each of the end-use applications of the semiconductors that we packaged and tested. This improvement was generally concentrated in the packaging of more advanced package types and the testing of more complex, high-performance semiconductors.

Pricing and Revenue Mix

We price our services on a cost-plus basis, taking into account the actual costs involved in providing these services, with reference to prevailing market prices. The majority of our prices and revenues are denominated in U.S. dollars. However, as more than half of our costs, including most of our labor and overhead costs, are denominated in NT dollars, we consider the NT dollar to be our functional currency. Furthermore, the majority of our financing costs are denominated in NT dollars.

The semiconductor industry is characterized by a general trend towards declining prices for products and services of a given technology over time. In addition, during periods of intense competition and adverse conditions in the semiconductor industry, the pace of this decline may be more rapid than that experienced in other years. The average selling prices of our packaging and testing services have experienced sharp declines during such periods as a result of intense price competition from other independent packaging and testing companies that attempt to maintain high capacity utilization levels in the face of reduced demand. During the industry downturn commencing in the fourth quarter of 2000, we experienced a significant deterioration in average selling prices which resulted in our company incurring a net loss in 2001 and a significant decrease in net income in 2002, as compared with the years prior to 2001. As a result of the modest recovery in the semiconductor industry and a gradual upturn in the outsourcing trend in 2002 and 2003, our average selling prices for packaging and testing services stabilized in 2002 and the first half of 2003 as compared to the average selling price in 2000 and 2001. We expect this pricing environment to continue in the first half of 2004.

In 2000, 2001 and 2002, packaging revenues accounted for 74.7%, 75.3% and 77.9% while testing revenues accounted for 25.1%, 24.7% and 22.1%, respectively, of our net revenues. In the six months ended June 30, 2002 and 2003, packaging revenues accounted for 77.9% and 78.0%, respectively, while testing revenues accounted for 22.1% and 21.7%, respectively, of our net revenues. Testing revenues as a percentage of our net revenues decreased in 2001 and 2002 and the six months ended June 30, 2003 as the average selling prices of our testing services are more severely affected by the downturn in the semiconductor industry than the average selling prices of our packaging services. In periods of an industry downturn, the decline in the average selling prices of our testing services is often exacerbated by the decrease in demand from our integrated device manufacturer customers, who typically maintain larger in-house testing capacity than in-house packaging capacity. These price declines are also exacerbated by the intense price competition from other independent testing service providers, who typically offer large price discounts during periods of depressed demand, such as in 2001, in order to maintain higher capacity utilization rates to defray the high fixed costs associated with testing operations.

Although the growth rate for outsourced semiconductor testing services slowed down as a result of the industry downturn in 2000 and 2001, we expect this growth rate to improve due to the modest recovery in the semiconductor industry in 2002 and 2003. We believe that the market for outsourced semiconductor testing services has more potential for growth than the market for outsourced semiconductor packaging services over the long term for two reasons. First, the portion of the semiconductor testing market that is currently accounted for by independent testing service providers is smaller than that for packaging. Second, the large capital expenditures needed for increasingly sophisticated testing equipment, as compared to less expensive packaging equipment, are also a driver for further outsourcing of testing services by integrated device manufacturers.

Declines in average selling prices have been partially offset over the last three years by a change in our revenue mix. In particular, revenues derived from packaging more advanced package types, such as BGA, higher density packages with finer lead-to-lead spacing, or pitch, and testing of more complex, high-performance semiconductors have increased as a percentage of total revenues. We intend to continue focusing on packaging more advanced package types, such as BGA and flip-chip BGA, developing and offering new technologies in packaging and testing services and expanding our capacity to achieve economies of scale, as well as improving production efficiencies for older technology, in order to mitigate the effects of declining average selling prices on our profitability.

High Fixed Costs

Our operations, in particular our testing operations, are characterized by relatively high fixed costs. We expect to continue to incur substantial depreciation and other expenses as a result of our previous acquisitions of packaging and testing equipment and facilities. Our profitability depends in part not only on absolute pricing levels for our services, but also on utilization rates for our packaging and testing equipment, commonly referred to as “capacity utilization rates”. In particular, increases or decreases in our capacity utilization rates could have a significant effect on gross margins since the unit cost of packaging and testing services generally decreases as fixed costs are allocated over a larger number of units.

