EXHIBIT 99.1

                                  CHIPPAC, INC.

                                  RISK FACTORS

     You should carefully consider the following factors in addition to the
other information set forth in this document in analyzing an investment in the
Class A common stock, 12.75% senior subordinated notes or 8% convertible
subordinated notes of ChipPAC, Inc. We believe that the risks and uncertainties
described below are the current material risks facing us. If any of the
following risks actually occur, our business, financial condition or results of
operations will likely suffer. In that case, the trading price of our publicly
traded Class A common stock, 12.75% senior subordinated notes or 8% convertible
subordinated notes could fall and you may lose all or part of the money you
invested.

                          Risks Related to Our Business

Failure to comply with any of our existing covenants in our senior credit
facilities would constitute a default under the senior credit facilities. An
event of default under any debt instrument, if not cured or waived, could have a
material adverse effect on us.

     The weakness in demand for packaging and test services as a result of the
current downturn in the semiconductor industry has and is expected to continue
to adversely affect our cash flow from operations. We believe that our existing
cash balances, cash flows from operations, available equipment lease financing
and available borrowings under our senior credit facilities provide sufficient
cash resources to meet our projected operating and other cash requirements for
the next twelve months. We have signed an amendment to our senior credit
facilities pursuant to which, among other things, our senior lenders waived
compliance with our financial covenants until December 31, 2002 and replaced
those covenants with new covenants that apply for the year ended December 31,
2002, which we believe better reflect current conditions in the semiconductor
industry. We cannot assure you that we will be able to remain in, compliance
with all of our other existing covenants. Failure to comply with any of our
existing covenants would constitute a default under the senior credit
facilities. A default could cause a cross default under the indenture for our
senior subordinated notes, which in turn could cause a substantial majority of
our aggregate indebtedness to become due and payable immediately. An event of
default under any debt instrument, if not cured or waived, could have a material
adverse effect on us.

Our operating results for the year ended December 31, 2001 declined
significantly from the year ended December 31, 2000.

     Our gross margins, net income and operating income for the year ended
December 31, 2001 decreased as compared to our results in the year ended
December 31, 2000, as a result of a decline in our revenue. Our revenue for the
year ended December 31, 2001 was $328.7 million, compared to $494.4 million in
the year 2000. The decline is attributable to the continued semiconductor
industry demand slowdown and resulting inventory buildup caused by ongoing end
market demand weakness. We cannot assure you that our business will not continue
to decline or that our performance will improve.

We may not be able to continue to implement our cost saving strategy. Even if we
do, it may not reduce our operating expenses by as much as we anticipated and
could even compromise the development of our business.

     In response to the recent weakness in demand for semiconductors, we
implemented cost saving measures, including significant reduction in our
workforce, furloughs, reduced work shift schedules, reductions in discretionary
spending, reduced materials cost and lower capital expenditures and redesign of
our manufacturing processes to improve productivity.

     As a result of these cost saving measures, we have incurred approximately
$2.9 million in restructuring charges during the year ended December 31, 2001.
Additionally, we expect there to be approximately $3.3 million in charges in
2002.

                                        1



However, we cannot assure you that these cost saving measures will increase
productivity or that the expected net savings will occur during this period or
at any other time in the expected amounts, if at all. In fact, our cost saving
measures could adversely affect our revenue, as it could create inefficiencies
in our business operations, result in labor disruptions and limit our ability to
expand and grow our business.

The cyclicality of the semiconductor industry could adversely affect our
operating results.

     Our operations are substantially affected by market conditions in the
semiconductor industry, which is highly cyclical and, at various times, has
experienced significant economic downturns characterized by reduced product
demand and production overcapacity which can result in rapid erosion of average
selling prices. Since the end of 2000 we have experienced a general slowdown in
the semiconductor industry.

Our profitability is affected by average selling prices which tend to decline.

     Decreases in the average selling prices of our packaging and test services
can have a material adverse effect on our profitability. The average selling
prices of packaging and test services have declined historically, with packaging
services in particular experiencing severe pricing pressure. This pricing
pressure for packaging and test services is likely to continue. Our ability to
maintain or increase our profitability will continue to be dependent, in large
part, upon our ability to offset decreases in average selling prices by
improving production efficiency, increasing unit volumes packaged or tested, or
by shifting to higher margin packaging and test services. If we are unable to do
so, our business, financial condition and results of operations could be
materially and adversely affected.

If we are unable to develop and market new technologies, we may not remain
competitive within the semiconductor packaging industry.

     The semiconductor packaging and test industry is characterized by rapid
increases in the diversity and complexity of packaging services. As a result, we
expect that we will need to continually introduce more advanced package designs
in order to respond to competitive industry conditions and customer
requirements. The requirement to develop, license and maintain advanced
packaging capabilities and equipment could require significant research and
development and capital expenditures in future years. Any failure by us to
achieve advances in package design or to obtain access to advanced package
designs developed by others could reduce our growth prospects and operating
income.

The intensity of competition in our industry could result in the loss of our
customers, which could adversely affect our revenues and profits.

     We face substantial competition from a number of established independent
packaging companies and with the internal capabilities of many of our largest
customers. Each of our primary competitors has significant operational capacity,
financial resources, research and development operations, and established
relationships with many large semiconductor companies, which are current or
potential customers of ours. Furthermore, our competitors may in the future
capture our existing or potential customers through superior responsiveness,
service quality, product design, technical competence or other factors, which we
view as principal elements of competition in our industry. In addition, our
primary customers may, in the future, shift more of their packaging and test
service demand internally. As a result, we may have reduced revenues and
profits.

Our research and development efforts may not yield profitable and commercially
viable services; thus, we may have significant short-term research and
development expenses, which will not necessarily result in increases in revenue.

     Our research and development efforts may not yield commercially viable
packages or test services. The qualification process for new customers is
conducted in various

                                        2



stages which may take one or more years to complete, and during each stage there
is a substantial risk that we will have to abandon a potential package or test
service which is no longer marketable and in which we have invested significant
resources. In the event we are able to qualify new packages, a significant
amount of time will have elapsed between our investment in new packages and the
receipt of any related revenues.

