8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 7, 2004

ChipPAC, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	000-31173	77-0463048
(State or Other Jurisdiction of Incorporation or Organization	(Commission File Number)	(I.R.S. Employee Identification No.)

47400 Kato Road, Fremont, California 94538

(Address of Principal Executive Offices)

Registrant’s telephone number, including area code (510) 979-8000

TABLE OF CONTENTS

Item 5. Other Events.

SIGNATURES

Exhibit 99.1

Exhibit 99.2

Item 5. Other Events.

On July 7, 2004, ChipPAC, Inc. issued a press release (the “Press Release”) regarding the receipt of a favorable private letter ruling from the U.S. Internal Revenue Service (the “Private Letter Ruling”).

A copy of the Press Release is attached hereto as Exhibit 99.1 and is incorporated by reference.

A copy of the Private Letter Ruling is attached hereto as Exhibit 99.2 and is incorporated by reference.

Item 7. Financial Statements and Exhibits.

(c) Exhibits.

99.1	Press release dated July 7, 2004
99.2	Letter from U.S. Internal Revenue Service to ChipPAC, Inc. received by ChipPAC, Inc. on July 6, 2004

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, as of July 7, 2004.

CHIPPAC, INC.

(Registrant)

/s/    Patricia H. McCall        

PATRICIA H. MCCALL  

Senior Vice President, General Counsel and Secretary

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Exhibit Index

Number	Description
99.1	Press release dated July 7, 2004
99.2	Letter from U.S. Internal Revenue Service to ChipPAC, Inc. received by ChipPAC, Inc. on July 6, 2004

EX-99.1

Exhibit 99.1

STATS, ChipPAC Merger Receives Favorable IRS Private Letter Ruling

July 7, 2004 – ST Assembly Test Services Ltd (“STATS” – Nasdaq: STTS and SGX: ST Assembly) and ChipPAC, Inc. (“ChipPAC” – Nasdaq: CHPC) today announced that they received a favorable private letter ruling from the U.S. Internal Revenue Service notifying them that the exchange of ChipPAC Class A common stock for STATS American Depositary Shares in the pending merger involving the two companies will not result in the recognition of gain under Section 367 of the U.S. Internal Revenue Code, as amended. The receipt of the private letter ruling satisfies a closing condition of the merger.

Completion of the merger is subject to approval of the shareholders of both STATS and ChipPAC and other customary conditions. The STATS and ChipPAC meetings of shareholders to vote on proposals related to the merger involving the two companies will be held on August 4, 2004. Mailing of the shareholders’ circular to STATS shareholders and the proxy statement/prospectus to ChipPAC stockholders is expected to commence on or about July 7, 2004.

About ST Assembly Test Services Ltd (STATS)

STATS is a leading semiconductor test and assembly service provider to fabless companies, integrated device manufacturers and wafer foundries. With its principal operations in Singapore and global operations in the United States, United Kingdom, Japan, China and Taiwan, STATS offers full back-end turnkey solutions to customers worldwide. STATS’ expertise is in testing mixed-signal semiconductors, which are extensively used in fast growing communications applications, such as data networking, broadband and mobile communications. STATS also offers advanced assembly services and has developed a wide array of traditional and advanced leadframe and laminate based products, including various ball grid array packages to serve some of the world’s technological leaders. STATS was listed on the Nasdaq National Market and The Singapore Exchange in January 2000 and is in the Morgan Stanley Capital International (MSCI) Index and the Straits Times Industrial Index. Further information is available at www.stts.com.

About ChipPAC, Inc.

ChipPAC is a full portfolio provider of semiconductor packaging, design, assembly, test and distribution services. The company is a leader in advanced packaging services that address the needs of semiconductors used in wireless communications, including flip-chip, chip-scale and stacked die technologies. The company combines a history of innovation and service with more than a decade of experience satisfying some of the largest customers in the industry. With advanced process technology capabilities and a global manufacturing presence spanning Korea, China, Malaysia and the United States, ChipPAC has a reputation for providing dependable, high quality packaging solutions. ChipPAC is publicly traded on the Nasdaq National Market under the symbol CHPC. For more information, visit the company’s Web site at www.chippac.com.