The current generation of advanced testers typically cost between US$2.0 million and US$5.0 million each, while wire bonders used in packaging typically cost approximately US$100,000 each. In 2000, 2001 and 2002, our depreciation expense as a percentage of net revenues was 15.7%, 27.0% and 25.0%, respectively. In the six months ended June 30, 2002 and 2003, depreciation expense as a percentage of our net revenues was 26.9% and 23.9%, respectively. The significant increase in depreciation expense as a percentage of net revenues in 2001 and 2002 compared to 2000 was primarily a result of the lower net revenues during 2001 and 2002 compared to 2000 and our capacity

expansion in 2000. We begin depreciating our equipment when it is placed into service. There may sometimes be a time lag between when our equipment is placed into service and when it achieves high levels of utilization. In periods of depressed industry conditions such as 2000 and 2001, we may experience lower than expected demand from customers and a sharp decline in the average selling price of our testing services, resulting in an increase in depreciation expense relative to net revenues. In particular, the capacity utilization rates for our testing equipment are more severely affected during an industry downturn as a result of the decrease in outsourcing demand from integrated device manufacturers, which typically maintain larger in-house testing capacity than in-house packaging capacity. We expect that our capacity utilization rate will improve in the first half of 2004 as a result of the modest recovery in the semiconductor industry and a gradual upturn in the outsourcing trend.

In 2003, we entered into operating leases with leasing companies to lease advanced testers, generally for a term of three years. We believe that these operating leases will allow us to better manage our capacity utilization rate and cash flow. Since testers operated under operating leases could be replaced with more advanced testers upon the expiration of the lease, we expect that these operating leases would improve our capacity utilization rate by reducing the number of testers with lower utilization. As of October 31, 2003, we leased 33 testers.

Raw Material Costs

Substantially all of our raw material costs are accounted for by packaging and the production of interconnect materials, as testing requires minimal raw materials. In 2000, 2001 and 2002, raw material cost as a percentage of our net revenues was 28.7%, 30.7% and 30.2%, respectively. In the six months ended June 30, 2002 and 2003, raw material cost as a percentage of our net revenues was 29.9% and 29.3%, respectively. We expect interconnect materials to become an increasingly important component of the cost of our packaging revenues and we plan to continue to develop and enhance our in-house interconnect materials capabilities in order to maintain and enhance our profitability, ensure an adequate supply of interconnect materials at competitive prices and reduce production time. On October 28, 2003, we entered into a merger agreement to merge ASE Material with and into ASE Inc., with ASE Inc. as the surviving corporation. In addition, on October 28, 2003, we entered into a joint venture agreement with Compeq to establish ASE-Compeq Technologies, Inc., which will focus on the design and production of interconnect materials for packaging semiconductors. We believe that our merger with ASE Material and our joint venture with Compeq will enhance our interconnect materials capabilities.

Goodwill Amortization

Our operating income and non-operating income in recent years have been affected by goodwill amortization charges in connection with the restructuring of our investment holdings and other share repurchases. Under ROC GAAP, additional purchases of shares of consolidated subsidiaries (majority owned) or of companies accounted for using the equity method (less than majority but at least 20% owned) will generate goodwill in an amount equal to the difference between the purchase price and the book value per share of those shares. The goodwill generated is amortized over ten years. Goodwill amortization from the purchases of shares of consolidated subsidiaries are recognized under general and administrative expense. Goodwill amortization from the purchases of shares of companies accounted for using the equity method are recognized as a debit under investment income. Transactions which created significant goodwill charges were (1) the purchase of additional ordinary shares of ASE Test in the open market in 2002, (2) the purchase of additional ordinary shares of ASE Test in 2001 from two of our directors at the prevailing market price, (3) the purchase of a total of 26,250,000 shares of ISE Labs in 1999, 2000 and 2002 and (4) the open market purchase of shares of Universal Scientific between 1999 and 2000. See “Related Party Transactions” and note 10 to the consolidated financial statements.