We could lose customers, and thus revenue, if we cannot maintain the quality of
our services.

     The semiconductor packaging process is complex and involves a number of
precise steps. Defective packaging can result from a number of factors,
including the level of contaminants in the operational environment, human error,
equipment malfunction, use of defective materials and plating services and
inadequate sample testing. From time to time, we expect to experience lower than
anticipated yields as a result of these factors, particularly in connection with
any expansion of capacity or change in processing steps. In addition, our yield
on new packaging could be lower during the period necessary for us to develop
the requisite expertise and experience with these processes. Any failure by us
to maintain high quality standards or acceptable yields, if significant and
sustained, could result in the loss of customers, delays in shipments, increased
costs and cancellation of orders.

     Our business may be adversely affected by the loss of, or reduced purchases
by, Atmel, Fairchild, Intel, Intersil, LSI Logic, nVIDIA or any other large
customer. Additionally, we may encounter difficulties in soliciting new
customers.

     For the year ended December 31, 2001, sales to our top five customers in
the aggregate accounted for approximately 70.6% of total net revenues. During
this same period, our three largest customers Intersil, Intel and LSI Logic,
respectively, produced 20.2%, 18.3% and 12.8% of our revenues. If any of our
main customers were to purchase significantly less of our services in the
future, these decreased levels of purchases could harm our operating results.

     Semiconductor packaging companies must pass a lengthy and rigorous
qualification process that can take up to six months at a cost to the customer
of approximately $250,000 to $300,000. If we fail to qualify packages with
potential customers or customers with which we have recently become qualified do
not use our services, then our customer base could become more concentrated with
a limited number of customers accounting for a significant portion of our
revenues. Moreover, we believe that once a semiconductor company has selected a
particular packaging and test foundry company's services, the semiconductor
company generally relies on that vendor's packages for specific applications
and, to the extent possible, subsequent generations of that vendor's packages.
Accordingly, it may be difficult to achieve significant sales from a particular
or potential customer once it selects another vendor's packaging services.

Our substantial indebtedness could adversely affect our financial health and
make us vulnerable to adverse economic and industry conditions.

     As of December 31, 2001, our total indebtedness was $383.6 million. Our
substantial indebtedness could have important consequences to you. For example,
it could:

     .    increase our vulnerability to general adverse economic and industry
          conditions by limiting our flexibility in planning for, or reacting
          to, changes in our business and the industry in which we operate;

     .    require us to dedicate a substantial portion of our cash flow from
          operations to payments on our indebtedness, thus reducing the
          availability of our cash flow to fund working capital, capital
          expenditures, research and development efforts and other general
          corporate purposes;

     .    place us at a competitive disadvantage relative to our competitors
          that have less debt; and

                                       3



     .    limit, along with the financial and other restrictive covenants in our
          indebtedness, our ability to borrow additional funds. Furthermore,
          failing to comply with those covenants could result in an event of
          default which, if not cured or waived, could have a material adverse
          effect on our ability to increase our revenues and profitability and
          meet our growth objectives.

Despite our current levels of indebtedness, we still may be able to incur
substantially more debt which could increase the risks created by our
substantial indebtedness.

     We may be able to incur substantial additional indebtedness in the future.
Our senior credit facility provides for revolving loans up to $50.0 million,
including letters of credit. In addition, we have the ability to increase our
revolving line of credit by $25.0 million without further consent from our
existing lenders. Additionally, the indenture for the existing senior
subordinated notes permits us to incur additional indebtedness if we meet a test
measuring our cash flow relative to our required interest payments. This
indenture also allows us to incur debt under our senior credit facility. The
indenture for our convertible notes does not limit our ability to incur
additional indebtedness. All of the borrowings under our senior credit facility
are secured by all of our assets and those of our subsidiaries, except those of
our Chinese operating subsidiary. The addition of new debt to our current debt
levels could intensify the debt-related risks that we now face that are
described above.

The senior credit facility and the indenture governing our 12.75% senior
subordinated notes impose limitations on how we conduct our business; as a
result, we may not be able to pursue strategies that could be in the best
interests of holders of our stock.

     The senior credit facility and the indenture governing our 12.75% senior
subordinated notes contain restrictions on us that could increase our
vulnerability to general adverse economic and industry conditions by limiting
our flexibility in planning for and reacting to changes in our business and
industry. Specifically, these restrictions limit our ability to:

     .    incur additional debt;

     .    pay dividends and make other distributions;

     .    prepay subordinated debt;

     .    make investments and other restricted payments;

     .    enter into sale and leaseback transactions;

     .    create liens;

     .    sell assets;

     .    enter into transactions with affiliates; and

     .    consolidate or merge.

     Our senior credit facility contains financial covenants that require us to
meet specified financial tests, including, without limitation, a minimum
interest coverage ratio, a maximum leverage ratio, a minimum fixed charge
coverage ratio, a maximum senior leverage ratio and a minimum consolidated
adjusted EBITDA amount. As a result of these restrictions, we may not be able to
pursue business strategies that could be in the best interest of the holders of
our notes and stock. Our senior lenders have waived compliance with our
financial covenants until December 31, 2002 and replaced those covenants with
new covenants that apply for the year ended December 31, 2002, which we believe
better reflect current conditions in the semi-conductor industry. The

                                        4



amendment stipulated that we must raise at least $20.0 million of net proceeds
of permitted junior capital and prepay the outstanding senior credit facilities
on or prior to March 1, 2002 in an aggregate principal amount equal to the
greater of (i) $20.0 million and (ii) 50% of those net proceeds. We fulfilled
this requirement with our common stock offering in January 2002.