Forward-Looking Statements

Certain statements in this press release, including statements regarding the proposed merger involving STATS and ChipPAC, are forward-looking statements that involve a number of risks and uncertainties that could cause actual events or results to differ materially from those described in this press release. Factors that could cause actual events or results to differ include the possibility that the merger will not close or that the closing will be delayed; the impact of the proposed merger involving ChipPAC; the ability of STATS and ChipPAC to successfully integrate their operations and employees; general business and economic conditions and the state of the semiconductor industry; demand for end-use applications products such as communications equipment and personal computers; reliance on a small group of principal customers; decisions by customers to discontinue outsourcing of test and assembly services; changes in customer order patterns; rescheduling or canceling of customer orders; changes in product mix; capacity utilization; level of competition; pricing pressures including declines in average selling prices; continued success in technological innovations; delays in acquiring or installing new equipment; shortages in supply of key components; availability of financing; exchange rate fluctuations; litigation and other risks described from time to time in STATS’ filings with the U.S. Securities and Exchange Commission (“SEC”), including STATS’

Annual Report on Form 20-F for the fiscal year ended December 31, 2003, and ChipPAC’s filings with the SEC, including ChipPAC’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003 and ChipPAC’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2004. Neither STATS nor ChipPAC undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Additional Information About the Proposed Merger and Where to Find It

STATS and ChipPAC have filed with the SEC a proxy statement/prospectus and other relevant materials in connection with the proposed merger involving STATS and ChipPAC pursuant to the terms of an Agreement and Plan of Merger and Reorganization among STATS, Camelot Merger, Inc., a wholly owned subsidiary of STATS, and ChipPAC. Investors and security holders of STATS and ChipPAC are urged to read the STATS shareholders’ circular and the ChipPAC proxy statement/prospectus and the other relevant materials because they contain important information about STATS, ChipPAC and the proposed merger. The proxy statement/prospectus and other relevant materials, and any other documents filed by STATS or ChipPAC with the SEC, may be obtained free of charge at the SEC’s web site at www.sec.gov. In addition, investors and security holders may obtain free copies of the documents filed with the SEC by STATS by contacting STATS Investor Relations in the United States at telephone (408) 586-0608 or email daviesd@statsus.com or in Singapore at telephone +011 (65) 6824-7705 or email angelaine@stats.st.com.sg. Investors and security holders may obtain free copies of the documents filed with the SEC by ChipPAC by contacting ChipPAC Investor Relations, ChipPAC Incorporated, 47400 Kato Road, Fremont, CA 94538, telephone (510) 979-8220 or email ir@chippac.com or David Pasquale at telephone (646) 536-7006 or email dpasquale@theruthgroup.com. Investors and security holders of STATS and ChipPAC are urged to read the STATS shareholders’ circular, the proxy statement/prospectus and the other relevant materials before making any voting or investment decision with respect to the proposed merger.

STATS, ChipPAC and certain of each of their executive officers and directors may be deemed to be participants in the solicitation of proxies of ChipPAC’s stockholders in connection with the proposed merger. Investors and security holders may obtain more detailed information regarding the names, affiliations and interests of such persons in the solicitation by reading the proxy statement/prospectus.

CONTACTS for ST Assembly Test Services Ltd:

Elaine Ang, Investor Relations & Corporate Communications

Tel: +011 (65) 6824-7705 or angelaine@stats.st.com.sg

Drew Davies, Director of Investor Relations

Tel: (408) 586-0608 or daviesd@statsus.com

CONTACTS for ChipPAC, Inc.:

David Pasquale, Investor Relations

Tel: (646) 536-7006 or dpasquale@theruthgroup.com

Moon Lee, Investor Relations

Tel: (646) 536-7001 or moonlee@theruthgroup.com

EX-99.2

Exhibit 99.2

[Letterhead of U.S. Internal Revenue Service]

Index Number: 367.00-00
Mr. Dennis McKenna	Person to Contact:
President	Tasheaya L. Ellison, ID No. 50-21786
ChipPAC, Inc.	Telephone Number:
47400 Kato Road	(202) 622-3870
Fremont, CA 94538	Refer Reply To:
	CC: INTL:BR5-PLR-112485-04
	Date: June 14, 2004

Legend
Target	=	ChipPAC, Inc.
	=	A domestic corporation
		EIN 77-0463048
Acquirer	=	ST Assembly Test Services, Ltd.
		A Singapore corporation
		EIN None
Business A	=	Semiconductor Test and Assembly Services
Country A	=	Singapore
Year 1	=	1994
Year 2	=	1995
State A	=	Delaware
Year 3	=	2000
Date 1	=	February 10, 2004
US Sub	=	Camelot Merger, Inc.
		A domestic corporation
X	=	55%
FX	=	Winstek Semiconductor Corporation
		A Taiwan corporation
Y	=	$79,718,000
Z	=	$315,000,000
AA	=	$115,000,000
BB	=	$2,920,000
CC	=	$227,000,000
Date 2	=	January 1, 2001
Date 3	=	January 13, 2004

PLR-112485-04

Dear Mr. McKenna:

This is in response to your letter, dated February 2, 2004, requesting a private letter ruling that based on your representations, the proposed merger of a wholly owned domestic subsidiary of PLR-112485-04 Acquirer, a foreign corporation, with and into Target, a domestic corporation will qualify for an exception to the general rule of section 367(a)(1) of the Internal Revenue Code of 1986, as amended (the Code). Additional information was submitted in letters dated February 19, 2004, April 8, 2004, April 21, 2004, May 5, 2004, and May 7, 2004.

The rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party. While this office has not verified any of the material submitted in support of the request for rulings, it is subject to verification on examination.

Acquirer is engaged in Business A. Acquirer is a publicly traded company, which has a non-US government as its indirect majority shareholder. Acquirer was incorporated in Year 1 in Country A and began operations in Year 2.

Target is engaged in the same business as Acquirer. Target is a publicly traded company, which has one class of stock issued and outstanding. Target was incorporated in State A in Year 3.

On Date 1, Acquirer and Target entered into an agreement whereby US Sub, a wholly owned domestic subsidiary of Acquirer, will merge with and into Target with Target surviving the merger (the “Merger”). Holders of Target stock, in exchange for their Target shares, will receive American Depository Shares (“ADS”) in Acquirer. Acquirer and Target represent that the Merger will qualify as a reorganization within the meaning of section 368(a) off the Code.

The exchange of Target shares by U.S. persons is subject to section 367(a) of the Code, which provides that where no exception applies, the transfer of appreciated property (including stock) by a U.S. person to a foreign corporation in a transaction that would otherwise qualify as a reorganization exchange is treated as a taxable transfer. In the case of a section 367(a) transaction in which a U.S. person transfers stock to a foreign corporation, the U.S. transferor will qualify for nonrecognition treatment only if the requirements of Treas. Reg. Section 1.367(a)-3(c)(1) are satisfied.

Among the requirements of Treas. Reg. Section 1.367(a)-3(c)(1) is the requirement that the U.S. target company must satisfy the reporting requirements of Treas. Reg. Section 1.367(a)-3(c)(6). Target represents that it will comply with the reporting requirements of Treas. Reg. Section 1.367(a)-3(c)(6). Additionally, a transfer by a U.S. transferor that is a five-percent shareholder of the transferee foreign corporation immediately after the transfer will only qualify for the exception in Treas. Reg. § 1.367(a)-3(c) if the transferor enters into a five-year gain recognition agreement as provided in Treas. Reg. Section 1.367(a)-8.

Among the remaining requirements under Treas. Reg. Section 1.367(a)-3(c)(1) is the requirement that U.S. persons transferring U.S. target stock must receive, in the aggregate, 50-percent or less of both the total voting power and total value of the stock in the transferee foreign corporation (taking into account the attribution rules under section 318 of the Code, as modified by the rules of section 958(b) of the Code). The Taxpayers represent that U.S.

PLR-112485-04

transferors of Target stock will receive, in the aggregate, actually or constructively, 50-percent or less of both the total voting power and total value of all shares of Acquirer stock outstanding after the merger. Another requirement is that U.S. persons who are officers or directors of the U.S. target corporation, or who are: 5-percent shareholders of the U.S. target corporation, must own in the aggregate, 50-percent or less of each of the total voting power and total value of the stock in the transferee foreign corporation (taking into account the attribution rules of section 318 of the Code, as modified by the rules of section 958(b) of the Code). The Taxpayers represent that U.S. persons who are officers, directors or 5-percent target shareholders (as defined in Treas. Reg. Section 1.367(a)-3(c)(5)(iii)) of Target will own, in the aggregate, actually or constructively, 50-percent or less of each of the total voting power and total value of all shares of Acquirer immediately after the Merger.

The active trade or business test of Treas. Reg. Section 1.367(a)-3(c)(3) must be satisfied. The active trade or business test consists of three elements. The first element provides that the transferee foreign corporation (or any qualified subsidiary or qualified partnership as defined under Treas. Reg. Section 1.367(a)-3(c)(5)(vii) and (viii)) must have been engaged in the active conduct of a trade or business outside of the United States, within the meaning of Treas. Reg. Sections 1.367(a)-2T(b)(2) and (3), for the entire 36-month period immediately preceding the exchange of U.S. target stock. Acquirer represents that it or one or more of its “qualified subsidiaries” (as defined in Treas. Reg. Section 1.367(a)-3(c)(5)(vii)) will have been engaged in the active conduct of a trade or business outside the United States (the “Acquiring Business”), within the meaning of Treas. Reg. Sections 1.367(a)-2T(b)(2) and (3), for the entire 36-month period immediately preceding the Merger.

The second element of the active trade or business test provides that at the time of the exchange, neither the transferors nor the transferee foreign corporation (or any qualified subsidiary or qualified partnership engaged in the active trade or business) will have the intention to substantially dispose of or discontinue such trade or business. Target represents that at the time of the Merger, no shareholders of Target (to the knowledge of Target) have any intention to substantially dispose of, or discontinue, the Acquiring Business. Acquiring represents that at the time of the Merger, Acquiring (including its qualified subsidiaries) does not have any intention to substantially dispose of, or discontinue, the Acquiring Business.