Pending Merger of ASE Chung Li and ASE Material

On October 28, 2003, we entered into a merger agreement with ASE Chung Li and ASE Material pursuant to which ASE Chung Li and ASE Material will be merged with and into ASE Inc., with ASE Inc. as the surviving corporation. The merger is to be consummated by means of a share exchange pursuant to which the respective shareholders (other than ASE Inc.) of ASE Chung Li and ASE Material will receive common shares of ASE Inc. in exchange for the common shares of each of ASE Chung Li and ASE Material. The planned share exchange pursuant to the merger agreement between ASE Inc. and entities under the control of ASE Inc. will be treated as a transaction between entities under common control, and all assets and liabilities exchanged will be transferred at their carrying amounts. With respect to the share exchange between ASE Inc. and the outstanding minority interests, the purchase method of accounting will be applied as the exchange represents the acquisition of non-controlling equity interests in a subsidiary. To the extent that the fair value of the ASE Inc. common shares (based on the closing price of NT$31.00 per ASE Inc. common share on the Taiwan Stock Exchange on October 28, 2003) exchanged for the non-controlling equity interests exceeds the fair value of the acquired net assets (as determined on July 1, 2004, the effective date of the merger), the merger will generate goodwill. For more information on the pending merger, see “Business—Recent Developments”.

Critical Accounting Policies and Estimates

Preparation of our consolidated financial statements requires us to make estimates and judgments in applying our critical accounting policies which have a significant impact on the results we report in our consolidated financial statements. We continually evaluate these estimates, including those related to revenue recognition, allowances for doubtful accounts, inventories, allowances for deferred income tax assets, useful lives of properties, realizability of long-term assets, goodwill and the valuation of marketable securities and long-term investments. We base our estimates on historical experience and other assumptions which we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions and conditions. We have identified below the accounting policies that are the most critical to our consolidated financial statements.

Revenue recognition. Revenues from semiconductor packaging services that we provide are recognized upon shipment. Revenues from testing services that we provide are recognized upon completion of the services. We do not take ownership of: (1) bare semiconductor wafers received from customers that we package into finished semiconductors, and (2) packaged semiconductors received from customers that we test. The title and risk of loss remains with the customer for those bare semiconductors and/or packaged semiconductors. Accordingly, the cost of customer-supplied semiconductors materials is not included in our consolidated financial statements. Other criteria that we use to determine when to recognize revenue are: (1) persuasive evidence that the services provided exist, (2) the selling price is fixed or determinable and (3) collectibility is reasonably assured. These policies are consistent with provisions in the Staff Accounting Bulletin No. 101 issued by the United States Securities and Exchange Commission, or SEC. We do not provide warranties to our customers except in cases of defects in the packaging services provided and deficiencies in testing services provided. An appropriate sales allowance is recognized in the period during which the sale is recognized, and is estimated based on historical experience.

Allowance for Doubtful Accounts. We periodically record a provision for doubtful accounts based on our evaluation of the collectibility of our accounts receivable. The total amount of this provision is determined by us as follows. We first identify the receivables of customers that are of a higher credit risk based on their current overdue accounts with us, difficulties collecting from these customers in the past or their overall financial condition. For each of these customers, we estimate the extent to which the customer will be able to meet its financial obligations to us, and we record an

allowance that reduces our accounts receivable for that customer to the amount that we reasonably believe will be collected. For all other customers, we maintain an allowance for doubtful accounts equal to a percentage of their aggregate accounts receivable. Based on our experience, we currently maintain an allowance for the account receivables of these other customers which average between 3% and 4%, on a consolidated basis, of our net revenues. Additional allowances may be required in the future if the financial condition of our customers or general economic conditions deteriorate, and this additional allowance would reduce our net income.

Inventories. Inventories are recorded at cost when acquired and stated at the lower of weighted average cost or market value. Market value for finished goods and work in process is the net realized value. Market value for raw materials, supplies and spare parts is the replacement cost. An allowance for loss on decline in market value and obsolescence is provided based on the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. An additional inventory provision may be required if actual market conditions are less favorable than those projected.