     The covenants waived for 2002 under the most recent bank amendment include:
(1) the minimum interest coverage ratio of 1.6 to 1.0 through March 31, 2002,
1.75 to 1.0 through June 30, 2002 and 1.85 to 1.0 through December 31, 2002; (2)
the maximum leverage ratio of 5.0 to 1.0 through June 30, 2002 and 4.5 to 1.0
through December 31, 2002; and (3) the maximum senior leverage ratio of 2.5 to
1.0 through December 31, 2002. These three covenants were waived under the
current amendment and replaced for 2002 with (1) a minimum consolidated
adjustable EBITDA amount of $30.0 million, $26.0 million, $32.0 million and
$40.0 million for the twelve months ended March 31, June 30, September 30 and
December 31, 2002, respectively, and (2) a new maximum capital expenditure
amount of $30.0 million. Pursuant to a prior amendment, the minimum fixed charge
coverage ratio of 1.05 to 1.0 was waived through December 31, 2002.

     At December 31, 2001, we were in compliance with all of our financial
covenants, except the minimum fixed charge coverage ratio whose compliance was
waived. In addition, at December 31, 2001, our interest coverage ratio was 1.31
to 1.0; our leverage ratio was 7.25 to 1.0 and our senior leverage ratio was
3.66 to 1.0. For the year ended December 31, 2001, our consolidated capital
expenditures were approximately $46.4 million. While we were not required to
maintain consolidated adjusted EBITDA for any periods ending on or prior to
December 31, 2001, our consolidated adjusted EBITDA for the year ended December
31, 2001 was $46.0 million.

     If we fail to comply with the restrictions in the senior credit facility, a
default may also occur under the indenture governing our 12.75% senior
subordinated notes and any other financing agreements. This default may allow
some creditors, if their respective agreements so provide, to accelerate
payments owed on such debt as well as any other indebtedness as to which a
cross-acceleration or cross-default provision applies. The creditors who may be
entitled to accelerated payments in the event of a default are: (1) the holders
of our 12.75% senior subordinated notes issued in the aggregate principal
amount of $165.0 million, under an indenture dated July 29, 1999 by and among
us, ChipPAC International Company Limited, and Firstar Bank, N.A. as trustee;
and (2) the senior credit facility lenders, including Credit Suisse First
Boston, New York branch, BankBoston N.A., State Street Bank and Trust Company,
Balanced High-Yield Fund II Limited, CIBC Inc., First Source Financial LLP,
Heller Financial, Inc., The First National Bank of Chicago and IBM Credit
Corporation, under our senior credit facility, dated as of August 5, 1999 by and
among the us, ChipPAC International Company Limited, and Credit Suisse First
Boston, New York branch as the administrative agent, collateral agent and sole
lead arranger for the senior facility lenders. As of December 31, 2001, the
aggregate principal amount of the senior credit facility was $275.0 million of
which approximately $168.6 million was outstanding. In addition, our lenders may
be able to terminate any commitments they had made to supply us with further
funds.

Economic crisis in Asia where most of our suppliers are located could prevent us
from securing adequate supplies of materials, which could, in turn, prevent us
from meeting the requirements of our customers and result in a decrease in our
revenues.

     Most of our materials suppliers are located in Asia. Historically, over
half of our substrate costs were incurred from the purchase of materials from
Japanese suppliers. In the future, we expect that a growing portion of these
materials will be supplied by sources in South Korea and Taiwan. Several
countries in this region have experienced currency devaluation and/or
difficulties in financing short-term obligations. We cannot assure you that the
effect of an economic crisis on our suppliers will not impact operations, or
that the effect on our customers in that region will not adversely affect both
the demand for our services and the collectibility of receivables.

The failure of our vendors to supply sufficient quantities of materials on a
timely

                                        5



basis could prevent us from fulfilling our customers' orders. In addition, we
may not be able to pass on any unexpected increase in the cost of these
materials to our customers.

     We obtain materials to fill orders for our packaging and test services
directly from vendors. To maintain competitive packaging operations, we must
obtain from our vendors, in a timely manner, sufficient quantities of acceptable
materials at expected prices. We source most of our materials, including
critical materials like laminate substrates, lead frames, mold compounds and
gold wires, from a limited group of suppliers. We purchase all of our materials
on a purchase order basis and have no long-term contracts with any suppliers.
From time to time, vendors have extended lead times or limited the supply of
required materials to us because of vendor capacity constraints and,
consequently, we have experienced difficulty in obtaining acceptable materials
on a timely basis. Our business and results could be negatively impacted if our
ability to obtain sufficient quantities of materials and other supplies in a
timely manner were substantially diminished or if there were significant
increases in the cost of materials that we could not pass on to our customers.

If we are unable to obtain capital equipment in a timely manner, we may be
unable to meet the increased demands of our customers which could result in a
decrease in our revenues.

     Our facilities currently have sufficient packaging and test services
capacity to meet the current and expected demands of our customers. Nonetheless,
in the event there are significant increases in overall semiconductor demand or
demand for some of our products and services, we may not be able to meet those
increased demands of our customers. Moreover, because the semiconductor
packaging and test services business requires investment in expensive capital
equipment and is characterized, from time to time, by intense demand, limited
supply and long delivery cycles, we may not be able to readily increase our
operating capacity. This would lead to a loss of sales of our packaging and test
services, could ultimately lead to a loss in market share and have a negative
impact on our results of operations.

We depend upon intellectual property and license critical technology from Hynix
Semiconductor, Motorola, Inc., Tessera, Inc., LSI Logic and Intersil. To the
extent these licenses are not perpetual and irrevocable, our net revenues could
be materially adversely affected if our rights under these licenses expire or
are terminated.

     We seek to protect our proprietary information and know-how through the use
of trade secrets, confidentiality agreements and other security measures. We may
not obtain patent protection for the patent applications that we file, or if we
are granted patents, those patents may not offer meaningful protection.
Additionally, we cannot assure you that our competitors will not develop, patent
or gain access to similar know-how and technology, or reverse engineer our
packaging services, or that any confidentiality agreements upon which we rely to
protect our trade secrets and other proprietary information will be adequate to
protect our proprietary technology.