The third element of the active trade or business test is the substantiality test as defined in Treas. Reg. Section 1.367(a)-3(c)(3)(iii). Under the substantiality test, the transferee foreign corporation must be equal to or greater in value than the U.S. target corporation at the time of the U.S. target stock exchange (see Treas. Reg. Section 1.367(a)-3(c)(3)(iii)(A)). Pursuant to Treas. Reg. Section 1.367(a)-3(c)(iii)(B)(1) the value of the transferee foreign corporation is reduced by the amount of any asset acquired outside the ordinary course of business by such corporation or any of its qualified subsidiaries or qualified partnerships within the 36-month period preceding the exchange to the extent that (i) at the time of the exchange such asset produces or is held for the production of passive income, as defined in section 1297(b) or (ii) such asset was acquired for the principal purpose of satisfying the substantiality test (commonly referred to as the “stuffing” rule). In addition, pursuant to Treas. Reg. Section 1.367(a)-3(c)(iii)(B)(3) the value of the transferee foreign corporation is reduced by the value of assets received within the 36-month period prior to the acquisition if such assets were owned by the U.S. target company or an affiliate. Acquirer represents that it did not undertake any debt issuance, acquisition, merger or restructuring with the 36 months preceding the Merger for any purpose related to satisfying the substantiality test.

PLR-112485-04

During the 36 months preceding the Merger, Acquirer (i) purchased X % of the stock of FX, a foreign corporation and that ownership interest in FX is worth $Y; (ii) issued $ Z worth of convertible notes; (iii) issued $AA worth of ordinary shares; and (iv) and the employees of Acquirer exercised compensatory options for Acquirer ordinary shares worth $BB.

FX is engaged in the same business as Acquirer and is treated as an integrated element of Acquirer’s business and not a passive investment. Acquirer purchased the FX shares in the ordinary course of business in order to expand its global presence in Business A.

During the prior 36-month period, Acquirer’s capital expenditures exceeded its cash flow from operations by $CC. Acquirer’s issuances of equity and convertible notes were necessary to fund Acquirer’s net capital expenditures, plus its working capital requirements and other commitments during the most recent 36 months and for Acquirer to maintain enough capital to fund future expenditures and/or acquisitions.

Acquirer issued convertible notes, which are convertible to Acquirer ordinary shares subject to certain limitations. The convertible notes were out-of-the-money when issued, have been out-of-the-money at all times since issuance, and are currently out-of-the-money. None of the convertible notes have been converted to equity. Acquirer also represents that as a result of the Merger, none of Acquirer’s currently outstanding debt will be required to be converted.

It is further represented that the compensatory options (both currently outstanding and those exercised between Date 2 and Date 3) were issued to Acquirer’s employees for valid business reasons and in the ordinary course of business.

Based solely on the information submitted and on the representations set forth above, and provided the convertible notes constitute debt not equity, and subject to the caveats below, it is held as follows:

1. The transfer of Target shares by US persons who are not 5 -percent transferee shareholders (as defined in Treas. Reg. Section 1.367(a)-3(c)(5)(ii)) for ADS of Acquiring will qualify for an exception to section 367(a)(1) under Treas. Reg. Section 1.367(a)-3(c)(1) and (9).

2. Any U.S. person transferring Target shares who is a 5-percent transferee shareholder (as defined in Treas. Reg. Section 1.367(a)-3(c)(5)(ii)) will qualify for the exception to section 367(a) only upon entering into a 5-year gain recognition agreement pursuant to Treas. Reg. section 1.367(a)-8.

Except as expressly provided herein, no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter. In particular, no opinion was requested and no opinion is expressed as to whether the Merger qualifies as a reorganization within the meaning of sections 368(a)(l)(B), 368(a)(1)(A) and 368(a)(2)(E) of the Code. No opinion is expressed as to the reporting requirements of U.S. persons exchanging stock under section 6038B and the regulations thereunder.

PLR-112485-04

This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) of the Code provides that it may not be used or cited as precedent.

It is important that a copy of this letter be attached to the federal income tax return of the taxpayer involved for the taxable year in which the transaction covered by this ruling is consummated.

In accordance with the Power of Attorney on file with this office, a copy of this letter is being sent to your authorized representative.

Sincerely,

/s/    MICHAEL H. FRANKEL

Michael H. Frankel

Senior Technical Reviewer

Branch 4

Office of Associate Chief Counsel

(International)

cc:	Mr. Tan Lay Koon, President, ST Assembly Test Services, Ltd.
	Mr. David Kung, Kirkland & Ellis LLP
	Mr. Laurence Crouch, Shearman & Sterling LLP