Allowances for Deferred Income Tax Assets. Tax benefits arising from deductible temporary differences, unused tax credits and net operating loss carryforwards are recognized as deferred tax assets. We record a valuation allowance to reduce our deferred income tax assets to an amount that we believe will more likely than not be realized. We have considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need and amount for the valuation allowance. In the event we were to determine that we would be able to realize our deferred income tax assets in the future in excess of our net recorded amount, an adjustment to our deferred income tax assets would increase income in the period such determination was made. Alternatively, should we determine that we would not be able to realize all or part of our net deferred income tax assets in the future, an adjustment to our deferred income tax assets would decrease income in the period such determination was made.

Useful Lives of Properties. Our properties primarily consist of machinery and equipment, buildings and improvements and land and land improvements. As our operations are capital intensive, we have significant investments in expensive packaging and testing equipment. Properties represented 55.9%, 57.0% and 60.2% of our total assets as of December 31, 2000, 2001 and 2002, respectively. Properties represented 58.6% and 56.4% of our total assets as of June 30, 2002 and 2003, respectively. We depreciate our properties based on our estimate of their economic useful lives to us, which is in turn based on our judgment, historical experience and the potential obsolescence of our existing equipment brought about by the introduction of more sophisticated packaging and testing technologies and processes. If we subsequently determine that the actual useful life of properties is shorter than what we had estimated, we will depreciate the remaining undepreciated value of that asset over its remaining economic useful life. This would result in increased depreciation expense and decreased net income during those periods. Similarly, if the actual lives of properties are longer than what we had estimated, we would have a smaller depreciation expense and higher net income in subsequent periods. As a result, if our estimations of the useful lives of our properties are not accurate or are required to be changed in the future, our net income in future periods would be affected.

Realizability of Long-Term Assets. We are required to evaluate our equipment, goodwill and other long-lived assets for impairment whenever there is an indication of impairment. If certain criteria are met, we are required to record an impairment charge. We have adopted U.S. Statement of Financial Accounting Standards, or U.S. SFAS, No. 144, “Accounting for the Impairment for Disposal of Long-Lived Assets” to account for the impairment of our long-lived assets under both ROC GAAP and U.S. GAAP. In accordance with U.S. SFAS No. 144, long-lived assets held and used by us are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of evaluating the recoverability of long-lived

assets, the recoverability test is performed by comparing undiscounted net cash flows of the assets against the net book value of the assets. If the recoverability test indicates that an impairment has occurred, the impairment loss is the amount of the asset’s net book value in excess of the related fair value. For example, we took a NT$1,225.6 million (US$35.3 million) impairment charge in 2002 against some of our testing equipment to reflect the decline in economic value of these equipment. In the six months ended June 30, 2003, we did not take any impairment charges against long-lived assets.

Goodwill. The U.S. Financial Accounting Standards Board, or FASB, recently issued U.S. SFAS No. 142, “Goodwill and Other Intangible Assets”. U.S. SFAS No. 142 requires the use of a nonamortization approach to account for purchased goodwill and certain intangibles. Under U.S. SFAS No. 142, goodwill and intangibles are evaluated at least annually to determine if an impairment writedown is required. Under U.S. GAAP, we realized an impairment charge at December 31, 2002 related to the goodwill from the acquisition of ASE Test. See “—U.S. GAAP Reconciliation”. We continue to carry goodwill resulting from the acquisition of ASE Korea and the purchase of shares of ISE Labs and Universal Scientific, and will have to assess such goodwill for impairment on at least an annual basis in the future. If events and circumstances deteriorate in the future, the value of the goodwill could be further impaired under U.S. GAAP. The merger of ASE Chung Li and ASE Material may generate goodwill to the extent that the fair value of the ASE Inc. common shares exchanged for the non-controlling equity interests exceeds the fair value of the acquired net assets. See “—Pending Merger of ASE Chung Li and ASE Material”.