     Any patents and utility model, design right and computer program right
registrations obtained relating to technology that we developed prior to our
recapitalization are owned by Hynix Semiconductor Inc., formerly Hyundai
Electronics Inc. In connection with our recapitalization, we entered into a
patent and technology license agreement by which Hynix Semiconductor granted us
license to use specific intellectual property rights in our semiconductor
packaging and test activities. We expect to seek patents and utility model,
design right and computer program right registrations, as applicable, on new
packaging process and package design technologies that we develop as a means of
protecting technology and market position.

     We have a non-exclusive sublicense from Hynix Semiconductor to use patented
BGA technologies owned by Motorola, which expires on December 31, 2002. Motorola
licenses these patents to others, including our competitors. After giving pro
forma effect to the acquisition of the Malaysian business as if it had occurred
at the beginning of 2000, these BGA technologies contributed 41.1% of our net
revenues in 2000,

                                       6



     We have a worldwide, royalty-bearing, non-exclusive license under specified
Tessera patents, technical information and trademarks relating to Tessera's
proprietary IC packages. This license will expire sometime after February 2018.

     We also have two separate license agreements with LSI Logic under which we
have worldwide, royalty-bearing, non-exclusive licenses to use LSI packaging
technology and technical information to manufacture, use and sell flip-chip
semiconductor devices having at least 200 solder balls and semiconductor device
assemblies having an overall height of less than 1.2 millimeters, respectively.
The LSI Logic license relating to flip-chip semiconductor devices becomes
perpetual and irrevocable upon our payment of fees or January 1, 2004, whichever
occurs first. The other LSI Logic license is perpetual but may be terminated by
LSI Logic in the event of our uncured breach or bankruptcy.

     In addition, we have a worldwide, royalty-free, non-exclusive license under
Intersil patents, copyrights and technical information which are used in or
related to the operation of the Malaysian business. This Intersil license is
perpetual and irrevocable. Any intellectual property rights in the bonding
diagrams, test programs, maskworks and test boards uniquely related to the
Intersil products for which we provide packaging and test services are licensed
to us only for use in providing those services.

     To the extent these licenses are not perpetual and irrevocable, we may be
unable to utilize the technologies under these licenses if they are not extended
or otherwise renewed or if any of these licenses are terminated by the licensor
due to our uncured breach or bankruptcy. Alternatively, if we are able to renew
these arrangements, we cannot assure you that they will be on the same terms as
currently exist. Any failure to extend or renew these license arrangements could
cause us to incur substantial liabilities and to suspend the packaging services
and processes that utilized these technologies.

The loss of our skilled technical, marketing and sales personnel or our key
executive officers could have a material adverse effect on our research and
development, marketing and sales efforts.

     Our competitiveness will depend in large part upon whether we can attract
and retain skilled technical, marketing and sales personnel and can retain
members of our executive team. Competition for skilled personnel is intense, and
we may not be successful in attracting and retaining the technical personnel or
executive managers we require to develop new and enhanced packaging and test
services and to continue to grow and operate profitably. If we cannot attract or
retain skilled personnel, we may not be able to operate successfully in the
future.

If we encounter future labor problems, we may fail to deliver our products in a
timely manner which could adversely affect our revenues and profitability.

     Our employees at our Ichon, South Korea facility are represented by ChipPAC
Korea Labor Union and are covered by collective bargaining and wage agreements.
The collective bargaining agreement, which covers basic union activities,
working conditions and welfare programs, among other things, is effective to May
1, 2003 and the wage agreement is effective to May 1, 2002. As of December 31,
2001, approximately 78% of our employees were represented by the ChipPAC Korea
Labor Union. In addition, one of our Chinese subsidiaries experienced labor
protests and a two-day work stoppage in July 1998 in connection with proposed
work force reductions. We cannot assure you that issues with the labor union or
other employees will be resolved favorably for us in the future, that we will
not experience significant work stoppages in future years or that we will not
record significant charges related to those work stoppages. In addition,
potential efficiency enhancement efforts, including personnel reductions,
following our recent acquisition of the Malaysian business may create the risk
of labor problems in Malaysia or at other facilities.

New laws and regulations, currency devaluation and political instability in
foreign countries, particularly in China, Malaysia and South Korea could make it
more

                                       7



difficult for us to operate successfully.

     For the years ended December 31, 2001, 2000 and 1999, we generated
approximately 8.1%, 16.7% and 11.3% of total revenues, respectively, from
international markets, primarily from customers in Southeast Asia and Europe. In
addition, all of the facilities currently used to provide our packaging services
are located in China, Malaysia and South Korea. Moreover, many of our customers'
operations are located in countries outside of the United States. We cannot
determine if our future operations and earnings will be affected by new laws,
new regulations, a volatile political climate, changes in or new interpretations
of existing laws or regulations or other consequences of doing business outside
the U.S., particularly in China, Malaysia and South Korea. If future operations
are negatively affected by these changes, our sales or profits may suffer.

Fluctuations in the exchange rate of the U.S. dollar and foreign currencies
could have a material adverse effect on our financial performance and
profitability.

     A portion of our costs are denominated in foreign currencies, like the
South Korean Won, the Chinese Renminbi or RMB and the Malaysian Ringgit. As a
result, changes in the exchange rates of these currencies or any other
applicable currencies to the U.S. dollar will affect our costs of goods sold and
operating margins and could result in exchange losses. We cannot fully predict
the impact of future exchange rate fluctuations on our profitability. From time
to time, we may engage in exchange rate hedging activities in an effort to
mitigate the impact of exchange rate fluctuations. However, we cannot assure you
that any hedging technique we may implement will be effective. If it is not
effective, we may experience reduced operating margins.

We could suffer adverse tax and other financial consequences if U.S. or foreign
taxing authorities do not agree with our interpretation of applicable tax laws.

     Our corporate structure is based, in part, on assumptions about the various
tax laws, including withholding tax, and other relevant laws of applicable
non-U.S. jurisdictions. We cannot assure you that foreign taxing authorities
will agree with our interpretations or that they will reach the same
conclusions. Our interpretations are not binding on any taxing authority and, if
these foreign jurisdictions were to change or to modify the relevant laws, we
could suffer adverse tax and other financial consequences or have the
anticipated benefits of our corporate structure materially impaired.

Because the Malaysian business previously operated as a subsidiary of Intersil,
our future financial results may be significantly different from those
experienced historically.

     Prior to our acquisition of our Malaysian business in 2000, it was operated
as a subsidiary of Intersil. All the historical revenues of the Malaysian
business represent intercompany sales to Intersil on terms determined by
Intersil. Although we expect to retain this business pursuant to a five-year
supply agreement with Intersil, volume, product mix and pricing may change in
the future, and we cannot assure you that Intersil will perform under our supply
agreement.

We entered into supply contracts with Intersil in connection with our
acquisition of our Malaysian business and with Fairchild Semiconductor following
Fairchild's acquisition of Intersil's discrete power business, and any decrease
in the purchase requirements of Intersil or Fairchild or the inability of
Intersil or Fairchild to meet its contractual obligations could substantially
reduce the financial performance of our Malaysian subsidiary.

     Historically, the Malaysian business generated all of its revenues from the
sale of products and services to affiliated Intersil companies. The revenue of
the Malaysian business for the first six months of 2000 prior to our acquisition
of it and for all of 1999 was $41.9 million and $101.9 million, respectively. As
a result of our acquisition of the Malaysian business, we have numerous
arrangements with Intersil, including arrangements relating to packaging and
test services as a vendor to

                                        8



affiliated Intersil companies and other services. Any material adverse change in
the purchase requirements of Intersil or in its ability to fulfill its other
contractual obligations could have a material adverse effect on our Malaysian
subsidiary. Moreover, we may be unable to sell any products and services to
affiliated Intersil companies beyond the term of our five-year supply agreement
with Intersil. In connection with Fairchild Semiconductor's acquisition of
Intersil's discrete power business, we entered into an assignment agreement that
assigned Intersil's portion of the supply agreement relating to this business to
Fairchild. We have also entered into a three-year IT services agreement with
Intersil under which the Malaysian business will continue to obtain a number of
these services from Intersil. We cannot assure you that Fairchild will perform
under the supply agreement or that Intersil will perform under the supply and
services agreements or that upon termination of these agreements we will be able
to obtain similar services on comparable terms.

We may not be able to consummate future acquisitions, and consequences of those
acquisitions which we do complete may adversely affect us.

     We plan to continue to pursue additional acquisitions of related
businesses. The expense incurred in consummating the future acquisition of
related businesses, or our failure to integrate those businesses successfully
into our existing business, could result in our incurring unanticipated expenses
and losses. We plan to continue to pursue additional acquisitions of related
businesses in the future. We may be unable to identify or finance additional
acquisitions or realize any anticipated benefits from those acquisitions.

     Should we successfully acquire another business, the process of integrating
acquired operations into our existing operations may result in unforeseen
operating difficulties and may require significant financial resources that
would otherwise be available for the ongoing development or expansion of our
existing operations. Possible future acquisitions could result in the incurrence
of contingent liabilities and amortization expenses related to goodwill and
other intangible assets, all of which could have a material adverse effect on
our financial condition and operating results.

     In addition, we may finance future acquisitions with additional
indebtedness. We have a substantial amount of outstanding indebtedness and will,
subject to compliance with our debt instruments, have the ability to incur
additional indebtedness. We will be required to generate cash flow from
operations to service that indebtedness and there can be no assurance that we
will generate sufficient cash flow to service that indebtedness. We may be
required to refinance our indebtedness upon its maturity, and we cannot assure
you that we will be able to refinance our indebtedness at all or on terms
acceptable to us.

Terrorist attacks, such as the attacks that occurred in New York and Washington,
D.C. on September 11, 2001, and other acts of violence or war may affect the
markets on which our securities trade, the markets in which we operate, our
operations and our profitability.

     Terrorist attacks may negatively affect our operations and your investment.
There can be no assurance that there will not be further terrorist attacks
against the United States or United States businesses. These attacks or armed
conflicts may directly impact our physical facilities or those of our suppliers
or customers. Our current facilities include administrative, sales, and R&D
facilities in the United States and manufacturing facilities in China, Malaysia
and South Korea. Furthermore, these attacks may make travel and the
transportation of our supplies and products more difficult and more expensive
and ultimately affect the sales of our products in the United States and
overseas.

     Also as a result of terrorism, the United States may enter into an armed
conflict which could have a further impact on our domestic and international
sales, our supply chain, our production capability and our ability to deliver
product to our customers. Political and economic instability in some regions of
the world may also result and could negatively impact our business. The
consequences of any of these armed conflicts

                                        9



are unpredictable, and we may not be able to foresee events that could have an
adverse effect on our business or your investment.

A limited number of persons indirectly control us and may exercise their control
in a manner adverse to your interests.

     At March 1, 2002, Citicorp Venture Capital, Ltd. and its affiliates owned
or had the right to acquire 23,849,397 shares or approximately 29.4% of our
outstanding Class A common stock. At March 1, 2002, funds affiliated with Bain
Capital, Inc. owned 21,387,396 shares or approximately 26.4% of our outstanding
Class A common stock. By virtue of this stock ownership, these entities
collectively have the power to direct our affairs and will be able to determine
the outcome of all matters required to be submitted to stockholders for
approval, including the election of a majority of our directors, any merger,
consolidation or sale of all or substantially all of our assets and amendment of
our certificate of incorporation. Because a limited number of persons control
us, transactions could be difficult or impossible to complete without the
support of those persons. It is possible that these persons will exercise
control over us in a manner adverse to your interests.

If our relationship with Hynix Semiconductor, our previous owner, deteriorates,
our business could be adversely affected.

     Our facilities in Ichon, South Korea occupy a portion of a building located
on property owned by Hynix Semiconductor, a current stockholder and former
majority owner. In addition, Hynix Semiconductor is one of our current
customers. An unfavorable change in our relations with Hynix Semiconductor could
adversely effect services we receive from them at this facility and the revenue
we derive from the products and services we provide to them.