Valuation of Marketable Securities and Long-term Investments. Under ROC GAAP, marketable equity securities are carried at the lower of aggregate cost or market value and are classified as trading or long-term investments depending on management’s intent to hold the security for long-term investment purposes. Trading securities are primarily mutual funds with readily determinable market values. We hold significant long-term investments in public and nonpublic entities. We periodically evaluate these long-term investments based on market prices, if available, the financial condition of the investee company, economic conditions in the industry, and our intent and ability to hold the investment for a long period of time. These assessments usually require a significant amount of judgment as a significant decline in the market price may not be the best indicator of impairment. Under U.S. GAAP, we evaluate long-term investments using the above mentioned criteria and to the extent any decline in the value of a long-term investment is determined to be other than temporary, an impairment charge is recorded in the current period. The methods to measure the amount of impairment under ROC GAAP and U.S. GAAP may be based on different estimates of fair value depending on the circumstances. Under U.S. GAAP, market price is to be used, if available, to determine the fair value. Under ROC GAAP, however, if the market price is deemed to be a result of an inactive market, other measures of fair value may be used. Several of the long-term investments held by us are accounted for under the equity method. Any significant decline in the operations of an equity method investee could affect the value of the long-term investment and an impairment charge may occur.

In determining whether an other-than-temporary impairment occurred in our long-term investments as of June 30, 2003, no amount was recorded under ROC GAAP based on the difference between the carrying value and the net-asset value of the investee with adjustments made to significant assets of the investee using appraised values and other appropriate information. In the six months ended June 30, 2003, no impairment charge was incurred under U.S. GAAP. See “—U.S. GAAP Reconciliation”.

Results of Operations

The following table sets forth, for the periods indicated, financial data from our consolidated statements of income, expressed as a percentage of net revenues.

	Year Ended December 31,						Six Months Ended June 30,
	2000		2001		2002		2002		2003
							(unaudited)
	(percentage of net revenues)
ROC GAAP:
Net revenues	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Packaging	74.7		75.3		77.9		77.9		78.0
Testing	25.1		24.7		22.1		22.1		21.7
Other	0.2		0.0		0.0		0.0		0.3
Cost of revenues	(69.9	)	(85.9	)	(84.4	)	(86.2	)	(85.7	)
Gross profit	30.1		14.1		15.6		13.8		14.3
Operating expenses	(10.7	)	(15.3	)	(17.1	)	(14.7	)	(14.5	)
Operating income (loss)	19.4		(1.2	)	(1.5	)	(0.9	)	(0.2	)
Non-operating income (expenses)	(2.9	)	(6.6	)	(4.4	)	(3.9	)	(3.3	)
Income (loss) before income tax and minority interest	16.5		(7.8	)	(5.9	)	(4.8	)	(3.5	)
Income tax benefit (expense)	(2.1	)	0.5		2.5		1.5		2.1
Income (loss) before minority interest	14.4		(7.3	)	(3.4	)	(3.3	)	(1.4	)
Extraordinary loss	—		(0.4	)	(0.1	)	—		—
Minority interest in net (income) loss of subsidiary	(2.9	)	2.1		3.8		2.5		1.5

Net income (loss)	11.5	%	(5.6	)%	0.3	%	(0.8	)%	0.1	%

The following table sets forth, for the periods indicated, the gross margins for our packaging and testing services and our total gross margin.

	Year Ended December 31,						Six Months Ended June 30,
	2000		2001		2002		2002		2003
							(unaudited)
	(percentage of net revenues)
ROC GAAP:
Gross margin
Packaging	26.3	%	16.0	%	17.6	%	17.2	%	13.7	%
Testing	41.5		8.3		8.4		2.1		16.8

Total	30.1	%	14.1	%	15.6	%	13.8	%	14.3	%

The following table sets forth, for the periods indicated, a breakdown of our total cost of revenues and operating expenses, expressed as a percentage of net revenues.

	Year Ended December 31,						Six Months Ended June 30,
	2000		2001		2002		2002		2003
							(unaudited)
	(percentage of net revenues)
ROC GAAP:
Cost of revenues
Raw materials	28.7	%	30.7	%	30.2	%	29.9	%	29.3	%
Labor	12.9		14.6