Environmental, health and safety laws could require us to incur capital and
operational costs to maintain compliance and could impose liability to remedy
the effects of hazardous substance contamination.

     We are subject to liabilities and compliance obligations arising under
environmental, health and safety laws. These laws impose various controls on the
quality of our air and water discharges, on the storage, handling, discharge and
disposal of chemicals the company uses, and on employee exposure to hazardous
substances in the workplace. Environmental, health and safety laws could require
us to incur capital and operational costs to maintain compliance and could
impose liability to remedy the effects of hazardous substance contamination. We
cannot assure you that applicable environmental, health and safety laws will not
in the future impose the need for additional capital equipment or other process
requirements upon the company, curtail its operations, or restrict its ability
to expand its operations. The adoption of new environmental, health and safety
laws, the failure to comply with new or existing laws, or issues relating to
hazardous substance contamination could subject the company to future material
liability.

                   Risks Relating to Our Class A Common Stock

Our stock price has fluctuated significantly in the past, and the market price
of our Class A common stock may be lower than you expect.

     Since our initial public offering on August 8, 2000, the closing price of
our Class A common stock has fluctuated significantly, ranging from a low of
$1.88 to a high of $18.50 per share. Fluctuations in our stock price could
continue. Among the factors that could affect our stock price are:

     .    quarterly variations in our operating results;

     .    rating changes by research analysts;

     .    strategic actions by us or our competitors, such as acquisitions;

     .    general market conditions; and

                                       10



     .    general economic factors unrelated to our performance.

     The stock markets in general, and the markets for technology companies in
particular, have experienced a high degree of volatility not necessarily related
to the operating performance of particular companies. We cannot provide
assurances as to our stock price.

Some of our long-time stockholders have the right to require us to register the
public sale of their shares; all of our total outstanding shares of Class A
common stock may be sold into the market; future sales of those shares could
depress the market price of our Class A common stock.

     The public market for our Class A common stock includes 11,500,000 shares
of Class A common stock that we sold in our initial public offering and an
additional 11,445,600 shares of Class A common stock that we sold to the public
in January 2002. At the time of our initial public offering, there were
55,631,718 additional shares of our Class A common stock outstanding. Those
people and entities who were our stockholders prior to our initial public
offering are able to sell their shares in the public market, subject to legal
restrictions on transfer. Some of our stockholders prior to our initial public
offering are parties to agreements with us that provide for demand registration
rights to cause us to register under the Securities Act of 1933, as amended, or
the Securities Act, all or part of their shares of our Class A common stock, as
well as piggyback registration rights. Currently, approximately 46,463,489
shares of our Class A common stock have restrictions on resale and are subject
to these registration rights. We believe that all of the other shares of our
Class A common stock are freely tradable. Registration of the sale of these
restricted shares of our Class A common stock would permit their sale into the
market immediately. If our stockholders sell a large number of shares, the
market price of our Class A common stock could decline, as these sales may be
viewed by the public as an indication of an upcoming or recently occurring
shortfall in the financial performance of our company. Moreover, the perception
in the public market that these stockholders might sell shares of our Class A
common stock could depress the market price of the Class A common stock.

     As of March 13, 2002, we had 81,031,705 shares of our Class A common stock
outstanding. All of these shares are freely tradeable without restriction under
the Securities Act, except for any shares which may be held or acquired by an
affiliate of our company, as that term is defined in Rule 144 promulgated under
the Securities Act. We believe that affiliates hold approximately 46,416,214
shares of common stock, and that those shares could only be sold over the next
12 months in accordance with the volume and manner of sale limitations set forth
in Rule 144.

Provisions of our charter documents could discourage potential acquisition
proposals and could delay, deter or prevent a change in control.

     Provisions of our certificate of incorporation and by-laws may inhibit
changes in control of our company not approved by our board of directors and
would limit the circumstances in which a premium may be paid for our Class A
common stock in proposed transactions, or a proxy contest for control of the
board may be initiated. These provisions provide for:

     .    a prohibition on stockholder action through written consents;

     .    a requirement that special meetings of stockholders be called only by
          our chief executive officer or the board of directors;

     .    advance notice requirements for stockholder proposals and nominations;

     .    limitations on the ability of stockholders to amend, alter or repeal
          the by-laws; and

     .    the authority of the board to issue, without stockholder approval,

                                       11



     preferred stock with terms as the board may determine.

Your right to receive payments on the Class A common stock is junior to the
company's existing and, possibly future, senior and subordinated indebtedness.
It is possible, therefore, that you may receive no compensation of any kind
relating to the Class A common stock if there is a bankruptcy, liquidation or
similar proceeding affecting us.

     The Class A common stock ranks behind all of our existing indebtedness,
including our guarantees of our subsidiary's obligations under the senior credit
facility and our subsidiary's 12.75% senior subordinated notes and our
obligations under our 8% convertible subordinated notes. The Class A common
stock also ranks behind all of our future borrowings, except any future
indebtedness that expressly provides that it ranks with, or subordinated in
right of payment to, the Class A common stock. As a result, upon any
distribution to our creditors, in a bankruptcy, liquidation or reorganization or
similar proceeding relating to us or our property, we will have to pay the
holders of debt senior to the Class A common stock in full before we can make
any payment on the Class A common stock. Moreover, the Class A common stock will
be structurally subordinated to all liabilities, including trade payables, of
our subsidiaries and any subsidiaries upon their liquidation or reorganization,
and the rights of the holders of the Class A common stock to share in those
assets, would be subordinate to the claims of the subsidiaries' creditors.

     In addition, all payments on the Class A common stock will be blocked in
the event of a payment default on our senior and subordinated debt, including
borrowings under the senior credit facility, and may be blocked for specified
periods in the event of non-payment defaults on certain senior debt.

             Risks Relating to Our 8% Convertible Subordinated Notes

Your right to receive payments on the 8% convertible subordinated notes is
junior to the company's existing and, possibly future, senior indebtedness. It
is possible, therefore, that you may receive no compensation of any kind
relating to the notes if there is a bankruptcy, liquidation or similar
proceeding affecting us.

     We may not have sufficient funds to satisfy our obligations relating to the
8% convertible subordinated notes. The 8% convertible subordinated notes rank
behind all of our existing indebtedness, including our guarantees of our
subsidiary's obligations under the senior credit facility and our subsidiary's
12.75% senior subordinated notes. The 8% convertible subordinated notes will
also rank behind all of our future borrowings, except any future indebtedness
that expressly provides that it ranks with, or subordinated in right of payment
to, the convertible subordinated notes. In total as of December 31, 2001, the
amount of our indebtedness which constitutes senior indebtedness was $333.6
million. As a result, upon any distribution to our creditors, in a bankruptcy,
liquidation or reorganization or similar proceeding relating to us or our
property, we will have to pay the holders of debt senior to the 8% convertible
subordinated notes in full before we can make any payment on the 8% convertible
subordinated notes. Moreover, the 8% convertible subordinated notes will be
structurally subordinated to all liabilities, including trade payables, of our
subsidiaries and any subsidiaries upon their liquidation or reorganization, and
the rights of the holders of the convertible subordinated notes to share in
those assets, would be subordinate to the claims of the subsidiaries' creditors.

     In addition, all payments on the 8% convertible subordinated notes will be
blocked in the event of a payment default on our senior debt, including
borrowings under the senior credit facility, and may be blocked for specified
periods in the event of non-payment defaults on certain senior debt.

     As a holder of debt securities, you would typically have equal rights to
your ratable share, along with all of our suppliers and vendors to which we owe
money, who are commonly referred to as trade creditors, and other holders of
debt of the same class as the notes, of any assets remaining after we have paid
off all of the debt senior to the notes. However, the indenture governing the 8%
convertible subordinated notes requires that amounts otherwise payable to
holders of the convertible

                                       12



subordinated notes in a bankruptcy, liquidation or similar proceeding be paid to
holders of debt senior to the convertible subordinated notes instead.
Consequently, holders of the 8% convertible subordinated notes may receive less,
ratably, than holders of trade payables or other debt of the same class in this
type of proceeding.

We are a holding company and conduct all of our operations through our
subsidiaries, which may affect our ability to make payments on the 8%
convertible subordinated notes.

     All of our manufacturing services are conducted through our subsidiaries.
As a result, our cash flow and our ability to service our debt, including the 8%
convertible subordinated notes, depend upon the earnings of our subsidiaries. In
addition, we depend on the distribution of earnings, loans or other payments by
our subsidiaries to us.

     Our subsidiaries are separate and distinct legal entities. Our subsidiaries
have no obligation to pay any amounts due on the 8% convertible subordinated
notes. Our subsidiaries are not required to provide us with funds for our
payment obligations, whether by dividends, distributions, loans or other
payments. In addition, any payment of dividends, distributions, loans or
advances by our subsidiaries to us could be subject to statutory or contractual
restrictions. Payments to us by our subsidiaries will also be contingent upon
our subsidiaries' earnings and business considerations.

We may not have the ability to raise the funds necessary to finance the change
in control offer required by the indenture governing the 8% convertible
subordinated notes.

     If the company undergoes a change in control (as defined in the indenture
governing the 8% convertible subordinated notes) we may need to refinance large
amounts of our debt, including our 12.75% senior subordinated notes, these 8%
convertible subordinated notes and borrowings under the senior revolving credit
facility. If a change in control occurs, we must offer to buy back the 8%
convertible subordinated notes for a price equal to 100.0% of the principal
amount of the 8% convertible subordinated notes, plus any accrued and unpaid
interest. We cannot assure you that there will be sufficient funds available for
us to make any required repurchases of the 8% convertible subordinated notes
upon a change in control. In addition, our senior revolving credit facility will
prohibit us from repurchasing the 8% convertible subordinated notes until we
first repay the senior revolving credit facility in full and the indenture
governing our 12.75% senior subordinated notes requires us to meet financial
tests before prepaying subordinated debt like the 8% convertible subordinated
notes. If we fail to repurchase the 8% convertible subordinated notes in that
circumstance, we will go into default under the indenture governing the 8%
convertible subordinated notes and by virtue of the cross-default provisions
contained in the notes, the senior revolving credit facility and the indenture
governing our 12.75% senior subordinated notes. A change in control for purposes
of the indenture governing the 8% convertible subordinated notes may also
constitute a change in control under the indenture governing our 12.75% senior
subordinated notes, which would require that we offer to buy back the 12.75%
senior subordinated notes prior to these notes. Any future debt which we incur
may also contain restrictions on repayment upon a change in control. If any
change in control occurs, we cannot assure you that we will have sufficient
funds to satisfy all of the company's debt obligations. These buyback
requirements may also delay or make it harder for others to effect a change in
control. However, certain other corporate events, such as leveraged
recapitalizations that would increase our level of indebtedness, would not
constitute a change in control under the indenture governing the 8% convertible
subordinated notes.

Federal and state laws allow courts, under specific circumstances, to void debts
and require holders of debt securities to return payments received from debtors.

     All of the net proceeds from the initial private placement of the 8%
convertible subordinated notes were used to repay our existing senior credit
facility. If a bankruptcy proceeding or a lawsuit is initiated by the company's
unpaid creditors, the debt which we incurred to repay our existing credit
facility, including the notes, may

                                       13



be reviewed under federal bankruptcy laws and comparable provisions of state
fraudulent transfer laws. Under these laws, the debt of the company could be
voided, or claims in respect of the debt could be subordinated to all other debt
if, among other things, the company:

     .    received less than reasonably equivalent value or fair consideration
          for the incurrence of such debt;

     .    was insolvent or rendered insolvent by reason of such incurrence;

     .    was engaged in a business or transaction for which the remaining
          assets of the company constituted unreasonably small capital; or

     .    intended to incur, or believed that the company would incur, debts
          beyond our ability to pay such debts as they mature.

     In addition, you may be required to return to fund for the benefit of
creditors, any payments received from us in respect of the 8% convertible
subordinated notes.

     The measures of insolvency will vary depending upon the fraudulent transfer
law applied in any proceeding to determine whether such a transfer has occurred.
Generally, however, a debtor would be considered insolvent if:

     .    the sum of its debts, including contingent liabilities, was greater
          than the fair saleable value of all of its assets;

     .    the present fair saleable value of its assets were less than the
          amount that would be required to pay its probable liability on
          existing debts, including contingent liabilities, as they become
          absolute and mature; or

     .    it could not pay its debts as they become due.

     On the basis of historical financial information, recent operating history
and other factors, we believe that we are not insolvent, do not have
unreasonably small capital for the business in which we are engaged and have not
incurred debts beyond our ability to pay such obligations as they mature. We
cannot assure you, however, as to what standard a court would apply in making
such determination, or that a court would agree with our conclusion in this
regard.

We cannot assure you that an active trading market will develop for the 8%
convertible subordinated notes.

     There has been no public market for the 8% convertible subordinated notes.
In addition, both the liquidity and the market price quoted for these notes may
be adversely affected by changes in the price of our Class A common stock,
changes in the overall market for convertible securities and by changes in our
financial performance or prospects, or in the prospects for companies in our
industry generally. In particular, the price of our 8% convertible subordinated
notes may fluctuate with our stock price since the notes are convertible into
stock. As a result, we cannot assure you that an active or stable trading market
will develop or continue for these 8% convertible subordinated notes. We also
cannot guarantee that the 8% convertible subordinated notes will trade in the
same or like manner as our 12.75% senior subordinated notes.

             Risks Relating to Our 12.75% Senior Subordinated Notes

ChipPAC International Company Limited does not have an independent source of
income from which to satisfy obligations of the 12.75% senior subordinated
notes.

     ChipPAC International Company Limited or ChipPAC International will rely on
intercompany loans through its direct and indirect subsidiaries to satisfy
obligations of its indebtedness; as a result, if these subsidiaries are not able
to make payments on these intercompany loans, we may not be able to pay our
noteholders interest on the

                                       14



12.75% senior subordinated notes when due.

     The only source of cash for ChipPAC International to pay principal and
interest on the 12.75% senior subordinated notes will be through payments of
interest and principal on intercompany notes, capital contributions from the
parent company or dividends or distributions from ChipPAC International's
subsidiaries, which dividends or distributions would be funded through payments
on intercompany notes. We will rely principally on funds generated by ChipPAC
International's operating subsidiaries to fund payments on the notes and other
indebtedness. If these subsidiaries are unable to make payments on their
intercompany loans, we may not be able to satisfy obligations under our debt
instruments, including payment of interest on the senior revolving credit
facility and these 12.75% senior subordinated notes.

     Our ability to pay our obligations under the 12.75% senior subordinated
notes may be reduced because ChipPAC International's Chinese operating
subsidiaries, which hold 27.6% of our consolidated assets and generated 17.1% of
our consolidated revenues for the year ended December 31, 2001, are not
guarantors of the notes.

     Our Chinese subsidiaries are not guarantors of the notes. For the year
ended December 31, 2001, the total revenues for our Chinese subsidiaries were
$58.9 million, representing approximately 17.1% of our consolidated revenues.
The combined assets for our Chinese subsidiaries at December 31, 2001 were
approximately $118.8 million, representing approximately 27.6% of our
consolidated assets.

     Claims of creditors of our Chinese operating subsidiaries, including trade
creditors, secured creditors and creditors holding indebtedness or guaranties
issued by these subsidiaries, will generally have priority on the assets and
earnings of these subsidiaries, over the claims of creditors of our company,
including holders of our 12.75% senior subordinated notes, even if the
obligations of our Chinese operating subsidiaries do not constitute senior
indebtedness. Since the company's Chinese subsidiaries will not guarantee the
12.75% senior subordinated notes, holders of the notes will have to rely solely
on dividends or distributions from the company's Korean, Malaysian and British
Virgin Islands subsidiaries to satisfy their respective obligations under the
notes should the company's Chinese subsidiaries be unable to make dividends or
distributions.

We may not have the ability to raise the funds necessary to finance the change
of control offer required by the indenture governing the 12.75% senior
subordinated notes.

     If the company undergoes a change of control (as defined in the indenture
governing the 12.75% senior subordinated notes) we may need to refinance large
amounts of our debt, including the 12.75% senior subordinated notes and
borrowings under the senior revolving credit facility. If a change of control
occurs, we must offer to buy back the 12.75% senior subordinated notes for a
price equal to 100.0% of the principal amount of the notes, plus any accrued and
unpaid interest. We cannot assure you that there will be sufficient funds
available for us to make any required repurchases of the 12.75% senior
subordinated notes upon a change of control. In addition, our senior revolving
credit facility will prohibit us from repurchasing the notes until we first
repay the senior revolving credit facility in full. If we fail to repurchase the
12.75% senior subordinated notes in that circumstance, we will go into default
under both the indenture governing the notes and the senior revolving credit
facility. Any future debt which we incur may also contain restrictions on
repayment upon a change of control. If any change of control occurs, we cannot
assure you that we will have sufficient funds to satisfy all of the company's
debt obligations. These buyback requirements may also delay or make it harder
for others to effect a change of control. However, certain other corporate
events, such as leveraged recapitalizations that would increase our level of
indebtedness, would not constitute a change of control under the indenture
governing the notes.

We cannot assure you that an active trading market will develop or continue for
the 12.75% senior subordinated notes.

                                       15



     The 12.75% senior subordinated notes are publicly traded but do not
necessarily trade actively. In addition, both the liquidity and the market price
quoted for these notes may be adversely affected by changes in the price of our
Class A common stock, changes in the overall market for convertible securities
and by changes in our financial performance or prospects, or in the prospects
for companies in our industry generally. As a result, we cannot assure you that
an active or stable trading market will develop or continue for these 12.75%
senior subordinated notes. We also cannot guarantee that the 12.75% senior
subordinated notes will trade in the same or like manner as our 8% convertible
subordinated notes.

                                       16